SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000 Commission file number 1-6682
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Hasbro, Inc.
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(Name of Registrant)
Rhode Island 05-0155090
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(State of Incorporation) (I.R.S. Employer
Identification No.)
1027 Newport Avenue, Pawtucket, Rhode Island 02861
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(Address of Principal Executive Offices)
(401) 431-8697
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock New York Stock Exchange
Preference Share Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes[X] or No[ ].
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part II of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant computed by reference to the price at which the stock was sold on
March 23, 2001 was $1,946,512,990.
The number of shares of Common Stock outstanding as of March 23, 2001 was
172,456,278.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of registrant's definitive proxy statement for its 2001 Annual
Meeting of Shareholders are incorporated by reference into Part III of this
Report.
Selected information contained in registrant's Annual Report to Shareholders
for the fiscal year ended December 31, 2000, is included as Exhibit 13, and
incorporated by reference into Parts I and II of this Report.
PART I
ITEM 1. BUSINESS
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(a) General Development of Business
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Except as expressly indicated or unless the context otherwise requires, as
used herein, the "Company" means Hasbro, Inc., a Rhode Island corporation
organized on January 8, 1926, and its subsidiaries.
The Company is a worldwide leader in children's and family leisure time and
entertainment products and services, including the design, manufacture and
marketing of games and toys ranging from traditional to high-tech. Both
internationally and in the U.S., its widely recognized core brands such as
PLAYSKOOL, TONKA, SUPER SOAKER, MILTON BRADLEY, PARKER BROTHERS, TIGER, and
WIZARDS OF THE COAST provide what the Company believes to be the highest
quality play experiences in the world. In its offerings are a broad variety of
games, including traditional board and card, hand-held electronic, electronic
interactive products, robotic pets, electronic learning aid, children's
consumer electronic, trading card, roleplaying and puzzles. Toy offerings
include boys' action, preschool, creative play and girls' toys, dolls and
plush products. The Company also licenses to others various trademarks,
characters and other property rights for use in connection with consumer
promotions and the sale by others of noncompeting toys and non-toy products.
(b) Description of Business Segments and Products
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The Company's focus on managing its business covers two major areas, Toys
and Games. Organizationally, the Company's reportable segments are U.S. Toys,
Games, International and Global Operations. Financial information with respect
to the Company's segments is included in the Annual Report to Shareholders for
the fiscal year ended December 31, 2000.
In the United States, the U.S. Toy segment includes the design, development,
marketing and selling of boys' action figures, vehicles and playsets, girls'
toys, preschool toys and infant products and creative play products. The Games
segment includes the design, development, marketing and selling of traditional
board and card games and puzzles, handheld electronic games, electronic
interactive products, children's consumer electronics, electronic learning
aids, and trading card and roleplaying games. During 2000, the Games segment
also included interactive software games based on the Company's owned and
licensed brands. The business units carrying these games were sold in January
2001. Within the International segment, the Company develops, markets and
sells both toy and certain game products in non-U.S. markets. The marketing
and sale of WIZARDS OF THE COAST products internationally and TIGER products
in the United Kingdom are managed through the Company's Games segment.
Global Operations manufactures and sources product for the majority of the
Company's segments. The Company also has other segments which license certain
of the Company's intellectual property to third parties and, which develop and
market non-traditional toy and game based product and historically have
realized more than half of their revenues and the majority of their operating
profit in the first half of the year, which is contra-seasonal to the rest of
the Company's business. In 2000, these other segments did not meet the
quantitative thresholds for reportable segments.
(i) U.S. Toy
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In the U.S. Toy segment, the Company's products are marketed as boys' toys,
girls' toys, preschool and creative play.
Boys' toys are offered across a wide range of core popular properties such
as G.I. JOE, ACTION MAN, TRANSFORMERS action figures, and the TONKA line of
trucks and interactive toys. Other products are tied to entertainment
properties, including STAR WARS, POKEMON and BATMAN toys and accessories. In
2001, the Company will be reintroducing its TRANSFORMERS - ROBOTS IN DISGUISE
line accompanied by an all-new kids television series, as well as a kid-
focused G.I. JOE line. Also in 2001, the Company plans to introduce B.I.O.
BUGS, robotic bugs that can act autonomously using advanced "nervous network"
technology. In addition, the TONKA 2001 product line includes DUSTY MY TALKIN'
TOOL BENCH, an interactive tool bench with personality, and CHOMPER MY TALKIN'
TRUCKBOT, a follow-up to last year's award-winning TUCKER MY TALKIN' TRUCKBOT.
The Company will also feature toy lines based on JURASSIC PARK III, scheduled
for release in July 2001 and Disney/Pixar's MONSTERS, INC., which is due out
in theaters in November 2001.
Hasbro's girls' toys include the classic RAGGEDY ANN and RAGGEDY ANDY rag
dolls. The Company also offers such popular dolls as MAKEUP MINDY. In 2001,
the Company is introducing SHOEZIES collectible shoe fashions, a kids line of
collectible miniature shoes.
The U.S. Toy segment's preschool products include a portfolio of core brands
primarily marketed under the PLAYSKOOL trademark. The PLAYSKOOL line includes
such well-known products as MR. POTATO HEAD, SIT 'N SPIN and GLOWORM, as well
as a successful line of infant toys such as KICK START GYM and the FIRST
STARTS infant line, and preschool role-play products. New products being
introduced during 2001 are the PLAYSKOOL MAGIC SCREEN LEARNING DESK, which
helps children discover letters, numbers, shapes and colors on a unique,
animated light-up screen and three fun play and learn keyboards, and the
PLAYSKOOL BABY EINSTEIN product line, which incorporates music, poetry,
language and art. New 2001 products also feature a licensed product line based
on HIT Entertainment's BOB THE BUILDER, which airs on NICKELODEON.
Creative Play items for both girls and boys include such classic core lines
as PLAY-DOH, EASY-BAKE OVEN, and LITE-BRITE and SPIROGRAPH design toys. During
2001, the Company will be offering new PLAY-DOH playsets featuring CHUCK E.
CHEESE, BOB THE BUILDER, and Disney/Pixar's MONSTERS, INC., and licensed
refill bake sets for the EASY-BAKE OVEN, including CHIPS AHOY! chocolate chips
and LIFESAVERS cakes.
(ii) Games
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The Company markets its games and puzzles under several well known core
brands, including MILTON BRADLEY, PARKER BROTHERS, AVALON HILL, TIGER, AND
WIZARDS OF THE COAST.
The MILTON BRADLEY, PARKER BROTHERS and AVALON HILL brand portfolios consist
of a broad assortment of games for children, families and adults. The
Company's staple items include MONOPOLY, BATTLESHIP, THE GAME OF LIFE,
SCRABBLE, CHUTES AND LADDERS, CANDY LAND, TROUBLE, MOUSETRAP, OPERATION,
HUNGRY HUNGRY HIPPOS, CONNECT FOUR, TWISTER, YAHTZEE, JENGA, CLUE, SORRY!,
RISK, BOGGLE, OUIJA, DIPLOMACY, ACQUIRE and TRIVIAL PURSUIT as well as a line
of jigsaw puzzles for children and adults. The Company has put in place a
series of marketing initiatives designed to encourage game play among a wide
variety of audiences, including MY FIRST GAMES, FAMILY GAME NIGHT and GET
TOGETHER GAMES. New product introductions for 2001 include POX, a portable
electronic game where players can compete using wireless technology, providing
numerous challenges as characters are built and collected, and M.A.G.S., the
Music Activated Games System where a player's personal choice of music
determines the game experience. In addition, new board games will include
WHEELS ON THE BUS, a preschool game based on the children's song, HANG IN
THERE, a jungle themed skill and action game, and MOODS, a party game testing
verbal and acting skills.
TIGER ELECTRONICS brand products bring innovation and technology to
entertainment and lifestyle products for the whole family. Electronic
interactive products include POO-CHI, MEOW-CHI, SUPER POO-CHI and FURBY.
Planned for 2001 are I-CYBIE, a fully articulated robo-dog that goes through
several stages of development from puppy to adult dog, as well as a broadened
line of ROBO-CHI interactive pet offerings including CHIRPY-CHI, DINO-CHI,
ROBO-BABY, and PETAL-CHI. Electronic learning aids include licensed product
featuring WINNIE THE POOH and BOB THE BUILDER. Innovative items in the 2001
line include the interactive animatronic SHELBY, a special friend of FURBY,
who has a vocabulary of more than 180 words, as well as OTTOBOT the robotic
friend and MUTSU the interactive fish. Consumer electronics include HITCLIPS
micro music systems and YAHOO! CAM. 2001 consumer electronics offerings
include i-KARAOKE, a consumer targeted portable karaoke system. Also new for
2001 is a line of robots based on the television show BATTLEBOTS that children
can build, customize and put into action.
WIZARDS OF THE COAST trading card and roleplaying games include the popular
MAGIC: THE GATHERING, DUNGEONS AND DRAGONS, POKEMON and MAJOR LEAGUE BASEBALL
SHOWDOWN. MAGIC: THE GATHERING, created in 1993, has worldwide popularity,
with more than six million players in over fifty countries. In 2001, MAGIC:
THE GATHERING - SEVENTH EDITION basic card set will be introduced as well as
the PLANESHIFT, APOCALYPSE and ODYSSEY expansions. WIZARDS OF THE COAST has a
unique organized play program for its trading card games, sanctioning over
80,000 game tournaments around the world in 2000. The Company operates
approximately 100 retail stores under the WIZARDS OF THE COAST and GAME KEEPER
names, many of which not only sell a wide range of games, but provide
important locations for tournaments and other organized play activities. New
for 2001 are the NFL SHOWDOWN and NBA SHOWDOWN trading card games which allow
players to assemble their own lineups, collect their favorite football and
basketball players and compete against other players' teams, the NEO GENESIS
and NEO DISCOVERY expansions for the POKEMON trading card game, and the HARRY
POTTER trading card game, based on the NEW YORK TIMES best-selling novels.
During 2000, the Company marketed interactive software games under the
HASBRO INTERACTIVE, MICROPROSE and EUROPRESS brands, which include ROLLER
COASTER TYCOON, CIVILIZATION, FALCON and the ATARI properties, such as
CENTIPEDE, MISSILE COMMAND, and PONG. The Company also completed the soft
launch of its internet games portal, Games.com. In December 2000, the Company
announced it had entered into an agreement with Infogrames Entertainment S.A.
(Infogrames) to sell the business units which make up Hasbro Interactive, as
well as its internet portal, Games.com. This sale closed in January 2001. In
conjunction with this agreement, the Company entered into a licensing
agreement with Infogrames whereby they will develop interactive games based on
the Company's properties. The Company will receive annual royalties, including
a minimum guarantee, from Infogrames based on sales generated under the
licensing agreement.
(iii) International
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In addition to the United States, the Company operates in more than 25
countries, selling a representative range of the toy and game products
marketed in the United States, together with some items which are sold only
internationally. Key international brands for 2000 included POKEMON, ACTION
MAN and FURBY. New products for 2001 include many of those noted in the U.S.
Toy and Game segments above, as well as TURBO SNAILS, a new line of boys'
action figures.
(iv) Global Operations
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The Company primarily sources production through unrelated manufacturers in
various Far East countries, principally China, using a Hong Kong subsidiary
for quality control and order coordination purposes. The Company also
manufactures products in the United States, Ireland and Spain. See
"Manufacturing and Importing" below.
(v) Other Information
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The Company has other segments which generate revenue through the licensing
of intellectual property for promotional and merchandising uses as well as
design, develop and market certain traditional and non-traditional toy and
game based product including the SUPER SOAKER line of water products, the NERF
line of soft action play equipment, a TINKERTOY classic line, and KOOSH brand
products.
In 2001, the Company has realigned its business segments to consolidate the
toy-related products into its U.S. Toy segment. As a result, many of the
brands reflected in other segments including SUPER SOAKER, NERF, TINKERTOYS,
and KOOSH will be marketed under the boys, girls, preschool and creative play
lines of the U.S. Toy segment in the future.
To further extend its range of products in its various segments, the Company
has Hong Kong units which market directly to retailers a line of high quality,
low priced toys, games and related products, primarily on a direct import
basis. Direct sales to these customers are reflected in the revenue of the
segment in which the product sold resides.
In addition, various products are licensed to other companies for certain
countries where the Company does not otherwise have a presence.
During the 2000 fiscal year, revenues from the POKEMON trading card line of
products contributed 15% of consolidated net revenues of the Company. In 1999,
revenues from the FURBY line of products and the STAR WARS boys toys line of
products contributed 13% and 12%, respectively, of consolidated net revenues
for the Company.
Working Capital Requirements
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The Company's production needs have been financed historically by means of
short-term borrowings which reach peak levels during September through
November of each year when receivables also generally reach peak levels. The
revenue pattern of the Company results in the second half of the year being
more significant to its overall business and, within that half, the fourth
quarter being the most prominent. The trend of retailers over the past few
years has been to make a higher percentage of their purchases within or close
to the fourth quarter holiday consumer selling season, which includes
Christmas. The Company expects that this trend will continue. The toy business
is also characterized by customer order patterns which vary from year to year
largely because of differences each year in the degree of consumer acceptance
of a product line, product availability, marketing strategies and inventory
policies of retailers, the dates of theatrical releases of major motion
pictures for which the Company has licenses for promotional product, and
differences in overall economic conditions. As a result, comparisons of
unshipped orders on any date with those at the same date in a prior year are
not necessarily indicative of sales for that entire given year. Also, quick
response inventory management practices now being used results in fewer orders
being placed in advance of shipment and more orders being placed for immediate
delivery. The Company's unshipped orders at March 4, 2001 and March 5, 2000
were approximately $166,933,000 and $375,000,000, respectively. Also, it is a
general industry practice that orders are subject to amendment or cancellation
by customers prior to shipment. The backlog at any date in a given year can be
affected by programs the Company may employ to induce its customers to place
orders and accept shipments early in the year. This method is a general
industry practice. The programs the Company is employing to promote sales in
2001 are not substantially different from those employed in 2000.
The Company commits to inventory production, advertising and marketing
expenditures prior to the peak third and fourth quarter retail selling season.
In addition, accounts receivable generally are at peak levels during the
fourth quarter and early in the first quarter of the subsequent year, making
it necessary for the Company to borrow significant amounts pending these
collections. During 2000, the Company relied on internally generated funds and
short-term borrowing arrangements, including commercial paper, to finance its
working capital needs. In February 2001, the Company entered into amended and
restated secured revolving and line of credit facility agreements with its
existing lenders. These committed lines include long-term and short-term
secured credit agreements of $325,000,000 each. The facilities are secured by
substantially all domestic accounts receivable and inventory, as well as
certain investments and intangible assets of the Company. The Company is not
required to maintain compensating balances under the agreements. The
agreements contain certain restrictive covenants setting forth minimum cash
flow and coverage requirements, and a number of other limitations, including
with respect to capital expenditures, investments, acquisitions, share
repurchases and dividend payments. During 2001, the Company expects to fund
its seasonal working capital needs through operations and these lines of
credit and believes that the funds available to it are adequate to meet its
needs. Amounts available for borrowing under the committed revolving and line
of credit facilities are $325,000,000 (long-term) and $325,000,000 (short-
term) and vary by quarter, with availability at its lowest point of
$300,000,000 in the first quarter of 2001. Of this amount available,
$213,000,000 is unused at March 4, 2001. In addition, the Company has
$143,000,000 of available uncommitted and unsecured lines of credit at March
4, 2001.
Royalties, Research and Development
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The continuing development of new products and the redesigning of existing
items for continuing market acceptance are key determinants of success in the
toy and game industry. In 2000, 1999 and 1998, approximately $208,485,000,
$254,599,000 and $184,962,000, respectively, were incurred on activities
relating to the development, design and engineering of new products and their
packaging (including items brought to the Company by independent designers)
and to the improvement or modification of ongoing products. Much of this work
is performed by the Company's staff of designers, artists, model makers and
engineers.
In addition to its own staff, the Company deals with a number of independent
toy and game designers for whose designs and ideas the Company competes with
other toy and game manufacturers. Rights to such designs and ideas, when
acquired by the Company, are usually exclusive under agreements requiring the
Company to pay the designer a royalty on the Company's net sales of the item.
These designer royalty agreements in some cases provide for advance royalties
and minimum guarantees.
The Company also produces a number of toys under trademarks and copyrights
utilizing the names or likenesses of familiar movie, television and comic
strip characters, for whose rights the Company competes with other toy and
game manufacturers. Licensing fees are generally paid as a royalty on the
Company's net sales of the item. Licenses for the use of characters are
generally exclusive for specific products or product lines in specified
territories. In many instances, advance royalties and minimum guarantees are
required by character license agreements. Under terms of agreements existing
at December 31, 2000, in certain circumstances the Company may be required to
pay an aggregate of up to $741,000,000 in guaranteed or minimum royalties
between 2001 and 2007. Of this amount, approximately $238,000,000 has been
paid. Approximately $58,000,000 is included in the $66,509,000 of prepaid
royalties which are a component of prepaid expenses and other current assets
on the balance sheet. Included in other assets is $180,000,000 representing
the long-term portion of the amount paid. Of the remaining unpaid minimum
guaranty, Hasbro may be required to pay approximately $44,000,000,
$193,000,000, $89,000,000, $56,000,000, and $121,000,000 in 2001, 2002, 2003,
2004 and 2005, respectively. Such payments are related to royalties which are
expected to be incurred on anticipated revenues in the years 2001 through
2008.
Marketing and Sales
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The Company's products are sold nationally and internationally to a broad
spectrum of customers including wholesalers, distributors, chain stores,
discount stores, mail order houses, catalog stores, department stores and
other traditional retailers, large and small, as well as internet-based "e-
tailers." The Company and its subsidiaries employ their own sales forces which
account for the majority of sales of their products. Remaining sales are
generated by independent distributors who sell the Company's products
principally in areas of the world where the Company does not otherwise
maintain a presence. With the acquisition of Wizards of the Coast, Inc. in the
fourth quarter of 1999, the Company acquired a specialized line of retail
stores featuring game, hobby and related products and an area for in-store
game play, as well as an online retail site. The Company maintains showrooms
in New York and selected other major cities world-wide as well as at most of
its subsidiary locations. Although the Company had more than 3,500 customers
in the United States and Canada during 2000 with the inclusion of specialty
retailers carrying trading card games and toy-related product there has been
significant consolidation at the retail level over the last several years, and
the majority of the Company's sales are to large chain stores, distributors
and wholesalers. In other countries, the Company has in excess of 20,000
customers, many of which are individual retail stores. During 2000, sales to
the Company's two largest customers, Wal-Mart Stores, Inc. and Toys `R Us,
Inc., represented 14% and 13%, respectively, of consolidated net revenues, and
sales to its top five customers accounted for approximately 41% of
consolidated net revenues.
The Company advertises many of its toy and game products extensively on
television. The Company generally advertises selected items in its product
groups in a manner designed to promote the sale of other specific items in
those product groups. Through 2001, the Company introduced its new products in
New York City at the time of the American International Toy Fair in February.
It also introduced some of its products to major customers during the prior
year.
In 2000, the Company spent approximately $452,978,000 in advertising,
promotion and marketing programs compared to $456,978,000 in 1999 and
$440,692,000 in 1998.
Manufacturing and Importing
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During 2000, the Company's products were manufactured in third party
facilities in the Far East as well as in the Company's own three principal
facilities located in East Longmeadow, Massachusetts, Waterford, Ireland, and
Valencia, Spain. Most of its products are manufactured from basic raw
materials such as plastic, paper and cardboard, although certain products also
make use of electronic components. All of these materials are readily
available but may be subject to significant fluctuations in price. The
Company's manufacturing processes include injection molding, blow molding,
spray painting, printing, box making and assembly. The Company purchases
certain components and accessories used in its toys and games and some
finished items from United States manufacturers as well as from manufacturers
in the Far East, which is the largest manufacturing center of toys in the
world, and other countries. The 1996 implementation of the General Agreement
on Tariffs and Trade reduced or eliminated customs duties on many products
imported by the Company. The Company believes that the manufacturing capacity
of third party manufacturers as well as its own facilities and the supply of
components, accessories and completed products which it purchases from
unaffiliated manufacturers are adequate to meet the demand in 2001 for the
products which it markets. The Company's reliance on external sources of
manufacturing can be shifted, over a period of time, to alternative sources of
supply for products it sells, should such changes be necessary.
However, if the Company is prevented from obtaining products from a
substantial number of its current Far East suppliers due to political, labor
or other factors beyond its control, the Company's operations would be
disrupted while alternative sources of product were secured. In 2000, the
United States Congress approved "permanent normal trade relations" status for
China, which was intended to eliminate the United States' annual review of
China trade relations status. China has signed similar agreements with the
European Union and other World Trade Organizations members in order to gain
support for its entry into the World Trade Organization, although such entry
is not guaranteed at this time. However, the imposition of trade sanctions by
the United States or the European Union against a class of products imported
by the Company from, or the loss of "normal trade relations" status by, the
People's Republic of China could significantly increase the cost of the
Company's products imported into the United States or Europe.
The Company makes its own tools and fixtures for its manufacturing
facilities but purchases dies and molds principally from independent United
States and international sources.
Competition
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The Company's business is highly competitive and it competes with several
large and many small United States and international designers, manufacturers
and marketers. The Company is a worldwide leader in the design, manufacture
and marketing of games and toys.
Employees
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At December 31, 2000, the Company employed approximately 8,900 persons
worldwide, approximately 5,500 of whom are located in the United States.
Trademarks, Copyrights and Patents
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The Company's products are protected, for the most part and in as many
countries as practical, by registered trademarks, copyrights and patents to
the extent that such protection is available and meaningful. The loss of such
rights concerning any particular product would not have a material adverse
effect on the Company's business, although the loss of such protection for a
number of significant items might have such an effect.
Government Regulation
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The Company's toy and game products sold in the United States are subject to
the provisions of the Consumer Product Safety Act (the "CPSA"), The Federal
Hazardous Substances Act (the "FHSA"), the Flammable Fabrics Act (the "FFA"),
and the regulations promulgated thereunder. The CPSA empowers the Consumer
Product Safety Commission (the "CPSC") to take action against hazards
presented by consumer products, including the formulation and implementation
of regulations and uniform safety standards. The CPSC has the authority to
seek to declare a product "a banned hazardous substance" under the CPSA and to
ban it from commerce. The CPSC can file an action to seize and condemn an
"imminently hazardous consumer product" under the CPSA and may also order
equitable remedies such as recall, replacement, repair or refund for the
product. The FHSA provides for the repurchase by the manufacturer of articles
which are banned. Consumer product safety laws also exist in some states and
cities within the United States and in Canada, Australia and Europe. The
Company maintains laboratories which have testing and other procedures
intended to maintain compliance with the CPSA, the FHSA, the FFA,
international standards, and the Company's own standards. Notwithstanding the
foregoing, there can be no assurance that all of the Company's products are or
will be hazard free. Any material product recall could have an effect on the
Company, depending on the product, and could affect sales of other products.
The Children's Television Act of 1990 and the rules promulgated thereunder
by the United States Federal Communications Commission as well as the laws of
certain countries place certain limitations on television commercials during
children's programming.
The Company maintains programs to comply with various United States federal,
state, local and international requirements relating to the environment, plant
safety and other matters.
Forward-Looking Information and Risk Factors
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From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. Forward-looking statements are inherently
subject to risks and uncertainties, many of which are known by, or self-
evident to, the investing public. The Private Securities Litigation Reform Act
of 1995 provides a safe harbor for forward-looking statements. These
statements may be identified by the use of forward-looking words or phrases
such as "anticipate," "believe," "could," "expect," "intend," "looking
forward," "may," "planned," "potential," "should," "will" and "would." In
order to comply with the terms of the safe harbor, the Company notes that a
variety of factors could cause its actual results and experience to differ
materially from the anticipated results or other expectations expressed in its
forward-looking statements. The factors listed below are illustrative and
other risks and uncertainties may arise as are or may be detailed from time to
time in the Company's public announcements and filings with the Securities and
Exchange Commission. The risks and uncertainties that may affect the
operations, performance, development and results of Hasbro's business and
impact forward looking information are as follows:
Volatility of consumer preferences and the high level of competition in
the
family entertainment industry makes it difficult to maintain the long-term
success of existing product lines and consistently introduce successful
new
products.
Our business and operating results depend largely upon the appeal of our
family entertainment products, principally games and toys. A decline in the
popularity of our existing products and product lines or the failure of new
products and product lines to achieve and sustain market acceptance could
result in reduced overall revenues and margins, which could have a material
adverse effect on our business financial condition and results of operations.
Our continued success will depend on our ability to redesign, restyle and
extend our existing family entertainment product lines and to develop,
introduce and gain customer acceptance of new family entertainment product
lines. However consumer preferences with respect to family entertainment are
continuously changing and are difficult to predict. Individual family
entertainment products typically have short life cycles. The success of
entertainment properties released theatrically, such as STAR WARS related
productions, can significantly impact revenues derived by the Company from
licensed product related to that property. In addition, competition in the
industry could adversely impact our ability to secure, maintain, and renew
popular licenses, and to attract and retain the talented employees necessary
to design, develop and market successful products. There can be no assurances
that:
1) Any of our current products or product lines will continue to be popular
for any significant period of time;
2) Any property for which the Company has a significant license will achieve
popularity;
3) Any new products and product lines introduced by us will achieve an
adequate degree of market acceptance; or
4) Any new product's life cycle will be sufficient to permit us to
profitably recover development, manufacturing, marketing, royalties (including
royalty advances and guarantees) and other costs of the product; or
5) We will be able to manufacture, source and ship new or continuing
products in a timely basis to meet consumer demands.
Our business is seasonal and therefore our annual operating results will
depend, in large part, on our sales during the relatively brief holiday
season. Further, this seasonality is increasing, as large retailers
become more efficient in their control of inventory levels through quick
response management techniques.
Sales of our family entertainment products at retail are seasonal, with a
majority of retail sales occurring during the period from September through
December in anticipation of the holiday season. This seasonality is
increasing, as large retailers become more efficient in their control of
inventory levels through quick response management techniques. These customers
are timing reorders so that they are being filled by suppliers closer to the
time of purchase by consumers, which to a large extent occur during September
through December, rather than maintaining large on-hand inventories throughout
the year to meet consumer demand. While these techniques reduce a retailer's
investment in inventory, they increase pressure on suppliers like us to fill
orders promptly and shift a significant portion of inventory risk and carrying
costs to the supplier. The limited inventory carried by retailers may also
reduce or delay retail sales. Additionally, the logistics of supplying more
and more product within shorter time periods will increase the risk that we
fail to achieve tight and compressed shipping schedules. This seasonal pattern
requires significant use of working capital mainly to manufacture inventory
during the year, prior to the holiday season, and requires accurate
forecasting of demand for products during the holiday season. Our failure to
accurately predict and respond to consumer demand could result in our
underproducing popular items and overproducing less popular items.
The continuing consolidation of our retail customer base means that
changes in the purchasing policies of our major customers could have a
significant impact on us.
If one or more of our major customers were to experience difficulties in
fulfilling their obligations to us, cease doing business with us, or
significantly reduce the amount of their purchases from us, it could have a
material adverse effect on our business, financial condition and results of
operations. For the fiscal year ended December 31, 2000, Wal-Mart Stores, Inc.
and Toys R Us, Inc. accounted for approximately 14% and 13%, respectively, of
our consolidated net revenues and our five largest customers, including Wal-
Mart and Toys R Us, in the aggregate accounted for approximately 41% of our
consolidated net revenues.
We may not realize anticipated benefits of acquisitions or these benefits
may be delayed or reduced in their realization.
Acquisitions have been a significant part of our growth over the years and
have enabled us to further broaden and diversify our product offerings. While
we target companies having what we believe to be attractive family
entertainment product offerings, there can be no assurance that the products
of companies we acquire will continue to be popular. In addition, in some
cases, we expect that the integration of the product lines of the companies
that we acquire into our operations will create production, marketing and
other operating synergies. We believe that creating these synergies can create
greater revenue growth and profitability and, where applicable, cost savings,
operating efficiencies and other synergies. However, we can provide no
assurances that these synergies, efficiencies and cost savings will be
realized. Even if achieved, these benefits may be delayed or reduced in their
realization. In other cases, we acquire companies with what we believe to have
strong and creative management, in which case we plan to create synergies by
operating them autonomously rather than integrating them into our operations.
There can be no assurance, however, that the key talented individuals at these
companies will continue to work for us after the acquisition or that they will
continue to develop popular and profitable products or services. Moreover,
because of limitations in our credit agreements, we are limited in our ability
to make substantial acquisitions in the near term. Although we plan to focus
greater attention and resources on our core owned and controlled brands, there
is no assurance that such efforts will produce revenue growth to replace the
growth historically provided by acquisitions.
Our sales and manufacturing operations outside the United States subject
us to risks normally associated with international operations.
Various international risks could negatively impact our international sales
and manufacturing operations, which could have a material adverse effect on
our business, financial condition and results of operations. For the year
ended December 31, 2000, our net revenues from international customers
comprised approximately 41% of our total consolidated net revenues. We expect
our sales to international customers to continue to account for a significant
portion of our revenues. Additionally, we utilize third-party manufacturers
principally in the Far East and we have manufacturing facilities in Ireland
and Spain. These sales and manufacturing operations are subject to the risks
normally associated with international operations, including:
1) Currency conversion risks and currency fluctuations;
2) Limitations, including taxes, on the repatriation of earnings;
3) Political instability, civil unrest and economic instability;
4) Greater difficulty enforcing intellectual property rights and weaker laws
protecting such rights;
5) Complications in complying with laws in varying jurisdictions and changes
in governmental policies;
6) Natural disasters and the greater difficulty and expense in recovering
therefrom;
7) Transportation delays and interruptions; and
8) The imposition of tariffs.
Our reliance on external sources of manufacturing can be shifted, over a
period of time, to alternative sources of supply, should such changes be
necessary. However, if we were prevented from obtaining products or components
for a material portion of our product line due to political, labor or other
factors beyond our control, Hasbro's operations would be disrupted while
alternative sources of products were secured. Also, the imposition of trade
sanctions by the United States or the European Union against a class of
products imported by us from, or the loss of "normal trade relations" status
by, the Peoples Republic of China could significantly increase our cost of
products imported into the United States or Europe.
The impact of market conditions, government actions and regulations and
other third party conduct could negatively impact implementation of the
Company's consolidation programs, margins, and other business initiatives.
Economic conditions, such as rising fuel prices, may adversely impact our
margins. Other conditions, such as the unavailability of electrical
components, may impede our ability to manufacture, source and ship new and
continuing products on a timely basis. Other conditions outside of our control
could delay or increase the cost of implementing our consolidation programs or
alter our actions and reduce actual results.
The impact of our reduced ability to obtain external financing at low
rates and the restrictions imposed by our amended and restated credit
facility agreements could alter our business practices.
In February 2001, we entered into amended and restated secured revolving and
line of credit facility agreements with our existing lenders. The facilities
are secured by substantially all of our domestic accounts receivable and
inventory, as well as certain of our investments and intangible assets. The
agreements contain certain restrictive covenants setting forth minimum cash
flow and coverage requirements, and a number of other limitations, including
restrictions on capital expenditures, investments, acquisitions, share
repurchases and dividend payments. These restrictive covenants may limit our
future actions, and financial, operating and strategic flexibility.
We believe that our cash flow from operations, together with our cash and
access to existing credit facilities, are adequate for current and planned
needs in 2001. However, our actual experience may differ from these
expectations. Factors that may lead to a difference include, but are not
limited to, the matters discussed herein as well as future events that might
have the effect of reducing our available cash balance (such as unexpected
material operating losses or increased capital or other expenditures, as well
as increases in inventory or accounts receivable) or future events that may
reduce or eliminate the availability of external financial resources. Our
failure to comply with covenants in our credit agreements could result in
significant negative consequences.
(c) Financial Information About International and United States
-----------------------------------------------------------
Operations and Export Sales
---------------------------
The information required by this item is included in note 16 of Notes to
Consolidated Financial Statements in Exhibit 13 to this Report and is
incorporated herein by reference.
ITEM 2. PROPERTIES
----------
Lease
Square Type of Expiration
Location Use Feet Possession Dates
- -------- --- ------ ---------- ----------
Rhode Island
- ------------
Pawtucket (1)(2)(3) Administrative, Sales
& Marketing Offices &
Product Development 343,000 Owned --
Pawtucket (2) Executive Office 23,000 Owned --
East Providence (2) Administrative Office 120,000 Leased 2004
Central
Falls (1)(2)(3) Warehouse 261,500 Owned --
California
- ----------
Ontario (1) Warehouse 432,000 Leased 2002
Illinois
- --------
Vernon Hills (1) Office & Warehouse 21,000 Leased 2002
Massachusetts
- -------------
East Longmeadow Office, Manufacturing
(1)(4) & Warehouse 1,148,000 Owned --
New Jersey
- ----------
Mt. Laurel (3) Office 11,000 Leased 2001
New York
- --------
New York(1)(2)(3)(5) Office & Showroom 106,800 Leased 2011
Texas
- -----
Arlington (1) Warehouse 60,200 Leased 2003
Dallas (1) Warehouse 127,000 Leased 2003
Grand Prairie (1) Warehouse 93,500 Leased 2003
Grand Prairie (1) Warehouse 50,400 Leased 2001
Washington
- ----------
Renton (1) Offices 158,000 Leased 2005
Seattle (1) Warehouse 30,500 Leased 2002
Argentina
- ---------
Buenos Aires (5) Offices 6,500 Leased 2003
Australia
- ---------
Lidcombe (5) Office & Warehouse 161,400 Leased 2007
Eastwood (5) Office 16,900 Leased 2001
Austria
- -------
Vienna (5) Office 4,400 Leased 2001
Belgium
- -------
Brussels (5) Office & Showroom 18,800 Leased 2008
Canada
- ------
Montreal (5) Office, Warehouse
& Showroom 133,900 Leased 2004
Mississauga (5) Sales Office & Showroom 16,300 Leased 2004
Montreal (5) Warehouse 88,100 Leased 2004
Chile
- -----
Santiago (5) Warehouse 54,000 Leased 2001
Santiago (5) Office 3,500 Leased 2001
Denmark
- -------
Glostrup (5) Office 9,200 Leased 2004
England
- -------
Uxbridge (5) Office & Showroom 92,900 Leased 2013
France
- ------
Le Bourget du Lac(5) Office & Warehouse 107,900 Owned --
Savoie Technolac (5) Office 33,500 Owned --
Creutzwald (5) Warehouse 301,300 Owned --
Germany
- -------
Dietzenbach (5) Office 43,000 Leased 2006
Soest (5) Office & Warehouse 164,200 Owned --
Greece
- ------
Athens (5) Office & Warehouse 25,100 Leased 2007
Hong Kong
- ---------
Kowloon (1)(3)(4)(5) Office & Warehouse 10,500 Leased 2000
Kowloon (1)(3)(4)(5) Office & Warehouse 33,700 Leased 2002
Kowloon (4) Offices 43,400 Leased 2002
New Territories (4) Office & Warehouse 17,800 Leased 2001
New Territories (4) Warehouse 11,500 Leased 2002
New Territories (4) Warehouse 8,100 Leased 2003
New Territories (4) Office 7,300 Leased 2002
Hungary
- -------
Budapest (5) Office 6,300 Leased 2001
Ireland
- -------
Waterford (4) Office, Manufacturing
& Warehouse 244,000 Owned --
Italy
- -----
Milan (5) Office & Showroom 12,100 Leased 2002
Mexico
- ------
Periferico (5) Office 16,100 Leased 2001
Carretera (5) Warehouse 215,500 Leased 2004
The Netherlands
- ---------------
Ter Apel (5) Warehouse 106,400 Leased 2001
Utrecht (5) Office 12,800 Leased 2003
New Zealand
- -----------
Auckland (5) Office & Warehouse 110,900 Leased 2005
Peru
- ----
Lima (5) Warehouse 32,400 Leased 2001
Lima (5) Office 11,000 Leased 2001
Poland
- ------
Warsaw (5) Office & Warehouse 21,400 Leased 2001
Portugal
- --------
Estoril-Lisboa (5) Office 2,900 Leased 2003
Singapore
- ---------
Singapore (5) Office & Warehouse 9,300 Leased 2003
Spain
- -----
Valencia (4)(5) Office, Manufacturing
& Warehouse 322,700 Owned --
Valencia (4)(5) Office, Manufacturing
& Warehouse 144,800 Leased 2011
Sweden
- ------
Vosby (5) Office 7,400 Leased 2003
Switzerland
- -----------
Berikon (5) Office & Warehouse 25,000 Leased 2001
Delemont (5) Office 9,200 Leased 2004
Wales
- -----
Newport (5) Warehouse 75,000 Leased 2003
Newport (5) Warehouse 170,000 Owned --
(1) Property used in the U.S. Toy or Games segment.
(2) Property used in the Corporate area.
(3) Property used in Other segments.
(4) Property used in the Global Operations segment.
(5) Property used in the International segment.
In addition to the above listed facilities, the Company either owns or
leases various other properties approximating 486,000 square feet which are
utilized by its various segments and include retail and game play locations
operated under the WIZARDS OF THE COAST and GAME KEEPER names. The Company
also either owns or leases an aggregate of approximately 103,000 square feet
not currently being utilized in its operations.
The foregoing properties consist, in general, of brick, cinder block or
concrete block buildings which the Company believes are in good condition and
well maintained.
ITEM 3. LEGAL PROCEEDINGS
-----------------
The Company is party to certain legal proceedings, substantially involving
routine litigation incidental to the Company's business, none of which,
individually or in the aggregate, is deemed to be material to the financial
condition of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following persons are the executive officers of the Company and its
subsidiaries and divisions. Such executive officers are elected annually. The
position and office listed below are the principal position(s) and office(s)
held by such person with the Company, subsidiary or divisions employing such
person. The persons listed below generally also serve as officers and
directors of the Company's various subsidiaries at the request and convenience
of the Company.
Period
Serving in
Current
Name Age Position and Office Held Position
- ---- --- ------------------------ ----------
Alan G. Hassenfeld (1) 52 Chairman of the Board and
Chief Executive Officer Since 1999
Alfred J. Verrecchia (2) 58 President and Chief
Operating Officer Since 2001
Harold P. Gordon 63 Vice Chairman Since 1995
David D. R. Hargreaves (3) 48 Senior Vice President and
Chief Financial Officer Since 2001
George B. Volanakis (4) 53 Executive Vice President Since 2000
Brian Goldner (5) 37 Senior Vice President and
General Manager, Hasbro U.S.
Toy Group Since 2000
Richard B. Holt 59 Senior Vice President and
Controller Since 1992
Barry Nagler (6) 44 Senior Vice President and
General Counsel Since 2000
Martin R. Trueb (7) 49 Senior Vice President and
Treasurer Since 1997
Phillip H. Waldoks 48 Senior Vice President -
Corporate Legal Affairs
and Secretary Since 1995
(1) Prior thereto, Chairman of the Board, President and Chief Executive
Officer.
(2) Prior thereto, President, Chief Operating Officer and Chief Financial
officer from 2000 to 2001; prior thereto, Executive Vice President and
Chief Financial Officer from 1999 to 2000; prior thereto Executive
Vice President, Global Operations and Development during 1999; prior
thereto, Executive Vice President and President, Global Operations
from 1996 to 1999; prior thereto, Chief Operating Officer, Domestic
Toy Operations.
(3) Prior thereto, Senior Vice President and Deputy Chief Financial
Officer from 1999 to 2000; prior thereto, Senior Vice President,
Finance during 1999; prior thereto, Senior Vice President, Finance
and Planning, Global Marketing from 1997 to 1999; prior thereto,
Senior Vice President, Finance and Planning, Global Operations from
1996 to 1997; prior thereto, Senior Vice President, Finance and
Administration, Domestic Toy Operations.
(4) Prior thereto, General Manager and Sector Head, International
Businesses from 1999 to 2000; prior thereto, President, European Sales
and Marketing from 1998 to 1999; prior thereto, President and Chief
Executive Officer, The Ertl Company, Inc.
(5) Prior thereto, during 2000, Chief Operating Officer of Tiger
Electronics, Inc., a subsidiary of the Company; prior thereto, Chief
Operating Officer, Bandai America, Inc., from 1997 to 2000; prior
thereto, Worldwide Director in Charge, Entertainment Division,
J. Walter Thompson Advertising.
(6) Prior thereto, Senior Vice President and General Counsel, Reebok
International, Ltd. (Reebok) from 1997 to 2000; prior thereto, Vice
President and General Counsel, Reebok.
(7) Prior thereto, Assistant Treasurer, Amway Corporation.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
-----------------------------------------------------
STOCKHOLDER MATTERS
-------------------
The information required by this item is included in Market for the
Registrant's Common Equity and Related Stockholder Matters in Exhibit 13 to
this Report and is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The information required by this item is included in Selected Financial Data
in Exhibit 13 to this Report and is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
The information required by this item is included in Management's Review in
Exhibit 13 to this Report and is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The information required by this item is included in Financial Statements
and Supplementary Data in Exhibit 13 to this Report and is incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-----------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
None.
PART III
ITEMS 10, 11, 12 and 13.
The information required by these items is included in registrant's
definitive proxy statement for the 2001 Annual Meeting of Shareholders and is
incorporated herein by reference, except that the sections under the headings
(a) "Comparison of Five Year Cumulative Total Shareholder Return Among Hasbro,
S&P 500 and Russell 1000 Consumer Discretionary Economic Sector" and
accompanying material, (b) "Report of the Compensation and Stock Option
Committee of the Board of Directors", and (c) "Report of the Audit Committee
of the Board of Directors" in the definitive proxy statement shall not be
deemed "filed" with the Securities and Exchange Commission or subject to
Section 18 of the Securities Exchange Act of 1934.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) Financial Statements, Financial Statement Schedules and Exhibits
----------------------------------------------------------------
(1) Financial Statements
--------------------
Included in PART II of this report:
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 2000 and
December 26, 1999
Consolidated Statements of Operations for the Three Fiscal
Years Ended in December 2000, 1999 and 1998
Consolidated Statements of Shareholders' Equity for the
Three Fiscal Years Ended in December 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the Three
Fiscal Years Ended in December 2000, 1999 and 1998
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
-----------------------------
Included in PART IV of this Report:
Report of Independent Certified Public Accountants
on Financial Statement Schedule
For the Three Fiscal Years Ended in December 2000, 1999
and 1998:
Schedule II - Valuation and Qualifying Accounts and
Reserves
Schedules other than those listed above are omitted for the reason that they
are not required or are not applicable, or the required information is shown
in the financial statements or notes thereto. Columns omitted from schedules
filed have been omitted because the information is not applicable.
(3) Exhibits
--------
The Company will furnish to any shareholder, upon written request, any
exhibit listed below upon payment by such shareholder to the Company of the
Company's reasonable expenses in furnishing such exhibit.
Exhibit
- -------
3. Articles of Incorporation and Bylaws
(a) Restated Articles of Incorporation of the Company.
(Incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the period ended
July 2, 2000, File No. 1-6682.)
(b) Amendment to Articles of Incorporation, dated June 28, 2000.
(Incorporated by reference to Exhibit 3.4 to the Company's
Quarterly Report on Form 10-Q for the period ended July 2,
2000, File No. 1-6682.)
(c) Amended and Restated Bylaws of the Company. (Incorporated by
reference to Exhibit (3) to the Company's Current Report on
Form 8-K, dated February 16, 1996, File No. 1-6682.)
(d) Certificate of Designations of Series C Junior Participating
Preference Stock of Hasbro, Inc. dated June 29, 1999.
(Incorporated by reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
July 2, 2000, File No. 1-6682.)
(e) Certificate of Vote(s) authorizing a decrease of class or
series of any class of shares. (Incorporated by reference to
exhibit 3.3 to the Company's Quarterly report on Form 10-Q for
the period ended July 2, 2000, File No. 1-6682.)
4. Instruments defining the rights of security holders, including
indentures.
(a) Indenture, dated as of July 17, 1998, by and between the
Company and Citibank, N.A. as Trustee. (Incorporated by
reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated July 14, 1998, File No. 1-6682.)
(b) Indenture, dated as of March 15, 2000, by and between the
Company and the Bank of Nova Scotia Trust Company of New
York. (Incorporated by reference to Exhibit 4(b)(i) to the
Company's Annual Report on Form 10-K for the year ended
December 26, 1999, File Number 1-6682.)
(c) Amended and Restated Line of Credit Agreement dated as of
February 16, 2001 by and among the Company, the Banks party
thereto, and Fleet National Bank, as Agent for the Banks.
(d) Amended and Restated Revolving Credit Agreement dated as of
February 16, 2001 by and among the Company, the Banks party
thereto, and Fleet National Bank, as Agent for the Banks.
(e) Rights Agreement, dated as of June 16, 1999, between the Company
and Fleet National Bank (the Rights Agent). (Incorporated by
reference to Exhibit 4 to The Company's Current Report on
Form 8-K dated as of June 16, 1999.)
(f) First Amendment to Rights Agreement, dated as of December 4,
2000, between the Company and the Rights Agent.
10. Material Contracts
(a) Lease between Hasbro Canada Corporation (formerly named Hasbro
Industries (Canada) Ltd.)("Hasbro Canada") and Central Toy
Manufacturing Co. ("Central Toy"), dated December 23, 1976.
(Incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-14, File No. 2-92550.)
(b) Lease between Hasbro Canada and Central Toy, together
with an Addendum thereto, each dated as of May 1, 1987.
(Incorporated by reference to Exhibit 10(f) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 27, 1987, File No. 1-6682.)
(c) Addendum to lease, dated March 5, 1998, between Hasbro Canada
and Central Toy. (Incorporated by reference to Exhibit 10(c)
to the Company's Annual Report on Form 10-K for the Fiscal
Year Ended December 28, 1997, File No. 1-6682.)
(d) Letter agreement, dated December 13, 2000, between Hasbro
Canada and Central Toy.
(e) Toy License Agreement between Lucas Licensing Ltd. and the
Company, dated as of October 14, 1997. (Portions of this
agreement have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.)(Incorporated by reference to
Exhibit 10(d) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 27, 1998, File No. 1-6682.)
(f) First Amendment to Toy License Agreement between Lucas
Licensing Ltd. and the Company, dated as of September 25, 1998.
(Portions of this agreement have been omitted pursuant to a
request for confidential treatment under Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.)(Incorporated by
reference to Exhibit 10(e) to the Company's Annual Report on
Form 10-K for the Fiscal Year Ended December 27, 1998, File No.
1-6682.)
(g) Agreement of Strategic Relationship between Lucasfilm Ltd. and
the Company dated as of October 14, 1997. (Portions of this
agreement have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.) (Incorporated by reference
to Exhibit 10(f) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 27, 1998, File No. 1-6682.)
(h) First Amendment to Agreement of Strategic Relationship between
Lucasfilm Ltd. and the Company, dated as of September 25, 1998.
(Incorporated by reference to Exhibit 10(g) to the Company's
Annual Report on Form 10-K for the Fiscal Year ended December
27, 1998, File No. 1-6682.)
(i) Warrant, dated October 14, 1997 between the Company and
Lucas Licensing Ltd. (Incorporated by reference to Exhibit
10(h) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(j) Warrant, dated October 14, 1997 between the Company and
Lucasfilm Ltd. (Incorporated by reference to Exhibit
10(i) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(k) Warrant, dated October 30, 1998 between the Company and
Lucas Licensing Ltd. (Incorporated by reference to Exhibit
10(j) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(l) Warrant, dated October 30, 1998 between the Company and
Lucasfilm Ltd. (Incorporated by reference to Exhibit
10(k) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(m) Asset Purchase Agreement dated as of February 8, 1998,
together with Amendment thereto dated as of March 31, 1998,
by and among the Company, Tiger Electronics Ltd. (formerly
named HIAC X Corp. and a wholly-owned subsidiary of the
Company), Tiger Electronics, Inc. and certain affiliates
thereof and Owen Randall Rissman and the Rissman Family 1997
Trust. (Incorporated by reference to Exhibit 2(a) to the
Company's Current Report on Form 8-K, dated April 1, 1998,
File No. 1-6682.)
Executive Compensation Plans and Arrangements
(n) Employee Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8, File No. 2-78018.)
(o) Amendment No. 1 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(l) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 28, 1986, File No. 1-6682.)
(p) Amendment No. 2 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 27, 1987, File No. 1-6682.)
(q) Amendment No. 3 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(o) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 25, 1988, File No. 1-6682.)
(r) Amendment No. 4 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(s) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1989, File No. 1-6682.)
(s) Form of Non Qualified Stock Option Agreement under the
Employee Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 10(q) to the Company's Annual Report
on Form 10-K for the Fiscal Year Ended December 25, 1988,
File No. 1-6682.)
(t) Non Qualified Stock Option Plan. (Incorporated by reference
to Exhibit 10.10 to the Company's Registration Statement on
Form S-14, File No. 2-92550.)
(u) Amendment No. 1 to Non Qualified Stock Option Plan.
(Incorporated by reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the Fiscal
Year Ended December 28, 1986, File No. 1-6682.)
(v) Amendment No. 2 to Non Qualified Stock Option Plan.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 1987 Annual Meeting of
Shareholders, File No. 1-6682.)
(w) Amendment No. 3 to Non Qualified Stock Option Plan.
(Incorporated by reference to Exhibit 10(l) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1989, File No. 1-6682.)
(x) Form of Stock Option Agreement (For Employees) under the Non
Qualified Stock Option Plan. (Incorporated by reference to
Exhibit 10(t) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 27, 1992, File No.
1-6682.)
(y) 1992 Stock Incentive Plan. (Incorporated by reference to
Appendix A to the Company's definitive proxy statement for
its 1992 Annual Meeting of Shareholders, File No. 1-6682.)
(z) Form of Stock Option Agreement under the 1992 Stock Incentive
Plan, the Stock Incentive Performance Plan and the Employee
Non-Qualified Stock Plan. (Incorporated by reference to
Exhibit 10(v) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 27, 1992, File No. 1-6682.)
(aa) Hasbro, Inc. Stock Incentive Performance Plan. (Incorporated
by reference to Appendix A to the Company's definitive proxy
statement for its 1995 Annual Meeting of Shareholders, File
No. 1-6682.)
(bb) First Amendment to the 1992 Stock Incentive Plan and the Stock
Incentive Performance Plan. (Incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the period ended June 27, 1999, File No. 1-6682.)
(cc) Second Amendment to the Stock Incentive Performance Plan.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 2000 Annual Meeting of
Shareholders, File No. 1-6682.)
(dd) Employee Non-Qualified Stock Plan. (Incorporated by reference
to Exhibit 10(dd) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 29, 1996, File No. 1-6682.)
(ee) First Amendment to the Employee Non-Qualified Stock Plan.
(Incorporated by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the period ended March 28,
1999, File No. 1-6682.)
(ff) Form of Stock Option Agreement (For Participants in the Long
Term Incentive Program) under the 1992 Stock Incentive Plan,
the Stock Incentive Performance Plan, and the Employee Non-
Qualified Stock Plan. (Incorporated by reference to Exhibit
10(w) to the Company's Annual Report on Form 10-K for the
Fiscal Year Ended December 27, 1992, File No. 1-6682.)
(gg) Form of Restricted Stock Agreement.
(hh) Form of Deferred Restricted Stock Unit Agreement.
(ii) Form of Employment Agreement between the Company and ten
Company executives. (Incorporated by reference to
Exhibit 10(v) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 1989, File No. 1-6682.)
(jj) Form of Amendment, dated as of March 10, 2000, to Form of
Employment Agreement included as Exhibit 10(ii) above.
(Incorporated by reference to Exhibit 10(ff) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended December
26, 1999.)
(kk) Hasbro, Inc. Retirement Plan for Directors. (Incorporated
by reference to Exhibit 10(x) to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 30,
1990, File No. 1-6682.)
(ll) Form of Director's Indemnification Agreement. (Incorporated
by reference to Appendix B to the Company's definitive proxy
statement for its 1988 Annual Meeting of Shareholders, File
No. 1-6682.)
(mm) Hasbro, Inc. Deferred Compensation Plan for Non-Employee
Directors.(Incorporated by reference to Exhibit 10(cc) to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 26, 1993, File No. 1-6682.)
(nn) Hasbro, Inc. Stock Option Plan for Non-Employee Directors.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 1994 Annual Meeting of
Shareholders, File No. 1-6682.)
(oo) First Amendment to the Stock Option Plan for Non-Employee
Directors. (Incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 27, 1999, File No. 1-6682.)
(pp) Form of Stock Option Agreement for Non-Employee Directors
under the Hasbro, Inc. Stock Option Plan for Non-Employee
Directors. (Incorporated by reference to Exhibit 10(w) to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 25, 1994, File No. 1-6682.)
(qq) Hasbro, Inc. 1999 Senior Management Annual Performance Plan.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 1999 Annual Meeting of
Shareholders, File No. 1-6682.)
(rr) Hasbro, Inc. Amended and Restated Nonqualified Deferred
Compensation Plan. (Incorporated by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the Period
Ended March 29, 1998, File No. 1-6682.)
(ss) Employment Agreement, dated as of January 1, 1996, between
the Company and Harold P. Gordon. (Incorporated by reference
to Exhibit 10(aa) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1995, File No. 1-6682.)
(tt) Letter dated January 26, 1998 from the Company to George B.
Volanakis. (Incorporated by reference to Exhibit 10(ii) to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 28, 1997, File No. 1-6682.)
(uu) Employment Agreement dated as of January 5, 1999, between the
Company and Herbert M. Baum. (Incorporated by reference to
Exhibit 10(rr) to the Company's Annual Report on Form 10-K for
the Fiscal Year ended December 27, 1998, File No. 1-6682.)
(vv) Settlement Agreement, dated January 31, 2001, among the
Company, Herbert M. Baum and the Dial Corporation.
(ww) Employment Agreement, dated as of March 18, 2000, among
Tiger Electronics, Ltd., the Company and Brian Goldner.
11. Statement re computation of per share earnings
12. Statement re computation of ratios
13. Selected information contained in Annual Report to Shareholders
21. Subsidiaries of the registrant
23. Consents of KPMG LLP
The Company agrees to furnish the Securities and Exchange Commission, upon
request, a copy of each agreement with respect to long-term debt of the
Company, the authorized principal amount of which does not exceed 10% of the
total assets of the Company and its subsidiaries on a consolidated basis.
(b) Reports on Form 8-K
-------------------
A Current Report on Form 8-K dated February 8, 2001 was filed to
announce the Company's results for the quarter and year ended
December 31, 2000. Consolidated statements of earnings (without
notes) for the quarter and year ended December 31, 2000 and
December 26, 1999 and consolidated condensed balance sheets
(without notes) as of said dates were also filed.
(c) Exhibits
--------
See (a)(3) above
(d) Financial Statement Schedules
-----------------------------
See (a)(2) above
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Hasbro, Inc.:
Under date of February 7, 2001, we reported on the consolidated balance
sheets of Hasbro, Inc. and subsidiaries as of December 31, 2000 and December
26, 1999 and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the fiscal years in the three-year period
ended December 31, 2000, as contained in the 2000 annual report to
shareholders. These consolidated financial statements and our report thereon
are incorporated by reference in the annual report on Form 10-K for the year
2000. In connection with our audits of the aforementioned consolidated
financial statements, we also audited the related financial statement schedule
listed in Item 14 (a) (2). This financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this financial statement schedule based on our audits.
In our opinion, such financial statement schedule when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ KPMG LLP
Providence, Rhode Island
February 7, 2001
HASBRO, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Fiscal Years Ended in December
(Thousands of Dollars)
Provision
Balance at Charged to Write-Offs Balance
Beginning of Costs and Other And at End of
Year Expenses Additions Other (a) Year
------------ ---------- ------------ ----------- ---------
Valuation
accounts
deducted
from assets
to which
they apply -
for doubtful
accounts
receivable:
2000 $65,000 4,387 59 (14,446) $55,000
====== ====== ====== ====== ======
1999 $64,400 9,053 2,329 (10,782) $65,000
====== ====== ====== ====== ======
1998 $51,700 13,057 2,832 (3,189) $64,400
====== ====== ====== ====== ======
(a) Includes write-offs, recoveries of previous write-offs, translation
adjustments, and an adjustment in 2000 to reflect the transfer of
balances related to business units held for sale, now included in
prepaid expenses and other current assets. Translation adjustments
and the transfer of balances in 2000 amounted to approximately $6,600.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
HASBRO, INC. (Registrant)
By: /s/ Alan G. Hassenfeld Date: March 31, 2001
------------------------- ---------------
Alan G. Hassenfeld
Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/ Alan G. Hassenfeld
- ---------------------------- Chairman of the Board, March 31, 2001
Alan G. Hassenfeld Chief Executive Officer
and Director
(Principal Executive Officer)
/s/ David D.R. Hargreaves
- ---------------------------- Senior Vice President and March 31, 2001
David D.R. Hargreaves Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Alan R. Batkin
- ---------------------------- Director March 31, 2001
Alan R. Batkin
/s/ E. Gordon Gee
- ---------------------------- Director March 31, 2001
E. Gordon Gee
/s/ Harold P. Gordon
- ---------------------------- Director March 31, 2001
Harold P. Gordon
/s/ Sylvia K. Hassenfeld
- ---------------------------- Director March 31, 2001
Sylvia K. Hassenfeld
- ---------------------------- Director March , 2001
Marie-Josee Kravis
/s/ Claudine B. Malone
- ---------------------------- Director March 31, 2001
Claudine B. Malone
/s/ Norma T. Pace
- ---------------------------- Director March 31, 2001
Norma T. Pace
/s/ E. John Rosenwald, Jr.
- ---------------------------- Director March 31, 2001
E. John Rosenwald, Jr.
/s/ Eli J. Segal
- ---------------------------- Director March 31, 2001
Eli J. Segal
- ---------------------------- Director March , 2001
Carl Spielvogel
/s/ Preston Robert Tisch
- ---------------------------- Director March 31, 2001
Preston Robert Tisch
/s/ Alfred J. Verrecchia
- ---------------------------- Director March 31, 2001
Alfred J. Verrecchia
HASBRO, INC.
Annual Report on Form 10-K
for the Year Ended December 31, 2000
Exhibit Index
Exhibit
- -------
3. Articles of Incorporation and Bylaws
(a) Restated Articles of Incorporation of the Company.
(Incorporated by reference to Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the period ended
July 2, 2000, File No. 1-6682.)
(b) Amendment to Articles of Incorporation, dated June 28, 2000.
(Incorporated by reference to Exhibit 3.4 to the Company's
Quarterly Report on Form 10-Q for the period ended July 2,
2000, File No. 1-6682.)
(c) Amended and Restated Bylaws of the Company. (Incorporated by
reference to Exhibit (3) to the Company's Current Report on
Form 8-K, dated February 16, 1996, File No. 1-6682.)
(d) Certificate of Designations of Series C Junior Participating
Preference Stock of Hasbro, Inc. dated June 29, 1999.
(Incorporated by reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the period ended
July 2, 2000, File No. 1-6682.)
(e) Certificate of Vote(s) authorizing a decrease of class or
series of any class of shares. (Incorporated by reference to
exhibit 3.3 to the Company's Quarterly report on Form 10-Q for
the period ended July 2, 2000, File No. 1-6682.)
4. Instruments defining the rights of security holders, including
indentures.
(a) Indenture, dated as of July 17, 1998, by and between the
Company and Citibank, N.A. as Trustee. (Incorporated by
reference to Exhibit 4.1 to the Company's Current Report on
Form 8-K dated July 14, 1998, File No. 1-6682.)
(b) Indenture, dated as of March 15, 2000, by and between the
Company and the Bank of Nova Scotia Trust Company of New
York. (Incorporated by reference to Exhibit 4(b)(i) to the
Company's Annual Report on Form 10-K for the year ended
December 26, 1999, File Number 1-6682.)
(c) Amended and Restated Line of Credit Agreement dated as of
February 16, 2001 by and among the Company, the Banks party
thereto, and Fleet National Bank, as Agent for the Banks.
(d) Amended and Restated Revolving Credit Agreement dated as of
February 16, 2001 by and among the Company, the Banks party
thereto, and Fleet National Bank, as Agent for the Banks.
(e) Rights Agreement, dated as of June 16, 1999, between the Company
and Fleet National Bank (the Rights Agent). (Incorporated by
reference to Exhibit 4 to The Company's Current Report on
Form 8-K dated as of June 16, 1999.)
(f) First Amendment to Rights Agreement, dated as of December 4,
2000, between the Company and the Rights Agent.
10. Material Contracts
(a) Lease between Hasbro Canada Corporation (formerly named Hasbro
Industries (Canada) Ltd.)("Hasbro Canada") and Central Toy
Manufacturing Co. ("Central Toy"), dated December 23, 1976.
(Incorporated by reference to Exhibit 10.15 to the Company's
Registration Statement on Form S-14, File No. 2-92550.)
(b) Lease between Hasbro Canada and Central Toy, together
with an Addendum thereto, each dated as of May 1, 1987.
(Incorporated by reference to Exhibit 10(f) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 27, 1987, File No. 1-6682.)
(c) Addendum to lease, dated March 5, 1998, between Hasbro Canada
and Central Toy. (Incorporated by reference to Exhibit 10(c)
to the Company's Annual Report on Form 10-K for the Fiscal
Year Ended December 28, 1997, File No. 1-6682.)
(d) Letter agreement, dated December 13, 2000, between Hasbro
Canada and Central Toy.
(e) Toy License Agreement between Lucas Licensing Ltd. and the
Company, dated as of October 14, 1997. (Portions of this
agreement have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.)(Incorporated by reference to
Exhibit 10(d) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 27, 1998, File No. 1-6682.)
(f) First Amendment to Toy License Agreement between Lucas
Licensing Ltd. and the Company, dated as of September 25, 1998.
(Portions of this agreement have been omitted pursuant to a
request for confidential treatment under Rule 24b-2 of the
Securities Exchange Act of 1934, as amended.)(Incorporated by
reference to Exhibit 10(e) to the Company's Annual Report on
Form 10-K for the Fiscal Year Ended December 27, 1998, File No.
1-6682.)
(g) Agreement of Strategic Relationship between Lucasfilm Ltd. and
the Company dated as of October 14, 1997. (Portions of this
agreement have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities
Exchange Act of 1934, as amended.) (Incorporated by reference
to Exhibit 10(f) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 27, 1998, File No. 1-6682.)
(h) First Amendment to Agreement of Strategic Relationship between
Lucasfilm Ltd. and the Company, dated as of September 25, 1998.
(Incorporated by reference to Exhibit 10(g) to the Company's
Annual Report on Form 10-K for the Fiscal Year ended December
27, 1998, File No. 1-6682.)
(i) Warrant, dated October 14, 1997 between the Company and
Lucas Licensing Ltd. (Incorporated by reference to Exhibit
10(h) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(j) Warrant, dated October 14, 1997 between the Company and
Lucasfilm Ltd. (Incorporated by reference to Exhibit
10(i) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(k) Warrant, dated October 30, 1998 between the Company and
Lucas Licensing Ltd. (Incorporated by reference to Exhibit
10(j) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(l) Warrant, dated October 30, 1998 between the Company and
Lucasfilm Ltd. (Incorporated by reference to Exhibit
10(k) to the Company's Annual Report on Form 10-K for the
Fiscal Year ended December 27, 1998, File No. 1-6682.)
(m) Asset Purchase Agreement dated as of February 8, 1998,
together with Amendment thereto dated as of March 31, 1998,
by and among the Company, Tiger Electronics Ltd. (formerly
named HIAC X Corp. and a wholly-owned subsidiary of the
Company), Tiger Electronics, Inc. and certain affiliates
thereof and Owen Randall Rissman and the Rissman Family 1997
Trust. (Incorporated by reference to Exhibit 2(a) to the
Company's Current Report on Form 8-K, dated April 1, 1998,
File No. 1-6682.)
Executive Compensation Plans and Arrangements
(n) Employee Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8, File No. 2-78018.)
(o) Amendment No. 1 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(l) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 28, 1986, File No. 1-6682.)
(p) Amendment No. 2 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(n) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 27, 1987, File No. 1-6682.)
(q) Amendment No. 3 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(o) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 25, 1988, File No. 1-6682.)
(r) Amendment No. 4 to Employee Incentive Stock Option Plan.
(Incorporated by reference to Exhibit 10(s) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1989, File No. 1-6682.)
(s) Form of Non Qualified Stock Option Agreement under the
Employee Incentive Stock Option Plan. (Incorporated by
reference to Exhibit 10(q) to the Company's Annual Report
on Form 10-K for the Fiscal Year Ended December 25, 1988,
File No. 1-6682.)
(t) Non Qualified Stock Option Plan. (Incorporated by reference
to Exhibit 10.10 to the Company's Registration Statement on
Form S-14, File No. 2-92550.)
(u) Amendment No. 1 to Non Qualified Stock Option Plan.
(Incorporated by reference to Exhibit 10(j) to the
Company's Annual Report on Form 10-K for the Fiscal
Year Ended December 28, 1986, File No. 1-6682.)
(v) Amendment No. 2 to Non Qualified Stock Option Plan.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 1987 Annual Meeting of
Shareholders, File No. 1-6682.)
(w) Amendment No. 3 to Non Qualified Stock Option Plan.
(Incorporated by reference to Exhibit 10(l) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended
December 31, 1989, File No. 1-6682.)
(x) Form of Stock Option Agreement (For Employees) under the Non
Qualified Stock Option Plan. (Incorporated by reference to
Exhibit 10(t) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 27, 1992, File No.
1-6682.)
(y) 1992 Stock Incentive Plan. (Incorporated by reference to
Appendix A to the Company's definitive proxy statement for
its 1992 Annual Meeting of Shareholders, File No. 1-6682.)
(z) Form of Stock Option Agreement under the 1992 Stock Incentive
Plan, the Stock Incentive Performance Plan and the Employee
Non-Qualified Stock Plan. (Incorporated by reference to
Exhibit 10(v) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 27, 1992, File No. 1-6682.)
(aa) Hasbro, Inc. Stock Incentive Performance Plan. (Incorporated
by reference to Appendix A to the Company's definitive proxy
statement for its 1995 Annual Meeting of Shareholders, File
No. 1-6682.)
(bb) First Amendment to the 1992 Stock Incentive Plan and the Stock
Incentive Performance Plan. (Incorporated by reference to
Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for
the period ended June 27, 1999, File No. 1-6682.)
(cc) Second Amendment to the Stock Incentive Performance Plan.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 2000 Annual Meeting of
Shareholders, File No. 1-6682.)
(dd) Employee Non-Qualified Stock Plan. (Incorporated by reference
to Exhibit 10(dd) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 29, 1996, File No. 1-6682.)
(ee) First Amendment to the Employee Non-Qualified Stock Plan.
(Incorporated by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the period ended March 28,
1999, File No. 1-6682.)
(ff) Form of Stock Option Agreement (For Participants in the Long
Term Incentive Program) under the 1992 Stock Incentive Plan,
the Stock Incentive Performance Plan, and the Employee Non-
Qualified Stock Plan. (Incorporated by reference to Exhibit
10(w) to the Company's Annual Report on Form 10-K for the
Fiscal Year Ended December 27, 1992, File No. 1-6682.)
(gg) Form of Restricted Stock Agreement.
(hh) Form of Deferred Restricted Stock Unit Agreement.
(ii) Form of Employment Agreement between the Company and ten
Company executives. (Incorporated by reference to
Exhibit 10(v) to the Company's Annual Report on Form 10-K for
the Fiscal Year Ended December 31, 1989, File No. 1-6682.)
(jj) Form of Amendment, dated as of March 10, 2000, to Form of
Employment Agreement included as Exhibit 10(ii) above.
(Incorporated by reference to Exhibit 10(ff) to the Company's
Annual Report on Form 10-K for the Fiscal Year Ended December
26, 1999.)
(kk) Hasbro, Inc. Retirement Plan for Directors. (Incorporated
by reference to Exhibit 10(x) to the Company's Annual
Report on Form 10-K for the Fiscal Year Ended December 30,
1990, File No. 1-6682.)
(ll) Form of Director's Indemnification Agreement. (Incorporated
by reference to Appendix B to the Company's definitive proxy
statement for its 1988 Annual Meeting of Shareholders, File
No. 1-6682.)
(mm) Hasbro, Inc. Deferred Compensation Plan for Non-Employee
Directors.(Incorporated by reference to Exhibit 10(cc) to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 26, 1993, File No. 1-6682.)
(nn) Hasbro, Inc. Stock Option Plan for Non-Employee Directors.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 1994 Annual Meeting of
Shareholders, File No. 1-6682.)
(oo) First Amendment to the Stock Option Plan for Non-Employee
Directors. (Incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the period ended
June 27, 1999, File No. 1-6682.)
(pp) Form of Stock Option Agreement for Non-Employee Directors
under the Hasbro, Inc. Stock Option Plan for Non-Employee
Directors. (Incorporated by reference to Exhibit 10(w) to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 25, 1994, File No. 1-6682.)
(qq) Hasbro, Inc. 1999 Senior Management Annual Performance Plan.
(Incorporated by reference to Appendix A to the Company's
definitive proxy statement for its 1999 Annual Meeting of
Shareholders, File No. 1-6682.)
(rr) Hasbro, Inc. Amended and Restated Nonqualified Deferred
Compensation Plan. (Incorporated by reference to Exhibit 10
to the Company's Quarterly Report on Form 10-Q for the Period
Ended March 29, 1998, File No. 1-6682.)
(ss) Employment Agreement, dated as of January 1, 1996, between
the Company and Harold P. Gordon. (Incorporated by reference
to Exhibit 10(aa) to the Company's Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 1995, File No. 1-6682.)
(tt) Letter dated January 26, 1998 from the Company to George B.
Volanakis. (Incorporated by reference to Exhibit 10(ii) to
the Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 28, 1997, File No. 1-6682.)
(uu) Employment Agreement dated as of January 5, 1999, between the
Company and Herbert M. Baum. (Incorporated by reference to
Exhibit 10(rr) to the Company's Annual Report on Form 10-K for
the Fiscal Year ended December 27, 1998, File No. 1-6682.)
(vv) Settlement Agreement, dated January 31, 2001, among the
Company, Herbert M. Baum and the Dial Corporation.
(ww) Employment Agreement, dated as of March 18, 2000, among
Tiger Electronics, Ltd., the Company and Brian Goldner.
11. Statement re computation of per share earnings
12. Statement re computation of ratios
13. Selected information contained in Annual Report to Shareholders
21. Subsidiaries of the registrant
23. Consents of KPMG LLP
EXHIBIT 4(c)
AMENDED AND RESTATED
LINE OF CREDIT AGREEMENT
Dated as of
February 16, 2001
Among
HASBRO, INC.
the BANKS party hereto
FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.), AS AGENT
with
FLEET SECURITIES, INC.,
having acted as Arranger
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION. 1
1.1. Definitions. 1
1.2. Rules of Interpretation. 20
2. THE SYNDICATED AND COMPETITIVE BID LOAN FACILITY. 21
2.1. Commitment to Lend Syndicated Loans. 21
2.2. Commitment Fee. 22
2.3. Reduction of Total Commitment. 23
2.4. Requests for Syndicated Loans. 23
2.5. Competitive Bid Loans. 24
2.5.1. Competitive Bid Borrowings. 24
2.5.2. Repayment of Competitive Bid Loans. 29
2.6. The Notes. 29
2.7. Interest on Loans. 30
2.8. Prepayments. 31
2.9. Funds for Loans. 32
2.10. Mandatory Repayments. 33
2.11. Application of Payments; Commitment Reduction.35
3. [INTENTIONALLY OMITTED] 35
4. INTEREST; PAYMENTS AND COMPUTATIONS. 35
4.1. Interest; Costs and Expenses. 35
4.2. Concerning Interest Periods. 41
4.3. Interest on Overdue Amounts. 41
4.4. Payments. 42
4.5. Computations. 43
4.6. Interest Limitation. 43
4.7. Indemnification. 43
4.8. Banks' Obligations Several. 44
4.9. Debt Rating Increase. 44
5. [INTENTIONALLY OMITTED]. 44
6. COLLATERAL SECURITY AND GUARANTIES. 44
6.1. Security of Company. 44
6.2. Guaranties and Security of Restricted
Subsidiaries. 45
6.3. Release of Collateral. 45
6.4. Limitation of Security. 46
7. FEES. 46
7.1. Amendment Fee. 46
7.2. Agent's Fee. 46
8. REPRESENTATIONS AND WARRANTIES. 46
8.1. Corporate Existence. 46
8.2. Corporate Authority, etc. 47
8.3. Binding Effect of Documents, etc. 48
8.4. Governmental Approvals. 48
8.5. No Event of Default, etc. 48
8.6. Chief Executive Offices. 48
8.7. Title to Properties; Leases. 48
8.8. Financial Statements and Projections. 49
8.8.1. Fiscal Year. 49
8.8.2. Financial Statements. 49
8.8.3. Projections. 49
8.9. No Material Changes, Etc. 49
8.10. Franchises, Patents, Copyrights, Etc. 50
8.11. Litigation. 50
8.12. No Materially Adverse Contracts, Etc. 50
8.13. Compliance With Other Instruments, Laws, Etc.50
8.14. Taxes. 50
8.15. Absence of Financing Statements, Etc. 51
8.16. Perfection of Security Interest. 51
8.17. Indebtedness. 51
8.18. True Copies of Charter and Other Documents. 52
8.19. Employee Benefit Plans. 52
8.19.1. In General. 52
8.19.2. Terminability of Welfare Plans. 52
8.19.3. Guaranteed Pension Plans. 52
8.19.4. Multiemployer Plans. 53
8.20. Holding Company and Investment Company Acts. 53
8.21. Certain Transactions. 54
8.22. Use of Proceeds. 54
8.22.1. General. 54
8.22.2. Regulations U and X. 54
8.23. Environmental Compliance. 54
8.24. Subsidiaries. 56
8.25. Disclosure. 56
8.26. Indebtedness of Foreign Subsidiaries. 56
8.27. Bank Accounts. 57
9. AFFIRMATIVE COVENANTS OF THE COMPANY. 57
9.1. Punctual Payment. 57
9.2. Use of Loan Proceeds. 57
9.3. Maintenance of Office. 57
9.4. Records and Accounts. 57
9.5. Financial Statements, Certificates and
Information. 58
9.6. Notices. 60
9.6.1. Defaults. 60
9.6.2. Environmental Events. 60
9.6.3. Notification of Claim against Collateral.
60
9.6.4. Notices Concerning Inventory Collateral.61
9.6.5. Notice of Litigation and Judgments. 61
9.7. Corporate Existence; Maintenance of Properties.61
9.8. Insurance. 62
9.9. Taxes. 62
9.10. Access. 62
9.11. Compliance with Laws, Contracts, Licenses, and
Permits. 63
9.12. Employee Benefit Plans. 64
9.13. Fiscal Year. 64
9.14. Additional Significant Subsidiaries and
Restricted Subsidiaries. 64
9.15. Debt Ratings. 65
9.16. Agency Account Agreements. 65
9.17. Further Assurances. 65
10. CERTAIN NEGATIVE COVENANTS OF THE COMPANY. 66
10.1. Restrictions on Indebtedness. 66
10.2. Restrictions on Liens. 67
10.3. Restrictions on Investments. 69
10.4. Restricted Payments. 72
10.5. Merger, Consolidation and Disposition of
Assets. 72
10.5.1. Mergers and Acquisitions. 72
10.5.2. Disposition of Assets. 73
10.6. Sale and Leaseback. 74
10.7. Compliance with Environmental Laws. 74
10.8. Subordinated Debt. 74
10.9. Employee Benefit Plans. 75
10.10. Business Activities. 75
10.11. Transactions with Affiliates. 76
10.12. Restrictions on Negative Pledges. 76
10.13. Cash Management. 76
10.14. Hedging Arrangements. 77
11. FINANCIAL COVENANTS. 77
11.1. Minimum EBITDA. 77
11.2. Total Funded Debt to EBITDA. 77
11.3. Fixed Charge Coverage Ratio. 78
11.4. Capital Expenditures. 78
12. CONDITIONS TO EFFECTIVENESS. 78
12.1. Loan Documents, etc. 79
12.2. Performance, etc. 79
12.3. Certified Copies of Charter Documents. 79
12.4. Proof of Corporate Action. 79
12.5. Incumbency Certificates. 80
12.6. Proceedings and Documents. 80
12.7. Validity of Liens. 80
12.8. Perfection Certificates and UCC Search Results.
80
12.9. Certificates of Insurance. 80
12.10. Agency Account Agreement. 81
12.11. Legal Opinions. 81
12.12. Payment of Fees. 81
12.13. Legality of Transactions. 81
12.14. Representations and Warranties. 81
13. CONDITIONS TO LOANS. 81
13.1. Legality of Transactions. 82
13.2. Representations and Warranties. 82
13.3. Performance, etc. 82
13.4. Proceedings and Documents. 82
13.5. Loan Documents. 83
14. EVENTS OF DEFAULT; ACCELERATION. 83
14.1. Remedies Upon Default. 83
14.2. Termination of Commitments. 86
14.3. Remedies. 87
14.4. Certain Rights of Cure. 87
14.5. Distribution of Collateral Proceeds. 88
15. SETOFF. 89
16. THE AGENT. 90
16.1. Authorization. 90
16.2. Employees and Agents. 90
16.3. No Liability. 91
16.4. No Representations. 91
16.4.1. General. 91
16.4.2. Closing Documentation, etc. 92
16.5. Indemnification. 92
16.6. Reimbursement. 92
16.7. Non-Reliance on Agent and Other Banks. 93
16.8. Payments. 93
16.8.1. Payments to Agent. 93
16.8.2. Distribution by Agent. 94
16.8.3. Delinquent Banks. 94
16.9. Holders of Notes. 95
16.10. Agent as Bank. 95
16.11. Resignation or Removal of Agent. 95
16.12. Notification of Defaults and Events of
Default. 95
16.13. Duties in the Case of Enforcement. 96
17. EXPENSES. 96
18. INDEMNIFICATION. 97
19. SURVIVAL OF COVENANTS, ETC. 98
20. ASSIGNMENT AND PARTICIPATION. 98
20.1. Conditions to Assignment by Banks. 98
20.2. Certain Representations and Warranties;
Limitations; Covenants. 99
20.3. Register. 100
20.4. New Notes. 101
20.5. Participations. 101
20.6. Assignee or Participant Affiliated with the
Company. 102
20.7. Miscellaneous Assignment Provisions. 102
20.8. Increased Costs. 103
20.9. Assignment by Company. 103
21. NOTICES, ETC. 103
22. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. 104
22.1. Confidentiality. 104
22.2. Prior Notification. 105
22.3. Other. 105
23. CONSENTS, AMENDMENTS, WAIVERS, ETC. 105
24. PROVISIONS OF GENERAL APPLICATIONS. 107
24.1. Governing Law. 107
24.2. Headings. 107
24.3. Counterparts. 107
24.4. Entire Agreement, Etc. 107
24.5. Waiver of Jury Trial. 108
24.6. Severability. 108
25. TRANSITIONAL ARRANGEMENTS. 108
25.1. Existing Credit Agreement Superseded. 108
25.2. Return and Cancellation of Notes. 109
25.3. Interest and Fees Under Superseded Agreement.109
SCHEDULES AND EXHIBITS
Schedule 1 Banks, Commitments and Commitment
Percentages
Schedule 8.7 Title to Properties; Leases
Schedule 8.11 Litigation
Schedule 8.23 Environmental Compliance
Schedule 8.24 Subsidiaries
Schedule 8.26 Foreign Scheduled Facilities
Schedule 8.27 Bank Accounts
Schedule 10.1 Existing Indebtedness
Schedule 10.2 Existing Liens
Schedule 10.12 Restrictions on Negative Pledges
Exhibit A-1 Form of Syndicated Note
Exhibit A-2 Form of Syndicated Loan Request
Exhibit B-1 Form of Competitive Bid Note
Exhibit B-2 Form of Competitive Bid Quote Request
Exhibit B-3 Form of Invitation for Competitive Bid
Quotes
Exhibit B-4 Form of Competitive Bid Quote
Exhibit B-5 Form of Notice of Competitive Bid Borrowing
Exhibit C [Intentionally omitted.]
Exhibit D [Intentionally omitted.]
Exhibit E Form of Compliance Certificate
Exhibit F Form of Subordination Agreement
Exhibit G [Intentionally omitted.]
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Confidentiality Agreement
AMENDED AND RESTATED
LINE OF CREDIT AGREEMENT
This AMENDED AND RESTATED LINE OF CREDIT AGREEMENT, is
dated as of February 16, 2001, by and among HASBRO, INC.
(the "Company"), a Rhode Island corporation having its
principal place of business at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862, and FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.) and the other lending institutions
listed on Schedule 1 (collectively, the "Banks") and FLEET
NATIONAL BANK (f/k/a BankBoston, N.A.), as agent for the
Banks (the "Agent").
WITNESSETH:
WHEREAS, pursuant to that certain Line of Credit
Agreement, dated as of June 28, 2000 (as amended and in
effect from time to time, the "Existing Credit Agreement"),
by and among the Company, the Banks, and the Agent, the
Banks have made available certain financing to the Company
upon the terms and conditions contained therein; and
WHEREAS, the Company has requested, among other things,
to amend and restate the Existing Credit Agreement and the
Banks are willing to amend and restate the Existing Credit
Agreement on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing
premises and the mutual covenants contained herein, the
Company, the Banks and the Agent agree that as of the date
hereof, the Existing Credit Agreement shall be amended and
restated in its entirety as set forth herein:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions.
The following terms shall have the meanings set forth
in this 1.1 or elsewhere in the provisions of this
Agreement referred to below:
Affiliate. Any Person that would be considered to be
an affiliate of the Company under Rule 144(a) of the Rules
and Regulations of the Securities and Exchange Commission,
as in effect on the date hereof, if the Company were issuing
securities.
Affected Bank. See 4.1(c).
Agent. Fleet, acting as agent for the Banks, and each
other Person appointed as the successor Agent in accordance
with 16.11.
Agent's Fee. See 7.2.
Agent's Office. The Agent's office located at 100
Federal Street, Boston, Massachusetts 02110, or at such
other location as the Agent may designate from time to time.
Agreement. This Amended and Restated Line of Credit
Agreement, including the Exhibits and Schedules hereto, as
originally executed, or if this Amended and Restated Line of
Credit Agreement is further amended, varied or supplemented
from time to time, as so amended, varied or supplemented.
Applicable Pension Legislation. At any time, any
pension or retirement benefits legislation (be it national,
federal, provincial, territorial or otherwise) then
applicable to the Company or any of its Subsidiaries.
Arranger. Fleet Securities, Inc.
Asset Sale. Any one or series of related transactions
on which the Company or any of its Subsidiaries conveys,
sells, leases, licenses or otherwise disposes of, directly
or indirectly, any of its properties, businesses or assets
whether owned on the Effective Date or thereafter acquired.
Assignee. A bank or other institution to which a Bank
assigns all, or a proportionate part of all, of such Bank's
rights and obligations under this Agreement and the Notes
payable to such transferor Bank, pursuant to the terms of
20.
Assignment and Acceptance. See 20.1.
Authorized Financial Officers. The Chief Financial
Officer of the Company, the Deputy Chief Financial Officer
of the Company, the Controller of the Company and any other
officer of the Company designated by the Company from time
to time as the chief financial officer or the chief
accounting officer of the Company and qualified to certify
as to financial information delivered on behalf of the
Company and its Subsidiaries pursuant to 9.5 hereof; and
"Authorized Financial Officer" means any one of the
Authorized Financial Officers.
Balance Sheet Date. December 31, 2000.
Bank Affiliate. (a) With respect to any Bank, (i) an
affiliate of such Bank or (ii) any entity (whether a
corporation, partnership, limited liability company, trust
or legal entity) that is engaged in making, purchasing,
holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business
and is administered or managed by such Bank or an affiliate
of such Bank and (b) with respect to any Bank that is a fund
which invests in bank loans and similar extensions of
credit, any other entity (whether a corporation,
partnership, limited liability company, trust or other legal
entity) that is a fund that invests in bank loans and
similar extensions of credit and is managed by the same
investment advisor as such Bank or by an affiliate of such
investment advisor.
Banks. As defined in the Preamble, and any bank or
institution that becomes an Assignee pursuant to, and
fulfills the conditions of, 20.
Banks' Special Counsel. Bingham Dana LLP, or such
other counsel as the Agent may approve.
Base Rate. A fluctuating interest rate per annum (as
shall be in effect from time to time) (rounded to the
nearest 1/100 of 1%) equal to the greater of: (a) the annual
rate of interest announced from time to time by the Agent at
the Agent's Office as its "Base Rate," and (b) the Federal
Funds Effective Rate plus one-half of one percent (0.5%).
If for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including, without limitation, the
inability or failure of the Agent to obtain sufficient bids
or publications in accordance with the terms thereof, the
rate announced by the Agent at its head office as its "Base
Rate" shall be the Base Rate until the circumstances giving
rise to such inability no longer exist.
Base Rate Loan(s). Loan(s) denominated in Dollars
bearing interest calculated by reference to the Base Rate.
Borrowing. A borrowing hereunder by the Company
consisting of a Loan to the Company by the Banks.
Business Day. Any day on which banking institutions in
Boston, Massachusetts and New York City, New York are open
for the conduct of normal banking business, and, in
addition, if Eurocurrency Rate Loans are involved, a day on
which dealings in Dollars can be carried on in the relevant
Eurocurrency Interbank Market and Dollar settlements of such
dealings may be effected in New York City.
Capitalized Leases. Leases under which the Company or
any of its Subsidiaries is the lessee or obligor, the
discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the
lessee or obligor in accordance with GAAP.
Capital Stock. Any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any
of the foregoing.
Casualty Event. With respect to any property
(including any interest in property) of any Hasbro Company,
any loss of, damage to, or condemnation or other taking of,
such property for which such Person receives insurance
proceeds, proceeds of a condemnation award or other
compensation.
CERCLA. See 8.23.
Change of Control. An event or series of events by
which any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act), directly or indirectly, of fifty-
one percent (51%) or more of the outstanding shares of
Capital Stock of the Company; or, during any period of
twelve (12) consecutive calendar months, individuals who
were directors of the Company on the first day of such
period (or whose election as directors was approved by a
majority of the directors who were in office on such date or
whose election previously was so approved) shall cease to
constitute a majority of the board of directors of the
Company.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests
of the Company and the Restricted Subsidiaries that are or
are intended to be subject to the security interests and
mortgages created by the Security Documents.
Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as the maximum amount of such
Bank's commitment to make Syndicated Loans to the Company,
as the same may be reduced from time to time; or if such
Bank's commitment is terminated pursuant to the provisions
hereof, zero. Each Bank's Commitment shall be deemed to be
reduced, while any Competitive Bid Loans are outstanding, by
an amount equal to such Bank's Commitment Percentage of such
outstanding Competitive Bid Loans.
Commitment Fee. See 2.2.
Commitment Percentage. With respect to each Bank, the
percentage set forth opposite such Bank's name on Schedule 1
hereto.
Company. See preamble.
Company Security Agreement. The Amended and Restated
Security Agreement, dated as of the Effective Date, as the
same may be amended from time to time, by and between the
Company and the Agent, in form and substance reasonably
satisfactory to the Agent.
Company Stock Pledge Agreement. The Pledge Over A
Securities Account, dated as of the Effective Date, as the
same may be amended or supplemented from time to time, by
and between the Company and the Agent, in form and substance
reasonably satisfactory to the Agent.
Competitive Bid Loan(s). A Borrowing hereunder
consisting of one or more revolving credit loans made by any
of the Banks whose offer to make a revolving credit loan as
part of such Borrowing has been accepted by the Company
under the auction bidding procedure described in 2.5
hereof.
Competitive Bid Notes. See 2.6.
Competitive Bid Note Record. A Record with respect to
a Competitive Bid Note.
Competitive Bid Quote. An offer by a Bank to make a
Competitive Bid Loan in accordance with 2.5 hereof.
Competitive Bid Quote Request. See 2.5.1(b).
Competitive Bid Rate. See 2.5.1(d)(ii)(C).
Compliance Certificate. See 9.5(c) hereof.
Consolidated or consolidated. With reference to any
term defined herein, shall mean that term as applied to the
accounts of the Company and all of its Subsidiaries,
consolidated in accordance with GAAP.
Consolidated Net Earnings (or Loss). The consolidated
net earnings (or loss) of the Company and its Subsidiaries,
after deduction of all expenses, taxes, and other proper
charges, determined in accordance with GAAP, after
eliminating therefrom all extraordinary items of income.
Consolidated Operating Cash Flow. With respect to the
Company and its Subsidiaries and for any period, an amount
equal to (i) EBITDA for such period, minus (ii) Capital
Expenditures made by the Company and its Subsidiaries during
such period.
Consolidated Total Debt Service. With respect to the
Company and its Subsidiaries and for any period, the sum,
without duplication, of (a) Consolidated Total Interest
Expense for such period plus (b) any and all scheduled
repayments of principal during such period in respect of
Consolidated Total Funded Debt that becomes due and payable
or that is to become due and payable during such period but
excluding any repayments of principal required under this
Agreement and the Revolving Credit Agreement plus (c) the
aggregate amount of all Distributions paid during such
period.
Consolidated Total Funded Debt. As at any date of
determination, with respect to the Company and its
Subsidiaries, the sum, without duplication, of (a) the
aggregate amount of Indebtedness of the Company and its
Subsidiaries, on a consolidated basis, relating to (i) the
borrowing of money or the obtaining of credit, (ii) the
deferred purchase price of assets (other than trade payables
incurred in the ordinary course of business), (iii) in
respect of any Synthetic Leases or any Capitalized Leases
and (iv) the face amount of all letters of credit
outstanding plus (b) Indebtedness of the type referred to in
clause (a) of another Person guaranteed by the Company or
any of its Subsidiaries.
Consolidated Total Interest Expense. For any period,
the aggregate amount of interest expense of the Company and
its Subsidiaries determined on a consolidated basis in
accordance with GAAP for such period.
Copyright Memorandum. The Memorandum of Grant of
Security Interest in Copyrights, dated as of the Effective
Date, as the same may be amended from time to time, by and
among the Company, the Restricted Subsidiaries and the
Agent, in form and substance reasonably satisfactory to the
Agent.
Debt Rating. The rating issued from time to time
(whether on a preliminary basis or otherwise) by Standard &
Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's") or Moody's Investors
Service, Inc. ("Moody's") or such other rating service or
services as the Company may designate from time to time with
the consent of the Majority Banks (each a "Successor Rating
Agency") with respect to Indebtedness evidenced by this
Agreement and the Revolving Credit Agreement.
Debt Rating Increase. See 4.9.
Default. Any Event of Default and any event which, but
for the giving of notice or the lapse of time, or both,
would constitute an Event of Default.
Delinquent Bank. See 16.8.3.
Distribution. The declaration or payment of any
dividend on or in respect of any shares of any class of
Capital Stock of the Company other than dividends payable
solely in shares of common stock of the Company (or payable
pursuant to the Rights Agreement, dated June 16, 1999,
between the Company and Fleet National Bank (f/k/a
BankBoston, N.A.) as amended); the purchase, redemption,
defeasance, retirement or other acquisition of any shares of
any class of Capital Stock of the Company directly or
indirectly through a Subsidiary of the Company or otherwise
(including the setting apart of assets for a sinking or
other analogous fund to be used for such purpose); the
return of capital by the Company to its shareholders as
such; or any other distribution on or in respect of any
shares of any class of Capital Stock of the Company.
Dollar(s) and $. The lawful currency of the United
States of America.
Domestic Subsidiary. Any Subsidiary of the Company
that is not a Foreign Subsidiary.
Drawdown Date. The date on which any Loan is made or
is to be made, and the date on which any Loan is converted
or continued in accordance with 4.1(a).
EBITDA. With respect to any particular fiscal period,
EBITDA shall mean the sum of (a) Consolidated Net Earnings
(or Loss) for such period, plus (b) in each case without
duplication, and to the extent deducted in calculating
Consolidated Net Earnings (or Loss) for such period, (i)
income tax expense of the Company and its Subsidiaries, (ii)
interest expense of the Company and its Subsidiaries, (iii)
depreciation and amortization of the Company and its
Subsidiaries, (iv) other non-cash charges of the Company and
its Subsidiaries, and (v) extraordinary losses of the
Company and its Subsidiaries, and minus to the extent
included in Consolidated Net Earnings (or Loss) for such
period, (vi) extraordinary gains of the Company and its
Subsidiaries for such period, all determined in accordance
with GAAP, plus (c) solely for the calculation of EBITDA for
the fiscal quarter ended December 31, 2000 or any period
that includes such quarter, a single incremental adjustment
in an amount equal to $210,000,000.
Effective Date. The date on which all of the
conditions set forth in 12 hereof have been satisfied, and
all "Loans" under and as defined in the Existing Credit
Agreement are converted into Loans hereunder.
Employee Benefit Plan. Any employee benefit plan
within the meaning of 3(3) of ERISA maintained or
contributed to by the Company or any ERISA Affiliate, other
than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See 8.23.
EPA. See 8.23.
Equity Issuance. The sale or issuance by the Company
or any of its Subsidiaries of any of its Capital Stock
(other than to the Company or any of its Subsidiaries).
ERISA. The Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
ERISA Affiliate. Any Person which is treated as a
single employer with the Company under 414 of the Code.
ERISA Reportable Event. A reportable event with
respect to a Guaranteed Pension Plan within the meaning of
4043 of ERISA and the regulations promulgated thereunder.
Eurocurrency Interbank Market. Any lawful recognized
market in which deposits of Dollars are offered by
international banking units of United States banking
institutions and by foreign banking institutions to each
other and in which eurocurrency funding operations are
customarily conducted.
Eurocurrency Offered Rate. With respect to the
Interest Period of any Eurocurrency Rate Loan, the annual
rate of interest determined by the Agent at or about 10:00
A.M. (Boston time) (or as soon thereafter as practicable)
two (2) Business Days preceding the first day of such
Interest Period, as being the average of the rates of
interest per annum at which deposits in the currency of such
Eurocurrency Rate Loan are offered to each of the respective
lending offices of each of the Reference Banks by prime
banks in the Eurocurrency Interbank Market selected by such
Reference Bank in its sole discretion acting in good faith
for such Interest Period, at the time of the determination
and in accordance with the usual practice in such market,
for delivery on the first day of such Interest Period in
immediately available funds and having a maturity equal to
such Interest Period and for the number of days comprised
therein, in an amount equal (as nearly as may be) to such
Reference Bank's Commitment Percentage of such Eurocurrency
Rate Loan.
Eurocurrency Rate. With respect to all Eurocurrency
Rate Loans for any Interest Period, the annual rate of
interest, rounded to the nearest 1/100 of 1%, determined by
the Agent for such Interest Period in accordance with the
following formula:
Eurocurrency Rate = Eurocurrency Offered Rate
------------------------------
1 - Eurocurrency Reserve Rate
Eurocurrency Rate Loan(s). Loan(s) denominated in
Dollars bearing interest calculated by reference to the
Eurocurrency Rate.
Eurocurrency Reserve Rate. The rate in effect from
time to time, expressed as a decimal, at which the Banks
would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any
successor or similar regulation relating to such reserve
requirements) against "Eurocurrency Liabilities" (as that
term is used in Regulation D), if such liabilities were
outstanding.
Existing Credit Agreement. See Preamble.
Event of Default. See 14.1.
Federal Funds Effective Rate. For any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or for any day on which such rate
is not so published for such day by the Federal Reserve Bank
of New York, the average of the quotations for such day for
such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the
Agent.
Fee Letter. The fee letter, dated as of February 16,
2001, by and among Company and the Agent.
Fees. Collectively, the Commitment Fee, Competitive
Bid fees, the Agent's Fee and the Closing Fee.
Final Maturity Date. February 15, 2002.
Fixed Charge Coverage Ratio. As at any date of
determination, the ratio of (i) the Consolidated Operating
Cash Flow of the Company and its Subsidiaries for the
Reference Period ending on such date, to (ii) the
Consolidated Total Debt Service of the Company and its
Subsidiaries for such Reference Period.
Fleet. Fleet National Bank, in its capacity as a Bank
hereunder.
Foreign Scheduled Facilities. See 8.26.
Foreign Sublimit. An amount which is available for
Borrowings in accordance with 8.22.1 equal to the aggregate
amount of Indebtedness of the Company consisting of
guaranties of the Foreign Scheduled Facilities, as such
Foreign Sublimit may be amended from time to time with the
consent of the Company and the Agent.
Foreign Subsidiary. Any Subsidiary that conducts
substantially all its business (other than export sales) in
countries other than the United States of America and that
is organized under the laws of a jurisdiction other than the
United States of America and the states thereof.
GAAP. (i) When used in 11 hereof, whether directly or
indirectly through reference to a capitalized term used
therein, principles which are (A) consistent with the
principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect
for the fiscal period ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the
accounting practice of the Company reflected in its
financial statements for the year ended on the Balance Sheet
Date; and (ii) when used in general, other than as provided
above, principles which are (A) consistent with the
principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors (or
successor organizations), as in effect from time to time and
(B) consistently applied with past financial statements of
the Company adopting the same principles.
Governmental Authority. Any foreign, federal, state,
regional, local, municipal or other government, or any
department, commission, board, bureau, agency, public
authority or instrumentality thereof, or any court or
arbitrator.
Guaranteed Pension Plan. Any employee pension benefit
plan within the meaning of 3(2) of ERISA maintained or
contributed to by the Company or any ERISA Affiliate the
benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
Guaranty. The Amended and Restated Guaranty, dated as
of the Effective Date, as the same may be amended and in
effect from time to time, made by each Restricted Subsidiary
in favor of the Banks and the Agent pursuant to which each
Restricted Subsidiary guarantees to the Banks and the Agent
the payment and performance of the Secured Obligations and
in form and substance reasonably satisfactory to the Agent.
Hasbro Companies. Collectively, the Company, the
Restricted Subsidiaries and the Significant Subsidiaries.
Hazardous Substances. See 8.23.
Hedging Agreement. Any foreign exchange contract,
currency swap agreement, currency or commodity agreement or
other similar agreement or arrangement designed to protect
against the fluctuation in currency values.
