Note

Master Stand-by Claims Purchase Agreement

On the Company entered into an agreement (the “First Agreement”) with JPMorgan Chase Bank, N.A. (“Chase”) wherein the Company had the right to sell, and Chase had the obligation to purchase, certain claims that could arise if accounts receivable amounts owed by Toys R Us-Delaware, Inc. (“TRU”) to the Company became uncollectible. The First Agreement would have expired on and carried a fee of per month of the limit of million of accounts receivable due from TRU. On TRU filed a voluntary petition for relief under Chapter of Title of the U.S. Bankruptcy Code (the “Bankruptcy Filing”). Pursuant to the terms of the First Agreement, the Bankruptcy Filing allowed the Company to exercise its right to sell to Chase the claim that arose as a result of the Bankruptcy Filing, which amounted to payable to the Company (the “Exercise”). At the owed to the Company by Chase was classified as other accounts receivable in the accompanying condensed consolidated balance sheets. The Exercise resulted in the acceleration of the recognition of the remaining unpaid fees owed under the First Agreement. During the and -month periods ended the Company recorded and respectively, in fees under the First Agreement, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income.

 

the Company entered into an agreement (the “Second Agreement”) with Chase wherein the Company has the right to sell, and Chase has the obligation to purchase, certain accounts receivable claims that could arise if TRU converts its Chapter case to Chapter of the U.S. Bankruptcy Code or takes other specified actions. The Second Agreement expires on and carries a fee of per month of the limit of million of accounts receivable due from TRU. On in accounts receivable covered by the Second Agreement was owed to the Company from TRU. During the -month period ended the Company recorded in fees under the Second Agreement, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income.

 

Factoring Agreement

The Company assigns the majority of its trade accounts receivable to CIT under factoring agreements whose expiration dates are coterminous with that of the financing agreement described below. Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT.

may

or limitation occurs, the Company either assumes (and seek to mitigate) the credit risk for shipments after the date of such termination or limitation or discontinues shipments to such customer. Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to and for the -month periods ended and respectively, and amounted to and for the -month periods ended and respectively.

 

Credit Facility:

The Company’s credit facility at consisted of a revolving line of credit under a financing agreement with CIT of up to million, which includes a million sub-limit for letters of credit, with an interest rate of prime minus or LIBOR plus The financing agreement is scheduled to mature on and is secured by a lien on all assets of the Company. As of the Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the LIBOR option. The financing agreement also provides for the payment by CIT to the Company of interest at the rate of prime as of the beginning of the calendar month minus which was as of on daily cash balances held at CIT.

and there was balance owed on the revolving line of credit and there was letter of credit outstanding. As of and million and million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.

r or consolidation transactions, transactions with affiliates and changes in or amendments to the organizational documents for the Company and its subsidiaries. The Company was in compliance with these covenants as of