LIMITED WAIVER AND SECOND AMENDMENT WITH RESPECT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Exhibit 99.2
LIMITED WAIVER AND SECOND AMENDMENT WITH RESPECT TO THIRD AMENDED AND
RESTATED CREDIT AGREEMENT
RESTATED CREDIT AGREEMENT
This LIMITED WAIVER AND SECOND AMENDMENT WITH RESPECT TO THIRD AMENDED AND RESTATED CREDIT
AGREEMENT (this “Waiver and Amendment”) is entered into as of this 7th day of
February, 2006, by NAVARRE CORPORATION, a Minnesota corporation (“Borrower”), the Credit
Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation, as agent
(the “Agent”) for itself and the Lenders under and as defined in the Credit Agreement (as
hereinafter defined), and the Lenders. Unless otherwise specified herein, capitalized terms used
in this Waiver and Amendment shall have the meanings ascribed to them by the Credit Agreement.
RECITALS
WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have entered into that
certain Third Amended and Restated Credit Agreement, dated as of June 1, 2005 (as amended,
supplemented, restated or otherwise modified from time to time, the “Credit Agreement”);
and
WHEREAS, the Borrower, the Credit Parties, the Agent and the Lenders have agreed to waive and
amend certain provisions of the Credit Agreement as herein set forth.
NOW THEREFORE, in consideration of the foregoing recital, mutual agreements contained herein
and for good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Borrower, the Credit Parties, the Agent, and Lenders hereby agree as follows:
SECTION 1. Limited Waiver. The Agent and the Requisite Lenders hereby waive the provisions
of Section 6.19 of the Credit Agreement to the extent, and solely to the extent, necessary
to permit the amendment of the FUNimation Acquisition Documents, in form and substance as set forth
on Exhibit A attached hereto (the “Memorandum of Understanding”).
SECTION 2. Amendments.
(a) The following defined terms shall be inserted in the appropriate alphabetical locations in
Annex A:
“FUNimation Purchase Price Adjustment Proceeds” means all of the
proceeds of the purchase price adjustment received by Borrower or any of its
Affiliates pursuant to that certain Memorandum of Understanding, dated as of
February 7, 2006.
(b) Immediately following Section 1.3(e) of the Credit Agreement a new Section
1.3(f), which shall read in its entirety as follows, is hereby added to the Credit Agreement:
“(f) If the Borrower or any of its Affiliates receives any FUNimation
Purchase Price Adjustment Proceeds, on the date such
1
FUNimation Purchase Price Adjustment Proceeds are received by the Borrower
or any of its Affiliates, the Borrower shall repay Term Loan B in an
amount equal to the FUNimation Purchase Price Adjustment Proceeds so
received.”
(c) The last paragraph of Annex G is hereby amended to add the following new sentences
at the end thereof which shall read as follows:
“To the extent that (i) the write-off of (a) the accounts receivable owing to
Borrower by Musicland Group and (b) Inventory consigned by Borrower to Musicland
Group in an aggregate amount not to exceed $12,800,000 during the Fiscal Quarter
ending December 31, 2005 reduce EBITDA of the Borrower for any period, solely for
the purposes of Sections (d), (e) and (f) of this Annex G,
EBITDA of the Borrower for such periods shall be increased by the aggregate amount
of such reductions and (ii) write-off of Vendor Advances owing to Borrower by RT
Entertainment in an aggregate amount not to exceed $4,100,000 during the Fiscal
Quarter ending December 31, 2005 reduce EBITDA of the Borrower for any period,
solely for the purposes of Section (f) of this Annex G, EBITDA of
the Borrower for such periods shall be increased by the aggregate amount of such
reductions; provided that in the event any of the foregoing amounts owing to
Borrower by Musicland Group or RT Entertainment that have been previously
written-off are later collected by Borrower during any period, to the extent such
amounts increase the EBITDA of Borrower for each such period, solely for the
purposes of Sections (d), (e) and (f) of this Annex G,
EBITDA of the Borrower for each such period shall be reduced by the aggregate amount
of such amounts so collected.”