Identified Brands. Collectively, the brand names
Action Man, Monopoly, Mr. Potato Head, Tonka, Lincoln Logs,
Playskool, Yahtzee, Clue and GI Joe.
Indebtedness. As to any Person and whether recourse is
secured by or is otherwise available against all or only a
portion of the assets of such Person and whether or not
contingent, but without duplication:
(a) every obligation of such Person to repay
money borrowed,
(b) every obligation of such Person for principal
evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in
connection with the acquisition of property, assets or
businesses,
(c) every reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances
or similar facilities issued for the account of such
Person,
(d) every obligation of such Person issued or
assumed as the deferred purchase price of property or
services (including securities repurchase agreements
but excluding (i) trade accounts payable or accrued
liabilities arising in the ordinary course of business
which are not overdue or which are being contested in
good faith and (ii) earnout obligations in respect of
assets or businesses acquired prior to the Effective
Date),
(e) every obligation of such Person under any
Capitalized Lease,
(f) every obligation of such Person under any
Synthetic Lease,
(g) all sales with recourse by such Person of (i)
accounts or general intangibles for money due or to
become due, (ii) chattel paper, instruments or
documents creating or evidencing a right to payment of
money or (iii) other receivables (collectively
"receivables"), whether pursuant to a purchase facility
or otherwise, other than in connection with the
disposition of the business operations of such Person
relating thereto or a disposition of defaulted
receivables for collection and not as a financing
arrangement, and together with any obligation of such
Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other
amounts in connection therewith,
(h) Indebtedness of any other entity (including
any partnership in which such Person is a general
partner) to the extent that such Person is liable
therefor as a result of such Person's ownership
interest in or other relationship with such entity,
except to the extent that the terms of such
Indebtedness provide that such Person is not liable
therefor and such terms are enforceable under
applicable law,
(i) every obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect
of guarantying or otherwise acting as surety for, any
obligation of a type described in any of clauses (a)
through (h) (the "primary obligation") of another
Person (the "primary obligor"), in any manner, whether
directly or indirectly, and including, without
limitation, any such obligation of such Person (i) to
purchase or pay (or advance or supply funds for the
purchase of) any security for the payment of such
primary obligation, (ii) to purchase property,
securities or services for the purpose of assuring the
payment of such primary obligation, or (iii) to
maintain working capital, equity capital or other
financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to
pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness
at any time of determination represented by (w) any
Indebtedness, issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of
the liability in respect thereof determined in accordance
with GAAP, (x) any Capitalized Lease shall be the discounted
aggregate rental obligations under such Capitalized Lease
required to be capitalized on the balance sheet of the
lessee in accordance with GAAP, (y) any sale of receivables
shall be the amount of unrecovered capital or principal
investment of the purchaser (other than the Company or any
of its wholly-owned Subsidiaries) thereof, excluding amounts
representative of yield or interest earned on such
investment, and (z) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent
amount.
Infogrames. Infogrames Entertainment S.A., a societe
anonyme organized under the laws of France.
Installment Amount. See 2.8.
Intercompany Indebtedness. The aggregate amount of all
Indebtedness of any of the Company or any Operating
Subsidiary of the Company to any other of the Company and
its Operating Subsidiaries.
Interest Period. (a) With respect to each Base Rate
Loan comprising the same Borrowing, the period (i)
commencing on the Drawdown Date of such Borrowing, and (ii)
ending thirty (30) days thereafter as determined in
accordance with the provisions of this Agreement;
(b) With respect to each Eurocurrency Rate Loan
comprising the same Borrowing, the period (i) commencing on
the Drawdown Date of such Borrowing, and (ii) ending one
(1), two (2), three (3) or six (6) months thereafter as
determined in accordance with the provisions of this
Agreement; and
(c) With respect to each Competitive Bid Loan
comprising the same Borrowing, the period (i) commencing on
the date of such Borrowing and (ii) ending from seven (7)
through one hundred eighty (180) days thereafter as
determined in accordance with the provisions of this
Agreement.
Interest Rate Agreement. Any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement, interest rate futures contract, interest rate
option agreement or other similar agreement or arrangement
to which the Company and any Bank is a party, designed to
protect the Company against fluctuations in interest rates.
Inventory. With respect to the Company or any of the
Restricted Subsidiaries, finished goods, work in progress
and raw materials and component parts inventory and all
"Inventory" as such term is defined in the Uniform
Commercial Code as in effect in the Commonwealth of
Massachusetts owned by such Person.
Investments. As to any Person, all expenditures made
for the acquisition of stock or Indebtedness of, or for
loans, advances or capital contributions to, any other
Person, in each case to the extent the same would be
recorded as an investment on the balance sheet of the first
Person under GAAP. In determining the aggregate amount of
Investments outstanding at any particular time: (a) there
shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating
dividend or liquidating distribution); (b) there shall not
be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as
dividends, interest or otherwise; and (c) there shall not be
deducted from the aggregate amount of Investments any
decrease in the value thereof.
Invitation for Competitive Bid Quotes. See 2.5.1(c).
Lien. Any mortgage, deed of trust, security interest,
pledge, hypothecation, security assignment, attachment,
deposit arrangement, lien (statutory, judgment or
otherwise), or other security agreement or similar
encumbrance or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other
title retention agreement, any Capitalized Lease, any
Synthetic Lease, any financing lease involving substantially
the same economic effect as any of the foregoing and the
filing of any financing statement evidencing any of the
foregoing under the Uniform Commercial Code or comparable
law of any jurisdiction).
Loan Documents. Collectively, this Agreement, the
Notes, the Security Documents, the Subordination Agreements
and the Fee Letter.
Loans. Collectively, the Syndicated Loans and the
Competitive Bid Loans.
Majority Banks. As of any date, the Banks whose
aggregate Commitments constitute more than fifty percent
(50%) of the Total Commitment, provided, that if at the time
Majority Banks is being determined, the Total Commitment has
been terminated, the Majority Banks shall be the Banks
holding more than fifty percent (50%) of the aggregate
outstanding principal amount of the Loans on such date.
Margin. (a) At any time of determination prior to a
Debt Rating Increase, an annual percentage rate equal to (a)
with respect to Base Rate Loans, three-quarters of one
percent (0.75%), and (b) with respect to Eurocurrency Rate
Loans, two and one-quarter percent (2.25%); or
(b) At any time of determination following a Debt
Rating Increase, an annual percentage rate equal to (a) with
respect to Base Rate Loans, one-half of one percent (0.50%),
and (b) with respect to Eurocurrency Rate Loans, two percent
(2.00%).
Material Adverse Effect. With respect to any event or
occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental
investigation or proceeding):
(a) a material adverse effect on the business,
properties, condition, assets, operations or results of
operations of the Hasbro Companies, taken as a whole;
(b) a material adverse effect on the ability of
the Company individually or the Hasbro Companies taken
as a whole, to perform its or their respective
Obligations (as the case may be) under the Loan
Documents; or
(c) any material impairment of (i) the validity,
binding effect or enforceability of this Agreement or
any of the other Loan Documents, (ii) the rights,
remedies or benefits available to the Agent or any Bank
under the Loan Documents or (iii) the attachment,
perfection or priority of any Lien of the Agent on a
material portion of the Collateral under the Security
Documents.
Maximum Availability. The aggregate amount available
for Borrowings under and as defined in this Agreement and
the Revolving Credit Agreement, which shall be equal to (a)
for the first fiscal quarter of 2001, $300,000,000; (b) for
the second fiscal quarter of 2001, $500,000,000; (c) for the
period from the first day of the third fiscal quarter of
2001 until December 29, 2001, $650,000,000; and (d) from and
after December 30, 2001, $325,000,000.
Moody's. As defined in the definition of "Debt
Rating".
Multiemployer Plan. Any multiemployer plan within the
meaning of 3(37) of ERISA maintained or contributed to by
the Company or any ERISA Affiliate.
Net Cash Sale Proceeds. The net cash proceeds received
by a Person in respect of any Asset Sale, less the sum of
(a) all reasonable out-of-pocket fees, commissions and other
expenses actually incurred in connection with such Asset
Sale, (b) the amount of any transfer, documentary, income or
other taxes required to be paid by the Company or any of its
Subsidiaries in connection with such Asset Sale, (c) the
aggregate amount of any Indebtedness (other than under the
Loan Documents) of the Company or any of its Subsidiaries
permitted by this Agreement that was secured by a Permitted
Lien with respect to the assets transferred and is required
to be repaid in whole or in part (which repayment, in the
case of any other revolving credit arrangement or multiple
advance arrangement, reduces the commitment thereunder) in
connection with such Asset Sale, (d) the amount of such
proceeds attributable to (and payable to) minority
interests, (e) the amount of any reserve reasonably
maintained by the Company or any of its Subsidiaries with
respect to indemnification obligations owing pursuant to the
definitive documentation pursuant to which such Asset Sale
is consummated (with any unused portion of such reserve to
constitute Net Cash Sale Proceeds on the date upon which the
indemnification obligations terminate or such reserve is
reduced other than in connection with a payment), and (f)
appropriate amounts to be provided by the Company or any of
its Subsidiaries to be applied to satisfy any reasonable
expenses and liabilities associated with any such property
or assets and retained by the Company or any such Subsidiary
after such Asset Sale.
Net Cash Equity Issuance Proceeds. With respect to any
Equity Issuance, the excess of the gross cash proceeds
received by such Person for such Equity Issuance after
deduction of all reasonable transaction expenses (including,
without limitation, underwriting discounts and commissions)
actually incurred in connection with such Equity Issuance.
New Loans. See 4.1(e).
Note(s). Singly, any of, and collectively, all of the
Syndicated Notes and the Competitive Bid Notes.
Notice of Competitive Bid Borrowing. See 2.4.1(f).
Obligations. All indebtedness, obligations and
liabilities to the Banks and the Agent, individually or
collectively, arising or incurred under this Agreement or
any of the other Loan Documents, or in respect of Loans made
and any Notes or other instruments at any time evidencing
any thereof, whether such indebtedness, obligations, and
liabilities exist on the date of this Agreement or arise
thereafter, or are direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise of the Company.
Operating Subsidiary. As at any particular date, any
Subsidiary (other than a Subsidiary engaged solely in the
business of incurring Indebtedness) of the Company actively
engaged in the conduct of business.
Outstanding. With respect to the Loans, the unpaid
principal thereof as of any date of determination.
Participant. See 20.5.
Patent Agreements. Collectively, (a) the Patent
Security Agreement (Registrations), dated as of the
Effective Date, as the same may be amended from time to
time, by and among the Company, the Restricted Subsidiaries
and the Agent, in form and substance reasonably satisfactory
to the Agent, pertaining to U.S. patent registrations, and
(b) the Patent Security Agreement (Applications), dated as
of the Effective Date, as the same may be amended from time
to time, by and among the Company, the Restricted
Subsidiaries and the Agent, in form and substance reasonably
satisfactory to the Agent, pertaining to U.S. patent
applications.
PBGC. The Pension Benefit Guaranty Corporation created
by 4002 of ERISA and any successor entity or entities
having similar responsibilities.
Permitted Acquisition. Any acquisition permitted by
10.5.1(b).
Permitted Liens. Liens permitted by 10.2.
Person. Any individual, corporation, partnership,
trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or
political subdivision thereof.
RCRA. See 8.23.
Record. The grid attached to a Note, or the
continuation of such grid, or any other similar record,
including computer records, maintained by any Lender with
respect to any Loan referred to in such Note.
Real Estate. All real property owned or leased (as
lessee or sublessee) by any of the Hasbro Companies.
Reemployment Period. See 2.8.
Reemployment Rate. See 2.8.
Reference Banks. Fleet, Bank of America, N.A.,
Citibank, N.A., Mellon Bank, N.A. and Commerzbank A.G., New
York.
Reference Period. As of the end of any fiscal quarter,
the period of four (4) consecutive fiscal quarters of the
Company and its Subsidiaries ending on such date, or if any
date of determination is not a fiscal quarter end date, the
period of four (4) consecutive fiscal quarters most recently
ended (in each case treated as a single accounting period).
Replacement Bank. See 4.1(f).
Replacement Date. See 4.1(f).
Restricted Payment. In relation to the Company and its
Subsidiaries, any (a) Distribution, (b) payment or
prepayment by the Company or its Subsidiaries to the
Company's or any Subsidiary's shareholders (or other equity
holders) in their capacity as such, in each case other than
(i) to the Company or any Subsidiary (or any payment or
prepayment excluded from the definition of the term
"Distribution") and (ii) the acquisition of the Capital
Stock of any Subsidiary of the Company existing on the
Effective Date from any then existing minority holder
thereof, (c) optional repayment, redemption or repurchase of
long term unsecured Indebtedness of the Company existing on
the Effective Date and having a maturity after the Final
Maturity Date, or (d) derivatives or other transactions with
any financial institution, commodities or stock exchange or
clearinghouse (a "Derivatives Counterparty") obligating the
Company or any Subsidiary to make payments to such
Derivatives Counterparty as a result of any change in market
value of any Capital Stock of the Company or such
Subsidiary.
Restricted Subsidiaries. Collectively, (a) Wizards of
the Coast, Inc., a Washington corporation, (b) OddzOn, Inc.,
a Delaware corporation, and (c) material Domestic
Subsidiaries (i) created or acquired by the Company
following the Effective Date and (ii) designated as
Restricted Subsidiaries by the Company or the Agent in a
written notice (it being understood that any Restricted
Subsidiary which merges with and into the Company such that
the Company is the survivor shall no longer constitute a
Restricted Subsidiary following such merger).
Revolving Credit Agreement. The Amended and Restated
Revolving Credit Agreement, dated as of the date hereof, by
and among the Company, the Banks party thereto and the
Agent, as amended, varied or supplemented from time to time.
SARA. See 8.23.
Secured Obligations. Collectively, (a) the
Obligations, (b) the "Obligations" under and as defined in
the Revolving Credit Agreement, (c) other Indebtedness of
the Company consisting of guaranties of Indebtedness of
Foreign Subsidiaries owing to any Bank or Bank Affiliate
under the Foreign Scheduled Facilities, (d) Indebtedness of
the Company under and pursuant to Letter of Credit No.
003146-793, dated September 27, 2000, in the original stated
amount of $2,199,866, as the same may be amended from time
to time, issued by SanPaolo IMI S.P.A. for the account of
the Company, and (e) obligations of the Company or its
Subsidiaries to the Banks and the Agent (individually or
collectively) arising under Interest Rate Agreements and
Hedging Agreements, in each case as defined in this
Agreement and the Revolving Credit Agreement.
Security Agreements. Collectively, the Company
Security Agreement and the Subsidiary Security Agreement.
Security Documents. The Guaranty, the Security
Agreements, the Company Stock Pledge Agreement, the
Trademark Agreement, the Patent Agreements, the Copyright
Memorandum and all other instruments and documents,
including without limitation Uniform Commercial Code
financing statements, required to be executed or delivered
pursuant to any Security Document.
Significant Subsidiary. (a) Any Subsidiary of the
Company, organized under the laws of the United States or
any State of the United States or the District of Columbia,
which, either alone or together with the Subsidiaries of
such Subsidiary, meets either of the following conditions:
(i) the investments of the Company and its
Subsidiaries in, or their proportionate share (based on
their equity interests) of the book value of the total
assets (after intercompany eliminations) of, the
Subsidiary in question exceed 10% of the book value of
the total assets of the Company and its Subsidiaries on
a consolidated basis, or
(ii) the equity of the Company and its
Subsidiaries in the revenues of the Subsidiary in
question exceeds 10% of the revenues from continuing
operations of the Company and its Subsidiaries on a
consolidated basis for the Company's most recent fiscal
year; or
(b) Any other Subsidiary of the Company designated as
a "Significant Subsidiary" by the Company in a written
notice to the Agent.
Specified Sale. The sale of the Company's interactive
and on-line businesses to Infogrames, and any disposition of
the Capital Stock of Infogrames by the Company acquired in
connection with such sale.
Standard & Poor's. As defined in the definition of
"Debt Rating".
Subordinated Debt. Unsecured Indebtedness of the
Company or any of its Subsidiaries that is expressly
subordinated and made junior to the payment and performance
in full of the Obligations (other than pursuant to the
Subordination Agreements), and evidenced as such by a
written instrument containing subordination provisions in
form and substance reasonably satisfactory to the Majority
Banks..
Subordination Agreement. The amended and restated
subordination agreement among the Company, the Significant
Subsidiaries and the Agent, substantially in the form of
Exhibit F hereto; and "Subordination Agreements" means the
Subordination Agreement and any additional subordination
agreements executed and delivered to the Agent for the
benefit of the Banks pursuant to 9.14 hereof.
Subsidiary. Any corporation, association, trust, or
other business entity of which the designated parent shall
at any time own directly or indirectly through a Subsidiary
or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Subsidiary Security Agreement. The Amended and
Restated Security Agreement, dated as of the Effective Date,
as the same may be amended from time to time, among the
Restricted Subsidiaries and the Agent, in form and substance
reasonably satisfactory to the Agent.
Syndicated Loan(s). Singly, any of, and collectively,
all of, the revolving credit loans made by the Banks in
accordance with their respective Commitment Percentages to
the Company as contemplated by 2.1 hereof.
Syndicated Note(s). See 2.6.
Syndicated Note Record. A Record with respect to a
Syndicated Note.
Synthetic Lease. Any lease of goods or other property,
whether real or personal, which is treated as an operating
lease under GAAP and as a loan or financing for U.S. income
tax purposes.
Total Commitment. The sum of the Commitments of the
Banks, as in effect from time to time, which as of the
Effective Date shall be equal to the aggregate principal
amount of $325,000,000.
Trademark Agreement. The Trademark Security Agreement,
dated as of the Effective Date, as the same may be amended
from time to time, by and among the Company, the Restricted
Subsidiaries and the Agent, in form and substance reasonably
satisfactory to the Agent.
Type. As to any Syndicated Loan, its nature as a Base
Rate Loan or a Eurocurrency Rate Loan.
Utilization. An amount equal to the sum of (i) the
outstanding amount of all Loans (after giving effect to all
amounts requested) and (ii) the amount by which the Foreign
Sublimit exceeds the outstanding amount of Loans borrowed to
satisfy the Company's obligations under guaranties of the
Foreign Scheduled Facilities.
Voting Stock. Stock or similar interests, of any class
or classes (however designated), the holders of which are at
the time entitled, as such holders, to vote for the election
of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or
other business entity involved, whether or not the right so
to vote exists by reason of the happening of a contingency
(unless the happening of any such contingency is not within
the control of the Company).
1.2. Rules of Interpretation.
(a) A reference to any document or agreement
shall include such document or agreement as amended,
modified or supplemented from time to time in
accordance with its terms and the terms of this
Agreement.
(b) The singular includes the plural and the
plural includes the singular.
(c) A reference to any law includes any amendment
or modification to such law.
(d) A reference to any Person includes its
permitted successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by GAAP applied on a
consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and
"including" are not limiting.
(g) All terms not specifically defined herein or
by GAAP, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of
Massachusetts, have the meanings assigned to them
therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "" refers to that
section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and
words of like import shall refer to this Agreement as a
whole and not to any particular section or subdivision
of this Agreement.
(j) Unless otherwise expressly indicated, in the
computation of periods of time from a specified date to
a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to
but excluding," and the word "through" means "to and
including."
(k) This Agreement and the other Loan Documents
may use several different limitations, tests or
measurements to regulate the same or similar matters.
All such limitations, tests and measurements are,
however, cumulative and are to be performed in
accordance with the terms thereof.
(l) This Agreement and the other Loan Documents
are the result of negotiation among, and have been
reviewed by counsel to, among others, the Agent and the
Company and are the product of discussions and
negotiations among all parties. Accordingly, this
Agreement and the other Loan Documents are not intended
to be construed against the Agent or any of the Banks
merely on account of the Agent's or any Bank's
involvement in the preparation of such documents.
2. THE SYNDICATED AND COMPETITIVE BID LOAN FACILITY.
2.1. Commitment to Lend Syndicated Loans.
(a) Subject to the terms and conditions set forth in
this Agreement, each of the Banks severally agrees to lend
to the Company and the Company may borrow, repay, and
reborrow from time to time between the Effective Date and
the Final Maturity Date upon notice by the Company to the
Agent given in accordance with 2.4 hereof, such sums, in
Dollars, as requested by the Company ("Syndicated Loans") up
to a maximum aggregate amount outstanding (after giving
effect to all amounts requested) at any one time equal to
such Bank's Commitment (as such Commitment has been deemed
to be reduced by such Bank's Commitment Percentage of
outstanding Competitive Bid Loans), provided that the
Utilization shall not at any time exceed the lesser of (i)
the Total Commitment and (ii) an amount equal to (A) the
Maximum Availability minus (B) the Utilization under and as
defined in the Revolving Credit Agreement at such time. The
Syndicated Loans shall be made pro rata in accordance with
each Bank's Commitment Percentage. Each request for
Syndicated Loans hereunder shall constitute a representation
by the Company that the conditions set forth in 12 and 13,
in the case of the initial Syndicated Loans to be converted
into Syndicated Loans hereunder on the Effective Date, and
13, in the case of all other Syndicated Loans, have been
satisfied on the date of such request. Each Base Rate Loan
and Eurocurrency Rate Loan shall mature and become due and
payable on the last day of the Interest Period relating
thereto and shall be payable in the currency in which such
Loan was made. Each Base Rate Loan shall be denominated in
Dollars. Each Eurocurrency Rate Loan shall be denominated
in Dollars.
(b) After any prepayment and at maturity of the
Syndicated Loans pursuant to 2.1(a) above, the Company
shall be entitled to reborrow any or all of the principal
amount of such Syndicated Loan, subject to all of the
conditions precedent set forth in 13. Each Bank's
Commitment shall terminate, all Syndicated Loans shall
become finally due and payable and the Company promises to
pay on the Final Maturity Date all Syndicated Loans
outstanding on the Final Maturity Date.
(c) The respective amount of each Bank's Commitment
and its Commitment Percentage shall be as set forth on
Schedule 1 hereto, subject to reduction in accordance with
2.3 and 2.11.
(d) Each Bank represents and warrants that it will use
its best efforts to ensure that the funding of its Loans is
not made directly out of the assets of any "employee benefit
plan" or of any "separate account" in which any "employee
benefit plan" has any interest other than a "government
plan" (each such term being used herein as defined in
Section 3 of ERISA).
2.2. Commitment Fee.
The Company agrees to pay to the Agent for the pro rata
accounts of the Banks in accordance with their respective
Commitment Percentages a commitment fee (the "Commitment
Fee") calculated at the rate of three-eighths percent (3/8%)
per annum on the average daily amount during each calendar
quarter or portion thereof from the Effective Date to the
Final Maturity Date by which (a) (i) the lesser of (A) the
Total Commitment and (B) an amount equal to (x) the Maximum
Availability minus (y) the Utilization under and as defined
in the Revolving Credit Agreement exceeds (b) the
outstanding amount of Syndicated Loans during such calendar
quarter. The Commitment Fee shall be payable quarterly in
arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the
first such date following the Effective Date, with a final
payment on the Final Maturity Date or any earlier date on
which the Commitments shall terminate.
2.3. Reduction of Total Commitment.
The Company shall have the right at any time and from
time to time upon five (5) Business Days written notice to
the Agent to reduce by $10,000,000 or an integral multiple
thereof or terminate entirely the unborrowed portion of the
Total Commitment, whereupon the Commitments of the Banks
shall be reduced pro rata in accordance with their
respective Commitment Percentages of the amount specified in
such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Company delivered pursuant
to this 2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such
reduction or termination, the Company shall pay to the Agent
for the respective accounts of the Banks the full amount of
the Commitment Fee then accrued on the amount of the
reduction. No reduction of the Commitments of the Banks may
be reinstated unless otherwise agreed to by the Company and
each of the Banks. Nothing contained in this 2.3 shall
obligate any Bank in any way whatsoever to reinstate all or
any part of its Commitment after a reduction of such
Commitment hereunder. If at any time the outstanding amount
of the Loans exceeds the Total Commitment as a result of any
reduction of the Total Commitment pursuant to this 2.3,
then the Company shall immediately pay the amount of such
excess to the Agent for the respective account of the Banks
for application to the Loans. Each payment of Loans shall
be allocated among the Banks, in proportion, as nearly as
practicable to the respective unpaid principal amount of
each Bank's Syndicated Note or Competitive Bid Note, as
applicable, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in
proportion. In addition, the Total Commitment shall be
reduced in accordance with 2.11.
2.4. Requests for Syndicated Loans.
(a) The Company shall give to the Agent written notice
in the form of Exhibit A-2 hereto (or telephonic notice
confirmed in a writing in the form of Exhibit A-2 hereto) of
each Syndicated Loan requested hereunder (a "Loan Request")
not later than (a) with respect to Base Rate Loans, 12 noon
(Boston time) on the proposed Drawdown Date of such Base
Rate Loan and (b) with respect to Eurocurrency Rate Loans,
1:00 P.M. (Boston time) on the third Business Day prior to
the proposed Drawdown Date of such Eurocurrency Rate Loan.
The Agent shall promptly notify the Banks of the contents of
each such notice at the address or addresses for each Bank
set forth on Schedule 1 hereof.
(b) Each such notice delivered by the Company shall
specify (i) the aggregate principal amount of Syndicated
Loans requested, stated in Dollars, (ii) the Type of
Syndicated Loan requested, (iii) the proposed Drawdown Date
and duration of the proposed Interest Period(s) applicable
to any Base Rate Loans, or Eurocurrency Rate Loans and (iv)
the Company's account to which payment of the proceeds of
such Syndicated Loan is to be made. Each such notice (which
shall be irrevocable) shall obligate the Company to accept
the Syndicated Loans requested from the Banks on the
proposed Drawdown Date therefor.
(c) Each request for Types of Syndicated Loans made
hereunder shall be in a minimum aggregate amount of
$5,000,000 or a greater integral multiple of $1,000,000.
(d) Any Syndicated Loans requested by the Company
pursuant to this 2.4 shall be made available to the Company
in accordance with the provisions of 2.9 hereof.
2.5. Competitive Bid Loans.
2.5.1. Competitive Bid Borrowings.
(a) The Competitive Bid Option. In addition to
the Syndicated Loans permitted to be made hereunder
pursuant to 2.1 hereof, the Company may, pursuant to
the terms of this 2.5, cause the Agent to request the
Banks to make offers to fund Competitive Bid Loans to
the Company from time to time prior to the Final
Maturity Date. The Banks may, but shall have no
obligation to, make such offers and the Company may,
but shall have no obligation to, accept such offers in
the manner set forth in this 2.5. Notwithstanding any
other provision herein to the contrary, at no time
shall the Utilization exceed the lesser of (i) the
Total Commitment and (ii) an amount equal to (A) the
Maximum Availability minus (B) the Utilization under
and as defined in the Revolving Credit Agreement at
such time;
(b) Competitive Bid Quote Request. When the
Company wishes to request offers to make Competitive
Bid Loans under this 2.5, it shall transmit to the
Agent by telephone, telex, cable or facsimile (in each
case confirmed in writing by the Company) a Competitive
Bid Quote Request substantially in the form of Exhibit
B-2 hereto (a "Competitive Bid Quote Request") so as to
be received no later than 11:00 a.m. (Boston time) on
the first Business Day prior to the requested Drawdown
Date, specifying (i) the requested Drawdown Date (which
must be a Business Day) and the amount of such
Competitive Bid Loan (which must be a minimum of
$5,000,000 or any greater integral multiple of
$1,000,000 and may not exceed the lesser of (A) the
Total Commitment and (B) the Maximum Availability in
effect from time to time during the Interest Period of
such Competitive Bid Loan), and (ii) the Interest
Period of such Competitive Bid Loan, subject to the
provisions of the definition of Interest Period, and be
accompanied by a Competitive Bid fee of $750 payable to
the Agent with respect to each Competitive Bid Quote
Request. The Company may request offers to make
Competitive Bid Loans for no more than one (1) amount
and three (3) Interest Periods in a single Competitive
Bid Quote Request. No new Competitive Bid Quote
Request shall be given until the Company has notified
the Agent of its acceptance or non-acceptance of the
Competitive Bid Quotes relating to any outstanding
Competitive Bid Quote Request.
(c) Invitation for Competitive Bid Quotes.
Subsequent to timely receipt of a Competitive Bid Quote
Request, the Agent shall send to the Banks by facsimile
an Invitation for Competitive Bid Quotes as promptly as
possible but not later than 3:00 p.m. (Boston time) on
the first Business Day prior to the requested Drawdown
Date, substantially in the form of Exhibit B-3 hereto
(an "Invitation for Competitive Bid Quotes"), which
shall constitute an invitation by the Company to each
Bank to submit Competitive Bid Quotes offering to make
Competitive Bid Loans to which such Competitive Bid
Quote Request relates in accordance with this 2.5.
If, after receipt by the Agent of a Competitive Bid
Quote Request from the Company in accordance with
subsection (b) of this 2.5.1, the Agent or any Bank
shall be unable to complete any procedure of the
auction process described in subsections (d) through
(f) (inclusive) of this 2.5.1 due to the inability of
such Person to transmit or receive communications
through the means specified therein, such Person may
rely on telephonic notice for the transmission or
receipt of such communications. In any case where such
Person shall rely on telephone transmission or receipt,
any communication made by telephone shall, as soon as
possible thereafter, be followed by written
confirmation thereof.
(d) Submission and Contents of Competitive Bid
Quotes.
(i) Each Bank may, but shall be under no
obligation to, submit a Competitive Bid Quote
containing an offer or offers to make Competitive Bid
Loans to the Company in response to any Invitation for
Competitive Bid Quotes. Each Competitive Bid Quote
must comply with the requirements of this subsection
(d) and must be submitted to the Agent by facsimile not
later than 10:00 a.m. (Boston time) on the requested
Drawdown Date, provided, that Competitive Bid Quotes
may be made by the Agent in its capacity as a Bank only
if it notifies the Company of the terms of its
Competitive Bid Quote no later than 9:45 a.m. (Boston
time) on the requested Drawdown Date. Subject to the
provisions of 12 and 13 hereof, any Competitive Bid
Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions
of the Company.
(ii) Each Competitive Bid Quote shall be in
substantially the form of Exhibit B-4 hereto and shall
in any case specify:
(A) the requested Drawdown Date and Interest
Periods;
(B) the principal amount of the Competitive
Bid Loan for which each such offer is being made,
which principal amount (w) may be greater than the
Commitment of the quoting Bank but may not exceed
the lesser of (A) the Total Commitment and (B) the
Maximum Availability in effect from time to time
during the Interest Period of such Competitive Bid
Loan, (x) must be $5,000,000 or a larger multiple
of $1,000,000, (y) may not exceed the aggregate
principal amount of Competitive Bid Loans for
which offers were requested, and (z) may be
subject to an aggregate limitation as to the
principal amount of Competitive Bid Loans for
which offers being made by such quoting Bank may
be accepted;
(C) the rate of interest per annum (rounded
to the nearest 1/1000th of 1%) (the "Competitive
Bid Rate") offered for each such Competitive Bid
Loan, and
(D) the identity of the quoting Bank.
A Competitive Bid Quote may include up to five (5)
separate offers by the quoting Bank with respect to
each Interest Period specified in the related
Invitation for Competitive Bid Quotes.
(iii) Any Competitive Bid Quote shall be
disregarded if it:
(A) is not substantially in the form of
Exhibit B-4 hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or
similar language (except that it may, in the case
of a quote relating to more than one Interest
Period, contain the condition described in
subsection (d)(ii)(B));
(C) proposes terms other than or in addition
to those set forth in the applicable Invitation
for Competitive Bid Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Company. Not later than 10:15 a.m.
(Boston time) on the requested Drawdown Date, the Agent
shall notify the Company of the terms of (i) all
Competitive Bid Quotes submitted by the Banks in
accordance with the preceding subsection (d) and (ii)
of any Competitive Bid Quote that amends, modifies or
is otherwise inconsistent with a previous Competitive
Bid Quote submitted by such Bank with respect to the
same Competitive Bid Quote Request. Any such
subsequent Competitive Bid Quote shall be disregarded
by the Agent unless such subsequent Competitive Bid
Quote is submitted solely to correct a manifest error
in such former Competitive Bid Quote. The Agent's
notice to the Company shall specify (A) the aggregate
principal amount of Competitive Bid Loans for which
offers have been received for each Interest Period
specified in the related Competitive Bid Quote Request,
(B) the respective principal amounts and Competitive
Bid Rates so offered, and the identity of the
respective Banks submitting such offers, and (C) if
applicable, limitations on the aggregate principal
amount of Competitive Bid Loans for which offers in any
single Competitive Bid Quote may be accepted.
(f) Acceptance and Notice by Company and Agent.
Not later than 10:45 a.m. (Boston time) on the
requested Drawdown Date, the Company shall notify the
Agent of the Company's acceptance or non-acceptance of
the offers of which it was notified pursuant to the
preceding subsection (e) in a notice, transmitted to
the Agent by telephone, telex, cable or facsimile (in
each case confirmed in writing by the Company), in
substantially the form of Exhibit B-5 hereto (a "Notice
of Competitive Bid Borrowing"). Such notice shall
specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Company
may accept any Competitive Bid Quote in whole or in
part; provided that:
(i) the aggregate principal amount of each
Competitive Bid Loan may not exceed the applicable
amount set forth in the related Competitive Bid
Quote Request,
(ii) the aggregate principal amount of each
Competitive Bid Loan must be $5,000,000 or a
larger multiple of $1,000,000,
(iii) acceptance of offers may only be
made on the basis of ascending Competitive Bid
Rates, and
(iv) no offer may be accepted that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
The Agent shall promptly notify each Bank which
submitted a Competitive Bid Quote of the acceptance or
non-acceptance thereof. The Agent will promptly notify
each Bank which submitted a Competitive Bid Quote and
each other Bank which so requests the following
information from the Agent of (a) the aggregate
principal amount of, and (b) the range of Competitive
Bid Rates of the accepted Competitive Bid Loans for
each requested Interest Period.
(g) Allocation by Agent; Usage of Commitments.
If offers are made by two (2) or more Banks with the
same Competitive Bid Rates, for a greater aggregate
principal amount than the amount in respect of which
offers are accepted for the related Interest Period,
the principal amount of Competitive Bid Loans in
respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in such multiples, not less than $100,000 as
the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. If any
such Bank has indicated a minimum acceptable
Competitive Bid Loan in its Competitive Bid Request,
and under the procedures of this subsection (g), the
Agent would have allocated to it an amount less than
such minimum, such Competitive Bid Quote will instead
be deemed to have been withdrawn. Determination by the
Agent of the amounts of Competitive Bid Loans and the
allocation thereof shall be conclusive in the absence
of manifest error.
(h) Funding of Competitive Bid Loans. If, on or
prior to the Drawdown Date of any Competitive Bid Loan,
the Total Commitment has not terminated in full and if,
on such Drawdown Date, the applicable conditions of
12 and 13 hereof are satisfied, the Bank or Banks
whose offers the Company has accepted will fund each
Competitive Bid Loan so accepted. Such Bank or Banks
will make such Competitive Bid Loans, by crediting the
Agent for further credit to the Company's specified
account, in immediately available funds not later than
1:00 p.m. (Boston time) on such Drawdown Date.
2.5.2. Repayment of Competitive Bid Loans.
The principal of each Competitive Bid Loan shall
become absolutely due and payable by the Company on the
last day of the Interest Period relating thereto, and
the Company hereby absolutely and unconditionally
promises to pay to the Agent for the account of the
relevant Banks on the last day of the Interest Period
relating thereto the principal amount of all such
Competitive Bid Loans, plus interest thereon at the
applicable Competitive Bid Rate. The Competitive Bid
Loans shall bear interest at the rate per annum
specified in the applicable Competitive Bid Quotes.
Interest on each Competitive Bid Loan shall be payable
(a) on the last day of the applicable Interest Period,
and if any such Interest Period is longer than ninety
(90) days, also on the last day of each ninety (90) day
period following the commencement of such Interest
Period, and (b) on the Final Maturity Date for each
Competitive Bid Loan. Subject to the terms of this
Agreement, the Company may make Competitive Bid Quote
Requests with respect to new Borrowings of any amounts
so repaid prior to the Final Maturity Date. Except
after an acceleration pursuant to 14.1 hereof, no
principal amount with respect to any Competitive Bid
Loan may be repaid other than on the last day of the
Interest Period relating thereto unless otherwise
agreed to in writing by the Company and the funding
Bank.
2.6. The Notes.
(a) The Syndicated Loans shall be evidenced by
separate promissory notes of the Company in substantially
the form of Exhibit A-1 hereto (the "Syndicated Notes"),
dated as of the date hereof (or such other date as a Bank
may become a party hereto pursuant to 20) with appropriate
insertions; one Syndicated Note being payable to the order
of each Bank in a principal amount equal to such Bank's
Commitment and representing the obligation of the Company to
pay to such Bank the amount of the Commitment or, if less,
the aggregate unpaid principal amount of all Syndicated
Loans made by such Bank hereunder, plus interest accrued
thereon as set forth below. The Company hereby irrevocably
authorizes each Bank to make or cause to be made, at or
about the time of each Syndicated Loan to the Company made
by such Bank, an appropriate notation on such Bank's
Syndicated Note Record reflecting the unpaid principal
amount of all Syndicated Loans made by such Bank, and such
Bank shall make or cause to be made, at or about the time of
receipt of any payment of principal on the Syndicated Note
of such Bank, an appropriate notation on such Syndicated
Note Record reflecting such payment. The aggregate unpaid
amount of Syndicated Loans made by such Bank set forth on
such Bank's Syndicated Note Record shall be rebuttably
presumptive evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any
error in so recording, any such amount on such Bank's
Syndicated Note Record shall not limit or otherwise affect
the obligations of the Company hereunder or under the
Syndicated Note to make payments of principal of or interest
on the Syndicated Note when due.
(b) Competitive Bid Notes. The Competitive Bid Loans
shall be evidenced by separate promissory notes of the
Company in substantially the form of Exhibit B-1 hereto (the
"Competitive Bid Notes"), dated as of the date hereof (or
such other date as a Bank may become a party hereto pursuant
to 20 hereof) with appropriate insertions; one Competitive
Bid Note being payable to the order of each Bank in a
principal amount equal to the Total Commitment and
representing the obligation of the Company to pay to such
Bank the aggregate unpaid principal amount of all
Competitive Bid Loans made by such Bank hereunder, as set
forth in 2.5 hereof, plus interest accrued thereon as set
forth below. The Company hereby irrevocably authorizes each
Bank to make or cause to be made, at or about the time of
each Competitive Bid Loan to the Company made by such Bank,
an appropriate notation on the Competitive Bid Note Record
of such Bank reflecting the unpaid principal amount of all
Competitive Bid Loans made by such Bank, and such Bank shall
make or cause to be made, at or about the time of receipt of
any payment of principal on the Competitive Bid Note of such
Bank, an appropriate notation on the Competitive Bid Note
Record reflecting such payment. The aggregate unpaid amount
of Competitive Bid Loans made by such Bank set forth on the
Competitive Bid Note Record shall be rebuttably presumptive
evidence of the principal amount thereof owing and unpaid to
such Bank, but the failure to record, or any error in so
recording, any such amount on such Competitive Bid Note
Record shall not limit or otherwise affect the obligations
of the Company hereunder or under the Competitive Bid Note
to make payments of principal of or interest on the
Competitive Bid Note when due.
2.7. Interest on Loans.
(a) Except as provided in 4.3 hereof, Base Rate Loans
outstanding from time to time shall bear interest during the
Interest Period relating thereto at the annual percentage
rate equal to the sum of (i) the Base Rate in effect from
time to time and (ii) the applicable Margin in effect during
such Interest Period. Interest on Base Rate Loans shall be
payable in Dollars and in accordance with 4.1(a) hereof.
(b) Except as provided in 4.3 hereof, Eurocurrency
Rate Loans shall bear interest during the Interest Period
relating thereto at the annual percentage rate equal to the
sum of (i) the Eurocurrency Rate and (ii) the applicable
Margin in effect during such Interest Period. Interest on
the Eurocurrency Rate Loans shall be payable in Dollars and
in accordance with 4.1(a) hereof.
(c) Except as provided in 4.3 hereof, each
Competitive Bid Loan shall bear interest at the rate per
annum specified in the applicable Competitive Bid Quote with
respect to such Competitive Bid Loan. Interest on
Competitive Bid Loans shall be payable in Dollars and in
accordance with 4.1(a) hereof.
2.8. Prepayments.
The Company shall repay Base Rate Loans or Eurocurrency
Rate Loans made to the Company hereunder on the last day of
the Interest Period relating thereto. As provided in
2.5.2, the Company shall repay Competitive Bid Loans made
to the Company hereunder on the last day of the Interest
Period relating thereto. The Company shall also have the
right at any time to prepay Syndicated Loans consisting of
Base Rate Loans, as a whole or in part, without premium or
penalty; provided that the Company shall provide written,
telegraphic or telephonic notice to the Agent not later than
11:00 a.m. (Boston time) on the proposed date of prepayment
stating the aggregate principal amount of such prepayment.
Each partial prepayment of any Syndicated Loan pursuant to
this 2.8 shall be in a minimum aggregate principal amount
of $5,000,000 or some greater integral multiple of
$1,000,000, or, if less, the aggregate outstanding principal
amount of the Syndicated Loans. Subject to the conditions
of 2.1 hereof, amounts so prepaid may be reborrowed. In
addition, the Company may, upon three (3) Business Days'
written, telegraphic or telephonic notice to the Agent
stating the proposed date and the aggregate principal amount
of such prepayments, prepay all, but not less than all, of
the Syndicated Loans constituting Eurocurrency Rate Loans
subject to a particular Interest Period on a date other than
the last day of the Interest Period relating thereto;
provided, that upon any such prepayment, and except as set
forth in 4.1(f) hereof, the Company shall pay to the Agent,
for the respective accounts of the Banks on a pro rata
basis, a sum which shall be determined by the Agent (to the
extent that the Agent is able to make such determination),
which determination shall be conclusive in the absence of
manifest error, in the following manner after each such
payment:
(a) First, the Agent shall determine the amount
(if any) (the "Installment Amount") by which (i) the
total amount of interest which would have otherwise
accrued hereunder on each installment of principal so
prepaid during the period beginning on the date of such
payment and ending on the last day of the Interest
Period relating thereto (the "Reemployment Period")
exceeds (ii) the total amount of interest which would
accrue, during the Reemployment Period, at the annual
rate of interest determined by the Agent (the
"Reemployment Rate") as being the prevailing rate per
annum bid at or about the time of such payment for the
purchase of deposits of Dollars from prime banks in the
Eurocurrency Interbank Market selected by the Agent in
its sole discretion (such Reemployment Rate to be the
rate payable on an amount equal (as nearly as may be)
to the Eurocurrency Rate Loans so prepaid and to have a
maturity (as nearly as may be) equal to the
Reemployment Period);
(b) Second, each Installment Amount shall be
treated as payable on the last day of the Interest
Period relating to the Eurocurrency Rate Loans prepaid.
(c) Third, the amount to be paid shall be the
present value of the Installment Amount determined by
discounting the amount thereof from the date on which
the Installment Amount is to be treated as payable, at
the same annual interest rate as the Reemployment Rate
designated as aforesaid by the Agent.
Each prepayment made pursuant to this 2.8 shall be
accompanied by the payment of accrued interest on the
principal prepaid to the date of prepayment.
2.9. Funds for Loans.
(a) Each Bank will, upon receiving notice from the
Agent of any request by the Company for Syndicated Loans
pursuant to 2.4, become and be obligated to make available
to the Agent, on the proposed Drawdown Date of each
Syndicated Loan, not later than (a) 2:30 P.M. (Boston time)
for Base Rate Loans with respect to which the Agent sent
notice to the Banks pursuant to 2.4 hereof no earlier than
the proposed Drawdown Date of such Loan, and (b) 11:00 A.M.
(Boston time) with respect to Eurocurrency Rate Loans and
all other Base Rate Loans, in funds immediately available
for credit to the Company's account, an aggregate amount,
equal to such Bank's Commitment Percentage of the Syndicated
Loan requested at the place specified in the notice
delivered by the Company pursuant to 2.4. Upon
satisfaction of the conditions set forth in 12 and 13, as
applicable, the Agent will cause the aggregate amount of
such funds actually received by the Agent from the Banks to
be credited to the Company's account as soon as practicable
on the date of such receipt. The failure or refusal of any
Bank to make available to the Agent at the aforesaid time on
any Drawdown Date the amount of the Syndicated Loan to be
made by such Bank thereon shall not relieve the other Banks
from their several obligations hereunder to make their
respective Commitment Percentages of any requested
Syndicated Loans.
(b) The Agent may, unless notified to the contrary by
any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Syndicated Loans
(or in the case of Competitive Bid Loans, the amount of such
Bank's accepted offers of Competitive Bid Loans, if any) to
be made on such Drawdown Date, and the Agent may (but it
shall not be required to), in reliance upon such assumption,
make available to the Company a corresponding amount. If
any Bank makes available to the Agent such amount on a date
after such Drawdown Date, such Bank shall pay to the Agent
on demand an amount equal to the product of (i) the average
computed for the period referred to in clause (iii) below,
of the weighted average interest rate paid by the Agent for
federal funds acquired by the Agent during each day included
in such period, times (ii) the amount of such Bank's
Commitment Percentage of such Loans (or accepted offers of
Competitive Bid Loans, as applicable), times (iii) a
fraction, the numerator of which is the number of days that
elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Loans shall become
immediately available to the Agent, and the denominator of
which is 365. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to
the Agent by such Bank. If the amount of such Bank's Loans
is not made available to the Agent by such Bank within three
(3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Company on
demand, with interest thereon at the rate per annum
applicable to the Loans made on such Drawdown Date.
2.10. Mandatory Repayments.
(a) Promptly, but in no event later than the earlier
of (a) the end of the next Interest Period and (b) seven (7)
days after such receipt, following receipt by any of the
Hasbro Companies of:
(i) Net Cash Sale Proceeds from Asset Sales (other
than the sale, lease, license or other disposition of
assets in the ordinary course of business consistent
with past practices);
(ii) Net Cash Equity Issuance Proceeds from Equity
Issuances by any of the Hasbro Companies;
(iii) net cash proceeds received by (A) the
Company in connection with its issuance of any
Indebtedness (other than purchase money Indebtedness,
issuances of commercial paper or Indebtedness under any
Loan Document or any "Loan Document" as defined in the
Revolving Credit Agreement) or (B) any Operating
Subsidiary of the Company in connection with its
issuance of any Indebtedness permitted by 10.1(c);
(iv) net cash proceeds of income tax refunds
received by any of the Hasbro Companies relating to any
year beginning on or after January 1, 2001; and
(v) net cash proceeds received from Casualty
Events by any of the Hasbro Companies which have not
been committed (as evidenced by a binding written
contract) by such Person prior to or within one hundred
eighty (180) days of receipt of such proceeds to the
repair or replacement of the property so damaged,
destroyed or taken, or, if so committed, such repair or
replacement of the property so damaged, destroyed or
taken shall have not commenced prior to or within one
hundred eighty (180) days of receipt of such proceeds
pursuant to such binding written contract;
the Company shall pay to the Agent for the respective
accounts of the Banks an amount equal to (A) one hundred
percent (100%) of such net cash proceeds or (B) if less, (x)
the then outstanding principal amount of the Loans and the
then outstanding principal amount of the "Loans" and the
"Unpaid Reimbursement Obligations" under and as defined in
the Revolving Credit Agreement and (y) if an Event of
Default has occurred and is continuing, the "Maximum Drawing
Amount" of "Letters of Credit" (as such term is defined in
the Revolving Credit Agreement) then outstanding to be held
by the Agent as cash collateral to secure all "Reimbursement
Obligations" (as such term is defined in the Revolving
Credit Agreement), to be applied in the manner set forth in
2.11. Notwithstanding the foregoing, no such payment shall
be required unless and only to the extent that such Asset
Sales, Equity Issuances, issuances of Indebtedness or
Casualty Events result in net cash proceeds that otherwise
would be required to be so applied equal to (x) $5,000,000
or more in any period of thirty (30) consecutive days or (y)
$15,000,000 in any fiscal year of the Company.
(b) If at any time the Utilization exceeds the lesser
of (i) the Total Commitment and (ii) an amount equal to (A)
the Maximum Availability minus (B) the Utilization under and
as defined in the Revolving Credit Agreement at such time,
then the Company shall immediately pay the amount of such
excess to the Agent for the respective account of the Banks
to be applied in the manner set forth in 2.11.
(c) If at any time the outstanding amount of the Loans
borrowed to satisfy the Company's obligations under
guaranties of the Foreign Scheduled Facilities exceeds the
Foreign Sublimit, then the Company shall immediately pay the
amount of such excess to the Agent for the respective
account of the Banks to be applied in the manner set forth
in 2.11.
2.11. Application of Payments; Commitment
Reduction.
All payments made pursuant to 2.10 shall be applied to
reduce the outstanding principal amount of the Loans and the
outstanding principal amount of the "Loans" and "Unpaid
Reimbursement Obligations" under and as defined in the
Revolving Credit Agreement by such amount pro rata based on
the then outstanding principal amount of the Loans and the
then outstanding principal amount of "Loans" and "Unpaid
Reimbursement Obligations" under and as defined in the
Revolving Credit Agreement. Such mandatory repayments shall
be allocated among the Banks in proportion, as nearly as
practicable, to the respective outstanding amounts of each
Bank's Note, with adjustments to the extent practicable to
equalize any prior prepayments not exactly in proportion.
Amounts repaid pursuant to 2.10 may be reborrowed. The
Total Commitment shall be reduced by an amount equal to (a)
one hundred percent (100%) of Net Cash Sale Proceeds from
Asset Sales (other than a Specified Sale and other than the
sale, lease, license or other disposition of assets in the
ordinary course of business consistent with past practices)
in excess of $30,000,000 in any fiscal year, (b) one hundred
percent (100%) of net cash proceeds received by the Company
in connection with the issuance of Subordinated Debt or
other long term unsecured Indebtedness having a maturity
after the Final Maturity Date (other than purchase money
Indebtedness), and (c) one hundred percent (100%) of net
cash proceeds received by any Operating Subsidiary of the
Company in connection with the issuance of Indebtedness
pursuant to 10.1(c). No reduction of the Total Commitment
made pursuant to this 2.11 may be reinstated.
3. [INTENTIONALLY OMITTED]
4. INTEREST; PAYMENTS AND COMPUTATIONS.
4.1. Interest; Costs and Expenses.
(a) Elections. At the option of the Company, so long
as no Default or Event of Default has occurred and is then
continuing, the Company may elect from time to time to have
a portion of the principal amount of the Syndicated Loans to
the Company outstanding from time to time bear interest
during any particular Interest Period calculated by
reference to the Base Rate or the Eurocurrency Rate,
provided that any portion of the Syndicated Loans selected
to bear interest by reference to the Base Rate or the
Eurocurrency Rate shall be in an amount not less than
$5,000,000 or some greater integral multiple of $1,000,000
with respect to any single Interest Period. Any election by
the Company to have interest calculated by reference to the
Base Rate or the Eurocurrency Rate shall be made by notice
(which shall be irrevocable) to the Agent as provided in
2.4. If in any such notice, the Company does not specify
whether any Eurocurrency Rate Loans are requested, the
Company shall be deemed to have elected that the requested
Syndicated Loans bear interest at the Base Rate and be
denominated in Dollars. Any election of a Eurocurrency Rate
shall lapse at the end of the expiring Interest Period
unless extended by a further election notice as provided in
2.4 hereof. If, on or prior to the last day of any
Interest Period for Base Rate Loans or Eurocurrency Rate
Loans, the Company (x) fails to deliver a further election
notice with respect to such Loans pursuant to 2.4 hereof
and this 4.1(a), and (y) fails to repay all or any part of
such Loans as provided in 4.4 hereof, then such Syndicated
Loans shall be deemed to be Base Rate Loans in accordance
with the terms set forth in 4.4(b) hereof. Each Base Rate
Loan or Eurocurrency Rate Loan shall bear interest during
each Interest Period relating thereto at the rate set forth
in 2.7 or 4.3 hereof, as the case may be. Interest on
each Base Rate Loan or Eurocurrency Rate Loan shall be
payable (i) on the last day of the Interest Period relating
thereto or (ii) if the Interest Period is longer than ninety
(90) days, on the last day of each 90-day period following
the commencement of such Interest Period and on the last day
of such Interest Period.
(b) Notices, etc. as to Eurocurrency Rate. Promptly
after the commencement of any Interest Period for any
Syndicated Loan, the Agent shall notify the Company and each
of the Banks of (A) the applicable interest rate determined
by the Agent hereunder with respect to any Eurocurrency Rate
Loan, (B) each date on which interest is payable hereunder,
and (C) the date on which the Interest Period with respect
to such Syndicated Loan shall end; provided, however, that
the obligations of the Company to pay to each Bank principal
and interest as herein provided shall not be subject to or
in any way conditional upon the giving of any such notice by
the Agent. Each such notice shall, absent manifest error,
be binding upon each Bank and the Company.
(c) Substitution of Base Rate. Notwithstanding any
other provision of this Agreement, if (i) the introduction
of, any change in, or any change in the interpretation of,
any law or regulation applicable to any Bank (the "Affected
Bank") shall make it unlawful, or any central bank or other
Governmental Authority having jurisdiction thereof shall
assert that it is unlawful, or in the reasonable judgment of
such Bank, impracticable, for such Bank to perform its
obligations in respect of any Loans bearing interest based
on the Eurocurrency Rate or (ii) if any Affected Bank shall
reasonably determine with respect to Loans bearing interest
based on the Eurocurrency Rate that (A) by reason of
circumstances affecting any Eurocurrency Interbank Market,
adequate and reasonable methods do not exist for
ascertaining the Eurocurrency Rate which would otherwise be
applicable during any Interest Period, or (B) deposits of
Dollars in the relevant amount for the relevant Interest
Period are not available to such Bank in any Eurocurrency
Interbank Market, or (C) the Eurocurrency Rate does not or
will not accurately reflect the cost to such Bank of
obtaining or maintaining the applicable Loans bearing
interest based on the Eurocurrency Rate during any Interest
Period, then any such Affected Bank shall promptly give
telephonic, telex or cable notice of such determination to
the Company (which notice shall be conclusive and binding
upon the Company absent manifest error), the Agent and the
other Banks. Upon such notification by any Affected Bank,
(x) the obligation of such Affected Bank to make Loans
bearing interest based on the Eurocurrency Rate shall be
suspended until such circumstances no longer exist, (y) any
new Loans made by such Affected Bank on or after the date of
such notification, which Loans would otherwise bear interest
at the suspended rate shall be deemed to be Loans bearing
interest by reference to the Base Rate and shall be
denominated in Dollars, as necessary, until such suspension
is no longer in effect, and (z) so long as it is not
unlawful for the Affected Bank to continue carrying
Outstanding Loans bearing interest at the suspended rate,
Outstanding Loans of such Affected Bank bearing interest
based on the Eurocurrency Rate shall continue to bear
interest at the applicable rate based on the Eurocurrency
Rate until the end of the applicable Interest Period. If it
is unlawful for any Affected Bank to continue carrying any
Outstanding Loans bearing interest at the suspended rate,
such Affected Bank shall so notify the Company and the Agent
and any such Outstanding Loans shall be automatically
converted to Base Rate Loans at the end of the Interest
Period which is current when such notice is given.
Notwithstanding any provision of this 4.1(c) to the
contrary, during any period in which a suspension is in
effect pursuant to this 4.1(c), the Company may notify the
Agent and any Affected Bank to which such suspension applies
that (I) the Company shall repay, in accordance with the
provisions of 4.1(f) hereof, any and all Loans made by such
Affected Bank to the Company, and (II) with respect to any
new Loans to be made by the Banks hereunder, the Company
shall not borrow from such Affected Bank and the Commitment
of such Affected Bank shall be terminated.
(d) Additional Costs and Expenses; Reserve
Requirements. Anything herein to the contrary
notwithstanding, if any present or future applicable law
(which expression, as used herein, includes statutes, rules
and regulations thereunder and interpretations thereof by
any competent court or by any governmental or other
regulatory body or official charged with the administration
or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank by any
central bank or other fiscal, monetary or other Governmental
Authority, whether or not having the force of law) shall
(A) subject such Bank to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any
nature not now in effect, with respect to the Bank's
commitment to make Loans bearing interest based on the
Eurocurrency Rate or the Bank's Loans bearing interest
based on the Eurocurrency Rate; or
(B) materially change the basis of taxation of
payments to such Bank on the principal of, interest on
or any other amounts payable in respect of the Loans
bearing interest based on the Eurocurrency Rate as such
(excluding changes in taxes measured by or imposed on
the net income, or on the capital or net worth of such
Bank; provided, however, nothing in this parenthetical
shall be deemed to limit the rights of the Banks or the
obligations of the Company pursuant to 4.1(e)); or
(C) impose or increase or render applicable any
liquidity, capital, special deposit or reserve or
similar requirements (whether or not having the force
of law) not now in effect, against assets held by, or
deposits in or for the account of, or loans by an
office of such Bank with respect to such Bank's
commitment to make Loans bearing interest based on the
Eurocurrency Rate or such Bank's Loans bearing interest
based on the Eurocurrency Rate; or
(D) impose on such Bank any other condition or
requirement not now in effect, with respect to such
Bank's commitment to make Loans bearing interest based
on the Eurocurrency Rate or such Bank's Loans bearing
interest based on the Eurocurrency Rate or any class of
loans of which the Loans bearing interest based on the
Eurocurrency Rate forms a part, and the result of any
of the foregoing is (x) to increase the cost to such
Bank attributable to the making, funding or maintaining
of Loans bearing interest based on the Eurocurrency
Rate or its commitment therefor, (y) to reduce the
amount of principal, interest, commitment fees or other
amounts payable in respect of Loans bearing interest
based on the Eurocurrency Rate to such Bank hereunder
or its commitment therefor, or (z) to require such Bank
to make any payment or to forego any interest or other
sum payable in respect of Loans bearing interest based
on the Eurocurrency Rate hereunder or its commitment
therefor, the amount of which payment or foregone
interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received
by such Bank from the Company hereunder;
then, and in each such case, the Company will, upon demand
by such Bank made by written notice to the Company from time
to time as often as the occasion therefor may arise, pay to
such Bank, within ten (10) days after receipt of notice of
such demand, such additional amounts as will be sufficient,
in the good faith opinion of such Bank, to compensate the
Bank for such additional costs, reduction, payment or
foregone interest or other sum in respect of Loans bearing
interest based on the Eurocurrency Rate; provided, however,
that the Company shall be required to pay only such
additional costs or other amounts which are incurred by such
Bank (i) from and after the date of such notice, with
respect to Loans outstanding during Interest Periods
commencing after the date on which the Company receives such
notice, (ii) with respect to Loans outstanding on the date
of such notice provided that (A) not less than 90 days
remain in the applicable Interest Period for such Loans and
(B) such costs are assessed only for the period commencing
on the date of such notice to the Company, and (iii) from
and after the date of such notice to the extent that the
incurrence of such additional costs or amounts is unrelated
to Outstanding Loans and is not otherwise covered by clauses
(i) or (ii) of this paragraph. Subject to the provisions of
the preceding sentence, a claim by any Bank for all or any
part of any additional amount required to be paid by the
Company pursuant to this 4.1(d) may be made before and/or
after the end of the Interest Period to which such claim
relates or during the Interest Period in which such claim
has arisen and before and/or after any repayment or
prepayment, to which such claim relates, of any or
Eurocurrency Rate Loans owed hereunder. A certificate
signed by an officer of such Bank, setting forth the amount
of such loss, expense or liability required to be paid by
the Company to such Bank, and the computations made by such
Bank to determine such additional amount, shall be submitted
by the Bank to the Company in connection with each demand
made at any time by such Bank upon the Company hereunder,
and shall, save for manifest or other obvious error,
constitute conclusive evidence of the additional amount
required to be paid by the Company to such Bank upon each
such demand.
(e) Increased Capital Requirements. If any present or
future, or any change in any present or future, law or any
governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) or the
interpretation or administration thereof by a Governmental
Authority with appropriate jurisdiction affects the amount
of capital required or expected to be maintained by any of
the Banks or any corporation controlling any of the Banks
and such Bank determines that any of the foregoing imposes
or increases a requirement by such Bank to allocate capital
resources to such Bank's credit facility established
hereunder or any loans made pursuant hereto, which would
have the effect of reducing the return on such Bank's
capital to a level below that which such Bank could have
achieved (assuming full utilization of the Bank's capital)
but for such increased capital requirements, then such Bank
may notify the Company (with a copy to the Agent) of such
fact. To the extent that the costs of such increased
capital requirements are not reflected in the Base Rate, the
Eurocurrency Rate or the Competitive Bid Rate, the Company
and such Bank shall thereafter attempt to negotiate in good
faith an adjustment to the compensation payable hereunder
with respect to such Bank's Commitment and, in the case of
any Loans made by such Bank after the date of the Company's
receipt of such notice ("New Loans"), all such New Loans,
which adjustment will adequately compensate the Bank in
light of these circumstances. If the Company and such Bank
are unable to agree to such adjustment within thirty (30)
days of the day on which the Company receives such notice,
then effective from the date on which the Company has
received such notice (but not earlier than the effective day
of such requirement or retroactive to any date prior to the
date on which the Company has received such notice), the
fees payable hereunder with respect to any New Loans made
by, or the Commitment of, such Bank shall increase by an
amount which will, in such Bank's reasonable determination,
provide adequate compensation. Such Bank shall allocate
such cost increases among its customers in good faith and on
an equitable basis.
(f) Replacement of Banks. Notwithstanding any other
provision of this Agreement, in the event that (i) the
obligation of any Bank to make Eurocurrency Rate Loans is
suspended pursuant to 4.1(c) hereof, or (ii) any Bank makes
demand upon the Company pursuant to 4.1(d) hereof for the
payment of additional costs or other amounts, or (iii) any
Bank makes demand upon the Company pursuant to 4.1(e)
hereof for an adjustment to the compensation payable to such
Bank by the Company hereunder, then, in each such case, the
Company in its discretion may (A) send written notice to
such Bank and the Agent advising such Bank that, subject to
the provisions of this 4.1(f), its Commitment hereunder
shall be terminated on a date determined by the Company (the
"Replacement Date"), which Replacement Date shall be no
earlier than the date on which such Bank and the Agent have
received such notice from the Company, and commencing on the
Replacement Date, the Commitment of such Bank hereunder
shall be terminated and no Commitment Fee shall be payable
by the Company to such Bank with respect to such Commitment,
and (B) replace such Bank with another Bank or other
commercial banking institution (the "Replacement Bank")
which has been selected by the Company and approved by the
Majority Banks, which approval shall not be unreasonably
withheld, provided that the Company, the Banks and the Agent
agree that (w) on or prior to the Replacement Date, the
Company shall have paid all principal, interest, fees and
other amounts owing by the Company hereunder, accruing up to
and including the Replacement Date, to the Bank being
replaced on such Replacement Date, (x) as of the Replacement
Date, the Replacement Bank will take over the entire
Commitment of the Bank being replaced, (y) on or prior to
the Drawdown Date first following the Replacement Date, the
Company, the Agent, the Banks (other than the Bank being
replaced) and the Replacement Bank shall make such
arrangements by way of new Syndicated Loans, purchases or
refundings of existing Syndicated Loans or otherwise as will
result thereafter in the outstanding and unpaid Syndicated
Loans of each Bank being equal, as near as may practically
be, to such Bank's Commitment Percentage of all of the
outstanding and unpaid Syndicated Loans made to the Company,
and (z) the Agent shall be entitled to receive prior to the
Replacement Date from the Company and the Replacement Bank
such supplemental agreements, documents, certificates and
legal opinions in connection with the replacement of such
Bank as the Agent and the other Banks may reasonably request
to give effect to the foregoing provisions of this 4.1(f).
(g) Change of Lending Office. If a Bank changes its
applicable lending office (other than pursuant to paragraph
(h) below) and the effect of the change, as of the date of
the change, would be to cause the Company to become
obligated to pay any additional amount under this 4.1 or
under 4.7, the Company shall not be obligated to pay such
additional amount.
(h) Mitigation. If a condition or an event occurs
which would, or would upon the passage of time or giving of
notice, result in the payment of any additional amount to
any Bank by the Company pursuant to this 4.1 or under 4.7,
such Bank shall take such steps as may reasonably be
available to it and acceptable to the Company to mitigate
the effects of such condition or event (which may include
efforts to rebook the Loans held by such Bank at another
lending office, or through another branch or an affiliate,
of such Bank); provided that such Bank shall not be required
to take any step that, in its reasonable judgment, would be
disadvantageous to its business or operations or would
require it to incur any additional cost or expense unless
the Company agrees to reimburse such Bank for such cost or
expense.
4.2. Concerning Interest Periods.
No Interest Period for Loans may be selected by the
Company if such Interest Period ends after the Final
Maturity Date. If any Interest Period would otherwise end
on a day which is not a Business Day for Base Rate,
Eurocurrency Rate or Competitive Bid Rate purposes, as
applicable, that Interest Period, shall end on the Business
Day next preceding or next succeeding such day determined by
the Agent in accordance with its usual practices. Any
Interest Period relating to any Eurocurrency Rate Loan that
begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall
end on the last Business Day of a calendar month.
4.3. Interest on Overdue Amounts.
Overdue principal and (to the extent permitted by
applicable law) interest on the Loans and all other overdue
amounts payable hereunder shall bear interest payable on
demand at a rate per annum equal to two percent (2%) above
the rate otherwise in effect with respect to Base Rate
Loans, whether or not any Eurocurrency Rate or Competitive
Bid Rate would otherwise have been applicable thereto, until
such amount shall be paid in full (whether before or after
judgment).
4.4. Payments.
(a) All payments of principal of and interest on Loans
made to the Company, any Fees and any other amounts due
hereunder shall be made by the Company to the Agent, at or
prior to 11:00 A.M., Boston time, on any payment date, in
Dollars and in immediately available funds at the Agent's
Office without setoff, counterclaim or deduction of any
kind. The Agent shall be entitled to debit any account of
the Company with the Agent in the amount of each such
payment when due in order to effect timely payment thereof.
Upon receipt by the Agent of any such payment, the Agent
shall promptly send by wire transfer, in immediately
available like funds, to each Bank, to an individual or an
account designated by such Bank, such Bank's pro rata share
of such payment.
(b) If any Bank makes a Syndicated Loan on a day on
which the Company is to repay all or any part of any
Outstanding Syndicated Loan, such Bank shall, to the extent
necessary, apply the proceeds of the requested Syndicated
Loan to make such repayment, and only an amount equal to (i)
the excess, if any, of the amount being repaid over the
amount being borrowed shall be remitted by the Company to
the Agent for the account of such Bank as provided in 2.8
and (ii) the excess, if any, of the amount being borrowed
over the amount being repaid shall be remitted by the Bank
to the Agent for the account of the Company. If the Company
fails to repay all or any part of any Outstanding Syndicated
Loan denominated in Dollars on the last day of the
applicable Interest Period therefor, and if the Company
fails to deliver an election notice with respect to such
unpaid portion of the Outstanding Syndicated Loan in
accordance with the provisions of 2.4 and 4.1(a) hereof,
then, subject to satisfaction of the conditions precedent
set forth in 13 hereof, the Company shall be deemed to have
requested that the unpaid portion of the Outstanding
Syndicated Loan constitute a new Borrowing as a Base Rate
Loan. Nothing contained in this 4.4(b) shall obligate the
Banks in any way to make any Loans to the Company at any
time from and after the Final Maturity Date.
(c) Whenever a payment hereunder or under the Notes
becomes due on a day which is not a Business Day, the due
date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during
such extension (and shall not be considered overdue during
such extension), provided, however, that if such extension
would cause payment of interest on or principal of
Eurocurrency Rate Loans to be made in the next following
calendar month, such payment shall be made on the next
preceding Business Day.
4.5. Computations.
All computations of interest on the Loans shall be
based on (a) with respect to Eurocurrency Rate Loans and
Competitive Bid Loans, a 360-day year, and (b) with respect
to Base Rate Loans, a 365-day year, and paid for the actual
number of days elapsed.
4.6. Interest Limitation.
Notwithstanding any other term of this Agreement or any
Note or any other document referred to herein or therein,
the maximum amount of interest, together with any other
amounts or charges which may constitute interest under
applicable law, which may be charged to or collected from
any Person liable hereunder or under any Note by the Banks
shall be absolutely limited to, and shall in no event
exceed, the maximum amount of interest which could lawfully
be charged or collected under applicable law (including, to
the extent applicable, the provisions of Section 5197 of the
Revised Statutes of the United States of America, as
amended, 12 U.S.C. Section 85, as amended), so that the
maximum of all amounts constituting interest under
applicable law, howsoever computed, shall never exceed as to
any Person liable therefor such lawful maximum, and any term
of this Agreement or any Note or any other document referred
to herein or therein which could be construed as providing
for interest in excess of such lawful maximum shall be and
hereby is made expressly subject to and modified by the
provisions of this paragraph.
4.7. Indemnification.
In the event that the Company shall at any time (a)
repay or prepay (other than in accordance with the
provisions of 2.8 hereof) any principal of any Eurocurrency
Rate Loans or Competitive Bid Loans on a date other than the
last day of the Interest Period with respect thereto,
whether by reason of acceleration following an Event of
Default or otherwise, or (b) for any reason fail to borrow
any Loan with respect to which the Company gave a notice of
borrowing pursuant to 2.4 or 4.1(a) hereof at an interest
rate based on the Eurocurrency Rate or a Notice of
Competitive Bid Borrowing pursuant to 2.5.1(f) or prepay a
Loan as to which notice of prepayment has been given, the
Company shall indemnify the Banks against all losses, costs
or expenses incurred by the Banks in respect of the
Company's payment, prepayment or failure to borrow, on the
date of such payment or failure to borrow. Such losses,
costs or expenses shall include, but not be limited to (i)
any costs incurred by the Banks in carrying funds which were
to have been borrowed by the Company or in carrying funds to
cover the amount of any overdue principal of or overdue
interest on any Loan, (ii) any interest payable by the Banks
to Banks of the funds borrowed by the Banks in order to
carry the funds referred to in the immediately preceding sub-
clause (i), and (iii) any losses (including losses of
anticipated interest which would otherwise have been
required to be paid hereunder through the end of such then
existing or, as the case may be, commencing Interest Period)
incurred by the Banks in liquidating or re-employing funds
acquired from third parties to effect or maintain all or any
part of the Loans, provided that to the extent that the
reemployment formula set forth in 2.8 hereof is capable of
being employed to compute such losses, the Agent shall
employ such reemployment formula to compute such losses.
Any losses, costs or expenses payable by the Company to the
Banks pursuant to this 4.7 shall be without duplication of
any amounts paid by the Company pursuant to 2.8, 4.1 or
4.3 hereof.
4.8. Banks' Obligations Several.
The Banks' obligations hereunder shall be several and
not joint, and no Bank's obligations to lend shall be
affected by any other Bank's failure to make any Loan
hereunder.
4.9. Debt Rating Increase.
If the Agent determines that the Debt Rating equals or
exceeds "BBB-" by Standard & Poor's or "Baa3" by Moody's (a
"Debt Rating Increase"), the Agent shall promptly give
notice thereof to the Company and the Banks. In the event
of a split Debt Rating by the two rating agencies, the Agent
shall use the higher rating in its determination of a Debt
Rating Increase.
5. [INTENTIONALLY OMITTED].
6. COLLATERAL SECURITY AND GUARANTIES.
6.1. Security of Company.
The Secured Obligations shall be secured by a perfected
first priority security interest (subject only to Permitted
Liens entitled to priority under applicable law) in all of
the following, whether now owned or hereafter acquired,
including all books and records and other recorded data in
each case relating to the following: (a) "Accounts",
"Chattel paper" and "Instruments" of the Company, in each
case as such terms are defined in the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts, (b)
Inventory of the Company, (c) the Company's U.S. trademarks
(and U.S. applications and U.S. registrations thereof
(except for "intent to use" applications for trademark
registrations filed pursuant to Section 1(b) of the Lanham
Act, unless and until an Amendment to Allege Use or a
Statement of Use under Sections 1(c) and 1(d) of the Lanham
Act has been filed)), U.S. copyrights (and U.S. applications
and U.S. registrations thereof) and U.S. patents and U.S.
patent applications, in each case relating exclusively to
the Identified Brands (but with respect to the Playskool
brand, only U.S. trademarks (and U.S. applications and U.S.
registrations thereof) and U.S. copyrights (and U.S.
applications and U.S. registrations thereof), in each case
that did not arise from particular products, shall be
included in the Collateral, and (d) shares of Capital Stock
of Infogrames owned by the Company, in each case pursuant to
the terms of and as and to the extent provided in the
Security Documents to which the Company is a party.
6.2. Guaranties and Security of Restricted
Subsidiaries.
The Secured Obligations shall also be guaranteed
pursuant to the terms of the Guaranty. The obligations of
each of the Restricted Subsidiaries under the Guaranty shall
be in turn secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to
priority under applicable law) in all of the following,
whether now owned or hereafter acquired, including all books
and records and other recorded data in each case relating to
the following: (a) "Accounts", "Chattel paper" and
"Instruments" of each such Restricted Subsidiary, in each
case as such terms are defined in the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts, (b)
Inventory of each such Restricted Subsidiary, and (c) such
Restricted Subsidiary's U.S. trademarks (and U.S.
applications and U.S. registrations thereof (except for
"intent to use" applications for trademark registrations
filed pursuant to Section 1(b) of the Lanham Act, unless and
until an Amendment to Allege Use or a Statement of Use under
Sections 1(c) and 1(d) of the Lanham Act has been filed)),
U.S. copyrights (and U.S. applications and U.S.
registrations thereof) and U.S. patents and U.S. patent
applications, in each case relating exclusively to the
Identified Brands (but with respect to the Playskool brand,
only U.S. trademarks (and U.S. applications and U.S.
registrations thereof) and U.S. copyrights (and U.S.
applications and U.S. registrations thereof), in each case
that did not arise from particular products, shall be
included in the Collateral), in each case pursuant to the
terms of and as and to the extent provided in the Security
Documents to which such Restricted Subsidiary is a party.
6.3. Release of Collateral.
(a) The parties hereto acknowledge and agree that the
Agent, on behalf of the Banks and the Agent, shall release
its Liens on the Collateral at such time as each of the
following conditions are satisfied:
(i) for each of the four (4) consecutive fiscal
quarters of the Company most recently ended, the ratio
of Consolidated Total Funded Debt at the end of such
fiscal quarter to EBITDA for the Reference Period then
ended shall be less than or equal to 3.00:1.00;
(ii) the ratio of EBITDA for the Reference Period
most recently ended to Consolidated Total Interest
Expense for such Reference Period shall be greater than
or equal to 6.00:1.00;
(iii) the sum of (i) the Total Commitment plus
(ii) the "Total Commitment" under and as defined in the
Revolving Credit Agreement shall have been permanently
reduced to an amount less than or equal to
$400,000,000; and
(iv) no Default or Event of Default shall have
occurred and be continuing.
(b) Without limiting the foregoing, in the event that
any part of the Collateral is sold or otherwise disposed of
in connection with a sale, disposition or other transaction
permitted hereunder, the Liens on such Collateral granted
pursuant to any Security Document shall be automatically
released and the Agent shall execute and deliver to the
Company or the relevant Restricted Subsidiary, as the case
may be, all releases or other documents (including without
limitation, Uniform Commercial Code termination statements),
and take all other actions necessary or reasonably desirable
for the release of such Liens.
6.4. Limitation of Security.
Notwithstanding anything to the contrary contained in
this 6 or in any of the Security Documents, no Lien shall
be granted on any shares of stock of any Subsidiary of the
Company or any evidences of indebtedness of any Subsidiary
of the Company.
7. FEES.
7.1. Amendment Fee.
The Company agrees to pay to the Agent for the pro rata
account of each Bank on the Effective Date an amendment fee
(the "Closing Fee") in an amount equal to one-half of one
percent (0.50%) of such Bank's Commitment.
7.2. Agent's Fee.
The Company shall pay to the Agent for the Agent's own
account an Agent's fee (the "Agent's Fee") on the terms and
conditions set forth in the Fee Letter.
8. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Banks that:
8.1. Corporate Existence.
(a) Each of the Hasbro Companies (i) is a corporation
duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) has all
requisite corporate power to own its property and conduct
its business as now conducted and as presently contemplated,
and (iii) is in good standing as a foreign corporation and
is duly authorized to do business in each jurisdiction where
such qualification is necessary except where a failure to be
so qualified would not have a Material Adverse Effect.
(b) Each of the Hasbro Companies has adequate
corporate power and authority and has full legal right to
enter into each of the Loan Documents to which it is or is
to become a party, to perform, observe and comply with all
of its agreements and obligations under each of such
documents, and, with respect to the Company, to make all of
the borrowings contemplated by this Agreement.
8.2. Corporate Authority, etc.
The execution, delivery and performance by each of the
Hasbro Companies of each of the Loan Documents to which it
is a party, the performance by each of the Hasbro Companies
of all of its agreements and obligations under each of such
documents, and the making by the Company of all of the
borrowings contemplated by this Agreement, have been duly
authorized by all necessary corporate action on the part of
each of the Hasbro Companies and their respective
shareholders and do not and will not (i) contravene any
provision of any of their charter or by-laws (each as from
time to time in effect), (ii) conflict with, or result in a
breach of any material term, condition or provision of, or
constitute a default under or result in the creation of any
Lien upon any of the property of any of the Hasbro Companies
under any agreement, trust deed, indenture, mortgage or
other instrument to which any of the Hasbro Companies is or
may become a party or by which any of the Hasbro Companies
or any of the property of any of the Hasbro Companies is or
may become bound or affected, the consequences of which
would have a Material Adverse Effect, (iii) violate or
contravene any provision of any law, regulation, order,
ruling or interpretation thereunder or any decree, order or
judgment of any court or governmental or regulatory
authority, bureau, agency or official (all as from time to
time in effect and applicable to any of the Hasbro
Companies), except where such violation or contravention
would not have a Material Adverse Effect, (iv) require any
waivers, consents or approvals by any of the creditors of
any of the Hasbro Companies which have not been obtained,
(v) require any consents or approvals by any shareholders of
any of the Hasbro Companies (except such as will be duly
obtained on or prior to the Effective Date and will be in
full force and effect on and as of the Effective Date), or
(vi) require any approval, consent, order, authorization or
license by, or giving notice to, or taking any other action
with respect to, any governmental or regulatory authority or
agency under any provision of any applicable law (other than
any filings of this Agreement and the other Loan Documents
with the Securities and Exchange Commission required to be
made after the date hereof), except where the failure to do
so would not result in a Material Adverse Effect.
8.3. Binding Effect of Documents, etc.
Each of the Hasbro Companies has duly executed and
delivered each of the Loan Documents to which it is a party
and each of such documents is in full force and effect. The
agreements and obligations of each of the Hasbro Companies
contained in each of the Loan Documents to which it is a
party constitute its legal, valid and binding obligations
enforceable against it in accordance with their respective
terms except as enforceability is limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the
extent that the availability of the remedy of specific
performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor
may be brought.
8.4. Governmental Approvals.
The execution, delivery and performance by the Company
and any of its Subsidiaries of this Agreement and the other
Loan Documents to which the Company or any of its
Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby do not require the approval
or consent of, or filing with, any governmental agency or
authority other than those already obtained or made, and
except for filings in connection with the Security
Documents.
8.5. No Event of Default, etc.
No Default or Event of Default has occurred and is
continuing.
8.6. Chief Executive Offices.
Until the Agent receives notice of a change, the chief
executive offices of the Company and the offices where
substantially all of the material financial records and
books of account of the Company are kept, are located in
Pawtucket and/or East Providence, Rhode Island.
8.7. Title to Properties; Leases.
Except as indicated on Schedule 8.7 hereto, the Company
and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date or acquired since
that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that
date), subject to no Liens except Permitted Liens.
8.8. Financial Statements and Projections.
8.8.1. Fiscal Year.
Each of the Hasbro Companies has a fiscal year
ending on the last Sunday in December of each calendar
year, subject to adjustment pursuant to 9.13.
8.8.2. Financial Statements.
There has been furnished to the Banks (a) a
consolidated balance sheet of the Company and its
Subsidiaries as at December 26, 1999, a consolidated
statement of earnings, and a consolidated statement of
cash flows for the fiscal year then ended, audited by
KPMG LLP, the Company's independent certified public
accountants, and (b) an unaudited condensed
consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date and an
unaudited condensed consolidated statement of earnings
for the fiscal year then ended. Each such balance
sheet and statement of earnings has been prepared in
accordance with GAAP and fairly presents the financial
condition of the Company as at the close of business on
the date thereof and the results of operations for the
fiscal period then ended.
8.8.3. Projections.
The Company's projections of the annual operating
budgets of the Company and its Subsidiaries on a
consolidated basis, balance sheets and cash flow
statements for the 2001 to 2002 fiscal years have been
delivered to each Bank. To the knowledge of the
Company or any of its Subsidiaries as of the Effective
Date, no facts exist that (individually or in the
aggregate) would result in any material change in any
of such projections. The projections are based upon
estimates and assumptions believed to be reasonable by
the management of the Company at the time of
preparation thereof and reflect estimates of the
Company and its Subsidiaries of the results of
operations and other information projected therein
believed to be reasonable by the management of the
Company at the time of preparation thereof.
8.9. No Material Changes, Etc.
Since the Balance Sheet Date, there has been no event
or occurrence which has had a Material Adverse Effect.
Since the Balance Sheet Date, the Company has not made any
Restricted Payment except as permitted by 10.4 hereof.
8.10. Franchises, Patents, Copyrights, Etc.
Each of the Hasbro Companies possesses all material
franchises, patents, copyrights, trademarks, permits,
service marks, trade names, domain names, licenses and
permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now
conducted, without any known conflict or conflicts with any
rights of others which would, individually or in the
aggregate, have a Material Adverse Effect.
8.11. Litigation.
Except as set forth on Schedule 8.11 hereto and except
as required to be disclosed pursuant to 9.6, there are no
actions, suits, proceedings or investigations of any kind
pending or threatened against any of the Hasbro Companies
before any court, tribunal or administrative agency or board
which, if adversely determined, either in any case or in the
aggregate, in the opinion of management of the Company after
taking into account any available insurance, could
reasonably be expected to have a Material Adverse Effect.
8.12. No Materially Adverse Contracts, Etc.
None of the Hasbro Companies is subject to any charter,
corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which has or is expected
in the future to have a Material Adverse Effect. None of
the Hasbro Companies is a party to any contract or agreement
which has or is expected, in the judgment of the Company's
officers, to have any Material Adverse Effect.
8.13. Compliance With Other Instruments, Laws, Etc.
None of the Hasbro Companies is in violation of any
provision of its charter documents, by-laws, or, to the best
of the Company's knowledge, any agreement or instrument to
which it may be subject or by which it or any of its
properties may be bound or any decree, order, judgment, or
any statute, license, rule or regulation, in any of the
foregoing cases in a manner which would result in the
imposition of substantial penalties or a Material Adverse
Effect.
8.14. Taxes.
Each of the Hasbro Companies has filed all federal,
state and other income and all other tax returns, reports
and declarations due and required by any jurisdiction to
which any of them is subject. Each of the Hasbro Companies
has paid, or has made reasonable provision for payment of,
all material taxes (if any) which have or may become due and
payable pursuant to any of the said returns or pursuant to
any matters raised by audits or for other reasons known to
the Company, except for taxes the amount, applicability, or
validity of which are currently being contested by it in
good faith by appropriate proceedings and with respect to
which the Company has set aside on its books, in accordance
with GAAP, reserves reasonably deemed by it to be adequate
with respect thereto. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know no
basis for any such claim, except for taxes the amount,
applicability, or validity of which are currently being
contested by it in good faith by appropriate proceedings and
with respect to which the Company has set aside on its
books, in accordance with GAAP, reserves reasonably deemed
by it to be adequate with respect thereto.
8.15. Absence of Financing Statements, Etc.
Except for Permitted Liens, there is no financing
statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing
records, registry, or other public office, which purports to
cover, affect or give notice of any present or possible
future Lien on any assets or property of the Company or any
of its Subsidiaries (other than Foreign Subsidiaries) or
rights thereunder.
8.16. Perfection of Security Interest.
All filings, assignments, pledges and deposits of
documents or instruments have been made (or provision
therefor shall have been made to the reasonable satisfaction
of the Agent) and all other actions have been taken that are
legally permitted and are necessary or advisable, under
applicable law, to establish and perfect the Agent's
security interest in the Collateral, in each case pursuant
to the terms of the Security Documents. Except as permitted
by the Security Documents or as set forth on Schedule 10.2,
the Collateral and the Agent's rights with respect to the
Collateral are not subject to any material setoff, claims,
withholdings or other defenses other than reconciliations
with customers and vendors in the ordinary course of
business consistent with past practices. The Company or a
Restricted Subsidiary, as the case may be, is the owner of
the Collateral free from any Lien except for Permitted
Liens.
8.17. Indebtedness.
None of the Operating Subsidiaries of the Company has
any Indebtedness other than Indebtedness of the kind
expressly permitted by the provisions contained in 10.1 of
this Agreement. As of the Balance Sheet Date, all
Indebtedness of the Company and its Subsidiaries that is
required by GAAP to be shown on the consolidated balance
sheet of the Company and its Subsidiaries described in
8.8.2(b) hereof is shown on such consolidated balance
sheet.
8.18. True Copies of Charter and Other Documents.
The Hasbro Companies has furnished or caused to be
furnished to each of the Banks true and complete copies of
(a) all of the charter and other incorporation documents of
each of the Hasbro Companies (together with any and all
amendments thereto), and (b) the by-laws of each of the
Hasbro Companies (together with any and all amendments
thereto).
8.19. Employee Benefit Plans.
8.19.1. In General.
Except as would not reasonably be expected to have
a Material Adverse Effect, each Employee Benefit Plan
and each Guaranteed Pension Plan has been maintained
and operated in compliance in all material respects
with the provisions of ERISA and all Applicable Pension
Legislation and, to the extent applicable, the Code,
including but not limited to the provisions thereunder
respecting prohibited transactions and the bonding of
fiduciaries and other persons handling plan funds as
required by 412 of ERISA. The Company has heretofore
delivered to the Agent the most recently completed
annual report, Form 5500, with all required
attachments, and actuarial statement required to be
submitted under 103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
8.19.2. Terminability of Welfare Plans.
Except for severance payment arrangements and
except as disclosed in (i) the financial statements of
the Company and its Subsidiaries described in 8.8.2 or
delivered pursuant to 9.5 or (ii) the periodic and
other reports of the Company filed from time to time
with the Securities and Exchange Commission, no
Employee Benefit Plan, which is an employee welfare
benefit plan within the meaning of 3(1) or 3(2)(B) of
ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title
I, Part 6 of ERISA or the applicable state insurance
laws.
8.19.3. Guaranteed Pension Plans.
Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding
deficiency, the notice or lien provisions of 302(f) of
ERISA, or otherwise, has been timely made. No waiver
of an accumulated funding deficiency or extension of
amortization periods has been received with respect to
any Guaranteed Pension Plan, and neither the Company
nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment to a
Guaranteed Pension Plan pursuant to 307 of ERISA or
401(a)(29) of the Code. No liability to the PBGC
(other than required insurance premiums, all of which
have been paid) has been incurred by the Company or any
ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event
(other than an ERISA Reportable Event as to which the
requirement of thirty (30) days notice has been
waived), or any other event or condition which presents
a material risk of termination of any Guaranteed
Pension Plan by the PBGC. As of the Effective Date,
based on the latest valuation of each Guaranteed
Pension Plan (which in each case occurred within twelve
months of the date of this representation), and on the
actuarial methods and assumptions employed for that
valuation, the aggregate benefit liabilities of all
such Guaranteed Pension Plans within the meaning of
4001 of ERISA did not exceed the aggregate value of
the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities
and assets of any Guaranteed Pension Plan with assets
in excess of benefit liabilities.
8.19.4. Multiemployer Plans.
Neither the Company nor any ERISA Affiliate has
incurred any material liability that remains
outstanding (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under 4201 of
ERISA or as a result of a sale of assets described in
4204 of ERISA. Neither the Company nor any ERISA
Affiliate has been notified that any Multiemployer Plan
is in reorganization or insolvent under and within the
meaning of 4241 or 4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that
any Multiemployer Plan intends to terminate or has been
terminated under 4041A of ERISA.
8.20. Holding Company and Investment Company Acts.
Neither the Company nor any of its Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company", as such
terms are defined in the Public Utility Holding Company Act
of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
8.21. Certain Transactions.
To the best of the Company's knowledge, and except as
disclosed in the Company's Forms 10-K or proxy statements
(or would be so disclosed but for the fact that the filing
thereof is not yet due), each as filed with the Securities
and Exchange Commission, none of the officers, directors, or
employees of any of the Hasbro Companies is presently a
party to any transaction (other than arms-length
transactions pursuant to which any of the Hasbro Companies
makes payments in the ordinary course of business upon terms
no less favorable than the such Person could obtain from
third parties,) with the Company or any of its Subsidiaries
(other than (i) for services as employees, officers and
directors, or (ii) for all related transactions with any one
Person, transactions involving an aggregate amount not in
excess of $60,000 at any one time), including, without
limitation, any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer,
director or such employee or any corporation, partnership,
trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer,
director, trustee or partner.
8.22. Use of Proceeds.
8.22.1. General.
The proceeds of the Loans shall be used for
working capital and general corporate purposes;
provided, however, that Borrowings made under the
Foreign Sublimit may be used solely to satisfy the
Company's obligations pursuant to guaranties of Foreign
Scheduled Facilities.
8.22.2. Regulations U and X.
No portion of any Loan is to be used for the
purpose of purchasing or carrying any "margin security"
or "margin stock" as such terms are used in Regulations
U and X of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Parts 221 and 224.
8.23. Environmental Compliance.
The Company has taken all necessary steps to
investigate the past and present condition and usage of the
Real Estate and the operations conducted thereon and, based
upon such diligent investigation, has determined that,
except as set forth on Schedule 8.23 hereto or except as
would not reasonably be expected to have a Material Adverse
Effect:
(a) none of the Company, its Subsidiaries or any
operator of the Real Estate or any operations thereon
is in violation, or alleged violation, of any judgment,
decree, order, law, license, rule or regulation
pertaining to environmental matters, including without
limitation, those arising under the Resource
Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any
state, local or foreign law, statute, regulation,
ordinance, order or decree relating to health, safety
or the environment (hereinafter "Environmental Laws");
(b) neither the Company nor any of its
Subsidiaries has received notice within the last five
(5) years from any third party including, without
limitation, any Governmental Authority, (i) that any
one of them has been identified by the United States
Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect
to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B; (ii) that any hazardous
waste, as defined by 42 U.S.C. 6903(5), any hazardous
substances as defined by 42 U.S.C. 9601(14), any
pollutant or contaminant as defined by 42 U.S.C.
9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Substances") which
any one of them has generated, transported or disposed
of has been found at any site at which a Governmental
Authority has conducted or has ordered that any Company
or any of its Subsidiaries conduct a remedial
investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is
or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances;
and
(c) none of the Company and its Subsidiaries is
required under any applicable Environmental Law to
perform Hazardous Substances site assessments, or to
remove or remediate Hazardous Substances, or to give
notice to any Governmental Authority or record or
deliver to other Persons an environmental disclosure
document or statement by virtue of the transactions set
forth herein and contemplated hereby.
8.24. Subsidiaries.
As of December 26, 1999, the Company had no active
Subsidiaries that are not listed in Exhibit 21 to the Form
10-K of the Company for the fiscal year ended December 26,
1999, as filed with the Securities and Exchange Commission,
a copy of such Exhibit 21 is attached hereto as Schedule
8.24, except for certain inactive or immaterial Subsidiaries
that would not, if taken as a whole, constitute a
Significant Subsidiary. During the period between
December 26, 1999 and the Effective Date, the Company has
had no Significant Subsidiaries other than (a) Hasbro
International, Inc. and Tiger Electronics, Ltd., each a
Delaware corporation, and (b) Wizards of the Coast, Inc., a
Washington corporation.
8.25. Disclosure.
No representation or warranty made by any of the Hasbro
Companies in this Agreement or in any agreement, instrument,
document, certificate, statement or letter furnished to the
Agent or the Banks by or on behalf of the any of the Hasbro
Companies in connection with any of the transactions
contemplated by any of the Loan Documents contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained therein not misleading in light of the
circumstances in which they are made. Except as disclosed
herein or otherwise disclosed in writing to the Agent and
the Banks, there is no fact known to the Company which has a
Material Adverse Effect, or which is reasonably likely in
the future to have a Material Adverse Effect, exclusive of
effects resulting from changes in general economic
conditions, legal standards or regulatory conditions.
8.26. Indebtedness of Foreign Subsidiaries.
All Indebtedness of Foreign Subsidiaries owing to any
Bank or Bank Affiliate has been incurred under the
facilities described on Schedule 8.26 hereto (the "Foreign
Scheduled Facilities"), as such Schedule 8.26 may be updated
from time to time by the Company by delivering a copy of
such updated Schedule 8.26 to the Agent and each Bank,
provided that (a) no revision to Schedule 8.26 that purports
to increase the aggregate amount of the Foreign Scheduled
Facilities shall be effective without the prior written
consent of the Agent (not to be unreasonably withheld) and
(b) no revision to Schedule 8.26 that purports to decrease
or eliminate a Foreign Scheduled Facility shall be effective
without the consent (not to be unreasonably withheld) of the
creditor under such Foreign Scheduled Facility.
8.27. Bank Accounts.
Schedule 8.27 sets forth the account numbers and
location of all bank accounts of the Company or any of its
Subsidiaries included in the Collateral or otherwise into
which proceeds of the Collateral are paid as of the
Effective Date.
9. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, so long as any
Loan or Note is outstanding or any Bank has any obligation
to make any Loans:
9.1. Punctual Payment.
The Company will duly and punctually pay or cause to be
paid the principal and interest on the Loans, all Fees and
all other amounts provided for in this Agreement and the
other Loan Documents to which the Company or any of its
Subsidiaries is a party, all in accordance with the terms of
this Agreement and such other Loan Documents.
9.2. Use of Loan Proceeds.
The Company shall use the proceeds of the Loans solely
for the purposes set forth in 8.22.
9.3. Maintenance of Office.
The Company will maintain its chief executive offices
in Pawtucket and/or East Providence, Rhode Island, or at
such other place or places in the United States of America
as the Company shall designate upon written notice to the
Agent, where notices, presentations and demands to or upon
the Company in respect of the Loan Documents may be given or
made.
9.4. Records and Accounts.
The Company will (a) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of
account in which full, true and correct entries will be made
in accordance with GAAP or, in the case of Foreign
Subsidiaries, statutory reporting principles, (b) maintain
adequate accounts and reserves for all taxes (including
income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves, and (c) at
all times engage KPMG LLP or other independent certified
public accountants reasonably satisfactory to the Agent as
the independent certified public accountants of the Company
and will not permit more than thirty (30) days to elapse
between the cessation of such firm's (or any successor
firm's) engagement as the independent certified public
accountants of the Company and the appointment in such
capacity of a successor firm as shall be reasonably
satisfactory to the Agent.
9.5. Financial Statements, Certificates and
Information.
The Company will deliver to each of the Banks:
(a) as soon as practicable, but, in any event not
later than one hundred (100) days after the end of each
fiscal year of the Company, the consolidated and
consolidating balance sheet of the Company and its
Subsidiaries as at the end of such year, and the related
consolidated and consolidating statement of earnings and the
consolidated statement of cash flows, with each setting
forth in comparative form the figures for the previous
fiscal year and all such consolidated statements to be in
reasonable detail, prepared in accordance with GAAP, and
certified without qualification (except as to changes in
GAAP with which such accountants concur) and without an
expression of uncertainty as to the ability of the Company
or any of its Subsidiaries to continue as going concerns by
KPMG LLP or by other independent certified public
accountants reasonably satisfactory to the Agent, together
with a written statement from such accountants to the effect
that they have read a copy of this Agreement, and that, in
making the examination necessary to said certification, they
have obtained no knowledge of any Default or Event of
Default, or, if such accountants shall have obtained
knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or
Event of Default; provided that such accountants shall not
be liable to the Banks for failure to obtain knowledge of
any Default or Event of Default;
(b) as soon as practicable, but in any event not later
than sixty (60) days after the end of each of the first
three (3) fiscal quarters of each fiscal year of the
Company, copies of the unaudited consolidated and
consolidating balance sheet of the Company and its
Subsidiaries, each as at the end of such quarter, and the
related consolidated and consolidating statement of earnings
and the consolidated statement of cash flows for the portion
of the Company's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with GAAP, together with a
certificate of any Authorized Financial Officer of the
Company that, subject to changes resulting from audit and
year-end adjustments, the information contained in such
financial statements fairly presents the financial condition
and results of operations of the Company and its
Subsidiaries for the periods covered;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a statement, in
the form attached hereto as Exhibit E (a "Compliance
Certificate"), certified by any Authorized Financial Officer
of the Company that the Company is in compliance with the
covenants contained in 9, 10 and 11 as of the end of the
applicable period and setting forth in reasonable detail
computations evidencing such compliance with the financial
covenants set forth in 11 and (if applicable)
reconciliations to reflect changes in GAAP since the Balance
Sheet Date;
(d) contemporaneously with the filing or mailing
thereof, copies of all other financial statements and
reports as the Company shall send to any holders of
Indebtedness of the Company or the stockholders of the
Company, and copies of all regular and periodic reports
which the Company may be required to file with the
Securities and Exchange Commission or any similar or
corresponding federal or state governmental commission,
department or agency substituted therefor;
(e) (i) within fifteen (15) Business Days after the
end of each fiscal month (except December and January), a
net accounts receivable aging report with respect to the
"Accounts" (as such term is defined in the Uniform
Commercial Code as in effect in The Commonwealth of
Massachusetts) of the Company and the Restricted
Subsidiaries, (ii) (A) within fifteen (15) Business Days
after the end of December, a gross accounts receivable aging
report with respect to the "Accounts" (as such term is
defined in the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts) of the Company and the
Restricted Subsidiaries, and (B) within thirty (30) Business
Days after the end of December, a net accounts receivable
aging report with respect to the "Accounts" (as such term is
defined in the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts) of the Company and the
Restricted Subsidiaries, and (iii) within fifteen (15)
Business Days after the end of January, a gross accounts
receivable aging report with respect to the "Accounts" (as
such term is defined in the Uniform Commercial Code as in
effect in The Commonwealth of Massachusetts) of the Company
and the Restricted Subsidiaries;
(f) (i) within fifteen (15) Business Days after the
end of each fiscal month (except December and January), an
inventory designation report in form and substance
reasonably satisfactory to the Agent, and (ii) within thirty
(30) Business Days after the end of December and January, an
inventory designation report in form and substance
reasonably satisfactory to the Agent;
(g) within fifteen (15) Business Days after the end of
each fiscal month, a report as to the Foreign Scheduled
Facilities and outstandings thereunder by facility and in
form and substance reasonably satisfactory to the Agent;
(h) as soon as practicable, but in any event not later
than sixty (60) days after the end of each fiscal year, the
budget of the Company for the next fiscal year, and from
time to time upon the reasonable request of the Agent,
projections of the Company and its Subsidiaries updating
those projections delivered to the Banks and referred to in
8.8.3 or, if applicable, updating any later such
projections delivered in response to this 9.5(h); and
(i) from time to time such other financial data and
information as the Agent or any Bank may reasonably request.
