Exhibit 10.23
LOAN AND SECURITY AGREEMENT
Dated December 21, 1999
by and between
ARTISAN PICTURES INC.
--------------------------
as Borrower
▇▇-▇▇▇▇▇▇▇
-------------------------------
(Federal Tax ID No. of Borrower)
and
FINOVA CAPITAL CORPORATION
as Lender
$1,200,000
------------------
Amount of Loan
=========================
COMMERCIAL EQUIPMENT FINANCE
=========================
LOAN AND SECURITY AGREEMENT
---------------------------
AGREEMENT, dated as of December 21, 1999, by and between Artisan Pictures
Inc., a California corporation ("Borrower"), having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and FINOVA
CAPITAL CORPORATION, a Delaware corporation ("Lender"), having a place of
business at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Borrower has requested Lender to make a loan to Borrower and
Lender is willing to make such loan to Borrower upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto covenant and agree as follows:
ARTICLE 1. DEFINITIONS; CONSTRUCTION
1.1 Definitions.
-----------
In addition to other words and terms defined elsewhere in this Agreement
(including the Schedule), as used herein the following words and terms have the
following meanings, respectively, unless the context hereof otherwise clearly
requires:
"Agreement" means this Loan and Security Agreement as amended, modified or
supplemented from time to time.
"Business Day" means any day other than a Saturday, Sunday or other day on
which banking institutions are authorized or obligated to close in New Jersey,
New York or Arizona.
"Closing Date" means the date on which the parties enter into this
Agreement.
"Collateral" means all assets of Borrower in which Borrower has granted or
will ▇▇▇▇▇ ▇ ▇▇▇▇ to Lender, pursuant to this Agreement or otherwise, including
those assets described in Section 3.1 hereof.
"Constituent Documents" means the certificate of incorporation, agreement
of partnership or limited partnership, organizational agreement, operating
agreement, by-laws, or such other similar document pursuant to which Borrower
was organized or its affairs are governed.
"Default" means an event which with notice or lapse of time, or both, would
constitute an Event of Default.
"Disbursement Date" means the date on which all conditions to the Loan are
satisfied by Borrower (which shall not be later than the Outside Date) and the
Loan proceeds are disbursed to Borrower or to other Persons at Borrower's
direction.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means any of the Events of Default described in Section
7.1 hereof.
"Executive Officer" means the President, the Chief Executive Officer, or
the Chief Financial Officer of Borrower elected from time to time.
"GAAP" means generally accepted accounting principles in the United States
of America (as such principles may change from time to time) applied on a
consistent basis (except for changes in application in which Borrower's
independent certified public accountants concur), applied both to classification
of items and amounts.
"Holdings" means Film Holdings Co., a Delaware corporation, and the owner
of 100% of the outstanding stock of Borrower.
"Interest Rate" means the "Interest Rate" defined on the Schedule.
"Law" means any law (including common law), constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or award of any
government or governmental agency, including, without limitation, environmental
laws, rules and regulations.
"Legal Requirements" means any and all present and future judicial, and
administrative rulings or decisions, and any and all present and future federal,
state, and local laws, ordinances, rules, regulations, permits and certificates,
in each case, in any way applicable to Borrower (or the ownership or use of the
Collateral or its other assets), or this transaction.
"Lien" means any mortgage, pledge, lien, security interest (including
without limitation any conditional sale or other title retention agreement),
grant of a leasehold, charge or other encumbrance of any nature whatsoever, and
also means the filing of or the agreement to give any financing statement or
analogous document under the UCC or analogous law of any jurisdiction.
"Loan" has the meaning given to such term in Section 2.1 hereof.
"Loan Documents" means this Agreement, the Note, the Insurance Letter and
any other agreements, instruments and documents required to be, or which are,
executed by Borrower in connection with this Agreement or the Loan (as the same
may from time to time be amended, modified or supplemented).
"Maturity Date" means the "Maturity Date" defined on the Schedule.
"Note" means the promissory note of Borrower executed and delivered by
Borrower under this Agreement, in substantially the form annexed hereto as
Exhibit A with the blanks appropriately filled in.
"Obligations" means all of the indebtedness, liabilities and obligations of
every kind and nature of Borrower to Lender, whether now existing or hereafter
arising, whether or not currently contemplated, howsoever arising, including,
without limitation, all indebtedness, liabilities and obligations arising under,
in connection with or evidenced by this Agreement, the Note, the other Loan
Documents, the October 1998 Loan, the October 1998 Loan Agreement, the other
October 1998 Loan Documents, or otherwise.
"October 1998 Loan" means the loan in the original principal sum of
$4,082,899.24 made by Lender to Borrower, pursuant to the October 1998 Loan
Agreement and the other October 1998 Loan Documents.