SECTION 3. Conditions. The effectiveness of this Waiver and Amendment is subject to the
satisfaction of each the following conditions precedent:
(a) Borrower shall have paid to Agent, for the ratable benefit of the Lenders that are
signatory to this Waiver and Amendment, an amendment fee in an amount equal to 0.10% of the
Commitments of such Lenders (which shall be fully earned and payable as of the date hereof and
non-refundable once paid);
(b) this Waiver and Amendment shall have been duly executed and delivered by the Borrower, the
Credit Parties, the Agent and Requisite Lenders; and
(c) Agent shall have received a fully executed copy of the Memorandum of Understanding.
SECTION 4. Representations and Warranties. In order to induce the Agent and each Lender
to enter into this Waiver and Amendment, each Credit Party hereby represents and warrants to the
Agent and each Lender, which representations and warranties shall survive the execution and
delivery of this Waiver and Amendment, that:
(a) all of the representations and warranties contained in the Credit Agreement and in each
Loan Document are true and correct as of the date hereof after giving effect to this Waiver
2
and Amendment, except to the extent that any such representations and warranties expressly
relate to an earlier date;
(b) the execution, delivery and performance by such Credit Party of this Waiver and Amendment
has been duly authorized by all necessary corporate, limited liability company or partnership
action required on its part and this Waiver and Amendment, and the Credit Agreement is the legal,
valid and binding obligation of such Credit Party enforceable against such Credit Party in
accordance with its terms, except as its enforceability may be affected by the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting the rights or remedies of creditors generally;
(c) neither the execution, delivery and performance of this Waiver and Amendment by such
Credit Party, the performance by such Credit Party of the Credit Agreement nor the consummation of
the transactions contemplated hereby does or shall contravene, result in a breach of, or violate
(i) any provision of any Credit Party’s certificate or articles of incorporation or bylaws or other
similar documents, or agreements, (ii) any law or regulation, or any order or decree of any court
or government instrumentality, or (iii) any indenture, mortgage, deed of trust, lease, agreement or
other instrument to which any Credit Party or any of its Subsidiaries is a party or by which any
Credit Party or any of its Subsidiaries or any of their property is bound, except in any such case
to the extent such conflict or breach has been waived herein or by a written waiver document, a
copy of which has been delivered to Agent on or before the date hereof; and
(d) no Default or Event of Default has occurred and is continuing.
SECTION 5. Reference to and Effect Upon the Credit Agreement.
(a) Except as specifically set forth above, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed; and
(b) The waiver and amendments set forth herein are effective solely for the purposes set forth
herein and shall be limited precisely as written, and shall not be deemed to (i) be a consent to
any amendment, waiver or modification of any other term or condition of the Credit Agreement or any
other Loan Document, (ii) operate as a waiver or otherwise prejudice any right, power or remedy
that the Agent or the Lenders may now have or may have in the future under or in connection with
the Credit Agreement or any other Loan Document or (iii) constitute an amendment or waiver of any
provision of the Credit Agreement or any Loan Document, except as specifically set forth herein.
Upon the effectiveness of this Waiver and Amendment, each reference in the Credit Agreement to
“this Agreement”, “herein”, “hereof” and words of like import and each reference in the Credit
Agreement and the Loan Documents to the Credit Agreement shall mean the Credit Agreement as amended
hereby. This Waiver and Amendment shall be construed in connection with and as part of the Credit
Agreement.
SECTION 6. GOVERNING LAW. THIS WAIVER AND AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
3
SECTION 7. Headings. Section headings in this Waiver and Amendment are included herein for
convenience of reference only and shall not constitute part of this Waiver and Amendment for any
other purposes.