9.6. Notices.
9.6.1. Defaults.
The Company will promptly notify the Agent and
each of the Banks in writing of the occurrence of any
Default or Event of Default, together with a reasonably
detailed description thereof, and the actions the
Company proposes to take with respect thereto. If (i)
any Person shall give any notice or take any other
action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement
or any other note, evidence of indebtedness, indenture
or other obligation to which or with respect to which
the Company or any of its Subsidiaries is a party or
obligor, whether as principal, guarantor, surety or
otherwise, and (ii) the aggregate amount of all of the
indebtedness of the Company and its Subsidiaries in
respect of such claimed defaults shall exceed
$15,000,000 at any one time, the Company shall
forthwith give written notice thereof to the Agent and
each of the Banks, describing the notice or action and
the nature of the claimed default.
9.6.2. Environmental Events.
The Company will promptly give notice to the Agent
and each of the Banks (a) of any violation of any
Environmental Law that the Company or any of its
Subsidiaries reports in writing or is reportable by
such Person in writing (or for which any written report
supplemental to any oral report is made) to any
Governmental Authority that would reasonably be
expected to have a Material Adverse Effect and (b) upon
becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from
any agency of potential environmental liability, of any
Governmental Authority that would reasonably be
expected to have a Material Adverse Effect.
9.6.3. Notification of Claim against
Collateral.
The Company will, immediately upon becoming aware
thereof, notify the Agent and each of the Banks in
writing of any material setoff, claims, withholdings or
other defenses to which any of the Collateral, or the
Agent's rights with respect to the Collateral, are
subject, other than reconciliations with customers and
vendors in the ordinary course of business consistent
with past practices.
9.6.4. Notices Concerning Inventory
Collateral.
The Company shall provide to the Agent prompt
notice of any physical count of the Company's or any of
the Restricted Subsidiaries' Inventory, together with a
copy of the results thereof certified by the Company or
such Restricted Subsidiary.
9.6.5. Notice of Litigation and Judgments.
The Company will, and will cause each of its
Subsidiaries to, give notice to the Agent and each of
the Banks in writing within fifteen (15) days of
becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and
proceedings affecting the Company or any of its
Subsidiaries or to which the Company or any of its
Subsidiaries is or becomes a party involving an
uninsured claim against the Company or any of its
Subsidiaries that could reasonably be expected to have
a Material Adverse Effect and stating the nature and
status of such litigation or proceedings. The Company
will, and will cause each of its Subsidiaries to, give
notice to the Agent and each of the Banks, in writing,
in form and detail reasonably satisfactory to the
Agent, within ten (10) days of any judgment not covered
by insurance, final or otherwise, against the Company
or any of its Subsidiaries in an amount in excess of
$15,000,000.
9.7. Corporate Existence; Maintenance of
Properties.
The Company will, and will cause each of the other
Hasbro Companies to, maintain its legal existence and good
standing under the laws of its jurisdiction of
incorporation, maintain its qualification to do business in
each state in which the failure to do so would have a
Material Adverse Effect, and maintain all of its rights and
franchises reasonably necessary to the conduct of its
business. The Company will cause all of its properties and
those of the other Hasbro Companies used or useful in the
conduct of its business or the business of the Hasbro
Companies to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted)
and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried
on in connection therewith may be properly and
advantageously conducted at all times, and will cause each
of the Hasbro Companies to continue to engage primarily in
the businesses now conducted by them and in related
businesses; provided, however, that, subject to the
provisions of 10.5.2 hereof, nothing in this 9.7 shall
prevent the Company from discontinuing the operation and
maintenance of any of its properties, or those of its
Subsidiaries, or from dissolving or liquidating any
Subsidiary or from consolidating or merging any Subsidiary
with or into another Subsidiary or with and into the
Company, if such discontinuance, dissolution or liquidation,
consolidation or merger is, in the judgment of the Company,
desirable in the conduct of the business of the Company and
its Subsidiaries on a consolidated basis and which do not in
the aggregate have a Material Adverse Effect.
9.8. Insurance.
The Company will maintain, and will cause each of its
Subsidiaries to maintain, with financially sound and
reputable insurance companies, funds or underwriters, or by
reasonable self-insurance, insurance of the kinds, covering
the risks and in the relative proportionate amounts usually
carried by reasonable and prudent companies conducting
businesses similar to that of the Company and otherwise in
accordance with the terms of the Security Documents to which
such Person is a party.
9.9. Taxes.
The Company will, and will cause each of the other
Hasbro Companies to, duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue,
all taxes, assessments and other governmental charges (other
than taxes, assessments and other governmental charges
imposed by foreign jurisdictions which in the aggregate are
not material to the business or assets of the Company and
its Subsidiaries on a consolidated basis) imposed upon it
and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as
all claims for labor, materials, or supplies, which if
unpaid might by law become a lien or charge upon any of its
property; provided, however, that any such tax, assessment,
charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or such
Subsidiary shall have set aside on its books, in accordance
with GAAP, adequate reserves with respect thereto; and
provided, further, that the Company and such Subsidiary will
pay or arrange for the bonding of all such taxes,
assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien which may
have attached as security therefor.
9.10. Access.
The Company will, and will cause each of the other
Hasbro Companies to, (a) permit the Agent, by its
representatives and agents, to inspect any of the
properties, including, without limitation, corporate books,
computer files and tapes and financial records of each of
the Hasbro Companies, to examine and make copies of the
books of accounts and other financial records of each of the
Hasbro Companies at such reasonable times and intervals as
the Agent may determine, and (b) permit each of the Banks to
discuss the affairs, finances and accounts of each of the
Hasbro Companies with, and to be advised as to the same by,
their respective officers at such reasonable times and
intervals as the Banks may designate. The Banks and the
Agent agree that they will treat in confidence all financial
information with respect to the Company and its Subsidiaries
and all information obtained during such inspection or
discussion or pursuant to 9.5 which has not become public
without violation hereof, and will not, without the consent
of the Company, disclose such information to any third party
or any trust or investment employee or trust or investment
officer of any Bank, and, if any representative or agent of
the Banks or the Agent shall not be an employee of one of
the Banks or the Agent or any affiliate of the Banks or the
Agent, such designee shall be reputable and of recognized
standing and shall agree in writing to treat in confidence
the information obtained during any such inspection and,
without the prior written consent of the Company, not to
disclose such information to any third party or make use of
such information for personal gain. Notwithstanding the
foregoing, the Company hereby authorizes the Agent and each
of the Banks to disclose information obtained pursuant to
this Agreement to banks or other financial institutions who
are participants or potential participants in or assignees
of the Loans made or to be made hereunder (provided, that
prior to any such disclosure to any such participant,
potential participant or assignee, such Person shall have
agreed to be bound by the provisions of this 9.10 and 22
pursuant to a confidentiality agreement substantially in the
form of Exhibit I hereto and provided to the Company), and
where required by applicable law or required or requested by
governmental or regulatory authorities.
9.11. Compliance with Laws, Contracts, Licenses, and
Permits.
The Company will, and will cause each of the other
Hasbro Companies to, comply with (i) all applicable laws and
regulations wherever its business is conducted, including,
without limitation, Environmental Laws, except where the
failure to comply is not reasonably likely to have a
Material Adverse Effect, (ii) the provisions of its charter
documents and by-laws, and (iii) all agreements and
instruments by which it or any of its properties may be
bound except where the failure to comply is not reasonably
likely to have a Material Adverse Effect, and (iv) all
applicable decrees, orders, and judgments, except where the
failure to comply is not reasonably likely to have a
Material Adverse Effect. If at any time while any Loan or
Note is outstanding or any Bank has any obligation to make
Loans hereunder, any authorization, consent, approval,
permit or license from any officer, agency or
instrumentality of any government shall become necessary or
required in order that the Company may fulfill any of its
obligations hereunder, the Company will promptly take or
cause to be taken all reasonable steps within the power of
the Company to obtain such authorization, consent, approval,
permit or license and furnish the Banks with evidence
thereof.
9.12. Employee Benefit Plans.
The Company will (a) promptly upon filing the same with
the Department of Labor or Internal Revenue Service upon
request of the Agent, furnish to the Agent a copy of the
most recent actuarial statement required to be submitted
under 103(d) of ERISA and Annual Report, Form 5500, with
all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch,
furnish to the Agent any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under
302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA,
or in respect of a Multiemployer Plan, under 4041A, 4202,
4219, 4242, or 4245 of ERISA.
9.13. Fiscal Year.
The Company will have a fiscal year which ends on the
last Sunday in December of each calendar year. The Company
may change its fiscal year upon (a) sixty (60) days prior
written notice to the Agent and the Banks and (b) in the
case of a change in fiscal year where the new fiscal year
end is not within forty-five (45) days of the fiscal year
end specified in the first sentence of this 9.13, receipt
by the Company of the prior written consent of the Majority
Banks, which consent shall not be unreasonably withheld,
provided that the granting of such consent by the Majority
Banks shall be conditioned upon the Company's entering into
such appropriate amendments to this Agreement, and
delivering therewith such supplemental documents,
agreements, certificates, accounting reports, and legal
opinions, as may be reasonably requested by the Majority
Banks in order to reflect the impact of such change in
fiscal year on the terms hereof.
9.14. Additional Significant Subsidiaries and
Restricted Subsidiaries.
Within thirty (30) days after the formation or
acquisition by the Company or its Subsidiaries of any Person
which is not designated in this Agreement as a Hasbro
Company and otherwise meets the conditions set forth in the
definition of "Significant Subsidiary" herein for
constituting a Significant Subsidiary or meets the
conditions set forth in the definition of "Restricted
Subsidiary" herein for constituting a Restricted Subsidiary,
such Person will be deemed to be a Hasbro Company under this
Agreement and the Company will cause such Person to observe
all the obligations and be bound by all the limitations set
forth in this Agreement with respect to Hasbro Companies,
including, without limitation, if such Subsidiary is a
Significant Subsidiary, requiring the execution and delivery
of a Subordination Agreement in the form of, mutatis
mutandis, Exhibit F hereto; and if such Subsidiary is a
Restricted Subsidiary, requiring the execution and delivery
of a joinder agreement, in form and substance reasonably
satisfactory to the Agent, to the Guaranty and the
Subsidiary Security Agreement, together with other
documents, certificates and instruments (including
Perfection Certificates and UCC financing statements)
required to be delivered pursuant to such Security Documents
and otherwise as may be reasonably requested by the Agent.
Once any Person has been so designated as a Hasbro Company
hereunder, such Person shall continue to be a Hasbro Company
hereunder until the earlier of (i) the date on which such
Person ceases to be a Subsidiary of the Company in
accordance with the terms of 10.5.2 hereof or the last
sentence of 9.6 hereof, and (ii) the date on which such
Person shall have performed in full its obligations under
the Loan Documents and the Loan Documents to which such
Person is a party have ceased to be in force and effect.
9.15. Debt Ratings.
Promptly upon the issuance of any Debt Rating or the
change in any existing Debt Rating, the Company shall give
written notice of such Debt Rating and of the resultant Debt
Rating to the Agent. The Agent promptly shall furnish
copies of each of such notices to the Banks.
9.16. Agency Account Agreements.
The Company shall maintain the lock box account
maintained by the Company with Bank of America, N.A. as of
the date hereof, provided, however, if the Company
terminates such lock box account pursuant to 10.13 or
otherwise instructs account debtors or other obligors to
remit payments to an account other than such lock box
account, the Company shall have established new cash
management arrangements on terms reasonably satisfactory to
the Agent with financial institutions which have executed
agency account agreements in form and substance reasonably
satisfactory to the Agent.
9.17. Further Assurances.
The Company will cooperate with the Banks and execute
such further instruments and documents as the Banks shall
reasonably request to carry out to their reasonable
satisfaction the transactions contemplated by this Agreement
and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, so long as any
Loan or Note is outstanding or any Bank has any obligation
to make any Loans:
10.1. Restrictions on Indebtedness.
The Company will not permit any Operating Subsidiary of
the Company to create, incur, assume, guarantee or be or
remain liable with respect to, contingently or otherwise,
any Indebtedness other than:
(a) Intercompany Indebtedness of Operating
Subsidiaries of the Company;
(b) Indebtedness of Foreign Subsidiaries,
provided that the aggregate amount of such Indebtedness
of Foreign Subsidiaries guaranteed by the Company or
any Hasbro Company shall not exceed the aggregate
amount of the Foreign Scheduled Facilities;
(c) Subordinated Debt or other long term
unsecured Indebtedness having a maturity at least one
(1) year after the Final Maturity Date and providing
for no payments of principal prior to the Final
Maturity Date; provided that, in the case of the
incurrence of additional Subordinated Debt or other
long term unsecured Indebtedness by such Subsidiary
after the Effective Date, (i) the Company applies the
net cash proceeds of such additional Subordinated Debt
or other long term unsecured Indebtedness in accordance
with 2.10(a)(iii) and (ii) no Default or Event of
Default has occurred and is continuing at the time of
the incurrence of such additional Indebtedness or would
result after giving effect thereto;
(d) Indebtedness incurred in connection with the
acquisition after the date hereof of any real or
personal property by such Subsidiary or under any
Capitalized Lease, provided that the aggregate
principal amount of such Indebtedness of such
Subsidiaries shall not exceed the aggregate amount of
$10,000,000 at any one time;
(e) Indebtedness to the Banks and the Agent
arising under any of the Loan Documents and the "Loan
Documents" as such term is defined in the Revolving
Credit Agreement;
(f) sales of receivables in connection with asset
dispositions permitted under 10.5.2;
(g) other Indebtedness existing on the date
hereof and described on Schedule 10.1 hereto; and
(h) other Indebtedness in an aggregate principal
amount not to exceed $25,000,000 outstanding at any
time.
10.2. Restrictions on Liens.
The Company will not, and will not permit any
Subsidiary (other than any Foreign Subsidiary) to, (a)
create or incur or suffer to be created or incurred or to
exist any Lien upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon
the income or profits therefrom; (b) transfer any of such
property or assets or the income or profits therefrom for
the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire,
or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or
purchase money security agreement, device or arrangement; or
(d) sell, assign, pledge or otherwise transfer any
"receivables" as defined in clause (g) of the definition of
the term "Indebtedness," with or without recourse (except
the conversion or exchange of accounts receivable into or
for notes receivable in connection with the compromise or
collection thereof, or as otherwise permitted by 10.5.2);
provided that the Company or any of its Subsidiaries may
create or incur or suffer to be created or incurred or to
exist:
(i) Liens to secure taxes, assessments and other
government charges or claims for labor, material or
supplies, but only to the extent that and so long as
the payment thereof shall not at the time be required
to be made in accordance with 9.9 hereof;
(ii) deposits or pledges made in connection with,
or to secure payment of, worker's compensation,
unemployment insurance, old age pensions or other
social security or insurance-related obligations, or to
secure the performance of bids, tenders, contracts
(other than those relating to borrowed money) or leases
(other than Capitalized Leases), or to secure statutory
obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds or
obligations required in the ordinary course of
business;
(iii) Liens in respect of judgments or awards
that have been in force for less than the applicable
appeal period so long as execution is not levied
thereunder or in respect of which the Company or the
appropriate Subsidiary of the Company shall at the time
in good faith be prosecuting an appeal or a proceeding
for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(iv) Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens arising in the
ordinary course of business, in existence less than one
hundred twenty (120) days from the date of creation
thereof in respect of obligations not overdue or being
contested in good faith by appropriate proceedings,
with respect to which obligations the Company has set
aside on its books reserves in accordance with GAAP;
(v) encumbrances consisting of easements, rights
of way, zoning restrictions, restrictions on the use of
real property and defects and irregularities in the
title thereto, landlord's or lessor's liens under
leases to which the Company or a Subsidiary of the
Company is a party, and other minor Liens, none of
which in the opinion of the Company interferes
materially with the use of the property affected in the
ordinary conduct of the business of the Company and its
Subsidiaries, which defects do not individually or in
the aggregate have a material adverse effect on the
business of the Hasbro Companies, considered as a
whole;
(vi) Liens consisting of purchase money security
interests in or purchase money mortgages on real or
personal property acquired after the date hereof to
secure purchase money Indebtedness incurred in
connection with the acquisition of such property or
Capitalized Leases, which Liens cover only the real or
personal property so acquired or leased provided that
the aggregate amount of Indebtedness secured by such
Liens and Capitalized Leases does not exceed
$50,000,000 outstanding at any time;
(vii) Liens existing on the date hereof and
listed on Schedule 10.2 hereto;
(viii) Liens securing the Secured Obligations
in favor of the Agent for the benefit of the Banks and
the Agent;
(ix) Liens on the property or assets of a Person
which becomes a Subsidiary of the Company after the
date hereof securing Indebtedness of such Subsidiary
permitted under 10.1 provided that (i) such Liens
existed at the time such Person became such a
Subsidiary and were not created in anticipation thereof
and (ii) any such Lien is not spread to cover any
property or assets of such Person after the time such
person becomes a Subsidiary;
(x) Liens (not otherwise permitted hereunder)
which secure obligations not exceeding $15,000,000 in
aggregate amount at any time outstanding;
(xi) Liens existing on assets or properties at the
time of the acquisition thereof by the Company or any
Subsidiary of the Company which were not created in
anticipation of the acquisition thereof by the Company
or such Subsidiary, and which do not materially
interfere with the use, occupancy, operation and
maintenance of the property or assets subject thereto
or extend to or cover any assets or property of the
Company or such Subsidiary other than the assets or
property being acquired or secure any Indebtedness not
permitted under 10.1;
(xii) any encumbrance or restriction
(including, without limitation, put and call agreements
and transfer restrictions, but not pledges) with
respect to the Capital Stock of any joint venture or
similar arrangement created pursuant to the joint
venture or similar agreements with respect to such
joint venture or similar arrangement; and
(xiii) a Lien on the shares of Capital Stock of
Infogrames and other Collateral covered by the Company
Stock Pledge Agreement to secure the Company's
obligations under a collar or other hedging agreement
between the Company and a third party reasonably
satisfactory to the Agent to hedge against fluctuations
in the price of such shares provided that (A) such
agreement is on terms and conditions reasonably
satisfactory to the Agent, (B) such Lien is limited to
the Collateral covered by the Company Stock Pledge
Agreement, and (C) the Agent, for the benefit of the
holders of Secured Obligations, has (x) a perfected
second priority security interest in and Lien upon such
shares (subject to Permitted Liens entitled to priority
under applicable law) and (y) a perfected security
interest in the Company's rights under such agreement.
10.3. Restrictions on Investments.
The Company will not, and will not permit any of its
Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) securities with maturities of one (1) year or
less from the date of acquisition issued or fully
guaranteed or insured by the United States Government
or any agency thereof;
(b) certificates of deposit and time deposits,
bankers acceptances and overnight bank deposits of any
Bank or of any commercial bank having capital and
surplus in excess of $500,000,000;
(c) repurchase obligations of any Bank or of any
commercial bank having capital and surplus in excess of
$500,000,000, having a term of not more than 30 days
with respect to securities issued or fully guaranteed
or insured by the United States Government or any
agency or instrumentality thereof;
(d) commercial paper of a domestic issuer rated
at least "A2" or the equivalent thereof by Standard &
Poor's or any successor rating agency or "P-2" or the
equivalent thereof by Moody's or any successor rating
agency (or if at such time neither is issuing ratings,
then a comparable rating of such other nationally
recognized rating agency as shall be approved by the
Agent in its reasonable judgment)
(e) securities with maturities of one (1) year or
less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of
the United States, by any political subdivision or
taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities
of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as
the case may be) are rated at least "A" by Standard &
Poor's or any successor rating agency or "A" by Moody's
or any successor rating agency (or if at such time
neither is issuing ratings, then a comparable rating of
such other nationally recognized rating agency as shall
be approved by the Agent in its reasonable judgment);
(f) securities with maturities of one (1) year or
less from the date of acquisition backed by standby
letters of credit issued by any Bank or any commercial
bank having capital and surplus in excess of
$500,000,000;
(g) shares of money market funds that are subject
to the risk limiting conditions of Rule 2a-7 or any
successor rule of the Securities and Exchange
Commission under the Investment Company Act of 1940, as
amended;
(h) investments similar to any of the foregoing
denominated in foreign currencies approved by the board
of directors or Treasurer of the Company, in each case
provided in clauses (a), (b) and (d) above, maturing
within twelve (12) months after the date of
acquisition;
(i) Investments existing on the date hereof;
(j) Investments arising from payments under the
Guaranty or guaranties of the Foreign Scheduled
Facilities;
(k) Investments received as proceeds of asset
dispositions permitted by 10.5.2;
(l) Investments consisting of loans and advances
to officers, directors and employees for moving,
entertainment, travel and other similar expenses and
other Investments in connection with the relocation of
employees in the ordinary course of business;
(m) Investments by the Company or a Subsidiary of
the Company in Subsidiaries formed for the purpose of
consummating Permitted Acquisitions or acquired in
connection with Permitted Acquisitions;
(n) Investments in the Company or any Subsidiary
of the Company, provided that neither the Company nor
any Restricted Subsidiary shall make any Investment in
any Foreign Subsidiary unless (i) such Investment is in
the ordinary course of business or is necessary in the
reasonable judgment of management of the Company for
the operation of the business of any Foreign Subsidiary
or Foreign Subsidiaries or (ii) after giving effect to
such Investment, all such Investments in Foreign
Subsidiaries made pursuant to this subclause (ii) do
not exceed $100,000,000 outstanding at such time.
(o) Investments permitted by 10.5.
(p) Investments in the nature of pledges or
deposits with respect to leases or utilities provided
to third parties in the ordinary course of business or
otherwise described under 10.2;
(q) Investments representing evidences of
Indebtedness, securities or other property received
from another Person in connection with any bankruptcy
or proceeding or other reorganization of such other
Person or as a result of foreclosure, perfection or
enforcement of any Lien or exchange for evidences of
Indebtedness, securities or other property of such
other Person;
(r) Investments constituting Capital
Expenditures, to the extent permitted by 11.4;
(s) Investments under any forward contract,
futures contract, swap, option or other financing
agreement or arrangement (including, without
limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon
interest rates, currency exchange rates, commodities or
other indices, to the extent permitted by 10.14;
(t) Investments consisting of loans and advances
to officers, directors or employees relating to
indemnification or reimbursement of any officers,
directors or employees in respect of liabilities
relating to their serving in any such capacity; and
(u) other Investments in an aggregate amount not
to exceed $15,000,000 at any one time outstanding.
10.4. Restricted Payments.
The Company will not make any Restricted Payment;
provided, however, so long as no Default or Event of Default
then exists or would result from such payment, the Company
may:
(a) declare or pay dividends on or in respect of
any shares of any class of Capital Stock of the Company
in any fiscal year in an aggregate amount not to exceed
the greater of the annual amount paid at the current
quarterly rate of three cents ($0.03) per share by the
Company and 25% of Consolidated Net Income for the
prior fiscal year; and
(b) make other Restricted Payments in any fiscal
year in an aggregate amount not to exceed $5,000,000.
10.5. Merger, Consolidation and Disposition of
Assets.
10.5.1. Mergers and Acquisitions.
The Company will not, and will not permit any of
its Subsidiaries to, become a party to any merger,
amalgamation or consolidation, or agree to or effect
any acquisition of at least a majority of the assets or
Capital Stock of any Person, or any business unit or
product line thereof (other than the acquisition of
assets in the ordinary course of business consistent
with past practices) except:
(a) the merger or consolidation of one (1) or
more of the Subsidiaries of the Company with and into
the Company, or the merger or consolidation of two (2)
or more Subsidiaries of the Company; provided that if
any of the parties to such merger or consolidation is a
Restricted Subsidiary, the survivor of such merger or
consolidation shall be a Restricted Subsidiary or the
Company; or
(b) the acquisition of stock or other securities
of, or any assets of, any Person, provided that:
(i) no Default or Event of Default has
occurred and is continuing or would result from
such acquisition;
(ii) not less than five (5) Business Days
prior to the consummation of such proposed
acquisition, the Company shall have delivered to
the Agent a Compliance Certificate demonstrating
pro forma compliance with the financial covenants
set forth in 11 hereof; and
(iii) the aggregate purchase price for
all such acquisitions shall not exceed (A)
$15,000,000 for the period from the Effective Date
up to and including the first anniversary of the
Effective Date and (B) $25,000,000 during the
period from the first anniversary of the Effective
Date up to the Final Maturity Date (it being
understood that any earnout payments in respect of
assets or business acquired prior to the Effective
Date shall not be included in the calculation of
such amount); or
(c) the acquisition of Capital Stock of any
Subsidiary of the Company existing on the Effective
Date from any then existing minority holder thereof.
10.5.2. Disposition of Assets.
The Company will not, and will not permit any of
its Subsidiaries to, become a party to or agree to or
effect any disposition or swap of assets, other than
(a) the sale of inventory, (b) the licensing of
intellectual property, (c) the disposition of obsolete
or other assets not necessary for the operation of the
Company's or such Subsidiary's business, in each case
in the ordinary course of business, (d) Asset Sales
provided that in the case of such Asset Sale, (i) no
Default or Event of Default has occurred and is
continuing or would result from such Asset Sale and
(ii) the Net Cash Sale Proceeds are applied to the
Loans as set forth in 2.10(a)(i); (e) the sale or
discount by any Foreign Subsidiary with or without
recourse of accounts receivable or notes receivable
arising in the ordinary course of business, or the
conversion or exchange of accounts receivable into or
for notes receivable in connection with the compromise
or collection thereof, (f) disposition of assets by the
Company to any of its Restricted Subsidiaries or by any
Subsidiary to the Company or any of its Restricted
Subsidiaries, or by any Foreign Subsidiary to the
Company or any Subsidiary, (g) the abandonment, sale or
other disposition of intellectual property that, in the
reasonable judgment of the Company, is no longer
economically practicable to maintain or useful in the
conduct of the business of the Hasbro Companies taken
as a whole, (h) any sale or disposition of any claim as
a creditor in a bankruptcy or similar proceeding in the
ordinary course of business, and (i) any Specified
Sale. Nothing in this 10.5.2 shall prevent the
Company from discontinuing the operation and
maintenance of any of its properties, or those of its
Subsidiaries, or from dissolving or liquidating any
Subsidiary or from consolidating or merging any
Subsidiary with or into another Subsidiary or with and
into the Company, if such discontinuance, dissolution
or liquidation, consolidation or merger is, in the
judgment of the Company, desirable in the conduct of
the business of the Company and its Subsidiaries on a
consolidated basis and which does not in the aggregate
have a Material Adverse Effect.
10.6. Sale and Leaseback.
The Company will not, and will not permit any of its
Subsidiaries (other than a Foreign Subsidiary) to, enter
into any arrangement, directly or indirectly, whereby the
Company or any Subsidiary of the Company shall sell or
transfer any property owned by it in order then or
thereafter to lease such property or lease other property
that the Company or any Subsidiary of the Company intends to
use for substantially the same purpose as the property being
sold or transferred, except in connection with any Asset
Sale permitted under 10.5.2.
10.7. Compliance with Environmental Laws.
Except as would not reasonably be expected to result in
a Material Adverse Effect, the Company will not, and will
not permit any of its Subsidiaries to, (a) use any of the
Real Estate or any portion thereof for the handling,
processing, storage or disposal of Hazardous Substances
except to the extent required by its day-to-day operations
and in all instances in compliance with applicable
Environmental Laws, (b) cause or permit to be located on any
of the Real Estate any underground tank or other underground
storage receptacle for Hazardous Substances, (c) generate
any Hazardous Substances on any of the Real Estate except to
the extent required by its day-to-day operations and in all
instances in compliance with applicable Environmental Laws,
(d) conduct any activity at any Real Estate or use any Real
Estate in any manner so as to cause a release (i.e.
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous
Substances on, upon or into the Real Estate or (e) otherwise
conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental
Law or bring such Real Estate in violation of any
Environmental Law.
10.8. Subordinated Debt.
The Company will not, and will not permit any of its
Subsidiaries to, amend, supplement or otherwise modify (a)
the subordination terms of any of the Subordinated Debt or
(b) any other terms of any of the Subordinated Debt, the
effect of which would be to shorten maturity or average
weighted life, increase pricing or amount, make covenants or
default provisions more restrictive, add covenants or
default provisions, or otherwise make such Subordinated Debt
materially more burdensome to the Company or such Subsidiary
or in any manner be materially adverse to the interests of
the Banks and the Agent, or prepay, redeem or repurchase any
of the Subordinated Debt or send any irrevocable notice of
prepayment, redemption or repurchase to holders of any
Subordinated Debt.
10.9. Employee Benefit Plans.
Neither the Company nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within
the meaning of 406 of ERISA or 4975 of the Code which
could result in a material liability for the Company or
any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur
an "accumulated funding deficiency", as such term is
defined in 302 of ERISA, whether or not such
deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension
Plan to an extent which, or terminate any Guaranteed
Pension Plan in a manner which, could result in the
imposition of a lien or encumbrance on the assets of
the Company or any of its Subsidiaries pursuant to
302(f) or 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in
circumstances requiring the posting of security
pursuant to 307 of ERISA or 401(a)(29) of the Code;
(e) permit or take any action which would result
in the aggregate benefit liabilities (with the meaning
of 4001 of ERISA) of all Guaranteed Pension Plans
exceeding the value of the aggregate assets of such
Plans by more than $15,000,000 at any time,
disregarding for this purpose the benefit liabilities
and assets of any such Plan with assets in excess of
benefit liabilities; or
(f) permit or take any action which would
contravene any Applicable Pension Legislation in the
United States, except as such action would not be
reasonably likely to result in a Material Adverse
Effect.
10.10. Business Activities.
The Company will not, and will not permit any of its
Subsidiaries to, engage directly or indirectly (whether
through Subsidiaries or otherwise) in any type of business
other than the businesses conducted by them on the Effective
Date and in related businesses.
10.11. Transactions with Affiliates.
The Company will not, and will not permit any of its
Subsidiaries to, engage in any material transaction with any
Affiliate that is not the Company or a Restricted
Subsidiary (other than in connection with services as
employees, officers and directors), including any material
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from any such Affiliate or, to the knowledge
of the Company, any corporation, partnership, trust or other
entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on
terms materially more favorable to such Person than would
have been obtainable on an arm's-length basis in the
ordinary course of business excluding (a) any transaction
with an Affiliate controlled by the Company entered into in
the ordinary course of business, (b) Restricted Payments
that otherwise comply with this Agreement and (c) any
transaction relating to the issuance of any class of Capital
Stock of the Company.
10.12. Restrictions on Negative Pledges.
The Company will not, nor will it permit any of its
Subsidiaries to, except for those existing agreements set
forth and described on Schedule 10.12, enter into or permit
to exist any arrangement or agreement (excluding this
Agreement, the Revolving Credit Agreement, the Loan
Documents and the "Loan Documents" under and as defined in
the Revolving Credit Agreement and except any industrial
revenue or development bonds, agreements governing any
purchase money liens, acquisition agreements or Capitalized
Leases or operating leases entered into in the ordinary
course of business otherwise permitted hereby (in which case
any prohibition or limitation shall only be effective
against the assets financed, acquired or leased thereby)
which directly or indirectly prohibits the Company or any of
its Subsidiaries from creating, assuming or incurring any
Lien in favor of the Banks or the Agent upon its properties,
revenues or assets or those of any of its Subsidiaries
whether now owned or hereafter acquired.
10.13. Cash Management.
The Company shall not (a) terminate its existing lock
box account arrangements with Bank of America, N.A., or (b)
instruct account debtors or other obligors to remit payments
to an account other than the lock box account referenced in
clause (a) above, in each case without providing at least
thirty (30) days prior written notice to the Agent.
10.14. Hedging Arrangements.
The Company will not, and will not permit any of its
Subsidiaries to, enter into any forward contract, futures
contract, swap, option or other financing agreement or
arrangement (including, without limitation, caps, floors,
collars and similar agreements), the value of which is
dependent upon interest rates, currency exchange rates,
commodities or other indices, other than in the ordinary
course of business and not for purposes of speculation.
11. FINANCIAL COVENANTS.
The Company covenants and agrees that, so long as any
Loan or Note is outstanding or any Bank has any obligation
to make any Loans:
11.1. Minimum EBITDA.
The Company will not permit EBITDA for any Reference
Period ending with the fiscal quarter referenced in the
table below to be less than the amount set forth in the
table below opposite such fiscal quarter in such table:
Fiscal Quarter Ending: EBITDA
First Quarter 2001 $310,000,000
Second Quarter 2001 $270,000,000
Third Quarter 2001 $300,000,000
Fourth Quarter 2001 $400,000,000
11.2. Total Funded Debt to EBITDA.
The Company will not permit the ratio of Consolidated
Total Funded Debt at the end of any fiscal quarter set forth
in the table set forth below to EBITDA for the Reference
Period then ended to exceed the ratio set forth opposite
such fiscal quarter set forth in table below:
Fiscal Quarter Ending: Ratio
Fourth Quarter 2000 3.25:1.00
First Quarter 2001 4.25:1.00
Second Quarter 2001 5.75:1.00
Third Quarter 2001 5.50:1.00
Fourth Quarter 2001 3.25:1.00
11.3. Fixed Charge Coverage Ratio.
For any Reference Period ending with any fiscal quarter
referenced in the table below, the Company will not permit
the Fixed Charge Coverage Ratio for such Reference Period to
be less than the ratio set forth opposite such fiscal
quarter in such table:
Fiscal Quarter Ending: Ratio
First Quarter 2001 1.20:1.00
Second Quarter 2001 1.10:1.00
Third Quarter 2001 1.70:1.00
Fourth Quarter 2001 2.50:1.00
11.4. Capital Expenditures.
During any period referenced in the table set forth
below, the Company will not, and will not allow any of its
Subsidiaries to, make Capital Expenditures that exceed the
aggregate amount set forth in the table below opposite such
period in such table:
Period Amount
First Quarter 2001 $30,000,000
First and Second $60,000,000
Quarter 2001
First, Second and Third
Quarter 2001 $80,000,000
First, Second, Third
and Fourth Quarter $90,000,000
2001
12. CONDITIONS TO EFFECTIVENESS.
The obligations of the Banks to convert the outstanding
Syndicated Loans to Syndicated Loans hereunder and to make
the initial Syndicated Loans shall be subject to the
satisfaction of the following conditions precedent on or
prior to February 16, 2001:
12.1. Loan Documents, etc.
(a) Each of the Loan Documents shall have been duly
and properly authorized, executed and delivered by the
respective party or parties thereto and shall be in full
force and effect on and as of the Effective Date. The Agent
(i) shall have accepted delivery in Boston, Massachusetts of
each of the duly executed Loan Documents from each of the
other parties thereto, and (ii) shall have duly and properly
executed each of the Loan Documents, to which it is a party,
in Boston, Massachusetts.
(b) Executed original counterparts of each of the Loan
Documents (other than the Notes) shall have been furnished
to each Bank or the Agent in sufficient copies for each Bank
and an executed copy of the Notes for each Bank shall have
been delivered to such Bank.
12.2. Performance, etc.
Each of the Hasbro Companies shall have duly and
properly performed, complied with and observed each of the
covenants, agreements and obligations to be performed,
complied with or observed by it on or prior to such date
contained in the Loan Documents. No event shall have
occurred on or prior to the Effective Date and be continuing
on such Effective Date, and no condition shall exist on such
Effective Date, which constitutes a Default or an Event of
Default.
12.3. Certified Copies of Charter Documents.
Each Bank or the Agent (in sufficient copies for each
Bank) shall have received from each of the Hasbro Companies
a copy, each of which shall have been certified by a duly
authorized officer of such respective Hasbro Company to be
true and complete on and as of the Effective Date, of each
of (a) the charter or other incorporation documents of each
of the Hasbro Companies in effect on such date of
certification, and (b) the by-laws of each of the Hasbro
Companies as in effect on such date.
12.4. Proof of Corporate Action.
The Agent shall have received from each of the Hasbro
Companies copies for each Bank, certified by a duly
authorized officer of such respective Hasbro Company to be
true and complete on and as of the Effective Date, of the
records of all corporate action taken by each of the Hasbro
Companies to authorize (a) its execution and delivery of
each of the Loan Documents to which it is or is to become a
party, (b) its performance of all of its agreements and
obligations under each of the Loan Documents, and (c) the
borrowings contemplated by this Agreement.
12.5. Incumbency Certificates.
The Agent shall have received from each of the Hasbro
Companies copies for each Bank of an original incumbency
certificate, dated as of the Effective Date signed by a duly
authorized officer of each of the Hasbro Companies and
giving the name and bearing a specimen signature of certain
individuals who shall be authorized: (i) to sign, in the
name and on behalf of such Hasbro Company, each of the Loan
Documents to which it is or is to become a party; and (ii)
to give notices and to make application for the Loans and to
take other action on behalf of such Hasbro Company under the
Loan Documents.
12.6. Proceedings and Documents.
All corporate, governmental and other proceedings in
connection with the transactions contemplated by the Loan
Documents, and all instruments and documents incidental
thereto, shall be in form and substance reasonably
satisfactory to the Agent and the Agent shall have received
all such counterpart originals or certified or other copies
of all such instruments and documents as the Agent shall
have reasonably requested.
12.7. Validity of Liens.
The Security Documents shall be effective to create in
favor of the Agent a legal, valid and enforceable first
priority (except for Permitted Liens entitled to priority
under applicable law) security interest in and Lien upon the
Collateral, as and to the extent provided therein. All
filings, recordings, deliveries of instruments and other
actions necessary or desirable in the reasonable opinion of
the Agent to protect and preserve such security interests
shall have been duly effected or arrangements to effect the
same shall have been made reasonably satisfactory to the
Agent. The Agent shall have received evidence thereof in
form and substance satisfactory to the Agent.
12.8. Perfection Certificates and UCC Search
Results.
The Agent shall have received from each of the Company
and the Restricted Subsidiaries a completed and fully
executed Perfection Certificate and the results of Uniform
Commercial Code searches with respect to the Collateral,
indicating no Liens other than Permitted Liens and otherwise
in form and substance reasonably satisfactory to the Agent.
12.9. Certificates of Insurance.
The Agent shall have received certificates of insurance
from an independent insurance broker dated as of the
Effective Date, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing
the insurance obtained in accordance with the provisions of
the Security Agreements.
12.10. Agency Account Agreement.
The Agent shall have received an executed agency
account agreement, in form and substance reasonably
satisfactory to the Agent, from Bank of America, N.A.,
concerning the Agent's security interest in the lock box
account maintained by the Company therewith.
12.11. Legal Opinions.
Each of the Banks and the Agent shall have received a
favorable legal opinion addressed to the Banks and the
Agent, dated as of the Effective Date, in form and substance
reasonably satisfactory to the Banks and the Agent, from (a)
Barry Nagler, Esq., Senior Vice President and General
Counsel of the Company, and (b) Debevoise & Plimpton,
special counsel to the Company.
12.12. Payment of Fees.
The Company shall have paid to the Banks or the Agent,
as appropriate, the Closing Fee and the Agent's Fee pursuant
to 7.1 and 7.2, respectively.
12.13. Legality of Transactions.
No change in applicable law shall have occurred as a
consequence of which it shall have become and continue to be
unlawful (a) for any Bank to perform any of its agreements
or obligations under any of the Loan Documents to which it
is a party on the Effective Date or (b) for the Company to
perform any of its material agreements or obligations under
any of the Loan Documents to which it is a party on the
Effective Date.
12.14. Representations and Warranties.
Each of the representations and warranties made by or
on behalf of each of the Hasbro Companies to the Banks in
this Agreement or any of the other Loan Documents shall be
true and correct in all material respects when made, shall
for all purposes of this Agreement be deemed to be repeated
on and as of the Effective Date, and shall be true and
correct in all material respects on and as of such date.
13. CONDITIONS TO LOANS.
The obligations of the Banks to make any Syndicated
Loan, whether on or after the Effective Date, shall also be
subject to the satisfaction of the following conditions
precedent:
13.1. Legality of Transactions.
It shall not be unlawful (a) for any Bank to perform
any of its agreements or obligations under any of the Loan
Documents to which the Bank is a party on the Drawdown Date
of such Loans, or (b) for any of the Hasbro Companies to
perform any of its material agreements or obligations under
any of the Loan Documents to which it is a party on such
date.
13.2. Representations and Warranties.
Each of the representations and warranties made by or
on behalf of the Company and its Subsidiaries to the Banks
in this Agreement or any other Loan Document shall be true
and correct in all material respects when made and shall for
all purposes of this Agreement, be deemed to be repeated on
and as of the date of the Company's notice of borrowing for
such Loan on and as of the Drawdown Date of such Loan, and
shall be true and correct in all material respects on and as
of each of such dates, except, in each case, as affected by
the consummation of the transactions contemplated by the
Loan Documents or to the extent representations and
warranties expressly referring to an earlier date shall
relate solely to such earlier date.
13.3. Performance, etc.
Each of the Hasbro Companies shall have duly and
properly performed, complied with and observed in all
material respects each of its covenants, agreements and
obligations contained in 9 and 10 hereof, and shall have
duly and properly performed, complied with and observed in
all material respects its covenants, agreements, and
obligations in all other articles of this Agreement and any
of the other Loan Documents to which it is a party or by
which it is bound on the Drawdown Date for such Loan. No
event shall have occurred on or prior to such date and be
continuing on such date, and no condition shall exist on
such date, which constitutes a Default or an Event of
Default.
13.4. Proceedings and Documents.
All corporate, governmental and other proceedings in
connection with the transactions contemplated by the Loan
Documents and all instruments and documents incidental
thereto shall be in form and substance reasonably
satisfactory to the Agent and the Agent shall have received
all such counterpart originals or certified or other copies
of all such instruments and documents as the Agent shall
have reasonably requested.
13.5. Loan Documents.
Each of the Loan Documents required by 9.14 hereof
shall have been duly and properly authorized, executed and
delivered by the respective party or parties thereto and
shall be in full force and effect on and as of such date.
14. EVENTS OF DEFAULT; ACCELERATION.
14.1. Remedies Upon Default.
If any of the following events ("Events of Default" or,
if the giving of notice or the lapse of time or both is
required, then, prior to such notice and/or lapse of time,
"Defaults") shall occur:
(a) if the Company shall fail to pay any
principal of the Loans when the same shall become due
and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date
fixed for payment;
(b) if the Company shall fail to pay any interest
on the Loans, any Fees hereunder or other sums due
hereunder, within three (3) Business Days after the
date on which the same shall become due and payable
whether at the stated date of maturity or any
accelerated date of maturity or at any other date fixed
for payment;
(c) if the Company shall fail to comply with any
of its covenants contained in 9.2, 9.5, 9.6, the
first sentence of 9.7, 9.13, 9.14, 10 or 11;
(d) if the Company shall fail to comply with any
of its covenants contained in 9.10 or 9.17, and such
failure shall continue for a period of ten (10) days;
(e) if any of the Hasbro Companies shall fail to
perform any term, covenant or agreement contained in
any of the Loan Documents (other than those specified
in subsections (a), (b), (c) and (d) above) for twenty
(20) days after written notice of such failure has been
given to the Company by the Agent;
(f) if any representation or warranty of any of
the Hasbro Companies in any of the Loan Documents or in
any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been
false in any material respect upon the date when made
or deemed to have been made or repeated;
(g) if any of the Hasbro Companies shall fail to
pay at maturity, or within any applicable period of
grace, any Indebtedness for borrowed money or credit
received or in respect of any Capitalized Leases or in
respect of any guaranties by such Hasbro Company of any
such Indebtedness of another Person, or fail to observe
or perform any material term, covenant or agreement
contained in any agreement by which it is bound,
evidencing or securing Indebtedness for borrowed money
or credit received or in respect of any Capitalized
Leases for such period of time as would permit
(assuming the giving of appropriate notice if required)
the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof,
or to rescind the purchase of any such obligations, and
the aggregate amount of all of such Indebtedness for
borrowed money or credit received or in respect of any
Capitalized Leases of the Hasbro Companies or in
respect of any guaranties by any Hasbro Company of any
such Indebtedness of another Person in respect of which
any one or more of such defaults or failures shall at
any time be continuing under any one or more of such
agreements shall exceed $25,000,000 at any one time;
(h) if any of the Hasbro Companies makes an
assignment for the benefit of creditors, or admits in
writing its inability to pay or generally fails to pay
its debts as they mature or become due, or petitions or
applies for the appointment of a trustee or other
custodian, liquidator or receiver of any of the Hasbro
Companies or of any substantial part of the assets of
any of the Hasbro Companies, or commences any case or
other proceeding relating to any of the Hasbro
Companies under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any
jurisdiction now or hereafter in effect, or takes any
action to authorize or in furtherance of any of the
foregoing, or if any such petition or application is
filed or any such case or other proceeding is commenced
against any of the Hasbro Companies and the such Person
indicates its approval thereof, consent thereto or
acquiescence therein or such petition or application
shall not have been dismissed within forty-five (45)
days following the filing thereof;
(i) if a decree or order is entered appointing
any such trustee, custodian, liquidator or receiver or
adjudicating any of the Hasbro Companies bankrupt or
insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is
entered in respect of any of the Hasbro Companies in an
involuntary case under federal bankruptcy laws as now
or hereafter constituted;
(j) if there shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty (30)
days, whether or not consecutive, any final judgment
against any of the Hasbro Companies which, with other
outstanding final judgments, undischarged, unsatisfied
and unstayed, against the Hasbro Companies exceeds in
the aggregate $25,000,000;
(k) the holders of all or any part of the
Subordinated Debt shall accelerate the maturity of all
or any part of the Subordinated Debt, the Subordinated
Debt shall be repaid, redeemed or repurchased in whole
or in part or an offer to repay, redeem or repurchase
the Subordinated Debt in whole or in part shall have
been made;
(l) (i) if any of the Loan Documents shall be
cancelled, terminated, revoked or rescinded or the
Agent's Liens in a material portion of the Collateral
shall cease to be perfected (other than by the Agent's
failure to file Uniform Commercial Code financing
statements executed and delivered by the Company or any
Restricted Subsidiary, as applicable, or to make any
required filings executed and delivered by the Company
or any Restricted Subsidiary with the United States
Patent and Trademark Office or the United States
Copyright Office or to continue such Uniform Commercial
Code financing statements or filings with the United
States Patent and Trademark Office or United States
Copyright Office in accordance with applicable law), or
shall cease to have the priority contemplated by the
Security Documents, in each case otherwise than in
accordance with the terms thereof or with the express
prior written agreement, consent or approval of the
Banks, or (ii) any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any
of the Loan Documents shall be commenced by any of the
Hasbro Companies party thereto, or (iii) any court or
any other governmental or regulatory authority or
agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree
or ruling to the effect that any one or more of the
Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof and such judgment,
order, decree or ruling shall continue in full force
and effect for a period of thirty (30) days;
(m) there shall occur any loss, theft,
destruction of, or material damage to the Inventory
included in the Collateral resulting in an uninsured
loss in excess of $20,000,000 during any one policy
period, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other
casualty, which in any such case causes, for more than
fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities
at any facility of the Company or any of its
Subsidiaries if such event or circumstance is not
covered by business interruption insurance and would
have a Material Adverse Effect;
(n) the Company or any ERISA Affiliate incurs any
liability to the PBGC or a Guaranteed Pension Plan
pursuant to Title IV of ERISA in an aggregate amount
exceeding $15,000,000, or the Company or any ERISA
Affiliate is assessed withdrawal liability pursuant to
Title IV of ERISA by a Multiemployer Plan requiring
aggregate annual payments exceeding $5,000,000, or any
of the following occurs with respect to a Guaranteed
Pension Plan: (i) an ERISA Reportable Event, or a
failure to make a required installment or other payment
(within the meaning of 302(f)(1) of ERISA), provided
that such event (A) would be expected to result in
liability of the Company or any of its Subsidiaries to
the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $15,000,000 and (B) would
constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC, for the
appointment by the appropriate United States District
Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor
of such Guaranteed Pension Plan; or (ii) the
appointment by a United States District Court of a
trustee to administer such Guaranteed Pension Plan; or
(iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;
(o) a Change of Control shall occur; or
(p) any "Event of Default" under and as defined
in the Revolving Credit Agreement shall occur;
then, and in any such event, so long as the same may be
continuing, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Company
declare all amounts owing with respect to this Agreement and
the Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable
without presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived by the
Company; provided that in the event of any Event of Default
specified in 14.1(h) or 14.1(i) hereof, all such amounts
shall become immediately due and payable automatically and
without any requirement of notice from the Agent or any
Bank.
14.2. Termination of Commitments.
If any one or more of the Events of Default specified
in 14.1(h) or 14.1(i) shall occur, any unused portion of
the credit hereunder shall forthwith terminate and each of
the Banks shall be relieved of all further obligations to
make Loans to the Company. If any other Event of Default
shall have occurred and be continuing, the Agent may and,
upon the request of the Majority Banks, shall, by notice to
the Company, terminate the unused portion of the credit
hereunder, and upon such notice being given such unused
portion of the credit hereunder shall terminate immediately
and each of the Banks shall be relieved of all further
obligations to make Loans. No termination of the credit
hereunder shall relieve the Company or any of its
Subsidiaries of any of the Obligations.
14.3. Remedies.
In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the
Banks shall have accelerated the maturity of the Loans
pursuant to 14.1, each Bank, if owed any amount with
respect to the Loans, may, with the consent of the Majority
Banks but not otherwise, proceed to protect and enforce its
rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any
covenant or agreement contained in this Agreement and the
other Loan Documents or any instrument pursuant to which the
Obligations to such Bank are evidenced, including as
permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have
become due, by declaration or otherwise, proceed to enforce
the payment thereof or any other legal or equitable right of
such Bank. No remedy herein conferred upon any Bank or the
Agent or the holder of any Note is intended to be exclusive
of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.
14.4. Certain Rights of Cure.
(a) Any Default or Event of Default may be waived as
provided by 20 hereof. With the prior written consent of
all of the Banks, any Default or Event of Default so waived
shall be deemed to have been cured and not to be continuing,
and upon such waiver the Company and each of the Banks shall
be restored to their respective positions prior to the
existence of the Default or Event or Default, whether or not
acceleration of the maturity of the Loans shall have
occurred pursuant to this 14. The Commitments, if
terminated pursuant to this 14 by reason of any Event of
Default so waived, shall be reinstated. In the event that
the Commitments, once terminated, are so reinstated, the
Commitment Fee shall be payable as though no termination had
occurred. No such waiver shall extend to or affect any
subsequent or other Default or Event of Default or impair
any rights consequent thereon.
(b) Notwithstanding any other provision of this
Agreement to the contrary, if a Default or Event of Default
shall occur at any time when no Loans shall be outstanding
and all other Obligations shall have been paid in full, the
Company may give notice to the Agent and the Banks (i) of
the occurrence or continuance of such Default or Event of
Default, (ii) of the Company's request to terminate the
Commitments in their entirety pursuant to 2.2 hereof, and
(iii) subject to compliance by the Company with the
provisions of 2.2 hereof and this 14.4(b), of the
Company's request that the Default or Event of Default be
deemed not to have occurred, and upon termination of the
Commitments and payment by the Company of all Fees and other
sums payable by the Company hereunder, the Company, the
Agent, and the Banks shall be deemed to have agreed, by
mutual consent, that no Default or Event of Default shall
have occurred hereunder.
14.5. Distribution of Collateral Proceeds.
In the event that, following the occurrence or during
the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies
in connection with the enforcement of any the Security
Documents, or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may
be) the reimbursement of the Agent for or in respect of
all reasonable costs, expenses, disbursements and
losses which shall have been incurred or sustained by
the Agent in connection with the collection of such
monies by the Agent, for the exercise, protection or
enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent under this
Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any
provision of adequate indemnity to the Agent against
any taxes or Liens which by law shall have, or may
have, priority over the rights of the Agent to such
monies;
(b) Second, to all other Secured Obligations
(other than obligations of the Company and its
Subsidiaries to any of the Banks and/or the Agent with
respect to any Interest Rate Agreements and Hedging
Agreements) in such order or preference among types of
Secured Obligations as the Majority Banks may
determine; provided, however, that (i) distributions
shall be made (A) pari passu among Secured Obligations
with respect to the Agent's Fee and all other Secured
Obligations and (B) with respect to each type of
Secured Obligation owing to the Banks, such as
interest, principal, fees and expenses, among the Banks
pro rata, based on the then outstanding amount of
Secured Obligations (and on the assumption that Secured
Obligations consisting of guaranties are equal to the
amount of the outstanding obligations guaranteed), and
(ii) the Agent may in its discretion make proper
allowance to take into account any Secured Obligations
not then due and payable;
(c) Third, to obligations of the Company and its
Subsidiaries to any of the Banks and/or the Agent with
respect to any Interest Rate Agreements and Hedging
Agreements;
(d) Fourth, upon payment and satisfaction in full
or other provisions for payment in full satisfactory to
the Banks and the Agent of all of the Secured
Obligations, to the payment of any obligations required
to be paid pursuant to 9-504(1)(c) of the Uniform
Commercial Code of The Commonwealth of Massachusetts;
and
(e) Fifth, the excess, if any, shall be returned
to the Company or to such other Persons as are entitled
thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during
the continuance of an Event of Default, any deposits or
other sums credited by or due from any of the Banks to the
Company and any securities or other property of the Company
in the possession of such Bank may be applied to or set off
by such Bank against the payment of Obligations and any and
all other liabilities, direct, or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising, of the Company to such Bank. ANY AND ALL RIGHTS TO
REQUIRE ANY BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
COMPANY ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED. Each of the Banks agree with each other Bank that
(a) if an amount to be set off is to be applied to
Indebtedness of the Company to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank, such
amount shall be applied ratably to such other Indebtedness
and to the Indebtedness evidenced by all such Notes held by
such Bank, and (b) if such Bank shall receive from the
Company, whether by voluntary payment, exercise of the right
of setoff, counterclaim, cross action, enforcement of the
claim evidenced by the Notes held by such Bank by
proceedings against the Company at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall
retain and apply to the payment of the Note or Notes held by
such Bank any amount in excess of its ratable portion of the
payments received by all of the Banks with respect to the
Notes held by all of the Banks, such Bank will make such
disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro
tanto assignment of claims, subrogation or otherwise as
shall result in each Bank receiving in respect of the Notes
held by it, its proportionate payment as contemplated by
this Agreement; provided that if all or any part of such
excess payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without
interest.
16. THE AGENT.
16.1. Authorization.
(a) The Agent is authorized to take such action on
behalf of each of the Banks and to exercise all such powers
as are hereunder and under any of the other Loan Documents
and any related documents delegated to the Agent, together
with such powers as are reasonably incident thereto,
including the authority, without the necessity of any notice
to or further consent of the Banks, from time to time to
take any action with respect to any Collateral or the
Security Documents which may be necessary to perfect,
maintain perfected or insure the priority of the security
interest in and liens upon the Collateral granted pursuant
to the Security Documents, provided that no duties or
responsibilities not expressly assumed herein or therein
shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the
Banks is that of an independent contractor. The use of the
term "Agent" is for convenience only and is used to
describe, as a form of convention, the independent
contractual relationship between the Agent and each of the
Banks. Nothing contained in this Agreement nor the other
Loan Documents shall be construed to create an agency, trust
or other fiduciary relationship between the Agent and any of
the Banks.
(c) As an independent contractor empowered by the
Banks to exercise certain rights and perform certain duties
and responsibilities hereunder and under the other Loan
Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the
benefit of the Banks and the Agent with respect to all
collateral security and guaranties contemplated by the Loan
Documents. Such actions include the designation of the
Agent as "secured party", "mortgagee" or the like on all
financing statements and other documents and instruments,
whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of
any of the Obligations, all for the benefit of the Banks and
the Agent.
16.2. Employees and Agents.
The Agent may exercise its powers and execute its
duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties
under this Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent
in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be
paid by the Company.
16.3. No Liability.
Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person
assisting them in their duties nor any agent or employee
thereof, shall be liable for any waiver, consent or approval
given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error
of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to
its willful misconduct or gross negligence.
16.4. No Representations.
16.4.1. General.
The Agent shall not be responsible for the
execution or validity or enforceability of this
Agreement, the Notes, any of the other Loan Documents
or any instrument at any time constituting, or intended
to constitute, collateral security for the Notes, or
for the value of any such collateral security or for
the validity, enforceability or collectability of any
such amounts owing with respect to the Notes, or for
any recitals or statements, warranties or
representations made herein or in any of the other Loan
Documents or in any certificate or instrument hereafter
furnished to it by or on behalf of the Company or any
of its Subsidiaries, or be bound to ascertain or
inquire as to the performance or observance of any of
the terms, conditions, covenants or agreements herein
or in any instrument at any time constituting, or
intended to constitute, collateral security for the
Notes or to inspect any of the properties, books or
records of the Company or any of its Subsidiaries. The
Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by
the Company or any holder of any of the Notes shall
have been duly authorized or is true, accurate and
complete. The Agent has not made nor does it now make
any representations or warranties, express or implied,
nor does it assume any liability to the Banks, with
respect to the credit worthiness or financial
conditions of the Company or any of its Subsidiaries.
Each Bank acknowledges that it has, independently and
without reliance upon the Agent or any other Bank, and
based upon such information and documents as it has
deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.
16.4.2. Closing Documentation, etc.
For purposes of determining compliance with the
conditions set forth in 12, each Bank that has
executed this Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied
with, each document and matter either sent, or made
available, by the Agent or the Arranger to such Bank
for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by
or acceptable or satisfactory to such Bank, unless an
officer of the Agent or the Arranger active upon the
Company's account shall have received notice from such
Bank not less than five (5) days prior to the Effective
Date specifying such Bank's objection thereto and such
objection shall not have been withdrawn by notice to
the Agent or the Arranger to such effect on or prior to
the Effective Date.
16.5. Indemnification.
Without limiting the obligations of the Company
hereunder or under any other Loan Document, the Banks agree
to indemnify and hold harmless the Agent and its affiliates,
ratably in accordance with their respective Commitment
Percentages, for any and all liabilities, obligations,
losses, damages, penalties, claims, actions and suits
(whether groundless or otherwise) judgments, costs, expenses
(including any expenses for which the Agent or such
affiliate has not been reimbursed by the Company as required
by 18) or disbursements of any kind or nature whatsoever
which may at any time (including without limitation at any
time following the payment of the Notes) be imposed on,
incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the Notes or
any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or the
enforcement of any of the terms hereof or thereof or of any
such other documents, provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the
Agent's gross negligence or willful misconduct. The
agreements in this 16.5 shall survive the payment of the
Notes and all other amounts payable hereunder.
16.6. Reimbursement.
Without limiting the provisions of 16.5, the Banks and
the Agent hereby agree that the Agent shall not be obliged
to make available to any Person any sum which the Agent is
expecting to receive for the account of that Person until
the Agent has determined that it has received that sum. The
Agent may, however, disburse funds prior to determining that
the sums which the Agent expects to receive have been
finally and unconditionally paid to the Agent, if the Agent
wishes to do so. If and to the extent that the Agent does
disburse funds and it later becomes apparent that the Agent
did not then receive a payment in an amount equal to the sum
paid out, then any Person to whom the Agent made the funds
available shall, on demand from the Agent:
(a) refund to the Agent the sum paid to that
Person; and
(b) reimburse the Agent for the additional amount
certified by the Agent as being necessary to indemnify
the Agent against any funding or other cost, loss,
expense or liability sustained or incurred by the Agent
as a result of paying out the sum before receiving it.
16.7. Non-Reliance on Agent and Other Banks.
Each Bank represents that it has, independently and
without reliance on the Agent or any other Bank, and based
on such documents and information as it has deemed
appropriate, made its own appraisal of the financial
condition and affairs of the Company and decision to enter
into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking
or not taking action under this Agreement or any other Loan
Document. The Agent shall not be required to keep informed
as to the performance or observance by the Company of this
Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or by any
other Person of any agreement or to make inquiry of, or to
inspect the properties or books of, any Person. Except for
notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning any Person which may come into the
possession of the Agent or any of its affiliates. Each Bank
shall have access to all documents relating to the Agent's
performance of its duties hereunder, at such Bank's request.
Unless any Bank shall object promptly after receiving notice
of any action taken by the Agent hereunder, such Bank shall
conclusively be presumed to have approved the same.
16.8. Payments.
16.8.1. Payments to Agent.
A payment by the Company to the Agent hereunder or
any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The
Agent agrees promptly to distribute to each Bank such
Bank's pro rata share of payments received by the Agent
for the account of the Banks except as otherwise
expressly provided herein or in any of the other Loan
Documents.
16.8.2. Distribution by Agent.
If in the opinion of the Agent the distribution of
any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain
from making distribution until its right to make
distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person
to whom any such distribution shall have been made
shall either repay to the Agent its proportionate share
of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as
shall be determined by such court.
16.8.3. Delinquent Banks.
Notwithstanding anything to the contrary contained
in this Agreement or any of the other Loan Documents,
any Bank that fails (a) to make available to the Agent
its pro rata share of any Loan or (b) to comply with
the provisions of 15 with respect to making
dispositions and arrangements with the other Banks,
where such Bank's share of any payment received,
whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and payable to all of
the Banks, in each case as, when and to the full extent
required by the provisions of this Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it
from the Company, whether on account of outstanding
Loans, interest, fees or otherwise, to the remaining
nondelinquent Banks for application to, and reduction
of, their respective pro rata shares of all outstanding
Loans. The Delinquent Bank hereby authorizes the Agent
to distribute such payments to the nondelinquent Banks
in proportion to their respective pro rata shares of
all outstanding Loans. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments
to all outstanding Loans of the nondelinquent Banks,
the Banks' respective pro rata shares of all
outstanding Loans have returned to those in effect
immediately prior to such delinquency and without
giving effect to the nonpayment causing such
delinquency.
16.9. Holders of Notes.
The Agent may deem and treat the payee of any Note as
the absolute owner thereof for all purposes hereof until it
shall have been furnished in writing with a different name
by such payee or by a subsequent holder, assignee or
transferee.
16.10. Agent as Bank.
In its individual capacity, Fleet shall have the same
obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it
hereunder, and as the holder of any of the Notes, as it
would have were it not also the Agent.
16.11. Resignation or Removal of Agent.
The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the
Company. Upon any such resignation, the Majority Banks,
with the prior written consent of the Company (which consent
shall not be unreasonably withheld), shall have the right
to appoint a successor Agent; provided that no such consent
of the Company shall be required if a Default or Event of
Default has occurred and is then continuing. If no
successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a financial
institution having a rating of not less than A or its
equivalent by Standard and Poor's. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring Agent as Agent, and the retiring Agent shall be
discharged from its duties and obligations hereunder. After
any retiring Agent's resignation, the provisions of this
Agreement shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it
while it was acting as Agent. In the event of a material
breach of its duties hereunder, the Agent may be removed by
the Banks for cause and the provisions of this 16.11 shall
apply to the appointment of a successor.
16.12. Notification of Defaults and Events of
Default.
Each Bank hereby agrees that, upon learning of the
existence of a Default or an Event of Default, it shall
promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this 16.12 it shall
promptly notify the other Banks of the existence of such
Default or Event of Default.
16.13. Duties in the Case of Enforcement.
In case one of more Events of Default have occurred and
shall be continuing, and whether or not acceleration of the
Obligations shall have occurred, the Agent shall, if (a) so
requested by the Majority Banks and (b) the Banks have
provided to the Agent such additional indemnities and
assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the
Security Documents authorizing the sale or other disposition
of all or any part of the Collateral and exercise all or any
such other legal and equitable and other rights or remedies
as it may have in respect of such Collateral. The Majority
Banks may direct the Agent in writing as to the method and
the extent of any such sale or other disposition, the Banks
hereby agreeing to indemnify and hold the Agent, harmless
from all liabilities incurred in respect of all actions
taken or omitted in accordance with such directions,
provided that the Agent need not comply with any such
direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
17. EXPENSES.
The Company agrees to pay (a) the reasonable costs of
producing and reproducing this Agreement, the other Loan
Documents and the other agreements and instruments mentioned
herein, (b) any taxes (including any interest and penalties
in respect thereto) payable by the Agent or any of the Banks
(other than taxes based upon the Agent's or any Bank's net
income) on or with respect to the transactions contemplated
by this Agreement (the Company hereby agreeing to indemnify
the Agent and each Bank with respect thereto), (c) the
reasonable fees, expenses and disbursements of the Banks'
Special Counsel or any local counsel to the Agent incurred
in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments
mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or
hereunder, or the cancellation of any Loan Document upon
payment in full in cash of all of the Obligations or
pursuant to any terms of such Loan Document for providing
for such cancellation, (d) the reasonable fees, expenses and
disbursements of the Agent or any of its affiliates incurred
by the Agent or such affiliate in connection with the
preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including
all reasonable collateral appraisal and examination charges,
(e) all reasonable out-of-pocket expenses (including without
limitation reasonable out of pocket attorneys' fees and
costs, and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and
charges) incurred by any Bank or the Agent in connection
with (i) the enforcement of or preservation of rights under
any of the Loan Documents against the Company or any of its
Subsidiaries, or the administration thereof after the
occurrence and during the continuance of a Default or Event
of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related
to any Bank's or the Agent's relationship with the Company
or any of its Subsidiaries relating to the Loan Documents or
the transactions contemplated thereby and (f) all reasonable
fees, expenses and disbursements of the Agent incurred in
connection with Uniform Commercial Code searches, Uniform
Commercial Code filings, intellectual property searches or
intellectual property filings. The covenants contained in
this 17 shall survive payment or satisfaction in full of
all other Obligations.
18. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless the
Agent, the Banks and each of their respective affiliates,
directors, officers, employees and representatives from and
against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature
and character arising out of this Agreement or any of the
other Loan Documents or the transactions contemplated hereby
including, without limitation, (a) any actual or proposed
use by the Company or any of its Subsidiaries of the
proceeds of any of the Loans, (b) the reversal or withdrawal
of any provisional credits granted by the Agent upon the
transfer of funds from lock box, bank agency, concentration
accounts or otherwise under any cash management arrangements
with the Company or any Subsidiary or in connection with the
provisional honoring of funds transfers, checks or other
items, (c) any actual or alleged infringement of any patent,
copyright, trademark, service mark or similar right of the
Company or any of its Subsidiaries comprised in the
Collateral, (d) the Company or any of its Subsidiaries
entering into or performing this Agreement or any of the
other Loan Documents or (e) with respect to the Company and
its Subsidiaries and their respective properties and assets,
the violation of any Environmental Law, the presence,
disposal, escape, seepage, leakage, spillage, discharge,
emission, release or threatened release of any Hazardous
Substances or any action, suit, proceeding or investigation
brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with
respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the
reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other
proceeding, but excluding (i) in the case of the Agent or
any affiliate, director, officer, employee or representative
thereof, claims arising solely as a result of the gross
negligence or willful misconduct of the Agent or any of its
affiliates, directors, officers, employees or
representatives, (ii) in the case of any Bank or any
affiliate, director, officer, employee or representative
thereof, claims arising solely as a result of the gross
negligence or willful misconduct of such Bank or any of its
affiliates, directors, officers, employees or
representatives, (iii) litigation commenced by the Company
against any Bank or the Agent which (A) seeks enforcement of
the Company's rights hereunder or under any of the Loan
Documents and (B) is finally determined adversely to such
Bank or the Agent, to the extent of such adverse
determination, and (iv) claims made or legal proceedings
commenced against the Agent or any Bank by any
securityholder or creditor thereof arising out of and based
upon rights afforded any such securityholder or creditor
solely in its capacity as such. In litigation, or the
preparation therefor, the Banks and the Agent and its
affiliates shall be entitled to select their own counsel
and, in addition to the foregoing indemnity, the Company
agrees to pay promptly the reasonable fees and expenses of
such counsel. If, and to the extent that the obligations of
the Company under this 18 are unenforceable for any reason,
the Company hereby agrees to make the maximum contribution
to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained
in this 18 shall survive payment or satisfaction in full of
all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and
warranties made herein, in the Notes or in any documents or
other papers delivered by or on behalf of the Company
pursuant hereto shall be deemed to have been relied upon by
the Banks, notwithstanding any investigation heretofore or
hereafter made by it, and shall survive the making by the
Banks of the Loans, as herein contemplated, and shall
continue in full force and effect so long as any amount due
under this Agreement or the Notes or any of the other Loan
Documents remains outstanding and unpaid or any Bank has any
obligation to make any Loans hereunder, and for such further
time as may be otherwise be expressly specified in this
Agreement. All statements contained in any certificate or
other paper delivered to any Bank at any time by or on
behalf of the Company pursuant hereto or in connection with
the transactions contemplated hereby shall constitute
representations and warranties by the Company hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. Conditions to Assignment by Banks.
Except as provided herein, each Bank may assign to one
or more commercial banks, other financial institutions or
other Persons, all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion
of its Commitment Percentage and Commitment and the same
portion of the Loans at the time owing to it, the Notes held
by it); provided that (a) each of the Agent and, unless a
Default or Event of Default shall have occurred and be
continuing, the Company shall have given its prior written
consent to such assignment, which consent, in the case of
the Company and the Agent, will not be unreasonably
withheld; except that the consent of the Company or the
Agent shall not be required in connection with any
assignment by a Bank to (i) an existing Bank or (ii) a Bank
Affiliate of such Bank, (b) each such assignment shall be of
a constant, and not a varying, percentage of all the
assigning Bank's rights and obligations under this
Agreement, (c) each assignment (or, in the case of
assignments by a Bank to its Bank Affiliates, the aggregate
holdings of such Bank and its Bank Affiliates after giving
effect to such assignments), shall be in a minimum amount
equal to $10,000,000 or a multiple of $5,000,000 in excess
thereof (or, if less, such Bank's entire Commitment), and
(d) the parties to such assignment shall execute and deliver
to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the
form of Exhibit H hereto (an "Assignment and Acceptance"),
together with any Notes subject to such assignment. Upon
such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (y) the assignee
thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (z) the assigning
Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred
to in 20.3, be released from its obligations under this
Agreement.
20.2. Certain Representations and Warranties;
Limitations; Covenants.
By executing and delivering an Assignment and
Acceptance, the parties to the assignment thereunder confirm
to and agree with each other and the other parties hereto as
follows:
(a) other than the representation and warranty
that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any
adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and
assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement or the execution,
legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan
Documents or any other instrument or document furnished
pursuant hereto or the attachment, perfection or
priority of any security interest or mortgage,
(b) the assigning Bank makes no representation or
warranty and assumes no responsibility with respect to
the financial condition of the Company and its
Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the
Obligations, or the performance or observance by the
Company and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of
the Obligations of any of their obligations under this
Agreement or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto
or thereto;
(c) such assignee confirms that it has received a
copy of this Agreement, together with copies of the
most recent financial statements referred to in 8.8
and 9.5 and such other documents and information as it
has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without
reliance upon the assigning Bank, the Agent or any
other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking
action under this Agreement;
(e) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other
Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(f) such assignee agrees that it will perform in
accordance with their terms all of the obligations that
by the terms of this Agreement are required to be
performed by it as a Bank; and
(g) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and
Acceptance.
20.3. Register.
The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and
addresses of the Banks and the Commitment Percentage of, and
principal amount of the Syndicated Loans owing to the Banks
from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the
Company, the Agent and the Banks may treat each Person whose
name is recorded in the Register as a Bank hereunder for all
purposes of this Agreement. The Register shall be available
for inspection by the Company and the Banks at any
reasonable time and from time to time upon reasonable prior
notice. Upon each such recordation, the assigning Bank
agrees to pay to the Agent a registration fee in the sum of
$3,500.
20.4. New Notes.
Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with
each Note subject to such assignment, the Agent shall (i)
record the information contained therein in the Register,
and (ii) give prompt notice thereof to the Company and the
Banks (other than the assigning Bank). Within five (5)
Business Days after receipt of such notice, the Company, at
its own expense, shall execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note to the order
of such Assignee in an amount equal to the amount assumed by
such Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its
obligations hereunder, a new Note to the order of the
assigning Bank in an amount equal to the amount retained by
it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal
amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and
returned to the Company.
20.5. Participations.
Each Bank may sell participations to one or more Banks
or other entities in all or a portion of such Bank's rights
and obligations under this Agreement and the other Loan
Documents; provided that (a) each such participation shall
be in an amount of not less than $10,000,000, (b) any such
sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Company and (c) the
only rights granted to the participant pursuant to such
participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications
that would reduce the principal of or the interest rate on
any Loans, extend the term or increase the amount of the
Commitment of such Bank as it relates to such participant,
reduce the amount of any Commitment Fee which such
participant is entitled or extend any regularly scheduled
payment date for principal or interest (it being understood
that (i) any vote to rescind any acceleration made pursuant
to 14.1 of amounts owing with respect to the Loans and
other Obligations and (ii) any modifications of the
provisions relating to amounts, timing or application or
prepayments of Loans and other Obligations shall not require
the approval of such participant).
20.6. Assignee or Participant Affiliated with the
Company.
If any assignee Bank is an Affiliate of the Company,
then any such assignee Bank shall have no right to vote as a
Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the
Loan Documents or for purposes of making requests to the
Agent pursuant to 14.1 or 14.2, and the determination of
the Majority Banks shall for all purposes of this Agreement
and the other Loan Documents be made without regard to such
assignee Bank's interest in any of the Loans. If any Bank
sells a participating interest in any of the Loans to a
participant, and such participant is the Company or an
Affiliate of the Company, then such transferor Bank shall
promptly notify the Agent of the sale of such participation.
A transferor Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan
Documents or for purposes of making requests to the Agent
pursuant to 14.1 or 14.2 to the extent that such
participation is beneficially owned by the Company or any
Affiliate of the Company, and the determination of the
Majority Banks shall for all purposes of this Agreement and
the other Loan Documents be made without regard to the
interest of such transferor Bank in the Loans to the extent
of such participation. The provisions of this 20.6 shall
not apply to an assignee Bank or participant which is also a
Bank on the Effective Date or to an assignee Bank or
participant which has disclosed to the other Banks that it
is an Affiliate of the Company and which, following such
disclosure, has been excepted from the provisions of this
20.6 in a writing signed by the Majority Banks determined
without regard to the interest of such assignee Bank or
transferor Bank, to the extent of such participation, in
Loans.
20.7. Miscellaneous Assignment Provisions.
Any assigning Bank shall retain its rights to be
indemnified pursuant to 18 with respect to any claims or
actions arising prior to the date of such assignment. If any
Reference Bank transfers all of its interest, rights and
obligations under this Agreement, the Agent shall, in
consultation with the Company and with the consent of the
Company and the Majority Banks, appoint another Bank to act
as a Reference Bank hereunder. Anything contained in this
20 to the contrary notwithstanding, any Bank may at any
time pledge or assign a security interest in all or any
portion of its interest and rights under this Agreement
(including all or any portion of its Notes) to secure
obligations of such Bank, including any pledge or assignment
to secure obligations to (a) any of the twelve Federal
Reserve Banks organized under 4 of the Federal Reserve Act,
12 U.S.C. 341 and (b) with respect to any Bank that is a
fund that invests in bank loans, to any lender or any
trustee for, or any other representative of, holders of
obligations owed or securities issued by such fund as
security for such obligations or securities or any
institutional custodian for such fund or for such lender.
Any foreclosure or similar action by any Person in respect
of such pledge or assignment shall be subject to the other
provisions of this 20. No such pledge or the enforcement
thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents, provide
any voting rights hereunder to the pledgee thereof, or
affect any rights or obligations of the Company or Agent
hereunder.
20.8. Increased Costs.
No assignee, participant or other transferee of any
Bank's rights shall be entitled to receive any greater
payment under 4.1 or 4.7 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Company's prior
written consent.
20.9. Assignment by Company.
The Company shall not assign or transfer any of its
rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
21. NOTICES, ETC.
Except as otherwise expressly provided in this
Agreement, all notices and other communications made or
required to be given pursuant to this Agreement or the Notes
shall be in writing and shall be delivered in hand, mailed
by United States registered or certified first class mail,
postage prepaid, sent by overnight courier, or sent by
telegraph, telecopy, facsimile or telex and confirmed by
delivery via courier or postal service, addressed as
follows:
(a) if to the Company, at 1011 Newport Avenue,
Pawtucket, Rhode Island 02862-0200, Attention: David D.
R. Hargreaves, Senior Vice President and Chief
Financial Officer, with a copy to Phillip H. Waldoks,
Senior Vice President-Corporate Legal Affairs and
Secretary, Hasbro, Inc., 32 West 23rd Street, New York,
New York 10010, or at such other address or addresses
for notice as the Company shall last have furnished in
writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street,
Boston, Massachusetts 02110, Attention: John P.
O'Loughlin, Director, or such other address for notice
as the Agent shall last have furnished in writing to
the Person giving the notice; and
(c) if to any Bank, at such Bank's address set
forth on Schedule 1 hereto, or such other address for
notice as such Bank shall have last furnished in
writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered
by hand to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such
officer, (b) if sent by registered or certified first-class
mail, postage prepaid, when received by a responsible
officer or employee of the party to which it is directed,
provided that such receipt may be evidenced by return
receipt signed by a responsible officer or employee of the
party to which it is directed, and (c) if sent by telegraph,
telecopy, facsimile or telex, at the time of dispatch
thereof, if in normal business hours in the state where
received or otherwise at the opening of business on the next
Business Day.
22. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
22.1. Confidentiality.
Each of the Banks and the Agent agrees, on behalf of
itself and each of its affiliates, directors, officers,
employees and representatives, to use reasonable precautions
to keep confidential, in accordance with their customary
procedures for handling confidential information of the same
nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the
Company or any of its Subsidiaries pursuant to this
Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks
or the Agent, provided that nothing herein shall limit the
disclosure of any such information (a) after such
information shall have become public other than through a
violation of this 22, or becomes available to any of the
Banks or the Agent on a nonconfidential basis from a source
other than the Company or any of its Subsidiaries without a
duty of confidentiality to the Company or such Subsidiary
being violated, (b) to the extent required by statute, rule,
regulation or judicial process, (c) to counsel for any of
the Banks or the Agent so long as the relevant Bank or Agent
informs such counsel of the agreement under this 22.1 and
such Bank assumes responsibility for compliance by such
counsel with such agreement, (d) to bank examiners or any
other regulatory authority having jurisdiction over any Bank
or the Agent, or to auditors or accountants, (e) to the
Agent or any Bank, (f) in connection with any litigation to
which any one or more of the Banks or the Agent is a party,
or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document, (g) to a Bank
Affiliate or a Subsidiary or affiliate of the Agent so long
as the relevant Bank or Agent informs such Bank Affiliate,
subsidiary or affiliate of the agreement under this 22.1
and such Bank or the Agent assumes responsibility for
compliance by such Person with such agreement, (h) to any
actual or prospective assignee or participant or any actual
or prospective counterparty (or its advisors) to any swap or
derivative transactions referenced to credit or other risks
or events arising under this Agreement or any other Loan
Document so long as such actual or prospective assignee,
participant or counterparty, as the case may be, agrees to
be bound by the provisions of this 22 pursuant to an
agreement in substantially the form of Exhibit I provided to
the Company, or (i) with the consent of the Company.
22.2. Prior Notification.
Unless specifically prohibited by applicable law or
court order, each of the Banks and the Agent shall, prior to
disclosure thereof, notify the Company of any request for
disclosure of any such non-public information by any
governmental agency or representative thereof (other than
any such request in connection with an examination of the
financial condition of such Bank by such governmental
agency) or pursuant to legal process and afford the Company
the opportunity to obtain a protective order or other
appropriate remedy or agreement to maintain confidentiality
of the information.
22.3. Other.
In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it by the
Company or any of its Subsidiaries. The obligations of each
Bank under this 22 shall supersede and replace the
obligations of such Bank under any confidentiality letter in
respect of this financing signed and delivered by such Bank
to the Company prior to the date hereof and shall be binding
upon any assignee of, or purchaser of any participation in,
any interest in any of the Loans from any Bank.
23. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this
Agreement to be given by the Banks may be given, and any
term of this Agreement, the other Loan Documents or any
other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Company or
any of its Subsidiaries of any terms of this Agreement, the
other Loan Documents or such other instrument or the
continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the
written consent of the Company and the written consent of
the Majority Banks. Notwithstanding the foregoing, no
amendment, modification or waiver shall:
(a) without the written consent of the Company and
each Bank directly affected thereby:
(i) reduce or forgive the principal amount of
any Loans, or reduce the rate of interest on the
Notes or the amount of the Commitment Fee;
(ii) increase the amount of the Commitments
or extend the expiration date of any Bank's
Commitment;
(iii) postpone or extend the Final Maturity
Date or any other regularly scheduled dates for
payments of principal of, or interest on, the
Loans or any Fees or other amounts payable to such
Bank (it being understood that (A) any vote to
rescind any acceleration made pursuant to 14.1 of
amounts owing with respect to the Loans and other
Obligations and (B) any modifications of the
provisions relating to amounts, timing or
application of prepayments of Loans and other
Obligations shall require only the approval of the
Majority Banks); and
(iv) other than pursuant to a transaction
permitted by the terms of this Agreement, release
all or substantially all of the Collateral or
release any of the Restricted Subsidiaries from
its guaranty obligations under the Guaranty
(excluding, if the Company or any Restricted
Subsidiary becomes a debtor under the federal
Bankruptcy Code, the release of "cash collateral",
as defined in Section 363(a) of the federal
Bankruptcy Code pursuant to a cash collateral
stipulation with the debtor approved by the
Majority Banks);
(b) without the written consent of all of the
Banks, amend or waive this 23 or the definition of
Majority Banks;
(c) without the written consent of the Agent,
amend or waive 3 or 15, the amount or time of payment
of the Agent's Fee or any other provision applicable to
the Agent.
No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the
Agent or any Bank in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Company shall entitle the
Company to other or further notice or demand in similar or
other circumstances.
24. PROVISIONS OF GENERAL APPLICATIONS.
24.1. Governing Law.
THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE
CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID
COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE COMPANY AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
COMPANY BY MAIL AT THE ADDRESS SPECIFIED IN 21. THE
COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH
COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
24.2. Headings.
The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions
hereof.
24.3. Counterparts.
This Agreement and any amendment hereof may be executed
in several counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall
be an original, and all of which together shall constitute
one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is
sought. Delivery by facsimile by any of the parties hereto
of an executed counterpart hereof or of any amendment or
waiver hereto shall be as effective as an original executed
counterpart hereof or of such amendment or waiver and shall
be considered a representation that an original executed
counterpart hereof or such amendment or waiver, as the case
may be, will be delivered.
24.4. Entire Agreement, Etc.
The Loan Documents and any other documents executed in
connection herewith or therewith express the entire
understanding of the parties with respect to the
transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or
terminated, except as provided in 17.12.
24.5. Waiver of Jury Trial.
THE COMPANY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY, INCLUDING ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT OR ANY BANK
RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THE LOAN DOCUMENTS AND AGREES THAT IT WILL NOT SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. Except as
prohibited by law, the Company hereby waives any right it
may have to claim or recover in any litigation referred to
in the preceding sentence any special, exemplary,
consequential or punitive damages or any damages other than,
or in addition to, actual damages. The Company (a)
certifies that no representative, agent or attorney of any
Bank or the Agent has represented, expressly or otherwise,
that such Bank or the Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced
to enter into this Agreement, the other Loan Documents to
which it is a party by, among other things, the waivers and
certifications contained herein.
24.6. Severability.
The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision
of this Agreement in any jurisdiction.
25. TRANSITIONAL ARRANGEMENTS.
25.1. Existing Credit Agreement Superseded.
This Agreement shall on the Effective Date supersede
the Existing Credit Agreement in its entirety, except as
provided in this 25. On the Effective Date, the rights and
obligations of the parties evidenced by the Existing Credit
Agreement shall be evidenced by the Agreement and other Loan
Documents, and the "Syndicated Loans" as defined in the
Existing Credit Agreement shall be converted to Syndicated
Loans as defined herein.
25.2. Return and Cancellation of Notes.
Upon receipt by any Bank of its Notes hereunder on the
Effective Date, any "Notes" of the Company held by such Bank
pursuant to and as defined in the Existing Credit Agreement
shall be deemed to be no longer outstanding. As soon as
reasonably practicable after its receipt of its Notes
hereunder on the Effective Date, each Bank will promptly
return to the Company, marked "Substituted" or "Cancelled",
as the case may be, any notes of the Company held by such
Bank pursuant to the Existing Credit Agreement.
25.3. Interest and Fees Under Superseded Agreement.
All interest and fees and expenses, if any, owing or
accruing under or in respect of the Existing Credit
Agreement through the Effective Date shall be calculated as
of the Effective Date (prorated in the case of any
fractional periods), and shall be paid as of the Effective
Date. Commencing on the Effective Date, the Commitment Fee
shall be payable by the Company to the Agent for the account
of the Banks in accordance with 2.2.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as an agreement under seal as of the date
first set forth above.
HASBRO, INC.
(Corporate Seal)
By: /s/ Martin R. Trueb
Martin R. Trueb
Senior Vice President and
Treasurer
FLEET NATIONAL BANK (f/k/a
BankBoston, N.A.), individually and as
Agent
By: /s/ John O'Loughlin
John O'Loughlin
Director
BANK OF AMERICA, N.A.
By: /s/ John W. Pocalyko
John W. Pocalyko
Managing Director
THE BANK OF NOVA SCOTIA
By: /s/ T.M. Pitcher
T.M. Pitcher
Managing Director
CITICORP USA, INC.
By: /s/ John S. Hutchins
John S. Hutchins
Managing Director
COMMERZBANK A.G., New York
Branch
By: /s/ Robert Donohue
Robert Donohue
Senior Vice President
By: /s/ Andrew P. Luck
Andrew P. Lusk
Assistant Vice President
MELLON BANK, N.A.
By: /s/ Janet R. Twomey
Janet R. Twomey
Vice President
SANPAOLO IMI S.P.A.
By: /s/ Luca Sacchi
Luca Sacchi
Vice President
By: /s/ Carlo Persico
Carlo Persico
DGM
BNP PARIBAS
By: /s/ Christopher Criswell
Christopher Criswell
Director
By: /s/ Arnaud Collin du
Bocage
Arnaud Collin du Bocage
BARCLAYS BANK PLC
By: /s/ Marlene Wechselblatt
Marlene Wechselblatt
Vice President
EXHIBIT A-1
FORM OF [AMENDED AND RESTATED]* SYNDICATED NOTE
$______________________ as of __________ __, 200__
FOR VALUE RECEIVED, the undersigned, HASBRO, INC., a
Rhode Island corporation (hereinafter, together with its
successors in title and assigns, called the "Company"),
hereby absolutely and unconditionally promises to pay to the
order of [INSERT NAME OF BANK] (hereinafter together with
its successors in title and permitted assigns, called the
"Bank") at the times and in accordance with the terms and
conditions specified in the Credit Line Agreement (as
defined below) but in no event later than the Final Maturity
Date (as defined in the Credit Line Agreement), the
principal sum of [INSERT COMMITMENT AMOUNT] ($____________),
or if less, the aggregate unpaid principal amount of all
Syndicated Loans made by the Bank to the Company pursuant to
the Amended and Restated Line of Credit Agreement (as the
same may be amended, restated, modified or supplemented and
in effect from time to time, the "Credit Line Agreement"),
dated as of February 16, 2001, by and among the Company, the
Bank and certain other lending institutions listed on
Schedule 1 thereto and Fleet National Bank (f/k/a
BankBoston, N.A.), as agent (the "Agent") for the Bank and
such other lending institutions. All capitalized terms used
herein which are defined in the Credit Line Agreement shall
have the same meanings herein as therein.
[This Amended and Restated Syndicated Note (this
"Note") constitutes the amendment and restatement in its
entirety of the Syndicated Note, dated as of
_______________, issued by the Company to the Bank in the
original principal amount of $__________________ (the
"Original Note"), and is in substitution therefor and an
amendment and replacement thereof. Nothing herein shall be
construed to constitute payment of the Original Note or to
release or terminate any guaranty or lien, mortgage, pledge
or other security entered in favor of the Bank.]*
This Note evidences borrowings under and has been
issued by the Company in accordance with the terms of the
Credit Line Agreement. The Bank and any holder hereof are
entitled to the benefits of the Credit Line Agreement, and
may enforce the agreement of the Company contained therein,
including without limitation the Company's promise to pay
interest on the Outstanding Syndicated Loans until paid in
full at the rates per annum set forth in or established
pursuant to the Credit Line Agreement. Such interest shall
be payable on such dates as are determined from time to time
pursuant to the Credit Line Agreement and shall be
calculated as therein provided.
The Bank shall, and is hereby irrevocably authorized by
the Company to, endorse on the schedule attached to this
Note or a continuation of such schedule attached hereto and
made a part hereof, an appropriate notation evidencing
advances and repayments of principal of this Note, provided
that failure by the Bank to make any such notation shall not
affect any of the Company's obligations in respect of this
Note.
The Company has the right in certain circumstances to
prepay the principal of this Note on the terms and
conditions specified in the Credit Line Agreement.
If any one or more of the Events of Default shall
occur, the entire unpaid principal amount of this Note and
all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect
provided in the Credit Line Agreement.
The Company and every endorser and guarantor of this
Note or the obligation represented hereby waive presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension
or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of
collateral and to the addition or release of any other party
or person primarily or secondarily liable.
This Note and the obligations of the Company hereunder
shall be governed by, and interpreted and determined in
accordance with, the laws of the Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or
choice of law). This Note is a sealed instrument under the
laws of the Commonwealth of Massachusetts.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Note to
be signed in its corporate name and its corporate seal to be
impressed hereon by its duly authorized officer as of the
day and in the year first above written.
HASBRO, INC.
By:___________________________
Name:
Title:
Attest:_______________________
Name:
Title:
Da Amount Interes Amount of Balance Notatio
te of Loan t Rate Principal of n
Electio Paid or Principal Made By
n Prepaid Unpaid
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
EXHIBIT A-2
FORM OF SYNDICATED LOAN REQUEST
______________, ___, 20__
Fleet National Bank, (f/k/a
BankBoston, N.A.), as Agent
100 Federal Street
Boston, Massachusetts 02110
Re: Syndicated Loan Request
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and
Restated Line of Credit Agreement, dated as of February 16,
2001 (as the same may be amended and in effect from time to
time, the "Credit Line Agreement"), by and among Hasbro,
Inc. (the "Company"), Fleet National Bank (f/k/a BankBoston,
N.A.) and the other lending institutions listed on Schedule
1 thereto (collectively, the "Banks") and Fleet National
Bank (f/k/a BankBoston, N.A.), as agent (the "Agent") for
the Banks. Capitalized terms which are used herein without
definition and which are defined in the Credit Line
Agreement shall have the same meanings herein as in the
Credit Line Agreement.
Pursuant to 2.4 of the Credit Line Agreement, we
hereby request that a Syndicated Loan consisting of [a Base
Rate Loan in the principal amount of $______________ or a
Eurocurrency Rate Loan in the principal amount of
$_______________ with an Interest Period of _______________]
be made on __________ __, 20___. We understand that this
request is irrevocable and binding on us and obligates us to
accept the requested Syndicated Loan on such date.
We hereby represent and warrant that all of the
conditions set forth in 13 of the Credit Line Agreement
have been satisfied on the date of this request.
We hereby certify that the borrowing requested hereby
is in accordance with 2.1(a) of the Credit Line Agreement.
Very truly yours,
HASBRO, INC.
By:
Name:
Title:
EXHIBIT B-1
FORM OF [AMENDED AND RESTATED]* COMPETITIVE BID NOTE
$ as of _______________ ___, 200__
FOR VALUE RECEIVED, the undersigned HASBRO, INC., a
Rhode Island corporation (hereinafter, together with its
successors in title and assigns, called the "Company"),
hereby absolutely and unconditionally promises to pay to the
order of [INSERT NAME OF BANK] (the "Bank") at the times and
in accordance with the terms and conditions specified in the
Credit Line Agreement (as defined below) but in no event
later than the Final Maturity Date, the principal amount of
DOLLARS ( $ ) or, if less, the aggregate
unpaid principal amount of Competitive Bid Loans advanced by
the Bank to the Company pursuant to the Amended and Restated
Line of Credit Agreement, dated as of February 16, 2001 (as
the same may be amended, restated, modified or supplemented
and in effect from time to time, the "Credit Line
Agreement"), by and among the Company, the Bank, the other
lending institutions which are or may become parties to the
Credit Line Agreement and Fleet National Bank (f/k/a
BankBoston, N.A.), as Agent. The Company also promises to
pay to the order of the Bank interest on the principal
balance hereof through and including the date on which such
principal amount is paid in full, at the times and at the
rates provided in the Credit Line Agreement. All
capitalized terms used in this Amended and Restated
Competitive Bid Note (this "Note") and not otherwise defined
herein shall have the same meanings herein as in the Credit
Line Agreement.
[This Note constitutes the amendment and restatement in
its entirety of the Competitive Bid Note, dated as of
_______________, issued by the Company to the Bank in the
original principal amount of $__________________ (the
"Original Note"), and is in substitution therefor and an
amendment and replacement thereof. Nothing herein shall be
construed to constitute payment of the Original Note or to
release or terminate any guaranty or lien, mortgage, pledge
or other security entered in favor of the Bank.]*
This Note evidences borrowings under and has been
issued by the Company in accordance with the terms of the
Credit Line Agreement. The Bank and any holder hereof are
entitled to the benefits of the Credit Line Agreement, and
may enforce the agreements of the Company contained therein,
including without limitation the Company's promise to repay
each Competitive Bid Loan advanced hereunder on the last day
of the applicable Interest Period with respect thereto.
The Bank shall, and is hereby irrevocably authorized by
the Company to, endorse on the schedule attached to this
Note or a continuation of such schedule attached hereto and
made a part hereof, an appropriate notation evidencing
advances and repayments of principal of this Note, provided
that failure by the Bank to make any such notations shall
not affect any of the Company's obligations in respect of
this Note.
The Company has the right in certain circumstances and
the obligation in certain other circumstances to prepay the
whole or part of the principal of this Note on the terms and
conditions specified in the Credit Line Agreement.
If any one or more of the Events of Default shall
occur, the entire unpaid principal amount of this Note and
all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect
provided in the Credit Line Agreement.
The Company and every endorser and guarantor of this
Note or the obligation represented hereby waive presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension
or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of
collateral and to the addition or release of any other party
or person primarily or secondarily liable.
This Note and the obligations of the Company hereunder
shall be governed by, and interpreted and determined in
accordance with, the laws of the Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or
choice of law). This Note is a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Note to
be signed in its corporate name by its duly authorized
officer as of the day and year first above written.
HASBRO, INC.
By:_______________________
Name:
Title:
Attest:____________________
Name:
Title:
Amount
of
Interest Principa Balance
l of
Amount Rate Paid or Principa Notation
of l
Dat Loan Election Prepaid Unpaid Made By
e
____________________________________________________________
__________________
____________________________________________________________
__________________
EXHIBIT B-2
FORM OF COMPETITIVE BID QUOTE REQUEST
[INSERT DATE]
To: Fleet National Bank (f/k/a BankBoston, N.A.),
as Agent (the "Agent")
From: Hasbro, Inc. (the "Company")
Re: Amended and Restated Line of Credit Agreement
(as amended and in effect from time to time, the
"Credit Line Agreement"), dated as of February 16,
2001, among the Company, the Banks party thereto
and the Agent
We hereby give notice pursuant to 2.5.1(b) of the
Credit Line Agreement that we request Competitive Bid Quotes
for the following proposed Competitive Bid Loan(s):
Date of Borrowing:
Principal Amount* Interest Period**
Maturity Date***
$
Such Competitive Bid Quotes should offer a Competitive
Bid Rate.
Terms used herein have the meanings assigned to them in
the Credit Line Agreement.
HASBRO, INC.
By:_____________________________
Title:
_____________________
* Amount must be $5,000,000 minimum, or a greater
integral multiple of $1,000,000.
** Up to one hundred eighty (180) days; a maximum of three
(3) Interest Periods may be selected in one Competitive
Bid Quote Request.
*** Last day of Interest Period.
EXHIBIT B-3
FORM OF INVITATION FOR COMPETITIVE BID QUOTE
To: [Name of Bank]
Re: Invitation for Competitive Bid Quotes to Hasbro,
Inc. (the "Company")
Pursuant to 2.5.1(c) of the Amended and Restated Line
of Credit Agreement, dated as of February 16, 2001 (as
amended and in effect from time to time, the "Credit Line
Agreement"), among the Company, the Banks party thereto and
Fleet National Bank (f/k/a BankBoston, N.A.), as Agent, we
are pleased on behalf of the Company to invite you to submit
Competitive Bid Quotes to the Company for the following
proposed Competitive Bid Loan(s):
Date of Borrowing:
Principal Amount Interest Period(s)*
Maturity Date**
$
Such Competitive Bid Quotes should offer a Competitive
Bid Rate.
Please respond to this invitation by no later than
10:00 a.m. (Boston time) on the requested Drawdown Date to
the attention of [ ] at
facsimile number [ ].