"October 1998 Loan Documents" means the Loan and Security Agreement dated
as of October 20, 1998 (the "October 1998 Loan Agreement") by and between Lender
and Borrower, and all agreements, instruments and documents executed and
delivered or to be executed and delivered by Borrower and/or Lender in
connection with the October 1998 Loan, as any and all of the same have been or
may from time to time be amended, modified or supplemented.
"Office", when used in connection with Lender, means its office located at
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, or such other office of Lender
as may be designated in writing from time to time by Lender to Borrower.
"Outside Date" means the "Outside Date" defined on the Schedule.
"Person" means an individual, corporation, national banking association,
partnership, trust, unincorporated association, joint venture, joint-stock
company, government (including political subdivisions), governmental authority
or agency, or any other entity.
"Plan" means any employee benefit plan which is covered by ERISA and which
is maintained by Borrower or, in the case of a plan to which more than one
employer contributes, to which Borrower made contributions at any time within
the five plan years preceding the date of termination.
"Premises" means the "Premises" defined on the Schedule.
-2-
"Schedule" means the Schedule annexed to this Agreement and made a part
hereof. The Schedule is an integral part of this Agreement. All references to
"herein", "herewith", "hereunder" and "hereof" and words of similar import shall
for all purposes be deemed to include the Schedule.
"Term" means the period beginning on the first payment date following the
Disbursement Date and ending on the Maturity Date.
"UCC" means the Uniform Commercial Code as adopted in the State of New
York.
1.2 General Interpretive Principles.
-------------------------------
For purposes of this Agreement, except as otherwise expressly provided
herein or unless the context otherwise requires:
(i) any pronoun used shall be deemed to cover both gender
forms as well as the neuter form;
(ii) all references to the plural shall include the singular,
the singular the plural and the part the whole;
(iii) the word "or" has the inclusive meaning frequently
identified by the phrase "and/or";
(iv) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(v) the words "herein", "herewith", "hereunder" and "hereof"
and similar terms in this Agreement refer to this Agreement as a whole and not
to any particular provision of this Agreement;
(vi) references herein to "Articles", "Sections",
"Subsections", "Paragraphs", and other subdivisions without reference to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;
(vii) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(viii) the term "include" or "including" shall mean, without
limitation, by reason of enumeration; and
(ix) the term "satisfactory to Lender" or "satisfaction of
Lender" or "satisfactory to counsel" or "satisfaction of counsel" or other
similar terms means satisfactory to Lender or its counsel in its sole and
absolute discretion.
ARTICLE 2. THE LOAN
2.1 The Loan.
--------
Subject to the terms and conditions and relying upon the representations
and warranties herein set forth, including, without limitation, the fulfillment
of each and every condition of lending, Lender agrees to make a Loan to Borrower
in the principal amount set forth on the Schedule (the "Loan").
2.2 Use of Proceeds.
---------------
The proceeds of the Loan shall be used by Borrower solely for the purposes
set forth on the Schedule.
2.3 The Note.
--------
The obligation of Borrower to repay the Loan and to pay interest thereon
shall be evidenced by the Note. The Note shall be dated the Closing Date and
shall be executed by Borrower delivered to Lender on the Closing Date.
2.4 Disbursement.
------------
Subject to the conditions set forth herein, Lender shall, on the
Disbursement Date, credit, by wire transfer, the amount of the Loan to the
account of Borrower or the Person or Persons specified in writing by Borrower.
-3-
2.5 Loan Account.
------------
Lender shall maintain a loan account on its books in the name of Borrower
for the Loan in which will be recorded all payments of principal thereof and all
accruals and payments of interest thereon. The entries in the loan account (in
the absence of manifest error in the making thereof) shall be conclusive
evidence of the outstanding principal thereof and accrued interest thereon from
time to time. Lender shall provide Borrower with statements of said account
from time to time on request.
2.6 Interest Rates.
--------------
2.6.1 Interest Prior to Maturity. Prior to maturity (whether by
--------------------------
acceleration or otherwise) the unpaid principal amount of the Loan shall bear
interest at the Interest Rate.
2.6.2 Interest After Maturity. Commencing with the day after the
-----------------------
principal amount of any part of the Loan shall have become due and payable (by
acceleration or otherwise), such part of the Loan or the entire Loan (as the
case may be) shall bear interest at the daily rate of one percent (1%) per annum
above the Interest Rate (the "Default Rate").