SECTION 8. Counterparts. This Waiver and Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original, but all such counterparts
shall constitute one and the same instrument.
(signature pages follow)
4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Waiver and Amendment
as of the date first written above.
| BORROWER: NAVARRE CORPORATION |
||||
| By: | ||||
| Title: | ||||
| Name: | ||||
| GENERAL ELECTRIC CAPITAL CORPORATION, as Agent and Lender |
||||
| By: | ||||
| Title: | ||||
| Name: | ||||
[Signature Page to Limited Waiver and Second Amendment With Respect
To Third Amended and Restated Credit Agreement]
To Third Amended and Restated Credit Agreement]
IN WITNESS WHEREOF, this Waiver and Amendment has been duly executed as of the date first
written above by below Persons in their capacity as Credit Parties not as Borrower.
| ENCORE SOFTWARE, INC., as Credit Party |
||||
| By: | ||||
| Title: | ||||
| Name: | ||||
| BCI ECLIPSE COMPANY, LLC, as Credit Party |
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| By: | ||||
| Title: | ||||
| Name: | ||||
| FUNIMATION PRODUCTIONS LTD., as Credit Party |
||||
| By: | Xxxxxxx XX, LLC, its General Partner | |||
| By: | ||||
| Title: | ||||
| Name: | ||||
| FUNIMATION STORE LTD., as Credit Party |
||||
| By: | Xxxxxxx XX, LLC, its General Partner | |||
| By: | ||||
| Title: | ||||
| Name: | ||||
| XXXXXXX XX, LLC, as Credit Party |
||||
| By: | ||||
| Title: | ||||
| Name: | ||||
| NAVARRE CLP, LLC, as Credit Party |
||||
| By: | ||||
| Title: | ||||
| Name: | ||||
[Signature Page to Limited Waiver and Second Amendment With Respect
To Third Amended and Restated Credit Agreement]
To Third Amended and Restated Credit Agreement]
| XXXXXXX XX, LLC, as Credit Party |
||||
| By: | ||||
| Title: | ||||
| Name: | ||||
[Signature Page to Limited Waiver and Second Amendment With Respect
To Third Amended and Restated Credit Agreement]
To Third Amended and Restated Credit Agreement]
Exhibit A
Amendment to FUNimation Acquisition Documents
Exh. A
MEMORANDUM OF UNDERSTANDING
THIS MEMORANDUM OF UNDERSTANDING is made and entered into as of this ___day of
___, 2006, by and among FUNimation Productions Management, LLC, a limited liability
company organized and existing under the laws of Texas (“FUN Seller”), FUNimation General
Partnership, a Texas general partnership organized and existing under the laws of Texas (“GP
Seller”), FUNimation Management Company, LLC, a limited liability company organized and existing
under the laws of Texas (“Management Seller”), each individual (“Individual”) signatory hereto,
(each of FUN Seller, GP Seller, Management Seller, and each Individual a “Seller” and collectively,
the “Sellers”), FUNimation Productions, Ltd., a limited partnership organized and existing under
the laws of Texas, The FUNimation Store, Ltd., a limited partnership organized and existing under
the laws of Texas (respectively, “Productions Company” and “Store Company” each a “Company” and
collectively, the “Companies”), and Xxxxxx Xxxxxxxxxxx as the representative of all Sellers (the
“Seller Representative”), and Xxxxxxx XX, LLC, a limited liability company organized and existing
under the laws of Minnesota (“Xxxxxxx XX”), Xxxxxxx XX, LLC, a limited liability company organized
and existing under the laws of Minnesota (“Xxxxxxx XX”), and Navarre CLP, LLC, a limited liability
company organized and existing under the laws of Minnesota (“Navarre CLP” and collectively with
Xxxxxxx XX and Xxxxxxx XX, the “Buyers”), and Navarre Corporation, a corporation organized and
existing under the laws of Minnesota (“Navarre”).