Capitalized terms used herein shall have the same
meanings assigned to such terms in the Credit Line
Agreement.
FLEET NATIONAL BANK (f/k/a
BankBoston, N.A.), as Agent
By:___________________________________
Authorized Officer
____________________
* Up to three (3) Interest Periods may be specified.
** Last day of Interest Period
EXHIBIT B-4
FORM OF COMPETITIVE BID QUOTE
Fleet National Bank (f/k/a BankBoston, N.A.), as Agent
100 Federal Street
Boston, Massachusetts 02110
Attention: [Insert Name]
Re: Competitive Bid Quote to Hasbro, Inc. (the
"Company")
In response to your invitation on behalf of the
Company, dated __________ ___, 20__ we hereby make the
following Competitive Bid Quote on the following terms:
1. Quoting
Bank:_______________________________________________________
2. Person to contact at Quoting
Bank:______________________________________
3. Date of Borrowing:
___________________________________________________*
4. We hereby offer to make Competitive Bid Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest
Competitive Bid
Amount** Period(s)***
Rate(s)****
$
$
5. Aggregate Principal Amount $
____________________
* As specified in the related Invitation for Competitive
Bid Quotes.
** Principal amount bid for each Interest Period (a) may
not exceed the lesser of (i) the Total Commitment and
(ii) the Maximum Availability in effect from time to
time during the applicable Interest Period and (b) may
not exceed the aggregate principal amount of
Competitive Bid Loans for which offers were requested.
Bids must be made for $5,000,000 or any larger multiple
of $1,000,000.
*** Up to one hundred eighty (180) days, as specified in
the related Invitation for Competitive Bid Quotes.
**** Specify rate of interest per annum (each rounded to the
nearest 1/1000th of 1%) for each applicable Interest
Period.
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable
conditions set forth in the Amended and Restated Line of
Credit Agreement, dated as of February 16, 2001, as amended
and in effect from time to time, among the Company, the
Banks party thereto and Fleet National Bank (f/k/a
BankBoston, N.A.), as Agent, irrevocably obligates us to
make the Competitive Bid Loan(s) for which any offer(s) are
accepted in whole or in part by the Company.
Very truly yours,
[NAME OF BANK]
Dated:____________________________
By:_____________________________
Authorized Officer
EXHIBIT B-5
FORM OF NOTICE OF COMPETITIVE BID BORROWING
Fleet National Bank
(f/k/a BankBoston, N.A.), as Agent
100 Federal Street
Boston, Massachusetts 02110
Attention: [Insert Name]
Re: Amended and Restated Line of Credit Agreement
(as amended and in effect from time to time, the
"Credit Line Agreement"), dated as of February 16,
2001, among the Company, the Banks party thereto
and the Agent
We hereby give notice pursuant to 2.5.1(f) of the
Credit Line Agreement of our acceptance of the following
Competitive Bid Quote(s):
1.
Bank:_______________________________________________________
2. Date of Borrowing:
___________________________________________________*
3. In the following principal amounts, for the following
Interest Periods and at the following rates:
Principal Interest
Competitive Bid
Amount Period(s) Rate(s)**
$
$
[Repeat for each Bank as necessary]
____________________
* As specified in the related Invitation for Competitive
Bid Quotes.
** Specify rate of interest per annum (each rounded to the
nearest 1/1000th of 1%) for each applicable Interest
Period.
4. The Aggregate Principal Amount for each Interest Period
is:
Interest Aggregate
Period Principal Amount
$
$
5. We hereby certify (a) that the borrowing accepted
hereby is in accordance with 2.5.1 of the Credit Line
Agreement and (b) that each of the representations and
warranties contained in the Credit Line Agreement or in
any other Loan Document made by or on behalf of the
Company and its Subsidiaries to the Banks delivered
pursuant to or in connection with the Credit Line
Agreement was true and correct in all material respects
as of the date as of which it was made and is true and
correct in all material respects at and as of the date
hereof (except to the extent of changes resulting from
transactions contemplated or permitted by the Credit
Line Agreement and changes occurring in the ordinary
course of business that singly or in the aggregate are
not materially adverse, and to the extent that such
representations and warranties related expressly to an
earlier date) and (c) that no Default or Event of
Default has occurred and is continuing.
Very truly yours,
HASBRO, INC.
Dated:____________________________
By:_____________________________
Name:
Title:
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
HASBRO, INC.
_________ __, 200_
Fleet National Bank (f/k/a
BankBoston, N.A.), as Agent
100 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
Reference is made to the Amended and Restated Line of
Credit Agreement (the "Credit Line Agreement"), dated as of
February 16, 2001, by and among Hasbro, Inc. (the
"Company"), Fleet National Bank (f/k/a BankBoston, N.A.) and
the lending institutions party thereto (collectively, the
"Banks"), and Fleet National Bank (f/k/a BankBoston, N.A.),
as agent for the Banks (the "Agent"). Capitalized terms
used herein without definition shall have the respective
meanings set forth in the Credit Line Agreement.
Pursuant to 9.5(c) of the Credit Line Agreement, the
Company and the undersigned officer of the company (who has
reviewed the Loan Documents) hereby certify that (a) the
information furnished in the attached Compliance Certificate
Worksheet was true and correct as of the last day of the
fiscal quarter next preceding the date of this certificate,
(b) as of the date hereof, no Default or Event of Default
under the Credit Line Agreement has occurred, (c) the
financial statements delivered herewith were prepared in
accordance with GAAP, and (d) except as specified in the
attached schedule, if any, the representations and
warranties set forth in 8 of the Credit Line Agreement are
true and correct in all material respects as of the date
hereof except to the extent such representations and
warranties expressly relate to an earlier date, provided,
however, that the representations and warranties set forth
in 8 of the Credit Line Agreement shall be deemed to be
made with respect to the financial statements of the Company
most recently delivered to the Agent and the Banks pursuant
to 9.5 of the Credit Line Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on this _____ day of _________________, 2001.
HASBRO, INC.
By:_________________________
Title:
COMPLIANCE CERTIFICATE WORKSHEET
As of ___________ __, 20__
Section
Calculation
11.1 Minimum EBITDA
for Reference Period ended on ______ __, 20__
A. EBITDA
(Sum of Item A(1) plus Items A(2), A(3) A(4), A(5) and
A(6),
minus Item A(7), plus solely for the fiscal quarter
ended
December 30, 2000 or any period that includes such
quarter, $210,000,000) $
(1) Consolidated Net Earnings (or Loss)
consolidated net earnings (or loss) after
deduction
of all expenses, taxes and other proper charges,
determined in accordance with GAAP, after
eliminating all extraordinary items of income for
such period: $
(2) income tax expense for such period, to the extent
deducted
in calculating Item A(1):
$
(3) interest expense for such period, to the extent
deducted
in calculating Item A(1):
$
(4) depreciation and amortization for such period, to
the extent
deducted in calculating Item A(1):
$
(5) non-cash charges for such period, to the extent
deducted
in calculating Item A(1):
$
(6) extraordinary losses for such period, to the extent
deducted
in calculating Item A(1):
$
(7) extraordinary gains for such period, to the extent
included
in calculating Item A(1):
$
B. Minimum EBITDA permitted under the Credit Line
Agreement
(For any Reference Period ending with the fiscal
quarter
referenced in the table set forth below, not to be less
than
the amount set forth opposite such fiscal quarter in
such table)
Fiscal Quarter Ending: EBITDA
First Quarter 2001 $310,000,000
Second Quarter 2001 $270,000,000
Third Quarter 2001 $300,000,000
Fourth Quarter 2001 $400,000,000
11.2 Consolidated Total Funded Debt to EBITDA
For the fiscal quarter ended ______ __, 20__
A.Consolidated Total Funded Debt $
(Sum of Item A(1) plus Item A(2) plus Item A(3)
plus Item A(4)
(1) Indebtedness for borrowed money or the obtaining
of
credit (including the face amount of letters of
credit
outstanding): $
(2) Indebtedness in respect of the deferred purchase
price
of assets (other than trade payables incurred in the
ordinary course of business):
$
(3) Indebtedness in respect of Capitalized Leases and
Synthetic Leases: $
(4) Indebtedness of the type referred to in Items
A(1), A(2)
and A(3) above which are guaranteed by the Company or
any of its Subsidiaries
$
B. EBITDA for the Reference Period then ended
(as set forth in Item 11.1(A)):
$
C. Ratio of Item A to Item B:
_____:_____
(For any fiscal quarter referenced in the table set
forth
below, not to exceed the ratio set forth opposite such
fiscal
quarter in such table)
Fiscal Quarter Ending: Ratio
Fourth Quarter 2000 3.25:1.00
First Quarter 2001 4.25:1.00
Second Quarter 2001 5.75:1.00
Third Quarter 2001 5.50:1.00
Fourth Quarter 2001 3.25:1.00
11.3 Fixed Charge Coverage Ratio
For the Reference Period ended on ______ __, 20__
A. Consolidated Operating Cash Flow:
(Item A(1) minus Item A(2)):
$
(1) EBITDA for such period (as set forth in Item
11.1(A)): $
(2) Capital Expenditures made during such period:
$
B. Consolidated Total Debt Service
(Sum of Item B(1) plus Item B(2) plus Item B(3)):
$
(1) Consolidated Total Interest Expense for such
period: $
(2) scheduled repayments of principal during such
period
in respect of Consolidated Total Funded Debt (set
forth
in Item 11.2(A)) that becomes due and payable during
such period or is to become due and payable during
such period (excluding any repayments of principal
required under the Credit Line Agreement and the
Credit Line
Agreement): $
(3) Distributions paid during such period:
$
C. Ratio of Item A to Item B:
:
(For any Reference Period ending with any fiscal
quarter
referenced in the table below, not to be less than the
ratio
set forth opposite such fiscal quarter in such table)
Fiscal Quarter Ending: Ratio
First Quarter 2001 1.20:1.00
Second Quarter 2001 1.10:1.00
Third Quarter 2001 1.70:1.00
Fourth Quarter 2001 2.50:1.00
11.4 Capital Expenditures
For the period from __________ to __________:
A. Capital Expenditures made during such period:
$
B. Maximum amount of Capital Expenditures permitted
under the Credit Line Agreement
(For any period referenced in the table below, not to
exceed
the aggregate amount set forth in the table below
opposite
such period in such table)
Period Amount
First Quarter 2001 $30,000,000
First and Second Quarter $60,000,000
2001
First, Second and Third
Quarter 2001 $80,000,000
First, Second, Third and
Fourth Quarter 2001 $90,000,000
EXHIBIT F
FORM OF SUBORDINATION AGREEMENT
This AMENDED AND RESTATED SUBORDINATION AGREEMENT,
dated as of February 16, 2001 (as amended and in effect from
time to time, this "Subordination Agreement"), is by and
among (a) HASBRO, INC., a Rhode Island corporation having
its principal place of business at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862 (the "Company"), (b) HASBRO
INTERNATIONAL, INC., a Delaware corporation having its
principal place of business at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862 ("HII"), (c) WIZARDS OF THE
COAST, INC., a Washington corporation having its principal
place of business at 1801 Lind Ave SW, Renton, Washington
98055 ("Wizards" and together with HII, the "Significant
Subsidiaries") and (d) FLEET NATIONAL BANK (f/k/a
BankBoston, N.A.), a national banking association having an
office at 100 Federal Street, Boston, Massachusetts 02110,
as agent for (in such capacity, the "Agent") the Banks (as
such term is hereinafter defined directly or by reference).
WHEREAS, the Company is the direct or indirect legal
and beneficial owner of all the issued and outstanding
shares of each class of the capital stock of each of the
Significant Subsidiaries;
WHEREAS, the Significant Subsidiaries are members of a
group of related corporations, the success of any one of
which is dependent in part on the success of the other
members of such group;
WHEREAS, the Company, the Agent, and the Banks are
entering into an (a) Amended and Restated Revolving Credit
Agreement, dated as of February 16, 2001 (as amended and in
effect from time to time, the "Revolving Credit Agreement")
and (b) Amended and Restated Line of Credit Agreement, dated
as of February 16, 2001 (as amended and in effect from time
to time, the "Credit Line Agreement", and together with the
Revolving Credit Agreement, the "Credit Agreements") which
amend and restate, respectively, the (i) Revolving Credit
Agreement, dated as of September 10, 1998 (as amended and in
effect from time to time, the "Existing Revolving Credit
Agreement") and (ii) Line of Credit Agreement, dated as of
June 28, 2000 (as amended and in effect from time to time,
the "Existing Credit Line Agreement", and together with the
Existing Revolving Credit Agreement, the "Existing Credit
Agreements").
WHEREAS, in connection with the Existing Credit
Agreements, the Company, the Significant Subsidiaries and
the Agent, for the benefit of the Banks and the Agent,
entered into a (a) Subordination Agreement, dated as of
September 10, 1998 (as amended, supplemented or otherwise
modified from time to time) and (b) Subordination Agreement,
dated as of June 28, 2000 (as amended, supplemented or
otherwise modified from time to time, collectively, the
"Existing Subordination Agreements");
WHEREAS, it is a condition precedent to the amendment
and restatement of the Existing Credit Agreements and to the
Banks' making any loans or otherwise extending credit to the
Company under the Credit Agreements that the Company and
each of the Significant Subsidiaries execute and deliver to
the Agent, for the benefit of the Banks and the Agent, an
amended and restated subordination agreement substantially
in the form hereof;
WHEREAS, the Significant Subsidiaries will receive
substantial direct and indirect benefit from the loans and
extension of credit by the Banks and the Agent to the
Company pursuant to the Credit Agreements (which benefits
are hereby acknowledged); and
WHEREAS, the Company and each of the Significant
Subsidiaries wish to amend and restate the Existing
Subordination Agreements as provided herein;
NOW THEREFORE, in consideration of the premises
contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. All capitalized terms used herein without
definitions shall have both the respective meanings provided
therefor in the Credit Agreements, provided that if the
Credit Agreements provide different meanings for any
capitalized term used herein without definition, such
capitalized term shall have both such meanings.
2. The Company and each of the Significant
Subsidiaries covenant and agree with the Agent that all of
the Subordinated Indebtedness (as hereinafter defined) of
the Company to the Significant Subsidiaries is hereby
expressly subordinated and made junior, to the extent and in
the manner hereinafter set forth in this agreement, in right
of payment to the prior payment in full of all the
Obligations. Until all the Obligations shall have been paid
in full and the Total Commitment shall have been terminated,
(a) the Company shall not, directly or indirectly, make any
payment of principal or interest on account of or transfer
any collateral for any part of any and all indebtedness of
the Company to each of the Significant Subsidiaries, whether
direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising (referred to herein
as the "Subordinated Indebtedness"), whether evidenced by
negotiable or non-negotiable instruments, securities or
other writings, book entries or otherwise, provided that
prior to the occurrence of an Event of Default, the Company
may make payments of principal and interest on account of
the Subordinated Indebtedness, (b) upon the occurrence, and
during the continuance of, an Event of Default, none of the
Significant Subsidiaries shall demand or accept from the
Company or any other Person any payment or collateral in
respect of the Subordinated Indebtedness, nor cancel, set
off or otherwise discharge any part of the Subordinated
Indebtedness, and (c) neither the Significant Subsidiaries
nor the Company shall otherwise take or permit any action
prejudicial to or inconsistent with the terms of this
agreement.
3. If an Event of Default shall have occurred and be
continuing, the Agent may, by notice to the Company and the
Significant Subsidiaries, demand that all payments made
thereafter by the Company in respect of the Subordinated
Indebtedness be made to the Agent for the benefit of the
Banks in payment of the Obligations. Upon receipt of such
notice from the Agent, the Company shall make all such
payments in respect of the Subordinated Indebtedness
directly to the Agent for application to the Obligations.
Each of the Significant Subsidiaries agrees to subordinate
any subrogation claims it may have in respect of any such
payments until the Obligations shall have been paid in full.
4. None of the Significant Subsidiaries will commence
or join with any other creditor or creditors of the Company
in commencing any bankruptcy, reorganization or insolvency
proceedings against the Company. At any meeting of
creditors of the Company or, in the event of any proceeding,
voluntary or involuntary, for the distribution, division or
application of all or part of the assets or business of the
Company or the proceeds thereof, whether such proceeding be
for the liquidation, reorganization, dissolution or winding
up of the Company or its business, a receivership,
insolvency or bankruptcy proceeding, an assignment for the
benefit of creditors or a proceeding by or against the
Company for relief under any bankruptcy, reorganization or
insolvency law or any law relating to the relief of debtors,
readjustment of indebtedness, reorganization, arrangement,
composition or extension or otherwise, if all Obligations
have not been paid in full at the time, the Agent is hereby
irrevocably authorized at any such meeting or in any such
proceeding:
(a) To enforce claims comprising Subordinated
Indebtedness either in its own name or the name of any
of the Significant Subsidiaries, by proof of debt,
proof of claim, suit or otherwise;
(b) To collect any assets of the Company
distributed, divided or applied by way of dividend or
payment, or any such securities issued, on account of
the Subordinated Indebtedness and apply the same, or
the proceeds of any realization upon the same that the
Agent in its discretion elects to effect, to the
Obligations until all the Obligations shall have been
paid in full, rendering any surplus to the applicable
Significant Subsidiary;
(c) To vote claims comprising the Subordinated
Indebtedness, to accept or reject any plan of partial
or complete liquidation, reorganization, arrangement,
composition or extension; and
(d) To take generally any action in connection
with any such meeting or proceeding which any of the
Significant Subsidiaries in their roles as creditors
might otherwise take.
5. Except as provided in 2 hereof, should any
payment on account of or any collateral for any part of the
Subordinated Indebtedness be received by any of the
Significant Subsidiaries, such payment or collateral shall
be delivered forthwith to the Agent by such Significant
Subsidiaries for application to the Obligations, in the form
received except for the addition of any endorsement or
assignment which may have been omitted. Until so delivered
any such payment or collateral shall be held by such
Significant Subsidiary in trust for the Agent and shall not
be commingled with other funds or property of such
Significant Subsidiary.
6. No part of the Subordinated Indebtedness is
evidenced by any instrument, security or other writing
(other than open-account indebtedness entries on the books
of the Company or the Significant Subsidiaries) a copy of
which has not previously been or is not concurrently being
delivered to the Agent and the Banks; the Significant
Subsidiaries are the lawful owners of the Subordinated
Indebtedness and no part thereof has been assigned to or
subjected to any security interest in favor of anyone.
Until all the Obligations have been paid in full, the
Company shall not issue any instrument, security or other
writing evidencing any part of the Subordinated Indebtedness
except at the request of and in the manner requested by the
Agent; and none of the Significant Subsidiaries shall assign
or subordinate any of the Subordinated Indebtedness except
to or in favor of the Agent or upon terms satisfactory in
form and substance to the Agent and the Banks.
7. The Agent is hereby authorized to demand specific
performance of this agreement, whether or not the Company
shall have complied with the provisions hereof applicable to
it, at any time when any of the Significant Subsidiaries
shall have failed to comply with any provision hereof
applicable to it. Each of the Significant Subsidiaries
hereby irrevocably waives any defense based on the adequacy
of a remedy at law which might be asserted as a bar to the
remedy of specific performance hereof in any action brought
therefor by the Agent. Each of the Significant Subsidiaries
further waives presentment, notice and protest in connection
with all negotiable instruments evidencing the Obligations
or the Subordinated Indebtedness to which it may be a party,
notice of the acceptance of this agreement by the Agent,
notice of any loan made, extension granted or other action
taken in reliance hereon and all demands and notices of
every kind (except as expressly provided in the Credit
Agreements) in connection with this Subordination Agreement,
the Obligations or the Subordinated Indebtedness; assent to
any renewal, extension or postponement of the time of
payment of the Obligations or any other indulgence with
respect thereto, to any substitution, exchange or release of
collateral therefor and to the addition or release of any
person primarily or secondarily liable thereon; and agree to
the provisions of any instrument, security or other writing
evidencing the Obligations.
8. The Significant Subsidiaries shall do, make,
execute and deliver all such additional and further acts,
things, deeds, assurances and instruments as the Agent may
reasonably require more completely to vest in and assure to
the Agent its rights hereunder or in any of the Subordinated
Indebtedness.
9. The Company and the Significant Subsidiaries shall
pay to the Agent on demand any and all expenses, including
reasonable counsel fees, incurred or paid by the Agent in
protecting, preserving or enforcing its rights hereunder.
After deducting all of said expenses, the residue of any
proceeds of collection or sale of any negotiable or non-
negotiable instruments, securities or other writings
evidencing any of the Subordinated Indebtedness shall be
applied to the payment of the Obligations ratably among the
Banks and the Agent and, while giving effect to such ratable
applications, proper allowance being made for interest on
Obligations not then due, and any excess shall be returned
to the applicable Significant Subsidiary.
10. If any warranty herein contained shall prove to
have been materially false when made or in the event of a
breach by the Company or any Significant Subsidiary in the
performance of any of the terms hereof, the Agent may, at
its option, declare that an Event of Default has occurred
pursuant to and in accordance with the terms of 14 of the
Credit Agreements (taking into account any applicable grace
period provided for therein), whereupon the Agent and the
Banks shall have all of the rights and remedies provided for
herein and in the other Loan Documents.
11. The Company and each of the Significant
Subsidiaries hereby acknowledge the agency provisions set
forth in 16 of the Credit Agreements and the authority of
the Agent thereunder to act for the Banks with respect to
this Subordination Agreement as provided in each such 16.
12. The rights granted to the Agent hereunder are
solely for the protection of the Agent and the Banks and
nothing herein contained shall impose on the Agent any
duties with respect to any property of the Company or any
Significant Subsidiary received hereunder beyond reasonable
care in its custody and preservation while in the Agent's
possession. The Agent shall have no duty to preserve rights
against prior parties in any instrument or chattel paper
received hereunder.
13. All rights and interests of the Agent and the
Banks hereunder, and all agreements and obligations of the
Significant Subsidiaries and the Company under this
Subordination Agreement, shall remain in full force and
effect irrespective of:
(i) any lack of validity or enforceability of the
Credit Agreements, the Notes or any other
agreement or instrument relating thereto:
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of
or any consent to any departure from the Credit
Agreements or the Notes, including, without
limitation, any increase in the Obligations
resulting from the extension of additional credit
to the Company or any of its subsidiaries or
otherwise;
(iii) any taking, exchange, release or
nonperfection of any other collateral, or any
taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or
any of the Obligations;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the
Obligations, or any manner of sale or other
disposition of any collateral for all or any of
the Obligations or any other assets of the Company
or any of its subsidiaries; and
(v) any other circumstances (other than payment in
full of the Obligations and the termination of the
Total Commitment) which might otherwise constitute
a defense available to, or a discharge of, the
Company or a subordinated creditor.
This Subordination Agreement shall continue to be
effective or be reinstated, as the case may be, if at any
time any payment of any of the Obligations is rescinded or
must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment has not been made.
14. The Significant Subsidiaries and the Company each
hereby represent and warrant as follows:
(a) The Subordinated Indebtedness now outstanding
has been duly authorized, issued and delivered by the
Company and constitutes the legal, valid and binding
obligations of the Company enforceable against the
Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium,
marshalling or other laws relating to or affecting the
enforcement generally of creditors' rights and remedies
(including such as may deny giving effect to waivers of
debtors' rights). There exists no default in respect
of any such Subordinated Indebtedness.
(b) The Significant Subsidiaries are the legal
and beneficial owners of the Subordinated Indebtedness
now outstanding, free and clear of any lien, security
interest, option or other charge or encumbrance (other
than Permitted Liens).
(c) There are no conditions precedent to the
effectiveness of this Subordination Agreement that have
not been satisfied or waived.
15. All notices and other communications provided for
hereunder shall be in writing (including telecopier,
telegrahic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered, if to
HII or Wizards, c/o the Company at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862 and if to the Company, the
Agent or any Bank, at its address specified in the Credit
Agreements; or as to each party, at such other address as
shall be designated by such party in a written notice to
each other party. All such notices and other communications
shall, when mailed, telecopied, telegraphed, telexed or
cabled, be effective when, respectively, deposited in the
mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable
company.
16. This Subordination Agreement is intended to take
effect as a sealed instrument, shall be binding upon the
Company and each of the Significant Subsidiaries and their
respective successors and assigns, shall inure to the
benefit of the Agent and the Banks, their successors and
assigns and shall be construed in accordance with the laws
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed as of this
______________ day of February, 2001.
(Corporate Seal) HASBRO, INC.
By:
Title:
HASBRO INTERNATIONAL, INC.
By:
Title:
WIZARDS OF THE COAST, INC.
By:
______________________________
Title:
____________________________
FLEET NATIONAL BANK, (f/k/a
BankBoston, N.A.), as Agent
By:
Title:
______________________________
EXHIBIT H
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Line of
Credit Agreement, dated as of February 16, 2001 (as from
time to time amended and in effect, the "Credit Line
Agreement"), by and among (a) Hasbro, Inc., a Rhode Island
corporation (the "Company"), (b) Fleet National Bank (f/k/a
BankBoston, N.A.), a national banking association and the
other lending institutions listed on Schedule 1 thereto
(collectively, the "Banks"), and (c) Fleet National Bank
(f/k/a BankBoston, N.A.), as agent for the Banks (in such
capacity, the "Agent"). Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to
such terms in the Credit Line Agreement.
_________________ (the "Assignor") and _______________
(the "Assignee") hereby agree as follows:
1. Assignment.
Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes
without recourse to the Assignor, a $_____________ interest
in and to the rights, benefits, indemnities and obligations
of the Assignor under the Credit Line Agreement equal to
____________% in respect of the Total Commitment immediately
prior to the Effective Date (as hereinafter defined).
2. Assignor's Representations.
The Assignor (i) represents and warrants that (a) it is
legally authorized to enter into this Assignment and
Acceptance, (b) as of the date hereof, its Commitment is
$_________________, its Commitment Percentage is
____________%, the aggregate outstanding principal balance
of its Syndicated Loans equals $_______________, the
aggregate outstanding principal balance of its Competitive
Bid Loans equals $_______________ and (c) immediately after
giving effect to all assignments which have not yet become
effective, the Assignor's Commitment Percentage will be
sufficient to give effect to this Assignment and Acceptance,
(ii) makes no representation or warranty, express or
implied, and assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with the Credit Line Agreement or any of the
other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the
Credit Line Agreement, the other Loan Documents or any other
instrument or document furnished pursuant thereto or the
attachment, perfection or priority of any security interest
or mortgage, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder free
and clear of any claim or encumbrance; (iii) makes no
representation or warranty and assumes no responsibility
with respect to the financial condition of the Company or
any of its Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations, or
the performance or observance by the Company or any of its
Subsidiaries or any other Person primarily or secondarily
liable in respect of any of the Obligations of any of its
obligations under the Credit Line Agreement or any of the
other Loan Documents or any other instrument or document
delivered or executed pursuant thereto; and (iv) attaches
hereto the Syndicated Note and Competitive Bid Note
delivered to it under the Credit Line Agreement.
The Assignor requests that the Company exchange the
Assignor's Syndicated Note for new Syndicated Notes and
Competitive Bid Notes payable to the Assignor and the
Assignee as follows:
Notes Payable Amount of Amount of
to the Order Syndicated Note Competitive Bid
of: Note
Assignor $________________ $_________________
______ ______
Assignee $________________ $_________________
______ ______
3. Assignee's Representations.
The Assignee (i) represents and warrants that (a) it is
duly and legally authorized to enter into this Assignment
and Acceptance, (b) the execution, delivery and performance
of this Assignment and Acceptance do not conflict with any
provision of law or of the charter or by-laws of the
Assignee, or of any agreement binding on the Assignee, (c)
all acts, conditions and things required to be done and
performed and to have occurred prior to the execution,
delivery and performance of this Assignment and Acceptance,
and to render the same the legal, valid and binding
obligation of the Assignee, enforceable against it in
accordance with its terms, have been done and performed and
have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy
of the Credit Line Agreement, together with copies of the
most recent financial statements delivered pursuant to 8.8
and 9.5 thereof and such other documents and information as
it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Acceptance;
(iii) agrees that it will, independently and without
reliance upon the Assignor, the Agent or any other Bank and
based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Credit
Line Agreement; (iv) appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such
powers under the Credit Line Agreement and the other Loan
Documents as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably
incidental thereto; and (v) agrees that it will perform in
accordance with their terms all the obligations which by the
terms of the Credit Line Agreement are required to be
performed by it as a Bank.
4. Effective Date.
The effective date for this Assignment and Acceptance
shall be ___________ __, _____ (the "Effective Date").
Following the execution of this Assignment and Acceptance,
and, if required by the Credit Line Agreement, the consent
of the Company hereto having been obtained, each party
hereto shall deliver its duly executed counterpart hereof to
the Agent for acceptance by the Agent and recording in the
Register by the Agent. Schedule 1 to the Credit Line
Agreement shall thereupon be replaced as of the Effective
Date by the Schedule 1 annexed hereto.
5. Rights Under Credit Line Agreement.
Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the
Credit Line Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations
of a Bank thereunder, and (ii) the Assignor shall, with
respect to that portion of its interest under the Credit
Line Agreement assigned hereunder, relinquish its rights and
be released from its obligations under the Credit Line
Agreement; provided, however, that the Assignor shall retain
its rights to be indemnified pursuant to 4.7 and 18 of the
Credit Line Agreement with respect to any claims or actions
arising prior to the Effective Date.
6. Payments.
Upon such acceptance of this Assignment and Acceptance
by the Agent and such recording, from and after the
Effective Date, the Agent shall make all payments in respect
of the rights and interests assigned hereby (including
payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and the Assignee shall make any
appropriate adjustments in payments for periods prior to the
Effective Date by the Agent or with respect to the making of
this assignment directly between themselves.
7. Governing Law.
THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).
8. Counterparts.
This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but
one and the same agreement.
[Remainder of page intentional left blank]
IN WITNESS WHEREOF, intending to be legally bound, each
of the undersigned has caused this Assignment and Acceptance
to be executed on its behalf by its officer thereunto duly
authorized, as of the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
CONSENTED TO:
FLEET NATIONAL BANK,
(f/k/a BankBoston, N.A.),
as Agent
By:
Name:
Title:
[HASBRO, INC.]
(required only if no
Default or Event of
Default has occurred and
is continuing)
By:
Name:
Title:
EXHIBIT I
FORM OF CONFIDENTIALITY AGREEMENT
[__________, 200__]
[Name and Address of Bank to
Provide Confidential Information
to Third Party]
Re: Hasbro, Inc.
Ladies and Gentlemen:
Reference is hereby made to the [Amended and Restated
Revolving Credit Agreement] [Amended and Restated Line of
Credit Agreement], dated as of February 16, 2001 (as amended
and in effect from time to time, the "Credit Agreement"), by
and among Hasbro, Inc., a Rhode Island corporation (the
"Company"), Fleet National Bank (f/k/a BankBoston, N.A.), a
national banking association and the other lending
institutions listed on Schedule 1 thereto (collectively, the
"Banks"), and Fleet National Bank (f/k/a BankBoston, N.A.),
as agent for the Banks (in such capacity, the "Agent").
Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit
Agreement.
Pursuant to and in accordance with 9.10 and 22 of the
Credit Agreement, the undersigned (the "Transaction Party"),
in connection with [DESCRIBE NATURE OF TRANSACTION], hereby
covenants and agrees, on behalf of itself and each of its
affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep
confidential, in accordance with its customary procedures
for handling confidential information of the same nature and
in accordance with safe and sound banking practices, any non-
public information supplied to it by the Company or any of
its Subsidiaries or any of the Banks that has been
designated as confidential at the time such information was
provided to such Bank, provided that nothing herein shall
limit the disclosure of any such information:
(a) after such information shall have become public other
than through a violation of 22 of the Credit Agreement, or
becomes available to the Transaction Party on a
nonconfidential basis from a source other than the Company
or any of its Subsidiaries without a duty of confidentiality
to the Company or such Subsidiary being violated;
(b) to the extent required by statute, rule, regulation or
judicial process;
(c) to counsel for the Transaction Party so long as the
Transaction Party informs its counsel of the agreement under
22 of the Credit Agreement and the Transaction Party
assumes responsibility for compliance by its counsel with
such agreement;
(d) to bank examiners or any other regulatory authority
having jurisdiction over the Transaction Party, or to
auditors or accountants;
(e) to the Agent or any Bank;
(f) in connection with any litigation to which the any one
of the Banks, the Agent or the Transaction Party is a party,
or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document;
(g) to a subsidiary or affiliate of the Transaction Party
so long as the Transaction Party informs the affiliate or
subsidiary of the agreement under 22 of the Credit
Agreement and the Transaction Party assumes responsibility
for compliance by such Person with such agreement;
(h) to any actual or prospective assignee or participant or
any actual or prospective counterparty (or its advisors) to
any swap or derivative transactions referenced to credit or
other risks or events arising under the Credit Agreement or
any other Loan Document so long as such actual or
prospective assignee, participant or counterparty, as the
case may be, agrees to execute and deliver an agreement in
substantially the same form hereof; or
(i) with the consent of the Company;
and provided further that, unless specifically
prohibited by applicable law or court order, prior to any
such disclosure, the Transaction Party shall notify the
Company of any request for disclosure of such information by
any governmental agency or representative thereof (other
than any such request in connection with an examination of
the financial condition of the Transaction Party by such
governmental agency) or pursuant to legal process and afford
the Company the opportunity to obtain a protective order or
other appropriate remedy or agreement to maintain
confidentiality of such information.
This letter shall constitute a sealed instrument under
and be governed by the law of the Commonwealth of
Massachusetts and is binding upon the successors and assigns
of the Transaction Party. Please indicate your acceptance
of the above by signing and returning an executed copy of
this letter to [INSERT NAME OF BANK TO PROVIDE THE
CONFIDENTIAL INFORMATION].
Sincerely,
[NAME OF TRANSACTION PARTY]
By:
___________________________
_________
Name:
Title:
Accepted and Acknowledged:
[NAME OF BANK TO PROVIDE
CONFIDENTIAL INFORMATION]
By: ________________________
Name:
Title:
EXHIBIT 4(d)
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of
February 16, 2001
Among
HASBRO, INC.
the BANKS party hereto
FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.), AS AGENT
with
FLEET SECURITIES, INC.,
having acted as Arranger
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
TABLE OF CONTENTS
1. DEFINITIONS AND RULES OF INTERPRETATION. 1
1.1. Definitions. 1
1.2. Rules of Interpretation. 19
2. THE SYNDICATED AND COMPETITIVE BID LOAN FACILITY. 20
2.1. Commitment to Lend Syndicated Loans. 20
2.2. Commitment Fee. 21
2.3. Reduction of Total Commitment. 21
2.4. Requests for Syndicated Loans. 22
2.5. Competitive Bid Loans. 22
2.5.1. Competitive Bid Borrowings. 22
2.5.2. Repayment of Competitive Bid Loans. 26
2.6. The Notes. 27
2.7. Interest on Loans. 28
2.8. Prepayments. 28
2.9. Funds for Loans. 29
2.10. Mandatory Repayments. 30
2.11. Application of Payments; Commitment Reduction.31
3. THE SWING LINE. 32
3.1. The Swing Line Loans. 32
3.2. Notice of Borrowing. 32
3.3. Interest on Swing Line Loans. 33
3.4. Repayment of Swing Line Loans. 33
3.5. The Swing Line Note. 33
4. INTEREST; PAYMENTS AND COMPUTATIONS. 34
4.1. Interest; Costs and Expenses. 34
4.2. Concerning Interest Periods. 39
4.3. Interest on Overdue Amounts. 39
4.4. Payments. 39
4.5. Computations. 40
4.6. Interest Limitation. 40
4.7. Indemnification. 40
4.8. Banks' Obligations Several. 41
4.9. Debt Rating Increase. 41
5. LETTERS OF CREDIT. 41
5.1. Letter of Credit Commitments. 41
5.1.1. Commitment to Issue Letters of Credit. 41
5.1.2. Letter of Credit Applications. 42
5.1.3. Terms of Letters of Credit. 42
5.1.4. Reimbursement Obligations of Banks. 42
5.1.5. Participations of Banks. 43
5.2. Reimbursement Obligation of the Company. 43
5.3. Letter of Credit Payments. 43
5.4. Obligations Absolute. 44
5.5. Reliance by Issuer. 45
5.6. Letter of Credit Fee. 45
6. COLLATERAL SECURITY AND GUARANTIES. 46
6.1. Security of Company. 46
6.2. Guaranties and Security of Restricted
Subsidiaries. 46
6.3. Release of Collateral. 47
6.4. Limitation of Security. 47
7. FEES. 47
7.1. Amendment Fee. 47
7.2. Agent's Fee. 47
8. REPRESENTATIONS AND WARRANTIES. 48
8.1. Corporate Existence. 48
8.2. Corporate Authority, etc. 48
8.3. Binding Effect of Documents, etc. 49
8.4. Governmental Approvals. 49
8.5. No Event of Default, etc. 49
8.6. Chief Executive Offices. 49
8.7. Title to Properties; Leases. 49
8.8. Financial Statements and Projections. 49
8.8.1. Fiscal Year. 49
8.8.2. Financial Statements. 49
8.8.3. Projections. 50
8.9. No Material Changes, Etc. 50
8.10. Franchises, Patents, Copyrights, Etc. 50
8.11. Litigation. 50
8.12. No Materially Adverse Contracts, Etc. 50
8.13. Compliance With Other Instruments, Laws, Etc.50
8.14. Taxes. 51
8.15. Absence of Financing Statements, Etc. 51
8.16. Perfection of Security Interest. 51
8.17. Indebtedness. 51
8.18. True Copies of Charter and Other Documents. 52
8.19. Employee Benefit Plans. 52
8.19.1. In General. 52
8.19.2. Terminability of Welfare Plans. 52
8.19.3. Guaranteed Pension Plans. 52
8.19.4. Multiemployer Plans. 53
8.20. Holding Company and Investment Company Acts. 53
8.21. Certain Transactions. 53
8.22. Use of Proceeds. 53
8.22.1. General. 53
8.22.2. Regulations U and X. 54
8.23. Environmental Compliance. 54
8.24. Subsidiaries. 55
8.25. Disclosure. 55
8.26. Indebtedness of Foreign Subsidiaries. 55
8.27. Bank Accounts. 55
9. AFFIRMATIVE COVENANTS OF THE COMPANY. 55
9.1. Punctual Payment. 56
9.2. Use of Loan Proceeds. 56
9.3. Maintenance of Office. 56
9.4. Records and Accounts. 56
9.5. Financial Statements, Certificates and
Information. 56
9.6. Notices. 58
9.6.1. Defaults. 58
9.6.2. Environmental Events. 58
9.6.3. Notification of Claim against Collateral.
59
9.6.4. Notices Concerning Inventory Collateral.59
9.6.5. Notice of Litigation and Judgments. 59
9.7. Corporate Existence; Maintenance of Properties.59
9.8. Insurance. 60
9.9. Taxes. 60
9.10. Access. 60
9.11. Compliance with Laws, Contracts, Licenses, and
Permits. 61
9.12. Employee Benefit Plans. 61
9.13. Fiscal Year. 61
9.14. Additional Significant Subsidiaries and
Restricted Subsidiaries. 62
9.15. Debt Ratings. 62
9.16. Agency Account Agreements. 62
9.17. Further Assurances. 62
10. CERTAIN NEGATIVE COVENANTS OF THE COMPANY. 63
10.1. Restrictions on Indebtedness. 63
10.2. Restrictions on Liens. 64
10.3. Restrictions on Investments. 66
10.4. Restricted Payments. 68
10.5. Merger, Consolidation and Disposition of
Assets. 68
10.5.1. Mergers and Acquisitions. 68
10.5.2. Disposition of Assets. 69
10.6. Sale and Leaseback. 70
10.7. Compliance with Environmental Laws. 70
10.8. Subordinated Debt. 70
10.9. Employee Benefit Plans. 70
10.10. Business Activities. 71
10.11. Transactions with Affiliates. 71
10.12. Restrictions on Negative Pledges. 72
10.13. Cash Management. 72
10.14. Hedging Arrangements. 72
11. FINANCIAL COVENANTS. 72
11.1. Minimum EBITDA. 72
11.2. Total Funded Debt to EBITDA. 73
11.3. Fixed Charge Coverage Ratio. 73
11.4. Capital Expenditures. 74
12. CONDITIONS TO EFFECTIVENESS. 74
12.1. Loan Documents, etc. 74
12.2. Performance, etc. 74
12.3. Certified Copies of Charter Documents. 75
12.4. Proof of Corporate Action. 75
12.5. Incumbency Certificates. 75
12.6. Proceedings and Documents. 75
12.7. Validity of Liens. 75
12.8. Perfection Certificates and UCC Search Results.
75
12.9. Certificates of Insurance. 76
12.10. Agency Account Agreement. 76
12.11. Legal Opinions. 76
12.12. Payment of Fees. 76
12.13. Legality of Transactions. 76
12.14. Representations and Warranties. 76
13. CONDITIONS TO LOANS. 76
13.1. Legality of Transactions. 76
13.2. Representations and Warranties. 77
13.3. Performance, etc. 77
13.4. Proceedings and Documents. 77
13.5. Loan Documents. 77
14. EVENTS OF DEFAULT; ACCELERATION. 77
14.1. Remedies Upon Default. 77
14.2. Termination of Commitments. 81
14.3. Remedies. 81
14.4. Certain Rights of Cure. 81
14.5. Distribution of Collateral Proceeds. 82
15. SETOFF. 83
16. THE AGENT. 83
16.1. Authorization. 83
16.2. Employees and Agents. 84
16.3. No Liability. 84
16.4. No Representations. 85
16.4.1. General. 85
16.4.2. Closing Documentation, etc. 85
16.5. Indemnification. 85
16.6. Reimbursement. 86
16.7. Non-Reliance on Agent and Other Banks. 86
16.8. Payments. 87
16.8.1. Payments to Agent. 87
16.8.2. Distribution by Agent. 87
16.8.3. Delinquent Banks. 87
16.9. Holders of Notes. 88
16.10. Agent as Bank. 88
16.11. Resignation or Removal of Agent. 88
16.12. Notification of Defaults and Events of
Default. 88
16.13. Duties in the Case of Enforcement. 88
17. EXPENSES. 89
18. INDEMNIFICATION. 89
19. SURVIVAL OF COVENANTS, ETC. 90
20. ASSIGNMENT AND PARTICIPATION. 91
20.1. Conditions to Assignment by Banks. 91
20.2. Certain Representations and Warranties;
Limitations; Covenants. 91
20.3. Register. 92
20.4. New Notes. 93
20.5. Participations. 93
20.6. Assignee or Participant Affiliated with the
Company. 93
20.7. Miscellaneous Assignment Provisions. 94
20.8. Increased Costs. 94
20.9. Assignment by Company. 94
21. NOTICES, ETC. 95
22. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION. 95
22.1. Confidentiality. 95
22.2. Prior Notification. 96
22.3. Other. 96
23. CONSENTS, AMENDMENTS, WAIVERS, ETC. 96
24. PROVISIONS OF GENERAL APPLICATIONS. 97
24.1. Governing Law. 97
24.2. Headings. 98
24.3. Counterparts. 98
24.4. Entire Agreement, Etc. 98
24.5. Waiver of Jury Trial. 98
24.6. Severability. 99
25. TRANSITIONAL ARRANGEMENTS. 99
25.1. Existing Credit Agreement Superseded. 99
25.2. Return and Cancellation of Notes. 99
25.3. Interest and Fees Under Superseded Agreement.99
SCHEDULES AND EXHIBITS
Schedule 1 Banks, Commitments and Commitment
Percentages
Schedule 8.7 Title to Properties; Leases
Schedule 8.11 Litigation
Schedule 8.23 Environmental Compliance
Schedule 8.24 Subsidiaries
Schedule 8.26 Foreign Scheduled Facilities
Schedule 8.27 Bank Accounts
Schedule 10.1 Existing Indebtedness
Schedule 10.2 Existing Liens
Schedule 10.12 Restrictions on Negative Pledges
Exhibit A-1 Form of Syndicated Note
Exhibit A-2 Form of Syndicated Loan Request
Exhibit B-1 Form of Competitive Bid Note
Exhibit B-2 Form of Competitive Bid Quote Request
Exhibit B-3 Form of Invitation for Competitive Bid
Quotes
Exhibit B-4 Form of Competitive Bid Quote
Exhibit B-5 Form of Notice of Competitive Bid Borrowing
Exhibit C Form of Swing Line Loan Request
Exhibit D Form of Swing Line Note
Exhibit E Form of Compliance Certificate
Exhibit F Form of Subordination Agreement
Exhibit G [Intentionally omitted.]
Exhibit H Form of Assignment and Acceptance
Exhibit I Form of Confidentiality Agreement
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT,
is dated as of February 16, 2001, by and among HASBRO, INC.
(the "Company"), a Rhode Island corporation having its
principal place of business at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862, and FLEET NATIONAL BANK
(f/k/a BankBoston, N.A.) and the other lending institutions
listed on Schedule 1 (collectively, the "Banks") and FLEET
NATIONAL BANK (f/k/a BankBoston, N.A.), as agent for the
Banks (the "Agent").
WITNESSETH:
WHEREAS, pursuant to that certain Revolving Credit
Agreement, dated as of September 10, 1998 (as amended and in
effect from time to time, the "Existing Credit Agreement"),
by and among the Company, the Banks, and the Agent, the
Banks have made available certain financing to the Company
upon the terms and conditions contained therein; and
WHEREAS, the Company has requested, among other things,
to amend and restate the Existing Credit Agreement and the
Banks are willing to amend and restate the Existing Credit
Agreement on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing
premises and the mutual covenants contained herein, the
Company, the Banks and the Agent agree that as of the date
hereof, the Existing Credit Agreement shall be amended and
restated in its entirety as set forth herein:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions.
The following terms shall have the meanings set forth
in this 1.1 or elsewhere in the provisions of this
Agreement referred to below:
Affiliate. Any Person that would be considered to be
an affiliate of the Company under Rule 144(a) of the Rules
and Regulations of the Securities and Exchange Commission,
as in effect on the date hereof, if the Company were issuing
securities.
Affected Bank. See 4.1(c).
Agent. Fleet, acting as agent for the Banks, and each
other Person appointed as the successor Agent in accordance
with 16.11.
Agent's Fee. See 7.2.
Agent's Office. The Agent's office located at 100
Federal Street, Boston, Massachusetts 02110, or at such
other location as the Agent may designate from time to time.
Agreement. This Amended and Restated Revolving Credit
Agreement, including the Exhibits and Schedules hereto, as
originally executed, or if this Amended and Restated
Revolving Credit Agreement is further amended, varied or
supplemented from time to time, as so amended, varied or
supplemented.
Applicable Pension Legislation. At any time, any
pension or retirement benefits legislation (be it national,
federal, provincial, territorial or otherwise) then
applicable to the Company or any of its Subsidiaries.
Arranger. Fleet Securities, Inc.
Asset Sale. Any one or series of related transactions
on which the Company or any of its Subsidiaries conveys,
sells, leases, licenses or otherwise disposes of, directly
or indirectly, any of its properties, businesses or assets
whether owned on the Effective Date or thereafter acquired.
Assignee. A bank or other institution to which a Bank
assigns all, or a proportionate part of all, of such Bank's
rights and obligations under this Agreement and the Notes
payable to such transferor Bank, pursuant to the terms of
20.
Assignment and Acceptance. See 20.1.
Authorized Financial Officers. The Chief Financial
Officer of the Company, the Deputy Chief Financial Officer
of the Company, the Controller of the Company and any other
officer of the Company designated by the Company from time
to time as the chief financial officer or the chief
accounting officer of the Company and qualified to certify
as to financial information delivered on behalf of the
Company and its Subsidiaries pursuant to 9.5 hereof; and
"Authorized Financial Officer" means any one of the
Authorized Financial Officers.
Balance Sheet Date. December 31, 2000.
Bank Affiliate. (a) With respect to any Bank, (i) an
affiliate of such Bank or (ii) any entity (whether a
corporation, partnership, limited liability company, trust
or legal entity) that is engaged in making, purchasing,
holding or otherwise investing in bank loans and similar
extensions of credit in the ordinary course of its business
and is administered or managed by such Bank or an affiliate
of such Bank and (b) with respect to any Bank that is a fund
which invests in bank loans and similar extensions of
credit, any other entity (whether a corporation,
partnership, limited liability company, trust or other legal
entity) that is a fund that invests in bank loans and
similar extensions of credit and is managed by the same
investment advisor as such Bank or by an affiliate of such
investment advisor.
Banks. As defined in the Preamble, and any bank or
institution that becomes an Assignee pursuant to, and
fulfills the conditions of, 20.
Banks' Special Counsel. Bingham Dana LLP, or such
other counsel as the Agent may approve.
Base Rate. A fluctuating interest rate per annum (as
shall be in effect from time to time) (rounded to the
nearest 1/100 of 1%) equal to the greater of: (a) the annual
rate of interest announced from time to time by the Agent at
the Agent's Office as its "Base Rate," and (b) the Federal
Funds Effective Rate plus one-half of one percent (0.5%). If
for any reason the Agent shall have determined (which
determination shall be conclusive absent manifest error)
that it is unable to ascertain the Federal Funds Effective
Rate for any reason, including, without limitation, the
inability or failure of the Agent to obtain sufficient bids
or publications in accordance with the terms thereof, the
rate announced by the Agent at its head office as its "Base
Rate" shall be the Base Rate until the circumstances giving
rise to such inability no longer exist.
Base Rate Loan(s). Loan(s) denominated in Dollars
bearing interest calculated by reference to the Base Rate.
Borrowing. A borrowing hereunder by the Company
consisting of a Loan to the Company by the Banks or the
Swing Line Bank.
Business Day. Any day on which banking institutions in
Boston, Massachusetts and New York City, New York are open
for the conduct of normal banking business, and, in
addition, if Eurocurrency Rate Loans are involved, a day on
which dealings in Dollars can be carried on in the relevant
Eurocurrency Interbank Market and Dollar settlements of such
dealings may be effected in New York City.
Capitalized Leases. Leases under which the Company or
any of its Subsidiaries is the lessee or obligor, the
discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the
lessee or obligor in accordance with GAAP.
Capital Stock. Any and all shares, interests,
participations or other equivalents (however designated) of
capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation)
and any and all warrants, rights or options to purchase any
of the foregoing.
Casualty Event. With respect to any property
(including any interest in property) of any Hasbro Company,
any loss of, damage to, or condemnation or other taking of,
such property for which such Person receives insurance
proceeds, proceeds of a condemnation award or other
compensation.
CERCLA. See 8.23.
Change of Control. An event or series of events by
which any person or group of persons (within the meaning of
Section 13 or 14 of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the Securities and Exchange
Commission under said Act), directly or indirectly, of fifty-
one percent (51%) or more of the outstanding shares of
Capital Stock of the Company; or, during any period of
twelve (12) consecutive calendar months, individuals who
were directors of the Company on the first day of such
period (or whose election as directors was approved by a
majority of the directors who were in office on such date or
whose election previously was so approved) shall cease to
constitute a majority of the board of directors of the
Company.
Code. The Internal Revenue Code of 1986, as amended.
Collateral. All of the property, rights and interests
of the Company and the Restricted Subsidiaries that are or
are intended to be subject to the security interests and
mortgages created by the Security Documents.
Commitment. With respect to each Bank, the amount set
forth on Schedule 1 hereto as the maximum amount of such
Bank's commitment to make Syndicated Loans to, and to
participate in the issuance, extension and renewal of
Letters of Credit for the account of, the Company, as the
same may be reduced from time to time; or if such Bank's
commitment is terminated pursuant to the provisions hereof,
zero. Each Bank's Commitment shall be deemed to be reduced,
while any Competitive Bid Loans are outstanding, by an
amount equal to such Bank's Commitment Percentage of such
outstanding Competitive Bid Loans.
Commitment Fee. See 2.2.
Commitment Percentage. With respect to each Bank, the
percentage set forth opposite such Bank's name on Schedule 1
hereto.
Company. See preamble.
Company Security Agreement. The Amended and Restated
Security Agreement, dated as of the Effective Date, as the
same may be amended from time to time, by and between the
Company and the Agent, in form and substance reasonably
satisfactory to the Agent.
Company Stock Pledge Agreement. The Pledge Over A
Securities Account, dated as of the Effective Date, as the
same may be amended or supplemented from time to time, by
and between the Company and the Agent, in form and substance
reasonably satisfactory to the Agent.
Competitive Bid Loan(s). A Borrowing hereunder
consisting of one or more revolving credit loans made by any
of the Banks whose offer to make a revolving credit loan as
part of such Borrowing has been accepted by the Company
under the auction bidding procedure described in 2.5
hereof.
Competitive Bid Notes. See 2.6.
Competitive Bid Note Record. A Record with respect to
a Competitive Bid Note.
Competitive Bid Quote. An offer by a Bank to make a
Competitive Bid Loan in accordance with 2.5 hereof.
Competitive Bid Quote Request. See 2.5.1(b).
Competitive Bid Rate. See 2.5.1(d)(ii)(C).
Compliance Certificate. See 9.5(c) hereof.
Consolidated or consolidated. With reference to any
term defined herein, shall mean that term as applied to the
accounts of the Company and all of its Subsidiaries,
consolidated in accordance with GAAP.
Consolidated Net Earnings (or Loss). The consolidated
net earnings (or loss) of the Company and its Subsidiaries,
after deduction of all expenses, taxes, and other proper
charges, determined in accordance with GAAP, after
eliminating therefrom all extraordinary items of income.
Consolidated Operating Cash Flow. With respect to the
Company and its Subsidiaries and for any period, an amount
equal to (i) EBITDA for such period, minus (ii) Capital
Expenditures made by the Company and its Subsidiaries during
such period.
Consolidated Total Debt Service. With respect to the
Company and its Subsidiaries and for any period, the sum,
without duplication, of (a) Consolidated Total Interest
Expense for such period plus (b) any and all scheduled
repayments of principal during such period in respect of
Consolidated Total Funded Debt that becomes due and payable
or that is to become due and payable during such period but
excluding any repayments of principal required under this
Agreement and the Credit Line Agreement plus (c) the
aggregate amount of all Distributions paid during such
period.
Consolidated Total Funded Debt. As at any date of
determination, with respect to the Company and its
Subsidiaries, the sum, without duplication, of (a) the
aggregate amount of Indebtedness of the Company and its
Subsidiaries, on a consolidated basis, relating to (i) the
borrowing of money or the obtaining of credit, (ii) the
deferred purchase price of assets (other than trade payables
incurred in the ordinary course of business), (iii) in
respect of any Synthetic Leases or any Capitalized Leases
and (iv) the face amount of all letters of credit
outstanding plus (b) Indebtedness of the type referred to in
clause (a) of another Person guaranteed by the Company or
any of its Subsidiaries.
Consolidated Total Interest Expense. For any period,
the aggregate amount of interest expense of the Company and
its Subsidiaries determined on a consolidated basis in
accordance with GAAP for such period.
Copyright Memorandum. The Memorandum of Grant of
Security Interest in Copyrights, dated as of the Effective
Date, as the same may be amended from time to time, by and
among the Company, the Restricted Subsidiaries and the
Agent, in form and substance reasonably satisfactory to the
Agent.
Credit Line Agreement. The Amended and Restated Line
of Credit Agreement, dated as of the date hereof, by and
among the Company, the Banks party thereto and the Agent, as
amended, varied or supplemented from time to time, and any
agreement providing a 364-day line of credit among the
Company, the Banks and the Agent as the same may be in
effect from time to time.
Debt Rating. The rating issued from time to time
(whether on a preliminary basis or otherwise) by Standard &
Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc. ("Standard & Poor's") or Moody's Investors
Service, Inc. ("Moody's") or such other rating service or
services as the Company may designate from time to time with
the consent of the Majority Banks (each a "Successor Rating
Agency") with respect to Indebtedness evidenced by this
Agreement and the Credit Line Agreement.
Debt Rating Increase. See 4.9.
Default. Any Event of Default and any event which, but
for the giving of notice or the lapse of time, or both,
would constitute an Event of Default.
Delinquent Bank. See 16.8.3.
Distribution. The declaration or payment of any
dividend on or in respect of any shares of any class of
Capital Stock of the Company other than dividends payable
solely in shares of common stock of the Company (or payable
pursuant to the Rights Agreement, dated June 16, 1999,
between the Company and Fleet National Bank (f/k/a
BankBoston, N.A.) as amended); the purchase, redemption,
defeasance, retirement or other acquisition of any shares of
any class of Capital Stock of the Company directly or
indirectly through a Subsidiary of the Company or otherwise
(including the setting apart of assets for a sinking or
other analogous fund to be used for such purpose); the
return of capital by the Company to its shareholders as
such; or any other distribution on or in respect of any
shares of any class of Capital Stock of the Company.
Dollar(s) and $. The lawful currency of the United
States of America.
Domestic Subsidiary. Any Subsidiary of the Company
that is not a Foreign Subsidiary.
Drawdown Date. The date on which any Loan is made or
is to be made, and the date on which any Loan is converted
or continued in accordance with 4.1(a).
EBITDA. With respect to any particular fiscal period,
EBITDA shall mean the sum of (a) Consolidated Net Earnings
(or Loss) for such period, plus (b) in each case without
duplication, and to the extent deducted in calculating
Consolidated Net Earnings (or Loss) for such period, (i)
income tax expense of the Company and its Subsidiaries, (ii)
interest expense of the Company and its Subsidiaries, (iii)
depreciation and amortization of the Company and its
Subsidiaries, (iv) other non-cash charges of the Company and
its Subsidiaries, and (v) extraordinary losses of the
Company and its Subsidiaries, and minus to the extent
included in Consolidated Net Earnings (or Loss) for such
period, (vi) extraordinary gains of the Company and its
Subsidiaries for such period, all determined in accordance
with GAAP, plus (c) solely for the calculation of EBITDA for
the fiscal quarter ended December 31, 2000 or any period
that includes such quarter, a single incremental adjustment
in an amount equal to $210,000,000.
Effective Date. The date on which all of the
conditions set forth in 12 hereof have been satisfied, and
all "Loans" under and as defined in the Existing Credit
Agreement are converted into Loans hereunder.
Employee Benefit Plan. Any employee benefit plan
within the meaning of 3(3) of ERISA maintained or
contributed to by the Company or any ERISA Affiliate, other
than a Guaranteed Pension Plan or a Multiemployer Plan.
Environmental Laws. See 8.23.
EPA. See 8.23.
Equity Issuance. The sale or issuance by the Company
or any of its Subsidiaries of any of its Capital Stock
(other than to the Company or any of its Subsidiaries).
ERISA. The Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
ERISA Affiliate. Any Person which is treated as a
single employer with the Company under 414 of the Code.
ERISA Reportable Event. A reportable event with
respect to a Guaranteed Pension Plan within the meaning of
4043 of ERISA and the regulations promulgated thereunder.
Eurocurrency Interbank Market. Any lawful recognized
market in which deposits of Dollars are offered by
international banking units of United States banking
institutions and by foreign banking institutions to each
other and in which eurocurrency funding operations are
customarily conducted.
Eurocurrency Offered Rate. With respect to the
Interest Period of any Eurocurrency Rate Loan, the annual
rate of interest determined by the Agent at or about 10:00
A.M. (Boston time) (or as soon thereafter as practicable)
two (2) Business Days preceding the first day of such
Interest Period, as being the average of the rates of
interest per annum at which deposits in the currency of such
Eurocurrency Rate Loan are offered to each of the respective
lending offices of each of the Reference Banks by prime
banks in the Eurocurrency Interbank Market selected by such
Reference Bank in its sole discretion acting in good faith
for such Interest Period, at the time of the determination
and in accordance with the usual practice in such market,
for delivery on the first day of such Interest Period in
immediately available funds and having a maturity equal to
such Interest Period and for the number of days comprised
therein, in an amount equal (as nearly as may be) to such
Reference Bank's Commitment Percentage of such Eurocurrency
Rate Loan.
Eurocurrency Rate. With respect to all Eurocurrency
Rate Loans for any Interest Period, the annual rate of
interest, rounded to the nearest 1/100 of 1%, determined by
the Agent for such Interest Period in accordance with the
following formula:
Eurocurrency Rate = Eurocurrency Offered Rate
-----------------------------
1 - Eurocurrency Reserve Rate
Eurocurrency Rate Loan(s). Loan(s) denominated in
Dollars bearing interest calculated by reference to the
Eurocurrency Rate.
Eurocurrency Reserve Rate. The rate in effect from
time to time, expressed as a decimal, at which the Banks
would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any
successor or similar regulation relating to such reserve
requirements) against "Eurocurrency Liabilities" (as that
term is used in Regulation D), if such liabilities were
outstanding.
Existing Credit Agreement. See Preamble.
Event of Default. See 14.1.
Federal Funds Effective Rate. For any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or for any day on which such rate
is not so published for such day by the Federal Reserve Bank
of New York, the average of the quotations for such day for
such transactions received by the Agent from three (3)
Federal funds brokers of recognized standing selected by the
Agent.
Fee Letter. The fee letter, dated as of February 16,
2001, by and between Company and the Agent.
Fees. Collectively, the Commitment Fee, Competitive Bid
fees, the Letter of Credit Fees, the Agent's Fee and the
Closing Fee.
Final Maturity Date. February 16, 2003.
Fixed Charge Coverage Ratio. As at any date of
determination, the ratio of (i) the Consolidated Operating
Cash Flow of the Company and its Subsidiaries for the
Reference Period ending on such date, to (ii) the
Consolidated Total Debt Service of the Company and its
Subsidiaries for such Reference Period.
Fleet. Fleet National Bank, in its capacity as a Bank
hereunder.
Foreign Scheduled Facilities. See 8.26.
Foreign Sublimit. An amount which is available for
Borrowings in accordance with 8.22.1 equal to the aggregate
amount of Indebtedness of the Company consisting of
guaranties of the Foreign Scheduled Facilities, as such
Foreign Sublimit may be amended from time to time with the
consent of the Company and the Agent.
Foreign Subsidiary. Any Subsidiary that conducts
substantially all its business (other than export sales) in
countries other than the United States of America and that
is organized under the laws of a jurisdiction other than the
United States of America and the states thereof.
GAAP. (i) When used in 11 hereof, whether directly or
indirectly through reference to a capitalized term used
therein, principles which are (A) consistent with the
principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect
for the fiscal period ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the
accounting practice of the Company reflected in its
financial statements for the year ended on the Balance Sheet
Date; and (ii) when used in general, other than as provided
above, principles which are (A) consistent with the
principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors (or
successor organizations), as in effect from time to time and
(B) consistently applied with past financial statements of
the Company adopting the same principles.
Governmental Authority. Any foreign, federal, state,
regional, local, municipal or other government, or any
department, commission, board, bureau, agency, public
authority or instrumentality thereof, or any court or
arbitrator.
Guaranteed Pension Plan. Any employee pension benefit
plan within the meaning of 3(2) of ERISA maintained or
contributed to by the Company or any ERISA Affiliate the
benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other
than a Multiemployer Plan.
Guaranty. The Amended and Restated Guaranty, dated as
of the Effective Date, as the same may be amended and in
effect from time to time, made by each Restricted Subsidiary
in favor of the Banks and the Agent pursuant to which each
Restricted Subsidiary guarantees to the Banks and the Agent
the payment and performance of the Secured Obligations and
in form and substance reasonably satisfactory to the Agent.
Hasbro Companies. Collectively, the Company, the
Restricted Subsidiaries and the Significant Subsidiaries.
Hazardous Substances. See 8.23.
Hedging Agreement. Any foreign exchange contract,
currency swap agreement, currency or commodity agreement or
other similar agreement or arrangement designed to protect
against the fluctuation in currency values.
Identified Brands. Collectively, the brand names
Action Man, Monopoly, Mr. Potato Head, Tonka, Lincoln Logs,
Playskool, Yahtzee, Clue and GI Joe.
Indebtedness. As to any Person and whether recourse is
secured by or is otherwise available against all or only a
portion of the assets of such Person and whether or not
contingent, but without duplication:
(a) every obligation of such Person to repay
money borrowed,
(b) every obligation of such Person for principal
evidenced by bonds, debentures, notes or other similar
instruments, including obligations incurred in
connection with the acquisition of property, assets or
businesses,
(c) every reimbursement obligation of such Person
with respect to letters of credit, bankers' acceptances
or similar facilities issued for the account of such
Person,
(d) every obligation of such Person issued or
assumed as the deferred purchase price of property or
services (including securities repurchase agreements
but excluding (i) trade accounts payable or accrued
liabilities arising in the ordinary course of business
which are not overdue or which are being contested in
good faith and (ii) earnout obligations in respect of
assets or businesses acquired prior to the Effective
Date),
(e) every obligation of such Person under any
Capitalized Lease,
(f) every obligation of such Person under any
Synthetic Lease,
(g) all sales with recourse by such Person of (i)
accounts or general intangibles for money due or to
become due, (ii) chattel paper, instruments or
documents creating or evidencing a right to payment of
money or (iii) other receivables (collectively
"receivables"), whether pursuant to a purchase facility
or otherwise, other than in connection with the
disposition of the business operations of such Person
relating thereto or a disposition of defaulted
receivables for collection and not as a financing
arrangement, and together with any obligation of such
Person to pay any discount, interest, fees,
indemnities, penalties, recourse, expenses or other
amounts in connection therewith,
(h) Indebtedness of any other entity (including
any partnership in which such Person is a general
partner) to the extent that such Person is liable
therefor as a result of such Person's ownership
interest in or other relationship with such entity,
except to the extent that the terms of such
Indebtedness provide that such Person is not liable
therefor and such terms are enforceable under
applicable law,
(i) every obligation, contingent or otherwise, of
such Person guaranteeing, or having the economic effect
of guarantying or otherwise acting as surety for, any
obligation of a type described in any of clauses (a)
through (h) (the "primary obligation") of another
Person (the "primary obligor"), in any manner, whether
directly or indirectly, and including, without
limitation, any such obligation of such Person (i) to
purchase or pay (or advance or supply funds for the
purchase of) any security for the payment of such
primary obligation, (ii) to purchase property,
securities or services for the purpose of assuring the
payment of such primary obligation, or (iii) to
maintain working capital, equity capital or other
financial statement condition or liquidity of the
primary obligor so as to enable the primary obligor to
pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness
at any time of determination represented by (w) any
Indebtedness, issued at a price that is less than the
principal amount at maturity thereof, shall be the amount of
the liability in respect thereof determined in accordance
with GAAP, (x) any Capitalized Lease shall be the discounted
aggregate rental obligations under such Capitalized Lease
required to be capitalized on the balance sheet of the
lessee in accordance with GAAP, (y) any sale of receivables
shall be the amount of unrecovered capital or principal
investment of the purchaser (other than the Company or any
of its wholly-owned Subsidiaries) thereof, excluding amounts
representative of yield or interest earned on such
investment, and (z) any Synthetic Lease shall be the
stipulated loss value, termination value or other equivalent
amount.
Infogrames. Infogrames Entertainment S.A., a societ,
anonyme organized under the laws of France.
Installment Amount. See 2.8.
Intercompany Indebtedness. The aggregate amount of all
Indebtedness of any of the Company or any Operating
Subsidiary of the Company to any other of the Company and
its Operating Subsidiaries.
Interest Period. (a) With respect to each Base Rate
Loan comprising the same Borrowing, the period (i)
commencing on the Drawdown Date of such Borrowing, and (ii)
ending thirty (30) days thereafter as determined in
accordance with the provisions of this Agreement;
(b) With respect to each Eurocurrency Rate Loan
comprising the same Borrowing, the period (i) commencing on
the Drawdown Date of such Borrowing, and (ii) ending one
(1), two (2), three (3) or six (6) months thereafter as
determined in accordance with the provisions of this
Agreement; and
(c) With respect to each Competitive Bid Loan
comprising the same Borrowing, the period (i) commencing on
the date of such Borrowing and (ii) ending from seven (7)
through one hundred eighty (180) days thereafter as
determined in accordance with the provisions of this
Agreement.
Interest Rate Agreement. Any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement, interest rate futures contract, interest rate
option agreement or other similar agreement or arrangement
to which the Company and any Bank is a party, designed to
protect the Company against fluctuations in interest rates.
Inventory. With respect to the Company or any of the
Restricted Subsidiaries, finished goods, work in progress
and raw materials and component parts inventory and all
"Inventory" as such term is defined in the Uniform
Commercial Code as in effect in the Commonwealth of
Massachusetts owned by such Person.
Investments. As to any Person, all expenditures made
for the acquisition of stock or Indebtedness of, or for
loans, advances or capital contributions to, any other
Person, in each case to the extent the same would be
recorded as an investment on the balance sheet of the first
Person under GAAP. In determining the aggregate amount of
Investments outstanding at any particular time: (a) there
shall be deducted in respect of each such Investment any
amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating
dividend or liquidating distribution); (b) there shall not
be deducted in respect of any Investment any amounts
received as earnings on such Investment, whether as
dividends, interest or otherwise; and (c) there shall not be
deducted from the aggregate amount of Investments any
decrease in the value thereof.
Invitation for Competitive Bid Quotes. See 2.5.1(c).
Letter of Credit. See 5.1.1.
Letter of Credit Application. See 5.1.1.
Letter of Credit Fee. See 5.6.
Letter of Credit Participation. See 5.1.4.
Lien. Any mortgage, deed of trust, security interest,
pledge, hypothecation, security assignment, attachment,
deposit arrangement, lien (statutory, judgment or
otherwise), or other security agreement or similar
encumbrance or preferential arrangement of any kind or
nature whatsoever (including any conditional sale or other
title retention agreement, any Capitalized Lease, any
Synthetic Lease, any financing lease involving substantially
the same economic effect as any of the foregoing and the
filing of any financing statement evidencing any of the
foregoing under the Uniform Commercial Code or comparable
law of any jurisdiction).
Loan Documents. Collectively, this Agreement, the
Notes, the Letter of Credit Applications, the Letters of
Credit, the Security Documents, the Subordination Agreements
and the Fee Letter.
Loans. Collectively, the Syndicated Loans, the
Competitive Bid Loans and the Swing Line Loan.
Majority Banks. As of any date, the Banks whose
aggregate Commitments constitute more than fifty percent
(50%) of the Total Commitment, provided, that if at the time
Majority Banks is being determined, the Total Commitment has
been terminated, the Majority Banks shall be the Banks
holding more than fifty percent (50%) of the aggregate
outstanding principal amount of the Loans on such date.
Margin. (a) At any time of determination prior to a
Debt Rating Increase, an annual percentage rate equal to (a)
with respect to Base Rate Loans, three-quarters of one
percent (0.75%), and (b) with respect to Eurocurrency Rate
Loans, two and one-quarter percent (2.25%); or
(b) At any time of determination following a Debt
Rating Increase, an annual percentage rate equal to (a) with
respect to Base Rate Loans, one-half of one percent (0.50%),
and (b) with respect to Eurocurrency Rate Loans, two percent
(2.00%).
Material Adverse Effect. With respect to any event or
occurrence of whatever nature (including any adverse
determination in any litigation, arbitration or governmental
investigation or proceeding):
(a) a material adverse effect on the business,
properties, condition, assets, operations or results of
operations of the Hasbro Companies, taken as a whole;
(b) a material adverse effect on the ability of
the Company individually or the Hasbro Companies taken
as a whole, to perform its or their respective
Obligations (as the case may be) under the Loan
Documents; or
(c) any material impairment of (i) the validity,
binding effect or enforceability of this Agreement or
any of the other Loan Documents, (ii) the rights,
remedies or benefits available to the Agent or any Bank
under the Loan Documents or (iii) the attachment,
perfection or priority of any Lien of the Agent on a
material portion of the Collateral under the Security
Documents.
Maximum Availability. The aggregate amount available
for Borrowings and issuances, extensions or renewals of
Letters of Credit under and as defined in this Agreement and
the Credit Line Agreement, which shall be equal to (a) for
the first fiscal quarter of 2001, $300,000,000; (b) for the
second fiscal quarter of 2001, $500,000,000; (c) for the
period from the first day of the third fiscal quarter of
2001 until December 29, 2001, $650,000,000; and (d) from and
after December 30, 2001, $325,000,000.
Maximum Drawing Amount. The maximum aggregate amount
that the beneficiaries may at any time draw under
outstanding Letters of Credit, as such aggregate amount may
be reduced from time to time pursuant to the terms of the
Letters of Credit.
Moody's. As defined in the definition of "Debt
Rating".
Multiemployer Plan. Any multiemployer plan within the
meaning of 3(37) of ERISA maintained or contributed to by
the Company or any ERISA Affiliate.
Net Cash Sale Proceeds. The net cash proceeds received
by a Person in respect of any Asset Sale, less the sum of
(a) all reasonable out-of-pocket fees, commissions and other
expenses actually incurred in connection with such Asset
Sale, (b) the amount of any transfer, documentary, income or
other taxes required to be paid by the Company or any of its
Subsidiaries in connection with such Asset Sale, (c) the
aggregate amount of any Indebtedness (other than under the
Loan Documents) of the Company or any of its Subsidiaries
permitted by this Agreement that was secured by a Permitted
Lien with respect to the assets transferred and is required
to be repaid in whole or in part (which repayment, in the
case of any other revolving credit arrangement or multiple
advance arrangement, reduces the commitment thereunder) in
connection with such Asset Sale, (d) the amount of such
proceeds attributable to (and payable to) minority
interests, (e) the amount of any reserve reasonably
maintained by the Company or any of its Subsidiaries with
respect to indemnification obligations owing pursuant to the
definitive documentation pursuant to which such Asset Sale
is consummated (with any unused portion of such reserve to
constitute Net Cash Sale Proceeds on the date upon which the
indemnification obligations terminate or such reserve is
reduced other than in connection with a payment), and (f)
appropriate amounts to be provided by the Company or any of
its Subsidiaries to be applied to satisfy any reasonable
expenses and liabilities associated with any such property
or assets and retained by the Company or any such Subsidiary
after such Asset Sale.
Net Cash Equity Issuance Proceeds. With respect to any
Equity Issuance, the excess of the gross cash proceeds
received by such Person for such Equity Issuance after
deduction of all reasonable transaction expenses (including,
without limitation, underwriting discounts and commissions)
actually incurred in connection with such Equity Issuance.
New Loans. See 4.1(e).
Note(s). Singly, any of, and collectively, all of the
Syndicated Notes, the Competitive Bid Notes and the Swing
Line Note.
Notice of Competitive Bid Borrowing. See 2.4.1(f).
Obligations. All indebtedness, obligations and
liabilities to the Banks and the Agent, individually or
collectively, arising or incurred under this Agreement or
any of the other Loan Documents, or in respect of Loans made
and any Notes or other instruments at any time evidencing
any thereof, whether such indebtedness, obligations, and
liabilities exist on the date of this Agreement or arise
thereafter, or are direct or indirect, joint or several,
absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract,
operation of law or otherwise of the Company.
Operating Subsidiary. As at any particular date, any
Subsidiary (other than a Subsidiary engaged solely in the
business of incurring Indebtedness) of the Company actively
engaged in the conduct of business.
Outstanding. With respect to the Loans, the unpaid
principal thereof as of any date of determination.
Participant. See 20.5.
Patent Agreements. Collectively, (a) the Patent
Security Agreement (Registrations), dated as of the
Effective Date, as the same may be amended from time to
time, by and among the Company, the Restricted Subsidiaries
and the Agent, in form and substance reasonably satisfactory
to the Agent, pertaining to U.S. patent registrations, and
(b) the Patent Security Agreement (Applications), dated as
of the Effective Date, as the same may be amended from time
to time, by and among the Company, the Restricted
Subsidiaries and the Agent, in form and substance reasonably
satisfactory to the Agent, pertaining to U.S. patent
applications.
PBGC. The Pension Benefit Guaranty Corporation created
by 4002 of ERISA and any successor entity or entities
having similar responsibilities.
Permitted Acquisition. Any acquisition permitted by
10.5.1(b).
Permitted Liens. Liens permitted by 10.2.
Person. Any individual, corporation, partnership,
trust, unincorporated association, business, or other legal
entity, and any government or any governmental agency or
political subdivision thereof.
RCRA. See 8.23.
Record. The grid attached to a Note, or the
continuation of such grid, or any other similar record,
including computer records, maintained by any Lender with
respect to any Loan referred to in such Note.
Real Estate. All real property owned or leased (as
lessee or sublessee) by any of the Hasbro Companies.
Reemployment Period. See 2.8.
Reemployment Rate. See 2.8.
Reference Banks. Fleet, Bank of America, N.A.,
Citibank, N.A., Mellon Bank, N.A. and Commerzbank A.G., New
York.
Reference Period. As of the end of any fiscal quarter,
the period of four (4) consecutive fiscal quarters of the
Company and its Subsidiaries ending on such date, or if any
date of determination is not a fiscal quarter end date, the
period of four (4) consecutive fiscal quarters most recently
ended (in each case treated as a single accounting period).
Reimbursement Obligation. The Company's obligation to
reimburse the Agent and the Banks on account of any drawing
under any Letter of Credit as provided in 5.2.
Replacement Bank. See 4.1(f).
Replacement Date. See 4.1(f).
Restricted Payment. In relation to the Company and its
Subsidiaries, any (a) Distribution, (b) payment or
prepayment by the Company or its Subsidiaries to the
Company's or any Subsidiary's shareholders (or other equity
holders) in their capacity as such, in each case other than
(i) to the Company or any Subsidiary (or any payment or
prepayment excluded from the definition of the term
"Distribution") and (ii) the acquisition of the Capital
Stock of any Subsidiary of the Company existing on the
Effective Date from any then existing minority holder
thereof, (c) optional repayment, redemption or repurchase of
long term unsecured Indebtedness of the Company existing on
the Effective Date and having a maturity after the Final
Maturity Date, or (d) derivatives or other transactions with
any financial institution, commodities or stock exchange or
clearinghouse (a "Derivatives Counterparty") obligating the
Company or any Subsidiary to make payments to such
Derivatives Counterparty as a result of any change in market
value of any Capital Stock of the Company or such
Subsidiary.
Restricted Subsidiaries. Collectively, (a) Wizards of
the Coast, Inc., a Washington corporation, (b) OddzOn, Inc.,
a Delaware corporation, and (c) material Domestic
Subsidiaries (i) created or acquired by the Company
following the Effective Date and (ii) designated as
Restricted Subsidiaries by the Company or the Agent in a
written notice (it being understood that any Restricted
Subsidiary which merges with and into the Company such that
the Company is the survivor shall no longer constitute a
Restricted Subsidiary following such merger).
SARA. See 8.23.
Secured Obligations. Collectively, (a) the
Obligations, (b) the "Obligations" under and as defined in
the Credit Line Agreement, (c) other Indebtedness of the
Company consisting of guaranties of Indebtedness of Foreign
Subsidiaries owing to any Bank or Bank Affiliate under the
Foreign Scheduled Facilities, (d) Indebtedness of the
Company under and pursuant to Letter of Credit No. 003146-
793, dated September 27, 2000, in the original stated amount
of $2,199,866, as the same may be amended from time to time,
issued by SanPaolo IMI S.P.A. for the account of the
Company, and (e) obligations of the Company or its
Subsidiaries to the Banks and the Agent (individually or
collectively) arising under Interest Rate Agreements and
Hedging Agreements, in each case as defined in this
Agreement and the Credit Line Agreement.
Security Agreements. Collectively, the Company
Security Agreement and the Subsidiary Security Agreement.
Security Documents. The Guaranty, the Security
Agreements, the Company Stock Pledge Agreement, the
Trademark Agreement, the Patent Agreements, the Copyright
Memorandum and all other instruments and documents,
including without limitation Uniform Commercial Code
financing statements, required to be executed or delivered
pursuant to any Security Document.
Significant Subsidiary. (a) Any Subsidiary of the
Company, organized under the laws of the United States or
any State of the United States or the District of Columbia,
which, either alone or together with the Subsidiaries of
such Subsidiary, meets either of the following conditions:
(i) the investments of the Company and its
Subsidiaries in, or their proportionate share (based on
their equity interests) of the book value of the total
assets (after intercompany eliminations) of, the
Subsidiary in question exceed 10% of the book value of
the total assets of the Company and its Subsidiaries on
a consolidated basis, or
(ii) the equity of the Company and its
Subsidiaries in the revenues of the Subsidiary in
question exceeds 10% of the revenues from continuing
operations of the Company and its Subsidiaries on a
consolidated basis for the Company's most recent fiscal
year; or
(b) Any other Subsidiary of the Company designated as
a "Significant Subsidiary" by the Company in a written
notice to the Agent.
Specified Sale. The sale of the Company's interactive
and on-line businesses to Infogrames, and any disposition of
the Capital Stock of Infogrames by the Company acquired in
connection with such sale.
Standard & Poor's. As defined in the definition of
"Debt Rating".
Subordinated Debt. Unsecured Indebtedness of the
Company or any of its Subsidiaries that is expressly
subordinated and made junior to the payment and performance
in full of the Obligations (other than pursuant to the
Subordination Agreements), and evidenced as such by a
written instrument containing subordination provisions in
form and substance reasonably satisfactory to the Majority
Banks..
Subordination Agreement. The amended and restated
subordination agreement among the Company, the Significant
Subsidiaries and the Agent, substantially in the form of
Exhibit F hereto; and "Subordination Agreements" means the
Subordination Agreement and any additional subordination
agreements executed and delivered to the Agent for the
benefit of the Banks pursuant to 9.14 hereof.
Subsidiary. Any corporation, association, trust, or
other business entity of which the designated parent shall
at any time own directly or indirectly through a Subsidiary
or Subsidiaries at least a majority (by number of votes) of
the outstanding Voting Stock.
Subsidiary Security Agreement. The Amended and
Restated Security Agreement, dated as of the Effective Date,
as the same may be amended from time to time, among the
Restricted Subsidiaries and the Agent, in form and substance
reasonably satisfactory to the Agent.
Swing Line Bank. Fleet.
Swing Line Loan. Any loan made by the Swing Line Bank
pursuant to 3.1 hereof.
Swing Line Loan Maturity Date. See 3.2.
Swing Line Loan Request. See 3.2.
Swing Line Note. See 3.5.
Swing Line Note Record. A Record with respect to a
Swing Line Note.
Syndicated Loan(s). Singly, any of, and collectively,
all of, the revolving credit loans made by the Banks in
accordance with their respective Commitment Percentages to
the Company as contemplated by 2.1 hereof.
Syndicated Note(s). See 2.6.
Syndicated Note Record. A Record with respect to a
Syndicated Note.
Synthetic Lease. Any lease of goods or other property,
whether real or personal, which is treated as an operating
lease under GAAP and as a loan or financing for U.S. income
tax purposes.
Total Commitment. The sum of the Commitments of the
Banks, as in effect from time to time, which as of the
Effective Date shall be equal to the aggregate principal
amount of $325,000,000.
Trademark Agreement. The Trademark Security Agreement,
dated as of the Effective Date, as the same may be amended
from time to time, by and among the Company, the Restricted
Subsidiaries and the Agent, in form and substance reasonably
satisfactory to the Agent.
Type. As to any Syndicated Loan, its nature as a Base
Rate Loan or a Eurocurrency Rate Loan.
Unpaid Reimbursement Obligation. Any Reimbursement
Obligation for which the Company does not reimburse the
Agent and the Banks on the date specified in, and in
accordance with, 5.2.
Utilization. An amount equal to the sum of (i) the
outstanding amount of all Loans (after giving effect to all
amounts requested), (ii) the Maximum Drawing Amount, (iii)
all Unpaid Reimbursement Obligations and (iv) the amount by
which the Foreign Sublimit exceeds the outstanding amount of
Loans borrowed to satisfy the Company's obligations under
guaranties of the Foreign Scheduled Facilities.
Voting Stock. Stock or similar interests, of any class
or classes (however designated), the holders of which are at
the time entitled, as such holders, to vote for the election
of a majority of the directors (or persons performing
similar functions) of the corporation, association, trust or
other business entity involved, whether or not the right so
to vote exists by reason of the happening of a contingency
(unless the happening of any such contingency is not within
the control of the Company).
1.2. Rules of Interpretation.
(a) A reference to any document or agreement
shall include such document or agreement as amended,
modified or supplemented from time to time in
accordance with its terms and the terms of this
Agreement.
(b) The singular includes the plural and the
plural includes the singular.
(c) A reference to any law includes any amendment
or modification to such law.
(d) A reference to any Person includes its
permitted successors and permitted assigns.
(e) Accounting terms not otherwise defined herein
have the meanings assigned to them by GAAP applied on a
consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and
"including" are not limiting.
(g) All terms not specifically defined herein or
by GAAP, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of
Massachusetts, have the meanings assigned to them
therein, with the term "instrument" being that defined
under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "" refers to that
section of this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and
words of like import shall refer to this Agreement as a
whole and not to any particular section or subdivision
of this Agreement.
(j) Unless otherwise expressly indicated, in the
computation of periods of time from a specified date to
a later specified date, the word "from" means "from and
including," the words "to" and "until" each mean "to
but excluding," and the word "through" means "to and
including."
(k) This Agreement and the other Loan Documents
may use several different limitations, tests or
measurements to regulate the same or similar matters.
All such limitations, tests and measurements are,
however, cumulative and are to be performed in
accordance with the terms thereof.
(l) This Agreement and the other Loan Documents
are the result of negotiation among, and have been
reviewed by counsel to, among others, the Agent and the
Company and are the product of discussions and
negotiations among all parties. Accordingly, this
Agreement and the other Loan Documents are not intended
to be construed against the Agent or any of the Banks
merely on account of the Agent's or any Bank's
involvement in the preparation of such documents.
2. THE SYNDICATED AND COMPETITIVE BID LOAN FACILITY.
2.1. Commitment to Lend Syndicated Loans.
(a) Subject to the terms and conditions set forth in
this Agreement, each of the Banks severally agrees to lend
to the Company and the Company may borrow, repay, and
reborrow from time to time between the Effective Date and
the Final Maturity Date upon notice by the Company to the
Agent given in accordance with 2.4 hereof, such sums, in
Dollars, as requested by the Company ("Syndicated Loans") up
to a maximum aggregate amount outstanding (after giving
effect to all amounts requested) at any one time equal to
such Bank's Commitment (as such Commitment has been deemed
to be reduced by such Bank's Commitment Percentage of
outstanding Competitive Bid Loans) minus such Bank's
Commitment Percentage of the sum of the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations, provided
that the Utilization shall not at any time exceed the lesser
of (i) the Total Commitment and (ii) an amount equal to (A)
the Maximum Availability minus (B) the Utilization under and
as defined in the Credit Line Agreement at such time. The
Syndicated Loans shall be made pro rata in accordance with
each Bank's Commitment Percentage. Each request for
Syndicated Loans hereunder shall constitute a representation
by the Company that the conditions set forth in 12 and 13,
in the case of the initial Syndicated Loans to be converted
into Syndicated Loans hereunder on the Effective Date, and
13, in the case of all other Syndicated Loans, have been
satisfied on the date of such request. Each Base Rate Loan
and Eurocurrency Rate Loan shall mature and become due and
payable on the last day of the Interest Period relating
thereto and shall be payable in the currency in which such
Loan was made. Each Base Rate Loan shall be denominated in
Dollars. Each Eurocurrency Rate Loan shall be denominated
in Dollars.
(b) After any prepayment and at maturity of the
Syndicated Loans pursuant to 2.1(a) above, the Company
shall be entitled to reborrow any or all of the principal
amount of such Syndicated Loan, subject to all of the
conditions precedent set forth in 13. Each Bank's
Commitment shall terminate, all Syndicated Loans shall
become finally due and payable and the Company promises to
pay on the Final Maturity Date all Syndicated Loans
outstanding on the Final Maturity Date.
(c) The respective amount of each Bank's Commitment
and its Commitment Percentage shall be as set forth on
Schedule 1 hereto, subject to reduction in accordance with
2.3 and 2.11.
(d) Each Bank represents and warrants that it will use
its best efforts to ensure that the funding of its Loans is
not made directly out of the assets of any "employee benefit
plan" or of any "separate account" in which any "employee
benefit plan" has any interest other than a "government
plan" (each such term being used herein as defined in
Section 3 of ERISA).
2.2. Commitment Fee.
The Company agrees to pay to the Agent for the pro rata
accounts of the Banks in accordance with their respective
Commitment Percentages a commitment fee (the "Commitment
Fee") calculated at the rate of three-eighths percent (3/8%)
per annum on the average daily amount during each calendar
quarter or portion thereof from the Effective Date to the
Final Maturity Date by which (a) (i) the lesser of (A) the
Total Commitment and (B) an amount equal to (x) the Maximum
Availability minus (y) the Utilization under and as defined
in the Credit Line Agreement minus (ii) the sum of (A) the
Maximum Drawing Amount and (B) all Unpaid Reimbursement
Obligations exceeds (b) the outstanding amount of Syndicated
Loans during such calendar quarter. The Commitment Fee
shall be payable quarterly in arrears on the first day of
each calendar quarter for the immediately preceding calendar
quarter commencing on the first such date following the
Effective Date, with a final payment on the Final Maturity
Date or any earlier date on which the Commitments shall
terminate.
2.3. Reduction of Total Commitment.
The Company shall have the right at any time and from
time to time upon five (5) Business Days written notice to
the Agent to reduce by $10,000,000 or an integral multiple
thereof or terminate entirely the unborrowed portion of the
Total Commitment, whereupon the Commitments of the Banks
shall be reduced pro rata in accordance with their
respective Commitment Percentages of the amount specified in
such notice or, as the case may be, terminated. Promptly
after receiving any notice of the Company delivered pursuant
to this 2.3, the Agent will notify the Banks of the
substance thereof. Upon the effective date of any such
reduction or termination, the Company shall pay to the Agent
for the respective accounts of the Banks the full amount of
the Commitment Fee then accrued on the amount of the
reduction. No reduction of the Commitments of the Banks may
be reinstated unless otherwise agreed to by the Company and
each of the Banks. Nothing contained in this 2.3 shall
obligate any Bank in any way whatsoever to reinstate all or
any part of its Commitment after a reduction of such
Commitment hereunder. If at any time the outstanding amount
of the Loans exceeds the Total Commitment as a result of any
reduction of the Total Commitment pursuant to this 2.3,
then the Company shall immediately pay the amount of such
excess to the Agent for the respective account of the Banks
for application to the Loans. Each payment of Loans shall
be allocated among the Banks, in proportion, as nearly as
practicable to the respective unpaid principal amount of
each Bank's Syndicated Note or Competitive Bid Note, as
applicable, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in
proportion. In addition, the Total Commitment shall be
reduced in accordance with 2.11.
2.4. Requests for Syndicated Loans.
(a) The Company shall give to the Agent written notice
in the form of Exhibit A-2 hereto (or telephonic notice
confirmed in a writing in the form of Exhibit A-2 hereto) of
each Syndicated Loan requested hereunder (a "Loan Request")
not later than (a) with respect to Base Rate Loans, 12 noon
(Boston time) on the proposed Drawdown Date of such Base
Rate Loan and (b) with respect to Eurocurrency Rate Loans,
1:00 P.M. (Boston time) on the third Business Day prior to
the proposed Drawdown Date of such Eurocurrency Rate Loan.
The Agent shall promptly notify the Banks of the contents of
each such notice at the address or addresses for each Bank
set forth on Schedule 1 hereof.
(b) Each such notice delivered by the Company shall
specify (i) the aggregate principal amount of Syndicated
Loans requested, stated in Dollars, (ii) the Type of
Syndicated Loan requested, (iii) the proposed Drawdown Date
and duration of the proposed Interest Period(s) applicable
to any Base Rate Loans, or Eurocurrency Rate Loans and (iv)
the Company's account to which payment of the proceeds of
such Syndicated Loan is to be made. Each such notice (which
shall be irrevocable) shall obligate the Company to accept
the Syndicated Loans requested from the Banks on the
proposed Drawdown Date therefor.
(c) Each request for Types of Syndicated Loans made
hereunder shall be in a minimum aggregate amount of
$5,000,000 or a greater integral multiple of $1,000,000.
(d) Any Syndicated Loans requested by the Company
pursuant to this 2.4 shall be made available to the Company
in accordance with the provisions of 2.9 hereof.
2.5. Competitive Bid Loans.
2.5.1. Competitive Bid Borrowings.
(a) The Competitive Bid Option. In addition to
the Syndicated Loans permitted to be made hereunder
pursuant to 2.1 hereof, the Company may, pursuant to
the terms of this 2.5, cause the Agent to request the
Banks to make offers to fund Competitive Bid Loans to
the Company from time to time prior to the Final
Maturity Date. The Banks may, but shall have no
obligation to, make such offers and the Company may,
but shall have no obligation to, accept such offers in
the manner set forth in this 2.5. Notwithstanding any
other provision herein to the contrary, at no time
shall the Utilization exceed the lesser of (i) the
Total Commitment and (ii) an amount equal to (A) the
Maximum Availability minus (B) the Utilization under
and as defined in the Credit Line Agreement at such
time;
(b) Competitive Bid Quote Request. When the
Company wishes to request offers to make Competitive
Bid Loans under this 2.5, it shall transmit to the
Agent by telephone, telex, cable or facsimile (in each
case confirmed in writing by the Company) a Competitive
Bid Quote Request substantially in the form of Exhibit
B-2 hereto (a "Competitive Bid Quote Request") so as to
be received no later than 11:00 a.m. (Boston time) on
the first Business Day prior to the requested Drawdown
Date, specifying (i) the requested Drawdown Date (which
must be a Business Day) and the amount of such
Competitive Bid Loan (which must be a minimum of
$5,000,000 or any greater integral multiple of
$1,000,000 and may not exceed the lesser of (A) the
Total Commitment and (B) the Maximum Availability in
effect from time to time during the Interest Period of
such Competitive Bid Loan), and (ii) the Interest
Period of such Competitive Bid Loan, subject to the
provisions of the definition of Interest Period, and be
accompanied by a Competitive Bid fee of $750 payable to
the Agent with respect to each Competitive Bid Quote
Request. The Company may request offers to make
Competitive Bid Loans for no more than one (1) amount
and three (3) Interest Periods in a single Competitive
Bid Quote Request. No new Competitive Bid Quote
Request shall be given until the Company has notified
the Agent of its acceptance or non-acceptance of the
Competitive Bid Quotes relating to any outstanding
Competitive Bid Quote Request.
(c) Invitation for Competitive Bid Quotes.
Subsequent to timely receipt of a Competitive Bid Quote
Request, the Agent shall send to the Banks by facsimile
an Invitation for Competitive Bid Quotes as promptly as
possible but not later than 3:00 p.m. (Boston time) on
the first Business Day prior to the requested Drawdown
Date, substantially in the form of Exhibit B-3 hereto
(an "Invitation for Competitive Bid Quotes"), which
shall constitute an invitation by the Company to each
Bank to submit Competitive Bid Quotes offering to make
Competitive Bid Loans to which such Competitive Bid
Quote Request relates in accordance with this 2.5.
If, after receipt by the Agent of a Competitive Bid
Quote Request from the Company in accordance with
subsection (b) of this 2.5.1, the Agent or any Bank
shall be unable to complete any procedure of the
auction process described in subsections (d) through
(f) (inclusive) of this 2.5.1 due to the inability of
such Person to transmit or receive communications
through the means specified therein, such Person may
rely on telephonic notice for the transmission or
receipt of such communications. In any case where such
Person shall rely on telephone transmission or receipt,
any communication made by telephone shall, as soon as
possible thereafter, be followed by written
confirmation thereof.
(d) Submission and Contents of Competitive Bid
Quotes.
(i) Each Bank may, but shall be under no
obligation to, submit a Competitive Bid Quote
containing an offer or offers to make Competitive Bid
Loans to the Company in response to any Invitation for
Competitive Bid Quotes. Each Competitive Bid Quote
must comply with the requirements of this subsection
(d) and must be submitted to the Agent by facsimile not
later than 10:00 a.m. (Boston time) on the requested
Drawdown Date, provided, that Competitive Bid Quotes
may be made by the Agent in its capacity as a Bank only
if it notifies the Company of the terms of its
Competitive Bid Quote no later than 9:45 a.m. (Boston
time) on the requested Drawdown Date. Subject to the
provisions of 12 and 13 hereof, any Competitive Bid
Quote so made shall be irrevocable except with the
written consent of the Agent given on the instructions
of the Company.
(ii) Each Competitive Bid Quote shall be in
substantially the form of Exhibit B-4 hereto and shall
in any case specify:
(A) the requested Drawdown Date and Interest
Periods;
(B) the principal amount of the Competitive
Bid Loan for which each such offer is being made,
which principal amount (w) may be greater than the
Commitment of the quoting Bank but may not exceed
the lesser of (A) the Total Commitment and (B) the
Maximum Availability in effect from time to time
during the Interest Period of such Competitive Bid
Loan, (x) must be $5,000,000 or a larger multiple
of $1,000,000, (y) may not exceed the aggregate
principal amount of Competitive Bid Loans for
which offers were requested, and (z) may be
subject to an aggregate limitation as to the
principal amount of Competitive Bid Loans for
which offers being made by such quoting Bank may
be accepted;
(C) the rate of interest per annum (rounded
to the nearest 1/1000th of 1%) (the "Competitive
Bid Rate") offered for each such Competitive Bid
Loan, and
(D) the identity of the quoting Bank.
A Competitive Bid Quote may include up to five (5)
separate offers by the quoting Bank with respect to
each Interest Period specified in the related
Invitation for Competitive Bid Quotes.
(iii) Any Competitive Bid Quote shall be
disregarded if it:
(A) is not substantially in the form of
Exhibit B-4 hereto or does not specify all of the
information required by subsection (d)(ii);
(B) contains qualifying, conditional or
similar language (except that it may, in the case
of a quote relating to more than one Interest
Period, contain the condition described in
subsection (d)(ii)(B));
(C) proposes terms other than or in addition
to those set forth in the applicable Invitation
for Competitive Bid Quotes; or
(D) arrives after the time set forth in
subsection (d)(i).
(e) Notice to Company. Not later than 10:15 a.m.
(Boston time) on the requested Drawdown Date, the Agent
shall notify the Company of the terms of (i) all
Competitive Bid Quotes submitted by the Banks in
accordance with the preceding subsection (d) and (ii)
of any Competitive Bid Quote that amends, modifies or
is otherwise inconsistent with a previous Competitive
Bid Quote submitted by such Bank with respect to the
same Competitive Bid Quote Request. Any such
subsequent Competitive Bid Quote shall be disregarded
by the Agent unless such subsequent Competitive Bid
Quote is submitted solely to correct a manifest error
in such former Competitive Bid Quote. The Agent's
notice to the Company shall specify (A) the aggregate
principal amount of Competitive Bid Loans for which
offers have been received for each Interest Period
specified in the related Competitive Bid Quote Request,
(B) the respective principal amounts and Competitive
Bid Rates so offered, and the identity of the
respective Banks submitting such offers, and (C) if
applicable, limitations on the aggregate principal
amount of Competitive Bid Loans for which offers in any
single Competitive Bid Quote may be accepted.
(f) Acceptance and Notice by Company and Agent.
Not later than 10:45 a.m. (Boston time) on the
requested Drawdown Date, the Company shall notify the
Agent of the Company's acceptance or non-acceptance of
the offers of which it was notified pursuant to the
preceding subsection (e) in a notice, transmitted to
the Agent by telephone, telex, cable or facsimile (in
each case confirmed in writing by the Company), in
substantially the form of Exhibit B-5 hereto (a "Notice
of Competitive Bid Borrowing"). Such notice shall
specify the aggregate principal amount of offers for
each Interest Period that are accepted. The Company
may accept any Competitive Bid Quote in whole or in
part; provided that:
(i) the aggregate principal amount of each
Competitive Bid Loan may not exceed the applicable
amount set forth in the related Competitive Bid
Quote Request,
(ii) the aggregate principal amount of each
Competitive Bid Loan must be $5,000,000 or a
larger multiple of $1,000,000,
(iii) acceptance of offers may only be
made on the basis of ascending Competitive Bid
Rates, and
(iv) no offer may be accepted that is
described in subsection (d)(iii) or that otherwise
fails to comply with the requirements of this
Agreement.
The Agent shall promptly notify each Bank which
submitted a Competitive Bid Quote of the acceptance or
non-acceptance thereof. The Agent will promptly notify
each Bank which submitted a Competitive Bid Quote and
each other Bank which so requests the following
information from the Agent of (a) the aggregate
principal amount of, and (b) the range of Competitive
Bid Rates of the accepted Competitive Bid Loans for
each requested Interest Period.
(g) Allocation by Agent; Usage of Commitments.
If offers are made by two (2) or more Banks with the
same Competitive Bid Rates, for a greater aggregate
principal amount than the amount in respect of which
offers are accepted for the related Interest Period,
the principal amount of Competitive Bid Loans in
respect of which such offers are accepted shall be
allocated by the Agent among such Banks as nearly as
possible (in such multiples, not less than $100,000 as
the Agent may deem appropriate) in proportion to the
aggregate principal amounts of such offers. If any
such Bank has indicated a minimum acceptable
Competitive Bid Loan in its Competitive Bid Request,
and under the procedures of this subsection (g), the
Agent would have allocated to it an amount less than
such minimum, such Competitive Bid Quote will instead
be deemed to have been withdrawn. Determination by the
Agent of the amounts of Competitive Bid Loans and the
allocation thereof shall be conclusive in the absence
of manifest error.
(h) Funding of Competitive Bid Loans. If, on or
prior to the Drawdown Date of any Competitive Bid Loan,
the Total Commitment has not terminated in full and if,
on such Drawdown Date, the applicable conditions of
12 and 13 hereof are satisfied, the Bank or Banks
whose offers the Company has accepted will fund each
Competitive Bid Loan so accepted. Such Bank or Banks
will make such Competitive Bid Loans, by crediting the
Agent for further credit to the Company's specified
account, in immediately available funds not later than
1:00 p.m. (Boston time) on such Drawdown Date.
2.5.2. Repayment of Competitive Bid Loans.
The principal of each Competitive Bid Loan shall
become absolutely due and payable by the Company on the
last day of the Interest Period relating thereto, and
the Company hereby absolutely and unconditionally
promises to pay to the Agent for the account of the
relevant Banks on the last day of the Interest Period
relating thereto the principal amount of all such
Competitive Bid Loans, plus interest thereon at the
applicable Competitive Bid Rate. The Competitive Bid
Loans shall bear interest at the rate per annum
specified in the applicable Competitive Bid Quotes.
Interest on each Competitive Bid Loan shall be payable
(a) on the last day of the applicable Interest Period,
and if any such Interest Period is longer than ninety
(90) days, also on the last day of each ninety (90) day
period following the commencement of such Interest
Period, and (b) on the Final Maturity Date for each
Competitive Bid Loan. Subject to the terms of this
Agreement, the Company may make Competitive Bid Quote
Requests with respect to new Borrowings of any amounts
so repaid prior to the Final Maturity Date. Except
after an acceleration pursuant to 14.1 hereof, no
principal amount with respect to any Competitive Bid
Loan may be repaid other than on the last day of the
Interest Period relating thereto unless otherwise
agreed to in writing by the Company and the funding
Bank.
2.6. The Notes.
(a) The Syndicated Loans shall be evidenced by
separate promissory notes of the Company in substantially
the form of Exhibit A-1 hereto (the "Syndicated Notes"),
dated as of the date hereof (or such other date as a Bank
may become a party hereto pursuant to 20) with appropriate
insertions; one Syndicated Note being payable to the order
of each Bank in a principal amount equal to such Bank's
Commitment and representing the obligation of the Company to
pay to such Bank the amount of the Commitment or, if less,
the aggregate unpaid principal amount of all Syndicated
Loans made by such Bank hereunder, plus interest accrued
thereon as set forth below. The Company hereby irrevocably
authorizes each Bank to make or cause to be made, at or
about the time of each Syndicated Loan to the Company made
by such Bank, an appropriate notation on such Bank's
Syndicated Note Record reflecting the unpaid principal
amount of all Syndicated Loans made by such Bank, and such
Bank shall make or cause to be made, at or about the time of
receipt of any payment of principal on the Syndicated Note
of such Bank, an appropriate notation on such Syndicated
Note Record reflecting such payment. The aggregate unpaid
amount of Syndicated Loans made by such Bank set forth on
such Bank's Syndicated Note Record shall be rebuttably
presumptive evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any
error in so recording, any such amount on such Bank's
Syndicated Note Record shall not limit or otherwise affect
the obligations of the Company hereunder or under the
Syndicated Note to make payments of principal of or interest
on the Syndicated Note when due.
(b) Competitive Bid Notes. The Competitive Bid Loans
shall be evidenced by separate promissory notes of the
Company in substantially the form of Exhibit B-1 hereto (the
"Competitive Bid Notes"), dated as of the date hereof (or
such other date as a Bank may become a party hereto pursuant
to 20 hereof) with appropriate insertions; one Competitive
Bid Note being payable to the order of each Bank in a
principal amount equal to the Total Commitment and
representing the obligation of the Company to pay to such
Bank the aggregate unpaid principal amount of all
Competitive Bid Loans made by such Bank hereunder, as set
forth in 2.5 hereof, plus interest accrued thereon as set
forth below. The Company hereby irrevocably authorizes each
Bank to make or cause to be made, at or about the time of
each Competitive Bid Loan to the Company made by such Bank,
an appropriate notation on the Competitive Bid Note Record
of such Bank reflecting the unpaid principal amount of all
Competitive Bid Loans made by such Bank, and such Bank shall
make or cause to be made, at or about the time of receipt of
any payment of principal on the Competitive Bid Note of such
Bank, an appropriate notation on the Competitive Bid Note
Record reflecting such payment. The aggregate unpaid amount
of Competitive Bid Loans made by such Bank set forth on the
Competitive Bid Note Record shall be rebuttably presumptive
evidence of the principal amount thereof owing and unpaid to
such Bank, but the failure to record, or any error in so
recording, any such amount on such Competitive Bid Note
Record shall not limit or otherwise affect the obligations
of the Company hereunder or under the Competitive Bid Note
to make payments of principal of or interest on the
Competitive Bid Note when due.
2.7. Interest on Loans.
(a) Except as provided in 4.3 hereof, Base Rate Loans
outstanding from time to time shall bear interest during the
Interest Period relating thereto at the annual percentage
rate equal to the sum of (i) the Base Rate in effect from
time to time and (ii) the applicable Margin in effect during
such Interest Period. Interest on Base Rate Loans shall be
payable in Dollars and in accordance with 4.1(a) hereof.
(b) Except as provided in 4.3 hereof, Eurocurrency
Rate Loans shall bear interest during the Interest Period
relating thereto at the annual percentage rate equal to the
sum of (i) the Eurocurrency Rate and (ii) the applicable
Margin in effect during such Interest Period. Interest on
the Eurocurrency Rate Loans shall be payable in Dollars and
in accordance with 4.1(a) hereof.
(c) Except as provided in 4.3 hereof, each
Competitive Bid Loan shall bear interest at the rate per
annum specified in the applicable Competitive Bid Quote with
respect to such Competitive Bid Loan. Interest on
Competitive Bid Loans shall be payable in Dollars and in
accordance with 4.1(a) hereof.
2.8. Prepayments.
The Company shall repay Base Rate Loans or Eurocurrency
Rate Loans made to the Company hereunder on the last day of
the Interest Period relating thereto. As provided in
2.5.2, the Company shall repay Competitive Bid Loans made
to the Company hereunder on the last day of the Interest
Period relating thereto. The Company shall also have the
right at any time to prepay Syndicated Loans consisting of
Base Rate Loans, as a whole or in part, without premium or
penalty; provided that the Company shall provide written,
telegraphic or telephonic notice to the Agent not later than
11:00 a.m. (Boston time) on the proposed date of prepayment
stating the aggregate principal amount of such prepayment.
Each partial prepayment of any Syndicated Loan pursuant to
this 2.8 shall be in a minimum aggregate principal amount
of $5,000,000 or some greater integral multiple of
$1,000,000, or, if less, the aggregate outstanding principal
amount of the Syndicated Loans. Subject to the conditions
of 2.1 hereof, amounts so prepaid may be reborrowed. In
addition, the Company may, upon three (3) Business Days'
written, telegraphic or telephonic notice to the Agent
stating the proposed date and the aggregate principal amount
of such prepayments, prepay all, but not less than all, of
the Syndicated Loans constituting Eurocurrency Rate Loans
subject to a particular Interest Period on a date other than
the last day of the Interest Period relating thereto;
provided, that upon any such prepayment, and except as set
forth in 4.1(f) hereof, the Company shall pay to the Agent,
for the respective accounts of the Banks on a pro rata
basis, a sum which shall be determined by the Agent (to the
extent that the Agent is able to make such determination),
which determination shall be conclusive in the absence of
manifest error, in the following manner after each such
payment:
(a) First, the Agent shall determine the amount
(if any) (the "Installment Amount") by which (i) the
total amount of interest which would have otherwise
accrued hereunder on each installment of principal so
prepaid during the period beginning on the date of such
payment and ending on the last day of the Interest
Period relating thereto (the "Reemployment Period")
exceeds (ii) the total amount of interest which would
accrue, during the Reemployment Period, at the annual
rate of interest determined by the Agent (the
"Reemployment Rate") as being the prevailing rate per
annum bid at or about the time of such payment for the
purchase of deposits of Dollars from prime banks in the
Eurocurrency Interbank Market selected by the Agent in
its sole discretion (such Reemployment Rate to be the
rate payable on an amount equal (as nearly as may be)
to the Eurocurrency Rate Loans so prepaid and to have a
maturity (as nearly as may be) equal to the
Reemployment Period);
(b) Second, each Installment Amount shall be
treated as payable on the last day of the Interest
Period relating to the Eurocurrency Rate Loans prepaid.
(c) Third, the amount to be paid shall be the
present value of the Installment Amount determined by
discounting the amount thereof from the date on which
the Installment Amount is to be treated as payable, at
the same annual interest rate as the Reemployment Rate
designated as aforesaid by the Agent.
Each prepayment made pursuant to this 2.8 shall be
accompanied by the payment of accrued interest on the
principal prepaid to the date of prepayment.
2.9. Funds for Loans.
(a) Each Bank will, upon receiving notice from the
Agent of any request by the Company for Syndicated Loans
pursuant to 2.4, become and be obligated to make available
to the Agent, on the proposed Drawdown Date of each
Syndicated Loan, not later than (a) 2:30 P.M. (Boston time)
for Base Rate Loans with respect to which the Agent sent
notice to the Banks pursuant to 2.4 hereof no earlier than
the proposed Drawdown Date of such Loan, and (b) 11:00 A.M.
(Boston time) with respect to Eurocurrency Rate Loans and
all other Base Rate Loans, in funds immediately available
for credit to the Company's account, an aggregate amount,
equal to such Bank's Commitment Percentage of the Syndicated
Loan requested at the place specified in the notice
delivered by the Company pursuant to 2.4. Upon
satisfaction of the conditions set forth in 12 and 13, as
applicable, the Agent will cause the aggregate amount of
such funds actually received by the Agent from the Banks to
be credited to the Company's account as soon as practicable
on the date of such receipt. The failure or refusal of any
Bank to make available to the Agent at the aforesaid time on
any Drawdown Date the amount of the Syndicated Loan to be
made by such Bank thereon shall not relieve the other Banks
from their several obligations hereunder to make their
respective Commitment Percentages of any requested
Syndicated Loans.
(b) The Agent may, unless notified to the contrary by
any Bank prior to a Drawdown Date, assume that such Bank has
made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Syndicated Loans
(or in the case of Competitive Bid Loans, the amount of such
Bank's accepted offers of Competitive Bid Loans, if any) to
be made on such Drawdown Date, and the Agent may (but it
shall not be required to), in reliance upon such assumption,
make available to the Company a corresponding amount. If
any Bank makes available to the Agent such amount on a date
after such Drawdown Date, such Bank shall pay to the Agent
on demand an amount equal to the product of (i) the average
computed for the period referred to in clause (iii) below,
of the weighted average interest rate paid by the Agent for
federal funds acquired by the Agent during each day included
in such period, times (ii) the amount of such Bank's
Commitment Percentage of such Loans (or accepted offers of
Competitive Bid Loans, as applicable), times (iii) a
fraction, the numerator of which is the number of days that
elapse from and including such Drawdown Date to the date on
which the amount of such Bank's Loans shall become
immediately available to the Agent, and the denominator of
which is 365. A statement of the Agent submitted to such
Bank with respect to any amounts owing under this paragraph
shall be prima facie evidence of the amount due and owing to
the Agent by such Bank. If the amount of such Bank's Loans
is not made available to the Agent by such Bank within three
(3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Company on
demand, with interest thereon at the rate per annum
applicable to the Loans made on such Drawdown Date.
2.10. Mandatory Repayments.
(a) Promptly, but in no event later than the earlier
of (a) the end of the next Interest Period and (b) seven (7)
days after such receipt, following receipt by any of the
Hasbro Companies of:
(i) Net Cash Sale Proceeds from Asset Sales (other
than the sale, lease, license or other disposition of
assets in the ordinary course of business consistent
with past practices);
(ii) Net Cash Equity Issuance Proceeds from Equity
Issuances by any of the Hasbro Companies;
(iii) net cash proceeds received by (A) the
Company in connection with its issuance of any
Indebtedness (other than purchase money Indebtedness,
issuances of commercial paper or Indebtedness under any
Loan Document or any "Loan Document" as defined in the
Credit Line Agreement) or (B) any Operating Subsidiary
of the Company in connection with its issuance of any
Indebtedness permitted by 10.1(c);
(iv) net cash proceeds of income tax refunds
received by any of the Hasbro Companies relating to any
year beginning on or after January 1, 2001; and
(v) net cash proceeds received from Casualty
Events by any of the Hasbro Companies which have not
been committed (as evidenced by a binding written
contract) by such Person prior to or within one hundred
eighty (180) days of receipt of such proceeds to the
repair or replacement of the property so damaged,
destroyed or taken, or, if so committed, such repair or
replacement of the property so damaged, destroyed or
taken shall have not commenced prior to or within one
hundred eighty (180) days of receipt of such proceeds
pursuant to such binding written contract;
the Company shall pay to the Agent for the respective
accounts of the Banks an amount equal to (A) one hundred
percent (100%) of such net cash proceeds or (B) if less, (x)
the then outstanding principal amount of the Loans and the
Unpaid Reimbursement Obligations and the then outstanding
principal amount of the "Loans" under and as defined in the
Credit Line Agreement and (y) if an Event of Default has
occurred and is continuing, the Maximum Drawing Amount of
Letters of Credit then outstanding to be held by the Agent
as cash collateral to secure all Reimbursement Obligations,
to be applied in the manner set forth in 2.11.
Notwithstanding the foregoing, no such payment shall be
required unless and only to the extent that such Asset
Sales, Equity Issuances, issuances of Indebtedness or
Casualty Events result in net cash proceeds that otherwise
would be required to be so applied equal to (x) $5,000,000
or more in any period of thirty (30) consecutive days or (y)
$15,000,000 in any fiscal year of the Company.
(b) If at any time the Utilization exceeds the lesser
of (i) the Total Commitment and (ii) an amount equal to (A)
the Maximum Availability minus (B) the Utilization under and
as defined in the Credit Line Agreement at such time, then
the Company shall immediately pay the amount of such excess
to the Agent for the respective account of the Banks to be
applied in the manner set forth in 2.11.
(c) If at any time the outstanding amount of the Loans
borrowed to satisfy the Company's obligations under
guaranties of the Foreign Scheduled Facilities exceeds the
Foreign Sublimit, then the Company shall immediately pay the
amount of such excess to the Agent for the respective
account of the Banks to be applied in the manner set forth
in 2.11.
2.11. Application of Payments; Commitment
Reduction.
All payments made pursuant to 2.10 shall be applied to
reduce the outstanding principal amount of the Loans and
Unpaid Reimbursement Obligations and the outstanding
principal amount of the "Loans" under and as defined in the
Credit Line Agreement by such amount pro rata based on the
then outstanding principal amount of the Loans and Unpaid
Reimbursement Obligations and the then outstanding principal
amount of "Loans" under and as defined in the Credit Line
Agreement. Such mandatory repayments shall be allocated
among the Banks in proportion, as nearly as practicable, to
the respective outstanding amounts of each Bank's Note, with
adjustments to the extent practicable to equalize any prior
prepayments not exactly in proportion. Amounts repaid
pursuant to 2.10 may be reborrowed. After all "Loans" and
"Notes" outstanding under and as defined in the Credit Line
Agreement are repaid in full, and no "Bank" has any
obligation to make any such "Loan" and the "Total
Commitment" under and in each case as defined in the Credit
Line Agreement has been permanently reduced to zero, the
Total Commitment shall be reduced by an amount equal to (a)
one hundred percent (100%) of Net Cash Sale Proceeds from
Asset Sales (other than a Specified Sale and other than the
sale, lease, license or other disposition of assets in the
ordinary course of business consistent with past practices)
in excess of $30,000,000 in any fiscal year, (b) one hundred
percent (100%) of net cash proceeds received by the Company
in connection with the issuance of Subordinated Debt or
other long term unsecured Indebtedness having a maturity
after the Final Maturity Date (other than purchase money
Indebtedness) and (c) one hundred percent (100%) of net cash
proceeds received by any Operating Subsidiary of the Company
in connection with the issuance of Indebtedness pursuant to
10.1(c). No reduction of the Total Commitment made
pursuant to this 2.11 may be reinstated.
3. THE SWING LINE.
3.1. The Swing Line Loans.
Subject to the terms and conditions hereinafter set
forth, upon notice by the Company made to the Swing Line
Bank in accordance with 3.2 hereof, the Swing Line Bank
agrees to lend to the Company Swing Line Loans on any
Business Day prior to the Final Maturity Date in an
aggregate principal amount not to exceed $25,000,000 (the
"Maximum Swing Line Loan Amount"). Each Swing Line Loan
shall be in a minimum amount equal to $1,000,000 or an
integral multiple thereof. Notwithstanding any other
provisions of this Agreement and in addition to the limit
set forth above, at no time shall the Utilization exceed the
lesser of (i) the Total Commitment and (ii) an amount equal
to (A) the Maximum Availability minus (B) the Utilization
under and as defined in the Credit Line Agreement at such
time; provided, however, subject to the limitations set
forth in this 3.1 from time to time the sum of the
aggregate outstanding Swing Line Loans plus all outstanding
Syndicated Loans made by the Swing Line Bank may exceed the
Swing Line Bank's Commitment Percentage of the Total
Commitment then in effect.
3.2. Notice of Borrowing.
When the Company desires the Swing Line Bank to make a
Swing Line Loan, the Company shall send to the Agent and the
Swing Line Bank written notice in the form of Exhibit C
hereto (or telephonic notice confirmed in a writing in the
form of Exhibit C hereto) of each Swing Line Loan requested
hereunder (a "Swing Line Loan Request") not later than 1:00
p.m. (Boston time) on the proposed Drawdown Date of any
Swing Line Loan. Each such Swing Line Loan Request shall
set forth the principal amount of the proposed Swing Line
Loan and the date on which the proposed Swing Line Loan
would mature (the "Swing Line Loan Maturity Date") which
shall in no event be later than the Final Maturity Date.
Each Swing Line Loan Request shall be irrevocable and
binding on the Company and shall obligate the Company to
borrow the Swing Line Loan from the Swing Line Bank on the
proposed Drawdown Date thereof. Upon satisfaction of the
applicable conditions set forth in this Agreement, on the
proposed Drawdown Date the Swing Line Bank shall make the
Swing Line Loan available to the Company no later than 3:00
p.m. (Boston time) on the proposed Drawdown Date by
crediting the amount of the Swing Line Loan to the
account(s) of the Company specified in the Swing Line Loan
Request; provided that the Swing Line Bank shall not advance
any Swing Line Loans after it has received notice from any
Bank that a Default or Event of Default has occurred and
stating that no new Swing Line Loans are to be made until
such Default or Event of Default has been cured or waived in
accordance with the provisions of this Agreement. The Swing
Line Bank shall not be obligated to make any Swing Line
Loans at any time when any Bank is a Delinquent Bank unless
the Swing Line Bank has entered into arrangements reasonably
satisfactory to it to eliminate the Swing Line Bank's risk
with respect to such Delinquent Bank, which may include cash
collateralizing such Delinquent Bank's Commitment Percentage
of the outstanding Swing Line Loans and any such additional
Swing Line Loans to be made.
3.3. Interest on Swing Line Loans.
Each Swing Line Loan shall be a Base Rate Loan and,
except as otherwise provided in 4.3 hereof, shall bear
interest from the Drawdown Date thereof until repaid in full
at the rate per annum equal to the Base Rate plus the Margin
with respect to Base Rate Loans, which shall be paid on each
Interest Payment Date for Base Rate Loans.
3.4. Repayment of Swing Line Loans.
The Company shall repay each outstanding Swing Line
Loan on or prior to the Swing Line Loan Maturity Date. Upon
notice by the Swing Line Bank on any Business Day, each of
the Banks hereby agrees to make Syndicated Loans
constituting Base Rate Loans to the Company having
outstanding Swing Line Loans, on the next succeeding
Business Day following such notice, in an amount equal to
such Bank's Commitment Percentage of the aggregate amount of
all Swing Line Loans outstanding to the Company. The
proceeds thereof shall be applied directly to the Swing Line
Bank to repay the Swing Line Bank for such outstanding Swing
Line Loans. Each Bank hereby absolutely, unconditionally
and irrevocably agrees to make such Syndicated Loans upon
one (1) Business Day's notice as set forth above,
notwithstanding (a) that the amount of such Syndicated Loan
may not comply with the applicable minimums set forth
herein, (b) the failure of the Company to meet the
conditions set forth in 12 or 13 hereof, (c) the
occurrence or continuance of a Default or an Event of
Default hereunder, (d) the date of such Syndicated Loan, and
(e) the Total Commitment and Maximum Availability in effect
at such time. In the event that it is impracticable for
such Syndicated Loan to be made for any reason on the date
otherwise required above, then each Bank hereby agrees that
it shall forthwith purchase (as of the date such Syndicated
Loan would have been made, but adjusted for any payments
received from the Company on or after such date and prior to
such purchase) from the Swing Line Bank, and the Swing Line
Bank shall sell to each Bank, such participations in the
Swing Line Loans (including all accrued and unpaid interest
thereon) outstanding as shall be necessary to cause the Bank
to share in such Swing Line Loans pro rata based on their
respective Commitment Percentages (without regard to any
termination of the Total Commitment hereunder) by making
available to the Swing Line Bank an amount equal to such
Bank's participation in the Swing Line Loans; provided that
(x) all interest payable on the Swing Line Loans shall be
for the account of the Swing Line Bank as a funding and
administrative fee until the date as of which the respective
participation is purchased, and (y) at the time any purchase
of such participation is actually made, the purchasing Bank
shall be required to pay the Swing Line Bank interest on the
principal amount of the participation so purchased for each
day from and including the date such Syndicated Loan would
otherwise have been made until the date of payment for such
participation at the rate of interest in effect applicable
to Base Rate Loans during such period.
3.5. The Swing Line Note.
The obligation of the Company to repay the Swing Line
Loans made pursuant to this Agreement and to pay interest
thereon as set forth in this Agreement shall be evidenced by
a promissory note of the Company with appropriate insertions
substantially in the form of Exhibit D attached hereto (the
"Swing Line Note"), dated the Effective Date and payable to
the order of the Swing Line Bank in a principal amount
stated to be the lesser of (a) the Maximum Swing Line Loan
Amount, or (b) the aggregate principal amount of Swing Line
Loans at any time advanced by the Swing Line Bank and
outstanding thereunder. The Company irrevocably authorizes
the Swing Line Bank to make or cause to be made, at or about
the time of the Drawdown Date of any Swing Line Loan or at
the time of receipt of any payment of principal on the Swing
Line Note, an appropriate notation on the Swing Line Note
Record reflecting the making of such Swing Line Loan or (as
the case may be) the receipt of such payment. The
outstanding amount of the Swing Line Loans set forth on such
Swing Line Note Record shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Swing Line
Bank, but the failure to record, or any error in so
recording, any such amount on such Swing Line Note Record
shall not limit or otherwise affect the actual amount of the
obligations of the Company hereunder or under the Swing Line
Note to make payments of principal of or interest on the
Swing Line Note when due.
4. INTEREST; PAYMENTS AND COMPUTATIONS.
4.1. Interest; Costs and Expenses.
(a) Elections. At the option of the Company, so long
as no Default or Event of Default has occurred and is then
continuing, the Company may elect from time to time to have
a portion of the principal amount of the Syndicated Loans to
the Company outstanding from time to time bear interest
during any particular Interest Period calculated by
reference to the Base Rate or the Eurocurrency Rate,
provided that any portion of the Syndicated Loans selected
to bear interest by reference to the Base Rate or the
Eurocurrency Rate shall be in an amount not less than
$5,000,000 or some greater integral multiple of $1,000,000
with respect to any single Interest Period. Any election by
the Company to have interest calculated by reference to the
Base Rate or the Eurocurrency Rate shall be made by notice
(which shall be irrevocable) to the Agent as provided in
2.4. If in any such notice, the Company does not specify
whether any Eurocurrency Rate Loans are requested, the
Company shall be deemed to have elected that the requested
Syndicated Loans bear interest at the Base Rate and be
denominated in Dollars. Any election of a Eurocurrency Rate
shall lapse at the end of the expiring Interest Period
unless extended by a further election notice as provided in
2.4 hereof. If, on or prior to the last day of any
Interest Period for Base Rate Loans or Eurocurrency Rate
Loans, the Company (x) fails to deliver a further election
notice with respect to such Loans pursuant to 2.4 hereof
and this 4.1(a), and (y) fails to repay all or any part of
such Loans as provided in 4.4 hereof, then such Syndicated
Loans shall be deemed to be Base Rate Loans in accordance
with the terms set forth in 4.4(b) hereof. Each Base Rate
Loan or Eurocurrency Rate Loan shall bear interest during
each Interest Period relating thereto at the rate set forth
in 2.7 or 4.3 hereof, as the case may be. Interest on
each Base Rate Loan or Eurocurrency Rate Loan shall be
payable (i) on the last day of the Interest Period relating
thereto or (ii) if the Interest Period is longer than ninety
(90) days, on the last day of each 90-day period following
the commencement of such Interest Period and on the last day
of such Interest Period.
(b) Notices, etc. as to Eurocurrency Rate. Promptly
after the commencement of any Interest Period for any
Syndicated Loan, the Agent shall notify the Company and each
of the Banks of (A) the applicable interest rate determined
by the Agent hereunder with respect to any Eurocurrency Rate
Loan, (B) each date on which interest is payable hereunder,
and (C) the date on which the Interest Period with respect
to such Syndicated Loan shall end; provided, however, that
the obligations of the Company to pay to each Bank principal
and interest as herein provided shall not be subject to or
in any way conditional upon the giving of any such notice by
the Agent. Each such notice shall, absent manifest error,
be binding upon each Bank and the Company.
(c) Substitution of Base Rate. Notwithstanding any
other provision of this Agreement, if (i) the introduction
of, any change in, or any change in the interpretation of,
any law or regulation applicable to any Bank (the "Affected
Bank") shall make it unlawful, or any central bank or other
Governmental Authority having jurisdiction thereof shall
assert that it is unlawful, or in the reasonable judgment of
such Bank, impracticable, for such Bank to perform its
obligations in respect of any Loans bearing interest based
on the Eurocurrency Rate or (ii) if any Affected Bank shall
reasonably determine with respect to Loans bearing interest
based on the Eurocurrency Rate that (A) by reason of
circumstances affecting any Eurocurrency Interbank Market,
adequate and reasonable methods do not exist for
ascertaining the Eurocurrency Rate which would otherwise be
applicable during any Interest Period, or (B) deposits of
Dollars in the relevant amount for the relevant Interest
Period are not available to such Bank in any Eurocurrency
Interbank Market, or (C) the Eurocurrency Rate does not or
will not accurately reflect the cost to such Bank of
obtaining or maintaining the applicable Loans bearing
interest based on the Eurocurrency Rate during any Interest
Period, then any such Affected Bank shall promptly give
telephonic, telex or cable notice of such determination to
the Company (which notice shall be conclusive and binding
upon the Company absent manifest error), the Agent and the
other Banks. Upon such notification by any Affected Bank,
(x) the obligation of such Affected Bank to make Loans
bearing interest based on the Eurocurrency Rate shall be
suspended until such circumstances no longer exist, (y) any
new Loans made by such Affected Bank on or after the date of
such notification, which Loans would otherwise bear interest
at the suspended rate shall be deemed to be Loans bearing
interest by reference to the Base Rate and shall be
denominated in Dollars, as necessary, until such suspension
is no longer in effect, and (z) so long as it is not
unlawful for the Affected Bank to continue carrying
Outstanding Loans bearing interest at the suspended rate,
Outstanding Loans of such Affected Bank bearing interest
based on the Eurocurrency Rate shall continue to bear
interest at the applicable rate based on the Eurocurrency
Rate until the end of the applicable Interest Period. If it
is unlawful for any Affected Bank to continue carrying any
Outstanding Loans bearing interest at the suspended rate,
such Affected Bank shall so notify the Company and the Agent
and any such Outstanding Loans shall be automatically
converted to Base Rate Loans at the end of the Interest
Period which is current when such notice is given.
Notwithstanding any provision of this 4.1(c) to the
contrary, during any period in which a suspension is in
effect pursuant to this 4.1(c), the Company may notify the
Agent and any Affected Bank to which such suspension applies
that (I) the Company shall repay, in accordance with the
provisions of 4.1(f) hereof, any and all Loans made by such
Affected Bank to the Company, and (II) with respect to any
new Loans to be made by the Banks hereunder, the Company
shall not borrow from such Affected Bank and the Commitment
of such Affected Bank shall be terminated.
(d) Additional Costs and Expenses; Reserve
Requirements. Anything herein to the contrary
notwithstanding, if any present or future applicable law
(which expression, as used herein, includes statutes, rules
and regulations thereunder and interpretations thereof by
any competent court or by any governmental or other
regulatory body or official charged with the administration
or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank by any
central bank or other fiscal, monetary or other Governmental
Authority, whether or not having the force of law) shall
(A) subject such Bank to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any
nature not now in effect, with respect to the Bank's
commitment to make Loans bearing interest based on the
Eurocurrency Rate or the Bank's Loans bearing interest
based on the Eurocurrency Rate; or
(B) materially change the basis of taxation of
payments to such Bank on the principal of, interest on
or any other amounts payable in respect of the Loans
bearing interest based on the Eurocurrency Rate as such
(excluding changes in taxes measured by or imposed on
the net income, or on the capital or net worth of such
Bank; provided, however, nothing in this parenthetical
shall be deemed to limit the rights of the Banks or the
obligations of the Company pursuant to 4.1(e)); or
(C) impose or increase or render applicable any
liquidity, capital, special deposit or reserve or
similar requirements (whether or not having the force
of law) not now in effect, against assets held by, or
deposits in or for the account of, or loans by an
office of such Bank with respect to such Bank's
commitment to make Loans bearing interest based on the
Eurocurrency Rate or such Bank's Loans bearing interest
based on the Eurocurrency Rate; or
(D) impose on such Bank any other condition or
requirement not now in effect, with respect to such
Bank's commitment to make Loans bearing interest based
on the Eurocurrency Rate or such Bank's Loans bearing
interest based on the Eurocurrency Rate or any class of
loans of which the Loans bearing interest based on the
Eurocurrency Rate forms a part, and the result of any
of the foregoing is (x) to increase the cost to such
Bank attributable to the making, funding or maintaining
of Loans bearing interest based on the Eurocurrency
Rate or its commitment therefor, (y) to reduce the
amount of principal, interest, commitment fees or other
amounts payable in respect of Loans bearing interest
based on the Eurocurrency Rate to such Bank hereunder
or its commitment therefor, or (z) to require such Bank
to make any payment or to forego any interest or other
sum payable in respect of Loans bearing interest based
on the Eurocurrency Rate hereunder or its commitment
therefor, the amount of which payment or foregone
interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received
by such Bank from the Company hereunder;
then, and in each such case, the Company will, upon demand
by such Bank made by written notice to the Company from time
to time as often as the occasion therefor may arise, pay to
such Bank, within ten (10) days after receipt of notice of
such demand, such additional amounts as will be sufficient,
in the good faith opinion of such Bank, to compensate the
Bank for such additional costs, reduction, payment or
foregone interest or other sum in respect of Loans bearing
interest based on the Eurocurrency Rate; provided, however,
that the Company shall be required to pay only such
additional costs or other amounts which are incurred by such
Bank (i) from and after the date of such notice, with
respect to Loans outstanding during Interest Periods
commencing after the date on which the Company receives such
notice, (ii) with respect to Loans outstanding on the date
of such notice provided that (A) not less than 90 days
remain in the applicable Interest Period for such Loans and
(B) such costs are assessed only for the period commencing
on the date of such notice to the Company, and (iii) from
and after the date of such notice to the extent that the
incurrence of such additional costs or amounts is unrelated
to Outstanding Loans and is not otherwise covered by clauses
(i) or (ii) of this paragraph. Subject to the provisions of
the preceding sentence, a claim by any Bank for all or any
part of any additional amount required to be paid by the
Company pursuant to this 4.1(d) may be made before and/or
after the end of the Interest Period to which such claim
relates or during the Interest Period in which such claim
has arisen and before and/or after any repayment or
prepayment, to which such claim relates, of any or
Eurocurrency Rate Loans owed hereunder. A certificate
signed by an officer of such Bank, setting forth the amount
of such loss, expense or liability required to be paid by
the Company to such Bank, and the computations made by such
Bank to determine such additional amount, shall be submitted
by the Bank to the Company in connection with each demand
made at any time by such Bank upon the Company hereunder,
and shall, save for manifest or other obvious error,
constitute conclusive evidence of the additional amount
required to be paid by the Company to such Bank upon each
such demand.
(e) Increased Capital Requirements. If any present or
future, or any change in any present or future, law or any
governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) or the
interpretation or administration thereof by a Governmental
Authority with appropriate jurisdiction affects the amount
of capital required or expected to be maintained by any of
the Banks or any corporation controlling any of the Banks
and such Bank determines that any of the foregoing imposes
or increases a requirement by such Bank to allocate capital
resources to such Bank's credit facility established
hereunder or any loans made pursuant hereto, which would
have the effect of reducing the return on such Bank's
capital to a level below that which such Bank could have
achieved (assuming full utilization of the Bank's capital)
but for such increased capital requirements, then such Bank
may notify the Company (with a copy to the Agent) of such
fact. To the extent that the costs of such increased
capital requirements are not reflected in the Base Rate, the
Eurocurrency Rate or the Competitive Bid Rate, the Company
and such Bank shall thereafter attempt to negotiate in good
faith an adjustment to the compensation payable hereunder
with respect to such Bank's Commitment and, in the case of
any Loans made by such Bank after the date of the Company's
receipt of such notice ("New Loans"), all such New Loans,
which adjustment will adequately compensate the Bank in
light of these circumstances. If the Company and such Bank
are unable to agree to such adjustment within thirty (30)
days of the day on which the Company receives such notice,
then effective from the date on which the Company has
received such notice (but not earlier than the effective day
of such requirement or retroactive to any date prior to the
date on which the Company has received such notice), the
fees payable hereunder with respect to any New Loans made
by, or the Commitment of, such Bank shall increase by an
amount which will, in such Bank's reasonable determination,
provide adequate compensation. Such Bank shall allocate
such cost increases among its customers in good faith and on
an equitable basis.
(f) Replacement of Banks. Notwithstanding any other
provision of this Agreement, in the event that (i) the
obligation of any Bank to make Eurocurrency Rate Loans is
suspended pursuant to 4.1(c) hereof, or (ii) any Bank makes
demand upon the Company pursuant to 4.1(d) hereof for the
payment of additional costs or other amounts, or (iii) any
Bank makes demand upon the Company pursuant to 4.1(e)
hereof for an adjustment to the compensation payable to such
Bank by the Company hereunder, then, in each such case, the
Company in its discretion may (A) send written notice to
such Bank and the Agent advising such Bank that, subject to
the provisions of this 4.1(f), its Commitment hereunder
shall be terminated on a date determined by the Company (the
"Replacement Date"), which Replacement Date shall be no
earlier than the date on which such Bank and the Agent have
received such notice from the Company, and commencing on the
Replacement Date, the Commitment of such Bank hereunder
shall be terminated and no Commitment Fee shall be payable
by the Company to such Bank with respect to such Commitment,
and (B) replace such Bank with another Bank or other
commercial banking institution (the "Replacement Bank")
which has been selected by the Company and approved by the
Majority Banks, which approval shall not be unreasonably
withheld, provided that the Company, the Banks and the Agent
agree that (w) on or prior to the Replacement Date, the
Company shall have paid all principal, interest, fees and
other amounts owing by the Company hereunder, accruing up to
and including the Replacement Date, to the Bank being
replaced on such Replacement Date, (x) as of the Replacement
Date, the Replacement Bank will take over the entire
Commitment of the Bank being replaced, (y) on or prior to
the Drawdown Date first following the Replacement Date, the
Company, the Agent, the Banks (other than the Bank being
replaced) and the Replacement Bank shall make such
arrangements by way of new Syndicated Loans, purchases or
refundings of existing Syndicated Loans or otherwise as will
result thereafter in the outstanding and unpaid Syndicated
Loans of each Bank being equal, as near as may practically
be, to such Bank's Commitment Percentage of all of the
outstanding and unpaid Syndicated Loans made to the Company,
and (z) the Agent shall be entitled to receive prior to the
Replacement Date from the Company and the Replacement Bank
such supplemental agreements, documents, certificates and
legal opinions in connection with the replacement of such
Bank as the Agent and the other Banks may reasonably request
to give effect to the foregoing provisions of this 4.1(f).
(g) Change of Lending Office. If a Bank changes its
applicable lending office (other than pursuant to paragraph
(h) below) and the effect of the change, as of the date of
the change, would be to cause the Company to become
obligated to pay any additional amount under this 4.1 or
under 4.7, the Company shall not be obligated to pay such
additional amount.
(h) Mitigation. If a condition or an event occurs
which would, or would upon the passage of time or giving of
notice, result in the payment of any additional amount to
any Bank by the Company pursuant to this 4.1 or under 4.7,
such Bank shall take such steps as may reasonably be
available to it and acceptable to the Company to mitigate
the effects of such condition or event (which may include
efforts to rebook the Loans held by such Bank at another
lending office, or through another branch or an affiliate,
of such Bank); provided that such Bank shall not be required
to take any step that, in its reasonable judgment, would be
disadvantageous to its business or operations or would
require it to incur any additional cost or expense unless
the Company agrees to reimburse such Bank for such cost or
expense.
4.2. Concerning Interest Periods.
No Interest Period for Loans may be selected by the
Company if such Interest Period ends after the Final
Maturity Date. If any Interest Period would otherwise end
on a day which is not a Business Day for Base Rate,
Eurocurrency Rate or Competitive Bid Rate purposes, as
applicable, that Interest Period, shall end on the Business
Day next preceding or next succeeding such day determined by
the Agent in accordance with its usual practices. Any
Interest Period relating to any Eurocurrency Rate Loan that
begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall
end on the last Business Day of a calendar month.
4.3. Interest on Overdue Amounts.
Overdue principal and (to the extent permitted by
applicable law) interest on the Loans and all other overdue
amounts payable hereunder shall bear interest payable on
demand at a rate per annum equal to two percent (2%) above
the rate otherwise in effect with respect to Base Rate
Loans, whether or not any Eurocurrency Rate or Competitive
Bid Rate would otherwise have been applicable thereto, until
such amount shall be paid in full (whether before or after
judgment).
4.4. Payments.
(a) All payments of principal of and interest on Loans
made to the Company, any Fees and any other amounts due
hereunder shall be made by the Company to the Agent, at or
prior to 11:00 A.M., Boston time, on any payment date, in
Dollars and in immediately available funds at the Agent's
Office without setoff, counterclaim or deduction of any
kind. The Agent shall be entitled to debit any account of
the Company with the Agent in the amount of each such
payment when due in order to effect timely payment thereof.
Upon receipt by the Agent of any such payment, the Agent
shall promptly send by wire transfer, in immediately
available like funds, to each Bank, to an individual or an
account designated by such Bank, such Bank's pro rata share
of such payment.
(b) If any Bank makes a Syndicated Loan on a day on
which the Company is to repay all or any part of any
Outstanding Syndicated Loan, such Bank shall, to the extent
necessary, apply the proceeds of the requested Syndicated
Loan to make such repayment, and only an amount equal to (i)
the excess, if any, of the amount being repaid over the
amount being borrowed shall be remitted by the Company to
the Agent for the account of such Bank as provided in 2.8
and (ii) the excess, if any, of the amount being borrowed
over the amount being repaid shall be remitted by the Bank
to the Agent for the account of the Company. If the Company
fails to repay all or any part of any Outstanding Syndicated
Loan denominated in Dollars on the last day of the
applicable Interest Period therefor, and if the Company
fails to deliver an election notice with respect to such
unpaid portion of the Outstanding Syndicated Loan in
accordance with the provisions of 2.4 and 4.1(a) hereof,
then, subject to satisfaction of the conditions precedent
set forth in 13 hereof, the Company shall be deemed to have
requested that the unpaid portion of the Outstanding
Syndicated Loan constitute a new Borrowing as a Base Rate
Loan. Nothing contained in this 4.4(b) shall obligate the
Banks in any way to make any Loans to the Company at any
time from and after the Final Maturity Date.
(c) Whenever a payment hereunder or under the Notes
becomes due on a day which is not a Business Day, the due
date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during
such extension (and shall not be considered overdue during
such extension), provided, however, that if such extension
would cause payment of interest on or principal of
Eurocurrency Rate Loans to be made in the next following
calendar month, such payment shall be made on the next
preceding Business Day.
4.5. Computations.
All computations of interest on the Loans shall be
based on (a) with respect to Eurocurrency Rate Loans and
Competitive Bid Loans, a 360-day year, and (b) with respect
to Base Rate Loans, a 365-day year, and paid for the actual
number of days elapsed.
4.6. Interest Limitation.
Notwithstanding any other term of this Agreement or any
Note or any other document referred to herein or therein,
the maximum amount of interest, together with any other
amounts or charges which may constitute interest under
applicable law, which may be charged to or collected from
any Person liable hereunder or under any Note by the Banks
shall be absolutely limited to, and shall in no event
exceed, the maximum amount of interest which could lawfully
be charged or collected under applicable law (including, to
the extent applicable, the provisions of Section 5197 of the
Revised Statutes of the United States of America, as
amended, 12 U.S.C. Section 85, as amended), so that the
maximum of all amounts constituting interest under
applicable law, howsoever computed, shall never exceed as to
any Person liable therefor such lawful maximum, and any term
of this Agreement or any Note or any other document referred
to herein or therein which could be construed as providing
for interest in excess of such lawful maximum shall be and
hereby is made expressly subject to and modified by the
provisions of this paragraph.
4.7. Indemnification.
In the event that the Company shall at any time (a)
repay or prepay (other than in accordance with the
provisions of 2.8 hereof) any principal of any Eurocurrency
Rate Loans or Competitive Bid Loans on a date other than the
last day of the Interest Period with respect thereto,
whether by reason of acceleration following an Event of
Default or otherwise, or (b) for any reason fail to borrow
any Loan with respect to which the Company gave a notice of
borrowing pursuant to 2.4 or 4.1(a) hereof at an interest
rate based on the Eurocurrency Rate or a Notice of
Competitive Bid Borrowing pursuant to 2.5.1(f) or prepay a
Loan as to which notice of prepayment has been given, the
Company shall indemnify the Banks against all losses, costs
or expenses incurred by the Banks in respect of the
Company's payment, prepayment or failure to borrow, on the
date of such payment or failure to borrow. Such losses,
costs or expenses shall include, but not be limited to (i)
any costs incurred by the Banks in carrying funds which were
to have been borrowed by the Company or in carrying funds to
cover the amount of any overdue principal of or overdue
interest on any Loan, (ii) any interest payable by the Banks
to Banks of the funds borrowed by the Banks in order to
carry the funds referred to in the immediately preceding sub-
clause (i), and (iii) any losses (including losses of
anticipated interest which would otherwise have been
required to be paid hereunder through the end of such then
existing or, as the case may be, commencing Interest Period)
incurred by the Banks in liquidating or re-employing funds
acquired from third parties to effect or maintain all or any
part of the Loans, provided that to the extent that the
reemployment formula set forth in 2.8 hereof is capable of
being employed to compute such losses, the Agent shall
employ such reemployment formula to compute such losses.
Any losses, costs or expenses payable by the Company to the
Banks pursuant to this 4.7 shall be without duplication of
any amounts paid by the Company pursuant to 2.8, 4.1 or
4.3 hereof.
4.8. Banks' Obligations Several.
The Banks' obligations hereunder shall be several and
not joint, and no Bank's obligations to lend shall be
affected by any other Bank's failure to make any Loan
hereunder.
4.9. Debt Rating Increase.
If the Agent determines that the Debt Rating equals or
exceeds "BBB-" by Standard & Poor's or "Baa3" by Moody's (a
"Debt Rating Increase"), the Agent shall promptly give
notice thereof to the Company and the Banks. In the event
of a split Debt Rating by the two rating agencies, the Agent
shall use the higher rating in its determination of a Debt
Rating Increase.
5. LETTERS OF CREDIT.
5.1. Letter of Credit Commitments.
5.1.1. Commitment to Issue Letters of Credit.
Subject to the terms and conditions hereof and the
execution and delivery by the Company of a letter of
credit application on the Agent's customary form (a
"Letter of Credit Application"), the Agent on behalf of
the Banks and in reliance upon the agreement of the
Banks set forth in 5.1.4 and upon the representations
and warranties of the Company contained herein, agrees,
in its individual capacity, to issue, extend and renew
for the account of the Company one or more standby or
documentary letters of credit (individually, a "Letter
of Credit"), in such form as may be requested from time
to time by the Company and agreed to by the Agent;
provided, however, that, after giving effect to such
request, (a) the sum of the aggregate Maximum Drawing
Amount and all Unpaid Reimbursement Obligations shall
not exceed $15,000,000 at any one time (or such other
amount as may be agreed from time to time by the
Company and the Agent and notified to the Banks) and
(b) the Utilization shall not exceed the lesser of the
(i) the Total Commitment and (ii) an amount equal to
(A) the Maximum Availability minus (B) the Utilization
under and as defined in the Credit Line Agreement at
such time. Notwithstanding the foregoing, the Agent
shall have no obligation to issue any Letter of Credit
to support or secure any Indebtedness of the Company or
any of its Subsidiaries to the extent that such
Indebtedness was incurred prior to the proposed
issuance date of such Letter of Credit, unless in any
such case the Company demonstrates to the reasonable
satisfaction of the Agent that (x) such prior incurred
Indebtedness was then fully secured by a prior
perfected and unavoidable security interest in
collateral provided by the Company or such Subsidiary
to the proposed beneficiary of such Letter of Credit or
(y) such prior incurred Indebtedness was then secured
or supported by a letter of credit issued for the
account of the Company or such Subsidiary.
5.1.2. Letter of Credit Applications.
Each Letter of Credit Application shall be
completed to the reasonable satisfaction of the Agent.
In the event that any provision of any Letter of Credit
Application shall be inconsistent with any provision of
this Agreement, then the provisions of this Agreement
shall, to the extent of any such inconsistency, govern.
5.1.3. Terms of Letters of Credit.
Each Letter of Credit issued, extended or renewed
hereunder shall, among other things, (a) provide for
the payment of sight drafts for honor thereunder when
presented in accordance with the terms thereof and when
accompanied by the documents described therein, and (b)
have an expiry date no later than the date which is
fourteen (14) days (or, if the Letter of Credit is
confirmed by a confirmer or otherwise provides for one
or more nominated persons, forty-five (45) days) prior
to the Final Maturity Date. Each Letter of Credit so
issued, extended or renewed shall be subject (to the
extent consistent with this Agreement) to the Uniform
Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce
Publication No. 500 or any successor version thereto
adopted by the Agent in the ordinary course of its
business as a letter of credit issuer and in effect at
the time of issuance of such Letter of Credit (the
"Uniform Customs") or, if agreed to by the Company, the
International Standby Practices (ISP98), International
Chamber of Commerce Publication No. 590, or any
successor code of standby letter of credit practices
among banks adopted by the Agent in the ordinary course
of its business as a standby letter of credit issuer
and in effect at the time of issuance of such Letter of
Credit.
5.1.4. Reimbursement Obligations of Banks.
Each Bank severally agrees that it shall be
absolutely liable, without regard to the occurrence of
any Default or Event of Default or any other condition
precedent whatsoever, to the extent of such Bank's
Commitment Percentage, to reimburse the Agent on demand
for the amount of each draft paid by the Agent under
each Letter of Credit to the extent that such amount is
not reimbursed by the Company pursuant to 5.2 (such
agreement for a Bank being called herein the "Letter of
Credit Participation" of such Bank).
5.1.5. Participations of Banks.
Each such payment made by a Bank shall be treated
as the purchase by such Bank of a participating
interest in the Company's Reimbursement Obligation
under 5.2 in an amount equal to such payment. Each
Bank shall share in accordance with its participating
interest in any interest which accrues pursuant to
5.2.
5.2. Reimbursement Obligation of the Company.
In order to induce the Agent to issue, extend and renew
each Letter of Credit and the Banks to participate therein,
the Company hereby agrees to reimburse or pay to the Agent,
for the account of the Agent or (as the case may be) the
Banks, with respect to each Letter of Credit issued,
extended or renewed by the Agent hereunder,
(a) except as otherwise expressly provided in
5.2(b) and (c), on each date that any draft presented
under such Letter of Credit is honored by the Agent
after the Agent determines that the documents
(including any draft) delivered in connection with such
presentment are in conformity with such Letter of
Credit, or the Agent otherwise makes a payment with
respect thereto, (i) the amount paid by the Agent under
or with respect to such Letter of Credit, and (ii) the
amount of any taxes, fees, charges or other costs and
expenses whatsoever reasonably incurred by the Agent or
any Bank in connection with any payment made by the
Agent or any Bank under, or with respect to, such
Letter of Credit, other than as a result of the Agent's
or any such Bank's gross negligence or willful
misconduct,
(b) upon the reduction (but not termination) of
the Total Commitment to an amount less than the Maximum
Drawing Amount, an amount equal to such difference,
which amount shall be held by the Agent for the benefit
of the Banks and the Agent as cash collateral for all
Reimbursement Obligations, and
(c) upon the termination of the Total Commitment,
or the acceleration of the Reimbursement Obligations
with respect to all Letters of Credit in accordance
with 14, an amount equal to the then Maximum Drawing
Amount on all outstanding Letters of Credit, which
amount shall be held by the Agent for the benefit of
the Banks and the Agent as cash collateral for all
Reimbursement Obligations.
Each such payment shall be made to the Agent at the
Agent's Office in immediately available funds. Interest on
any and all amounts remaining unpaid by the Company under
this 5.2 at any time from the date such amounts become due
and payable (whether as stated in this 5.2, by acceleration
or otherwise) until payment in full (whether before or after
judgment) shall be payable to the Agent on demand at the
rate specified in 4.3 for overdue principal on the
Syndicated Loans.
5.3. Letter of Credit Payments.
If any draft shall be presented or other demand for
payment shall be made under any Letter of Credit, the Agent
shall notify the Company of the date and amount of the draft
presented or demand for payment and of the date and time
when it expects to pay such draft or honor such demand for
payment. If the Company fails to reimburse the Agent as
provided in 5.2 on or before the date that such draft is
paid or other payment is made by the Agent, the Agent may at
any time thereafter notify the Banks of the amount of any
such Unpaid Reimbursement Obligation. No later than 3:00
p.m. (Boston time) on the Business Day next following the
receipt of such notice, each Bank shall make available to
the Agent, at the Agent's Office, in immediately available
funds, such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to
the product of (a) the average, computed for the period
referred to in clause (c) below, of the weighted average
interest rate paid by the Agent for federal funds acquired
by the Agent during each day included in such period, times
(b) the amount equal to such Bank's Commitment Percentage of
such Unpaid Reimbursement Obligation, times (c) a fraction,
the numerator of which is the number of days that elapse
from and including the date the Agent paid the draft
presented for honor or otherwise made payment to the date on
which such Bank's Commitment Percentage of such Unpaid
Reimbursement Obligation shall become immediately available
to the Agent, and the denominator of which is 360. The
responsibility of the Agent in respect of a presentment of
any Letter of Credit to the Company and the Banks shall be
only to determine that the documents (including each draft)
delivered under each Letter of Credit in connection with
such presentment shall be in conformity with such Letter of
Credit, provided that this 5.3 shall not relieve the Agent
of any liability resulting from the gross negligence or
willful misconduct of the Agent, or otherwise affect any
defense or other right the Company may have as a result of
any such gross negligence or willful misconduct.
5.4. Obligations Absolute.
The Company's obligations under this 5 shall be
absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event
of Default or any condition precedent whatsoever or any
setoff, counterclaim or defense to payment which the Company
may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Company further
agrees with the Agent and the Banks that the Agent and the
Banks shall not be responsible for, and the Company's
Reimbursement Obligations under 5.2 shall not be affected
by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even if such
documents should in fact prove to be in any or all respects
invalid, fraudulent or forged, or any dispute between or
among the Company, the beneficiary of any Letter of Credit
or any financing institution or other party to which any
Letter of Credit may be transferred or any claims or
defenses whatsoever of the Company against the beneficiary
of any Letter of Credit or any such transferee. The Agent
and the Banks shall not be liable for any error, omission,
interruption or delay in transmission, dispatch or delivery
of any message or advice, however transmitted, in connection
with any Letter of Credit. The Company agrees that any
action taken or omitted by the Agent or any Bank under or in
connection with each Letter of Credit and the related drafts
and documents, if done in good faith, shall be binding upon
the Company and shall not result in any liability on the
part of the Agent or any Bank to the Company.
Notwithstanding the foregoing, nothing in this 5.4 shall
relieve the Agent or any Bank of any liability resulting
from the gross negligence or willful misconduct of the Agent
or such Bank, or otherwise affect any defense or other right
that the Company may have as a result of any such gross
negligence or willful misconduct.
5.5. Reliance by Issuer.
To the extent not inconsistent with 5.4, the Agent
shall be entitled to rely, and shall be fully protected in
relying, upon any Letter of Credit, draft, writing,
resolution, notice, consent, certificate, affidavit, letter,
telegram, telecopy, telex or facsimile message, statement,
order or other document believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal
counsel, independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement unless
it shall first have received such advice or concurrence of
the Majority Banks as it reasonably deems appropriate or it
shall first be indemnified to its reasonable satisfaction by
the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, under
this Agreement in accordance with a request of the Majority
Banks, and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Banks and all
future holders of the Syndicated Notes or of Letter of
Credit Participations. Notwithstanding the foregoing,
nothing in this 5.5 shall relieve the Agent of any
liability resulting from the gross negligence or willful
misconduct of the Agent, or otherwise affect any defense or
other right that the Company may have as a result of any
such gross negligence or willful misconduct.
5.6. Letter of Credit Fee.
The Company shall pay to the Agent, for the accounts of
the Banks in accordance with their respective Commitment
Percentages, a letter of credit fee (a "Letter of Credit
Fee") with respect to each Letter of Credit, computed for
the period from and including the date of issuance,
extension or renewal of such Letter of Credit to the expiry
date of such Letter of Credit, at a rate per annum equal to
(a) in respect of any standby Letter of Credit, the
applicable Margin per annum with respect to Eurocurrency
Rate Loans on the aggregate face amount of standby Letters
of Credit outstanding and (b) in respect of any documentary
Letter of Credit, fifty percent (50%) of the applicable
Margin per annum with respect to Eurocurrency Rate Loans on
the aggregate face amount of documentary Letters of Credit
outstanding. Such Letter of Credit Fee shall be payable (i)
in respect of standby Letters of Credit, periodically in
arrears on the last Business Day of each March, June,
September and December occurring after the date of issuance,
extension or renewal of each such standby Letter of Credit
and on the Final Maturity Date, and (ii) in respect of
documentary Letters of Credit, periodically in arrears on
the last Business Day of each March, June, September and
December occurring after the date of issuance, extension or
renewal of each such documentary Letter of Credit and on the
Final Maturity Date. In addition, the Company shall, on the
date of issuance, extension or renewal of any Letter of
Credit, pay to the Agent a fronting fee for the account of
the Agent equal to one-eighth of one percent (1/8%) per
annum of the face amount of each such standby or documentary
Letter of Credit. In respect of each Letter of Credit, the
Company shall also pay to the Agent for the Agent's own
account, at such other time or times as such charges are
customarily made by the Agent, the Agent's customary
issuance, amendment, negotiation or document examination and
other administrative fees as in effect from time to time.
6. COLLATERAL SECURITY AND GUARANTIES.
6.1. Security of Company.
The Secured Obligations shall be secured by a perfected
first priority security interest (subject only to Permitted
Liens entitled to priority under applicable law) in all of
the following, whether now owned or hereafter acquired,
including all books and records and other recorded data in
each case relating to the following: (a) "Accounts",
"Chattel paper" and "Instruments" of the Company, in each
case as such terms are defined in the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts, (b)
Inventory of the Company, (c) the Company's U.S. trademarks
(and U.S. applications and U.S. registrations thereof
(except for "intent to use" applications for trademark
registrations filed pursuant to Section 1(b) of the Lanham
Act, unless and until an Amendment to Allege Use or a
Statement of Use under Sections 1(c) and 1(d) of the Lanham
Act has been filed)), U.S. copyrights (and U.S. applications
and U.S. registrations thereof) and U.S. patents and U.S.
patent applications, in each case relating exclusively to
the Identified Brands (but with respect to the Playskool
brand, only U.S. trademarks (and U.S. applications and U.S.
registrations thereof) and U.S. copyrights (and U.S.
applications and U.S. registrations thereof), in each case
that did not arise from particular products, shall be
included in the Collateral), and (d) shares of Capital Stock
of Infogrames owned by the Company, in each case pursuant to
the terms of and as and to the extent provided in the
Security Documents to which the Company is a party.
6.2. Guaranties and Security of Restricted
Subsidiaries.
The Secured Obligations shall also be guaranteed
pursuant to the terms of the Guaranty. The obligations of
each of the Restricted Subsidiaries under the Guaranty shall
be in turn secured by a perfected first priority security
interest (subject only to Permitted Liens entitled to
priority under applicable law) in all of the following,
whether now owned or hereafter acquired, including all books
and records and other recorded data in each case relating to
the following: (a) "Accounts", "Chattel paper" and
"Instruments" of each such Restricted Subsidiary, in each
case as such terms are defined in the Uniform Commercial
Code as in effect in the Commonwealth of Massachusetts, (b)
Inventory of each such Restricted Subsidiary, and (c) such
Restricted Subsidiary's U.S. trademarks (and U.S.
applications and U.S. registrations thereof (except for
"intent to use" applications for trademark registrations
filed pursuant to Section 1(b) of the Lanham Act, unless and
until an Amendment to Allege Use or a Statement of Use under
Sections 1(c) and 1(d) of the Lanham Act has been filed)),
U.S. copyrights (and U.S. applications and U.S.
registrations thereof) and U.S. patents and U.S. patent
applications, in each case relating exclusively to the
Identified Brands (but with respect to the Playskool brand,
only U.S. trademarks (and U.S. applications and U.S.
registrations thereof) and U.S. copyrights (and U.S.
applications and U.S. registrations thereof), in each case
that did not arise from particular products, shall be
included in the Collateral), in each case pursuant to the
terms of and as and to the extent provided in the Security
Documents to which such Restricted Subsidiary is a party.
6.3. Release of Collateral.
(a) The parties hereto acknowledge and agree that the
Agent, on behalf of the Banks and the Agent, shall release
its Liens on the Collateral at such time as each of the
following conditions are satisfied:
(i) for each of the four (4) consecutive fiscal
quarters of the Company most recently ended, the ratio
of Consolidated Total Funded Debt at the end of such
fiscal quarter to EBITDA for the Reference Period then
ended shall be less than or equal to 3.00:1.00;
(ii) the ratio of EBITDA for the Reference Period
most recently ended to Consolidated Total Interest
Expense for such Reference Period shall be greater than
or equal to 6.00:1.00;
(iii) the sum of (i) the Total Commitment plus
(ii) the "Total Commitment" under and as defined in the
Credit Line Agreement shall have been permanently
reduced to an amount less than or equal to
$400,000,000; and
(iv) no Default or Event of Default shall have
occurred and be continuing.
(b) Without limiting the foregoing, in the event that
any part of the Collateral is sold or otherwise disposed of
in connection with a sale, disposition or other transaction
permitted hereunder, the Liens on such Collateral granted
pursuant to any Security Document shall be automatically
released and the Agent shall execute and deliver to the
Company or the relevant Restricted Subsidiary, as the case
may be, all releases or other documents (including without
limitation, Uniform Commercial Code termination statements),
and take all other actions necessary or reasonably desirable
for the release of such Liens.
6.4. Limitation of Security.
Notwithstanding anything to the contrary contained in
this 6 or in any of the Security Documents, no Lien shall
be granted on any shares of stock of any Subsidiary of the
Company or any evidences of indebtedness of any Subsidiary
of the Company.
7. FEES.
7.1. Amendment Fee.
The Company agrees to pay to the Agent for the pro rata
account of each Bank on the Effective Date an amendment fee
(the "Closing Fee") in an amount equal to one-half of one
percent (0.50%) of such Bank's Commitment.
7.2. Agent's Fee.
The Company shall pay to the Agent for the Agent's own
account an Agent's fee (the "Agent's Fee") on the terms and
conditions set forth in the Fee Letter.
8. REPRESENTATIONS AND WARRANTIES.
The Company represents and warrants to the Banks that:
8.1. Corporate Existence.
(a) Each of the Hasbro Companies (i) is a corporation
duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, (ii) has all
requisite corporate power to own its property and conduct
its business as now conducted and as presently contemplated,
and (iii) is in good standing as a foreign corporation and
is duly authorized to do business in each jurisdiction where
such qualification is necessary except where a failure to be
so qualified would not have a Material Adverse Effect.
(b) Each of the Hasbro Companies has adequate
corporate power and authority and has full legal right to
enter into each of the Loan Documents to which it is or is
to become a party, to perform, observe and comply with all
of its agreements and obligations under each of such
documents, and, with respect to the Company, to make all of
the borrowings contemplated by this Agreement.
8.2. Corporate Authority, etc.
The execution, delivery and performance by each of the
Hasbro Companies of each of the Loan Documents to which it
is a party, the performance by each of the Hasbro Companies
of all of its agreements and obligations under each of such
documents, and the making by the Company of all of the
borrowings contemplated by this Agreement, have been duly
authorized by all necessary corporate action on the part of
each of the Hasbro Companies and their respective
shareholders and do not and will not (i) contravene any
provision of any of their charter or by-laws (each as from
time to time in effect), (ii) conflict with, or result in a
breach of any material term, condition or provision of, or
constitute a default under or result in the creation of any
Lien upon any of the property of any of the Hasbro Companies
under any agreement, trust deed, indenture, mortgage or
other instrument to which any of the Hasbro Companies is or
may become a party or by which any of the Hasbro Companies
or any of the property of any of the Hasbro Companies is or
may become bound or affected, the consequences of which
would have a Material Adverse Effect, (iii) violate or
contravene any provision of any law, regulation, order,
ruling or interpretation thereunder or any decree, order or
judgment of any court or governmental or regulatory
authority, bureau, agency or official (all as from time to
time in effect and applicable to any of the Hasbro
Companies), except where such violation or contravention
would not have a Material Adverse Effect, (iv) require any
waivers, consents or approvals by any of the creditors of
any of the Hasbro Companies which have not been obtained,
(v) require any consents or approvals by any shareholders of
any of the Hasbro Companies (except such as will be duly
obtained on or prior to the Effective Date and will be in
full force and effect on and as of the Effective Date), or
(vi) require any approval, consent, order, authorization or
license by, or giving notice to, or taking any other action
with respect to, any governmental or regulatory authority or
agency under any provision of any applicable law (other than
any filings of this Agreement and the other Loan Documents
with the Securities and Exchange Commission required to be
made after the date hereof), except where the failure to do
so would not result in a Material Adverse Effect.
8.3. Binding Effect of Documents, etc.
Each of the Hasbro Companies has duly executed and
delivered each of the Loan Documents to which it is a party
and each of such documents is in full force and effect. The
agreements and obligations of each of the Hasbro Companies
contained in each of the Loan Documents to which it is a
party constitute its legal, valid and binding obligations
enforceable against it in accordance with their respective
terms except as enforceability is limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium or other laws relating to or affecting generally
the enforcement of creditors' rights and except to the
extent that the availability of the remedy of specific
performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor
may be brought.
8.4. Governmental Approvals.
The execution, delivery and performance by the Company
and any of its Subsidiaries of this Agreement and the other
Loan Documents to which the Company or any of its
Subsidiaries is or is to become a party and the transactions
contemplated hereby and thereby do not require the approval
or consent of, or filing with, any governmental agency or
authority other than those already obtained or made, and
except for filings in connection with the Security
Documents.
8.5. No Event of Default, etc.
No Default or Event of Default has occurred and is
continuing.
8.6. Chief Executive Offices.
Until the Agent receives notice of a change, the chief
executive offices of the Company and the offices where
substantially all of the material financial records and
books of account of the Company are kept, are located in
Pawtucket and/or East Providence, Rhode Island.
8.7. Title to Properties; Leases.
Except as indicated on Schedule 8.7 hereto, the Company
and its Subsidiaries own all of the assets reflected in the
consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date or acquired since
that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that
date), subject to no Liens except Permitted Liens.
8.8. Financial Statements and Projections.
8.8.1. Fiscal Year.
Each of the Hasbro Companies has a fiscal year
ending on the last Sunday in December of each calendar
year, subject to adjustment pursuant to 9.13.
8.8.2. Financial Statements.
There has been furnished to the Banks (a) a
consolidated balance sheet of the Company and its
Subsidiaries as at December 26, 1999, a consolidated
statement of earnings, and a consolidated statement of
cash flows for the fiscal year then ended, audited by
KPMG LLP, the Company's independent certified public
accountants, and (b) an unaudited condensed
consolidated balance sheet of the Company and its
Subsidiaries as at the Balance Sheet Date and an
unaudited condensed consolidated statement of earnings
for the fiscal year then ended. Each such balance
sheet and statement of earnings has been prepared in
accordance with GAAP and fairly presents the financial
condition of the Company as at the close of business on
the date thereof and the results of operations for the
fiscal period then ended.
8.8.3. Projections.
The Company's projections of the annual operating
budgets of the Company and its Subsidiaries on a
consolidated basis, balance sheets and cash flow
statements for the 2001 to 2002 fiscal years have been
delivered to each Bank. To the knowledge of the
Company or any of its Subsidiaries as of the Effective
Date, no facts exist that (individually or in the
aggregate) would result in any material change in any
of such projections. The projections are based upon
estimates and assumptions believed to be reasonable by
the management of the Company at the time of
preparation thereof and reflect estimates of the
Company and its Subsidiaries of the results of
operations and other information projected therein
believed to be reasonable by the management of the
Company at the time of preparation thereof.
8.9. No Material Changes, Etc.
Since the Balance Sheet Date, there has been no event
or occurrence which has had a Material Adverse Effect.
Since the Balance Sheet Date, the Company has not made any
Restricted Payment except as permitted by 10.4 hereof.
8.10. Franchises, Patents, Copyrights, Etc.
Each of the Hasbro Companies possesses all material
franchises, patents, copyrights, trademarks, permits,
service marks, trade names, domain names, licenses and
permits, and rights in respect of the foregoing, adequate
for the conduct of its business substantially as now
conducted, without any known conflict or conflicts with any
rights of others which would, individually or in the
aggregate, have a Material Adverse Effect.
8.11. Litigation.
Except as set forth on Schedule 8.11 hereto and except
as required to be disclosed pursuant to 9.6, there are no
actions, suits, proceedings or investigations of any kind
pending or threatened against any of the Hasbro Companies
before any court, tribunal or administrative agency or board
which, if adversely determined, either in any case or in the
aggregate, in the opinion of management of the Company after
taking into account any available insurance, could
reasonably be expected to have a Material Adverse Effect.
8.12. No Materially Adverse Contracts, Etc.
None of the Hasbro Companies is subject to any charter,
corporate or other legal restriction, or any judgment,
decree, order, rule or regulation which has or is expected
in the future to have a Material Adverse Effect. None of
the Hasbro Companies is a party to any contract or agreement
which has or is expected, in the judgment of the Company's
officers, to have any Material Adverse Effect.
8.13. Compliance With Other Instruments, Laws, Etc.
None of the Hasbro Companies is in violation of any
provision of its charter documents, by-laws, or, to the best
of the Company's knowledge, any agreement or instrument to
which it may be subject or by which it or any of its
properties may be bound or any decree, order, judgment, or
any statute, license, rule or regulation, in any of the
foregoing cases in a manner which would result in the
imposition of substantial penalties or a Material Adverse
Effect.
8.14. Taxes.
Each of the Hasbro Companies has filed all federal,
state and other income and all other tax returns, reports
and declarations due and required by any jurisdiction to
which any of them is subject. Each of the Hasbro Companies
has paid, or has made reasonable provision for payment of,
all material taxes (if any) which have or may become due and
payable pursuant to any of the said returns or pursuant to
any matters raised by audits or for other reasons known to
the Company, except for taxes the amount, applicability, or
validity of which are currently being contested by it in
good faith by appropriate proceedings and with respect to
which the Company has set aside on its books, in accordance
with GAAP, reserves reasonably deemed by it to be adequate
with respect thereto. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know no
basis for any such claim, except for taxes the amount,
applicability, or validity of which are currently being
contested by it in good faith by appropriate proceedings and
with respect to which the Company has set aside on its
books, in accordance with GAAP, reserves reasonably deemed
by it to be adequate with respect thereto.
8.15. Absence of Financing Statements, Etc.
Except for Permitted Liens, there is no financing
statement, security agreement, chattel mortgage, real estate
mortgage or other document filed or recorded with any filing
records, registry, or other public office, which purports to
cover, affect or give notice of any present or possible
future Lien on any assets or property of the Company or any
of its Subsidiaries (other than Foreign Subsidiaries) or
rights thereunder.
8.16. Perfection of Security Interest.
All filings, assignments, pledges and deposits of
documents or instruments have been made (or provision
therefor shall have been made to the reasonable satisfaction
of the Agent) and all other actions have been taken that are
legally permitted and are necessary or advisable, under
applicable law, to establish and perfect the Agent's
security interest in the Collateral, in each case pursuant
to the terms of the Security Documents. Except as permitted
by the Security Documents or as set forth on Schedule 10.2,
the Collateral and the Agent's rights with respect to the
Collateral are not subject to any material setoff, claims,
withholdings or other defenses other than reconciliations
with customers and vendors in the ordinary course of
business consistent with past practices. The Company or a
Restricted Subsidiary, as the case may be, is the owner of
the Collateral free from any Lien except for Permitted
Liens.
8.17. Indebtedness.
None of the Operating Subsidiaries of the Company has
any Indebtedness other than Indebtedness of the kind
expressly permitted by the provisions contained in 10.1 of
this Agreement. As of the Balance Sheet Date, all
Indebtedness of the Company and its Subsidiaries that is
required by GAAP to be shown on the consolidated balance
sheet of the Company and its Subsidiaries described in
8.8.2(b) hereof is shown on such consolidated balance
sheet.
8.18. True Copies of Charter and Other Documents.
The Hasbro Companies has furnished or caused to be
furnished to each of the Banks true and complete copies of
(a) all of the charter and other incorporation documents of
each of the Hasbro Companies (together with any and all
amendments thereto), and (b) the by-laws of each of the
Hasbro Companies (together with any and all amendments
thereto).
8.19. Employee Benefit Plans.
8.19.1. In General.
Except as would not reasonably be expected to have
a Material Adverse Effect, each Employee Benefit Plan
and each Guaranteed Pension Plan has been maintained
and operated in compliance in all material respects
with the provisions of ERISA and all Applicable Pension
Legislation and, to the extent applicable, the Code,
including but not limited to the provisions thereunder
respecting prohibited transactions and the bonding of
fiduciaries and other persons handling plan funds as
required by 412 of ERISA. The Company has heretofore
delivered to the Agent the most recently completed
annual report, Form 5500, with all required
attachments, and actuarial statement required to be
submitted under 103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
8.19.2. Terminability of Welfare Plans.
Except for severance payment arrangements and
except as disclosed in (i) the financial statements of
the Company and its Subsidiaries described in 8.8.2 or
delivered pursuant to 9.5 or (ii) the periodic and
other reports of the Company filed from time to time
with the Securities and Exchange Commission, no
Employee Benefit Plan, which is an employee welfare
benefit plan within the meaning of 3(1) or 3(2)(B) of
ERISA, provides benefit coverage subsequent to
termination of employment, except as required by Title
I, Part 6 of ERISA or the applicable state insurance
laws.
8.19.3. Guaranteed Pension Plans.
Each contribution required to be made to a
Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding
deficiency, the notice or lien provisions of 302(f) of
ERISA, or otherwise, has been timely made. No waiver
of an accumulated funding deficiency or extension of
amortization periods has been received with respect to
any Guaranteed Pension Plan, and neither the Company
nor any ERISA Affiliate is obligated to or has posted
security in connection with an amendment to a
Guaranteed Pension Plan pursuant to 307 of ERISA or
401(a)(29) of the Code. No liability to the PBGC
(other than required insurance premiums, all of which
have been paid) has been incurred by the Company or any
ERISA Affiliate with respect to any Guaranteed Pension
Plan and there has not been any ERISA Reportable Event
(other than an ERISA Reportable Event as to which the
requirement of thirty (30) days notice has been
waived), or any other event or condition which presents
a material risk of termination of any Guaranteed
Pension Plan by the PBGC. As of the Effective Date,
based on the latest valuation of each Guaranteed
Pension Plan (which in each case occurred within twelve
months of the date of this representation), and on the
actuarial methods and assumptions employed for that
valuation, the aggregate benefit liabilities of all
such Guaranteed Pension Plans within the meaning of
4001 of ERISA did not exceed the aggregate value of
the assets of all such Guaranteed Pension Plans,
disregarding for this purpose the benefit liabilities
and assets of any Guaranteed Pension Plan with assets
in excess of benefit liabilities.
8.19.4. Multiemployer Plans.
Neither the Company nor any ERISA Affiliate has
incurred any material liability that remains
outstanding (including secondary liability) to any
Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under 4201 of
ERISA or as a result of a sale of assets described in
4204 of ERISA. Neither the Company nor any ERISA
Affiliate has been notified that any Multiemployer Plan
is in reorganization or insolvent under and within the
meaning of 4241 or 4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that
any Multiemployer Plan intends to terminate or has been
terminated under 4041A of ERISA.
8.20. Holding Company and Investment Company Acts.
Neither the Company nor any of its Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company", as such
terms are defined in the Public Utility Holding Company Act
of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
8.21. Certain Transactions.
To the best of the Company's knowledge, and except as
disclosed in the Company's Forms 10-K or proxy statements
(or would be so disclosed but for the fact that the filing
thereof is not yet due), each as filed with the Securities
and Exchange Commission, none of the officers, directors, or
employees of any of the Hasbro Companies is presently a
party to any transaction (other than arms-length
transactions pursuant to which any of the Hasbro Companies
makes payments in the ordinary course of business upon terms
no less favorable than the such Person could obtain from
third parties,) with the Company or any of its Subsidiaries
(other than (i) for services as employees, officers and
directors, or (ii) for all related transactions with any one
Person, transactions involving an aggregate amount not in
excess of $60,000 at any one time), including, without
limitation, any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or
otherwise requiring payments to or from any officer,
director or such employee or any corporation, partnership,
trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer,
director, trustee or partner.
8.22. Use of Proceeds.
8.22.1. General.
The proceeds of the Loans shall be used for
working capital and general corporate purposes;
provided, however, that Borrowings made under the
Foreign Sublimit may be used solely to satisfy the
Company's obligations pursuant to guaranties of Foreign
Scheduled Facilities. The Company will obtain Letters
of Credit solely for working capital and general
corporate purposes.
8.22.2. Regulations U and X.
No portion of any Loan is to be used, and no
portion of any Letter of Credit is to be obtained, for
the purpose of purchasing or carrying any "margin
security" or "margin stock" as such terms are used in
Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
8.23. Environmental Compliance.
The Company has taken all necessary steps to
investigate the past and present condition and usage of the
Real Estate and the operations conducted thereon and, based
upon such diligent investigation, has determined that,
except as set forth on Schedule 8.23 hereto or except as
would not reasonably be expected to have a Material Adverse
Effect:
(a) none of the Company, its Subsidiaries or any
operator of the Real Estate or any operations thereon
is in violation, or alleged violation, of any judgment,
decree, order, law, license, rule or regulation
pertaining to environmental matters, including without
limitation, those arising under the Resource
Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal
Clean Air Act, the Toxic Substances Control Act, or any
state, local or foreign law, statute, regulation,
ordinance, order or decree relating to health, safety
or the environment (hereinafter "Environmental Laws");
(b) neither the Company nor any of its
Subsidiaries has received notice within the last five
(5) years from any third party including, without
limitation, any Governmental Authority, (i) that any
one of them has been identified by the United States
Environmental Protection Agency ("EPA") as a
potentially responsible party under CERCLA with respect
to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B; (ii) that any hazardous
waste, as defined by 42 U.S.C. 6903(5), any hazardous
substances as defined by 42 U.S.C. 9601(14), any
pollutant or contaminant as defined by 42 U.S.C.
9601(33) and any toxic substances, oil or hazardous
materials or other chemicals or substances regulated by
any Environmental Laws ("Hazardous Substances") which
any one of them has generated, transported or disposed
of has been found at any site at which a Governmental
Authority has conducted or has ordered that any Company
or any of its Subsidiaries conduct a remedial
investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is
or shall be a named party to any claim, action, cause
of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs,
expenses, losses or damages of any kind whatsoever in
connection with the release of Hazardous Substances;
and
(c) none of the Company and its Subsidiaries is
required under any applicable Environmental Law to
perform Hazardous Substances site assessments, or to
remove or remediate Hazardous Substances, or to give
notice to any Governmental Authority or record or
deliver to other Persons an environmental disclosure
document or statement by virtue of the transactions set
forth herein and contemplated hereby.
8.24. Subsidiaries.
As of December 26, 1999, the Company had no active
Subsidiaries that are not listed in Exhibit 21 to the Form
10-K of the Company for the fiscal year ended December 26,
1999, as filed with the Securities and Exchange Commission,
a copy of such Exhibit 21 is attached hereto as Schedule
8.24, except for certain inactive or immaterial Subsidiaries
that would not, if taken as a whole, constitute a
Significant Subsidiary. During the period between
December 26, 1999 and the Effective Date, the Company has
had no Significant Subsidiaries other than (a) Hasbro
International, Inc. and Tiger Electronics, Ltd., each a
Delaware corporation, and (b) Wizards of the Coast, Inc., a
Washington corporation.
8.25. Disclosure.
No representation or warranty made by any of the Hasbro
Companies in this Agreement or in any agreement, instrument,
document, certificate, statement or letter furnished to the
Agent or the Banks by or on behalf of the any of the Hasbro
Companies in connection with any of the transactions
contemplated by any of the Loan Documents contains any
untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements
contained therein not misleading in light of the
circumstances in which they are made. Except as disclosed
herein or otherwise disclosed in writing to the Agent and
the Banks, there is no fact known to the Company which has a
Material Adverse Effect, or which is reasonably likely in
the future to have a Material Adverse Effect, exclusive of
effects resulting from changes in general economic
conditions, legal standards or regulatory conditions.
8.26. Indebtedness of Foreign Subsidiaries.
All Indebtedness of Foreign Subsidiaries owing to any
Bank or Bank Affiliate has been incurred under the
facilities described on Schedule 8.26 hereto (the "Foreign
Scheduled Facilities"), as such Schedule 8.26 may be updated
from time to time by the Company by delivering a copy of
such updated Schedule 8.26 to the Agent and each Bank,
provided that (a) no revision to Schedule 8.26 that purports
to increase the aggregate amount of the Foreign Scheduled
Facilities shall be effective without the prior written
consent of the Agent (not to be unreasonably withheld) and
(b) no revision to Schedule 8.26 that purports to decrease
or eliminate a Foreign Scheduled Facility shall be effective
without the consent (not to be unreasonably withheld) of the
creditor under such Foreign Scheduled Facility.
8.27. Bank Accounts.
Schedule 8.27 sets forth the account numbers and
location of all bank accounts of the Company or any of its
Subsidiaries included in the Collateral or otherwise into
which proceeds of the Collateral are paid as of the
Effective Date.
9. AFFIRMATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, so long as any
Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Note is outstanding or any Bank has any obligation to make
any Loans or the Agent has any obligation to issue, extend
or renew any Letters of Credit:
9.1. Punctual Payment.
The Company will duly and punctually pay or cause to be
paid the principal and interest on the Loans, all
Reimbursement Obligations, all Fees and all other amounts
provided for in this Agreement and the other Loan Documents
to which the Company or any of its Subsidiaries is a party,
all in accordance with the terms of this Agreement and such
other Loan Documents.
9.2. Use of Loan Proceeds.
The Company shall use the proceeds of the Loans and
obtain Letters of Credit solely for the purposes set forth
in 8.22.
9.3. Maintenance of Office.
The Company will maintain its chief executive offices
in Pawtucket and/or East Providence, Rhode Island, or at
such other place or places in the United States of America
as the Company shall designate upon written notice to the
Agent, where notices, presentations and demands to or upon
the Company in respect of the Loan Documents may be given or
made.
9.4. Records and Accounts.
The Company will (a) keep, and cause each of its
Subsidiaries to keep, true and accurate records and books of
account in which full, true and correct entries will be made
in accordance with GAAP or, in the case of Foreign
Subsidiaries, statutory reporting principles, (b) maintain
adequate accounts and reserves for all taxes (including
income taxes), depreciation, depletion, obsolescence and
amortization of its properties and the properties of its
Subsidiaries, contingencies, and other reserves, and (c) at
all times engage KPMG LLP or other independent certified
public accountants reasonably satisfactory to the Agent as
the independent certified public accountants of the Company
and will not permit more than thirty (30) days to elapse
between the cessation of such firm's (or any successor
firm's) engagement as the independent certified public
accountants of the Company and the appointment in such
capacity of a successor firm as shall be reasonably
satisfactory to the Agent.
9.5. Financial Statements, Certificates and
Information.
The Company will deliver to each of the Banks:
(a) as soon as practicable, but, in any event not
later than one hundred (100) days after the end of each
fiscal year of the Company, the consolidated and
consolidating balance sheet of the Company and its
Subsidiaries as at the end of such year, and the related
consolidated and consolidating statement of earnings and the
consolidated statement of cash flows, with each setting
forth in comparative form the figures for the previous
fiscal year and all such consolidated statements to be in
reasonable detail, prepared in accordance with GAAP, and
certified without qualification (except as to changes in
GAAP with which such accountants concur) and without an
expression of uncertainty as to the ability of the Company
or any of its Subsidiaries to continue as going concerns by
KPMG LLP or by other independent certified public
accountants reasonably satisfactory to the Agent, together
with a written statement from such accountants to the effect
that they have read a copy of this Agreement, and that, in
making the examination necessary to said certification, they
have obtained no knowledge of any Default or Event of
Default, or, if such accountants shall have obtained
knowledge of any then existing Default or Event of Default
they shall disclose in such statement any such Default or
Event of Default; provided that such accountants shall not
be liable to the Banks for failure to obtain knowledge of
any Default or Event of Default;
(b) as soon as practicable, but in any event not later
than sixty (60) days after the end of each of the first
three (3) fiscal quarters of each fiscal year of the
Company, copies of the unaudited consolidated and
consolidating balance sheet of the Company and its
Subsidiaries, each as at the end of such quarter, and the
related consolidated and consolidating statement of earnings
and the consolidated statement of cash flows for the portion
of the Company's fiscal year then elapsed, all in reasonable
detail and prepared in accordance with GAAP, together with a
certificate of any Authorized Financial Officer of the
Company that, subject to changes resulting from audit and
year-end adjustments, the information contained in such
financial statements fairly presents the financial condition
and results of operations of the Company and its
Subsidiaries for the periods covered;
(c) simultaneously with the delivery of the financial
statements referred to in (a) and (b) above, a statement, in
the form attached hereto as Exhibit E (a "Compliance
Certificate"), certified by any Authorized Financial Officer
of the Company that the Company is in compliance with the
covenants contained in 9, 10 and 11 as of the end of the
applicable period and setting forth in reasonable detail
computations evidencing such compliance with the financial
covenants set forth in 11 and (if applicable)
reconciliations to reflect changes in GAAP since the Balance
Sheet Date;
(d) contemporaneously with the filing or mailing
thereof, copies of all other financial statements and
reports as the Company shall send to any holders of
Indebtedness of the Company or the stockholders of the
Company, and copies of all regular and periodic reports
which the Company may be required to file with the
Securities and Exchange Commission or any similar or
corresponding federal or state governmental commission,
department or agency substituted therefor;
(e) (i) within fifteen (15) Business Days after the
end of each fiscal month (except December and January), a
net accounts receivable aging report with respect to the
"Accounts" (as such term is defined in the Uniform
Commercial Code as in effect in The Commonwealth of
Massachusetts) of the Company and the Restricted
Subsidiaries, (ii) (A) within fifteen (15) Business Days
after the end of December, a gross accounts receivable aging
report with respect to the "Accounts" (as such term is
defined in the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts) of the Company and the
Restricted Subsidiaries, and (B) within thirty (30) Business
Days after the end of December, a net accounts receivable
aging report with respect to the "Accounts" (as such term is
defined in the Uniform Commercial Code as in effect in The
Commonwealth of Massachusetts) of the Company and the
Restricted Subsidiaries, and (iii) within fifteen (15)
Business Days after the end of January, a gross accounts
receivable aging report with respect to the "Accounts" (as
such term is defined in the Uniform Commercial Code as in
effect in The Commonwealth of Massachusetts) of the Company
and the Restricted Subsidiaries;
(f) (i) within fifteen (15) Business Days after the
end of each fiscal month (except December and January), an
inventory designation report in form and substance
reasonably satisfactory to the Agent, and (ii) within thirty
(30) Business Days after the end of December and January, an
inventory designation report in form and substance
reasonably satisfactory to the Agent;
(g) within fifteen (15) Business Days after the end of
each fiscal month, a report as to the Foreign Scheduled
Facilities and outstandings thereunder by facility and in
form and substance reasonably satisfactory to the Agent;
(h) as soon as practicable, but in any event not later
than sixty (60) days after the end of each fiscal year, the
budget of the Company for the next fiscal year, and from
time to time upon the reasonable request of the Agent,
projections of the Company and its Subsidiaries updating
those projections delivered to the Banks and referred to in
8.8.3 or, if applicable, updating any later such
projections delivered in response to this 9.5(h); and
(i) from time to time such other financial data and
information as the Agent or any Bank may reasonably request.
9.6. Notices.
9.6.1. Defaults.
The Company will promptly notify the Agent and
each of the Banks in writing of the occurrence of any
Default or Event of Default, together with a reasonably
detailed description thereof, and the actions the
Company proposes to take with respect thereto. If (i)
any Person shall give any notice or take any other
action in respect of a claimed default (whether or not
constituting an Event of Default) under this Agreement
or any other note, evidence of indebtedness, indenture
or other obligation to which or with respect to which
the Company or any of its Subsidiaries is a party or
obligor, whether as principal, guarantor, surety or
otherwise, and (ii) the aggregate amount of all of the
indebtedness of the Company and its Subsidiaries in
respect of such claimed defaults shall exceed
$15,000,000 at any one time, the Company shall
forthwith give written notice thereof to the Agent and
each of the Banks, describing the notice or action and
the nature of the claimed default.
9.6.2. Environmental Events.
The Company will promptly give notice to the Agent
and each of the Banks (a) of any violation of any
Environmental Law that the Company or any of its
Subsidiaries reports in writing or is reportable by
such Person in writing (or for which any written report
supplemental to any oral report is made) to any
Governmental Authority that would reasonably be
expected to have a Material Adverse Effect and (b) upon
becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from
any agency of potential environmental liability, of any
Governmental Authority that would reasonably be
expected to have a Material Adverse Effect.
9.6.3. Notification of Claim against
Collateral.
The Company will, immediately upon becoming aware
thereof, notify the Agent and each of the Banks in
writing of any material setoff, claims, withholdings or
other defenses to which any of the Collateral, or the
Agent's rights with respect to the Collateral, are
subject, other than reconciliations with customers and
vendors in the ordinary course of business consistent
with past practices.
9.6.4. Notices Concerning Inventory
Collateral.
The Company shall provide to the Agent prompt
notice of any physical count of the Company's or any of
the Restricted Subsidiaries' Inventory, together with a
copy of the results thereof certified by the Company or
such Restricted Subsidiary.
9.6.5. Notice of Litigation and Judgments.
The Company will, and will cause each of its
Subsidiaries to, give notice to the Agent and each of
the Banks in writing within fifteen (15) days of
becoming aware of any litigation or proceedings
threatened in writing or any pending litigation and
proceedings affecting the Company or any of its
Subsidiaries or to which the Company or any of its
Subsidiaries is or becomes a party involving an
uninsured claim against the Company or any of its
Subsidiaries that could reasonably be expected to have
a Material Adverse Effect and stating the nature and
status of such litigation or proceedings. The Company
will, and will cause each of its Subsidiaries to, give
notice to the Agent and each of the Banks, in writing,
in form and detail reasonably satisfactory to the
Agent, within ten (10) days of any judgment not covered
by insurance, final or otherwise, against the Company
or any of its Subsidiaries in an amount in excess of
$15,000,000.
9.7. Corporate Existence; Maintenance of
Properties.
The Company will, and will cause each of the other
Hasbro Companies to, maintain its legal existence and good
standing under the laws of its jurisdiction of
incorporation, maintain its qualification to do business in
each state in which the failure to do so would have a
Material Adverse Effect, and maintain all of its rights and
franchises reasonably necessary to the conduct of its
business. The Company will cause all of its properties and
those of the other Hasbro Companies used or useful in the
conduct of its business or the business of the Hasbro
Companies to be maintained and kept in good condition,
repair and working order (reasonable wear and tear excepted)
and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment
of the Company may be necessary so that the business carried
on in connection therewith may be properly and
advantageously conducted at all times, and will cause each
of the Hasbro Companies to continue to engage primarily in
the businesses now conducted by them and in related
businesses; provided, however, that, subject to the
provisions of 10.5.2 hereof, nothing in this 9.7 shall
prevent the Company from discontinuing the operation and
maintenance of any of its properties, or those of its
Subsidiaries, or from dissolving or liquidating any
Subsidiary or from consolidating or merging any Subsidiary
with or into another Subsidiary or with and into the
Company, if such discontinuance, dissolution or liquidation,
consolidation or merger is, in the judgment of the Company,
desirable in the conduct of the business of the Company and
its Subsidiaries on a consolidated basis and which do not in
the aggregate have a Material Adverse Effect.
9.8. Insurance.
The Company will maintain, and will cause each of its
Subsidiaries to maintain, with financially sound and
reputable insurance companies, funds or underwriters, or by
reasonable self-insurance, insurance of the kinds, covering
the risks and in the relative proportionate amounts usually
carried by reasonable and prudent companies conducting
businesses similar to that of the Company and otherwise in
accordance with the terms of the Security Documents to which
such Person is a party.
9.9. Taxes.
The Company will, and will cause each of the other
Hasbro Companies to, duly pay and discharge, or cause to be
paid and discharged, before the same shall become overdue,
all taxes, assessments and other governmental charges (other
than taxes, assessments and other governmental charges
imposed by foreign jurisdictions which in the aggregate are
not material to the business or assets of the Company and
its Subsidiaries on a consolidated basis) imposed upon it
and its real properties, sales and activities, or any part
thereof, or upon the income or profits therefrom, as well as
all claims for labor, materials, or supplies, which if
unpaid might by law become a lien or charge upon any of its
property; provided, however, that any such tax, assessment,
charge, levy or claim need not be paid if the validity or
amount thereof shall currently be contested in good faith by
appropriate proceedings and if the Company or such
Subsidiary shall have set aside on its books, in accordance
with GAAP, adequate reserves with respect thereto; and
provided, further, that the Company and such Subsidiary will
pay or arrange for the bonding of all such taxes,
assessments, charges, levies or claims forthwith upon the
commencement of proceedings to foreclose any lien which may
have attached as security therefor.
9.10. Access.
The Company will, and will cause each of the other
Hasbro Companies to, (a) permit the Agent, by its
representatives and agents, to inspect any of the
properties, including, without limitation, corporate books,
computer files and tapes and financial records of each of
the Hasbro Companies, to examine and make copies of the
books of accounts and other financial records of each of the
Hasbro Companies at such reasonable times and intervals as
the Agent may determine, and (b) permit each of the Banks to
discuss the affairs, finances and accounts of each of the
Hasbro Companies with, and to be advised as to the same by,
their respective officers at such reasonable times and
intervals as the Banks may designate. The Banks and the
Agent agree that they will treat in confidence all financial
information with respect to the Company and its Subsidiaries
and all information obtained during such inspection or
discussion or pursuant to 9.5 which has not become public
without violation hereof, and will not, without the consent
of the Company, disclose such information to any third party
or any trust or investment employee or trust or investment
officer of any Bank, and, if any representative or agent of
the Banks or the Agent shall not be an employee of one of
the Banks or the Agent or any affiliate of the Banks or the
Agent, such designee shall be reputable and of recognized
standing and shall agree in writing to treat in confidence
the information obtained during any such inspection and,
without the prior written consent of the Company, not to
disclose such information to any third party or make use of
such information for personal gain. Notwithstanding the
foregoing, the Company hereby authorizes the Agent and each
of the Banks to disclose information obtained pursuant to
this Agreement to banks or other financial institutions who
are participants or potential participants in or assignees
of the Loans made or to be made hereunder (provided, that
prior to any such disclosure to any such participant,
potential participant or assignee, such Person shall have
agreed to be bound by the provisions of this 9.10 and 22
pursuant to a confidentiality agreement substantially in the
form of Exhibit I hereto and provided to the Company), and
where required by applicable law or required or requested by
governmental or regulatory authorities.
9.11. Compliance with Laws, Contracts, Licenses, and
Permits.
The Company will, and will cause each of the other
Hasbro Companies to, comply with (i) all applicable laws and
regulations wherever its business is conducted, including,
without limitation, Environmental Laws, except where the
failure to comply is not reasonably likely to have a
Material Adverse Effect, (ii) the provisions of its charter
documents and by-laws, and (iii) all agreements and
instruments by which it or any of its properties may be
bound except where the failure to comply is not reasonably
likely to have a Material Adverse Effect, and (iv) all
applicable decrees, orders, and judgments, except where the
failure to comply is not reasonably likely to have a
Material Adverse Effect. If at any time while any Loan,
Note, Unpaid Reimbursement Obligation or Letter of Credit is
outstanding or any Bank has any obligation to make Loans
hereunder or the Agent has any obligations to issue, extend
or renew any Letters of Credit, any authorization, consent,
approval, permit or license from any officer, agency or
instrumentality of any government shall become necessary or
required in order that the Company may fulfill any of its
obligations hereunder, the Company will promptly take or
cause to be taken all reasonable steps within the power of
the Company to obtain such authorization, consent, approval,
permit or license and furnish the Banks with evidence
thereof.
9.12. Employee Benefit Plans.
The Company will (a) promptly upon filing the same with
the Department of Labor or Internal Revenue Service upon
request of the Agent, furnish to the Agent a copy of the
most recent actuarial statement required to be submitted
under 103(d) of ERISA and Annual Report, Form 5500, with
all required attachments, in respect of each Guaranteed
Pension Plan and (b) promptly upon receipt or dispatch,
furnish to the Agent any notice, report or demand sent or
received in respect of a Guaranteed Pension Plan under
302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA,
or in respect of a Multiemployer Plan, under 4041A, 4202,
4219, 4242, or 4245 of ERISA.