WHEREAS, the Sellers, Companies, Seller Representative, Buyers and Navarre entered into that
certain Partnership Interest Purchase Agreement, dated January 10, 2005, pursuant to which the
Buyers acquired all of the outstanding limited partnership interests and general partnership
interests of the Companies on May 11, 2005 (the “Purchase Agreement”);
WHEREAS, pursuant to Sections 1.4 and 5.13 of the Purchase Agreement certain post-closing
calculations, and potentially payments, may be required to be made by the Buyers or Sellers, as the
case may be (the “Post Closing Adjustments”); and
WHEREAS, notwithstanding anything in the Purchase Agreement to the contrary, the Sellers,
Companies, Seller Representative, Buyers and Navarre desire to complete and finalize the Post
Closing Adjustments, and certain other matters, as set forth in this Memorandum of Understanding.
NOW THEREFORE, in consideration of the foregoing and the mutual promises contained herein, the
parties agree as follows:
1. Post Closing Adjustments. Notwithstanding anything in the Purchase Agreement to
the contrary, the Sellers, Companies, Seller Representative, Buyers and Navarre agree to complete
and finalize the Post Closing Adjustments as follows:
(a) Closing Accounts Receivable. The Buyers and the Companies shall retain all
right, title and interest in and to the Closing Accounts Receivable and shall not be
obligated to reassign all or any portion of the Closing Accounts Receivable to the Seller
Representative.
Exh. A-1
(b) A/R Amount. Within five (5) days following the execution and delivery of
this Memorandum of Understanding, the Buyers and Seller Representative shall direct the
Escrow Agent to release from the Escrow Account to Navarre the A/R Amount by executing and
delivering to the Escrow Agent the escrow notice substantially in the form attached hereto
as Exhibit A (the “Escrow Notice”).
(c) Indemnification Cash. Within five (5) days following the execution and
delivery of this Memorandum of Understanding, the Buyers and Seller Representative shall
direct the Escrow Agent to release from the Escrow Account $10,000,000 of the
Indemnification Cash to Navarre and $10,000,000 of the Indemnification Cash to the Seller
Representative, with any and all interest thereon earned in the Escrow Account to be
released to the Seller Representative, by executing and delivering to the Escrow Agent the
Escrow Notice.
(d) Cash Payment. Within five (5) days following the execution and delivery of
this Memorandum of Understanding, Navarre shall make a payment to the Seller Representative
in an amount equal to $680,000 in cash or certified funds or by wire transfer.
(e) Termination of Escrow Agreement. Concurrently with the delivery of the
Escrow Notice to the Escrow Agent and the disbursement of amounts as provided in the Escrow
Notice, the Escrow Agreement is terminated.
(f) No Known Claims. Each of the parties hereto acknowledges and agrees that,
as of the date hereof, after giving effect to this Memorandum of Understanding, no party
hereto has any claim against any other party hereto arising out of the Purchase Agreement or
the transactions contemplated thereby or consummated thereunder, including without
limitation any claims under Article 8 of the Purchase Agreement.
(g) Termination of Indemnification. Each of the parties hereto agrees that no
further claims of any kind or nature may be brought under the Purchase Agreement or in
connection with the transactions contemplated thereby, including without limitation pursuant
to Article 8 thereof; provided that Seller shall continue to have the right to receive
payments pursuant to Section 1.5 of the Purchase Agreement and to make claims in connection
therewith.