9.13. Fiscal Year.
The Company will have a fiscal year which ends on the
last Sunday in December of each calendar year. The Company
may change its fiscal year upon (a) sixty (60) days prior
written notice to the Agent and the Banks and (b) in the
case of a change in fiscal year where the new fiscal year
end is not within forty-five (45) days of the fiscal year
end specified in the first sentence of this 9.13, receipt
by the Company of the prior written consent of the Majority
Banks, which consent shall not be unreasonably withheld,
provided that the granting of such consent by the Majority
Banks shall be conditioned upon the Company's entering into
such appropriate amendments to this Agreement, and
delivering therewith such supplemental documents,
agreements, certificates, accounting reports, and legal
opinions, as may be reasonably requested by the Majority
Banks in order to reflect the impact of such change in
fiscal year on the terms hereof.
9.14. Additional Significant Subsidiaries and
Restricted Subsidiaries.
Within thirty (30) days after the formation or
acquisition by the Company or its Subsidiaries of any Person
which is not designated in this Agreement as a Hasbro
Company and otherwise meets the conditions set forth in the
definition of "Significant Subsidiary" herein for
constituting a Significant Subsidiary or meets the
conditions set forth in the definition of "Restricted
Subsidiary" herein for constituting a Restricted Subsidiary,
such Person will be deemed to be a Hasbro Company under this
Agreement and the Company will cause such Person to observe
all the obligations and be bound by all the limitations set
forth in this Agreement with respect to Hasbro Companies,
including, without limitation, if such Subsidiary is a
Significant Subsidiary, requiring the execution and delivery
of a Subordination Agreement in the form of, mutatis
mutandis, Exhibit F hereto; and if such Subsidiary is a
Restricted Subsidiary, requiring the execution and delivery
of a joinder agreement, in form and substance reasonably
satisfactory to the Agent, to the Guaranty and the
Subsidiary Security Agreement, together with other
documents, certificates and instruments (including
Perfection Certificates and UCC financing statements)
required to be delivered pursuant to such Security Documents
and otherwise as may be reasonably requested by the Agent.
Once any Person has been so designated as a Hasbro Company
hereunder, such Person shall continue to be a Hasbro Company
hereunder until the earlier of (i) the date on which such
Person ceases to be a Subsidiary of the Company in
accordance with the terms of 10.5.2 hereof or the last
sentence of 9.6 hereof, and (ii) the date on which such
Person shall have performed in full its obligations under
the Loan Documents and the Loan Documents to which such
Person is a party have ceased to be in force and effect.
9.15. Debt Ratings.
Promptly upon the issuance of any Debt Rating or the
change in any existing Debt Rating, the Company shall give
written notice of such Debt Rating and of the resultant Debt
Rating to the Agent. The Agent promptly shall furnish
copies of each of such notices to the Banks.
9.16. Agency Account Agreements.
The Company shall maintain the lock box account
maintained by the Company with Bank of America, N.A. as of
the date hereof, provided, however, if the Company
terminates such lock box account pursuant to 10.13 or
otherwise instructs account debtors or other obligors to
remit payments to an account other than such lock box
account, the Company shall have established new cash
management arrangements on terms reasonably satisfactory to
the Agent with financial institutions which have executed
agency account agreements in form and substance reasonably
satisfactory to the Agent.
9.17. Further Assurances.
The Company will cooperate with the Banks and execute
such further instruments and documents as the Banks shall
reasonably request to carry out to their reasonable
satisfaction the transactions contemplated by this Agreement
and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, so long as any
Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Note is outstanding or any Bank has any obligation to make
any Loans or the Agent has any obligation to issue, extend
or renew any Letters of Credit:
10.1. Restrictions on Indebtedness.
The Company will not permit any Operating Subsidiary of
the Company to create, incur, assume, guarantee or be or
remain liable with respect to, contingently or otherwise,
any Indebtedness other than:
(a) Intercompany Indebtedness of Operating
Subsidiaries of the Company;
(b) Indebtedness of Foreign Subsidiaries,
provided that the aggregate amount of such Indebtedness
of Foreign Subsidiaries guaranteed by the Company or
any Hasbro Company shall not exceed the aggregate
amount of the Foreign Scheduled Facilities;
(c) Subordinated Debt or other long term
unsecured Indebtedness having a maturity at least one
(1) year after the Final Maturity Date and providing
for no payments of principal prior to the Final
Maturity Date; provided that, in the case of the
incurrence of additional Subordinated Debt or other
long term unsecured Indebtedness by such Subsidiary
after the Effective Date, (i) the Company applies the
net cash proceeds of such additional Subordinated Debt
or other long term unsecured Indebtedness in accordance
with 2.10(a)(iii) and (ii) no Default or Event of
Default has occurred and is continuing at the time of
the incurrence of such additional Indebtedness or would
result after giving effect thereto;
(d) Indebtedness incurred in connection with the
acquisition after the date hereof of any real or
personal property by such Subsidiary or under any
Capitalized Lease, provided that the aggregate
principal amount of such Indebtedness of such
Subsidiaries shall not exceed the aggregate amount of
$10,000,000 at any one time;
(e) Indebtedness to the Banks and the Agent
arising under any of the Loan Documents and the "Loan
Documents" as such term is defined in the Credit Line
Agreement;
(f) sales of receivables in connection with asset
dispositions permitted under 10.5.2;
(g) other Indebtedness existing on the date
hereof and described on Schedule 10.1 hereto; and
(h) other Indebtedness in an aggregate principal
amount not to exceed $25,000,000 outstanding at any
time.
10.2. Restrictions on Liens.
The Company will not, and will not permit any
Subsidiary (other than any Foreign Subsidiary) to, (a)
create or incur or suffer to be created or incurred or to
exist any Lien upon any of its property or assets of any
character whether now owned or hereafter acquired, or upon
the income or profits therefrom; (b) transfer any of such
property or assets or the income or profits therefrom for
the purpose of subjecting the same to the payment of
Indebtedness or performance of any other obligation in
priority to payment of its general creditors; (c) acquire,
or agree or have an option to acquire, any property or
assets upon conditional sale or other title retention or
purchase money security agreement, device or arrangement; or
(d) sell, assign, pledge or otherwise transfer any
"receivables" as defined in clause (g) of the definition of
the term "Indebtedness," with or without recourse (except
the conversion or exchange of accounts receivable into or
for notes receivable in connection with the compromise or
collection thereof, or as otherwise permitted by 10.5.2);
provided that the Company or any of its Subsidiaries may
create or incur or suffer to be created or incurred or to
exist:
(i) Liens to secure taxes, assessments and other
government charges or claims for labor, material or
supplies, but only to the extent that and so long as
the payment thereof shall not at the time be required
to be made in accordance with 9.9 hereof;
(ii) deposits or pledges made in connection with,
or to secure payment of, worker's compensation,
unemployment insurance, old age pensions or other
social security or insurance-related obligations, or to
secure the performance of bids, tenders, contracts
(other than those relating to borrowed money) or leases
(other than Capitalized Leases), or to secure statutory
obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds or
obligations required in the ordinary course of
business;
(iii) Liens in respect of judgments or awards
that have been in force for less than the applicable
appeal period so long as execution is not levied
thereunder or in respect of which the Company or the
appropriate Subsidiary of the Company shall at the time
in good faith be prosecuting an appeal or a proceeding
for review and in respect of which a stay of execution
shall have been obtained pending such appeal or review;
(iv) Liens of carriers, warehousemen, mechanics
and materialmen, and other like Liens arising in the
ordinary course of business, in existence less than one
hundred twenty (120) days from the date of creation
thereof in respect of obligations not overdue or being
contested in good faith by appropriate proceedings,
with respect to which obligations the Company has set
aside on its books reserves in accordance with GAAP;
(v) encumbrances consisting of easements, rights
of way, zoning restrictions, restrictions on the use of
real property and defects and irregularities in the
title thereto, landlord's or lessor's liens under
leases to which the Company or a Subsidiary of the
Company is a party, and other minor Liens, none of
which in the opinion of the Company interferes
materially with the use of the property affected in the
ordinary conduct of the business of the Company and its
Subsidiaries, which defects do not individually or in
the aggregate have a material adverse effect on the
business of the Hasbro Companies, considered as a
whole;
(vi) Liens consisting of purchase money security
interests in or purchase money mortgages on real or
personal property acquired after the date hereof to
secure purchase money Indebtedness incurred in
connection with the acquisition of such property or
Capitalized Leases, which Liens cover only the real or
personal property so acquired or leased provided that
the aggregate amount of Indebtedness secured by such
Liens and Capitalized Leases does not exceed
$50,000,000 outstanding at any time;
(vii) Liens existing on the date hereof and
listed on Schedule 10.2 hereto;
(viii) Liens securing the Secured Obligations
in favor of the Agent for the benefit of the Banks and
the Agent;
(ix) Liens on the property or assets of a Person
which becomes a Subsidiary of the Company after the
date hereof securing Indebtedness of such Subsidiary
permitted under 10.1 provided that (i) such Liens
existed at the time such Person became such a
Subsidiary and were not created in anticipation thereof
and (ii) any such Lien is not spread to cover any
property or assets of such Person after the time such
person becomes a Subsidiary;
(x) Liens (not otherwise permitted hereunder)
which secure obligations not exceeding $15,000,000 in
aggregate amount at any time outstanding;
(xi) Liens existing on assets or properties at the
time of the acquisition thereof by the Company or any
Subsidiary of the Company which were not created in
anticipation of the acquisition thereof by the Company
or such Subsidiary, and which do not materially
interfere with the use, occupancy, operation and
maintenance of the property or assets subject thereto
or extend to or cover any assets or property of the
Company or such Subsidiary other than the assets or
property being acquired or secure any Indebtedness not
permitted under 10.1;
(xii) any encumbrance or restriction
(including, without limitation, put and call agreements
and transfer restrictions, but not pledges) with
respect to the Capital Stock of any joint venture or
similar arrangement created pursuant to the joint
venture or similar agreements with respect to such
joint venture or similar arrangement; and
(xiii) a Lien on the shares of Capital Stock of
Infogrames and other Collateral covered by the Company
Stock Pledge Agreement to secure the Company's
obligations under a collar or other hedging agreement
between the Company and a third party reasonably
satisfactory to the Agent to hedge against fluctuations
in the price of such shares provided that (A) such
agreement is on terms and conditions reasonably
satisfactory to the Agent, (B) such Lien is limited to
the Collateral covered by the Company Stock Pledge
Agreement, and (C) the Agent, for the benefit of the
holders of Secured Obligations, has (x) a perfected
second priority security interest in and Lien upon such
shares (subject to Permitted Liens entitled to priority
under applicable law) and (y) a perfected security
interest in the Company's rights under such agreement.
10.3. Restrictions on Investments.
The Company will not, and will not permit any of its
Subsidiaries to, make or permit to exist or to remain
outstanding any Investment except Investments in:
(a) securities with maturities of one (1) year or
less from the date of acquisition issued or fully
guaranteed or insured by the United States Government
or any agency thereof;
(b) certificates of deposit and time deposits,
bankers acceptances and overnight bank deposits of any
Bank or of any commercial bank having capital and
surplus in excess of $500,000,000;
(c) repurchase obligations of any Bank or of any
commercial bank having capital and surplus in excess of
$500,000,000, having a term of not more than 30 days
with respect to securities issued or fully guaranteed
or insured by the United States Government or any
agency or instrumentality thereof;
(d) commercial paper of a domestic issuer rated
at least "A2" or the equivalent thereof by Standard &
Poor's or any successor rating agency or "P-2" or the
equivalent thereof by Moody's or any successor rating
agency (or if at such time neither is issuing ratings,
then a comparable rating of such other nationally
recognized rating agency as shall be approved by the
Agent in its reasonable judgment)
(e) securities with maturities of one (1) year or
less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of
the United States, by any political subdivision or
taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities
of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government (as
the case may be) are rated at least "A" by Standard &
Poor's or any successor rating agency or "A" by Moody's
or any successor rating agency (or if at such time
neither is issuing ratings, then a comparable rating of
such other nationally recognized rating agency as shall
be approved by the Agent in its reasonable judgment);
(f) securities with maturities of one (1) year or
less from the date of acquisition backed by standby
letters of credit issued by any Bank or any commercial
bank having capital and surplus in excess of
$500,000,000;
(g) shares of money market funds that are subject
to the risk limiting conditions of Rule 2a-7 or any
successor rule of the Securities and Exchange
Commission under the Investment Company Act of 1940, as
amended;
(h) investments similar to any of the foregoing
denominated in foreign currencies approved by the board
of directors or Treasurer of the Company, in each case
provided in clauses (a), (b) and (d) above, maturing
within twelve (12) months after the date of
acquisition;
(i) Investments existing on the date hereof;
(j) Investments arising from payments under the
Guaranty or guaranties of the Foreign Scheduled
Facilities;
(k) Investments received as proceeds of asset
dispositions permitted by 10.5.2;
(l) Investments consisting of loans and advances
to officers, directors and employees for moving,
entertainment, travel and other similar expenses and
other Investments in connection with the relocation of
employees in the ordinary course of business;
(m) Investments by the Company or a Subsidiary of
the Company in Subsidiaries formed for the purpose of
consummating Permitted Acquisitions or acquired in
connection with Permitted Acquisitions;
(n) Investments in the Company or any Subsidiary
of the Company, provided that neither the Company nor
any Restricted Subsidiary shall make any Investment in
any Foreign Subsidiary unless (i) such Investment is in
the ordinary course of business or is necessary in the
reasonable judgment of management of the Company for
the operation of the business of any Foreign Subsidiary
or Foreign Subsidiaries or (ii) after giving effect to
such Investment, all such Investments in Foreign
Subsidiaries made pursuant to this subclause (ii) do
not exceed $100,000,000 outstanding at such time.
(o) Investments permitted by 10.5.
(p) Investments in the nature of pledges or
deposits with respect to leases or utilities provided
to third parties in the ordinary course of business or
otherwise described under 10.2;
(q) Investments representing evidences of
Indebtedness, securities or other property received
from another Person in connection with any bankruptcy
or proceeding or other reorganization of such other
Person or as a result of foreclosure, perfection or
enforcement of any Lien or exchange for evidences of
Indebtedness, securities or other property of such
other Person;
(r) Investments constituting Capital
Expenditures, to the extent permitted by 11.4;
(s) Investments under any forward contract,
futures contract, swap, option or other financing
agreement or arrangement (including, without
limitation, caps, floors, collars and similar
agreements), the value of which is dependent upon
interest rates, currency exchange rates, commodities or
other indices, to the extent permitted by 10.14;
(t) Investments consisting of loans and advances
to officers, directors or employees relating to
indemnification or reimbursement of any officers,
directors or employees in respect of liabilities
relating to their serving in any such capacity; and
(u) other Investments in an aggregate amount not
to exceed $15,000,000 at any one time outstanding.
10.4. Restricted Payments.
The Company will not make any Restricted Payment;
provided, however, so long as no Default or Event of Default
then exists or would result from such payment, the Company
may:
(a) declare or pay dividends on or in respect of
any shares of any class of Capital Stock of the Company
in any fiscal year in an aggregate amount not to exceed
the greater of the annual amount paid at the current
quarterly rate of three cents ($0.03) per share by the
Company and 25% of Consolidated Net Income for the
prior fiscal year; and
(b) make other Restricted Payments in any fiscal
year in an aggregate amount not to exceed $5,000,000.
10.5. Merger, Consolidation and Disposition of
Assets.
10.5.1. Mergers and Acquisitions.
The Company will not, and will not permit any of
its Subsidiaries to, become a party to any merger,
amalgamation or consolidation, or agree to or effect
any acquisition of at least a majority of the assets or
Capital Stock of any Person, or any business unit or
product line thereof (other than the acquisition of
assets in the ordinary course of business consistent
with past practices) except:
(a) the merger or consolidation of one (1) or
more of the Subsidiaries of the Company with and into
the Company, or the merger or consolidation of two (2)
or more Subsidiaries of the Company; provided that if
any of the parties to such merger or consolidation is a
Restricted Subsidiary, the survivor of such merger or
consolidation shall be a Restricted Subsidiary or the
Company; or
(b) the acquisition of stock or other securities
of, or any assets of, any Person, provided that:
(i) no Default or Event of Default has
occurred and is continuing or would result from
such acquisition;
(ii) not less than five (5) Business Days
prior to the consummation of such proposed
acquisition, the Company shall have delivered to
the Agent a Compliance Certificate demonstrating
pro forma compliance with the financial covenants
set forth in 11 hereof; and
(iii) the aggregate purchase price for
all such acquisitions shall not exceed (A)
$15,000,000 for the period from the Effective Date
up to and including the first anniversary of the
Effective Date and (B) $25,000,000 during the
period from the first anniversary of the Effective
Date up to the Final Maturity Date (it being
understood that any earnout payments in respect of
assets or business acquired prior to the Effective
Date shall not be included in the calculation of
such amount); or
(c) the acquisition of Capital Stock of any
Subsidiary of the Company existing on the Effective
Date from any then existing minority holder thereof.
10.5.2. Disposition of Assets.
The Company will not, and will not permit any of
its Subsidiaries to, become a party to or agree to or
effect any disposition or swap of assets, other than
(a) the sale of inventory, (b) the licensing of
intellectual property, (c) the disposition of obsolete
or other assets not necessary for the operation of the
Company's or such Subsidiary's business, in each case
in the ordinary course of business, (d) Asset Sales
provided that in the case of such Asset Sale, (i) no
Default or Event of Default has occurred and is
continuing or would result from such Asset Sale and
(ii) the Net Cash Sale Proceeds are applied to the
Loans as set forth in 2.10(a)(i); (e) the sale or
discount by any Foreign Subsidiary with or without
recourse of accounts receivable or notes receivable
arising in the ordinary course of business, or the
conversion or exchange of accounts receivable into or
for notes receivable in connection with the compromise
or collection thereof, (f) disposition of assets by the
Company to any of its Restricted Subsidiaries or by any
Subsidiary to the Company or any of its Restricted
Subsidiaries, or by any Foreign Subsidiary to the
Company or any Subsidiary, (g) the abandonment, sale or
other disposition of intellectual property that, in the
reasonable judgment of the Company, is no longer
economically practicable to maintain or useful in the
conduct of the business of the Hasbro Companies taken
as a whole, (h) any sale or disposition of any claim as
a creditor in a bankruptcy or similar proceeding in the
ordinary course of business, and (i) any Specified
Sale. Nothing in this 10.5.2 shall prevent the
Company from discontinuing the operation and
maintenance of any of its properties, or those of its
Subsidiaries, or from dissolving or liquidating any
Subsidiary or from consolidating or merging any
Subsidiary with or into another Subsidiary or with and
into the Company, if such discontinuance, dissolution
or liquidation, consolidation or merger is, in the
judgment of the Company, desirable in the conduct of
the business of the Company and its Subsidiaries on a
consolidated basis and which does not in the aggregate
have a Material Adverse Effect.
10.6. Sale and Leaseback.
The Company will not, and will not permit any of its
Subsidiaries (other than a Foreign Subsidiary) to, enter
into any arrangement, directly or indirectly, whereby the
Company or any Subsidiary of the Company shall sell or
transfer any property owned by it in order then or
thereafter to lease such property or lease other property
that the Company or any Subsidiary of the Company intends to
use for substantially the same purpose as the property being
sold or transferred, except in connection with any Asset
Sale permitted under 10.5.2.
10.7. Compliance with Environmental Laws.
Except as would not reasonably be expected to result in
a Material Adverse Effect, the Company will not, and will
not permit any of its Subsidiaries to, (a) use any of the
Real Estate or any portion thereof for the handling,
processing, storage or disposal of Hazardous Substances
except to the extent required by its day-to-day operations
and in all instances in compliance with applicable
Environmental Laws, (b) cause or permit to be located on any
of the Real Estate any underground tank or other underground
storage receptacle for Hazardous Substances, (c) generate
any Hazardous Substances on any of the Real Estate except to
the extent required by its day-to-day operations and in all
instances in compliance with applicable Environmental Laws,
(d) conduct any activity at any Real Estate or use any Real
Estate in any manner so as to cause a release (i.e.
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching,
disposing or dumping) or threatened release of Hazardous
Substances on, upon or into the Real Estate or (e) otherwise
conduct any activity at any Real Estate or use any Real
Estate in any manner that would violate any Environmental
Law or bring such Real Estate in violation of any
Environmental Law.
10.8. Subordinated Debt.
The Company will not, and will not permit any of its
Subsidiaries to, amend, supplement or otherwise modify (a)
the subordination terms of any of the Subordinated Debt or
(b) any other terms of any of the Subordinated Debt, the
effect of which would be to shorten maturity or average
weighted life, increase pricing or amount, make covenants or
default provisions more restrictive, add covenants or
default provisions, or otherwise make such Subordinated Debt
materially more burdensome to the Company or such Subsidiary
or in any manner be materially adverse to the interests of
the Banks and the Agent, or prepay, redeem or repurchase any
of the Subordinated Debt or send any irrevocable notice of
prepayment, redemption or repurchase to holders of any
Subordinated Debt.
10.9. Employee Benefit Plans.
Neither the Company nor any ERISA Affiliate will:
(a) engage in any "prohibited transaction" within
the meaning of 406 of ERISA or 4975 of the Code which
could result in a material liability for the Company or
any of its Subsidiaries; or
(b) permit any Guaranteed Pension Plan to incur
an "accumulated funding deficiency", as such term is
defined in 302 of ERISA, whether or not such
deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension
Plan to an extent which, or terminate any Guaranteed
Pension Plan in a manner which, could result in the
imposition of a lien or encumbrance on the assets of
the Company or any of its Subsidiaries pursuant to
302(f) or 4068 of ERISA; or
(d) amend any Guaranteed Pension Plan in
circumstances requiring the posting of security
pursuant to 307 of ERISA or 401(a)(29) of the Code;
(e) permit or take any action which would result
in the aggregate benefit liabilities (with the meaning
of 4001 of ERISA) of all Guaranteed Pension Plans
exceeding the value of the aggregate assets of such
Plans by more than $15,000,000 at any time,
disregarding for this purpose the benefit liabilities
and assets of any such Plan with assets in excess of
benefit liabilities; or
(f) permit or take any action which would
contravene any Applicable Pension Legislation in the
United States, except as such action would not be
reasonably likely to result in a Material Adverse
Effect.
10.10. Business Activities.
The Company will not, and will not permit any of its
Subsidiaries to, engage directly or indirectly (whether
through Subsidiaries or otherwise) in any type of business
other than the businesses conducted by them on the Effective
Date and in related businesses.
10.11. Transactions with Affiliates.
The Company will not, and will not permit any of its
Subsidiaries to, engage in any material transaction with any
Affiliate that is not the Company or a Restricted
Subsidiary (other than in connection with services as
employees, officers and directors), including any material
contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from any such Affiliate or, to the knowledge
of the Company, any corporation, partnership, trust or other
entity in which any such Affiliate has a substantial
interest or is an officer, director, trustee or partner, on
terms materially more favorable to such Person than would
have been obtainable on an arm's-length basis in the
ordinary course of business excluding (a) any transaction
with an Affiliate controlled by the Company entered into in
the ordinary course of business, (b) Restricted Payments
that otherwise comply with this Agreement and (c) any
transaction relating to the issuance of any class of Capital
Stock of the Company.
10.12. Restrictions on Negative Pledges.
The Company will not, nor will it permit any of its
Subsidiaries to, except for those existing agreements set
forth and described on Schedule 10.12, enter into or permit
to exist any arrangement or agreement (excluding this
Agreement, the Credit Line Agreement, the Loan Documents and
the "Loan Documents" under and as defined in the Credit Line
Agreement and except any industrial revenue or development
bonds, agreements governing any purchase money liens,
acquisition agreements or Capitalized Leases or operating
leases entered into in the ordinary course of business
otherwise permitted hereby (in which case any prohibition or
limitation shall only be effective against the assets
financed, acquired or leased thereby) which directly or
indirectly prohibits the Company or any of its Subsidiaries
from creating, assuming or incurring any Lien in favor of
the Banks or the Agent upon its properties, revenues or
assets or those of any of its Subsidiaries whether now owned
or hereafter acquired.
10.13. Cash Management.
The Company shall not (a) terminate its existing lock
box account arrangements with Bank of America, N.A., or (b)
instruct account debtors or other obligors to remit payments
to an account other than the lock box account referenced in
clause (a) above, in each case without providing at least
thirty (30) days prior written notice to the Agent.
10.14. Hedging Arrangements.
The Company will not, and will not permit any of its
Subsidiaries to, enter into any forward contract, futures
contract, swap, option or other financing agreement or
arrangement (including, without limitation, caps, floors,
collars and similar agreements), the value of which is
dependent upon interest rates, currency exchange rates,
commodities or other indices, other than in the ordinary
course of business and not for purposes of speculation.
11. FINANCIAL COVENANTS.
The Company covenants and agrees that, so long as any
Loan, Unpaid Reimbursement Obligation, Letter of Credit or
Note is outstanding or any Bank has any obligation to make
any Loans or the Agent has any obligation to issue, extend
or renew any Letters of Credit:
11.1. Minimum EBITDA.
The Company will not permit EBITDA for any Reference
Period ending with the fiscal quarter referenced in the
table below to be less than the amount set forth in the
table below opposite such fiscal quarter in such table:
Fiscal Quarter Ending: EBITDA
First Quarter 2001 $310,000,000
Second Quarter 2001 $270,000,000
Third Quarter 2001 $300,000,000
Fourth Quarter 2001 $400,000,000
First Quarter 2002 $400,000,000
Second Quarter 2002 $400,000,000
Third Quarter 2002 $425,000,000
Fourth Quarter 2002 $475,000,000
11.2. Total Funded Debt to EBITDA.
The Company will not permit the ratio of Consolidated
Total Funded Debt at the end of any fiscal quarter set forth
in the table set forth below to EBITDA for the Reference
Period then ended to exceed the ratio set forth opposite
such fiscal quarter set forth in table below:
Fiscal Quarter Ending: Ratio
Fourth Quarter 2000 3.25:1.00
First Quarter 2001 4.25:1.00
Second Quarter 2001 5.75:1.00
Third Quarter 2001 5.50:1.00
Fourth Quarter 2001 3.25:1.00
First Quarter 2002 3.00:1.00
Second Quarter 2002 3.15:1.00
Third Quarter 2002 3.40:1.00
Fourth Quarter 2002 2.55:1.00
11.3. Fixed Charge Coverage Ratio.
For any Reference Period ending with any fiscal quarter
referenced in the table below, the Company will not permit
the Fixed Charge Coverage Ratio for such Reference Period to
be less than the ratio set forth opposite such fiscal
quarter in such table:
Fiscal Quarter Ending: Ratio
First Quarter 2001 1.20:1.00
Second Quarter 2001 1.10:1.00
Third Quarter 2001 1.70:1.00
Fourth Quarter 2001 2.50:1.00
First Quarter 2002 2.60:1.00
Second Quarter 2002 2.55:1.00
Third Quarter 2002 2.90:1.00
Fourth Quarter 2002 3.45:1.00
11.4. Capital Expenditures.
During any period referenced in the table set forth
below, the Company will not, and will not allow any of its
Subsidiaries to, make Capital Expenditures that exceed the
aggregate amount set forth in the table below opposite such
period in such table:
Period Amount
First Quarter 2001 $30,000,000
First and Second $60,000,000
Quarter 2001
First, Second and Third
Quarter 2001 $80,000,000
First, Second, Third
and Fourth Quarter $90,000,000
2001
First Quarter 2002 $35,000,000
First and Second $70,000,000
Quarter 2002
First, Second and Third
Quarter 2002 $95,000,000
First, Second, Third
and Fourth Quarter $110,000,000
2002
12. CONDITIONS TO EFFECTIVENESS.
The obligations of the Banks to convert the outstanding
Syndicated Loans to Syndicated Loans hereunder and to make
the initial Syndicated Loans, the Swing Line Bank to make
the initial Swing Line Loans and of the Agent to issue any
initial Letters of Credit shall be subject to the
satisfaction of the following conditions precedent on or
prior to February 16, 2001:
12.1. Loan Documents, etc.
(a) Each of the Loan Documents shall have been duly
and properly authorized, executed and delivered by the
respective party or parties thereto and shall be in full
force and effect on and as of the Effective Date. The Agent
(i) shall have accepted delivery in Boston, Massachusetts of
each of the duly executed Loan Documents from each of the
other parties thereto, and (ii) shall have duly and properly
executed each of the Loan Documents, to which it is a party,
in Boston, Massachusetts.
(b) Executed original counterparts of each of the Loan
Documents (other than the Notes) shall have been furnished
to each Bank or the Agent in sufficient copies for each Bank
and an executed copy of the Notes for each Bank shall have
been delivered to such Bank.
12.2. Performance, etc.
Each of the Hasbro Companies shall have duly and
properly performed, complied with and observed each of the
covenants, agreements and obligations to be performed,
complied with or observed by it on or prior to such date
contained in the Loan Documents. No event shall have
occurred on or prior to the Effective Date and be continuing
on such Effective Date, and no condition shall exist on such
Effective Date, which constitutes a Default or an Event of
Default.
12.3. Certified Copies of Charter Documents.
Each Bank or the Agent (in sufficient copies for each
Bank) shall have received from each of the Hasbro Companies
a copy, each of which shall have been certified by a duly
authorized officer of such respective Hasbro Company to be
true and complete on and as of the Effective Date, of each
of (a) the charter or other incorporation documents of each
of the Hasbro Companies in effect on such date of
certification, and (b) the by-laws of each of the Hasbro
Companies as in effect on such date.
12.4. Proof of Corporate Action.
The Agent shall have received from each of the Hasbro
Companies copies for each Bank, certified by a duly
authorized officer of such respective Hasbro Company to be
true and complete on and as of the Effective Date, of the
records of all corporate action taken by each of the Hasbro
Companies to authorize (a) its execution and delivery of
each of the Loan Documents to which it is or is to become a
party, (b) its performance of all of its agreements and
obligations under each of the Loan Documents, and (c) the
borrowings contemplated by this Agreement.
12.5. Incumbency Certificates.
The Agent shall have received from each of the Hasbro
Companies copies for each Bank of an original incumbency
certificate, dated as of the Effective Date signed by a duly
authorized officer of each of the Hasbro Companies and
giving the name and bearing a specimen signature of certain
individuals who shall be authorized: (i) to sign, in the
name and on behalf of such Hasbro Company, each of the Loan
Documents to which it is or is to become a party; and (ii)
to give notices to make application for the Loans and
Letters of Credit and to take other action on behalf of such
Hasbro Company under the Loan Documents.
12.6. Proceedings and Documents.
All corporate, governmental and other proceedings in
connection with the transactions contemplated by the Loan
Documents, and all instruments and documents incidental
thereto, shall be in form and substance reasonably
satisfactory to the Agent and the Agent shall have received
all such counterpart originals or certified or other copies
of all such instruments and documents as the Agent shall
have reasonably requested.
12.7. Validity of Liens.
The Security Documents shall be effective to create in
favor of the Agent a legal, valid and enforceable first
priority (except for Permitted Liens entitled to priority
under applicable law) security interest in and Lien upon the
Collateral, as and to the extent provided therein. All
filings, recordings, deliveries of instruments and other
actions necessary or desirable in the reasonable opinion of
the Agent to protect and preserve such security interests
shall have been duly effected or arrangements to effect the
same shall have been made reasonably satisfactory to the
Agent. The Agent shall have received evidence thereof in
form and substance satisfactory to the Agent.
12.8. Perfection Certificates and UCC Search
Results.
The Agent shall have received from each of the Company
and the Restricted Subsidiaries a completed and fully
executed Perfection Certificate and the results of Uniform
Commercial Code searches with respect to the Collateral,
indicating no Liens other than Permitted Liens and otherwise
in form and substance reasonably satisfactory to the Agent.
12.9. Certificates of Insurance.
The Agent shall have received certificates of insurance
from an independent insurance broker dated as of the
Effective Date, identifying insurers, types of insurance,
insurance limits, and policy terms, and otherwise describing
the insurance obtained in accordance with the provisions of
the Security Agreements.
12.10. Agency Account Agreement.
The Agent shall have received an executed agency
account agreement, in form and substance reasonably
satisfactory to the Agent, from Bank of America, N.A.,
concerning the Agent's security interest in the lock box
account maintained by the Company therewith.
12.11. Legal Opinions.
Each of the Banks and the Agent shall have received a
favorable legal opinion addressed to the Banks and the
Agent, dated as of the Effective Date, in form and substance
reasonably satisfactory to the Banks and the Agent, from (a)
Barry Nagler, Esq., Senior Vice President and General
Counsel of the Company, and (b) Debevoise & Plimpton,
special counsel to the Company.
12.12. Payment of Fees.
The Company shall have paid to the Banks or the Agent,
as appropriate, the Closing Fee and the Agent's Fee pursuant
to 7.1 and 7.2, respectively.
12.13. Legality of Transactions.
No change in applicable law shall have occurred as a
consequence of which it shall have become and continue to be
unlawful (a) for any Bank to perform any of its agreements
or obligations under any of the Loan Documents to which it
is a party on the Effective Date or (b) for the Company to
perform any of its material agreements or obligations under
any of the Loan Documents to which it is a party on the
Effective Date.
12.14. Representations and Warranties.
Each of the representations and warranties made by or
on behalf of each of the Hasbro Companies to the Banks in
this Agreement or any of the other Loan Documents shall be
true and correct in all material respects when made, shall
for all purposes of this Agreement be deemed to be repeated
on and as of the Effective Date, and shall be true and
correct in all material respects on and as of such date.
13. CONDITIONS TO LOANS.
The obligations of the Banks to make any Syndicated
Loan, the Swing Line Bank to make any Swing Line Loan, and
of the Agent to issue, extend or renew any Letter of Credit,
in each case whether on or after the Effective Date, shall
also be subject to the satisfaction of the following
conditions precedent:
13.1. Legality of Transactions.
It shall not be unlawful (a) for any Bank to perform
any of its agreements or obligations under any of the Loan
Documents to which the Bank is a party on the Drawdown Date
of such Loans, or (b) for any of the Hasbro Companies to
perform any of its material agreements or obligations under
any of the Loan Documents to which it is a party on such
date.
13.2. Representations and Warranties.
Each of the representations and warranties made by or
on behalf of the Company and its Subsidiaries to the Banks
in this Agreement or any other Loan Document shall be true
and correct in all material respects when made and shall for
all purposes of this Agreement, be deemed to be repeated on
and as of the date of the Company's notice of borrowing for
such Loan on and as of the Drawdown Date of such Loan, or
the issuance, extension or renewal of such Letter of Credit,
and shall be true and correct in all material respects on
and as of each of such dates, except, in each case, as
affected by the consummation of the transactions
contemplated by the Loan Documents or to the extent
representations and warranties expressly referring to an
earlier date shall relate solely to such earlier date.
13.3. Performance, etc.
Each of the Hasbro Companies shall have duly and
properly performed, complied with and observed in all
material respects each of its covenants, agreements and
obligations contained in 9 and 10 hereof, and shall have
duly and properly performed, complied with and observed in
all material respects its covenants, agreements, and
obligations in all other articles of this Agreement and any
of the other Loan Documents to which it is a party or by
which it is bound on the Drawdown Date for such Loan or the
date of the issuance, extension or renewal of such Letter of
Credit. No event shall have occurred on or prior to such
date and be continuing on such date, and no condition shall
exist on such date, which constitutes a Default or an Event
of Default.
13.4. Proceedings and Documents.
All corporate, governmental and other proceedings in
connection with the transactions contemplated by the Loan
Documents and all instruments and documents incidental
thereto shall be in form and substance reasonably
satisfactory to the Agent and the Agent shall have received
all such counterpart originals or certified or other copies
of all such instruments and documents as the Agent shall
have reasonably requested.
13.5. Loan Documents.
Each of the Loan Documents required by 9.14 hereof
shall have been duly and properly authorized, executed and
delivered by the respective party or parties thereto and
shall be in full force and effect on and as of such date.
14. EVENTS OF DEFAULT; ACCELERATION.
14.1. Remedies Upon Default.
If any of the following events ("Events of Default" or,
if the giving of notice or the lapse of time or both is
required, then, prior to such notice and/or lapse of time,
"Defaults") shall occur:
(a) if the Company shall fail to pay any
principal of the Loans when the same shall become due
and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date
fixed for payment;
(b) if the Company shall fail to pay any interest
on the Loans or the Unpaid Reimbursement Obligations,
any Fees hereunder, or other sums due hereunder, within
three (3) Business Days after the date on which the
same shall become due and payable whether at the stated
date of maturity or any accelerated date of maturity or
at any other date fixed for payment;
(c) if the Company shall fail to comply with any
of its covenants contained in 9.2, 9.5, 9.6, the
first sentence of 9.7, 9.13, 9.14, 10 or 11;
(d) if the Company shall fail to comply with any
of its covenants contained in 9.10 or 9.17, and such
failure shall continue for a period of ten (10) days;
(e) if any of the Hasbro Companies shall fail to
perform any term, covenant or agreement contained in
any of the Loan Documents (other than those specified
in subsections (a), (b), (c) and (d) above) for twenty
(20) days after written notice of such failure has been
given to the Company by the Agent;
(f) if any representation or warranty of any of
the Hasbro Companies in any of the Loan Documents or in
any document or instrument delivered pursuant to or in
connection with this Agreement shall prove to have been
false in any material respect upon the date when made
or deemed to have been made or repeated;
(g) if any of the Hasbro Companies shall fail to
pay at maturity, or within any applicable period of
grace, any Indebtedness for borrowed money or credit
received or in respect of any Capitalized Leases or in
respect of any guaranties by such Hasbro Company of any
such Indebtedness of another Person, or fail to observe
or perform any material term, covenant or agreement
contained in any agreement by which it is bound,
evidencing or securing Indebtedness for borrowed money
or credit received or in respect of any Capitalized
Leases for such period of time as would permit
(assuming the giving of appropriate notice if required)
the holder or holders thereof or of any obligations
issued thereunder to accelerate the maturity thereof,
or to rescind the purchase of any such obligations, and
the aggregate amount of all of such Indebtedness for
borrowed money or credit received or in respect of any
Capitalized Leases of the Hasbro Companies or in
respect of any guaranties by any Hasbro Company of any
such Indebtedness of another Person in respect of which
any one or more of such defaults or failures shall at
any time be continuing under any one or more of such
agreements shall exceed $25,000,000 at any one time;
(h) if any of the Hasbro Companies makes an
assignment for the benefit of creditors, or admits in
writing its inability to pay or generally fails to pay
its debts as they mature or become due, or petitions or
applies for the appointment of a trustee or other
custodian, liquidator or receiver of any of the Hasbro
Companies or of any substantial part of the assets of
any of the Hasbro Companies, or commences any case or
other proceeding relating to any of the Hasbro
Companies under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt,
dissolution or liquidation or similar law of any
jurisdiction now or hereafter in effect, or takes any
action to authorize or in furtherance of any of the
foregoing, or if any such petition or application is
filed or any such case or other proceeding is commenced
against any of the Hasbro Companies and the such Person
indicates its approval thereof, consent thereto or
acquiescence therein or such petition or application
shall not have been dismissed within forty-five (45)
days following the filing thereof;
(i) if a decree or order is entered appointing
any such trustee, custodian, liquidator or receiver or
adjudicating any of the Hasbro Companies bankrupt or
insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is
entered in respect of any of the Hasbro Companies in an
involuntary case under federal bankruptcy laws as now
or hereafter constituted;
(j) if there shall remain in force, undischarged,
unsatisfied and unstayed, for more than thirty (30)
days, whether or not consecutive, any final judgment
against any of the Hasbro Companies which, with other
outstanding final judgments, undischarged, unsatisfied
and unstayed, against the Hasbro Companies exceeds in
the aggregate $25,000,000;
(k) the holders of all or any part of the
Subordinated Debt shall accelerate the maturity of all
or any part of the Subordinated Debt, the Subordinated
Debt shall be repaid, redeemed or repurchased in whole
or in part or an offer to repay, redeem or repurchase
the Subordinated Debt in whole or in part shall have
been made;
(l) (i) if any of the Loan Documents shall be
cancelled, terminated, revoked or rescinded or the
Agent's Liens in a material portion of the Collateral
shall cease to be perfected (other than by the Agent's
failure to file Uniform Commercial Code financing
statements executed and delivered by the Company or any
Restricted Subsidiary, as applicable, or to make any
required filings executed and delivered by the Company
or any Restricted Subsidiary with the United States
Patent and Trademark Office or the United States
Copyright Office or to continue such Uniform Commercial
Code financing statements or filings with the United
States Patent and Trademark Office or United States
Copyright Office in accordance with applicable law), or
shall cease to have the priority contemplated by the
Security Documents, in each case otherwise than in
accordance with the terms thereof or with the express
prior written agreement, consent or approval of the
Banks, or (ii) any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any
of the Loan Documents shall be commenced by any of the
Hasbro Companies party thereto, or (iii) any court or
any other governmental or regulatory authority or
agency of competent jurisdiction shall make a
determination that, or issue a judgment, order, decree
or ruling to the effect that any one or more of the
Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof and such judgment,
order, decree or ruling shall continue in full force
and effect for a period of thirty (30) days;
(m) there shall occur any loss, theft,
destruction of, or material damage to the Inventory
included in the Collateral resulting in an uninsured
loss in excess of $20,000,000 during any one policy
period, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other
casualty, which in any such case causes, for more than
fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities
at any facility of the Company or any of its
Subsidiaries if such event or circumstance is not
covered by business interruption insurance and would
have a Material Adverse Effect;
(n) the Company or any ERISA Affiliate incurs any
liability to the PBGC or a Guaranteed Pension Plan
pursuant to Title IV of ERISA in an aggregate amount
exceeding $15,000,000, or the Company or any ERISA
Affiliate is assessed withdrawal liability pursuant to
Title IV of ERISA by a Multiemployer Plan requiring
aggregate annual payments exceeding $5,000,000, or any
of the following occurs with respect to a Guaranteed
Pension Plan: (i) an ERISA Reportable Event, or a
failure to make a required installment or other payment
(within the meaning of 302(f)(1) of ERISA), provided
that such event (A) would be expected to result in
liability of the Company or any of its Subsidiaries to
the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $15,000,000 and (B) would
constitute grounds for the termination of such
Guaranteed Pension Plan by the PBGC, for the
appointment by the appropriate United States District
Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor
of such Guaranteed Pension Plan; or (ii) the
appointment by a United States District Court of a
trustee to administer such Guaranteed Pension Plan; or
(iii) the institution by the PBGC of proceedings to
terminate such Guaranteed Pension Plan;
(o) a Change of Control shall occur; or
(p) any "Event of Default" under and as defined
in the Credit Line Agreement shall occur;
then, and in any such event, so long as the same may be
continuing, the Agent may, and upon the request of the
Majority Banks shall, by notice in writing to the Company
declare all amounts owing with respect to this Agreement and
the Notes and the other Loan Documents and all Reimbursement
Obligations to be, and they shall thereupon forthwith
become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; provided that in
the event of any Event of Default specified in 14.1(h) or
14.1(i) hereof, all such amounts shall become immediately
due and payable automatically and without any requirement of
notice from the Agent or any Bank.
14.2. Termination of Commitments.
If any one or more of the Events of Default specified
in 14.1(h) or 14.1(i) shall occur, any unused portion of
the credit hereunder shall forthwith terminate and each of
the Banks shall be relieved of all further obligations to
make Loans to the Company and the Agent shall be relieved of
all further obligations to issue, extend or renew Letters of
Credit. If any other Event of Default shall have occurred
and be continuing, the Agent may and, upon the request of
the Majority Banks, shall, by notice to the Company,
terminate the unused portion of the credit hereunder, and
upon such notice being given such unused portion of the
credit hereunder shall terminate immediately and each of the
Banks shall be relieved of all further obligations to make
Loans and the Agent shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. No
termination of the credit hereunder shall relieve the
Company or any of its Subsidiaries of any of the
Obligations.
14.3. Remedies.
In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the
Banks shall have accelerated the maturity of the Loans
pursuant to 14.1, each Bank, if owed any amount with
respect to the Loans or the Reimbursement Obligations, may,
with the consent of the Majority Banks but not otherwise,
proceed to protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, whether for
the specific performance of any covenant or agreement
contained in this Agreement and the other Loan Documents or
any instrument pursuant to which the Obligations to such
Bank are evidenced, including as permitted by applicable law
the obtaining of the ex parte appointment of a receiver,
and, if such amount shall have become due, by declaration or
otherwise, proceed to enforce the payment thereof or any
other legal or equitable right of such Bank. No remedy
herein conferred upon any Bank or the Agent or the holder of
any Note or purchaser of any Letter of Credit Participation
is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other
provision of law.
14.4. Certain Rights of Cure.
(a) Any Default or Event of Default may be waived as
provided by 20 hereof. With the prior written consent of
all of the Banks, any Default or Event of Default so waived
shall be deemed to have been cured and not to be continuing,
and upon such waiver the Company and each of the Banks shall
be restored to their respective positions prior to the
existence of the Default or Event or Default, whether or not
acceleration of the maturity of the Loans shall have
occurred pursuant to this 14. The Commitments, if
terminated pursuant to this 14 by reason of any Event of
Default so waived, shall be reinstated. In the event that
the Commitments, once terminated, are so reinstated, the
Commitment Fee shall be payable as though no termination had
occurred. No such waiver shall extend to or affect any
subsequent or other Default or Event of Default or impair
any rights consequent thereon.
(b) Notwithstanding any other provision of this
Agreement to the contrary, if a Default or Event of Default
shall occur at any time when no Loans shall be outstanding
and all other Obligations shall have been paid in full, the
Company may give notice to the Agent and the Banks (i) of
the occurrence or continuance of such Default or Event of
Default, (ii) of the Company's request to terminate the
Commitments in their entirety pursuant to 2.2 hereof, and
(iii) subject to compliance by the Company with the
provisions of 2.2 hereof and this 14.4(b), of the
Company's request that the Default or Event of Default be
deemed not to have occurred, and upon termination of the
Commitments and payment by the Company of all Fees and other
sums payable by the Company hereunder, the Company, the
Agent, and the Banks shall be deemed to have agreed, by
mutual consent, that no Default or Event of Default shall
have occurred hereunder.
14.5. Distribution of Collateral Proceeds.
In the event that, following the occurrence or during
the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies
in connection with the enforcement of any the Security
Documents, or otherwise with respect to the realization upon
any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may
be) the reimbursement of the Agent for or in respect of
all reasonable costs, expenses, disbursements and
losses which shall have been incurred or sustained by
the Agent in connection with the collection of such
monies by the Agent, for the exercise, protection or
enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent under this
Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any
provision of adequate indemnity to the Agent against
any taxes or Liens which by law shall have, or may
have, priority over the rights of the Agent to such
monies;
(b) Second, to all other Secured Obligations
(other than obligations of the Company and its
Subsidiaries to any of the Banks and/or the Agent with
respect to any Interest Rate Agreements and Hedging
Agreements) in such order or preference among types of
Secured Obligations as the Majority Banks may
determine; provided, however, that (i) distributions
shall be made (A) pari passu among Secured Obligations
with respect to the Agent's Fee and all other Secured
Obligations and (B) with respect to each type of
Secured Obligation owing to the Banks, such as
interest, principal, fees and expenses, among the Banks
pro rata, based on the then outstanding amount of
Secured Obligations (and on the assumption that Secured
Obligations consisting of guaranties are equal to the
amount of the outstanding obligations guaranteed), and
(ii) the Agent may in its discretion make proper
allowance to take into account any Secured Obligations
not then due and payable;
(c) Third, to obligations of the Company and its
Subsidiaries to any of the Banks and/or the Agent with
respect to any Interest Rate Agreements and Hedging
Agreements;
(d) Fourth, upon payment and satisfaction in full
or other provisions for payment in full satisfactory to
the Banks and the Agent of all of the Secured
Obligations, to the payment of any obligations required
to be paid pursuant to 9-504(1)(c) of the Uniform
Commercial Code of The Commonwealth of Massachusetts;
and
(e) Fifth, the excess, if any, shall be returned
to the Company or to such other Persons as are entitled
thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during
the continuance of an Event of Default, any deposits or
other sums credited by or due from any of the Banks to the
Company and any securities or other property of the Company
in the possession of such Bank may be applied to or set off
by such Bank against the payment of Obligations and any and
all other liabilities, direct, or indirect, absolute or
contingent, due or to become due, now existing or hereafter
arising, of the Company to such Bank. ANY AND ALL RIGHTS TO
REQUIRE ANY BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE
OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF THE
COMPANY ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY
WAIVED. Each of the Banks agree with each other Bank that
(a) if an amount to be set off is to be applied to
Indebtedness of the Company to such Bank, other than
Indebtedness evidenced by the Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank,
such amount shall be applied ratably to such other
Indebtedness and to the Indebtedness evidenced by all such
Notes held by such Bank or constituting Reimbursement
Obligations owed to such Bank, and (b) if such Bank shall
receive from the Company, whether by voluntary payment,
exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by, or
constituting Reimbursement Obligations owed to, such Bank by
proceedings against the Company at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall
retain and apply to the payment of the Note or Notes held
by, or Reimbursement Obligations owed to, such Bank any
amount in excess of its ratable portion of the payments
received by all of the Banks with respect to the Notes held
by, and Reimbursement Obligations owed to, all of the Banks,
such Bank will make such disposition and arrangements with
the other Banks with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation
or otherwise as shall result in each Bank receiving in
respect of the Notes held by it or Reimbursement Obligations
owed it, its proportionate payment as contemplated by this
Agreement; provided that if all or any part of such excess
payment is thereafter recovered from such Bank, such
disposition and arrangements shall be rescinded and the
amount restored to the extent of such recovery, but without
interest.
16. THE AGENT.
16.1. Authorization.
(a) The Agent is authorized to take such action on
behalf of each of the Banks and to exercise all such powers
as are hereunder and under any of the other Loan Documents
and any related documents delegated to the Agent, together
with such powers as are reasonably incident thereto,
including the authority, without the necessity of any notice
to or further consent of the Banks, from time to time to
take any action with respect to any Collateral or the
Security Documents which may be necessary to perfect,
maintain perfected or insure the priority of the security
interest in and liens upon the Collateral granted pursuant
to the Security Documents, provided that no duties or
responsibilities not expressly assumed herein or therein
shall be implied to have been assumed by the Agent.
(b) The relationship between the Agent and each of the
Banks is that of an independent contractor. The use of the
term "Agent" is for convenience only and is used to
describe, as a form of convention, the independent
contractual relationship between the Agent and each of the
Banks. Nothing contained in this Agreement nor the other
Loan Documents shall be construed to create an agency, trust
or other fiduciary relationship between the Agent and any of
the Banks.
(c) As an independent contractor empowered by the
Banks to exercise certain rights and perform certain duties
and responsibilities hereunder and under the other Loan
Documents, the Agent is nevertheless a "representative" of
the Banks, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the
benefit of the Banks and the Agent with respect to all
collateral security and guaranties contemplated by the Loan
Documents. Such actions include the designation of the
Agent as "secured party", "mortgagee" or the like on all
financing statements and other documents and instruments,
whether recorded or otherwise, relating to the attachment,
perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of
any of the Obligations, all for the benefit of the Banks and
the Agent.
16.2. Employees and Agents.
The Agent may exercise its powers and execute its
duties by or through employees or agents and shall be
entitled to take, and to rely on, advice of counsel
concerning all matters pertaining to its rights and duties
under this Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent
in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be
paid by the Company.
16.3. No Liability.
Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person
assisting them in their duties nor any agent or employee
thereof, shall be liable for any waiver, consent or approval
given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan
Documents, or in connection herewith or therewith, or be
responsible for the consequences of any oversight or error
of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to
its willful misconduct or gross negligence.
16.4. No Representations.
16.4.1. General.
The Agent shall not be responsible for the
execution or validity or enforceability of this
Agreement, the Notes, the Letters of Credit, any of the
other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral
security for the Notes, or for the value of any such
collateral security or for the validity, enforceability
or collectability of any such amounts owing with
respect to the Notes, or for any recitals or
statements, warranties or representations made herein
or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by
or on behalf of the Company or any of its Subsidiaries,
or be bound to ascertain or inquire as to the
performance or observance of any of the terms,
conditions, covenants or agreements herein or in any
instrument at any time constituting, or intended to
constitute, collateral security for the Notes or to
inspect any of the properties, books or records of the
Company or any of its Subsidiaries. The Agent shall
not be bound to ascertain whether any notice, consent,
waiver or request delivered to it by the Company or any
holder of any of the Notes shall have been duly
authorized or is true, accurate and complete. The
Agent has not made nor does it now make any
representations or warranties, express or implied, nor
does it assume any liability to the Banks, with respect
to the credit worthiness or financial conditions of the
Company or any of its Subsidiaries. Each Bank
acknowledges that it has, independently and without
reliance upon the Agent or any other Bank, and based
upon such information and documents as it has deemed
appropriate, made its own credit analysis and decision
to enter into this Agreement.
16.4.2. Closing Documentation, etc.
For purposes of determining compliance with the
conditions set forth in 12, each Bank that has
executed this Agreement shall be deemed to have
consented to, approved or accepted, or to be satisfied
with, each document and matter either sent, or made
available, by the Agent or the Arranger to such Bank
for consent, approval, acceptance or satisfaction, or
required thereunder to be consented to or approved by
or acceptable or satisfactory to such Bank, unless an
officer of the Agent or the Arranger active upon the
Company's account shall have received notice from such
Bank not less than five (5) days prior to the Effective
Date specifying such Bank's objection thereto and such
objection shall not have been withdrawn by notice to
the Agent or the Arranger to such effect on or prior to
the Effective Date.
16.5. Indemnification.
Without limiting the obligations of the Company
hereunder or under any other Loan Document, the Banks agree
to indemnify and hold harmless the Agent and its affiliates,
ratably in accordance with their respective Commitment
Percentages, for any and all liabilities, obligations,
losses, damages, penalties, claims, actions and suits
(whether groundless or otherwise) judgments, costs, expenses
(including any expenses for which the Agent or such
affiliate has not been reimbursed by the Company as required
by 18) or disbursements of any kind or nature whatsoever
which may at any time (including without limitation at any
time following the payment of the Notes) be imposed on,
incurred by or asserted against the Agent in any way
relating to or arising out of this Agreement or the Notes or
any of the other Loan Documents or any documents
contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or the
enforcement of any of the terms hereof or thereof or of any
such other documents, provided that no Bank shall be liable
for any of the foregoing to the extent they arise from the
Agent's gross negligence or willful misconduct. The
agreements in this 16.5 shall survive the payment of the
Notes and all other amounts payable hereunder.
16.6. Reimbursement.
Without limiting the provisions of 16.5, the Banks and
the Agent hereby agree that the Agent shall not be obliged
to make available to any Person any sum which the Agent is
expecting to receive for the account of that Person until
the Agent has determined that it has received that sum. The
Agent may, however, disburse funds prior to determining that
the sums which the Agent expects to receive have been
finally and unconditionally paid to the Agent, if the Agent
wishes to do so. If and to the extent that the Agent does
disburse funds and it later becomes apparent that the Agent
did not then receive a payment in an amount equal to the sum
paid out, then any Person to whom the Agent made the funds
available shall, on demand from the Agent:
(a) refund to the Agent the sum paid to that
Person; and
(b) reimburse the Agent for the additional amount
certified by the Agent as being necessary to indemnify
the Agent against any funding or other cost, loss,
expense or liability sustained or incurred by the Agent
as a result of paying out the sum before receiving it.
16.7. Non-Reliance on Agent and Other Banks.
Each Bank represents that it has, independently and
without reliance on the Agent or any other Bank, and based
on such documents and information as it has deemed
appropriate, made its own appraisal of the financial
condition and affairs of the Company and decision to enter
into this Agreement and the other Loan Documents and agrees
that it will, independently and without reliance upon the
Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time,
continue to make its own appraisals and decisions in taking
or not taking action under this Agreement or any other Loan
Document. The Agent shall not be required to keep informed
as to the performance or observance by the Company of this
Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or by any
other Person of any agreement or to make inquiry of, or to
inspect the properties or books of, any Person. Except for
notices, reports and other documents and information
expressly required to be furnished to the Banks by the Agent
hereunder, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other
information concerning any Person which may come into the
possession of the Agent or any of its affiliates. Each Bank
shall have access to all documents relating to the Agent's
performance of its duties hereunder, at such Bank's request.
Unless any Bank shall object promptly after receiving notice
of any action taken by the Agent hereunder, such Bank shall
conclusively be presumed to have approved the same.
16.8. Payments.
16.8.1. Payments to Agent.
A payment by the Company to the Agent hereunder or
any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The
Agent agrees promptly to distribute to each Bank such
Bank's pro rata share of payments received by the Agent
for the account of the Banks except as otherwise
expressly provided herein or in any of the other Loan
Documents.
16.8.2. Distribution by Agent.
If in the opinion of the Agent the distribution of
any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan
Documents might involve it in liability, it may refrain
from making distribution until its right to make
distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent
jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person
to whom any such distribution shall have been made
shall either repay to the Agent its proportionate share
of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as
shall be determined by such court.
16.8.3. Delinquent Banks.
Notwithstanding anything to the contrary contained
in this Agreement or any of the other Loan Documents,
any Bank that fails (a) to make available to the Agent
its pro rata share of any Loan or to purchase any
Letter of Credit Participation or (b) to comply with
the provisions of 15 with respect to making
dispositions and arrangements with the other Banks,
where such Bank's share of any payment received,
whether by setoff or otherwise, is in excess of its pro
rata share of such payments due and payable to all of
the Banks, in each case as, when and to the full extent
required by the provisions of this Agreement, shall be
deemed delinquent (a "Delinquent Bank") and shall be
deemed a Delinquent Bank until such time as such
delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it
from the Company, whether on account of outstanding
Loans, Unpaid Reimbursement Obligations, interest, fees
or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective pro
rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective
pro rata shares of all outstanding Loans and Unpaid
Reimbursement Obligations. A Delinquent Bank shall be
deemed to have satisfied in full a delinquency when and
if, as a result of application of the assigned payments
to all outstanding Loans and Unpaid Reimbursement
Obligations of the nondelinquent Banks, the Banks'
respective pro rata shares of all outstanding Loans and
Unpaid Reimbursement Obligations have returned to those
in effect immediately prior to such delinquency and
without giving effect to the nonpayment causing such
delinquency.
16.9. Holders of Notes.
The Agent may deem and treat the payee of any Note or
the purchaser of any Letter of Credit Participation as the
absolute owner thereof for all purposes hereof until it
shall have been furnished in writing with a different name
by such payee or by a subsequent holder, assignee or
transferee.
16.10. Agent as Bank.
In its individual capacity, Fleet shall have the same
obligations and the same rights, powers and privileges in
respect to its Commitment and the Loans made by it
hereunder, and as the holder of any of the Notes and as the
purchaser of any Letter of Credit Participation, as it would
have were it not also the Agent.
16.11. Resignation or Removal of Agent.
The Agent may resign at any time by giving sixty (60)
days prior written notice thereof to the Banks and the
Company. Upon any such resignation, the Majority Banks,
with the prior written consent of the Company (which consent
shall not be unreasonably withheld), shall have the right
to appoint a successor Agent; provided that no such consent
of the Company shall be required if a Default or Event of
Default has occurred and is then continuing. If no
successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within thirty
(30) days after the retiring Agent's giving of notice of
resignation, then the retiring Agent may, on behalf of the
Banks, appoint a successor Agent, which shall be a financial
institution having a rating of not less than A or its
equivalent by Standard and Poor's. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of
the retiring Agent both as Agent and Swing Line Bank
(including without limitation the rights, powers, privileges
and duties of the retiring Agent with respect to such
Agent's commitment to issue Letters of Credit pursuant to
5), and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any retiring
Agent's resignation, the provisions of this Agreement shall
continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as
Agent. In the event of a material breach of its duties
hereunder, the Agent may be removed by the Banks for cause
and the provisions of this 16.11 shall apply to the
appointment of a successor.
16.12. Notification of Defaults and Events of
Default.
Each Bank hereby agrees that, upon learning of the
existence of a Default or an Event of Default, it shall
promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this 16.12 it shall
promptly notify the other Banks of the existence of such
Default or Event of Default.
16.13. Duties in the Case of Enforcement.
In case one of more Events of Default have occurred and
shall be continuing, and whether or not acceleration of the
Obligations shall have occurred, the Agent shall, if (a) so
requested by the Majority Banks and (b) the Banks have
provided to the Agent such additional indemnities and
assurances against expenses and liabilities as the Agent may
reasonably request, proceed to enforce the provisions of the
Security Documents authorizing the sale or other disposition
of all or any part of the Collateral and exercise all or any
such other legal and equitable and other rights or remedies
as it may have in respect of such Collateral. The Majority
Banks may direct the Agent in writing as to the method and
the extent of any such sale or other disposition, the Banks
hereby agreeing to indemnify and hold the Agent, harmless
from all liabilities incurred in respect of all actions
taken or omitted in accordance with such directions,
provided that the Agent need not comply with any such
direction to the extent that the Agent reasonably believes
the Agent's compliance with such direction to be unlawful or
commercially unreasonable in any applicable jurisdiction.
17. EXPENSES.
The Company agrees to pay (a) the reasonable costs of
producing and reproducing this Agreement, the other Loan
Documents and the other agreements and instruments mentioned
herein, (b) any taxes (including any interest and penalties
in respect thereto) payable by the Agent or any of the Banks
(other than taxes based upon the Agent's or any Bank's net
income) on or with respect to the transactions contemplated
by this Agreement (the Company hereby agreeing to indemnify
the Agent and each Bank with respect thereto), (c) the
reasonable fees, expenses and disbursements of the Banks'
Special Counsel or any local counsel to the Agent incurred
in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments
mentioned herein, each closing hereunder, any amendments,
modifications, approvals, consents or waivers hereto or
hereunder, or the cancellation of any Loan Document upon
payment in full in cash of all of the Obligations or
pursuant to any terms of such Loan Document for providing
for such cancellation, (d) the reasonable fees, expenses and
disbursements of the Agent or any of its affiliates incurred
by the Agent or such affiliate in connection with the
preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including
all reasonable collateral appraisal and examination charges,
(e) all reasonable out-of-pocket expenses (including without
limitation reasonable out of pocket attorneys' fees and
costs, and reasonable consulting, accounting, appraisal,
investment banking and similar professional fees and
charges) incurred by any Bank or the Agent in connection
with (i) the enforcement of or preservation of rights under
any of the Loan Documents against the Company or any of its
Subsidiaries, or the administration thereof after the
occurrence and during the continuance of a Default or Event
of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related
to any Bank's or the Agent's relationship with the Company
or any of its Subsidiaries relating to the Loan Documents or
the transactions contemplated thereby and (f) all reasonable
fees, expenses and disbursements of the Agent incurred in
connection with Uniform Commercial Code searches, Uniform
Commercial Code filings, intellectual property searches or
intellectual property filings. The covenants contained in
this 17 shall survive payment or satisfaction in full of
all other Obligations.
18. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless the
Agent, the Banks and each of their respective affiliates,
directors, officers, employees and representatives from and
against any and all claims, actions and suits whether
groundless or otherwise, and from and against any and all
liabilities, losses, damages and expenses of every nature
and character arising out of this Agreement or any of the
other Loan Documents or the transactions contemplated hereby
including, without limitation, (a) any actual or proposed
use by the Company or any of its Subsidiaries of the
proceeds of any of the Loans or Letters of Credit, (b) the
reversal or withdrawal of any provisional credits granted by
the Agent upon the transfer of funds from lock box, bank
agency, concentration accounts or otherwise under any cash
management arrangements with the Company or any Subsidiary
or in connection with the provisional honoring of funds
transfers, checks or other items, (c) any actual or alleged
infringement of any patent, copyright, trademark, service
mark or similar right of the Company or any of its
Subsidiaries comprised in the Collateral, (d) the Company or
any of its Subsidiaries entering into or performing this
Agreement or any of the other Loan Documents or (e) with
respect to the Company and its Subsidiaries and their
respective properties and assets, the violation of any
Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or
threatened release of any Hazardous Substances or any
action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to
wrongful death, personal injury or damage to property), in
each case including, without limitation, the reasonable fees
and disbursements of counsel incurred in connection with any
such investigation, litigation or other proceeding, but
excluding (i) in the case of the Agent or any affiliate,
director, officer, employee or representative thereof,
claims arising solely as a result of the gross negligence or
willful misconduct of the Agent or any of its affiliates,
directors, officers, employees or representatives, (ii) in
the case of any Bank or any affiliate, director, officer,
employee or representative thereof, claims arising solely as
a result of the gross negligence or willful misconduct of
such Bank or any of its affiliates, directors, officers,
employees or representatives, (iii) litigation commenced by
the Company against any Bank or the Agent which (A) seeks
enforcement of the Company's rights hereunder or under any
of the Loan Documents and (B) is finally determined
adversely to such Bank or the Agent, to the extent of such
adverse determination, and (iv) claims made or legal
proceedings commenced against the Agent or any Bank by any
securityholder or creditor thereof arising out of and based
upon rights afforded any such securityholder or creditor
solely in its capacity as such. In litigation, or the
preparation therefor, the Banks and the Agent and its
affiliates shall be entitled to select their own counsel
and, in addition to the foregoing indemnity, the Company
agrees to pay promptly the reasonable fees and expenses of
such counsel. If, and to the extent that the obligations of
the Company under this 18 are unenforceable for any reason,
the Company hereby agrees to make the maximum contribution
to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained
in this 18 shall survive payment or satisfaction in full of
all other Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and
warranties made herein, in the Notes or in any documents or
other papers delivered by or on behalf of the Company
pursuant hereto shall be deemed to have been relied upon by
the Banks, notwithstanding any investigation heretofore or
hereafter made by it, and shall survive the making by the
Banks of the Loans and the issuance, extension or renewal of
any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of
Credit or amount due under this Agreement or the Notes or
any of the other Loan Documents remains outstanding and
unpaid or any Bank has any obligation to make any Loans
hereunder or the Agent has any obligation to issue, extend
or renew any Letter of Credit, and for such further time as
may be otherwise be expressly specified in this Agreement.
All statements contained in any certificate or other paper
delivered to any Bank at any time by or on behalf of the
Company pursuant hereto or in connection with the
transactions contemplated hereby shall constitute
representations and warranties by the Company hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. Conditions to Assignment by Banks.
Except as provided herein, each Bank may assign to one
or more commercial banks, other financial institutions or
other Persons, all or a portion of its interests, rights and
obligations under this Agreement (including all or a portion
of its Commitment Percentage and Commitment and the same
portion of the Loans at the time owing to it, the Notes held
by it and its participating interest in the risk relating to
any Letters of Credit); provided that (a) each of the Agent
and, unless a Default or Event of Default shall have
occurred and be continuing, the Company shall have given its
prior written consent to such assignment, which consent, in
the case of the Company and the Agent, will not be
unreasonably withheld; except that the consent of the
Company or the Agent shall not be required in connection
with any assignment by a Bank to (i) an existing Bank or
(ii) a Bank Affiliate of such Bank, (b) each such assignment
shall be of a constant, and not a varying, percentage of all
the assigning Bank's rights and obligations under this
Agreement, (c) each assignment (or, in the case of
assignments by a Bank to its Bank Affiliates, the aggregate
holdings of such Bank and its Bank Affiliates after giving
effect to such assignments), shall be in a minimum amount
equal to $10,000,000 or a multiple of $5,000,000 in excess
thereof (or, if less, such Bank's entire Commitment), and
(d) the parties to such assignment shall execute and deliver
to the Agent, for recording in the Register (as hereinafter
defined), an Assignment and Acceptance, substantially in the
form of Exhibit H hereto (an "Assignment and Acceptance"),
together with any Notes subject to such assignment. Upon
such execution, delivery, acceptance and recording, from and
after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, (y) the assignee
thereunder shall be a party hereto and, to the extent
provided in such Assignment and Acceptance, have the rights
and obligations of a Bank hereunder, and (z) the assigning
Bank shall, to the extent provided in such assignment and
upon payment to the Agent of the registration fee referred
to in 20.3, be released from its obligations under this
Agreement.
20.2. Certain Representations and Warranties;
Limitations; Covenants.
By executing and delivering an Assignment and
Acceptance, the parties to the assignment thereunder confirm
to and agree with each other and the other parties hereto as
follows:
(a) other than the representation and warranty
that it is the legal and beneficial owner of the
interest being assigned thereby free and clear of any
adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and
assumes no responsibility with respect to any
statements, warranties or representations made in or in
connection with this Agreement or the execution,
legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan
Documents or any other instrument or document furnished
pursuant hereto or the attachment, perfection or
priority of any security interest or mortgage,
(b) the assigning Bank makes no representation or
warranty and assumes no responsibility with respect to
the financial condition of the Company and its
Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the
Obligations, or the performance or observance by the
Company and its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of
the Obligations of any of their obligations under this
Agreement or any of the other Loan Documents or any
other instrument or document furnished pursuant hereto
or thereto;
(c) such assignee confirms that it has received a
copy of this Agreement, together with copies of the
most recent financial statements referred to in 8.8
and 9.5 and such other documents and information as it
has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without
reliance upon the assigning Bank, the Agent or any
other Bank and based on such documents and information
as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking
action under this Agreement;
(e) such assignee appoints and authorizes the
Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement and the other
Loan Documents as are delegated to the Agent by the
terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(f) such assignee agrees that it will perform in
accordance with their terms all of the obligations that
by the terms of this Agreement are required to be
performed by it as a Bank;
(g) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and
Acceptance; and
(h) such assignee acknowledges that it has made
arrangements with the assigning Bank satisfactory to
such assignee with respect to its pro rata share of
Letter of Credit Fees in respect of outstanding Letters
of Credit.
20.3. Register.
The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list
(the "Register") for the recordation of the names and
addresses of the Banks and the Commitment Percentage of, and
principal amount of the Syndicated Loans owing to and Letter
of Credit Participations purchased by, the Banks from time
to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Company, the Agent
and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this
Agreement. The Register shall be available for inspection
by the Company and the Banks at any reasonable time and from
time to time upon reasonable prior notice. Upon each such
recordation, the assigning Bank agrees to pay to the Agent a
registration fee in the sum of $3,500.
20.4. New Notes.
Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with
each Note subject to such assignment, the Agent shall (i)
record the information contained therein in the Register,
and (ii) give prompt notice thereof to the Company and the
Banks (other than the assigning Bank). Within five (5)
Business Days after receipt of such notice, the Company, at
its own expense, shall execute and deliver to the Agent, in
exchange for each surrendered Note, a new Note to the order
of such Assignee in an amount equal to the amount assumed by
such Assignee pursuant to such Assignment and Acceptance
and, if the assigning Bank has retained some portion of its
obligations hereunder, a new Note to the order of the
assigning Bank in an amount equal to the amount retained by
it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal
amount of the surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of the assigned
Notes. The surrendered Notes shall be cancelled and
returned to the Company.
20.5. Participations.
Each Bank may sell participations to one or more Banks
or other entities in all or a portion of such Bank's rights
and obligations under this Agreement and the other Loan
Documents; provided that (a) each such participation shall
be in an amount of not less than $10,000,000, (b) any such
sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Company and (c) the
only rights granted to the participant pursuant to such
participation arrangements with respect to waivers,
amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications
that would reduce the principal of or the interest rate on
any Loans, extend the term or increase the amount of the
Commitment of such Bank as it relates to such participant,
reduce the amount of any Commitment Fee or Letter of Credit
Fees to which such participant is entitled or extend any
regularly scheduled payment date for principal or interest
(it being understood that (i) any vote to rescind any
acceleration made pursuant to 14.1 of amounts owing with
respect to the Loans and other Obligations and (ii) any
modifications of the provisions relating to amounts, timing
or application or prepayments of Loans and other Obligations
shall not require the approval of such participant).
20.6. Assignee or Participant Affiliated with the
Company.
If any assignee Bank is an Affiliate of the Company,
then any such assignee Bank shall have no right to vote as a
Bank hereunder or under any of the other Loan Documents for
purposes of granting consents or waivers or for purposes of
agreeing to amendments or other modifications to any of the
Loan Documents or for purposes of making requests to the
Agent pursuant to 14.1 or 14.2, and the determination of
the Majority Banks shall for all purposes of this Agreement
and the other Loan Documents be made without regard to such
assignee Bank's interest in any of the Loans or
Reimbursement Obligations. If any Bank sells a
participating interest in any of the Loans or Reimbursement
Obligations to a participant, and such participant is the
Company or an Affiliate of the Company, then such transferor
Bank shall promptly notify the Agent of the sale of such
participation. A transferor Bank shall have no right to
vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or
for purposes of agreeing to amendments or modifications to
any of the Loan Documents or for purposes of making requests
to the Agent pursuant to 14.1 or 14.2 to the extent that
such participation is beneficially owned by the Company or
any Affiliate of the Company, and the determination of the
Majority Banks shall for all purposes of this Agreement and
the other Loan Documents be made without regard to the
interest of such transferor Bank in the Loans or
Reimbursement Obligations to the extent of such
participation. The provisions of this 20.6 shall not apply
to an assignee Bank or participant which is also a Bank on
the Effective Date or to an assignee Bank or participant
which has disclosed to the other Banks that it is an
Affiliate of the Company and which, following such
disclosure, has been excepted from the provisions of this
20.6 in a writing signed by the Majority Banks determined
without regard to the interest of such assignee Bank or
transferor Bank, to the extent of such participation, in
Loans or Reimbursement Obligations.
20.7. Miscellaneous Assignment Provisions.
Any assigning Bank shall retain its rights to be
indemnified pursuant to 18 with respect to any claims or
actions arising prior to the date of such assignment. If any
Reference Bank transfers all of its interest, rights and
obligations under this Agreement, the Agent shall, in
consultation with the Company and with the consent of the
Company and the Majority Banks, appoint another Bank to act
as a Reference Bank hereunder. Anything contained in this
20 to the contrary notwithstanding, any Bank may at any
time pledge or assign a security interest in all or any
portion of its interest and rights under this Agreement
(including all or any portion of its Notes) to secure
obligations of such Bank, including any pledge or assignment
to secure obligations to (a) any of the twelve Federal
Reserve Banks organized under 4 of the Federal Reserve Act,
12 U.S.C. 341 and (b) with respect to any Bank that is a
fund that invests in bank loans, to any lender or any
trustee for, or any other representative of, holders of
obligations owed or securities issued by such fund as
security for such obligations or securities or any
institutional custodian for such fund or for such lender.
Any foreclosure or similar action by any Person in respect
of such pledge or assignment shall be subject to the other
provisions of this 20. No such pledge or the enforcement
thereof shall release the pledgor Bank from its obligations
hereunder or under any of the other Loan Documents, provide
any voting rights hereunder to the pledgee thereof, or
affect any rights or obligations of the Company or Agent
hereunder.
20.8. Increased Costs.
No assignee, participant or other transferee of any
Bank's rights shall be entitled to receive any greater
payment under 4.1 or 4.7 than such Bank would have been
entitled to receive with respect to the rights transferred,
unless such transfer is made with the Company's prior
written consent.
20.9. Assignment by Company.
The Company shall not assign or transfer any of its
rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
21. NOTICES, ETC.
Except as otherwise expressly provided in this
Agreement, all notices and other communications made or
required to be given pursuant to this Agreement or the Notes
or any Letter of Credit Applications shall be in writing and
shall be delivered in hand, mailed by United States
registered or certified first class mail, postage prepaid,
sent by overnight courier, or sent by telegraph, telecopy,
facsimile or telex and confirmed by delivery via courier or
postal service, addressed as follows:
(a) if to the Company, at 1011 Newport Avenue,
Pawtucket, Rhode Island 02862-0200, Attention: David D.
R. Hargreaves, Senior Vice President and Chief
Financial Officer, with a copy to Phillip H. Waldoks,
Senior Vice President-Corporate Legal Affairs and
Secretary, Hasbro, Inc., 32 West 23rd Street, New York,
New York 10010, or at such other address or addresses
for notice as the Company shall last have furnished in
writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street,
Boston, Massachusetts 02110, Attention: John P.
O'Loughlin, Director, or such other address for notice
as the Agent shall last have furnished in writing to
the Person giving the notice; and
(c) if to any Bank, at such Bank's address set
forth on Schedule 1 hereto, or such other address for
notice as such Bank shall have last furnished in
writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly
given or made and to have become effective (a) if delivered
by hand to a responsible officer of the party to which it is
directed, at the time of the receipt thereof by such
officer, (b) if sent by registered or certified first-class
mail, postage prepaid, when received by a responsible
officer or employee of the party to which it is directed,
provided that such receipt may be evidenced by return
receipt signed by a responsible officer or employee of the
party to which it is directed, and (c) if sent by telegraph,
telecopy, facsimile or telex, at the time of dispatch
thereof, if in normal business hours in the state where
received or otherwise at the opening of business on the next
Business Day.
22. TREATMENT OF CERTAIN CONFIDENTIAL INFORMATION.
22.1. Confidentiality.
Each of the Banks and the Agent agrees, on behalf of
itself and each of its affiliates, directors, officers,
employees and representatives, to use reasonable precautions
to keep confidential, in accordance with their customary
procedures for handling confidential information of the same
nature and in accordance with safe and sound banking
practices, any non-public information supplied to it by the
Company or any of its Subsidiaries pursuant to this
Agreement that is identified by such Person as being
confidential at the time the same is delivered to the Banks
or the Agent, provided that nothing herein shall limit the
disclosure of any such information (a) after such
information shall have become public other than through a
violation of this 22, or becomes available to any of the
Banks or the Agent on a nonconfidential basis from a source
other than the Company or any of its Subsidiaries without a
duty of confidentiality to the Company or such Subsidiary
being violated, (b) to the extent required by statute, rule,
regulation or judicial process, (c) to counsel for any of
the Banks or the Agent so long as the relevant Bank or Agent
informs such counsel of the agreement under this 22.1 and
such Bank assumes responsibility for compliance by such
counsel with such agreement, (d) to bank examiners or any
other regulatory authority having jurisdiction over any Bank
or the Agent, or to auditors or accountants, (e) to the
Agent or any Bank, (f) in connection with any litigation to
which any one or more of the Banks or the Agent is a party,
or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document, (g) to a Bank
Affiliate or a Subsidiary or affiliate of the Agent so long
as the relevant Bank or Agent informs such Bank Affiliate,
subsidiary or affiliate of the agreement under this 22.1
and such Bank or the Agent assumes responsibility for
compliance by such Person with such agreement, (h) to any
actual or prospective assignee or participant or any actual
or prospective counterparty (or its advisors) to any swap or
derivative transactions referenced to credit or other risks
or events arising under this Agreement or any other Loan
Document so long as such actual or prospective assignee,
participant or counterparty, as the case may be, agrees to
be bound by the provisions of this 22 pursuant to an
agreement in substantially the form of Exhibit I provided to
the Company, or (i) with the consent of the Company.
22.2. Prior Notification.
Unless specifically prohibited by applicable law or
court order, each of the Banks and the Agent shall, prior to
disclosure thereof, notify the Company of any request for
disclosure of any such non-public information by any
governmental agency or representative thereof (other than
any such request in connection with an examination of the
financial condition of such Bank by such governmental
agency) or pursuant to legal process and afford the Company
the opportunity to obtain a protective order or other
appropriate remedy or agreement to maintain confidentiality
of the information.
22.3. Other.
In no event shall any Bank or the Agent be obligated or
required to return any materials furnished to it by the
Company or any of its Subsidiaries. The obligations of each
Bank under this 22 shall supersede and replace the
obligations of such Bank under any confidentiality letter in
respect of this financing signed and delivered by such Bank
to the Company prior to the date hereof and shall be binding
upon any assignee of, or purchaser of any participation in,
any interest in any of the Loans or Reimbursement
Obligations from any Bank.
23. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this
Agreement to be given by the Banks may be given, and any
term of this Agreement, the other Loan Documents or any
other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Company or
any of its Subsidiaries of any terms of this Agreement, the
other Loan Documents or such other instrument or the
continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the
written consent of the Company and the written consent of
the Majority Banks. Notwithstanding the foregoing, no
amendment, modification or waiver shall:
(a) without the written consent of the Company and
each Bank directly affected thereby:
(i) reduce or forgive the principal amount of
any Loans or Reimbursement Obligations, or reduce
the rate of interest on the Notes or the amount of
the Commitment Fee or Letter of Credit Fees;
(ii) increase the amount of the Commitments
or extend the expiration date of any Bank's
Commitment;
(iii) postpone or extend the Final Maturity
Date or any other regularly scheduled dates for
payments of principal of, or interest on, the
Loans or Reimbursement Obligations or any Fees or
other amounts payable to such Bank (it being
understood that (A) any vote to rescind any
acceleration made pursuant to 14.1 of amounts
owing with respect to the Loans and other
Obligations and (B) any modifications of the
provisions relating to amounts, timing or
application of prepayments of Loans and other
Obligations shall require only the approval of the
Majority Banks); and
(iv) other than pursuant to a transaction
permitted by the terms of this Agreement, release
all or substantially all of the Collateral or
release any of the Restricted Subsidiaries from
its guaranty obligations under the Guaranty
(excluding, if the Company or any Restricted
Subsidiary becomes a debtor under the federal
Bankruptcy Code, the release of "cash collateral",
as defined in Section 363(a) of the federal
Bankruptcy Code pursuant to a cash collateral
stipulation with the debtor approved by the
Majority Banks);
(b) without the written consent of all of the
Banks, amend or waive this 23 or the definition of
Majority Banks;
(c) without the written consent of the Agent,
amend or waive 3 or 15, the amount or time of payment
of the Agent's Fee or any Letter of Credit Fees payable
for the Agent's account or any other provision
applicable to the Agent.
No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of the
Agent or any Bank in exercising any right shall operate as a
waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon the Company shall entitle the
Company to other or further notice or demand in similar or
other circumstances.
24. PROVISIONS OF GENERAL APPLICATIONS.
24.1. Governing Law.
THIS AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE
CONTRACTS UNDER THE LAWS OF THE COMMONWEALTH OF
MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID
COMMONWEALTH (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE COMPANY AGREES THAT ANY SUIT FOR THE
ENFORCEMENT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH
OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
COMPANY BY MAIL AT THE ADDRESS SPECIFIED IN 21. THE
COMPANY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH
COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
24.2. Headings.
The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions
hereof.
24.3. Counterparts.
This Agreement and any amendment hereof may be executed
in several counterparts and by each party on a separate
counterpart, each of which when executed and delivered shall
be an original, and all of which together shall constitute
one instrument. In proving this Agreement it shall not be
necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is
sought. Delivery by facsimile by any of the parties hereto
of an executed counterpart hereof or of any amendment or
waiver hereto shall be as effective as an original executed
counterpart hereof or of such amendment or waiver and shall
be considered a representation that an original executed
counterpart hereof or such amendment or waiver, as the case
may be, will be delivered.
24.4. Entire Agreement, Etc.
The Loan Documents and any other documents executed in
connection herewith or therewith express the entire
understanding of the parties with respect to the
transactions contemplated hereby. Neither this Agreement nor
any term hereof may be changed, waived, discharged or
terminated, except as provided in 17.12.
24.5. Waiver of Jury Trial.
THE COMPANY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL
WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY
DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY, INCLUDING ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT OR ANY BANK
RELATING TO THE ADMINISTRATION OF THE LOANS OR ENFORCEMENT
OF THE LOAN DOCUMENTS AND AGREES THAT IT WILL NOT SEEK TO
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. Except as
prohibited by law, the Company hereby waives any right it
may have to claim or recover in any litigation referred to
in the preceding sentence any special, exemplary,
consequential or punitive damages or any damages other than,
or in addition to, actual damages. The Company (a)
certifies that no representative, agent or attorney of any
Bank or the Agent has represented, expressly or otherwise,
that such Bank or the Agent would not, in the event of
litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced
to enter into this Agreement, the other Loan Documents to
which it is a party by, among other things, the waivers and
certifications contained herein.
24.6. Severability.
The provisions of this Agreement are severable and if
any one clause or provision hereof shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect only such
clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision
in any other jurisdiction, or any other clause or provision
of this Agreement in any jurisdiction.
25. TRANSITIONAL ARRANGEMENTS.
25.1. Existing Credit Agreement Superseded.
This Agreement shall on the Effective Date supersede
the Existing Credit Agreement in its entirety, except as
provided in this 25. On the Effective Date, the rights and
obligations of the parties evidenced by the Existing Credit
Agreement shall be evidenced by the Agreement and other Loan
Documents, the "Syndicated Loans" as defined in the Existing
Credit Agreement shall be converted to Syndicated Loans as
defined herein, and all outstanding letters of credit issued
by Fleet for the account of the Company prior to the
Effective Date shall, for the purposes of this Credit
Agreement, be Letters of Credit.
25.2. Return and Cancellation of Notes.
Upon receipt by any Bank of its Notes hereunder on the
Effective Date, any "Notes" of the Company held by such Bank
pursuant to and as defined in the Existing Credit Agreement
shall be deemed to be no longer outstanding. As soon as
reasonably practicable after its receipt of its Notes
hereunder on the Effective Date, each Bank will promptly
return to the Company, marked "Substituted" or "Cancelled",
as the case may be, any notes of the Company held by such
Bank pursuant to the Existing Credit Agreement.
25.3. Interest and Fees Under Superseded Agreement.
All interest and fees and expenses, if any, owing or
accruing under or in respect of the Existing Credit
Agreement through the Effective Date shall be calculated as
of the Effective Date (prorated in the case of any
fractional periods), and shall be paid as of the Effective
Date. Commencing on the Effective Date, the Commitment Fee
shall be payable by the Company to the Agent for the account
of the Banks in accordance with 2.2.
IN WITNESS WHEREOF, the undersigned have duly executed
this Agreement as an agreement under seal as of the date
first set forth above.
HASBRO, INC.
(Corporate Seal)
By: /s/ Martin R. Trueb
Martin R. Trueb
Senior Vice President and
Treasurer
FLEET NATIONAL BANK (f/k/a
BankBoston, N.A.), individually and as
Agent
By: /s/ John O'Loughlin
John O'Loughlin
Director
BANK OF AMERICA, N.A.
By: /s/ John W. Pocalyko
John W. Pocalyko
Managing Director
THE BANK OF NOVA SCOTIA
By: /s/ T.M. Pitcher
T.M Pitcher
Managing Director
CITICORP USA, INC.
By: /s/ John S. Hutchins
John S. Hutchins
Managing Director
COMMERZBANK A.G., New York
Branch
By: /s/ Robert Donohue
Robert Donohue
Senior Vice President
By: /s/ Andrew P. Luck
Andrew P. Lusk
Assistant Vice President
MELLON BANK, N.A.
By: /s/ Janet R. Twomey
Janet R. Twomey
Vice President
SANPAOLO IMI S.P.A.
By: /s/ Luca Sacchi
Luca Sacchi
Vice President
By: /s/ Carlo Persico
Carlo Persico
DGM
BNP PARIBAS
By: /s/ Christopher Criswell
Christopher Criswell
Director
By: /s/ Arnaud Collin du
Bocage
Arnaud Collin du Bocage
EXHIBIT A-1
FORM OF [AMENDED AND RESTATED]* SYNDICATED NOTE
$______________________ as of ____________ ___, 200__
FOR VALUE RECEIVED, the undersigned, HASBRO, INC., a
Rhode Island corporation (hereinafter, together with its
successors in title and assigns, called the "Company"),
hereby absolutely and unconditionally promises to pay to the
order of [INSERT NAME OF BANK] (hereinafter together with
its successors in title and permitted assigns, called the
"Bank") at the times and in accordance with the terms and
conditions specified in the Credit Agreement (as defined
below) but in no event later than the Final Maturity Date
(as defined in the Credit Agreement), the principal sum of
[INSERT COMMITMENT AMOUNT] ($____________), or if less, the
aggregate unpaid principal amount of all Syndicated Loans
made by the Bank to the Company pursuant to the Amended and
Restated Revolving Credit Agreement (as the same may be
amended, restated, modified or supplemented and in effect
from time to time, the "Credit Agreement"), dated as of
February 16, 2001, by and among the Company, the Bank and
certain other lending institutions listed on Schedule 1
thereto and Fleet National Bank (f/k/a BankBoston, N.A.), as
agent (the "Agent") for the Bank and such other lending
institutions. All capitalized terms used herein which are
defined in the Credit Agreement shall have the same meanings
herein as therein.
[This Amended and Restated Syndicated Note (this
"Note") constitutes the amendment and restatement in its
entirety of the Syndicated Note, dated as of
_______________, issued by the Company to the Bank in the
original principal amount of $__________________ (the
"Original Note"), and is in substitution therefor and an
amendment and replacement thereof. Nothing herein shall be
construed to constitute payment of the Original Note or to
release or terminate any guaranty or lien, mortgage, pledge
or other security entered in favor of the Bank.]*
This Note evidences borrowings under and has been
issued by the Company in accordance with the terms of the
Credit Agreement. The Bank and any holder hereof are
entitled to the benefits of the Credit Agreement, and may
enforce the agreement of the Company contained therein,
including without limitation the Company's promise to pay
interest on the Outstanding Syndicated Loans until paid in
full at the rates per annum set forth in or established
pursuant to the Credit Agreement. Such interest shall be
payable on such dates as are determined from time to time
pursuant to the Credit Agreement and shall be calculated as
therein provided.
The Bank shall, and is hereby irrevocably authorized by
the Company to, endorse on the schedule attached to this
Note or a continuation of such schedule attached hereto and
made a part hereof, an appropriate notation evidencing
advances and repayments of principal of this Note, provided
that failure by the Bank to make any such notation shall not
affect any of the Company's obligations in respect of this
Note.
The Company has the right in certain circumstances to
prepay the principal of this Note on the terms and
conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall
occur, the entire unpaid principal amount of this Note and
all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect
provided in the Credit Agreement.
The Company and every endorser and guarantor of this
Note or the obligation represented hereby waive presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension
or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of
collateral and to the addition or release of any other party
or person primarily or secondarily liable.
This Note and the obligations of the Company hereunder
shall be governed by, and interpreted and determined in
accordance with, the laws of the Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or
choice of law). This Note is a sealed instrument under the
laws of the Commonwealth of Massachusetts.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Note to
be signed in its corporate name and its corporate seal to be
impressed hereon by its duly authorized officer as of the
day and in the year first above written.
HASBRO, INC.
By:___________________________
Name:
Title:
Attest:_______________________
Name:
Title:
Da Amount of Interes Amount of Balance Notatio
te Loan t Principal of n Made
Rate Paid or Principa By
Electio Prepaid l Unpaid
n
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
EXHIBIT A-2
FORM OF SYNDICATED LOAN REQUEST
______________, ___, 20__
Fleet National Bank, (f/k/a
BankBoston, N.A.), as Agent
100 Federal Street
Boston, Massachusetts 02110
Re: Syndicated Loan Request
Ladies and Gentlemen:
Reference is hereby made to that certain Amended and
Restated Revolving Credit Agreement, dated as of February
16, 2001 (as the same may be amended and in effect from time
to time, the "Credit Agreement"), by and among Hasbro, Inc.
(the "Company"), Fleet National Bank (f/k/a BankBoston,
N.A.) and the other lending institutions listed on Schedule
1 thereto (collectively, the "Banks") and Fleet National
Bank (f/k/a BankBoston, N.A.), as agent (the "Agent") for
the Banks. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement
shall have the same meanings herein as in the Credit
Agreement.
Pursuant to 2.4 of the Credit Agreement, we hereby
request that a Syndicated Loan consisting of [a Base Rate
Loan in the principal amount of $______________ or a
Eurocurrency Rate Loan in the principal amount of
$_______________ with an Interest Period of _______________]
be made on __________ __, 20___. We understand that this
request is irrevocable and binding on us and obligates us to
accept the requested Syndicated Loan on such date.
We hereby represent and warrant that all of the
conditions set forth in 13 of the Credit Agreement have
been satisfied on the date of this request.
We hereby certify that the borrowing requested hereby
is in accordance with 2.1(a) of the Credit Agreement.
Very truly yours,
HASBRO, INC.
By:
Name:
Title:
EXHIBIT B-1
FORM OF [AMENDED AND RESTATED]* COMPETITIVE BID NOTE
$ as of ________________ ___, 200__
FOR VALUE RECEIVED, the undersigned HASBRO, INC., a
Rhode Island corporation (hereinafter, together with its
successors in title and assigns, called the "Company"),
hereby absolutely and unconditionally promises to pay to the
order of [INSERT NAME OF BANK] (the "Bank") at the times and
in accordance with the terms and conditions specified in the
Credit Agreement (as defined below) but in no event later
than the Final Maturity Date, the principal amount of
DOLLARS ( $ ) or, if less, the aggregate
unpaid principal amount of Competitive Bid Loans advanced by
the Bank to the Company pursuant to the Amended and Restated
Revolving Credit Agreement, dated as of February 16, 2001
(as the same may be amended, restated, modified or
supplemented and in effect from time to time, the "Credit
Agreement"), by and among the Company, the Bank, the other
lending institutions which are or may become parties to the
Credit Agreement and Fleet National Bank (f/k/a BankBoston,
N.A.), as Agent. The Company also promises to pay to the
order of the Bank interest on the principal balance hereof
through and including the date on which such principal
amount is paid in full, at the times and at the rates
provided in the Credit Agreement. All capitalized terms
used in this Amended and Restated Competitive Bid Note (this
"Note") and not otherwise defined herein shall have the same
meanings herein as in the Credit Agreement.
[This Note constitutes the amendment and restatement in
its entirety of the Competitive Bid Note, dated as of
_______________, issued by the Company to the Bank in the
original principal amount of $__________________ (the
"Original Note"), and is in substitution therefor and an
amendment and replacement thereof. Nothing herein shall be
construed to constitute payment of the Original Note or to
release or terminate any guaranty or lien, mortgage, pledge
or other security entered in favor of the Bank.]*
This Note evidences borrowings under and has been
issued by the Company in accordance with the terms of the
Credit Agreement. The Bank and any holder hereof are
entitled to the benefits of the Credit Agreement, and may
enforce the agreements of the Company contained therein,
including without limitation the Company's promise to repay
each Competitive Bid Loan advanced hereunder on the last day
of the applicable Interest Period with respect thereto.
The Bank shall, and is hereby irrevocably authorized by
the Company to, endorse on the schedule attached to this
Note or a continuation of such schedule attached hereto and
made a part hereof, an appropriate notation evidencing
advances and repayments of principal of this Note, provided
that failure by the Bank to make any such notations shall
not affect any of the Company's obligations in respect of
this Note.
The Company has the right in certain circumstances and
the obligation in certain other circumstances to prepay the
whole or part of the principal of this Note on the terms and
conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall
occur, the entire unpaid principal amount of this Note and
all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect
provided in the Credit Agreement.
The Company and every endorser and guarantor of this
Note or the obligation represented hereby waive presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension
or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of
collateral and to the addition or release of any other party
or person primarily or secondarily liable.
This Note and the obligations of the Company hereunder
shall be governed by, and interpreted and determined in
accordance with, the laws of the Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or
choice of law). This Note is a sealed instrument under the
laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the Company has caused this Note to
be signed in its corporate name by its duly authorized
officer as of the day and year first above written.
HASBRO, INC.
By:_________________
______
Name:
Title:
Attest:____________________
Name:
Title:
Amount
of
Interest Principa Balance
l of
Amount Rate Paid or Principa Notation
of l
Dat Loan Election Prepaid Unpaid Made By
e
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
____________________________________________________________
__________________
EXHIBIT B-2
FORM OF COMPETITIVE BID QUOTE REQUEST
[INSERT DATE]
To: Fleet National Bank (f/k/a BankBoston, N.A.),
as Agent (the "Agent")
From: Hasbro, Inc. (the "Company")
Re: Amended and Restated Revolving Credit
Agreement (as amended and in effect from time to
time, the "Credit Agreement"), dated as of
February 16, 2001, among the Company, the Banks
party thereto and the Agent
We hereby give notice pursuant to 2.5.1(b) of the
Credit Agreement that we request Competitive Bid Quotes for
the following proposed Competitive Bid Loan(s):
Date of Borrowing:
Principal Amount* Interest Period**
Maturity Date***
$
Such Competitive Bid Quotes should offer a Competitive
Bid Rate.
Terms used herein have the meanings assigned to them in
the Credit Agreement.
HASBRO, INC.
By:_____________________________
Title:
_____________________
* Amount must be $5,000,000 minimum, or a greater
integral multiple of $1,000,000.
** Up to one hundred eighty (180) days; a maximum of three
(3) Interest Periods may be selected in one Competitive
Bid Quote Request.
*** Last day of Interest Period.
EXHIBIT B-3
FORM OF INVITATION FOR COMPETITIVE BID QUOTE
To: [Name of Bank]
Re: Invitation for Competitive Bid Quotes to Hasbro,
Inc. (the "Company")
Pursuant to 2.5.1(c) of the Amended and Restated
Revolving Credit Agreement, dated as of February 16, 2001
(as amended and in effect from time to time, the "Credit
Agreement"), among the Company, the Banks party thereto and
Fleet National Bank (f/k/a BankBoston, N.A.), as Agent, we
are pleased on behalf of the Company to invite you to submit
Competitive Bid Quotes to the Company for the following
proposed Competitive Bid Loan(s):
Date of Borrowing:
Principal Amount Interest Period(s)*
Maturity Date**
$
Such Competitive Bid Quotes should offer a Competitive
Bid Rate.
Please respond to this invitation by no later than
10:00 a.m. (Boston time) on the requested Drawdown Date to
the attention of [ ] at
facsimile number [ ].
Capitalized terms used herein shall have the same
meanings assigned to such terms in the Credit Agreement.
FLEET NATIONAL BANK (f/k/a
BankBoston, N.A.), as Agent
By:___________________________________
Authorized Officer
____________________
* Up to three (3) Interest Periods may be specified.
** Last day of Interest Period
EXHIBIT B-4
FORM OF COMPETITIVE BID QUOTE
Fleet National Bank (f/k/a BankBoston, N.A.), as Agent
100 Federal Street
Boston, Massachusetts 02110
Attention: [Insert Name]
Re: Competitive Bid Quote to Hasbro, Inc. (the
"Company")
In response to your invitation on behalf of the
Company, dated __________ ___, 20__ we hereby make the
following Competitive Bid Quote on the following terms:
1. Quoting
Bank:_______________________________________________________
2. Person to contact at Quoting
Bank:______________________________________
3. Date of Borrowing:
_________________________________________________*
4. We hereby offer to make Competitive Bid Loan(s) in the
following principal amounts, for the following Interest
Periods and at the following rates:
Principal Interest
Competitive Bid
Amount** Period(s)***
Rate(s)****
$
$
5. Aggregate Principal Amount $
____________________
* As specified in the related Invitation for Competitive
Bid Quotes.
** Principal amount bid for each Interest Period (a) may
not exceed the lesser of (i) the Total Commitment and
(ii) the Maximum Availability in effect from time to
time during the applicable Interest Period and (b) may
not exceed the aggregate principal amount of
Competitive Bid Loans for which offers were requested.
Bids must be made for $5,000,000 or any larger multiple
of $1,000,000.
*** Up to one hundred eighty (180) days, as specified in
the related Invitation for Competitive Bid Quotes.
**** Specify rate of interest per annum (each rounded to the
nearest 1/1000th of 1%) for each applicable Interest
Period.
We understand and agree that the offer(s) set forth
above, subject to the satisfaction of the applicable
conditions set forth in the Amended and Restated Revolving
Credit Agreement, dated as of February 16, 2001, as amended
and in effect from time to time, among the Company, the
Banks party thereto and Fleet National Bank (f/k/a
BankBoston, N.A.), as Agent, irrevocably obligates us to
make the Competitive Bid Loan(s) for which any offer(s) are
accepted in whole or in part by the Company.
Very truly yours,
[NAME OF BANK]
Dated:____________________________
By:_____________________________
Authorized Officer
EXHIBIT B-5
FORM OF NOTICE OF COMPETITIVE BID BORROWING
Fleet National Bank
(f/k/a BankBoston, N.A.), as Agent
100 Federal Street
Boston, Massachusetts 02110
Attention: [Insert Name]
Re: Amended and Restated Revolving Credit
Agreement (as amended and in effect from time to
time, the "Credit Agreement"), dated as of
February 16, 2001, among the Company, the Banks
party thereto and the Agent
We hereby give notice pursuant to 2.5.1(f) of the
Credit Agreement of our acceptance of the following
Competitive Bid Quote(s):
1.
Bank:_______________________________________________________
2. Date of Borrowing:
___________________________________________________*
3. In the following principal amounts, for the following
Interest Periods and at the following rates:
Principal Interest
Competitive Bid
Amount Period(s) Rate(s)**
$
$
[Repeat for each Bank as necessary]
____________________
* As specified in the related Invitation for Competitive
Bid Quotes.
** Specify rate of interest per annum (each rounded to the
nearest 1/1000th of 1%) for each applicable Interest
Period.
4. The Aggregate Principal Amount for each Interest Period
is:
Interest Aggregate
Period Principal Amount
$
$
5. We hereby certify (a) that the borrowing accepted
hereby is in accordance with 2.5.1 of the Credit
Agreement and (b) that each of the representations and
warranties contained in the Credit Agreement or in any
other Loan Document made by or on behalf of the Company
and its Subsidiaries to the Banks delivered pursuant to
or in connection with the Credit Agreement was true and
correct in all material respects as of the date as of
which it was made and is true and correct in all
material respects at and as of the date hereof (except
to the extent of changes resulting from transactions
contemplated or permitted by the Credit Agreement and
changes occurring in the ordinary course of business
that singly or in the aggregate are not materially
adverse, and to the extent that such representations
and warranties related expressly to an earlier date)
and (c) that no Default or Event of Default has
occurred and is continuing.
Very truly yours,
HASBRO, INC.
Dated:____________________________
By:_____________________________
Name:
Title:
EXHIBIT C
FORM OF SWING LINE LOAN REQUEST
HASBRO, INC.
1027 Newport Avenue
Pawtucket, RI 02862
_____________ __, 20__
Fleet National Bank (f/k/a
BankBoston, N.A.), as Agent
100 Federal Street
Boston, MA 02110
Attention: John P. O'Loughlin, Director
Re: Swing Line Loan Request Under the Amended and
Restated Revolving Credit Agreement, dated as of
February 16, 2001
Ladies and Gentlemen:
Please refer to that certain Amended and Restated
Revolving Credit Agreement, dated as of February 16, 2001
(the "Credit Agreement"), by and among Hasbro, Inc. (the
"Company"), Fleet National Bank (f/k/a BankBoston, N.A.) and
the lending institutions party thereto (collectively, the
"Banks") and Fleet National Bank (f/k/a BankBoston, N.A.),
as agent for the Banks (the "Agent"). Capitalized terms
defined in the Credit Agreement and used in this letter
without definition shall have for purposes of this letter
the meanings assigned to them in the Credit Agreement.
Pursuant to 3.2 of the Credit Agreement, we hereby
request that a Swing Line Loan be made to the Company
consisting of a Base Rate Loan in the principal amount of
$__________ on __________ __, 20__ with a maturity date of
_______ __, 20__. We understand that this request is
irrevocable and binding on us and obligates us to accept the
requested Swing Line Loan on such date.
Very truly yours,
HASBRO, INC.
By: _____________________________
__
Title:
EXHIBIT D
FORM OF SWING LINE NOTE
$____________ as of _______________ ___, 200__
FOR VALUE RECEIVED, the undersigned HASBRO, INC., a
Rhode Island corporation (hereinafter, together with its
successors in title and assigns, called the "Company"),
hereby absolutely and unconditionally promises to pay to the
order of FLEET NATIONAL BANK (f/k/a BankBoston, N.A.,
hereinafter, together with its successors in title and
permitted assigns, called the "Swing Line Bank") at the
times and in accordance with the terms and conditions
specified in the Credit Agreement (as defined below) but in
no event later than the Swing Line Loan Maturity Date (as
defined in the Credit Agreement), the principal sum of
[INSERT AMOUNT] ($______________), or if less, the aggregate
unpaid principal amount of all Swing Line Loans made by the
Swing Line Bank to the Company pursuant to the Amended and
Restated Revolving Credit Agreement (as the same may be
amended, restated, modified or supplemented and in effect
from time to time, the "Credit Agreement"), dated as of
February 16, 2001, by and among the Company, the Swing Line
Bank and certain other lending institutions listed on
Schedule 1 thereto and Fleet National Bank (f/k/a
BankBoston, N.A.), as agent (the "Agent") for the Bank and
such other lending institutions. All capitalized terms used
herein which are defined in the Credit Agreement shall have
the same meanings herein as therein.
This Swing Line Note (this "Note") evidences borrowings
under and has been issued by the Company in accordance with
the terms of the Credit Agreement. The Swing Line Bank and
any holder hereof are entitled to the benefits of the Credit
Agreement, and may enforce the agreement of the Company
contained therein, including without limitation the
Company's promise to pay interest on the Outstanding Swing
Line Loans until paid in full at the rates per annum set
forth in or established pursuant to the Credit Agreement.
Such interest shall be payable on such dates as are
determined from time to time pursuant to the Credit
Agreement and shall be calculated as therein provided.
The Swing Line Bank shall, and is hereby irrevocably
authorized by the Company to, endorse on the schedule
attached to this Note or a continuation of such schedule
attached hereto and made a part hereof, an appropriate
notation evidencing advances and repayments of principal of
this Note, provided that failure by the Swing Line Bank to
make any such notation shall not affect any of the Company's
obligations in respect of this Note.
The Company has the right in certain circumstances to
prepay the principal of this Note on the terms and
conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall
occur, the entire unpaid principal amount of this Note and
all of the unpaid interest accrued thereon may become or be
declared due and payable in the manner and with the effect
provided in the Credit Agreement.
The Company and every endorser and guarantor of this
Note or the obligation represented hereby waive presentment,
demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance,
default or enforcement of this Note, assent to any extension
or postponement of the time of payment or any other
indulgence, to any substitution, exchange or release of
collateral and to the addition or release of any other party
or person primarily or secondarily liable.
This Note and the obligations of the Company hereunder
shall be governed by, and interpreted and determined in
accordance with, the laws of the Commonwealth of
Massachusetts (excluding the laws applicable to conflicts or
choice of law). This Note is a sealed instrument under the
laws of the Commonwealth of Massachusetts.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the Company has caused this Note to
be signed in its corporate name and its corporate seal to be
impressed hereon by its duly authorized officer as of the
day and in the year first above written.
HASBRO, INC.
By: __________________________
_____
Name:
Title:
Date Notation
Amount of Amount of Balance of Made By:
Swing Line Principal Principal
Loan Paid Unpaid
or Prepaid
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
HASBRO, INC.
____________ __, 200_
Fleet National Bank (f/k/a
BankBoston, N.A.), as Agent
100 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
Reference is made to the Amended and Restated Revolving
Credit Agreement (the "Credit Agreement"), dated as of
February 16, 2001, by and among Hasbro, Inc. (the
"Company"), Fleet National Bank (f/k/a BankBoston, N.A.) and
the lending institutions party thereto (collectively, the
"Banks"), and Fleet National Bank (f/k/a BankBoston, N.A.),
as agent for the Banks (the "Agent"). Capitalized terms
used herein without definition shall have the respective
meanings set forth in the Credit Agreement.
Pursuant to 9.5(c) of the Credit Agreement, the
Company and the undersigned officer of the company (who has
reviewed the Loan Documents) hereby certify that (a) the
information furnished in the attached Compliance Certificate
Worksheet was true and correct as of the last day of the
fiscal quarter next preceding the date of this certificate,
(b) as of the date hereof, no Default or Event of Default
under the Credit Agreement has occurred, (c) the financial
statements delivered herewith were prepared in accordance
with GAAP, and (d) except as specified in the attached
schedule, if any, the representations and warranties set
forth in 8 of the Credit Agreement are true and correct in
all material respects as of the date hereof except to the
extent such representations and warranties expressly relate
to an earlier date, provided, however, that the
representations and warranties set forth in 8 of the Credit
Agreement shall be deemed to be made with respect to the
financial statements of the Company most recently delivered
to the Agent and the Banks pursuant to 9.5 of the Credit
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this
certificate on this _____ day of ________________, 200_.
HASBRO, INC.
By:_________________________
Title:
COMPLIANCE CERTIFICATE WORKSHEET
As of ___________ __, 20__
Section
Calculation
11.1 Minimum EBITDA
for Reference Period ended on ______ __, 20__
A. EBITDA
(Sum of Item A(1) plus Items A(2), A(3) A(4), A(5) and
A(6),
minus Item A(7), plus solely for the fiscal quarter
ended
December 30, 2000 or any period that includes such
quarter, $210,000,000) $
(1) Consolidated Net Earnings (or Loss)
consolidated net earnings (or loss) after
deduction
of all expenses, taxes and other proper charges,
determined in accordance with GAAP, after
eliminating all extraordinary items of income for
such period: $
(2) income tax expense for such period, to the extent
deducted
in calculating Item A(1):
$
(3) interest expense for such period, to the extent
deducted
in calculating Item A(1):
$
(4) depreciation and amortization for such period, to
the extent
deducted in calculating Item A(1):
$
(5) non-cash charges for such period, to the extent
deducted
in calculating Item A(1):
$
(6) extraordinary losses for such period, to the extent
deducted
in calculating Item A(1):
$
(7) extraordinary gains for such period, to the extent
included
in calculating Item A(1):
$
B. Minimum EBITDA permitted under the Credit Agreement
(For any Reference Period ending with the fiscal
quarter
referenced in the table set forth below, not to be less
than
the amount set forth opposite such fiscal quarter in
such table)
Fiscal Quarter Ending: EBITDA
First Quarter 2001 $310,000,000
Second Quarter 2001 $270,000,000
Third Quarter 2001 $300,000,000
Fourth Quarter 2001 $400,000,000
First Quarter 2002 $400,000,000
Second Quarter 2002 $400,000,000
Third Quarter 2002 $425,000,000
Fourth Quarter 2002 $475,000,000
11.2 Consolidated Total Funded Debt to EBITDA
For the fiscal quarter ended ______ __, 20__
A.Consolidated Total Funded Debt $
(Sum of Item A(1) plus Item A(2) plus Item A(3)
plus Item A(4)
(1) Indebtedness for borrowed money or the obtaining
of
credit (including the face amount of letters of
credit
outstanding): $
(2) Indebtedness in respect of the deferred purchase
price
of assets (other than trade payables incurred in the
ordinary course of business):
$
(3) Indebtedness in respect of Capitalized Leases and
Synthetic Leases: $
(4) Indebtedness of the type referred to in Items
A(1), A(2)
and A(3) above which are guaranteed by the Company or
any of its Subsidiaries
$
B. EBITDA for the Reference Period then ended
(as set forth in Item 11.1(A)):
$
C. Ratio of Item A to Item B:
_____:_____
(For any fiscal quarter referenced in the table set
forth
below, not to exceed the ratio set forth opposite such
fiscal
quarter in such table)
Fiscal Quarter Ending: Ratio
Fourth Quarter 2000 3.25:1.00
First Quarter 2001 4.25:1.00
Second Quarter 2001 5.75:1.00
Third Quarter 2001 5.50:1.00
Fourth Quarter 2001 3.25:1.00
First Quarter 2002 3.00:1.00
Second Quarter 2002 3.15:1.00
Third Quarter 2002 3.40:1.00
Fourth Quarter 2002 2.55:1.00
11.3 Fixed Charge Coverage Ratio
For the Reference Period ended on ______ __, 20__
A. Consolidated Operating Cash Flow:
(Item A(1) minus Item A(2)):
$
(1) EBITDA for such period (as set forth in Item
11.1(A)): $
(2) Capital Expenditures made during such period:
$
B. Consolidated Total Debt Service
(Sum of Item B(1) plus Item B(2) plus Item B(3)):
$
(1) Consolidated Total Interest Expense for such
period: $
(2) scheduled repayments of principal during such
period
in respect of Consolidated Total Funded Debt (set
forth
in Item 11.2(A)) that becomes due and payable during
such period or is to become due and payable during
such period (excluding any repayments of principal
required under the Credit Agreement and the Credit
Line
Agreement): $
(3) Distributions paid during such period:
$
C. Ratio of Item A to Item B:
:
(For any Reference Period ending with any fiscal
quarter
referenced in the table below, not to be less than the
ratio
set forth opposite such fiscal quarter in such table)
Fiscal Quarter Ending: Ratio
First Quarter 2001 1.20:1.00
Second Quarter 2001 1.10:1.00
Third Quarter 2001 1.70:1.00
Fourth Quarter 2001 2.50:1.00
First Quarter 2002 2.60:1.00
Second Quarter 2002 2.55:1.00
Third Quarter 2002 2.90:1.00
Fourth Quarter 2002 3.45:1.00
11.4 Capital Expenditures
For the period from __________ to __________:
A. Capital Expenditures made during such period:
$
B. Maximum amount of Capital Expenditures permitted
under the Credit Agreement
(For any period referenced in the table below, not to
exceed
the aggregate amount set forth in the table below
opposite
such period in such table)
Period Amount
First Quarter 2001 $30,000,000
First and Second Quarter $60,000,000
2001
First, Second and Third
Quarter 2001 $80,000,000
First, Second, Third and
Fourth Quarter 2001 $90,000,000
First Quarter 2002 $35,000,000
First and Second Quarter $70,000,000
2002
First, Second and Third
Quarter 2002 $95,000,000
First, Second, Third and
Fourth Quarter 2002 $110,000,000
EXHIBIT F
FORM OF SUBORDINATION AGREEMENT
This AMENDED AND RESTATED SUBORDINATION AGREEMENT,
dated as of February 16, 2001 (as amended and in effect from
time to time, this "Subordination Agreement"), is by and
among (a) HASBRO, INC., a Rhode Island corporation having
its principal place of business at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862 (the "Company"), (b) HASBRO
INTERNATIONAL, INC., a Delaware corporation having its
principal place of business at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862 ("HII"), (c) WIZARDS OF THE
COAST, INC., a Washington corporation having its principal
place of business at 1801 Lind Ave SW, Renton, Washington
98055 ("Wizards" and together with HII, the "Significant
Subsidiaries") and (d) FLEET NATIONAL BANK (f/k/a
BankBoston, N.A.), a national banking association having an
office at 100 Federal Street, Boston, Massachusetts 02110,
as agent for (in such capacity, the "Agent") the Banks (as
such term is hereinafter defined directly or by reference).
WHEREAS, the Company is the direct or indirect legal
and beneficial owner of all the issued and outstanding
shares of each class of the capital stock of each of the
Significant Subsidiaries;
WHEREAS, the Significant Subsidiaries are members of a
group of related corporations, the success of any one of
which is dependent in part on the success of the other
members of such group;
WHEREAS, the Company, the Agent, and the Banks are
entering into an (a) Amended and Restated Revolving Credit
Agreement, dated as of February 16, 2001 (as amended and in
effect from time to time, the "Revolving Credit Agreement")
and (b) Amended and Restated Line of Credit Agreement, dated
as of February 16, 2001 (as amended and in effect from time
to time, the "Credit Line Agreement", and together with the
Revolving Credit Agreement, the "Credit Agreements") which
amend and restate, respectively, the (i) Revolving Credit
Agreement, dated as of September 10, 1998 (as amended and in
effect from time to time, the "Existing Revolving Credit
Agreement") and (ii) Line of Credit Agreement, dated as of
June 28, 2000 (as amended and in effect from time to time,
the "Existing Credit Line Agreement", and together with the
Existing Revolving Credit Agreement, the "Existing Credit
Agreements").
WHEREAS, in connection with the Existing Credit
Agreements, (a) the Company, HII and the Agent, for the
benefit of the Banks and the Agent, entered into a
Subordination Agreement, dated as of September 10, 1998 and
(b) the Company, the Significant Subsidiaries and the Agent,
for the benefit of the Banks and the Agent, entered into a
Subordination Agreement, dated as of June 28, 2000 (as each
has been amended, supplemented or otherwise modified from
time to time, the Subordination Agreements referred to in
clauses (a) and (b) are hereinafter collectively referred to
as the "Existing Subordination Agreements");
WHEREAS, it is a condition precedent to the amendment
and restatement of the Existing Credit Agreements and to the
Banks' making any loans or otherwise extending credit to the
Company under the Credit Agreements that the Company and
each of the Significant Subsidiaries execute and deliver to
the Agent, for the benefit of the Banks and the Agent, an
amended and restated subordination agreement substantially
in the form hereof;
WHEREAS, the Significant Subsidiaries will receive
substantial direct and indirect benefit from the loans and
extension of credit by the Banks and the Agent to the
Company pursuant to the Credit Agreements (which benefits
are hereby acknowledged); and
WHEREAS, the Company and each of the Significant
Subsidiaries wish to amend and restate the Existing
Subordination Agreements as provided herein;
NOW THEREFORE, in consideration of the premises
contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. All capitalized terms used herein without
definitions shall have both the respective meanings provided
therefor in the Credit Agreements, provided that if the
Credit Agreements provide different meanings for any
capitalized term used herein without definition, such
capitalized term shall have both such meanings.
2. The Company and each of the Significant
Subsidiaries covenant and agree with the Agent that all of
the Subordinated Indebtedness (as hereinafter defined) of
the Company to the Significant Subsidiaries is hereby
expressly subordinated and made junior, to the extent and in
the manner hereinafter set forth in this agreement, in right
of payment to the prior payment in full of all the
Obligations. Until all the Obligations shall have been paid
in full and the Total Commitment shall have been terminated,
(a) the Company shall not, directly or indirectly, make any
payment of principal or interest on account of or transfer
any collateral for any part of any and all indebtedness of
the Company to each of the Significant Subsidiaries, whether
direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising (referred to herein
as the "Subordinated Indebtedness"), whether evidenced by
negotiable or non-negotiable instruments, securities or
other writings, book entries or otherwise, provided that
prior to the occurrence of an Event of Default, the Company
may make payments of principal and interest on account of
the Subordinated Indebtedness, (b) upon the occurrence, and
during the continuance of, an Event of Default, none of the
Significant Subsidiaries shall demand or accept from the
Company or any other Person any payment or collateral in
respect of the Subordinated Indebtedness, nor cancel, set
off or otherwise discharge any part of the Subordinated
Indebtedness, and (c) neither the Significant Subsidiaries
nor the Company shall otherwise take or permit any action
prejudicial to or inconsistent with the terms of this
agreement.
3. If an Event of Default shall have occurred and be
continuing, the Agent may, by notice to the Company and the
Significant Subsidiaries, demand that all payments made
thereafter by the Company in respect of the Subordinated
Indebtedness be made to the Agent for the benefit of the
Banks in payment of the Obligations. Upon receipt of such
notice from the Agent, the Company shall make all such
payments in respect of the Subordinated Indebtedness
directly to the Agent for application to the Obligations.
Each of the Significant Subsidiaries agrees to subordinate
any subrogation claims it may have in respect of any such
payments until the Obligations shall have been paid in full.
4. None of the Significant Subsidiaries will commence
or join with any other creditor or creditors of the Company
in commencing any bankruptcy, reorganization or insolvency
proceedings against the Company. At any meeting of
creditors of the Company or, in the event of any proceeding,
voluntary or involuntary, for the distribution, division or
application of all or part of the assets or business of the
Company or the proceeds thereof, whether such proceeding be
for the liquidation, reorganization, dissolution or winding
up of the Company or its business, a receivership,
insolvency or bankruptcy proceeding, an assignment for the
benefit of creditors or a proceeding by or against the
Company for relief under any bankruptcy, reorganization or
insolvency law or any law relating to the relief of debtors,
readjustment of indebtedness, reorganization, arrangement,
composition or extension or otherwise, if all Obligations
have not been paid in full at the time, the Agent is hereby
irrevocably authorized at any such meeting or in any such
proceeding:
(a) To enforce claims comprising Subordinated
Indebtedness either in its own name or the name of any of
the Significant Subsidiaries, by proof of debt, proof of
claim, suit or otherwise;
(b) To collect any assets of the Company
distributed, divided or applied by way of dividend or
payment, or any such securities issued, on account of the
Subordinated Indebtedness and apply the same, or the
proceeds of any realization upon the same that the Agent in
its discretion elects to effect, to the Obligations until
all the Obligations shall have been paid in full, rendering
any surplus to the applicable Significant Subsidiary;
(c) To vote claims comprising the Subordinated
Indebtedness, to accept or reject any plan of partial or
complete liquidation, reorganization, arrangement,
composition or extension; and
(d) To take generally any action in connection
with any such meeting or proceeding which any of the
Significant Subsidiaries in their roles as creditors might
otherwise take.
5. Except as provided in 2 hereof, should any
payment on account of or any collateral for any part of the
Subordinated Indebtedness be received by any of the
Significant Subsidiaries, such payment or collateral shall
be delivered forthwith to the Agent by such Significant
Subsidiaries for application to the Obligations, in the form
received except for the addition of any endorsement or
assignment which may have been omitted. Until so delivered
any such payment or collateral shall be held by such
Significant Subsidiary in trust for the Agent and shall not
be commingled with other funds or property of such
Significant Subsidiary.
6. No part of the Subordinated Indebtedness is
evidenced by any instrument, security or other writing
(other than open-account indebtedness entries on the books
of the Company or the Significant Subsidiaries) a copy of
which has not previously been or is not concurrently being
delivered to the Agent and the Banks; the Significant
Subsidiaries are the lawful owners of the Subordinated
Indebtedness and no part thereof has been assigned to or
subjected to any security interest in favor of anyone.
Until all the Obligations have been paid in full, the
Company shall not issue any instrument, security or other
writing evidencing any part of the Subordinated Indebtedness
except at the request of and in the manner requested by the
Agent; and none of the Significant Subsidiaries shall assign
or subordinate any of the Subordinated Indebtedness except
to or in favor of the Agent or upon terms satisfactory in
form and substance to the Agent and the Banks.
7. The Agent is hereby authorized to demand specific
performance of this agreement, whether or not the Company
shall have complied with the provisions hereof applicable to
it, at any time when any of the Significant Subsidiaries
shall have failed to comply with any provision hereof
applicable to it. Each of the Significant Subsidiaries
hereby irrevocably waives any defense based on the adequacy
of a remedy at law which might be asserted as a bar to the
remedy of specific performance hereof in any action brought
therefor by the Agent. Each of the Significant Subsidiaries
further waives presentment, notice and protest in connection
with all negotiable instruments evidencing the Obligations
or the Subordinated Indebtedness to which it may be a party,
notice of the acceptance of this agreement by the Agent,
notice of any loan made, extension granted or other action
taken in reliance hereon and all demands and notices of
every kind (except as expressly provided in the Credit
Agreements) in connection with this Subordination Agreement,
the Obligations or the Subordinated Indebtedness; assent to
any renewal, extension or postponement of the time of
payment of the Obligations or any other indulgence with
respect thereto, to any substitution, exchange or release of
collateral therefor and to the addition or release of any
person primarily or secondarily liable thereon; and agree to
the provisions of any instrument, security or other writing
evidencing the Obligations.
8. The Significant Subsidiaries shall do, make,
execute and deliver all such additional and further acts,
things, deeds, assurances and instruments as the Agent may
reasonably require more completely to vest in and assure to
the Agent its rights hereunder or in any of the Subordinated
Indebtedness.
9. The Company and the Significant Subsidiaries shall
pay to the Agent on demand any and all expenses, including
reasonable counsel fees, incurred or paid by the Agent in
protecting, preserving or enforcing its rights hereunder.
After deducting all of said expenses, the residue of any
proceeds of collection or sale of any negotiable or non-
negotiable instruments, securities or other writings
evidencing any of the Subordinated Indebtedness shall be
applied to the payment of the Obligations ratably among the
Banks and the Agent and, while giving effect to such ratable
applications, proper allowance being made for interest on
Obligations not then due, and any excess shall be returned
to the applicable Significant Subsidiary.
10. If any warranty herein contained shall prove to
have been materially false when made or in the event of a
breach by the Company or any Significant Subsidiary in the
performance of any of the terms hereof, the Agent may, at
its option, declare that an Event of Default has occurred
pursuant to and in accordance with the terms of 14 of the
Credit Agreements (taking into account any applicable grace
period provided for therein), whereupon the Agent and the
Banks shall have all of the rights and remedies provided for
herein and in the other Loan Documents.
11. The Company and each of the Significant
Subsidiaries hereby acknowledge the agency provisions set
forth in 16 of the Credit Agreements and the authority of
the Agent thereunder to act for the Banks with respect to
this Subordination Agreement as provided in each such 16.
12. The rights granted to the Agent hereunder are
solely for the protection of the Agent and the Banks and
nothing herein contained shall impose on the Agent any
duties with respect to any property of the Company or any
Significant Subsidiary received hereunder beyond reasonable
care in its custody and preservation while in the Agent's
possession. The Agent shall have no duty to preserve rights
against prior parties in any instrument or chattel paper
received hereunder.
13. All rights and interests of the Agent and the
Banks hereunder, and all agreements and obligations of the
Significant Subsidiaries and the Company under this
Subordination Agreement, shall remain in full force and
effect irrespective of:
(i)any lack of validity or enforceability of the
Credit Agreements, the Notes or any other
agreement or instrument relating thereto:
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of
or any consent to any departure from the Credit
Agreements or the Notes, including, without
limitation, any increase in the Obligations
resulting from the extension of additional credit
to the Company or any of its subsidiaries or
otherwise;
(iii) any taking, exchange, release or
nonperfection of any other collateral, or any
taking, release or amendment or waiver of or
consent to departure from any guaranty, for all or
any of the Obligations;
(iv) any manner of application of collateral, or
proceeds thereof, to all or any of the
Obligations, or any manner of sale or other
disposition of any collateral for all or any of
the Obligations or any other assets of the Company
or any of its subsidiaries; and
(v) any other circumstances (other than payment in
full of the Obligations and the termination of the
Total Commitment) which might otherwise constitute
a defense available to, or a discharge of, the
Company or a subordinated creditor.
This Subordination Agreement shall continue to be
effective or be reinstated, as the case may be, if at any
time any payment of any of the Obligations is rescinded or
must otherwise be returned by the Agent or any Bank upon the
insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment has not been made.
14. The Significant Subsidiaries and the Company each
hereby represent and warrant as follows:
(a) The Subordinated Indebtedness now outstanding
has been duly authorized, issued and delivered by the
Company and constitutes the legal, valid and binding
obligations of the Company enforceable against the Company
in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, marshalling or other
laws relating to or affecting the enforcement generally of
creditors' rights and remedies (including such as may deny
giving effect to waivers of debtors' rights). There exists
no default in respect of any such Subordinated Indebtedness.
(b) The Significant Subsidiaries are the legal
and beneficial owners of the Subordinated Indebtedness now
outstanding, free and clear of any lien, security interest,
option or other charge or encumbrance (other than Permitted
Liens).
(c) There are no conditions precedent to the
effectiveness of this Subordination Agreement that have not
been satisfied or waived.
15. All notices and other communications provided for
hereunder shall be in writing (including telecopier,
telegrahic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered, if to
HII or Wizards, c/o the Company at 1027 Newport Avenue,
Pawtucket, Rhode Island 02862 and if to the Company, the
Agent or any Bank, at its address specified in the Credit
Agreements; or as to each party, at such other address as
shall be designated by such party in a written notice to
each other party. All such notices and other communications
shall, when mailed, telecopied, telegraphed, telexed or
cabled, be effective when, respectively, deposited in the
mails, telecopied, delivered to the telegraph company,
confirmed by telex answerback or delivered to the cable
company.
16. This Subordination Agreement is intended to take
effect as a sealed instrument, shall be binding upon the
Company and each of the Significant Subsidiaries and their
respective successors and assigns, shall inure to the
benefit of the Agent and the Banks, their successors and
assigns and shall be construed in accordance with the laws
of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this
Subordination Agreement to be duly executed as of this
______________ day of February, 2001.
(Corporate Seal) HASBRO, INC.
By:
Title:
HASBRO INTERNATIONAL, INC.
By:
Title:
WIZARDS OF THE COAST, INC.
By:
______________________________
Title:
____________________________
FLEET NATIONAL BANK, (f/k/a
BankBoston, N.A.), as Agent
By:
Title:
EXHIBIT H
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Amended and Restated Revolving
Credit Agreement, dated as of February 16, 2001 (as from
time to time amended and in effect, the "Credit Agreement"),
by and among (a) Hasbro, Inc., a Rhode Island corporation
(the "Company"), (b) Fleet National Bank (f/k/a BankBoston,
N.A.), a national banking association and the other lending
institutions listed on Schedule 1 thereto (collectively, the
"Banks"), and (c) Fleet National Bank (f/k/a BankBoston,
N.A.), as agent for the Banks (in such capacity, the
"Agent"). Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in
the Credit Agreement.
_________________ (the "Assignor") and _______________
(the "Assignee") hereby agree as follows:
1. Assignment.
Subject to the terms and conditions of this Assignment
and Acceptance, the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes
without recourse to the Assignor, a $_____________ interest
in and to the rights, benefits, indemnities and obligations
of the Assignor under the Credit Agreement equal to
____________% in respect of the Total Commitment immediately
prior to the Effective Date (as hereinafter defined).
2. Assignor's Representations.
The Assignor (i) represents and warrants that (a) it is
legally authorized to enter into this Assignment and
Acceptance, (b) as of the date hereof, its Commitment is
$_________________, its Commitment Percentage is
____________%, the aggregate outstanding principal balance
of its Syndicated Loans equals $_______________, the
aggregate outstanding principal balance of its Competitive
Bid Loans equals $_______________, and the aggregate amount
of its participations in respect of Swing Line Loans equals
$___________________and (c) immediately after giving effect
to all assignments which have not yet become effective, the
Assignor's Commitment Percentage will be sufficient to give
effect to this Assignment and Acceptance, (ii) makes no
representation or warranty, express or implied, and assumes
no responsibility with respect to any statements, warranties
or representations made in or in connection with the Credit
Agreement or any of the other Loan Documents or the
execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, the other Loan
Documents or any other instrument or document furnished
pursuant thereto or the attachment, perfection or priority
of any security interest or mortgage, other than that it is
the legal and beneficial owner of the interest being
assigned by it hereunder free and clear of any claim or
encumbrance; (iii) makes no representation or warranty and
assumes no responsibility with respect to the financial
condition of the Company or any of its Subsidiaries or any
other Person primarily or secondarily liable in respect of
any of the Obligations, or the performance or observance by
the Company or any of its Subsidiaries or any other Person
primarily or secondarily liable in respect of any of the
Obligations of any of its obligations under the Credit
Agreement or any of the other Loan Documents or any other
instrument or document delivered or executed pursuant
thereto; and (iv) attaches hereto the Syndicated Note and
Competitive Bid Note delivered to it under the Credit
Agreement.
The Assignor requests that the Company exchange the
Assignor's Syndicated Note for new Syndicated Notes and
Competitive Bid Notes payable to the Assignor and the
Assignee as follows:
Notes Payable Amount of Amount of
to the Order Syndicated Note Competitive Bid
of: Note
Assignor $__________________ $________________
_____ _____
Assignee $__________________ $________________
_____ _____
3. Assignee's Representations.
The Assignee (i) represents and warrants that (a) it is
duly and legally authorized to enter into this Assignment
and Acceptance, (b) the execution, delivery and performance
of this Assignment and Acceptance do not conflict with any
provision of law or of the charter or by-laws of the
Assignee, or of any agreement binding on the Assignee, (c)
all acts, conditions and things required to be done and
performed and to have occurred prior to the execution,
delivery and performance of this Assignment and Acceptance,
and to render the same the legal, valid and binding
obligation of the Assignee, enforceable against it in
accordance with its terms, have been done and performed and
have occurred in due and strict compliance with all
applicable laws; (ii) confirms that it has received a copy
of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to 8.8 and
9.5 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon
the Assignor, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv)
appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are
delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto; and (v)
agrees that it will perform in accordance with their terms
all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Bank.
4. Effective Date.
The effective date for this Assignment and Acceptance
shall be ___________ __, _____ (the "Effective Date").
Following the execution of this Assignment and Acceptance,
and, if required by the Credit Agreement, the consent of the
Company hereto having been obtained, each party hereto shall
deliver its duly executed counterpart hereof to the Agent
for acceptance by the Agent and recording in the Register by
the Agent. Schedule 1 to the Credit Agreement shall
thereupon be replaced as of the Effective Date by the
Schedule 1 annexed hereto.
5. Rights Under Credit Agreement.
Upon such acceptance and recording, from and after the
Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations
of a Bank thereunder, and (ii) the Assignor shall, with
respect to that portion of its interest under the Credit
Agreement assigned hereunder, relinquish its rights and be
released from its obligations under the Credit Agreement;
provided, however, that the Assignor shall retain its rights
to be indemnified pursuant to 4.7 and 18 of the Credit
Agreement with respect to any claims or actions arising
prior to the Effective Date.
6. Payments.
Upon such acceptance of this Assignment and Acceptance
by the Agent and such recording, from and after the
Effective Date, the Agent shall make all payments in respect
of the rights and interests assigned hereby (including
payments of principal, interest, fees and other amounts) to
the Assignee. The Assignor and the Assignee shall make any
appropriate adjustments in payments for periods prior to the
Effective Date by the Agent or with respect to the making of
this assignment directly between themselves.
7. Governing Law.
THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE
EFFECT AS A SEALED INSTRUMENT TO BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICT OF LAWS).
8. Counterparts.
This Assignment and Acceptance may be executed in any
number of counterparts which shall together constitute but
one and the same agreement.
[Remainder of page intentional left blank]
IN WITNESS WHEREOF, intending to be legally bound, each
of the undersigned has caused this Assignment and Acceptance
to be executed on its behalf by its officer thereunto duly
authorized, as of the date first above written.
[ASSIGNOR]
By:
Title:
[ASSIGNEE]
By:
Title:
CONSENTED TO:
FLEET NATIONAL BANK,
(f/k/a BankBoston, N.A.),
as Agent
By:
Name:
Title:
[HASBRO, INC.]
(required only if no
Default or Event of
Default has occurred and
is continuing)
By:
Name:
Title:
EXHIBIT I
FORM OF CONFIDENTIALITY AGREEMENT
[__________, 200__]
[Name and Address of Bank to
Provide Confidential Information
to Third Party]
Re: Hasbro, Inc.
Ladies and Gentlemen:
Reference is hereby made to the [Amended and Restated
Revolving Credit Agreement] [Amended and Restated Line of
Credit Agreement], dated as of February 16, 2001 (as amended
and in effect from time to time, the "Credit Agreement"), by
and among Hasbro, Inc., a Rhode Island corporation (the
"Company"), Fleet National Bank (f/k/a BankBoston, N.A.), a
national banking association and the other lending
institutions listed on Schedule 1 thereto (collectively, the
"Banks"), and Fleet National Bank (f/k/a BankBoston, N.A.),
as agent for the Banks (in such capacity, the "Agent").
Capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit
Agreement.
Pursuant to and in accordance with 9.10 and 22 of the
Credit Agreement, the undersigned (the "Transaction Party"),
in connection with [DESCRIBE NATURE OF TRANSACTION], hereby
covenants and agrees, on behalf of itself and each of its
affiliates, directors, officers, employees and
representatives, to use reasonable precautions to keep
confidential, in accordance with its customary procedures
for handling confidential information of the same nature and
in accordance with safe and sound banking practices, any non-
public information supplied to it by the Company or any of
its Subsidiaries or any of the Banks that has been
designated as confidential at the time such information was
provided to such Bank, provided that nothing herein shall
limit the disclosure of any such information:
(a) after such information shall have become public other
than through a violation of 22 of the Credit Agreement, or
becomes available to the Transaction Party on a
nonconfidential basis from a source other than the Company
or any of its Subsidiaries without a duty of confidentiality
to the Company or such Subsidiary being violated;
(b) to the extent required by statute, rule,
regulation or judicial process;
(c) to counsel for the Transaction Party so long as the
Transaction Party informs its counsel of the agreement under
22 of the Credit Agreement and the Transaction Party
assumes responsibility for compliance by its counsel with
such agreement;
(d) to bank examiners or any other regulatory authority
having jurisdiction over the Transaction Party, or to
auditors or accountants;
(e) to the Agent or any Bank;
(f) in connection with any litigation to which the any one
of the Banks, the Agent or the Transaction Party is a party,
or in connection with the enforcement of rights or remedies
hereunder or under any other Loan Document;
(g) to a subsidiary or affiliate of the Transaction Party
so long as the Transaction Party informs the affiliate or
subsidiary of the agreement under 22 of the Credit
Agreement and the Transaction Party assumes responsibility
for compliance by such Person with such agreement;
(h) to any actual or prospective assignee or participant or
any actual or prospective counterparty (or its advisors) to
any swap or derivative transactions referenced to credit or
other risks or events arising under the Credit Agreement or
any other Loan Document so long as such actual or
prospective assignee, participant or counterparty, as the
case may be, agrees to execute and deliver an agreement in
substantially the same form hereof; or
(i) with the consent of the Company;
and provided further that, unless specifically
prohibited by applicable law or court order, prior to any
such disclosure, the Transaction Party shall notify the
Company of any request for disclosure of such information by
any governmental agency or representative thereof (other
than any such request in connection with an examination of
the financial condition of the Transaction Party by such
governmental agency) or pursuant to legal process and afford
the Company the opportunity to obtain a protective order or
other appropriate remedy or agreement to maintain
confidentiality of such information.
This letter shall constitute a sealed instrument under
and be governed by the law of the Commonwealth of
Massachusetts and is binding upon the successors and assigns
of the Transaction Party. Please indicate your acceptance
of the above by signing and returning an executed copy of
this letter to [INSERT NAME OF BANK TO PROVIDE THE
CONFIDENTIAL INFORMATION].
Sincerely,
[NAME OF TRANSACTION PARTY]
By:
___________________________
_________Name:
Title:
Accepted and Acknowledged:
[NAME OF BANK TO PROVIDE
CONFIDENTIAL INFORMATION]
By: ________________________
Name:
Title:
EXHIBIT 4(f)
FIRST AMENDMENT TO RIGHTS AGREEMENT
-----------------------------------
FIRST AMENDMENT, dated as of December 4, 2000, to
the Rights Agreement, dated as of June 16, 1999 (the
"Rights Agreement"), between Hasbro, Inc., a Rhode Island
corporation (the "Company"), and Fleet National Bank
(formerly known as BankBoston N.A.), as Rights Agent (the
"Rights Agent").
The Company and the Rights Agent have heretofore
executed and entered into the Rights Agreement. Pursuant to
Section 27 of the Rights Agreement, the Company and the
Rights Agent may from time to time supplement or amend the
Rights Agreement in accordance with the provisions of
Section 27 thereof. All acts and things necessary to make
this First Amendment a valid agreement, enforceable
according to its terms, have been done and performed, and
the execution and delivery of this First Amendment by the
Company and the Rights Agent have been in all respects duly
authorized by the Company and the Rights Agent.
In consideration of the foregoing and the mutual
agreements set forth herein, the parties hereto agree as
follows:
1. Section 23(c) of the Rights Agreement is hereby
deleted in its entirety from the Rights Agreement.
2. This First Amendment to the Rights Agreement shall be
governed by and construed in accordance with the laws of
the State of Rhode Island and for all purposes shall be
governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed
entirely within such State.
3. This First Amendment to the Rights Agreement may be
executed in any number of counterparts, each of which shall
be an original, but such counterparts shall together
constitute one and the same instrument. Terms not defined
herein shall, unless the context otherwise requires, have
the meanings assigned to such terms in the Rights Agreement
4. In all respects not inconsistent with the terms and
provisions of this First Amendment to the Rights Agreement,
the Rights Agreement is hereby ratified, adopted, approved
and confirmed. In executing and delivering this First
Amendment, the Rights Agent shall be entitled to all the
privileges and immunities afforded to the Rights Agent
under the terms and conditions of the Rights Agreement
IN WITNESS WHEREOF, the parties hereto have
caused this First Amendment to be duly executed and
attested, all as of the date and year first above written.
Attest: HASBRO, INC.
By: /s/ Phillip H. Waldoks By: /s/ Alan G. Hassenfeld
------------------------ -------------------------
Secretary Chairman and Chief
Executive Officer
Attest: FLEET NATIONAL BANK
By: /s/ Stephen M. Plefka By: /s/ Katherine Anderson
----------------------- ---------------------------
EXHIBIT 10(d)
[Hasbro Logo]
December 13, 2000
Salvatore Meli, Esq.
189-05 Crocheron Avenue
Flushing, NY 11358
U.S.A.
Dear Sal,
Further to our conversations and the telephone conversation
I had today with Donald Bezahler please be advised that we
have agreed that the total rent for the lease with Central
Toy Manufacturing Inc. which was extended to January 31,
2004 in July will be as follows:
February 1, 2001 to January 31, 2002 $579,382.77
February 1, 2002 to January 31, 2003 $589,382.77
February 1, 2003 to January 31, 2004 $599,382.77
We request that you indicate your consent to the aforesaid
by executing and returning to us a duplicate of this
letter.
Yours very truly,
/s/ Avrum Stark
Avrum Stark
Senior Vice President
Finance and Operations
Receipt acknowledged and agreed to this 29th day of
December, 2000.
Per: Central Toy Manufacturing Inc.
Signature: /S/ SALVATORE MELI
------------------------------
Name: Salvatore Meli
------------------------------
cc: Donald Bezahler
HASBRO CANADA CORPORATION / CORPORATION HASBRO CANADA 2350
de la Province, Longueuil, Quebec J4G 1G2, 450-570-9820,
Fax 450-351-4531
HASBRO SALES CORPORATION / CORPORATION LES VENTES HASBRO
2605 Skymark Avenue, Mississauga, Ontario L4W 4L5 905-238-
3374 Fax 905-238-2860
EXHIBIT 10(gg)
RESTRICTED STOCK AGREEMENT
--------------------------
THIS AGREEMENT, entered into as of the Grant Date (as
defined in paragraph 1), by and between the Participant (as
defined in paragraph 1) and Hasbro, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company maintains the Employee Non-
Qualified Stock Plan (the "Plan"), a copy of which is
annexed hereto as Exhibit A and the provisions of which are
incorporated herein as if set forth in full, and the
Participant has been selected by the Compensation and Stock
Option Committee of the Board of Directors of the Company
(the "Committee"), which administers the Plan, to receive
an award of restricted stock under the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company
and the Participant, as follows:
1. Terms of Award. The following terms used in this
Agreement shall have the meanings set forth in this
paragraph 1:
A. The "Participant" is NAME
--------------.
B. The "Grant Date" is DATE
---------.
C. The "Restricted Period" is the period beginning on
the Grant Date and ending on DATE *
D. The number of shares of "Restricted Stock" awarded
under this Agreement shall be --------- shares. Shares of
"Restricted Stock" are shares of the Company's common
stock, par value $.50 per share ("Common Stock") granted
under this Agreement and subject to the terms of this
Agreement and the Plan.
Other terms used in this Agreement are defined pursuant to
paragraph 8 or elsewhere in this Agreement.
2. Award. The Participant is hereby granted the number
of shares of Restricted Stock set forth in paragraph 1.
*Restricted Period is generally three years
3. Dividends and Voting Rights. The Participant shall
be entitled to receive any dividends paid with respect to
shares of Restricted Stock that become payable during the
Restricted Period; provided, however, that no dividends
shall be payable to or for the benefit of the Participant
with respect to record dates occurring prior to the Grant
Date, or with respect to record dates occurring on or after
the date, if any, on which the Participant has forfeited
the Restricted Stock. The Participant shall be entitled to
vote the shares of Restricted Stock during the Restricted
Period to the same extent as would have been applicable to
the Participant if the Participant was then vested in the
shares; provided, however, that the Participant shall not
be entitled to vote the shares with respect to record dates
for such voting rights arising prior to the Grant Date, or
with respect to record dates occurring on or after the
date, if any, on which the Participant has forfeited the
Restricted Stock.
4. Escrow of Shares of Restricted Stock; Restrictive
Legends. Each certificate issued in respect of shares of
Restricted Stock granted under this Agreement shall be
registered in the name of the Participant and shall be
deposited in escrow in accordance with this paragraph 4.
The Participant shall, upon the execution of this
Agreement, execute Joint Escrow Instructions in the form
attached to this agreement as Exhibit B. The Joint Escrow
Instructions shall be delivered to the Secretary of the
Company, as escrow agent thereunder. The Participant shall
deliver to such escrow agent a stock transfer form duly
endorsed in blank and hereby instructs the Company to
deliver to such escrow agent, on behalf of the Participant,
the certificate(s) evidencing the shares issued hereunder.
Such materials shall be held by such escrow agent pursuant
to the terms of the Joint Escrow Instructions.
All certificates representing shares of Restricted Stock
shall have affixed thereto a legend in substantially the
following form, in addition to any other legends that may
be required under federal or state securities laws:
"THIS CERTIFICATE AND THE SHARES OF
STOCK REPRESENTED HEREBY ARE SUBJECT TO
THE TERMS AND CONDITIONS, INCLUDING
FORFEITURE PROVISIONS AND RESTRICTIONS
AGAINST TRANSFER (THE "RESTRICTIONS"),
CONTAINED IN THE HASBRO, INC. EMPLOYEE
NON-QUALIFIED STOCK PLAN AND AN
AGREEMENT ENTERED INTO BETWEEN THE
REGISTERED OWNER AND HASBRO, INC. ANY
ATTEMPT TO DISPOSE OF THESE SHARES IN
CONTRAVENTION OF THE RESTRICTIONS,
INCLUDING BY WAY OF SALE, ASSIGNMENT,
TRANSFER, PLEDGE, HYPOTHECATION OR
OTHERWISE, SHALL BE NULL AND VOID AND
WITHOUT EFFECT."
5. Transfer and Forfeiture of Shares. If the
Participant's Date of Termination (as defined below) does
not occur during the Restricted Period, then, at the end of
the Restricted Period, the Participant shall become vested
in the shares of Restricted Stock, and shall own the shares
free of all restrictions otherwise imposed by this
Agreement. The Participant shall become vested in the
shares of Restricted Stock, and become owner of the shares
free of all restrictions otherwise imposed by this
Agreement, prior to the end of the Restricted Period, as
follows:
A. The Participant shall become vested in the shares of
Restricted Stock as of the Participant's Date of
Termination prior to the date the Restricted Stock would
otherwise become vested, if the Participant's Date of
Termination occurs by reason of (i) the Participant's
retirement at his or her normal Retirement Date (as defined
below), (ii) the Participant's retirement at an Early
Retirement Date (as defined below), subject to the
discretion of the Committee based, among other things, upon
the execution by the Participant of a "covenant not to
compete" in a form approved by the Board or the Committee,
or (iii) if the Participant has at least one year of
Credited Service (as defined below), the Participant's
death or Participant's suffering a Permanent Physical or
Mental Disability (as defined below).
B. The Participant shall become vested in the shares of
Restricted Stock as of the date of a Change in Control (as
defined below), if the Change in Control occurs prior to
the end of the Restricted Period, and the Participant's
Date of Termination does not occur before the Change in
Control date.
Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered until the
expiration of the Restricted Period or, if earlier, until
the Participant is vested in the shares. Except as
otherwise provided in this paragraph 5, if the
Participant's Date of Termination occurs prior to the end
of the Restricted Period, the Participant shall forfeit the
Restricted Stock as of the Participant's Date of
Termination.
6. Income Taxes. The Participant shall pay to the
Company promptly upon request, and in any event at the time
the Participant recognizes taxable income in respect of the
Restricted Stock (or, if the Participant makes an election
under Section 83(b) of the Internal Revenue Code of 1986,
as amended (the "Code"), in connection with such grant), an
amount equal to the taxes the Company determines it is
required to withhold under applicable tax laws with respect
to the Restricted Stock. Such payment shall be made in the
form of cash, shares of Common Stock already owned or
otherwise issuable upon the lapse of restrictions, or in a
combination of such methods. The Participant shall
promptly notify the Company of any election made pursuant
to Section 83(b) of the Code.
7. Non-Competition/Non-Solicitation**.
(a) In consideration for the award of the shares of
Restricted Stock to the Participant pursuant to this
Agreement, the Participant agrees that while employed by
the Company and for a period of one (1) year after
termination or cessation of such employment for any reason,
the Participant will not directly or indirectly:
(1) Engage in any business or enterprise (whether
as an owner, partner, officer, employee, director,
investor, lender, consultant, independent contractor or
otherwise, except as the holder of not more than one
percent (1%) of the combined voting power of the
outstanding stock of a publicly held company) that is
competitive with the Company's business; including but not
limited to, any business or enterprise that develops,
designs, produces, markets, sells or renders any toy or
game.
(2) Either alone or in association with others
solicit, or permit any person or organizations directly or
indirectly to solicit, any individual who at the time of
the solicitation is, or who within the six (6) month period
prior to such solicitation was, an employee of the Company
to leave the employ of the Company or terminate his/her
relationship with the Company.
** Applicable only to grants of 5,000 or more shares of
Restricted Stock. Mr. Goldner's non-competition/non-solicitation
obligations are set forth in his employment agreement.
(b) The geographic scope of this Section 7 shall
extend to anywhere the Company or any of its subsidiaries
or affiliates is doing business at the time of the
Participant's termination or cessation of employment with
the Company.
(c) The Participant acknowledges that the
restrictions set forth in this Section 7 are necessary for
the protection of the business and goodwill of the Company
and considers the restrictions to be reasonable for such
purpose. The Participant agrees that any breach of this
Agreement is likely to cause the Company substantial and
irrevocable damage and that any breach of this Section 7
would entail the inevitable use and or disclosure of
proprietary information. Therefore, the Participant agrees
that in the event of any breach of Section 7(a)(1), the
Participant shall immediately return to the Company all
shares of Restricted Stock granted hereby. In the event
that any of such shares of Restricted Stock have been sold
or transferred by the Participant, Participant shall pay to
the Company as liquidated damages all Net Proceeds (as
defined below) Participant realized on the sale or transfer
of any such shares in lieu of returning such shares. With
respect to a sale of shares, "Net Proceeds" shall be
calculated by multiplying the number of shares of
Restricted Stock sold times the sales price, without regard
to any subsequent market price increase or decrease, less
commission, if any. With respect to a transfer of shares,
"Net Proceeds" shall be calculated by multiplying the
number of shares of Restricted Stock transferred times the
closing price of the shares on the day of the transfer.
The Company and Participant agree that either the return to
the Company of the shares of Restricted Stock or the Net
Proceeds from any sale or transfer made by Participant
shall be the Company's sole and exclusive remedy for any
breach by the Participant of Section 7(a)(1). The
Participant further agrees that in the event of any breach
of Section 7(a)(2), the Company, in addition to such other
remedies which may be available, shall be entitled to
specific performance and other injunctive relief without
posting a bond.
8. Definitions. For purposes of this Agreement, the
terms used in this Agreement shall be subject to the
following:
A. Change in Control. The term "Change in Control" shall
have the meaning ascribed to it in the Plan.
B. Credited Service. The term "Credited Service" shall
mean the period of the employee's employment considered in
determining whether the employee is eligible to receive
benefits under the Company's Pension Plan (or any successor
plan) upon termination of employment.
C. Date of Termination. The Participant's "Date of
Termination" shall be the first day occurring on or after
the Grant Date on which the Participant is not employed by
the Company or any entity directly or indirectly controlled
by the Company (a "Subsidiary"), regardless of the reason
for the termination of employment; provided that a
termination of employment shall not be deemed to occur by
reason of a transfer of the Participant between the Company
and a Subsidiary or between two Subsidiaries; and further
provided that the Participant's employment shall not be
considered terminated while the Participant is on a leave
of absence from the Company or a Subsidiary approved by the
Participant's employer. If, as a result of a sale or other
transaction, the Participant's employer ceases to be a
Subsidiary (and the Participant's employer is or becomes an
entity that is separate from the Company), the occurrence
of such transaction shall be treated as the Participant's
Date of Termination caused by the Participant being
discharged by the employer.
D. Early Retirement Date. The term "Early Retirement
Date" shall mean the day on which a Participant who has
attained age fifty-five (55), but has not reached age
sixty-five (65), with ten (10) or more years of Credited
Service, retires. A Participant is eligible for early
retirement on the first day of the calendar month
coincident with or immediately following the attainment of
age fifty-five (55) and the completion of ten (10) years of
Credited Service, and "early retirement" shall mean
retirement by an eligible Participant at the Early
Retirement Date.
E. Normal Retirement Date. The term "Normal Retirement
Date" shall mean the day on which a Participant who has
attained age sixty-five (65), with five (5) years of
Credited Service, retires. A Participant is eligible for
normal retirement on the first day of the calendar month
coincident with or immediately following the Participant's
attainment of age sixty-five (65) and completion of five
(5) years of Credited Service, and "normal retirement"
shall mean the retirement by an eligible Participant at the
Normal Retirement Date.
F. Permanent Physical or Mental Disability. The term
"Permanent Physical or Mental Disability" shall mean the
Participant's inability to perform his or her job or any
position which the Participant can perform with his or her
background and training by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and
indefinite duration.
G. Plan Definitions. Except where the context clearly
implies or indicates the contrary, a word, term, or phrase
used in the Plan is similarly used in this Agreement.
9. Heirs and Successors. This Agreement shall be
binding upon, and inure to the benefit of, the Company and
its successors and assigns, and upon any person acquiring,
whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company's assets
and business and the Participant and the successors and
permitted assigns of the Participant, including but not
limited to, the estate of the Participant and the executor,
administrator or trustee of such estate, the guardian or
legal representative of the Participant.
10. Administration. The authority to manage and
control the operation and administration of this Agreement
shall be vested in the Committee, and the Committee shall
have all powers with respect to this Agreement as it has
with respect to the Plan. Any interpretation of the
Agreement by the Committee and any decision made by it with
respect to the Agreement is final and binding.
11. Plan Governs. Notwithstanding anything in this
Agreement to the contrary, the terms of this Agreement
shall be subject to the terms of the Plan.
12. Amendment. This Agreement may be amended by
written Agreement of the Participant and the Company,
without the consent of any other person.
13. Entire Agreement. This Agreement and the Plan
contain the entire agreement and understanding of the
parties hereto with respect of the subject matter contained
herein and therein and supersede all prior communications,
representations and negotiations in respect thereof.
14. Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall
be severable and enforceable to the extent permitted by law
and any court determining the unenforceability of any
provisions shall have the power to reduce the scope or
duration of such provision to render such provision
enforceable.
IN WITNESS WHEREOF, the Participant has executed this
Agreement, and the Company has caused these presents to be
executed in its name and on its behalf, all as of the Grant
Date.
Participant
-------------------------
Signature
-------------------------
Print Name
HASBRO, INC.
By: ----------------------
Exhibit B
Hasbro, Inc.
Joint Escrow Instructions
DATE
Barry Nagler
Senior Vice President and General Counsel
Hasbro, Inc.
1027 Newport Avenue
Pawtucket, RI 02862
Dear Sir:
As Escrow Agent for Hasbro, Inc. a Rhode Island
corporation (the "Company"), and the undersigned person
("Participant"), you are hereby authorized and directed to
hold the documents delivered to you pursuant to the terms
of that certain Restricted Stock Agreement (the
"Agreement") of even date herewith, to which a copy of
these Joint Escrow Instructions is attached, in accordance
with the following instructions (Terms not otherwise
defined herein shall have the meaning ascribed to them in
the Agreement):
(1) Appointment. The Participant irrevocably authorizes the
Company to deposit with you any certificates evidencing
shares of Restricted Stock (the "Shares") to be held by you
hereunder and any additions and substitutions to said
Shares. The Participant does hereby irrevocably constitute
and appoint you as his or her attorney-in-fact and agent
for the term of this escrow to complete any documents
necessary to comply with the terms hereof. Subject to the
provisions of this paragraph 1 and the terms of the
Agreement, Participant shall exercise all rights and
privileges of a shareholder of the Company while the Shares
are held by you.
(2) Release of Shares.
(a) Upon receipt from the Company of written notice of
the Participant's Date of Termination (other than as a
result of the occurrence of one of the events described in
Section 5(A) of the Agreement (a "Section 5A Event")) prior
to the expiration of the Restricted Period, the Participant
and the Company hereby irrevocably authorize and direct you
(i) to fill in and date the stock transfer form or forms
necessary for the transfer of the Shares to the Company and
(ii) deliver same, together with the certificate or
certificates evidencing the Shares, to the Company.
(b) Upon receipt from the Company of written notice of
(i) the occurrence of a Section 5A Event, (ii) a Change in
Control or (iii) the expiration of the Restricted Period,
the Participant and the Company hereby irrevocably
authorize and direct you to deliver the certificates or
certificates evidencing the Shares, together with the stock
transfer form or forms signed by the Participant in blank,
to the Participant.
(3) Duties of Escrow Agent.
(a) Your duties hereunder may be altered, amended,
modified or revoked only by a writing signed by all of the
parties hereto.
(b) You shall be obligated only for the performance of
such duties as are specifically set forth herein and may
rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper
party or parties. You shall not be personally liable for
any act you may do or omit to do hereunder as Escrow Agent
or as attorney-in-fact of Participant while acting in good
faith and in the exercise of your own good judgment, and
any act done or omitted by you pursuant to the advice of
your own attorneys shall be conclusive evidence of such
good faith.
(c) You are hereby expressly authorized to disregard any
and all warnings given by any of the parties hereto or by
any other person, excepting only orders or process of
courts of law, and are hereby expressly authorized to
comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order,
judgment or decree of any court, you shall not be liable to
any of the parties hereto or to any other person, by reason
of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified,
annulled, set aside, vacated or found to have been entered
without jurisdiction.
(d) You shall not be liable in any respect on account of
the identity, authority or rights of the parties executing
or delivering or purporting to execute or deliver the
Agreement or any documents or papers deposited or called
for hereunder.
(e) You shall be entitled to employ such legal counsel
and other experts as you may deem necessary properly to
advise you in connection with your obligations hereunder
and may rely upon the advice of such counsel.
(f) Your rights and responsibilities as Escrow Agent
hereunder shall terminate if (i) you cease to be Secretary
of the Company or (ii) you resign by written notice to each
party. In the event of a termination under clause (i),
your successor as Secretary shall become Escrow Agent
hereunder; in the event of a termination under clause (ii),
the Company shall appoint a successor Escrow Agent
hereunder.
(g) If you reasonably require other or further
instruments in connection with these Joint Escrow
Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such
instruments.
(h) It is understood and agreed that should any dispute
arise with respect to the delivery and/or ownership or
right of possession of the securities held by you
hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part
of said securities until such dispute shall have been
settled either by mutual written agreement of the parties
concerned or by a final order, decree or judgment of a
court of competent jurisdiction after the time for appeal
has expired and no appeal has been perfected, but you shall
be under no duty whatsoever to institute or defend any such
proceedings.
(i) These Joint Escrow Instructions set forth your sole
duties with respect to any and all matters pertinent hereto
and no implied duties or obligations shall be read into
these Joint Escrow Instructions against you.
(j) The Company shall indemnify you and hold you harmless
against any and all damages, losses, liabilities, costs,
and expenses, including attorneys' fees and disbursements,
for anything done or omitted to be done by you as Escrow
Agent in connection with this Agreement or the performance
of your duties hereunder, except such as shall result from
your gross negligence or willful misconduct.
(4) Notice. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively
given upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties
hereto.
COMPANY: Hasbro, Inc.
1027 Newport Avenue
Pawtucket, RI 02861
PARTICIPANT: Notices to Participant shall be
sent to the address set forth below Participant's
signature below.
ESCROW
AGENT:
Barry Nagler, Senior Vice President and General
Counsel
Hasbro, Inc.
1027 Newport Avenue
Pawtucket, RI 02862
(5) Miscellaneous.
(a) By signing these Joint Escrow Instructions, you
become a party hereto only for the purpose of said Joint
Escrow Instructions, and you do not become a party to the
Agreement.
(b) This instrument shall be binding upon and inure to
the benefit of the parties hereto and their respective
successors and permitted assigns.
Very truly yours,
HASBRO, INC.
By: -------------------
PARTICIPANT:
- ------------------------- (Signature)
- -------------------------
Print Name
Address
- -------------------------
- -------------------------
Date
Signed:------------------
ESCROW AGENT:
- -----------------------------------
Barry Nagler, Senior Vice President
and General Counsel
EXHIBIT 10(hh)
DEFERRED RESTRICTED STOCK UNIT AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date (as
defined in paragraph 1), by and between the Participant (as
defined in paragraph 1) and Hasbro, Inc. (the "Company");
WITNESSETH THAT:
WHEREAS, the Company maintains the Employee Non-
Qualified Stock Plan (the "Plan"), a copy of which is
annexed hereto as Exhibit A and the provisions of which are
incorporated herein as if set forth in full, and the
Participant has been selected by the Compensation and Stock
Option Committee of the Board of Directors of the Company
(the "Committee"), which administers the Plan, to receive
an award of deferred restricted stock units under the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company
and the Participant, as follows:
1. Terms of Award. The following terms used in this
Agreement shall have the meanings set forth in this
paragraph 1:
A. The "Participant" is NAME.
B. The "Grant Date" is DATE.
C. The "Vesting Period" is the period beginning on the
Grant Date and ending on DATE.*
D. The number of deferred restricted stock units
("Stock Units") awarded under this Agreement shall be
Stock Units. Stock Units are fictional shares of
the Company's common stock, par value $.50 per share
("Common Stock") granted under this Agreement and subject
to the terms of this Agreement and the Plan.
E. For record-keeping purposes only, the Company shall
maintain an account (a "Stock Unit Account") for the
Participant where Stock Units shall be accumulated and
accounted for. Without limiting the provisions of Section
6 of the Plan, in the event the Company pays a stock
dividend or reclassifies or divides or combines its
outstanding Common Stock then an appropriate adjustment
* Vesting period is generally three years
shall be made in the hypothetical number of shares of.Common
Stock held in the Stock Unit Account. The Stock Unit
Account will reflect fictional fractional shares of Common
Stock to the nearest hundredth of a share.
Other terms used in this Agreement are defined pursuant to
paragraph 8 or elsewhere in this Agreement.
2. Award. The Participant is hereby granted the
number of Stock Units set forth in paragraph 1.
3. No Dividends and No Voting Rights. The Participant
shall not be entitled to any dividends or voting rights
with respect to the Stock Units or Stock Unit Account.
4. Vesting and Forfeiture of Units. If the
Participant's Date of Termination (as defined below) does
not occur during the Vesting Period, then, at the end of
the Vesting Period, the Participant shall become vested in
the Stock Units and the Stock Unit Account. The
Participant shall become vested in the Stock Units and the
Stock Unit Account, prior to the end of the Vesting Period,
as follows:
A. The Participant shall become vested in the Stock
Units and the Stock Unit Account as of the Participant's
Date of Termination prior to the expiration of the Vesting
Period, if the Participant's Date of Termination occurs by
reason of (i) the Participant's retirement at his or her
normal Retirement Date (as defined below), (ii) the
Participant's retirement at an Early Retirement Date (as
defined below), subject to the discretion of the Committee
based, among other things, upon the execution by the
Participant of a "covenant not to compete" in a form
approved by the Board or the Committee, or (iii) if the
Participant has at least one year of Credited Service (as
defined below), the Participant's death or Participant's
suffering a Permanent Physical or Mental Disability (as
defined below).
B. The Participant shall become vested in the Stock
Units and the Stock Unit Account as of the date of a Change
in Control (as defined below), if the Change in Control
occurs prior to the end of the Vesting Period, and the
Participant's Date of Termination does not occur before the
Change in Control date.
The Stock Units and the Stock Unit Account may not be sold,
assigned, transferred, pledged or otherwise encumbered.
Except as otherwise provided in this paragraph 4, if the
Participant's Date of Termination occurs prior to the end
of the Vesting Period, the Participant shall forfeit the
Stock Units and the Stock Unit Account as of the
Participant's Date of Termination.
5. Settlement in Shares of Common Stock. Provided
that the Participant's interest in the Stock Units and the
Stock Unit Account has vested as provided in Section 4
above, the Participant's Stock Unit Account, or a portion
thereof, shall be converted into actual shares of Common
Stock on the earlier to occur of (i) the Participant's Date
of Termination and (ii) any date prior to the last day of
any fiscal year that the Company reasonably determines that
it will not be denied a deduction under Section 162(m) of
the Internal Revenue Code of 1986 (the "Code"), as amended,
for the compensation deemed to be paid to the Participant
under the Code by virtue of the delivery of such actual
shares to the Participant. If the Company would be denied
a full deduction under Section 162(m) of the Code for the
delivery of actual shares to the Participant representing
the value of the Participant's full Stock Unit Account, the
Company shall deliver such number of actual shares as is
equal in value to the deduction it can receive and the
Stock Unit Account shall continue to reflect the balance
thereof not so converted and delivered. Such shares of
Common Stock shall be registered in the name of the
Participant as of the date of conversion and the actual
stock certificate representing such actual shares shall be
delivered to the Participant within a reasonable time
thereafter. To the extent that there are fictional
fractional shares of Common Stock in a Stock Unit Account
upon settlement, such fictional fractions shares shall be
rounded to the nearest whole share.
6. Income Taxes. The Participant shall pay to the
Company promptly upon request, and in any event at the time
the Participant recognizes taxable income in respect of the
shares of Common Stock received by the Participant upon the
conversion of the Participant's Stock Unit Account, an
amount equal to the taxes the Company determines it is
required to withhold under applicable tax laws with respect
to the such shares of Common Stock. Such payment shall be
made in the form of cash, the delivery of shares of Common
Stock already owned or by withholding such number of actual
shares otherwise deliverable pursuant to this Agreement as
is equal to the withholding tax due, or in a combination of
such methods.
7. Non-Competition/Non-Solicitation.
(a) In consideration for the award of the Stock
Units to the Participant pursuant to this Agreement, the
Participant agrees that while employed by the Company and
for a period of one (1) year after termination or cessation
of such employment for any reason, the Participant will not
directly or indirectly:
(1) Engage in any business or enterprise (whether
as an owner, partner, officer, employee, director,
investor, lender, consultant, independent contractor or
otherwise, except as the holder of not more than one
percent (1%) of the combined voting power of the
outstanding stock of a publicly held company) that is
competitive with the Company's business; including but not
limited to, any business or enterprise that develops,
designs, produces, markets, sells or renders any toy or
game.
(2) Either alone or in association with others
solicit, or permit any person or organizations directly or
indirectly to solicit, any individual who at the time of
the solicitation is, or who within the six (6) month period
prior to such solicitation was, an employee of the Company
to leave the employ of the Company or terminate his/her
relationship with the Company.
(b) The geographic scope of this Section 7 shall
extend to anywhere the Company or any of its subsidiaries
or affiliates is doing business at the time of
Participant's termination or cessation of employment with
the Company.
(c) The Participant acknowledges that the
restrictions set forth in this Section 7 are necessary for
the protection of the business and goodwill of the Company
and considers the restrictions to be reasonable for such
purpose. The Participant agrees that any breach of this
Agreement is likely to cause the Company substantial and
irrevocable damage and that any breach of this Section 7
would entail the inevitable use and or disclosure of
proprietary information. Therefore, the Participant agrees
that in the event of any breach of Section 7(a)(1), the
Participant shall forfeit all rights and interest the
Participant had in the Stock Units or, if the Stock Units
have been converted to shares of Common Stock of the
Company pursuant to Paragraph 5 above, Participant shall
immediately return to the Company all such shares of Common
Stock. In the event that any of such shares of Common
Stock have been sold or transferred by the Participant,
Participant shall pay to the Company as liquidated damages
all Net Proceeds (as defined below) Participant realized on
the sale or transfer of any such shares in lieu of
returning such shares. With respect to a sale of shares,
"Net Proceeds" shall be calculated by multiplying the
number of shares of Common Stock sold times the sales
price, without regard to any subsequent market price
increase or decrease, less commission, if any. With
respect to a transfer of shares, "Net Proceeds" shall be
calculated by multiplying the number of shares of
Restricted Stock transferred times the closing price of the
shares on the day of the transfer. The Company and
Participant agree that either the return to the Company of
the shares of Common Stock or the Net Proceeds from any
sale or transfer made by Participant shall be the Company's
sole and exclusive remedy for any breach by the Participant
of Section 7(a)(1). The Participant further agrees that in
the event of any breach of Section 7(a)(2), Company, in
addition to such other remedies which may be available,
shall be entitled to specific performance and other
injunctive relief without posting a bond.
8. Definitions. For purposes of this Agreement, the
terms used in this Agreement shall be subject to the
following:
A. Change in Control. The term "Change in Control"
shall have the meaning ascribed to it in the Plan.
B. Credited Service. The term "Credited Service"
shall mean the period of the employee's employment
considered in determining whether the employee is eligible
to receive benefits under the Company's Pension Plan (or
any successor plan) upon termination of employment.
C. Date of Termination. The Participant's "Date of
Termination" shall be the first day occurring on or after
the Grant Date on which the Participant is not employed by
the Company or any entity directly or indirectly controlled
by the Company (a "Subsidiary"), regardless of the reason
for the termination of employment; provided that a
termination of employment shall not be deemed to occur by
reason of a transfer of the Participant between the Company
and a Subsidiary or between two Subsidiaries; and further
provided that the Participant's employment shall not be
considered terminated while the Participant is on a leave
of absence from the Company or a Subsidiary approved by the
Participant's employer. If, as a result of a sale or other
transaction, the Participant's employer ceases to be a
Subsidiary (and the Participant's employer is or becomes an
entity that is separate from the Company), the occurrence
of such transaction shall be treated as the Participant's
Date of Termination caused by the Participant being
discharged by the employer.
D. Early Retirement Date. The term "Early Retirement
Date" shall mean the day on which a Participant who has
attained age fifty-five (55), but has not reached age
sixty-five (65), with ten (10) or more years of Credited
Service, retires. A Participant is eligible for early
retirement on the first day of the calendar month
coincident with or immediately following the attainment of
age fifty-five (55) and the completion of ten (10) years of
Credited Service, and "early retirement" shall mean
retirement by an eligible Participant at the Early
Retirement Date.
E. Normal Retirement Date. The term "Normal
Retirement Date" shall mean the day on which a Participant
who has attained age sixty-five (65), with five (5) years
of Credited Service, retires. A Participant is eligible
for normal retirement on the first day of the calendar
month coincident with or immediately following the
Participant's attainment of age sixty-five (65) and
completion of five (5) years of Credited Service, and
"normal retirement" shall mean the retirement by an
eligible Participant at the Normal Retirement Date.
F. Permanent Physical or Mental Disability. The term
"Permanent Physical or Mental Disability" shall mean the
Participant's inability to perform his or her job or any
position which the Participant can perform with his or her
background and training by reason of any medically
determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and
indefinite duration.
G. Plan Definitions. Except where the context clearly
implies or indicates the contrary, a word, term, or phrase
used in the Plan is similarly used in this Agreement.
9. Heirs and Successors. This Agreement shall be
binding upon, and inure to the benefit of, the Company and
its successors and assigns, and upon any person acquiring,
whether by merger, consolidation, purchase of assets or
otherwise, all or substantially all of the Company's assets
and business and the Participant and the successors and
permitted assigns of the Participant, including but not
limited to, the estate of the Participant and the executor,
administrator or trustee of such estate, the guardian or
legal representative of the Participant.
10. Administration. The authority to manage and
control the operation and administration of this Agreement
shall be vested in the Committee, and the Committee shall
have all powers with respect to this Agreement as it has
with respect to the Plan. Any interpretation of the
Agreement by the Committee and any decision made by it with
respect to the Agreement is final and binding.
11. Plan Governs. Notwithstanding anything in this
Agreement to the contrary, the terms of this Agreement
shall be subject to the terms of the Plan.
12. Amendment. This Agreement may be amended by
written Agreement of the Participant and the Company,
without the consent of any other person.
13. Entire Agreement. This Agreement and the Plan
contain the entire agreement and understanding of the
parties hereto with respect of the subject matter contained
herein and therein and supersede all prior communications,
representations and negotiations in respect thereof.
14. Severability. The invalidity or unenforceability
of any provision of this Agreement shall not affect the
validity or enforceabilty of any other provision of this
Agreement, and each other provision of this Agreement shall
be severable and enforceable to the extent permitted by law
and any court determining the unenforceability of any
provisions shall have the power to reduce the scope or
duration of such provision to render such provision
enforceable.
IN WITNESS WHEREOF, the Participant has executed this
Agreement, and the Company has caused these presents to be
executed in its name and on its behalf, all as of the Grant
Date.
Participant
- ------------------------
Signature
- ------------------------
Print Name
HASBRO, INC.
By: ----------------------
EXHIBIT 10(vv)
RELEASE AND SETTLEMENT AGREEMENT
This Release and Settlement Agreement ("Settlement
Agreement") is dated this 31st day of January, 2001 by and
between Hasbro, Inc. ("Hasbro"), the Dial Corporation ("Dial")
and Herbert M. Baum ("Baum").
WHEREAS, Baum and Hasbro entered into an Employment
Agreement dated January 5, 1999 (the "Employment Agreement");
WHEREAS, Baum was employed by Hasbro commencing January 5,
1999 until he resigned from Hasbro on or about August 5, 1999
and accepted a position as Chief Executive Officer with Dial;
WHEREAS, a dispute arose between Hasbro, Dial and Baum with
respect to a certain payment by Hasbro to Baum pursuant to
Section 6.3 of the Employment Agreement; and
WHEREAS, the parties hereto desire to resolve all disputes
arising between themselves including, but not limited to, all
disputes relating to the Employment Agreement, the employment
relationship between Baum and Hasbro and the offer of employment
made to Baum by Dial;
NOW, THEREFORE, in consideration of the promises and
conditions set forth herein, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. In exchange for (i) a payment to Baum by Hasbro in the
amount of Seven Hundred Fifty Thousand Dollars ($750,000), which
payment shall be made eight (8) days after receipt by Hasbro of
this fully executed Settlement Agreement, provided that Baum
does not revoke his acceptance of this Settlement Agreement
within the seven day revocation period, and (ii) Hasbro's
forbearance of asserting claims against Baum, Baum hereby
fully, forever, irrevocably and unconditionally releases,
remises and discharges Hasbro and its subsidiaries and
affiliates and each of their current or former officers,
directors, stockholders, attorneys, agents, or employees
(collectively, the "Hasbro Released Parties") from any and all
claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts,
reckonings, covenants, contracts, agreements, promises, doings,
omissions, damages, executions, obligations, liabilities and
expenses (including attorneys' fees and costs), of every kind
and nature, known or unknown, which he ever had or now has
against the Hasbro Released Parties including, but not limited
to, all claims arising out of Baum's employment with or
separation from Hasbro, the Employment Agreement, all claims and
damages relating to race, sex, national origin, handicap,
religious, sexual orientation, benefits and age discrimination,
all employment discrimination claims under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. Section 2000 et. seq., the
Age Discrimination in Employment Act, 29 U.S.C. Section 621 et.
seq., the Employee Retirement Income Security Act of 1974, 29
U.S.C. Section 1001, et. seq., and the Americans with
Disabilities Act, 42 U.S.C. Section 12101 et. seq., and similar
state or local statutes including but not limited to the R.I.
Fair Employment Practices Act, R.I., Gen. Laws Section 28-5-1,
et. seq., all wrongful discharge claims, all common law claims
including, but not limited to, actions in tort, defamation,
breach of contract and any claims under any other federal, state
or local statutes or ordinances not expressly referenced above.
Notwithstanding the foregoing, in no event shall Baum be deemed
by this Paragraph 1 to have released any rights to
indemnification or contribution as provided by law or to any
protection provided to Baum under Hasbro's directors' and
officers' liability insurance policies. In addition, a deferred
compensation payment of Seven Hundred Thirteen Thousand One
Hundred Thirty Six Dollars and Twenty Five Cents ($713,136.25)
was made to Baum on January 19, 2001 pursuant to the Hasbro
Deferred Compensation Plan and a pension payment of Four Hundred
Eighty One Thousand Four Hundred Twenty Six Dollars and Eleven
Cents ($481,426.11) will be paid to Baum in accordance with the
Employment Agreement.
2. In exchange for Hasbro's forebearance of asserting
claims against Dial and each of Dial's subsidiaries and
affiliates and their current or former officers, directors,
stockholders, attorneys, agents or employees (collectively, the
"Dial Released Parties"), Dial hereby fully, forever,
irrevocably and unconditionally releases, remises and discharges
the Hasbro Released Parties from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages,
executions, obligations, liabilities and expenses (including
attorneys' fees and costs) of every kind and nature, known or
unknown, which Dial has against the Hasbro Released Parties
including, but not limited to, all claims arising out of Baum's
employment with or separation from Hasbro, the Employment
Agreement, and all common law claims including, but not limited
to, actions in tort, defamation, and breach of contract and any
claims under any other federal, state or local statutes or
ordinances.
3. In exchange for Baum's forbearance of asserting
certain claims against Hasbro, Hasbro hereby fully, forever,
irrevocably and unconditionally releases, remises and discharges
Baum from any and all claims, charges, complaints, demands,
actions, causes of action, suits, rights, debts, sums of money,
costs, accounts, reckonings, covenants, contracts, agreements,
promises, doings, omissions, damages, executions, obligations,
liabilities and expenses (including attorneys' fees and costs)
of every kind and nature, known or unknown, which Hasbro has
against Baum including, but not limited to, all claims arising
out of Baum's employment with or separation from Hasbro, the
Employment Agreement, Dial's offer of employment to Baum and all
common law claims including, but not limited to, actions in
tort, defamation, and breach of contract and any claims under
any other federal, state or local statutes or ordinances.
4. In exchange for a payment to Hasbro by Dial in the
amount of Three Hundred Seventy Five Thousand Dollars ($375,000)
(the "Dial Payment"), which payment shall be wire transferred to
Hasbro on the eighth (8th) day after receipt by Hasbro of this
fully executed Settlement Agreement provided that Baum did not
revoke his acceptance of the Settlement Agreement during the
seven day revocation period, Hasbro hereby fully, forever,
irrevocably and unconditionally releases, remises and discharges
the Dial Released Parties from any and all claims, charges,
complaints, demands, actions, causes of action, suits, rights,
debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages,
executions, obligations, liabilities and expenses (including
attorneys' fees and costs) of every kind and nature, known or
unknown, which Hasbro has against the Dial Released Parties
including, but not limited to, all claims arising out of Baum's
separation from Hasbro, the Employment Agreement, Dial's offer
of employment to Baum and all common law claims including, but
not limited to, actions in tort, defamation and breach of
contract and any claims under any other federal, state or local
statutes or ordinances.
5. Confidentiality. The parties hereto understand and
agree that the terms and contents
of this Agreement, and the contents of the negotiations and
discussions resulting in this Agreement, shall be maintained as
confidential, and none of the above shall be disclosed except to
the extent required by federal or state law.
6. Amendment. This Agreement shall be binding upon
the parties and may not be
modified in any manner, except by an instrument in writing of
concurrent or subsequent date signed by a duly authorized
representative of the parties hereto. This agreement is binding
upon and shall inure to the benefit of the parties and their
respective agents, assigns, heirs, executors, successors and
administrators.
7. Entire Agreement and Applicable Law. This
Agreement contains and constitutes the entire understanding and
agreement between the parties hereto with respect to the
settlement of claims the parties have against each other. This
Agreement cancels all previous oral and written negotiations,
agreements, commitments, and writings in connection therewith.
This Agreement shall be governed by the laws of the State of
Rhode Island to the extent not preempted by federal law.
8. Acknowledgments and Assent. Baum acknowledges that he
has been given at least
twenty-one (21) days to consider this Letter Agreement and that
he was advised to consult with an attorney prior to signing this
letter and has in fact consulted with counsel of his own
choosing prior to executing this Settlement Agreement. Baum may
revoke this agreement for a period of seven (7) days after
signing this letter, and the agreement shall not be effective or
enforceable until the expiration of this seven (7) day
revocation period. Baum agrees that he has read this letter and
understands the content herein, and freely and voluntarily
assents to all of the terms herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Release and Settlement Agreement as of the date set forth above.
HASBRO, INC.
By: /s/ Harold J. Gordon
--------------------
Title: Vice Chairman
-----------------
THE DIAL CORPORATION
By: /s/ Christopher J. Littlefield
------------------------------
Title: Senior Vice President & General Counsel
---------------------------------------
/s/ Herbert M. Baum
- -------------------
Herbert M. Baum
EXHIBIT 10(ww)
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is effective as of
March 18, 2000, by and between Tiger Electronics, Ltd., a
Delaware corporation with a principal place of business at 980
Woodlands Parkway, Vernon Hills, IL 60061-3103 ("Tiger"),
Hasbro, Inc., a Rhode Island corporation with a principal place
of business at 1027 Newport Avenue, Pawtucket, RI 02862
("Hasbro"), and Brian Goldner, an individual with a residence at
3104 Laurel Avenue, Manhattan Beach, CA 90266 (the "Employee").
WHEREAS, Tiger desires to employ Employee; and
WHEREAS, Employee desires to be employed by Tiger;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term of Employment. Tiger hereby agrees to employ
Employee and Employee hereby accepts employment with Tiger for
the period commencing on or about March 18, 2000 (the
"Commencement Date") and ending on March 17, 2003, (the "Term")
unless otherwise terminated in accordance with the provisions of
Section 4. The Term shall be extended by mutual agreement.
2. Title; Reporting Employee. Employee shall serve as Chief
Operating Officer of Tiger until January 1, 2001, at which time
Tiger shall elect Employee to the position of President and
Chief Operating Officer of Tiger. . In accepting such
employment, Employee agrees to undertake the duties and
responsibilities described herein and such other duties and
responsibilities as are assigned to Employee. Employee agrees
to devote his entire business time, attention and energies to
the business and interests of Tiger during the Term. Employee
agrees to comply with all Tiger and applicable Hasbro policies
that are in effect during the Term.
3. Compensation and Benefits.
3.1 Salary. Tiger shall pay to Employee, an annual base
salary of Five Hundred Thousand Dollars ($500,000) in biweekly
installments, less all applicable taxes and withholdings.
Provided Employee remains employed by Tiger in the capacity
noted in 2, above, Employee's salary shall be adjusted to Five
Hundred Twenty Five Thousand Dollars ($525,000) on or about
March 19, 2001 and to Five Hundred Fifty Thousand Dollars
($550,000) on or about March 19, 2002.
3.2 Sign-On Bonus. Employee will receive a sign-on bonus of
Two Hundred Fifty Thousand Dollars ($250,000), payable in two
equal installments. The first installment shall be paid to
Employee as soon as practicable after March 18, 2000 and the
second installment shall be paid to Employee as soon as
practicable after March 18, 2001. If Employee (i) voluntarily
leaves the employ of Tiger or (ii) is terminated by Tiger
pursuant to Paragraph 4.1 below, prior to March 18, 2001,
Employee shall repay the entire first installment of such sign-
on bonus to Tiger on the date Employee terminates his employment
with Tiger. If Employee (i) voluntarily leaves the employ of
Tiger or (ii) is terminated by Tiger pursuant to Paragraph 4.1
below, prior to March 18, 2002, Employee shall repay the entire
second installment of such sign-on bonus to Tiger on the date
Employee terminates his employment with Tiger. Employee shall
be entitled to retain any bonus previously paid if Employee's
termination is for any reason other that Employee voluntarily
leaving the employ of Tiger or Employee is terminated pursuant
to Paragraph 4.1.
3.3 Management Incentive Plan Bonus.
(a) During the Term, Employee will be eligible to receive a
Management Incentive Plan bonus based on a target of fifty
percent (50%) of Employee's earned base salary for the incentive
year. Actual bonus awards may vary depending on Tiger, Hasbro
or Employee's performance and are discretionary.
(b) Notwithstanding the foregoing, Employee will receive, at
the time Management Incentive Plan Bonuses are customarily paid
by Tiger, a minimum Management Incentive Plan Bonus for calendar
year 2000 of Two Hundred Fifty Thousand Dollars ($250,000) (the
"2000 MIP Bonus"). If Employee terminates his employment
pursuant to Paragraph 4.5 below prior to March 18, 2001, no 2000
MIP Bonus shall be payable to Employee. If Employee terminates
his employment pursuant to Paragraph 4.5 below between March 19,
2001 and March 18, 2002, Employee shall repay Tiger two-thirds
(2/3) of the 2000 MIP Bonus paid. If Employee terminates his
employment pursuant to Paragraph 4.5 below between March 19,
2002 and March 18, 2003, Employee shall repay Tiger one-third
(1/3) of the 2000 MIP Bonus paid. All repayments of the 2000
MIP Bonus shall be made on the date Employee terminates his
employment with Tiger. Employee shall be entitled to retain any
of the 2000 MIP Bonus if termination is for any reason other
than pursuant to Paragraph 4.1 or 4.5 below.
3.4 Stock Option and Restricted Stock Grants.
(a) Prior to March 18, 2000, Hasbro agrees to obtain the
approval of the Hasbro Compensation and Stock Option Committee
to grant Employee a non-qualified stock option for the purchase
of 50,000 shares of common stock of Hasbro. Such option shall
have an exercise price equal to the mean of the high and low
prices of the shares on March 20, 2000 and shall vest in three
equal annual installments commencing March 18, 2001. Such
option shall be granted pursuant to Hasbro's standard form of
Stock Option Agreement, as modified to reflect the last sentence
of Section 5.3 below.
(b) Prior to March 18, 2000, Hasbro agrees to obtain the
approval of the Hasbro Compensation and Stock Option Committee
to grant Employee a non-qualified stock option grant for the
purchase of 100,000 shares of common stock of Hasbro. Such
option shall have an exercise price equal to ten percent (10%)
higher than the mean of the high and low prices of the shares on
March 20, 2000 Such options shall vest in five equal annual
installments commencing March 18, 2001. Such option shall be
granted pursuant to Hasbro's standard form of Stock Option
Agreement. for premium priced options, as modified to reflect
the last sentence of Section 5.3 below.
(c) Prior to March 18, 2000, Hasbro agrees to obtain the
approval of the Hasbro Compensation and Stock Option Committee
to grant Employee 61,000 restricted shares of Hasbro common
stock, to be awarded to Employee on March 18, 2000. Such
restricted shares shall vest in one installment on March 18,
2003 and certificate(s) for such restricted shares shall be held
in escrow and shall contain legends, which indicate the shares
are subject to forfeiture and transfer restrictions. The grant
of restricted shares of common stock shall be granted pursuant
to Hasbro's standard form of Restricted Stock Agreement.
(d) Fringe Benefits. Employee shall be entitled to
participate in benefit programs that Tiger establishes and makes
available to its senior officers to the extent that Employee's
position, tenure, salary and other qualifications make Employee
eligible to participate, including but not limited to Tiger's
group life insurance, short and long term disability insurance,
medical, dental, pension, 401(k) savings, stock incentive
programs and deferred compensation programs for salaried
employees, as in effect from time-to-time. Employee shall be
entitled to 4 weeks paid vacation per year, in accordance with
Tiger's vacation policy and to be taken at a mutually agreeable
time.
3.5 Air Travel. All air travel by Employee for business or
relocation purposes shall be at business class level and if
business class is not available, first class provided that first
class is approved by Employee's immediate supervisor.
3.6 Company Car Allowance/Lease. During the Term of the
Agreement, Employee shall receive, at Employee's option, a
monthly car allowance of Eight Hundred Sixty Dollars ($860.00)
or the equivalent in an automobile leased by Tiger for Employee.
3.7 Relocation. Employee shall be entitled to relocation
assistance pursuant to Hasbro's Relocation Expenses for
Transferred Employees and Executive New Hires (the "Relocation
Policy"), a copy of which Employee acknowledges he has received
and reviewed. Tiger and the Employee agree that Sections 2.4,
4.2, 9.2, 9.3 and 11 of the Relocation Policy shall not apply;
however, Employee agrees that Employee will use reasonable
efforts to relocate to the Vernon Hills, Illinois area within
six (6) months from commencing employment. Tiger and Employee
further agree: (a) that Section 5.1 of the Relocation Policy is
amended to provide Employee with suitable housing at Tiger's
expense for up to six (6) months; (b) Section 6.2 of the
Relocation Policy shall be construed to mean that insurance on
household goods will be for full replacement value; and (c)
Section 7.1 of the Relocation Policy will be modified such that
the miscellaneous expenses maximum shall be Ten Thousand Dollars
($10,000).
3.8 Change of Control Agreement. Hasbro and the Employee
shall enter into Hasbro's standard form of Change of Control
Agreement as amended.
4. Employment Termination. Employee's employment by Tiger
pursuant to this Agreement shall terminate upon the occurrence
of any of the following:
4.1 At the election of Tiger, for cause, immediately upon
written notice to Employee by Tiger. For the purposes of this
Section 4.1, for cause termination shall be deemed to exist upon
(a) Employee's material failure to perform (i) Employee's
assigned duties for Tiger; or (ii) Employee's obligations under
this Agreement; (b) conduct of the Employee involving fraud,
gross negligence or willful misconduct or other action which
damages the reputation of Tiger or Hasbro; (c) Employee's
indictment for or conviction of, or the entry of a pleading of
guilty or nolo contendere by Employee to, any crime involving
moral turpitude or any felony; (d) Employee's fraud,
embezzlement or other intentional misappropriation from Tiger or
Hasbro; or (e) Employee's material breach of any material
policies, rules or regulations of employment which may be
adopted or amended from time to time by Tiger or Hasbro. Tiger
shall provide Employee in writing of any alleged violation of
(a) or (b) above, after which Employee shall have thirty (30)
days to cure such violation.
4.2 Thirty days after Employee's death or disability. As
used in this Agreement, the term "disability" shall mean
Employee's inability, due to a physical or mental disability,
for a period of 180 consecutive days, to perform the services
contemplated under this Agreement, with or without reasonable
accommodation. A determination of disability shall be made by a
physician satisfactory to both Employee and Tiger, provided that
if Employee and Tiger do not agree on a physician, Employee and
Tiger shall each select a physician and these two together shall
select a third physician, whose determination as to disability
shall be binding on all parties.
4.3 At the election of Tiger without cause and not because
of a "Change of Control."
4.4 At Employee's election for "good reason", defined as the
failure of Tiger to elect Employee to the position of President
and Chief Operating Officer on or about January 1, 2001.
4.5 At Employee's election without cause or good reason, as
defined above, upon not less than thirty (30) days notice.
5. Effect of Termination.
5.1 Termination for Cause or at Employee's Election. In the
event Employee's employment is terminated for cause pursuant to
Section 4.1 or at Employee's election pursuant to Section 4.5,
Tiger shall pay Employee the compensation and benefits otherwise
payable to Employee under Section 3 through the last day of
Employee's actual employment by Tiger.
5.2 Termination for Death or Disability. If Employee's
employment is terminated by death or because of disability
pursuant to Section 4.2, Tiger shall pay to Employee's estate or
to Employee, as the case may be, the compensation which would
otherwise be payable to Employee up to the end of the month in
which the termination of Employee's employment because of death
or disability occurs. All stock options and restricted stock
granted to Employee shall vest and be exercisable in accordance
with the relevant agreements and plans.
5.3 Termination at the Election of Tiger or for Good Reason.
If Employee's employment is terminated at the election of Tiger
pursuant to Section 4.3 or at Employee's election for "good
reason" as defined in Section 4.4, and provided Employee
executes a full and complete release in a form prepared by
Tiger, then Employee shall be entitled to the greater of
Employee's base salary at the times and in the amounts that
would have been paid to Employee had Employee remained in the
employ of the Company for the balance of the Term or twelve (12)
months of base salary continuation. Such base salary
continuation shall be less all applicable taxes and
withholdings, and shall be paid in accordance with the
applicable severance plan for Hasbro Salaried Employees (the
"Severance Plan"). Notwithstanding the provisions of the
Severance Plan or this Paragraph 5.3, provided that Employee
executes a full and complete release in a form prepared by
Tiger, if Employee's employment is terminated pursuant to
Section 4.3 or 4.4, all unvested stock options and restricted
stock will become vested and any bonus repayment obligations of
Employee, as set forth in paragraphs 3.2 or 3.3 above, will
terminate.
5.4 Survival. The provisions of Sections 6 and 7 below
shall survive the termination of this Agreement.
6. Non-Solicitation.
(a) During the Employment Period and for a period of one (1)
year after the termination or expiration thereof, for any
reason, Employee will not directly or indirectly:
(i) either alone or in association with others, solicit, or
permit any person or organizations directly or indirectly to
solicit, any individual who at the time of the solicitation is,
or who within the six (6) month period prior to such
solicitation was an employee of Tiger or Hasbro to leave the
employ of Tiger or Hasbro or terminate his or her employment
relationship with either Tiger or Hasbro, or hire or attempt to
hire or induce, any employee or employees of Tiger or Hasbro to
terminate their employment with, or otherwise cease their
relationship with, Tiger or Hasbro; or
(ii) solicit, divert or take away, or attempt to divert or
to take away, the business or patronage of any of the clients,
customers or accounts, or prospective clients, customers or
accounts, of Tiger or Hasbro;
(b) The geographic scope of this Section 6 shall extend to
anywhere Tiger or Hasbro or their respective subsidiaries is
doing business at the time of termination or expiration. If any
restriction set forth in this Section 6 is found by any court of
competent jurisdiction to be unenforceable because it extends
for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time,
range of activities or geographic area as to which it may be
enforceable.
(c) Employee acknowledges that the restrictions contained in
this Section 6 are necessary for the protection of the business
and goodwill of Tiger and Hasbro and are considered by Employee
to be reasonable for such purpose. Employee agrees that any
breach of this Section 6 will cause Tiger and Hasbro substantial
and irrevocable damage, and therefore, in the event of any such
breach, in addition to such other remedies which may be
available, Tiger and Hasbro shall have the right to obtain and
receive specific performance and injunctive relief without
posting a bond or other security.
7. Other Agreements.
(a) Employee hereby represents that Employee is not bound by
the terms of any agreement with any previous employer or other
party, which would impair Employee's right or ability to enter
the employ of Tiger or perform fully Employee's obligations
pursuant to this Agreement. Employee further represents and
warrants that Employee's performance of all the terms of this
Agreement and as an Employee of Tiger does not and will not
breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by Employee in
confidence or in trust prior to Employee's employment with
Tiger.
(b) Employee agrees that upon the Commencement of Employee's
employment with Tiger he shall execute Hasbro's Invention
Assignment and Proprietary Information Agreement.
8. Notices. All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective upon
personal delivery or upon deposit in the United States Mail, by
registered or certified mail, postage prepaid, addressed to
Hasbro at 1027 Newport Avenue, Pawtucket, RI 02862 Attention:
General Counsel and to Employee at 2323 Sheridan Road, Highland
Park, IL and to Employee's attorney, Robert F. Krug, Jr.,
Carponelli & Krug, Suite 2350, 55 W. Monroe Street, Chicago, IL
60603 or at such other address or addresses as either party
shall designate to the other in accordance with this Section 8.
9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior
agreements and understandings, whether written or oral, relating
to the subject matter of this Agreement.
10. Amendment. This Agreement may be amended or modified
only by a written instrument executed by Employee, Tiger and
Hasbro.
11. Governing Law. This Agreement shall be construed, inter-
preted and enforced in accordance with the laws of the State of
Rhode Island and Employee consents to the exclusive jurisdiction
of the Federal District Court for the District of Rhode Island
to resolve all disputes arising out of Employee's employment
relationship with the Company.
12. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of both parties and their
respective successors and assigns, including any corporation
with which or into which Tiger may be merged or which may
succeed to its assets or business, provided, however, that
Employee's obligations are personal and shall not be assigned by
Employee.
13. Miscellaneous.
13.1 No delay or omission by Tiger in exercising any right
under this Agreement shall operate as a waiver of that or any
other right. A waiver or consent given by Tiger on any one
occasion shall be effective only in that instance and shall not
be construed as a bar or waiver of any right on any other
occasion.
13.2 The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or
affect the scope or substance of any Section of this Agreement.
13.3 In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity,
legality and enforceability of the remaining provisions shall in
no way be affected or impaired thereby.
13.4 IN WITNESS WHEREOF, the parties hereto have executed
this Agreement under seal as of the day and year set forth
above.
Tiger Electronics, Ltd.
/s/ Alfred J. Verrecchia
- ------------------------
Hasbro, Inc.