2. Mutual Releases. The Sellers, Companies, Seller Representative, Buyers and Navarre
agree to the following releases:
(a) Buyer Release. The Companies, Buyers and Navarre, for themselves, and
their respective successors, assigns, subsidiaries, affiliates, insurers, officers,
directors, governors, members, shareholders, employees, managers, agents, and attorneys
hereby release and forever discharge the Sellers and the Seller Representative and their
respective successors, assigns, subsidiaries, affiliates, insurers, officers, directors,
governors, members, shareholders, employees, managers, agents, attorneys and assigns, from
any and all actions, liabilities, liens, debts, damages, claims, suits, judgments,
executions and demands of every kind, nature and description, whether based on common
Xxx. X-0
law or statutory law (collectively, a “Claim”), that the Companies, Buyers and/or
Navarre has, had, or may have against the Sellers and/or the Seller Representative up to the
date of this Memorandum of Understanding, except for any Claims arising out of this
Memorandum of Understanding or any documents or agreements executed in connection therewith
or any action or event occurring after the date hereof.
(b) Seller Release. The Sellers and Seller Representative, for themselves, and
their respective successors, assigns, subsidiaries, affiliates, insurers, officers,
directors, governors, members, shareholders, employees, managers, agents, and attorneys
hereby release and forever discharge the Companies, Buyers and Navarre and their respective
successors, assigns, subsidiaries, affiliates, insurers, officers, directors, governors,
members, shareholders, employees, managers, agents, attorneys and assigns, from any and all
Claims, that the Sellers and/or Seller Representative has, had, or may have against the
Companies, Buyers and/or Navarre up to the date of this Memorandum of Understanding, except
for any Claims arising out of this Memorandum of Understanding or any documents or
agreements executed in connection therewith or any action or event occurring after the date
hereof.
3. Non-Disparagement. The parties hereto agree that no party will make any statements
or other communications, oral or written, to any third party disparaging the reputation or
character of any other party hereto, or their respective partners or advisors, as the case may be,
nor will they disparage any product or service offered or business conducted by either party. Each
party hereto agrees to indemnify and hold harmless the other from and against any loss, cost,
liability or expense (including reasonable attorneys’ fees) arising out of or resulting from a
breach of this Section 3.
4. Capitalized Terms. All capitalized terms not defined herein shall have the
meanings forth in the Purchase Agreement.
5. Enforceability. In the event that any one or more of the provisions of this
Memorandum of Understanding is invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any way be affected or
impaired.
6. Law Governing. THIS MEMORANDUM OF UNDERSTANDING IS INTENDED AS A CONTRACT UNDER
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LOCAL LAW OF THE STATE OF MINNESOTA
(WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS TO THE EXTENT SUCH PRINCIPLES WOULD PERMIT OR
REQUIRE THE APPLICATION OF LAW OF ANY OTHER JURISDICTION), INCLUDING WITHOUT LIMITATION AS TO ALL
MATTERS OF CONSTRUCTION, VALIDITY, ENFORCEABILITY AND PERFORMANCE.
7. Entire Agreement. This Memorandum of Understanding constitutes the entire
agreement among the parties hereto relating to the subject matter hereof, and supersedes and
Exh. A-3
cancels any and all prior agreements among them, relating to the subject matter hereof and may
not be amended or modified except by a written agreement signed by each party hereto.
8. Successors in Interest. This Memorandum of Understanding shall inure to the
benefit of, and shall be binding upon, the heirs, legatees, transferees, assigns, personal
representatives, owners, insurers, agents, employees, administrators, executors, representatives
and/or successors, business entities or successors in interest of any kind whatsoever, of the
parties hereto.
9. Counterparts. This Memorandum of Understanding may be executed in several
counterparts, and all counterparts so executed shall constitute one agreement, binding on the
parties hereto, notwithstanding that such parties are not signatory to the same counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Exh. A-4
[Signature page to that certain Memorandum of Understanding, dated ___, 2006.]
| IN WITNESS WHEREOF, the parties have caused this Memorandum of Understanding to be executed on the day and year first above mentioned. |
| FUNimation Productions Management, LLC |
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| By: | ||||
| Name: | Xxx Xxxxxxxx | |||
| Title: | Manager | |||
| FUNimation General Partnership |
||||
| By: | ||||
| Name: | Xxxxxx Xxxxxxxxxxx | |||
| Title: | Managing Partner | |||
| FUNimation Management Company, LLC |
||||
| By: | ||||
| Name: | Xxx Xxxxxxxx | |||
| Title: | Manager | |||
| Xxxxxx Xxxxxxxxxxx, as the Seller Representative |
||||
| By: | ||||
| XXXXXX XXXXXXXXXXX | ||||
| XXX XXXXXXXX | ||||
| XXXXXX XXXXXXXXXXX | ||||
| XXXXXX XXXXXXXXXXX | ||||
| XXXXX XXXXXXXXXXX | ||||
| XXXXXXXX X. XXXXXXXXXXX | ||||
Exh. A-5
[Signature page continued to that certain Memorandum of Understanding, dated ___,
2006.]
|
XXXXXX XXXXXXXXXXX, Custodian for XXXXXX X.XXXXXXXXXXX XX., Minor |
||||
| XXXXXX XXXXXXXXXXX XX., Custodian for XXXXXXXX X. XXXXXXXXXXX, Minor |
||||
|
XXXXXX XXXXXXXXXXX XX., Custodian for XXXXX X. XXXXXXXXXXX, Minor |
||||
| XXXXX XXXXXXXX |
||||
| XXXXXX XXXXXXX |
||||
|
XXXXX XXXXXX |
||||
| FUNimation Productions, Ltd. | ||||
| By: | Xxxxxxx XX, LLC, its general partner | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
| The FUNimation Store, Ltd. | ||||
| By: | Xxxxxxx XX, LLC, its general partner | |||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Xxxxxxx XX, LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Exh. A-6
[Signature page continued to that certain Memorandum of Understanding, dated ___,
2006.]
| Xxxxxxx XX, LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Navarre CLP, LLC |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Navarre Corporation |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
Exh. A-7
EXHIBIT A
ESCROW NOTICE
The undersigned hereby certify that they are duly authorized to execute and deliver this
Escrow Notice on behalf of Xxxxxxx XX, LLC, a Minnesota limited liability company (“Xxxxxxx XX”),
Xxxxxxx XX, LLC, a Minnesota limited liability company (“Xxxxxxx XX”), Navarre CLP, LLC, a
Minnesota limited liability company (“Navarre CLP” and collectively with Xxxxxxx XX and Xxxxxxx XX,
the “Buyers”), and the general and limited partners of the Companies as the Seller Representative.
Pursuant to Section 3 of the Escrow Agreement (the “Escrow Agreement”), dated May 11, 2005, by
and among the Buyers, the Seller Representative and Xxxxx Fargo Bank, National Association (the
“Escrow Agent”), the Buyers and the Seller Representative hereby request that the Escrow Agent
remit, in immediately available funds, from the Escrow Account to:
| Party: | Amount | |||||
Navarre Corporation
|
$ | 11,800,000 | ||||
Bank Name: |
||||||
Bank Address: |
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Account Name: |
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Account Number: |
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ABA Routing Number: |
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Xxxxxx Xxxxxxxxxxx, as Seller Representative |
$ | 10,000,000 | ||||
Bank Name: |
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Bank Address: |
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Account Name: |
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Account Number: |
||||||
ABA Routing Number: |
||||||
All interest earned on the Escrow Funds shall be paid to Xxxxxx Xxxxxxxxxxx, as the Seller
Representative.
All capitalized terms not defined herein shall have the meanings forth in the Escrow
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the undersigned have executed this Escrow Notice.
| Date: | , 2006 | Xxxxxxx XX, LLC | ||||||
By: |
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Its: |
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| Date: | , 2006 | Xxxxxxx XX, LLC | ||||||
By: |
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Its: |
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| Date: | , 2006 | Navarre CLP, LLC | ||||||
By: |
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Its: |
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| Date: | , 2006 | |||||||
| Xxxxxx Xxxxxxxxxxx, as Seller Representative |
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Xxx. X-0