/s/ Alfred J. Verrecchia
- ------------------------
Title: President and Chief Operating Officer
/s/ Brian Goldner
- -----------------
Brian Goldner
EXHIBIT 11
HASBRO, INC. AND SUBSIDIARIES
Computation of Earnings (Loss) Per Share
(Thousands of Dollars and Shares Except Per Share Data)
2000 1999 1998
----------------- --------------- ---------------
Basic Diluted Basic Diluted Basic Diluted
------- ------- ------- ------- ------- -------
Net earnings (loss) $(144,631) (144,631) 188,953 188,953 206,365 206,365
======= ======= ======= ======= ======= =======
Weighted average number
of shares outstanding:
Outstanding at
beginning of year 192,984 192,984 196,175 196,175 200,162 200,162
Exercise of stock
options and warrants:
Actual 128 128 3,382 3,382 2,214 2,214
Assumed - - - 7,186 - 7,493
Purchase of
common stock (16,675) (16,675) (4,640) (4,640) (4,449) (4,449)
------- ------- ------- ------- ------- -------
Equivalent shares 176,437 176,437 194,917 202,103 197,927 205,420
======= ======= ======= ======= ======= =======
Earnings (loss)
per share $ (.82) (.82) .97 .93 1.04 1.00
======= ======= ======= ======= ======= =======
EXHIBIT 12
HASBRO, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
Fiscal Years Ended in December
(Thousands of Dollars)
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Earnings available for
fixed charges:
Net earnings (loss) ($144,631) 188,953 206,365 134,986 199,912
Add:
Fixed charges 135,302 88,456 53,209 43,893 47,174
Taxes on income (81,355) 84,892 97,113 69,539 106,981
------- ------- ------- ------- -------
Total ($90,684) 362,301 356,687 248,418 354,067
======= ======= ======= ======= =======
Fixed charges:
Interest on long-term
debt $ 74,206 25,068 9,688 7,348 9,258
Other interest charges 40,215 44,272 26,423 20,138 22,207
Amortization of debt
expense 1,724 425 121 377 339
Rental expense representa-
tive of interest factor 19,157 18,691 16,977 16,030 15,370
------- ------- ------- ------- -------
Total $135,302 88,456 53,209 43,893 47,174
======= ======= ======= ======= =======
Ratio of earnings to fixed
charges (0.67) 4.10 6.70 5.66 7.51
======= ======= ======= ======= =======
EXHIBIT 13
HASBRO, INC. AND SUBSIDIARIES
Selected Information Contained in
Annual Report to Shareholders
for the Year Ended December 31, 2000
MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- -------------------------------------------------------------------------
The Company's common stock, par value $.50 per share (the "Common Stock"), is
traded on the New York and London Stock Exchanges. Prior to June 23, 1999,
the Common Stock was traded on the American and London Stock Exchanges. The
following table sets forth the high and low sales prices as reported on the
Composite Tape of the New York Stock Exchange and the American Stock
Exchange, as applicable, and the cash dividends declared per share of Common
Stock for the periods listed.
Sales Prices
---------------- Cash Dividends
Period High Low Declared
- ------ ---- --- --------------
1999
1st Quarter $30 1/8 21 13/16 $.06
2nd Quarter 37 27 .06
3rd Quarter 28 5/8 21 15/16 .06
4th Quarter 24 1/4 16 7/8 .06
2000
1st Quarter $19 1/8 13 3/4 $.06
2nd Quarter 18 9/16 15 .06
3rd Quarter 17 13/16 10 3/16 .06
4th Quarter 12 15/16 8 3/8 .03
The approximate number of holders of record of the Company's Common Stock as
of February 28, 2001 was 8,650.
Dividends
---------
Declaration of dividends is at the discretion of the Company's Board of
Directors and will depend upon the earnings, financial condition of the
Company and such other factors as the Board of Directors deems appropriate.
Payment of dividends is further subject to restrictions contained in
agreements relating to the Company's outstanding short-term and long-term
debt. Under the most restrictive agreement, dividend payments are restricted
to the greater of $.03 per share quarterly or 25% of prior fiscal year
consolidated net income.
SELECTED FINANCIAL DATA
- -----------------------
(Thousands of Dollars and Shares Except per share Data and Ratios)
Fiscal Year
------------------------------------------------
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Statement of
Earnings Data:
Net revenues $3,787,215 4,232,263 3,304,454 3,188,559 3,002,370
Net earnings (loss)$ (144,631) 188,953 206,365 134,986 199,912
Per Common Share
Data:
Earnings (loss)
Basic $ (.82) .97 1.04 .70 1.02
Diluted $ (.82) .93 1.00 .68 .98
Cash dividends
declared $ .21 .24 .21 .21 .18
Balance Sheet Data:
Total assets $3,828,459 4,463,348 3,793,845 2,899,717 2,701,509
Long-term debt $1,167,838 420,654 407,180 - 149,382
Ratio of Earnings to
Fixed Charges(1) (.67) 4.10 6.70 5.66 7.51
Weighted Average
Number of Common
Shares:
Basic 176,437 194,917 197,927 193,089 195,061
Diluted 176,437 202,103 205,420 206,353 209,283
(1) For purposes of calculating the ratio of earnings to fixed charges,
fixed charges include interest, amortization of debt expense and
one-third of rentals; earnings available for fixed charges represent
earnings before fixed charges and income taxes. Earnings for 2000
were insufficient to cover fixed charges by $225,986.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Summary
- -------
A percentage analysis of results of operations follows:
2000 1999 1998
---- ---- ----
Net revenues 100.0% 100.0% 100.0%
Cost of sales 44.2 40.1 41.3
----- ----- -----
Gross profit 55.8 59.9 58.7
Amortization 4.2 4.1 2.2
Royalties, research and development 16.8 16.8 12.9
Advertising 12.0 10.8 13.3
Selling, distribution and administration 22.7 19.0 19.8
Restructuring charge and acquired in-process
research and development 1.7 1.5 .6
Loss on sale of business units 1.2 - -
Interest expense 3.0 1.6 1.1
Other (income) expense, net .2 (.4) (.4)
----- ----- -----
Earnings (loss) before income taxes (6.0) 6.5 9.2
Income taxes (2.2) 2.0 2.9
----- ----- -----
Net earnings (loss) (3.8)% 4.5% 6.3%
===== ===== =====
(Thousands of Dollars Except Share Data)
Results of Operations
- ---------------------
Net earnings (loss) for the three fiscal years ended December 31, 2000 were
$(144,631), $188,953 and $206,365, respectively. Diluted earnings (loss) per
share was $(.82) in 2000, $.93 in 1999 and $1.00 in 1998. Net revenues and
operating profit, excluding charges relating to the Company's consolidation
programs, decreased from 1999 levels in the U.S. Toy and International
segments. In U.S. Toys, the decline in revenues resulted from a decline in
sales of product related to STAR WARS: EPISODE 1: THE PHANTOM MENACE, POKEMON
toys and TELETUBBIES preschool products, offset in part by the United States
introduction of ACTION MAN. Coupled with the decline in revenues, lower
gross profit margins on product sold in 2000, and early 2000 higher
administrative overhead and expenditures for items such as advertising
resulted in an operating loss. In the International segment, the decline in
sales of STAR WARS product was largely offset by shipments of POKEMON toy and
non-trading card game related products. The decline in revenues was due
primarily to the unfavorable impact of currency. Higher product costs on
items sold in 2000 contributed to the decline in operating profit. The
Company's Other segments had an operating loss in 2000 compared to operating
profit in 1999 due to reduced revenues from sales of seasonal outdoor play
products, combined with decreased shipments of KOOSH and candy products. In
the Company's Games segment, revenues increased while operating profits,
before consolidation program charges and loss on sale of business units,
decreased. The increased revenues are due in large part to the full year
inclusion of trading cards games from Wizards of the Coast, Inc. (Wizards),
acquired in the fourth quarter of 1999, while decreased operating profits
result from a significant decline in sales of FURBY and related lost profit.
Included in the results of the Games segment are revenues and operating
profits derived from sales of interactive software games, and costs
associated with development of an online interactive game initiative,
Games.com. In December 2000, the Company announced it had entered into an
agreement with Infogrames Entertainment S.A. (Infogrames) to sell the
business units which make up Hasbro Interactive as well as Games.com. This
sale closed in January 2001. Net revenues from the business units held for
sale, including revenues from affiliated companies, for the three fiscal
years ended December 31, 2000 were $194,300, $237,200 and $197,000,
respectively. Operating losses of the business units to be sold, including
consolidation program charges and discontinued development charge, were
$(104,200) in 2000, $(124,300) in 1999 and $(2,100) in 1998.
Net revenues for 2000 were $3,787,215 compared to $4,232,263 and $3,304,454
for 1999 and 1998, respectively. This 11% decrease in net revenues from 1999
levels includes an approximate $129,800 worldwide unfavorable impact of
foreign currency translation rates. Decreased revenues of 47% in the U.S. Toy
segment resulted primarily from decreased sales of product relating to STAR
WARS: EPISODE 1: THE PHANTOM MENACE. It is expected that revenues and
related expenses of entertainment based products are higher in the year of a
theatrical release. STAR WARS: EPISODE 1: THE PHANTOM MENACE was released
theatrically in the United States in May 1999, and throughout international
markets thereafter. In the International segment, net revenues decreased 12%
from 1999 levels, 10% of which is due to the unfavorable impact of currency
noted above, and the remainder to a combination of reduced sales of STAR
WARS, FURBY and ACTION MAN products, offset in part by increased sales of
POKEMON toy related products. Reduced revenues of these segments over the
prior year were offset in part by increased revenues of the Games segment,
which experienced an 11% growth in revenues over the prior year. This
increase was driven primarily by trading card game revenues from Wizards,
which was acquired in the fourth quarter of 1999. While the most significant
contribution from trading card games came from sales of POKEMON card games,
other staple products from Wizards, including MAGIC: THE GATHERING, accounted
for 30% of the increase attributable to trading card games. Partly
offsetting this increase was an approximate 86% decrease in sales of FURBY
and FURBY related product, and a 22% decrease in revenues from interactive
software games.
In comparing 1999 to 1998, the Games segment led revenue growth during the
year, accounting for approximately 71% of the increase, followed by U.S. Toys
and International, contributing 18% and 13% of revenue growth, respectively.
Increased Games segment revenue was primarily driven by FURBY, which
accounted for 24% of segment revenue in 1999 compared to 7% in 1998. Revenues
from Wizards, acquired in the fourth quarter of 1999, accounted for 14% of
Games segment revenues. Increased activity in hand-held electronic games
utilizing Company and licensed brands, interactive CD-ROM games and
traditional board games such as MONOPOLY and TRIVIAL PURSUIT also contributed
to Games segment growth. U.S. Toy segment revenues were boosted by sales of
STAR WARS product associated with the theatrical release of STAR WARS:
EPISODE 1: THE PHANTOM MENACE. Revenues from this line accounted for 36% of
segment revenues in 1999 compared to 13% in 1998. This, as well as the
popular POKEMON line, traditional toy offerings such as EASY BAKE and LITE
BRITE and the full year inclusion of the MICRO MACHINES line acquired with
Galoob Toys, Inc. (Galoob) in the fourth quarter of 1998, also contributed to
revenue growth over 1998 by the U.S. Toy segment. The International segment
contribution to revenue growth was primarily driven by sales of STAR WARS,
POKEMON, TELETUBBIES and FURBY and hand-held electronic products in certain
markets, all partly offset by decreased volume in traditional board games and
puzzles as well as the negative impact of foreign currency translation. The
results of Other segments negatively affected revenue by approximately 3%,
primarily due to decreased revenues of KOOSH and candy product.
The Company's gross profit margin decreased to 55.8% in 2000 from 59.9% in
1999 and 58.7% in 1998. The decrease in margin primarily reflects product
mix, with lower revenues generated from FURBY and entertainment based
properties, such as STAR WARS related products, which carry higher gross
margins. Partially offsetting this decrease is the higher gross margin
associated with trading card games from Wizards. Moderating this higher
anticipated gross margin in 2000 was the impact of obsolescence costs
associated with overproduction of certain trading card games, primarily
POKEMON related. The increase in margin in 1999 from 1998 principally
reflects the increased revenues in the Games segment, where many product
lines carry a higher gross margin.
Amortization expense of $157,763 includes amortization of both property
rights and cost in excess of net assets acquired. This compares with $173,533
in 1999 and $72,208 in 1998. Impairment charges of $25,046 were recognized
in 2000 resulting from discontinued product line offerings arising from the
Company's decision to focus on developing its core brands. In 1999, as part
of its consolidation program, the Company recognized $38,449 in impairment
charges arising from decisions to discontinue or significantly reduce product
line offerings. The remaining increases in all years were attributable to the
acquisitions made during the period.
Expenditures for royalties, research and development decreased 11% to
$635,366 from $711,790 in 1999, which had increased from $424,673 in 1998.
Included in these amounts are expenditures for research and development of
$208,485 in 2000, $254,599 in 1999 and $184,962 in 1998. As percentages of
net revenues, research and development was 5.5% in 2000, down from 6.0% in
1999 and 5.6% in 1998. In 1999, contractual development commitments
recognized for discontinued product lines in connection with the 1999
consolidation program amounted to $10,992. The decrease in 2000 reflects
reduced spending on development of interactive software game titles, the
primary reason for the increase in 1999 over 1998, and reduced product
development in the U.S. Toy group as the Company focuses its efforts on
developing its core brands. Revenues derived from entertainment based
properties, such as STAR WARS and POKEMON, and resultant royalties, while
continuous over the life of a contract, are generally higher in amount in the
year a theatrical release takes place. It is anticipated that operating
profit will also generally be higher in these years. The degree to which
revenues, royalties and operating profits fluctuate is dependent not only on
theatrical release dates, but video release dates as well. Excluding charges
of $42,270 in 2000 and $15,300 in 1999 relating to royalty commitments on
discontinued product lines and product lines with significantly reduced
expectations recognized in connection with the Company's consolidation
programs, royalty expenditures decreased by approximately $57,000 and .2% as
a percent of net revenues from 1999. Excluding consolidation program charges,
the increase in 1999 over 1998 reflects the increased percentage of 1999
revenues obtained from licensed product carrying higher royalty rates,
primarily STAR WARS.
Advertising expense increased to 12.0% of net revenues, compared to 10.8% of
net revenues in 1999 and the 1998 level of 13.3%. Included in 2000 expense is
$3,155 related to contractual commitments on discontinued product lines
arising from the Company's 2000 consolidation program. This charge, combined
with expenditures committed to early in the year, contributed to the
increased percentage of lower 2000 net revenue. The percentage decrease in
1999 from 1998 levels primarily reflects the mix of more entertainment based
properties, such as STAR WARS and POKEMON, marketed throughout our segments,
which tend to carry a lower advertising to revenue ratio. Increased 1999
revenues in the Games segment from FURBY and trading card games also
contributed to the decrease from 1998, as these lines do not carry as great
of an advertising spend ratio as other products.
Selling, distribution and administration costs increased in both dollars and
as a percentage of net revenues in 2000 from 1999 levels. The increase
results from marketing, selling and administrative costs in the Games segment
associated with Wizards. Costs associated with tournament sponsorship and
retail operations of Wizards result in higher selling, distribution and
administrative costs than historically found in the Games segment. The
increase in the Games segment was offset in part by lower administrative
costs in the remainder of the Games segment and in the US Toy segment
relating to a significant decrease or elimination of performance based bonus
accruals existing in 1999. Comparing 1999 to 1998, selling, distribution and
administration costs increased in dollars but decreased as a percentage of
net revenues to $799,919, or 19.0% of revenues, from $655,938, or 19.9% in
1998. Of the increase in dollars, approximately 25% of the increase reflects
the Games segment's 1999 acquisition of Wizards and approximately 31% of the
increase reflects higher performance based bonus accruals. The remainder of
the increase in dollars primarily reflects costs associated with the higher
level of activity in 1999. The decreased percentage reflects higher 1999
revenues as well as the Company's commitment to control these costs, and the
benefit received from the 1997 global integration and profit enhancement
program.
The Company recognized $63,951 of restructuring expense in 2000. This amount
reflects charges under the 2000 restructuring plan of $70,079 and adjustments
to the 1999 plan of $(6,128). The pretax impact of consolidation program
charges and adjustments for the fiscal year ended December 31, 2000 was
$146,142.
On October 12, 2000, the Company announced a plan approved by its Board of
Directors (Board) to consolidate its U.S. Toy group in Rhode Island,
significantly reduce overhead through reductions in product development,
sales and marketing, and administrative functions across the Company and to
increase its focus on development of the Company's core brands. The impact
of this plan was recorded in the fourth quarter as follows:
Restructuring charge $ 70,079
--------
Other operating expenses:
Cost of sales 6,625
Amortization 25,046
Royalties, research and development 42,270
Advertising 3,155
Selling, distribution and administration 5,095
--------
82,191
--------
Total 2000 consolidation program cost $ 152,270
========
The significant components of the 2000 plan include the closing of offices in
Cincinnati, Ohio, the Napa, California office and warehouse and a small
office in San Francisco, California, thereby essentially consolidating the
U.S. Toy group in Rhode Island. These actions were substantially completed at
December 31, 2000. Additionally, the plan includes the reduction of
overhead, particularly in marketing and sales, product development and
administration. This includes a curtailment of expansion of the retail
business of Wizards, the further consolidation of certain international
operating offices into regional centers and consolidation and streamlining of
the Company's marketing activities. The Company is also increasing its focus
on developing and marketing its core brands and reducing its reliance on
licenses. This focus has resulted in product lines which will be discontinued
or for which the Company has significantly reduced expectations.
Together, the components of this plan anticipate the redundancy of
approximately 850 employees, including 125 in manufacturing and sourcing
activities and 725 worldwide in research and product development, marketing,
sales and administration. Employee redundancies by area are as follows:
Opening Balance at
Balance Activity December 31, 2000
------- ------- -------
Manufacturing activities 125 (98) 27
Research, product development, sales
marketing and administration 725 (403) 322
------- ------- -------
850 (501) 349
======= ======= =======
Total charges under the 2000 plan represent cash charges of $89,400,
comprised of approximately $31,800 for severance benefits which will be
disbursed over the employee's entitlement period, $5,100 in related charges
paid in 2000 to relocate certain U.S. Toy group employees to Rhode Island,
$21,400 for lease costs to be expended over the contractual lease term of the
closed facilities and approximately $31,100 of contractual commitments on
exited product lines and certain other licensed product lines with reduced
expectations due to the Company's enhanced focus on its core brands. The
product lines being exited were not, either individually or in the aggregate,
material to the Company's revenues or operating results. Total non-cash
charges were $62,900 of which charges of $16,900 were for fixed asset write-
offs relating primarily to Corporate and the U.S. Toy segment. The remaining
approximate $46,000 relates to asset write-offs and a write-down of assets
impaired due to the Company's enhanced focus on its core brands. This
includes impairment of intangible assets arising from the decision to
discontinue product line offerings. Non-cash charges relating to asset write-
offs have been credited to the respective line items on the balance sheet.
The components of the plan included in the restructuring charge in the
statement of operations are severance costs of $31,800, lease costs of
$21,400 and fixed asset write-offs of $16,900. Included in accrued
liabilities at December 31, 2000 is $53,200 relating to amounts due to
terminated employees over their severance entitlement period and costs
associated with lease costs. The Company anticipates pretax savings under the
restructuring plan of $49,000 in 2001 and $53,000 in 2002. The restructuring
plan is expected to be completed in fiscal 2001. Third party actions and the
impact of competition could delay or increase the cost of implementation of
the Company's consolidation program or alter the Company's actions and reduce
actual results.
In December 1999, the Company commenced a program to consolidate
manufacturing and sourcing activities and product lines, as well as
streamline and further regionalize marketing, sales and research and
development activities worldwide. Costs associated with this program in 1999
amounted to $141,575, and were recorded $64,232 in restructuring, $8,740 in
cost of sales, $38,449 in amortization, $26,292 in royalties, research and
development and $3,862 in advertising. Adjustments to the 1999 restructuring
plan of $(6,128) were recorded in 2000.
The significant components of the 1999 restructuring plan included the
closing of factories in Mexico and in the United Kingdom, reducing capacity
at the remaining three factories, shifting production to third party
manufacturers in the Far East and further consolidation and regionalization
of the International marketing and sales structure. Actions under the plan
commenced in December 1999 and were completed in fiscal 2000. There were no
material changes to the plan, however adjustments were recognized in 2000
reflecting the reversal of excess restructuring accruals due to lower than
previously estimated costs to achieve the overall objectives of the plan,
primarily in the consolidation and regionalization of the International
marketing and sales structure. The 1999 restructuring charge of $64,232
represented approximately $38,700 of cash charges for severance benefits for
termination of approximately 2,200 employees, which will be disbursed over
the employee's entitlement period, $14,300 of cash charges for lease and
facility closing costs to be expended over the contractual lease terms and
closing process and non-cash charges of $11,200 for fixed asset write-offs,
arising primarily in the manufacturing area. Of the cash amount,
approximately $4,700 was paid prior to December 26, 1999 for severance
benefits relating to approximately 200 employees terminated prior to that
date. Non-cash charges relating to fixed asset write-offs were credited to
the respective line items on the balance sheet. Details of
activity in the restructuring plan for fiscal 2000 follow:
Balance at Balance at
Dec. 26, Dec. 31,
1999 Adjustments Activity 2000
------- ----------- -------- ------
Severance $ 34,000 (4,800) (25,200) 4,000
Lease and facility
closing costs 14,300 (1,300) (9,100) 3,900
------- ------- ------- ------
$ 48,300 (6,100) (34,300) 7,900
======= ======= ======= ======
Employee redundancies by area:
Manufacturing and sourcing
activities 1,700 - (1,700) -
Research, product development, sales
marketing and administration 300 (40) (260) -
------- ------- ------- ------
2,000 (40) (1,960) -
======= ======= ======= ======
The remaining severance liability represents cash charges for severance
benefits for employees made redundant which will be disbursed over the
employee's entitlement period. The balance in lease and facility closing
costs will be expended over the contractual lease term. The Company
generated pre-tax savings of approximately $15,900 from this plan in 2000.
The components of the 1999 program included in other operating expenses
represented costs associated with exiting certain product lines and
reevaluating other product lines which resulted in reduced expectations. The
product lines being exited were not, either individually or in the aggregate,
material to the Company's revenues or operating results. Approximately
$12,000 represents cash charges that will be incurred on contractual royalty,
product development and advertising commitments associated with the
discontinued product lines. Non-cash charges of approximately $65,000 relate
to asset write-offs and write-downs of underutilized assets. This includes
impairment of intangible assets arising from the decision to discontinue or
significantly reduce product line offerings. The resulting sum of
undiscounted future cash flows of these assets was not sufficient to cover
the carrying amount of the assets, and as such, they were written down to
their fair market value. Items relating to property rights and licenses,
goodwill, inventory, prepaid and other current assets have been credited to
the respective asset in the balance sheet.
As noted above, in December 2000, the Company entered into an agreement to
sell certain business units comprising Hasbro Interactive, as well as its
internet portal, Games.com, to Infogrames for Infogrames securities and cash.
The sale of the business units closed in January 2001. Net assets of the
business units to be sold have been written down to estimated fair value as
of December 31, 2000, resulting in the recognition of a pretax loss of
$43,965. In addition, the Company entered into an agreement with Infogrames,
whereby Infogrames will develop interactive games based on the Company's
properties. The Company will receive annual royalties including a minimum
guarantee from Infogrames based on sales generated from the licensing
agreement.
During the third quarter of 1998, the Company incurred a one-time charge to
write-off the $20,000 appraised value of acquired in-process research and
development of MicroProse, Inc., which was acquired for a total purchase
price of approximately $70,000 on September 14, 1998.
Interest expense was $114,421 in 2000, compared to $69,340 in 1999 and
$36,111 during 1998. The increase largely reflects the costs associated with
funding the Company's recent acquisitions and the Company's stock repurchase
program. Under the terms of the Company's amended and restated credit
facility agreements, coupled with the increased amount of long-term debt of
the Company, Hasbro expects interest expense to increase in 2001.
Other expense of $7,288 in 2000 compares with income of $15,616 in 1999 and
$14,707 in 1998. Expense in 2000 relates primarily to the write down of
investments held for sale which have experienced a non-temporary decline in
value, coupled with a higher level of transactional losses resulting from an
unfavorable movement in foreign currency.
Income tax benefit on the pre-tax loss was 36.0% in 2000. This compares with
income tax expense of 31.0% in 1999 and 32.0% in 1998. This year's higher
rate reflects the tax benefit of operating losses in jurisdictions with
higher statutory tax rates.
Liquidity and Capital Resources
- -------------------------------
Cash and cash equivalents were $127,115 at December 31, 2000 compared to
$280,159 and $177,748 at December 26, 1999 and December 27, 1998,
respectively.
Hasbro generated approximately $163,000 of net cash from its operating
activities in 2000, compared with approximately $392,000 in 1999 and $127,000
in 1998. The 58% decrease in cash provided by operating activities from 1999
is due primarily to the approximate $145,000 net loss incurred in 2000.
Coupled with cash utilized to reduce accounts payable and accrued
liabilities, the decrease was partially offset by a 37% decrease in accounts
receivable. The decrease in accounts receivable results from a 27% decrease
in revenues for the fourth quarter of 2000 and a greater proportion of cash
collected on sales during the year. Inventories decreased as a result of
both lower production in anticipation of reduced shipments in the first
quarter of 2001 and the write-down of excess inventory, particularly trading
card games, in the fourth quarter. Conversely, prepaid expenses and other
current assets increased in large part as a result of inclusion of assets
held for sale in regards to the Company's sale of Hasbro Interactive and
Games.com to Infogrames.
Hasbro generated approximately $392,000 of net cash from its operating
activities in 1999, compared with approximately $127,000 in 1998. The
significant change between the 1999 and 1998 amounts results from a
combination of factors. Included in the 1999 amount was $38,361 utilized by
changes in operating assets and liabilities, compared with $267,231 utilized
in 1998. Full year accounts receivable for 1999 increased at a rate
significantly below that of the increase in fourth quarter revenues.
Reflecting the acquisition of Wizards made during the fourth quarter and
growth in inventory levels in the International segment for 2000 product
introduction, 1999 inventories increased over prior year levels. Prepaid and
other current assets also increased from the prior year, in part due to the
acquisition of Wizards and the increased spending on product development.
Reflecting amounts payable in 2000 for the Wizards acquisition, the remaining
unpaid amounts from the 1999 consolidation program and increased bonus
accruals in high performing segments, accounts payable and accrued
liabilities increased by 35% over prior year levels. Royalty advances made in
connection with the STAR WARS license that apply to future years have been
included in long-term assets. During 1998, $267,231 was utilized by changes
in operating assets and liabilities. With the $170,723 increase in fourth
quarter revenues from the comparable period of 1997, most of which, under
Hasbro's normal trading terms, became due after the end of the Company's
fiscal year, accounts receivable increased. Inventories also increased, in
part reflecting acquisitions made during the year, as did prepaid expenses
and other current assets, largely reflecting higher advance royalty payments.
Partially offsetting these utilizations of funds was a small increase in
accounts payable and other accrued liabilities.
Cash flows from investing activities were a net utilization of $180,710,
$429,092 and $792,700 in 2000, 1999 and 1998, respectively. During 2000, the
Company expended approximately $125,000 on additions to its property, plant
and equipment while during 1999 and 1998 it expended approximately $107,000
and $142,000, respectively. Of these amounts, 33% in 2000, 53% in 1999 and
38% in 1998 were for purchases of tools, dies and molds related to the
Company's products. Under the terms of the Company's amended and restated
credit facilities, the Company is restricted in the amount it can expend on
additions to property, plant and equipment. The 1998 additions also include
the expenditures associated with the consolidation of its Spanish
manufacturing and marketing operations into one facility. During the three
years, depreciation and amortization of plant and equipment was $106,458,
$103,791 and $96,991, respectively.
During 2000, the Company made several small acquisitions for approximately
$58,000 in total, net of cash acquired, none of which were considered
individually significant. An additional post closing adjustment payment made
and contingent payments accrued in 2000 with relation to the September 1999
acquisition of Wizards totaled approximately $79,800, bringing the total
acquisition cost to date to $492,574. On September 30, 1999, the Company
acquired the outstanding shares of Wizards, for an initial purchase price of
$325,000, subject to additional payments based upon the closing balance sheet
and future payments contingent upon achieving certain operating objectives.
The Company also made other smaller acquisitions and investments in 1999,
none of which were significant. Hasbro made three major acquisitions during
1998, having an aggregate purchase price of $669,737. On April 1, 1998, it
acquired substantially all of the business and operating assets of Tiger
Electronics, Inc. and certain affiliates. On September 14, 1998, it acquired
the outstanding shares of MicroProse Inc. through a cash tender offer of
$6.00 for each outstanding share. On October 30, 1998, it acquired the
outstanding shares of Galoob through a cash tender offer of $12.00 for each
outstanding share. Other investing activities in 2000 largely reflects a
reduction in intangible and other long-term assets of Hasbro Interactive and
Games.com, which were sold to Infogrames. Under the terms of the Company's
amended and restated credit facilities, the Company is restricted in the
amount it can expend on future acquisitions.
The Company commits to inventory production, advertising and marketing
expenditures prior to the peak third and fourth quarter retail selling
season. In addition, accounts receivable, which increase with customer
purchases, are also closer to this selling season and are generally not due
for payment until the fourth quarter or early in the first quarter of the
subsequent year. This timing difference between expenses paid and revenues
collected makes it necessary for the Company to borrow significant amounts
during the year. During 2000, the Company borrowed through the issuance of
commercial paper and against short-term lines of credit to fund its seasonal
working capital requirements in excess of funds available from operations and
the issuance of long-term debt. In February 2001, the Company entered into
amended and restated secured revolving and line of credit facility agreements
with its existing lenders. These committed lines include long-term and
short-term secured credit agreements of $325,000 each. The facilities are
secured by substantially all domestic accounts receivable and inventory, as
well as certain investments and intangible assets of the Company. The
Company is not required to maintain compensating balances under the
agreements. The agreements contain certain restrictive covenants setting
forth minimum cash flow and coverage requirements, and a number of other
limitations, including with respect to capital expenditures, investments,
acquisitions, share repurchases and dividend payments. During 2001, the
Company expects to fund its seasonal working capital needs through operations
and these lines of credit and believes that the funds available to it are
adequate to meet its needs. Amounts available for borrowing under the
committed revolving and line of credit facilities are $325,000 (long-term)
and $325,000 (short-term) and vary by quarter, with availability at its
lowest point of $300,000 in the first quarter of 2001. Of this amount
available, $213,000 is unused at March 4, 2001. Amounts available and unused
under uncommitted lines at March 4, 2001 were $143,000.
During 2000, net financing activities utilized approximately $128,000 of
funds of the Company, primarily as a result of the completion on March 27 of
a "Modified Dutch Auction" tender offer, pursuant to which the Company
accepted for payment 18,085,578 shares of common stock, representing
approximately 9.5% of outstanding shares, at a purchase price of $17.25 per
share. The aggregate purchase, including fees and expenses associated with
the tender offer, was approximately $313,000. Offsetting this utilization
was net borrowing activities in 2000 which included the issuance of $550,000
of 7.95% notes due March 15, 2003 and $200,000 of 8.50% notes due March 15,
2006. During 1999, net financing activities provided approximately $145,000
of funds to the Company, primarily through the use of short-term borrowings.
Net financing activities during 1998 provided approximately $490,000,
principally through the issuance of $100,000 of 5.60% notes due November 1,
2005, $150,000 of 6.15% notes due July 15, 2008 and $150,000 of 6.6%
debentures due July 15, 2028.
On December 9, 1997, the Board cancelled all prior share repurchase
authorizations and authorized the purchase of up to an additional $500,000 of
the Company's common stock. On December 6, 1999, the Board authorized an
additional common stock repurchase program up to $500,000. As a result of the
"Modified Dutch Auction" tender offer, the repurchase authorization of 1997
has been completed while $204,500 remains under the 1999 authorization. The
shares acquired under these programs are being used for corporate purposes
including issuance upon the exercise of stock options and warrants. Under
terms of the current bank agreements, the Company is limited in its
repurchase of its shares in the future to $5,000 per year. During 1999, the
Company also invested approximately $240,000 to repurchase its common stock
in the open market. This compares with approximately $180,000 repurchased in
the open market in 1998.
At December 31, 2000, under the most restrictive bank credit agreement
covenant, dividend payments are restricted to the greater of $.03 per share
quarterly or 25% of prior fiscal year consolidated net income.
Financial Risk Management
- -------------------------
The Company is exposed to market risks attributable to fluctuations in
foreign currency exchange rates primarily as a result of sourcing products in
four currencies while marketing those products in more than thirty
currencies. Results of operations will be affected primarily by changes in
the value of the U.S. dollar, Hong Kong dollar, British pound, Euro, Canadian
dollar and Mexican peso versus other currencies, principally in Europe and
the United States.
To manage this exposure, as of December 31, 2000, the Company has hedged a
portion of its estimated fiscal 2001 foreign currency transactions using a
combination of forward foreign exchange contracts and purchased foreign
currency options. The Company estimates that a hypothetical immediate 10%
unfavorable movement in the currencies involved could result in an
approximate $13.7 million decrease in the fair value of these instruments.
The Company is also exposed to foreign currency risk with respect to its net
cash and cash equivalents or short-term borrowing positions in other than the
U.S. dollar. The Company believes, however, that the risk on this net
exposure would not be material to its financial condition. In addition, the
Company's revenues and costs have been and will likely continue to be
affected by changes in foreign currency rates. The Company does not speculate
in and other than set forth above, the Company does not hedge foreign
currencies.
At December 31, 2000, the Company had fixed rate long-term debt of
$1,167,838. Interest rate changes affect the fair value of this fixed rate
debt but do not impact earnings or cash flows. The Company estimates that a
hypothetical one percentage point decrease or increase in interest rates
would increase or decrease the fair value of this debt by approximately
$31,000 or $29,000, respectively.
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (SFAS 133). SFAS 133 was
amended during 1999, requiring the Company to adopt SFAS 133 effective
January 1, 2001. SFAS 133 will require that the Company record all
derivatives, such as foreign exchange contracts, in the balance sheet at fair
value. Changes in derivative fair values will either be recognized in
earnings as an offset to the changes in the fair value of the related hedged
assets, liabilities and firm commitments or, for forecasted transactions,
deferred and recorded as a component of other shareholders' equity until the
hedged transactions occur and are recognized in earnings. The ineffective
portion of a hedging derivative's change in fair value will be immediately
recognized in earnings.
The one-time effect of adopting SFAS 133 on the Company's assets,
liabilities, other comprehensive income and net income will be less than
$1,000 for the fiscal quarter ending April 1, 2001.
The Economy and Inflation
- -------------------------
The Company continued to experience difficult economic environments in some
parts of the world during 2000. The principal market for the Company's
products is the retail sector where certain customers have experienced
economic difficulty. The Company closely monitors the creditworthiness of its
customers and adjusts credit policies and limits as it deems appropriate.
The effect of inflation on the Company's operations during 2000 was not
significant and the Company will continue its policy of monitoring costs and
adjusting prices accordingly.
Euro Conversion
- ---------------
Certain member countries of the European Union established fixed conversion
rates between their existing currencies and the European Economic Monetary
Union common currency, or Euro. While the Euro was introduced on January 1,
1999, member countries will continue to use their existing currencies through
January 1, 2002, with the transition period for full conversion to the Euro
ending June 30, 2002. Transition to the Euro creates certain issues for the
Company with respect to upgrading information technology systems for 2002
full use requirements, reassessing currency risk, product pricing, amending
business and financial contracts as well as processing tax and accounting
records. The Company has and will continue to address these transition issues
and does not expect the Euro to have a material effect on the results of
operations or financial condition of the Company.
Other Information
- -----------------
The Company's revenue pattern continues to show the second half of the year
more significant to its overall business. The trend of retailers over the
past few years has been to make a higher percentage of their purchases within
or close to the fourth quarter holiday consumer selling season, which
includes Christmas.
The Company is not aware of any material amounts of potential exposure
relating to environmental matters and does not believe its compliance costs
or liabilities to be material to its operating results or financial position.
In May 2000, the Emerging Issues Task Force reached a consensus on issue No.
00-14, Accounting for Coupons, Rebates, and Discounts (Issue 00-14). Issue
00-14 requires that all expenses relating to sales incentives such as
coupons, rebates and discounts be reported as a reduction of sales. Issue
00-14 will be effective for the Company not later than the second quarter of
2001. The Company currently estimates the impact of adopting Issue 00-14 on
net revenues and selling, distribution and administration expense would not
have a material effect on the Company's financial condition.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- -------------------------------------------
See attached pages.
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Hasbro, Inc.:
We have audited the accompanying consolidated balance sheets of
Hasbro, Inc. and subsidiaries as of December 31, 2000 and December 26, 1999
and the related consolidated statements of operations, shareholders' equity
and cash flows for each of the fiscal years in the three-year period ended
December 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Hasbro, Inc. and subsidiaries as of December 31, 2000 and December 26, 1999
and the results of their operations and their cash flows for each of the
fiscal years in the three-year period ended December 31, 2000 in conformity
with accounting principles generally accepted in the United States of
America.
/s/ KPMG LLP
Providence, Rhode Island
February 7, 2001
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2000 and December 26, 1999
(Thousands of Dollars Except Share Data)
Assets 2000 1999
------ ---- ----
Current assets
Cash and cash equivalents $ 127,115 280,159
Accounts receivable, less allowance for
doubtful accounts of $55,000 in 2000
and $65,000 in 1999 685,975 1,084,118
Inventories 335,493 408,571
Prepaid expenses and other current assets 431,630 358,804
--------- ---------
Total current assets 1,580,213 2,131,652
Property, plant and equipment, net 296,729 318,825
--------- ---------
Other assets
Cost in excess of acquired net assets, less
accumulated amortization of $225,770 in 2000
and $193,947 in 1999 803,189 806,092
Other intangibles, less accumulated amortization
of $347,149 in 2000 and $300,632 in 1999 902,893 949,789
Other 245,435 256,990
--------- ---------
Total other assets 1,951,517 2,012,871
--------- ---------
Total assets $3,828,459 4,463,348
========= =========
HASBRO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
December 31, 2000 and December 26, 1999
(Thousands of Dollars Except Share Data)
Liabilities and Shareholders' Equity 2000 1999
------------------------------------ ---- ----
Current liabilities
Short-term borrowings $ 228,085 714,669
Accounts payable 191,749 284,772
Accrued liabilities 789,128 983,280
Income taxes 30,850 88,606
--------- ---------
Total current liabilities 1,239,812 2,071,327
Long-term debt 1,167,838 420,654
Deferred liabilities 93,403 92,392
--------- ---------
Total liabilities 2,501,053 2,584,373
--------- ---------
Shareholders' equity
Preference stock of $2.50 par value.
Authorized 5,000,000 shares; none issued - -
Common stock of $.50 par value. Authorized
600,000,000 shares; issued 209,694,630 shares
in 2000 and 1999 104,847 104,847
Additional paid-in capital 464,084 468,329
Deferred compensation (6,889) -
Retained earnings 1,583,394 1,764,110
Accumulated other comprehensive earnings (44,718) (32,982)
Treasury stock, at cost, 37,253,164 shares in
2000 and 16,710,620 shares in 1999 (773,312) (425,329)
--------- ---------
Total shareholders' equity 1,327,406 1,878,975
--------- ---------
Total liabilities and shareholders' equity $3,828,459 4,463,348
========= =========
See accompanying notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Fiscal Years Ended in December
(Thousands of Dollars Except Share Data)
2000 1999 1998
---- ---- ----
Net revenues $3,787,215 4,232,263 3,304,454
Cost of sales 1,673,973 1,698,242 1,366,061
--------- --------- ---------
Gross profit 2,113,242 2,534,021 1,938,393
--------- --------- ---------
Expenses
Amortization 157,763 173,533 72,208
Royalties, research and development 635,366 711,790 424,673
Advertising 452,978 456,978 440,692
Selling, distribution and administration 863,496 799,919 655,938
Restructuring charge 63,951 64,232 -
Loss on sale of business units 43,965 - -
Acquired in-process research and
development - - 20,000
--------- --------- ---------
Total expenses 2,217,519 2,206,452 1,613,511
--------- --------- ---------
Operating profit (loss) (104,277) 327,569 324,882
--------- --------- ---------
Nonoperating (income) expense
Interest expense 114,421 69,340 36,111
Other (income) expense, net 7,288 (15,616) (14,707)
--------- --------- ---------
Total nonoperating expense 121,709 53,724 21,404
--------- --------- ---------
Earnings (loss) before income taxes (225,986) 273,845 303,478
Income taxes (81,355) 84,892 97,113
--------- --------- ---------
Net earnings (loss) $ (144,631) 188,953 206,365
========= ========= =========
Per common share
Net earnings (loss)
Basic $ (.82) .97 1.04
========= ========= =========
Diluted $ (.82) .93 1.00
========= ========= =========
Cash dividends declared $ .21 .24 .21
========= ========= =========
See accompanying notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Fiscal Years Ended in December
(Thousands of Dollars)
2000 1999 1998
---- ---- ----
Cash flows from operating activities
Net earnings (loss) $(144,631) 188,953 206,365
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation and amortization of plant
and equipment 106,458 103,791 96,991
Other amortization 157,763 173,533 72,208
Deferred income taxes (67,690) (38,675) 1,679
Compensation earned under restricted
stock programs 2,754 - -
Loss on sale of business units 43,965 - -
Acquired in-process research and
development - - 20,000
Change in operating assets and liabilities
(other than cash and cash equivalents):
Decrease (increase) in accounts
receivable 395,682 (11,248) (126,842)
Decrease (increase) in inventories 69,657 (44,212) (44,606)
Increase in prepaid expenses
and other current assets (84,006) (26,527) (113,451)
(Decrease) increase in accounts payable
and other current liabilities (292,313) 193,626 17,668
Long-term advances and other (25,083) (147,729) (3,425)
------- ------- -------
Net cash provided by operating
activities 162,556 391,512 126,587
------- ------- -------
Cash flows from investing activities
Additions to property, plant and
equipment (125,055) (107,468) (141,950)
Investments and acquisitions, net of
cash acquired (138,518) (352,417) (667,736)
Other 82,863 30,793 16,986
------- ------- -------
Net cash utilized by investing
activities (180,710) (429,092) (792,700)
------- ------- -------
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
Fiscal Years Ended in December
(Thousands of Dollars)
2000 1999 1998
---- ---- ----
Cash flows from financing activities
Proceeds from borrowings with original
maturities of more than three months 912,979 460,333 407,377
Repayments of borrowings with original
maturities of more than three months (291,779) (308,128) (24,925)
Net (repayments) proceeds of other
short-term borrowings (341,522) 226,103 271,895
Purchase of common stock (367,548) (237,532) (178,917)
Stock option and warrant transactions 2,523 50,358 58,493
Dividends paid (42,494) (45,526) (42,277)
------- ------- -------
Net cash (utilized) provided by
financing activities (127,841) 145,608 491,646
------- ------- -------
Effect of exchange rate changes on cash (7,049) (5,617) (9,570)
------- ------- -------
(Decrease) increase in cash
and cash equivalents (153,044) 102,411 (184,037)
Cash and cash equivalents at beginning
of year 280,159 177,748 361,785
------- ------- -------
Cash and cash equivalents at end
of year $127,115 280,159 177,748
======= ======= =======
Supplemental information
Cash paid during the year for
Interest $ 91,180 64,861 25,135
======= ======= =======
Income taxes $ 95,975 108,342 128,436
======= ======= =======
See accompanying notes to consolidated financial statements.
HASBRO, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(Thousands of Dollars)
Accumulated
Additional Other Total
Common Paid-in Deferred Retained Comprehensive Treasury Shareholders'
Stock Capital Compensation Earnings Earnings Stock Equity
--------- --------- --------- --------- --------- --------- ---------
Balance, December 28, 1997 $ 104,849 454,498 - 1,457,495 (3,903) (174,822) 1,838,117
Net earnings - - - 206,365 - - 206,365
Other comprehensive earnings - - - - (5,722) - (5,722)
Comprehensive earnings 200,643
Purchase of treasury stock - - - - - (178,917) (178,917)
Stock option and warrant
transactions - 66,818 - - - 60,195 127,013
Dividends declared - - - (42,061) - - (42,061)
--------- --------- --------- --------- --------- --------- ---------
Balance, December 27, 1998 104,849 521,316 - 1,621,799 (9,625) (293,544) 1,944,795
Net earnings - - - 188,953 - - 188,953
Other comprehensive earnings - - - - (23,357) - (23,357)
Comprehensive earnings 165,596
Purchase of treasury stock - - - - - (237,532) (237,532)
Stock option and warrant
transactions - (52,892) - - - 105,747 52,855
Dividends declared - - - (46,642) - - (46,642)
Other (2) (95) - - - - (97)
--------- --------- --------- --------- --------- --------- ---------
Balance, December 26, 1999 104,847 468,329 - 1,764,110 (32,982) (425,329) 1,878,975
Net loss - - - (144,631) - - (144,631)
Other comprehensive earnings - - - - (11,736) - (11,736)
Comprehensive earnings (156,367)
Purchase of treasury stock - - - - - (367,548) (367,548)
Stock option and warrant
transactions - (1,708) - - - 7,406 5,698
Restricted stock activity (2,537) (6,889) - - 12,159 2,733
Dividends declared - - - (36,085) - - (36,085)
--------- --------- --------- --------- --------- --------- ---------
Balance, December 31, 2000 $ 104,847 464,084 (6,889) 1,583,394 (44,718) (773,312) 1,327,406
========= ========= ========= ========= ========= ========= =========
See accompanying notes to consolidated financial statements
HASBRO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Thousands of Dollars Except Share Data)
(1) Summary of Significant Accounting Policies
------------------------------------------
Principles of Consolidation
---------------------------
The consolidated financial statements include the accounts of Hasbro,
Inc. and all significant majority-owned subsidiaries (Hasbro or the
Company). Investments in affiliates representing 20% to 50% ownership
interest are accounted for using the equity method. All significant
intercompany balances and transactions have been eliminated.
Preparation of Financial Statements
-----------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and notes thereto. Actual results could differ from those estimates.
Fiscal Year
-----------
Hasbro's fiscal years end on the last Sunday in December. The fiscal
year ended December 31, 2000 is a fifty-three week period while the
fiscal years ended December 26, 1999 and December 27, 1998 were fifty-two
week periods.
Cash and Cash Equivalents
-------------------------
Cash and cash equivalents include all cash balances and highly liquid
investments purchased with a maturity to the Company of three months or
less.
Inventories
-----------
Inventories are valued at the lower of cost (first-in, first-out) or
market.
Long-Lived Assets
-----------------
The Company reviews long-lived assets (property, plant and equipment,
cost in excess of acquired net assets and other intangibles) for
impairment whenever events or changes in circumstances indicate the
carrying value may not be recoverable. Recoverability is measured by a
comparison of the carrying amount of an asset to future undiscounted net
cash flows expected to be generated by the asset. If such assets were
considered to be impaired, the impairment to be recognized would be
measured by the amount by which the carrying value of the assets exceed
their fair value. Fair value is determined based on discounted cash flows
or appraised values, depending on the nature of the asset. Assets to be
disposed of are carried at the lower of the carrying amount or their fair
value less disposal costs.
Cost in Excess of Net Assets Acquired and Other Intangibles
-----------------------------------------------------------
Approximately 43% of Hasbro's goodwill results from the 1984 acquisition
of Milton Bradley Company (Milton Bradley), including its Playskool and
international units, and the 1991 acquisition of Tonka Corporation
(Tonka), including its Kenner, Parker Brothers and international units.
Approximately 24% results from the Company's 1998 acquisitions of Tiger
Electronics, Inc. and Galoob Toys, Inc. An additional approximate 21%
results from the Company's 1999 acquisition of Wizards of the Coast, Inc.
Goodwill is being amortized on the straight-line basis over lives ranging
from ten to forty years.
Substantially all of the other intangibles consist of the cost of
acquired product rights. In establishing the value of such rights, the
Company considers, but does not individually value, existing trademarks,
copyrights, patents, license agreements and other product-related rights.
Approximately 61% of these other intangibles relate to rights acquired in
the acquisitions noted above. These rights, which were valued at their
acquisition date based on the anticipated future cash flows from the
underlying product lines, are being amortized over three to twenty-five
years using the straight-line method. An additional approximate 11% of
these other intangibles relate to rights acquired from a major motion
picture studio and are being amortized over the contract life, in
proportion to projected sales of the licensed products during the same
period.
Depreciation and Amortization
-----------------------------
Depreciation and amortization are computed using accelerated and
straight-line methods to amortize the cost of property, plant and
equipment over their estimated useful lives. The principal lives, in
years, used in determining depreciation rates of various assets are: land
improvements 15 to 19, buildings and improvements 15 to 25 and machinery
and equipment 3 to 12.
Tools, dies and molds are amortized over a three year period or their
useful lives, whichever is less, using an accelerated method.
Revenue Recognition
-------------------
Revenue from product sales is recognized upon the passing of title to the
customer, generally at the time of shipment. Provisions for discounts,
rebates and returns are made when the related revenues are recognized.
The Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin 101 (SAB 101), Revenue Recognition in Financial Statements, in
December 1999. The SAB summarizes certain of the SEC staff's views in
applying generally accepted accounting principles to revenue recognition
in financial statements. SAB 101 was adopted by the Company in the fourth
quarter and had no significant impact on the consolidated financial
statements.
Research and Development
------------------------
Research and product development costs for 2000, 1999 and 1998 were
$208,485, $254,599 and $184,962, respectively.
Advertising
-----------
Production costs of commercials and programming are charged to operations
in the fiscal year during which the production is first aired. The costs
of other advertising, promotion and marketing programs are charged to
operations in the fiscal year incurred.
Shipping and Handling
---------------------
Hasbro expenses costs related to the shipment and handling of goods to
customers as incurred. For 2000, 1999, and 1998, these costs were
$177,200, $169,068 and $155,521 and are included in selling, distribution
and administration expenses.
Income Taxes
------------
Hasbro uses the asset and liability approach for financial accounting and
reporting for income taxes. Deferred income taxes have not been provided
on undistributed earnings of international subsidiaries as substantially
all of such earnings are indefinitely reinvested by the Company.
Comprehensive Income
--------------------
Comprehensive income is comprised primarily of gains and losses on the
translation of foreign currency financial statements and also includes
unrealized gains and losses on certain investment securities, net of tax.
The related tax benefit of other comprehensive income items was $720,
$3,187 and $1,684 for the years 2000, 1999 and 1998, respectively.
Reclassification adjustments in 2000, net of related income taxes of
$2,695, were $4,398.
Foreign Currency Translation
----------------------------
Foreign currency assets and liabilities are translated into dollars at
current rates, and revenues, costs and expenses are translated at average
rates during each reporting period. Current earnings include gains or
losses resulting from foreign currency transactions as well as
translation gains and losses resulting from the use of the U.S. dollar as
the functional currency in highly inflationary economies. Other gains and
losses resulting from translation of financial statements are the
principal component of other comprehensive earnings.
Pension Plans, Postretirement and Postemployment Benefits
---------------------------------------------------------
Hasbro, except for certain international subsidiaries, has pension plans
covering substantially all of its full-time employees. Pension expense is
based on actuarial computations of current and future benefits. The
Company's policy is to fund amounts which are required by applicable
regulations and which are tax deductible. The estimated amounts of future
payments to be made under other retirement programs are being accrued
currently over the period of active employment and are also included in
pension expense.
Hasbro has a contributory postretirement health and life insurance plan
covering substantially all employees who retire under any of its United
States defined benefit pension plans and meet certain age and length of
service requirements. It also has several plans covering certain groups
of employees which may provide benefits to such employees following their
period of employment but prior to their retirement.
Risk Management Contracts
-------------------------
Hasbro does not enter into derivative financial instruments for
speculative purposes. The Company enters into foreign currency forward
and option contracts to mitigate its exposure to foreign currency
exchange rate fluctuations. This exposure relates to future purchases of
inventory not denominated in the functional currency of the unit
purchasing the inventory as well as other cross-border currency
requirements. Premiums on option contracts are amortized over their term
and if such contract is terminated before its maturity, the unamortized
premium is expensed and included in other expense, net. The carrying
value of options is included in prepaid expenses and other current
assets. Gains and losses on forward and option contracts meeting hedge
accounting requirements are deferred and recognized as adjustments to the
carrying value of the related transactions. In the event hedge accounting
requirements are not met, gains and losses on such instruments are
included currently in the statements of operations.
Earnings Per Common Share
-------------------------
Basic earnings per share is computed by dividing net earnings by the
weighted average number of shares outstanding for the year. Diluted
earnings per share is similar except that the weighted average number of
shares outstanding is increased by shares issuable upon exercise of stock
options and warrants for which market price exceeds exercise price, less
shares which could have been purchased by the Company with the related
proceeds. As a result of the Company's net loss during 2000, the basic
and diluted shares are the same because increasing diluted shares by 526
related to employee stock options would have an antidilutive effect.
A reconciliation of earnings per share for the three fiscal years ended
December 31, 2000 is as follows:
2000 1999 1998
--------------- --------------- ---------------
Basic Diluted Basic Diluted Basic Diluted
------- ------- ------- ------- ------- -------
Net earnings (loss) $(144,631) (144,631) 188,953 188,953 206,365 206,365
======= ======= ======= ======= ======= =======
Average shares
outstanding 176,437 176,437 194,917 194,917 197,927 197,927
Options and warrants - - - 7,186 - 7,493
------- ------- ------- ------- ------- -------
Equivalent shares 176,437 176,437 194,917 202,103 197,927 205,420
======= ======= ======= ======= ======= =======
Earnings (loss)
per share $ (.82) (.82) .97 .93 1.04 1.00
======= ======= ======= ======= ======= =======
(2) Acquisitions and Disposals
--------------------------
In December 2000, the Company entered into an agreement to sell certain
business units comprising Hasbro Interactive, as well as its internet
portal, Games.com, to Infogrames Entertainment SA (Infogrames) for
Infogrames securities and cash. The sale of the business units closed in
January 2001. Net assets of the business units to be sold have been
written down to estimated fair value as of December 31, 2000, resulting
in the recognition of a pretax loss of $43,965. The net assets of the
business units held for sale are presented in the balance sheet at
December 31,2000 as a component of prepaid expenses and other current
assets. In the three fiscal years ended December 31, 2000, net revenues
of the business units sold were $194,300, $237,200 and $197,000,
respectively. Operating losses of the business units to be sold,
including consolidation program charges and discontinued development
charge, were $(104,200) in 2000, $(124,300) in 1999 and $(2,100) in 1998.
On September 30, 1999, Hasbro acquired Wizards of the Coast, Inc.
(Wizards) for an initial purchase price of $325,000 subject to additional
payments based upon the closing balance sheet and future payments
contingent upon achieving certain operating objectives. The total
acquisition cost to date amounts to $492,574, which includes $76,495 of
contingent payment in accrued liabilities at year end with respect to
2000, and has been accounted for using the purchase method. The Company
also made several smaller acquisitions in 2000, none of which were
material.
On a pro forma basis, reflecting the acquisition of Wizards as if it had
taken place at the beginning of each period and after giving effect to
adjustments recording the acquisition, unaudited net revenues, net
earnings and basic and diluted earnings per share for the year ended
December 26, 1999 would have been $4,630,368, $270,386, $1.39 and $1.34,
respectively, and for the year ended December 27, 1998 would have been
$3,459,343, $177,704, $.90 and $.87, respectively. These pro forma
results are not indicative of either future performance or actual results
which would have occurred had the acquisition taken place at the
beginning of the respective periods.
(3) Inventories
-----------
2000 1999
---- ----
Finished products $285,884 348,058
Work in process 19,071 13,470
Raw materials 30,538 47,043
------- -------
$335,493 408,571
======= =======
(4) Property, Plant and Equipment
-----------------------------
2000 1999
---- ----
Land and improvements $ 12,146 16,323
Buildings and improvements 206,518 199,713
Machinery and equipment 297,410 355,958
------- -------
516,074 571,994
Less accumulated depreciation 253,533 298,766
------- -------
262,541 273,228
Tools, dies and molds, net of
amortization 34,188 45,597
------- -------
$296,729 318,825
======= =======
Expenditures for maintenance and repairs which do not materially extend
the life of the assets are charged to operations.
(5) Short-Term Borrowings
---------------------
At December 31, 2000, Hasbro has available secured committed and
unsecured uncommitted lines of credit from various banks approximating
$704,000 and $419,000, respectively. Substantially all of the short-term
borrowings outstanding at the end of 2000 and 1999 represent borrowings
made under, or supported by, these lines of credit and the weighted
average interest rates of the outstanding borrowings were 10.0% and 6.4%,
respectively. During 2000, Hasbro's working capital needs were fulfilled
by borrowing under these lines of credit and through the issuance of
commercial paper, both of which were on terms and at interest rates
generally extended to companies of comparable creditworthiness. Certain
domestic accounts receivable and inventory of the Company secured the
committed lines at December 31, 2000. In February 2001, the Company
entered into amended and restated secured revolving and line of credit
facility agreements with its existing lenders. These committed lines
include $325,000 and $325,000 available under long-term and short-term
secured credit agreements, respectively. The facilities are secured by
substantially all domestic accounts receivable and inventory, as well as
certain investments and intangible assets of the Company. The Company is
not required to maintain compensating balances, however, it is required
to pay a fee of 3/8% per annum of the unused amount of the facility
available for borrowing. The agreements contain certain restrictive
covenants setting forth minimum cash flow and coverage requirements, and
a number of other limitations, including with respect to capital
expenditures, investments, acquisitions, share repurchases and dividend
payments.
(6) Accrued Liabilities
-------------------
2000 1999
---- ----
Royalties $149,020 178,211
Advertising 86,480 140,129
Payroll and management incentives 71,840 114,852
Other 481,788 550,088
------- -------
$789,128 983,280
======= =======
(7) Long-Term Debt
--------------
2000 1999
---- ----
7.95% Notes Due 2003 $ 550,000 -
5.60% Notes Due 2005 100,000 100,000
8.50% Notes Due 2006 200,000 -
6.15% Notes Due 2008 150,000 150,000
6.60% Debentures Due 2028 150,000 150,000
Other 17,838 20,654
------- -------
$1,167,838 420,654
========= =======
Current installments of $1,793 in 2000 and $4,142 in 1999 are aggregated
with short-term borrowings. The maturities of long-term debt in 2002 and
in the succeeding three years are $2,400, $550,900, $1,000 and $101,000.
(8) Income Taxes
------------
Income taxes attributable to earnings (loss) before income taxes are:
2000 1999 1998
---- ---- ----
Current
United States $(41,343) 77,512 40,256
State and local (443) 5,566 5,226
International 28,121 40,489 49,952
------- ------- -------
(13,665) 123,567 95,434
------- ------- -------
Deferred
United States (59,775) (40,131) (6,458)
State and local (5,124) (3,440) (554)
International (2,791) 4,896 8,691
------- ------- -------
(67,690) (38,675) 1,679
------- ------- -------
$(81,355) 84,892 97,113
======= ======= =======
Certain tax benefits are not reflected in income taxes in the statements
of operations. Such benefits of $248 in 2000, $16,735 in 1999 and
$14,377 in 1998, relate primarily to stock options.
A reconciliation of the statutory United States federal income tax rate
to Hasbro's effective income tax rate is as follows:
2000 1999 1998
---- ---- ----
Statutory income tax rate (35.0)% 35.0% 35.0%
State and local income taxes, net (1.6) .5 1.0
Goodwill amortization 4.6 3.3 1.8
Tax on international earnings (3.1) (7.9) (5.4)
Other, net (.9) .1 (.4)
---- ---- ----
(36.0)% 31.0% 32.0%
==== ==== ====
The components of earnings (loss) before income taxes, determined by tax
jurisdiction, are as follows:
2000 1999 1998
---- ---- ----
United States $(318,859) 79,519 123,969
International 92,873 194,326 179,509
------- ------- -------
$(225,986) 273,845 303,478
======= ======= =======
The components of deferred income tax expense arise from various
temporary differences and relate to items included in the statements of
operations.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 2000
and December 26, 1999 are:
2000 1999
Deferred tax assets: ---- ----
Accounts receivable $ 33,227 36,696
Inventories 22,839 26,205
Net operating loss carryovers 29,885 28,930
Operating expenses 50,713 39,512
Postretirement benefits 12,032 12,243
Other 147,023 99,143
------- -------
Gross deferred tax assets 295,719 242,729
Valuation allowance (11,124) (15,146)
------- -------
Net deferred tax assets 284,595 227,583
------- -------
Deferred tax liabilities 118,870 100,820
------- -------
Net deferred income taxes $165,725 126,763
======= =======
Hasbro has a valuation allowance for deferred tax assets at December 31,
2000 of $11,124, which is a decrease of $4,022 from the $15,146 at
December 26, 1999. The allowance pertains to United States and
international operating loss carryforwards, some of which have no
expiration and others that would expire beginning in 2003. If fully
realized, $7,103 will reduce goodwill and the balance will reduce future
income tax expense. Deferred tax liabilities relate primarily to property
rights.
Based on Hasbro's history of taxable income and the anticipation of
sufficient taxable income in years when the temporary differences are
expected to become tax deductions, it believes that it will realize the
benefit of the deferred tax assets, net of the existing valuation
allowance.
Deferred income taxes of $155,291 and $115,646 at the end of 2000 and
1999, respectively, are included as a component of prepaid expenses and
other current assets, and $14,693 and $19,592, respectively, are included
as a component of other assets. At the same dates, deferred income taxes
of $806 and $1,236, respectively, are included as a component of accrued
liabilities, and $3,453 and $7,239, respectively, are included as a
component of deferred liabilities.
The cumulative amount of undistributed earnings of Hasbro's international
subsidiaries held for reinvestment is approximately $408,000 at December
31, 2000. In the event that all international undistributed earnings were
remitted to the United States, the amount of incremental taxes would be
approximately $60,000.
(9) Capital Stock
-------------
Preference Share Purchase Rights
--------------------------------
Hasbro maintains a Preference Share Purchase Rights plan (the Rights
Plan). Under the terms of the Rights Plan, each share of common stock is
accompanied by a Preference Share Purchase Right. Each Right is only
exercisable under certain circumstances and, until exercisable, the
Rights are not transferable apart from Hasbro's common stock. When
exercisable, each Right will entitle its holder to purchase until June
30, 2009, in certain merger or other business combination or
recapitalization transactions, at the Right's then current exercise
price, a number of the acquiring company's or Hasbro's, as the case may
be, common shares having a market value at that time of twice the Right's
exercise price. Under certain circumstances, the Company may substitute
cash, other assets, equity securities or debt securities for the common
stock. At the option of the Board of Directors of Hasbro (the Board),
the rightholder may, under certain circumstances, receive shares of
Hasbro's stock in exchange for Rights.
Prior to the acquisition by the person or group of beneficial ownership
of a certain percentage of Hasbro's common stock, the Rights are
redeemable for $.01 per Right. The Rights Plan contains certain
exceptions with respect to the Hassenfeld family and related entities.
Common Stock
------------
On December 6, 1999, the Board authorized a common share repurchase
program up to $500,000. At December 31, 2000, $204,500 remained under
this authorization.
On February 19, 1999, the Board declared a three-for-two stock split,
payable in the form of a 50% stock dividend, on March 15, 1999 to
shareholders of record on March 1, 1999. All earnings per common share
amounts, references to common stock and shareholders' equity amounts are
reflective of the stock split.
(10) Stock Options, Restricted Stock and Warrants
--------------------------
Hasbro has various stock plans for employees as well as a plan for non-
employee members of the Board (collectively, the plans) and has reserved
30,316,339 shares of its common stock for issuance upon exercise of
options granted or to be granted under the plans. These options generally
vest in equal annual amounts over three to five years. The plans provide
that options be granted at exercise prices not less than market value on
the date the option is granted and options are adjusted for such changes
as stock splits and stock dividends. No options are exercisable for
periods of more than ten years after date of grant. Certain of the plans
permit the granting of awards in the form of stock options, stock
appreciation rights, stock awards and cash awards.
During 2000, the Company issued restricted stock and granted deferred
restricted stock units to certain key employees. At December 31, 2000,
these awards, net of forfeitures, aggregated the equivalent of 634,076
shares. These shares or units are nontransferable and subject to
forfeiture for periods prescribed by the Company. Upon granting of these
awards, unearned compensation equivalent to the market value at the date
of grant is charged to shareholders' equity and subsequently amortized
over the periods during which the restrictions lapse, generally 3 years.
Deferred compensation relating to the grants, net of forfeitures,
amounted to $9,622. Amortization of deferred, unearned compensation
relating to the restricted stock and deferred restricted stock units of
$2,733 was recorded in fiscal 2000. During 2000, the Company also made
awards under a Long Term Incentive Program (LTIP) under the Company's
omnibus employee stock plans. Conditional upon the Company reaching
certain volume, earnings per share and stock price benchmarks within a
three year performance cycle, restricted shares would be awarded which
would vest over the two years following that cycle. Unearned
compensation equivalent to the market value of the target number of
shares that would be awarded if these conditions were met was recorded at
the date of the LTIP award and is being amortized over a five-year
period. Adjustments are made to compensation expense for changes in
market value and achievement of financial goals. For the year ended
December 31, 2000, conditional requirements of the LTIP award had not
been met and accordingly no compensation expense has been recognized.
As permitted by Statement of Financial Accounting Standards No. 123 (SFAS
123), Hasbro continues to apply Accounting Principles Board Opinion No.
25 (APB 25) in accounting for the plans under which no compensation cost
is recognized. Had compensation expense been recorded under the
provisions of SFAS 123, the impact on the Company's net earnings (loss)
and earnings (loss) per share would have been:
2000 1999 1998
---- ---- ----
Reported net earnings (loss) $(144,631) 188,953 206,365
Pro forma compensation expense,
net of tax (21,981) (18,335) (10,339)
------- ------- -------
Pro forma net earnings (loss) $(166,612) 170,618 196,026
======= ======= =======
Pro forma earnings (loss) per share
Basic $ (.94) .88 .99
Diluted $ (.94) .84 .95
======= ======= =======
The weighted average fair value of options granted in 2000, 1999 and 1998
were $6.43, $12.13 and $8.66, respectively. The fair value of each option
grant is estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions used for
grants in 2000, 1999 and 1998, respectively: risk-free interest rates of
6.77%, 5.60% and 5.70%; expected dividend yields of 1.58%, 0.78% and
0.85% and expected volatility of approximately 41%, 34% and 26%, and
expected lives of approximately 6 years.
Additionally, the Company has reserved 18,962,500 shares of its common
stock for issuance upon exercise of outstanding warrants. During 2000,
in connection with the acquisition of certain rights, the Company issued
warrants to purchase 500,000 shares at an exercise price of $15.00 and a
fair value at date of grant of $6.00. In addition, the Company granted
warrants to purchase 1,000,000 and 700,000 shares at exercise prices of
$15.70 and $18.84 respectively, relating to future rights.
Information with respect to options and warrants, in thousands of shares,
for the three years ended December 31, 2000 is as follows:
2000 1999 1998
---- ---- ----
Number of shares:
Outstanding at beginning of year 33,776 36,361 31,424
Granted 9,029 7,168 8,639
Exercised (475) (8,313) (3,468)
Expired or canceled (1,872) (1,440) (234)
------ ------ ------
Outstanding at end of year 40,458 33,776 36,361
====== ====== ======
Exercisable at end of year 27,656 23,456 11,673
====== ====== ======
Weighted average exercise price:
Granted $ 15.59 31.32 23.86
Exercised $ 7.81 14.51 13.34
Expired or canceled $ 22.40 27.43 18.75
Outstanding at end of year $ 20.27 21.46 18.17
Exercisable at end of year $ 20.11 19.09 14.43
====== ====== ======
Information, in thousands of shares, with respect to the 40,458 options
and warrants outstanding and the 27,656 exercisable at December 31, 2000,
is as follows:
Weighted
Average Weighted
Remaining Average
Range of Contractual Exercise
Exercise Prices Shares Life Price
--------------- ------- ---------- -------
Outstanding
$11.10-$14.06 2,823 2.7 years $13.13
$14.14-$16.81 10,466 7.0 years $15.44
$17.34-$23.27 13,989 7.8 years $18.90
$23.33-$36.27 13,180 8.6 years $27.09
====== =====
Exercisable
$11.10-$14.06 2,630 $13.26
$14.14-$16.81 3,257 $15.76
$17.34-$23.27 12,453 $18.82
$23.33-$36.27 9,316 $25.30
====== =====
(11) Pension, Postretirement and Postemployment Benefits
---------------------------------------------------
Pension and Postretirement Benefits
-----------------------------------
Hasbro's net pension, 401(k) matching contribution and profit sharing
cost for 2000, 1999 and 1998 was approximately $13,700, $14,200 and
$14,500, respectively.
United States Plans
-------------------
Substantially all United States employees are covered under at least one
of several non-contributory defined benefit pension plans maintained by
the Company. Benefits under the two major plans, principally covering
non-union employees, are based primarily on salary and years of service.
One of these plans is funded. Benefits under the remaining plans are
based primarily on fixed amounts for specified years of service. One of
these plans is also funded. At December 31, 2000, the two funded plans
have plan assets of $236,296 and accumulated benefit obligations of
$145,589. The unfunded plans have accumulated benefit obligations of
$17,747.
Hasbro also provides certain postretirement health care and life
insurance benefits to eligible employees who retire and have either
attained age 65 with 5 years of service or age 55 with 10 years of
service. The cost of providing these benefits on behalf of employees who
retired prior to 1993 is and will continue to be substantially borne by
the Company. The cost of providing benefits on behalf of employees who
retire after 1992 is shared, with the employee contributing an increasing
percentage of the cost, resulting in an employee-paid plan after the year
2002. The plan is not funded.
Pension Postretirement
--------------- ---------------
2000 1999 2000 1999
---- ---- ---- ----
Change in projected benefit
---------------------------
obligation
----------
Projected benefit obligation
at beginning of year $ 188,318 207,063 24,683 28,428
Service cost 8,032 9,356 241 227
Interest cost 13,656 13,670 1,792 1,775
Plan amendments 955 (2,298) - -
Actuarial gain (18,660) (32,438) (1,155) (3,263)
Benefits paid (7,652) (6,305) (2,238) (2,484)
Expenses paid (371) (730) - -
Other (1,735) - (384) -
------- ------- ------- -------
Projected benefit obligation
at end of year $ 182,543 188,318 22,939 24,683
======= ======= ======= =======
Change in plan assets
---------------------
Fair value of plan assets at
beginning of year $ 242,889 219,410 - -
Actual return on plan assets 919 30,061 - -
Employer contribution 511 453 - -
Benefits paid (7,652) (6,305) - -
Expenses paid (371) (730) - -
------- ------- ------- -------
Fair value of plan assets at
end of year $ 236,296 242,889 - -
======= ======= ======= =======
Funded status $ 53,752 54,571 (22,939) (24,683)
Unrecognized net gain (73,588) (80,496) (1,424) (406)
Unrecognized prior service cost 5,191 5,836 (384) -
------- ------- ------- -------
Accrued benefit cost $(14,645) (20,089) (24,747) (25,089)
======= ======= ======= =======
The assets of the funded plans are managed by investment advisors and
consist primarily of pooled indexed and actively managed stock and bond
funds. For measuring the expected pension accumulated benefit obligation,
assumed discount rates of 8.00%, 7.75% and 6.75% were used for 2000, 1999
and 1998, respectively; assumed long-term rates of compensation increase
of 4.50% in 2000, 1999 and 1998, and an assumed long-term rate of return
on plan assets of 9.00% in all years.
For measuring the expected postretirement benefit obligation, a 7.00%,
7.25% and 7.50% annual rate of increase in the per capita cost of covered
health care benefits was assumed for 2000, 1999 and 1998, respectively.
The rates for all years were further assumed to decrease gradually to
4.50% in 2012. All were assumed to remain constant after 2012. The
discount rates used in the pension calculation were also used for the
postretirement calculation.
2000 1999 1998
---- ---- ----
Components of net periodic cost
-------------------------------
Pension
-------
Service cost $ 8,032 9,356 9,362
Interest cost 13,656 13,670 12,798
Expected return on assets (21,368) (19,484) (17,465)
Net amortization and deferrals (4,498) (786) (448)
------- ------- -------
Net periodic benefit cost (benefit) $(4,178) 2,756 4,247
======= ======= =======
Postretirement
--------------
Service cost $ 241 227 224
Interest cost 1,792 1,775 1,893
Net amortization and deferrals (136) 27 57
------- ------- -------
Net periodic benefit cost $ 1,897 2,029 2,174
======= ======= =======
If the health care cost trend rate were increased one percentage point in
each year, the accumulated postretirement benefit obligation at December
31, 2000 and the aggregate of the benefits earned during the period and
the interest cost would have each increased by approximately 10%.
Hasbro has a retirement savings plan to which eligible employees may make
contributions of up to 18% of their salary, as allowed under Section
401(k) of the Internal Revenue Code. In 2000, the plan was amended to
increase Hasbro's matching percentage of employee contributions, in lieu
of discretionary contributions to the profit sharing component of the
plan. The Company contributed approximately $11,200, $6,500 and $6,600
to the plan in 2000, 1999 and 1998, respectively.
International Plans
-------------------
Pension coverage for employees of Hasbro's international subsidiaries is
provided, to the extent deemed appropriate, through separate defined
benefit and defined contribution plans. These plans were neither
significant individually nor in the aggregate.
Postemployment Benefits
-----------------------
Hasbro has several plans covering certain groups of employees which may
provide benefits to such employees following their period of active
employment but prior to their retirement. These plans include certain
severance plans which provide benefits to employees involuntarily
terminated and certain plans which continue the Company's health and life
insurance contributions for employees who have left Hasbro's employ under
terms of its long-term disability plan.
(12) Leases
------
Hasbro occupies certain manufacturing facilities and sales offices and
uses certain equipment under various operating lease arrangements. The
rent expense under such arrangements, net of sublease income which is not
material, for 2000, 1999 and 1998 amounted to $57,470, $56,072 and
$50,932, respectively.
Minimum rentals, net of minimum sublease income which is not material,
under long-term operating leases for the five years subsequent to 2000
and in the aggregate are as follows:
2001 $ 32,443
2002 23,982
2003 19,561
2004 16,181
2005 13,121
Later years 51,243
-------
$156,531
=======
All leases expire prior to 2014. Real estate taxes, insurance and
maintenance expenses are generally obligations of the Company. It is
expected that in the normal course of business, leases that expire will
be renewed or replaced by leases on other properties; thus, it is
anticipated that future minimum lease commitments will not be less than
the amounts shown for 2000.
In addition, Hasbro leases certain facilities which, as a result of
restructurings, are no longer in use. Future costs relating to such
facilities were included as a component of the restructuring charge and
are not included in the table above.
(13) Consolidation Program and Restructuring Charge
----------------------------------------------
The Company recognized $63,951 of restructuring expense in 2000. This
amount reflects charges under the 2000 restructuring plan of $70,079 and
adjustments to the 1999 plan of $(6,128). The pretax impact of all
consolidation program charges and adjustments to the statement of
operations for the fiscal year ended December 31, 2000 was $146,142.
On October 12, 2000, the Company announced a plan approved by its Board
of Directors to consolidate its U.S. Toy group into Rhode Island,
significantly reduce overhead through reductions in product development,
sales and marketing, and administrative functions across the Company and
to increase its focus on development of the Company's core brands. The
impact of this plan was recorded in the fourth quarter as follows:
Restructuring charge $ 70,079
--------
Other operating expenses:
Cost of sales 6,625
Amortization 25,046
Royalties, research and development 42,270
Advertising 3,155
Selling, distribution and administration 5,095
--------
82,191
--------
Total 2000 consolidation program cost $ 152,270
========
The significant components of the 2000 plan include the closing of
offices in Cincinnati, Ohio, the Napa, California office and warehouse
and a small office in San Francisco, California, thereby essentially
consolidating the U.S. Toy group in Rhode Island. These actions were
substantially completed at December 31, 2000. Additionally, the plan
includes the reduction of overhead, particularly in marketing and sales,
product development and administration. This includes a curtailment of
expansion of the retail business of Wizards, the further consolidation of
certain international operating offices into regional centers and
consolidation and streamlining of the Company's marketing activities. The
Company is also increasing its focus on developing and marketing its core
brands, reducing its reliance on licenses. This focus has resulted in
product lines which will be discontinued or for which the Company has
significantly reduced expectations.
Together, the components of this plan anticipate the redundancy of
approximately 850 employees, including 125 in manufacturing and sourcing
activities and 725 worldwide in research and product development,
marketing, sales and administration. Employee redundancies by area are as
follows:
Opening Balance at
Balance Activity December 31, 2000
-------- -------- -----------------
Manufacturing activities 125 (98) 27
Research, product development, sales
marketing and administration 725 (403) 322
------- ------- -------
850 (501) 349
======= ======= =======
Total charges under the 2000 plan represent cash charges of $89,400,
comprised of approximately $31,800 for severance benefits which will be
disbursed over the employee's entitlement period, $5,100 in related
charges paid in 2000 to relocate certain U.S. Toy group employees to
Rhode Island, $21,400 for lease costs to be expended over the contractual
lease term of the closed facilities and approximately $31,100 of
contractual commitments on exited product lines and certain other
licensed product lines with reduced expectations due to the Company's
enhanced focus on its core brands. The product lines being exited were
not, either individually or in the aggregate, material to the Company's
revenues or operating results. Total non-cash charges were $62,900. Non-
cash charges of $16,900 for fixed asset write-offs relate primarily to
Corporate and the U.S. Toy segment. The remaining approximate $46,000
relates to asset write-offs and a write-down of assets impaired due to
the Company's enhanced focus on its core brands. This includes impairment
of intangible assets arising from the decision to discontinue product
line offerings. Non-cash charges relating to asset write-offs have been
credited to the respective line items on the balance sheet. The
components of the plan included in the restructuring charge in the
statement of operations are severance costs of $31,800, lease costs of
$21,400 and fixed asset write-offs of $16,900. Included in accrued
liabilities at December 31, 2000 is $53,200 relating to amounts due to
terminated employees over their severance entitlement period and costs
associated with lease and closing costs. The restructuring plan is
expected to be completed in fiscal 2001.
On December 7, 1999, the Company announced a program to consolidate
manufacturing and sourcing activities and product lines, as well as
streamline and further regionalize marketing, sales and research and
development activities worldwide. Costs associated with the 1999
consolidation program, recorded in the fourth quarter of 1999, amounted
to $141,575, of which $64,232 was recorded as a restructuring charge and
$77,343 in various other operating expense categories. Adjustments to the
restructuring plan of $(6,128) were recorded in 2000.
The significant components of the plan included the closing of factories
in Mexico and in the United Kingdom, reducing capacity at the remaining
three factories, shifting production to third party manufacturers in the
Far East and further consolidation and regionalization of the
International marketing and sales structure. Actions under the plan
commenced in December 1999 and were completed in fiscal 2000. There were
no material changes to the plan, however, adjustments were recognized in
2000 reflecting the reversal of excess restructuring accruals due to
lower than previously estimated costs to achieve the overall objectives
of the plan, primarily in the consolidation and regionalization of the
International marketing and sales structure. The 1999 restructuring
charge of $64,232 represented approximately $38,700 of cash charges for
severance benefits for termination of approximately 2,200 employees,
which will be disbursed over the employee's entitlement period, $14,300
of cash charges for lease and facility closing costs to be expended over
the contractual lease terms and closing process and non-cash charges of
$11,200 for fixed asset write-offs, arising primarily in the
manufacturing area. Of the cash amount, approximately $4,700 was paid
prior to December 26, 1999 for severance benefits relating to
approximately 200 employees terminated prior to that date. Non-cash
charges relating to fixed asset write-offs were credited to the
respective line items on the balance sheet. Details of activity in the
restructuring plan for fiscal 2000 follow:
Balance at Balance at
Dec. 26, Dec. 31,
1999 Adjustments Activity 2000
------- ----------- -------- ------
Severance $ 34,000 (4,800) (25,200) 4,000
Lease and facility
closing costs 14,300 (1,300) (9,100) 3,900
------- ------- ------- ------
$ 48,300 (6,100) (34,300) 7,900
======= ======= ======= ======
Employee redundancies by area:
Manufacturing and sourcing
activities 1,700 - (1,700) -
Research, product development, sales
marketing and administration 300 (40) (260) -
------- ------- ------- ------
2,000 (40) (1,960) -
======= ======= ======= ======
The remaining severance liability represents cash charges for severance
benefits for employees made redundant which will be disbursed over the
employee's entitlement period. The balance in lease and facility closing
costs will be expended over the contractual lease term.
The components of the consolidation program included in other operating
expenses in 1999 represent costs associated with exiting certain product
lines and reevaluating other product lines resulting in reduced
expectations. The product lines being exited were not, either
individually or in the aggregate, material to the Company's revenues or
operating results. Approximately $12,000 represented cash charges to be
incurred on contractual royalty, product development and advertising
commitments associated with the discontinued product lines. Non-cash
charges of approximately $65,000 related to asset write-offs and write-
downs of underutilized assets. This includes impairment of intangible
assets arising from the decision to discontinue or significantly reduce
product line offerings. The resulting sum of undiscounted future cash
flows of these assets was not sufficient to cover the carrying amount of
the assets, and as such, they were written down to their fair market
value. Items relating to property rights and licenses, goodwill,
inventory, prepaid and other current assets were credited to the
respective asset in the balance sheet.
(14) Financial Instruments
---------------------
Hasbro's financial instruments include cash and cash equivalents,
accounts receivable, short- and long-term borrowings, accounts payable
and accrued liabilities. At December 31, 2000, the carrying cost of these
instruments approximated their fair value. Its financial instruments also
include foreign currency forwards and options. At December 31, 2000, the
carrying value of these instruments approximated their fair value based
on quoted or publicly available market information.
Hasbro uses foreign currency forwards and options, generally purchased
for terms of not more than twelve months, to protect itself from adverse
currency rate fluctuations on firmly committed and anticipated foreign
currency transactions. These over-the-counter contracts, which hedge
future purchases of inventory and other cross-border currency
requirements, are primarily denominated in United States and Hong Kong
dollars and Irish punts and entered into with counterparties who are
major financial institutions with which Hasbro also has other financial
relationships. The Company believes any risk related to default by a
counterparty to be remote.
The Company had the equivalent of approximately $166,500 and $85,000 of
foreign currency forwards outstanding, and approximately $89,500 and
$132,000 of foreign currency options outstanding at December 31, 2000 and
December 26, 1999, respectively. Gains and losses deferred under hedge
accounting provisions are subsequently included in the measurement of the
related foreign currency transaction. Gains and losses on contracts not
meeting hedge accounting provisions are included currently in earnings.
The aggregate amount of gains and losses resulting from all foreign
currency transactions was not material.
(15) Commitments and Contingencies
-----------------------------
Hasbro had unused open letters of credit of approximately $40,000 and
$15,000 at December 31, 2000 and December 26, 1999, respectively.
The Company routinely enters into license agreements with inventors,
designers and others for the use of intellectual properties in its
products. Certain of these agreements contain provisions for the payment
of guaranteed or minimum royalty amounts. Under terms of currently
existing agreements, in certain circumstances the Company may become
liable for remaining guaranteed minimum royalties of up to $741,000
between 2001 and 2008. Of this amount, approximately $238,000 has been
paid. Approximately $58,000 is included in the $66,509 of prepaid
royalties which are a component of prepaid expenses and other current
assets in the balance sheet. Included in other assets is $180,000
representing the long-term portion of amounts paid. Of the remaining
unpaid minimum guaranties, Hasbro may be required to pay amounts as
follows:
2001 $ 44,000
2002 193,000
2003 89,000
2004 56,000
2005 121,000
-------
$ 503,000
=======
Such payments are related to royalties which are expected to be incurred
on anticipated revenues in the years 2001 through 2008.
Hasbro is party to certain legal proceedings, substantially involving
routine litigation incidental to the Company's business, none of which,
individually or in the aggregate, is deemed to be material to the
financial condition of the Company.
(16) Segment Reporting
-----------------
Segment and Geographic Information
----------------------------------
Hasbro is a worldwide marketer and distributor of children's and family
entertainment products, principally engaged in the design, manufacture
and marketing of games and toys ranging from traditional to high-tech.
The Company's reportable segments are U.S. Toys, Games, International and
Global Operations.
In the United States, the U.S. Toy segment includes the design, marketing
and selling of boys action figures, vehicles and playsets, girls toys,
preschool toys and infant products and creative play products. The Games
segment includes the development, marketing and selling of traditional
board games and puzzles, handheld electronic games, electronic
interactive products, children's consumer electronics, electronic
learning aids, trading card and role-playing games and interactive
software games based on the Company's owned and licensed brands. Within
the International segment, the Company develops, markets and sells both
toy and certain game products in non-U.S. markets. Global Operations
manufactures and sources product for the majority of the Company's
segments. The Company also has other segments which license certain toy
properties and which develop and market non-traditional toy and game
based product realizing more than half of their revenues and the majority
of their operating profit in the first half of the year, which is contra-
seasonal to the rest of the Company's business. These other segments do
not meet the quantitative thresholds for reportable segments and have
been combined for reporting purposes.
Segment performance is measured at the operating profit level, prior to
certain charges. In 2000, segment profitability was measured prior to
$146,142 and $43,965 in charges incurred in connection with the
consolidation programs and loss on sale of business units, respectively.
In 1999, segment profitability was measured prior to $141,575 in charges
incurred in connection with the 1999 consolidation program. For 1998,
operating profits are reflected prior to the $20,000 charge incurred to
write-off acquired in-process research and development arising on the
MicroProse acquisition. Included in Corporate and eliminations are
general corporate expenses, the elimination of intersegment transactions
and assets not identified with a specific segment. Intersegment sales and
transfers are reflected in management reports at amounts approximating
cost.
As a result of the complexity of the Company's organizational changes, it
is unable to segregate assets and related expenses between the U.S. Toys
and Games segments for 1999 and prior and these balances are reported as
one. Assets are segregated in 2000 and are separately reported for that
period. The total of U.S. Toys and Games assets in 2000 is presented for
comparative purposes only, and is not used by management in assessing
segment performance in 2000. Certain asset related expense items,
including depreciation and amortization of intangibles, have been
allocated to segments in 1999 and 1998 based upon estimates in order to
arrive at segment operating profit. In December of 2000, the Company
announced that it entered into an agreement to dispose of certain
business units included in its Games segment (see note 2). During 1999,
the Company's Games segment acquired Wizards of the Coast, Inc.
The accounting policies of the segments are the same as those described
in note (1) to the consolidated financial statements.
Information by segment and a reconciliation to reported amounts are as
follows:
Revenues
from Operating Depreciation
External Affiliate Profit and Capital Total
Customers Revenues (Loss) Amortization Additions Assets
--------- --------- --------- --------- --------- ---------
2000
- ----
U.S. Toys $ 558,915 5,130 (112,338) 24,240 923 273,381
Games 1,898,177 83,164 146,009 90,196 45,463 2,099,809
--------- --------- --------- --------- --------- ---------
U.S. Toys and Games 2,457,092 88,294 33,671 114,436 46,386 2,373,190
International 1,085,839 - 61,458 35,073 19,447 1,244,479
Global Operations (b) 24,885 825,594 (1,329) 56,542 42,989 504,105
Other segments 219,399 17,898 (18,749) 21,328 2,467 276,203
Corporate and eliminations - (931,786) 10,779 11,796 13,766 (569,518)
--------- --------- --------- --------- --------- ---------
Segment total 3,787,215 - 85,830 239,175 125,055 3,828,459
Consolidation program (c) - - (146,142) 25,046 - -
Loss on sale of business units (d) - - (43,965) - - -
--------- --------- --------- --------- --------- ---------
Consolidated Total $3,787,215 - (104,277) 264,221 125,055 3,828,459
========= ========= ========= ========= ========= =========
1999
- ----
U.S. Toys (a) $1,056,700 - 91,588
Games (a) 1,703,216 81,948 259,314
--------- --------- --------- --------- --------- ---------
U.S. Toys and Games (a) 2,759,916 81,948 350,902 109,250 12,077 3,588,994
International 1,227,949 6,403 140,567 34,150 9,539 1,285,342
Global Operations (b) 24,923 1,030,028 (1,878) 61,175 67,644 572,454
Other segments 219,475 18,988 5,777 22,517 4,301 269,435
Corporate and eliminations - (1,137,367) (26,224) 11,783 13,907 (1,252,877)
--------- --------- --------- --------- --------- ---------
Segment total 4,232,263 - 469,144 238,875 107,468 4,463,348
Consolidation program (c) - - (141,575) 38,449 - -
--------- --------- --------- --------- --------- ---------
Consolidated Total $4,232,263 - 327,569 277,324 107,468 4,463,348
========= ========= ========= ========= ========= =========
Revenues
from Operating Depreciation
External Affiliate Profit and Capital Total
Customers Revenues (Loss) Amortization Additions Assets
--------- --------- --------- --------- --------- ---------
1998
- ----
U.S. Toys (a) $ 894,279 61 55,103
Games (a) 1,043,623 1,019 143,216
--------- --------- --------- --------- --------- ---------
U.S. Toys and Games (a) 1,937,902 1,080 198,319 54,543 12,739 2,390,147
International 1,106,565 (174) 130,232 23,905 34,480 840,246
Global Operations (b) 6,453 935,683 (6,560) 62,397 71,585 415,872
Other segments 253,534 8,992 35,565 19,106 4,925 354,717
Corporate and eliminations - (945,581) (12,674) 9,248 18,221 (207,137)
--------- --------- --------- --------- --------- ---------
Segment total 3,304,454 - 344,882 169,199 141,950 3,793,845
Acquired in-process research
and development - - (20,000) - - -
--------- --------- --------- --------- --------- ---------
Consolidated Total $3,304,454 - 324,882 169,199 141,950 3,793,845
========= ========= ========= ========= ========= =========
(a) As a result of the complexity of the Company's organizational changes, it was unable to segregate
assets and related expenses between the U.S. Toys and Games segments prior to fiscal 2000. Certain
asset related expense items including depreciation and amortization of intangibles have been allocated
to segments based upon estimates in order to arrive at segment operating profit.
(b) The Global Operations segment derives substantially all of its revenues, and thus its operating
results, from intersegment activities.
(c) The impact of the consolidation programs to operating profit by segment was $45,437 to U. S. Toys,
$5,937 to Games, $29,301 to International, $401 to Global Operations and $65,066 to Corporate and Other
segments for 2000. In 1999, the impact to operating profit by segment was $16,150 to U.S. Toys, $35,732
to Games, $23,044 to International, $44,324 to Global Operations and $22,325 to Other.
(d) The loss on sale of business units relates to the sale of the Games segment's business units
comprising Hasbro Interactive and Games.com (see note 2).
The following table presents consolidated net revenues by classes of
principal products for the years ended in December:
2000 1999 1998
---- ---- ----
Boys toys $ 719,900 1,232,300 891,600
Games and puzzles 2,146,800 1,936,100 1,268,700
Interactive software games 179,600 229,400 192,300
Preschool toys 202,000 273,600 341,600
Other 538,915 560,863 610,254
------- --------- ---------
Net revenues $3,787,215 4,232,263 3,304,454
========= ========= =========
Information as to Hasbro's operations in different geographical areas is
presented below on the basis the Company uses to manage its business.
Net revenues and the related pretax earnings are categorized based on
location of the customer, while long-lived assets (property, plant and
equipment, cost in excess of acquired net assets and other intangibles)
are categorized based on their location:
2000 1999 1998
---- ---- ----
Net revenues
United States $2,251,023 2,818,837 2,113,057
International 1,536,192 1,413,426 1,191,397
--------- --------- ---------
$3,787,215 4,232,263 3,304,454
========= ========= =========
Pretax earnings (loss)
United States $ (242,758) 158,834 194,050
International 16,772 115,011 109,428
--------- --------- ---------
$ (225,986) 273,845 303,478
========= ========= =========
Long-lived assets
United States $1,803,688 1,880,029 1,694,967
International 199,123 194,677 177,569
--------- --------- ---------
$2,002,811 2,074,706 1,872,536
========= ========= =========
Principal international markets include Western Europe, Canada, Mexico,
Australia, New Zealand and Hong Kong.
Other Information
-----------------
Hasbro markets its products primarily to customers in the retail sector.
Although the Company closely monitors the creditworthiness of its
customers, adjusting credit policies and limits as deemed appropriate, a
substantial portion of its customers' ability to discharge amounts owed
is dependent upon the overall retail economic environment.
Sales to the Company's two largest customers, Wal-Mart Stores, Inc. and
Toys `R Us, Inc., amounted to 14% and 13%, respectively, of consolidated
net revenues during 2000, 16% each during 1999 and 18% and 17%,
respectively, during 1998.
Hasbro purchases certain components and accessories used in its
manufacturing process and certain finished products from manufacturers
in the Far East. The Company's reliance on external sources of
manufacturing can be shifted, over a period of time, to alternative
sources of supply for products it sells, should such changes be
necessary. However, if the Company were prevented from obtaining
products from a substantial number of its current Far East suppliers due
to political, labor or other factors beyond its control, the Company's
operations would be disrupted while alternative sources of product were
secured. The imposition of trade sanctions by the United States or the
European Union against a class of products imported by Hasbro from, or
the loss of "normal trade relations" status by, the People's Republic of
China could significantly increase the cost of the Company's products
imported into the United States or Europe.
(17) Quarterly Financial Data (Unaudited)
------------------------------------
2000
----
Quarter
-----------------------------------
First Second Third Fourth Full Year
----- ------ ----- ------ ---------
Net revenues $773,481 778,373 1,072,617 1,162,744 3,787,215
Gross profit $473,180 480,330 613,082 546,650 2,113,242
Earnings (loss) before
income taxes $ 21,923 9,421 20,046 (277,376)(a)(225,986)
Net earnings (loss) $ 15,127 6,500 13,832 (180,090) (144,631)
======= ======= ======= ========= =========
Per common share
Earnings (loss)
Basic $ .08 .04 .08 (1.05) (.82)
Diluted $ .08 .04 .08 (1.05) (.82)
Market price
High $ 19 1/8 18 9/16 17 13/16 12 15/16 19 1/8
Low $ 13 3/4 15 10 3/16 8 3/8 8 3/8
Cash dividends
declared $ .06 .06 .06 .03 .21
======= ======= ======= ========= =========
1999
----
Quarter
-----------------------------------
First Second Third Fourth Full Year
----- ------ ----- ------ ---------
Net revenues $668,398 874,574 1,098,179 1,591,112 4,232,263
Gross profit $411,881 529,548 654,166 938,426 2,534,021
Earnings before
income taxes $ 19,993 46,796 123,434 83,622(a) 273,845
Net earnings $ 13,795 32,289 85,170 57,699 188,953
======= ======= ======= ========= =========
Per common share
Earnings
Basic $ .07 .17 .44 .30 .97
Diluted $ .07 .16 .43 .29 .93
Market price
High $ 30 1/8 37 28 5/8 24 1/4 37
Low $ 21 13/16 27 21 15/16 16 7/8 16 7/8
Cash dividends
declared $ .06 .06 .06 .06 .24
======= ======= ======= ========= =========
(a) In 2000 and 1999, includes $63,951 and $64,232, respectively,
relating to restructuring of operations.
EXHIBIT 21
HASBRO, INC. AND SUBSIDIARIES
Subsidiaries of the Registrant (a)
Name Under Which Subsidiary State or Other Jurisdiction of
Does Business Incorporation or Organization
- --------------------------- ------------------------------
Hasbro International, Inc. Delaware
Hasbro France S.A. France
Hasbro Deutschland GmbH Germany
Hasbro Italy S.r.l. Italy
Hasbro Latin America Inc. Delaware
Hasbro Argentina S.A. Argentina
Hasbro Chile LTDA Chile
Hasbro Latin America, L.P. Delaware
Hasbro S.A. Switzerland
Hasbro Holdings S.A.
Hasbro Canada Corporation / Corporation
Hasbro Canada Nova Scotia
Hasbro Asia-Pacific Marketing Ltd. Hong Kong
Tiger Electronics Far East Services, Limited Hong Kong
Hasbro de Mexico S.de R.L.de C.V. Mexico
Hasbro (Schweiz) AG Switzerland
Hasbro U.K. Limited United Kingdom
Tiger Electronics UK Limited United Kingdom
Group Grosvenor plc. United Kingdom
MB International B.V. The Netherlands
Hasbro B.V. The Netherlands
Hasbro Hellas Industrial & Commercial
Company S.A. Greece
Hasbro Toys & Games Holdings, S.L. Spain
MB Espana, S.A. Spain
Hasbro Iberia SL Spain
S.A. Hasbro N.V. Belgium
Hasbro InterToy Eqitim Araclari Sanayi Ve
Ticaret A.S. Turkey
Hasbro Far East LTD Hong Kong
Tiger Electronics Far East, Limited Hong Kong
WowWee Limited Hong Kong
Hasbro Australia Limited Australia
Hasbro New Zealand New Zealand
Hasbro Ireland Limited Ireland
Palmyra Holdings Pte Ltd. Singapore
Hasbro Managerial Services, Inc. Rhode Island
Larami Limited Delaware
OddzOn, Inc. Delaware
Wizards of the Coast, Inc. Washington
(a) Inactive subsidiaries and subsidiaries with minimal operations have
been omitted. Such subsidiaries, if taken as a whole, would not
constitute a significant subsidiary.
EXHIBIT 23
ACCOUNTANTS' CONSENT
The Board of Directors
Hasbro, Inc.:
We consent to incorporation by reference in the
Registration Statements Nos. 2-78018, 2-93483, 33-57344,
33-59583, 333-38159, 333-10404, 333-10412, and 333-34282 on
Form S-8 and Nos. 33-41548, 333-44101, 333-82077 and 333-
46986 on Form S-3 of Hasbro, Inc. of our reports dated
February 7, 2001 relating to the consolidated balance
sheets of Hasbro, Inc. and subsidiaries as of December 31,
2000 and December 26, 1999 and the related statements of
operations, shareholders' equity and cash flows and related
schedule for each of the fiscal years in the three-year
period ended December 31, 2000, which report on the
consolidated financial statements is incorporated by
reference and which report on the related schedule is
included in the Annual Report on Form 10-K of Hasbro, Inc.
for the fiscal year ended December 31, 2000.
/s/ KPMG LLP
Providence, Rhode Island
March 30, 2001