2.6.3 Maximum Rate. Lender and Borrower intend the Loan Documents to
------------
comply in all respects with all provisions of Law and not to violate, in any
way, any legal limitations on interest charges. Accordingly, if, for any reason,
Borrower is required to pay, or has paid, interest at a rate in excess of the
highest rate of interest which may be charged by Lender or which Borrower may
legally contract to pay under applicable law (the "Maximum Rate"), then the
Interest Rate shall be deemed to be reduced, automatically and immediately, to
the Maximum Rate, and interest payable hereunder shall be computed and paid at
the Maximum Rate and the portion of all prior payments of interest in excess of
the Maximum Rate shall be deemed to have been prepayments of the outstanding
principal of the Loan and applied to the installments in the inverse order of
their maturities.
2.7 Payments.
--------
2.7.1 Time; Place; Manner. All payments to be made in respect of
-------------------
principal, interest, or other amounts due from Borrower hereunder or under the
Note shall become due at 12:00 o'clock noon, New Jersey time, on the day when
due without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived. Such payments shall be made to Lender in lawful money
of the United States of America in immediately available funds.
2.7.2 Payments of Principal and Interest. The Loan, together with
----------------------------------
interest thereon shall be repaid by Borrower to Lender in the amounts and on the
dates and as otherwise set forth on the Schedule.
2.7.3 Application of Payments. Each payment under this Agreement and
-----------------------
the other Loan Documents shall be applied, first to fees, costs, expenses and
charges, if any, owing to Lender, then to interest as may be due hereunder, and
the balance of such payment shall be applied to the principal balance of the
Loan.
2.7.4 Net Payments. All payments hereunder and under the Note shall
------------
be made by Borrower to Lender without defense, set-off, claim or counterclaim
and without deduction for any present or future income, stamp or other taxes,
levies, imposts, deductions, charges or withholdings whatsoever imposed,
assessed, levied or collected by or for the benefit of any jurisdiction or
taxing authority. In addition, Borrower shall pay any and all taxes (stamp or
otherwise) payable or determined to be payable in connection with the execution
and delivery of this Agreement, the Note and the other Loan Documents and on all
payments to be made by Borrower hereunder and under the Note and the other Loan
Documents (other than Lender's income taxes) and all taxes payable in connection
with or related to the Collateral.
2.8 Prepayments.
-----------
The Loan may be prepaid only as set forth on the Schedule.
-4-
2.9 Administrative Costs.
--------------------
If Borrower shall fail to make any payment of principal or interest within
ten (10) days after the same is due, Borrower shall pay a late charge of two and
one-half percent (2.5%) of the unpaid amounts, but in no event greater than the
maximum rate permitted by law, and such amount shall be payable upon demand.
Such payment is not interest for the use of money, but is solely to cover
Lender's administrative costs occasioned by such delay.
ARTICLE 3. SECURITY
3.1 Security.
--------
As security for the full and timely payment and performance of all of the
Obligations of Borrower to Lender, Borrower hereby assigns, pledges, transfers
and sets over to Lender, and hereby agrees that Lender shall have, and hereby
grants to and creates in favor of Lender, a first security interest under the
UCC subject to no other Liens, in and to the following, in each case, whether
now existing or hereafter arising, now owned or hereafter acquired, wherever
located:
3.1.1 All equipment, machinery, furniture, fixtures and other assets
listed on Schedule A annexed hereto; and
3.1.2 All accessions and additions thereto, substitutions for, and
all replacements of, any and all of the foregoing, and all proceeds of the
foregoing, cash and non-cash, including insurance proceeds.
3.2 Lender Has Rights and Remedies of a Secured Party.
-------------------------------------------------
In addition to all rights and remedies given to Lender by this Agreement,
Lender shall have all the rights and remedies of a secured party under the UCC.
3.3 Additional Provisions Applicable to the Collateral.
--------------------------------------------------
The parties agree that, at all times during the term of this Agreement, the
following provisions shall be applicable to the Collateral:
3.3.1 Borrower covenants and agrees that it will keep accurate and
complete books and records concerning the Collateral owned or acquired by it in
accordance with GAAP.
3.3.2 Lender shall have the right to review the books and records of
Borrower pertaining to the Collateral and to copy the same and to make excerpts
therefrom, all at such reasonable times upon reasonable notice and as often as
Lender may reasonably request.
3.3.3 Borrower shall maintain and keep its principal place of
business and its chief executive office at the address set forth at the
beginning of this Agreement, and at no other location without giving Lender at
least thirty (30) days prior written notice of any move. Borrower shall
maintain and keep its records concerning the Collateral at such address and at
no other location without giving Lender at least thirty (30) days prior written
notice of any move. Borrower shall keep all Collateral only at the Premises.
Borrower may not move the Collateral without the prior written consent of
Lender.
3.3.4 Except for Liens granted to Lender, Borrower shall not sell,
lease, transfer or otherwise dispose of or encumber any of the Collateral,
provided that so long as there is no Default, Borrower may, in the ordinary
course of its business, (a) replace obsolete and worn-out equipment with
substantially identical equipment having a fair market value of not less than
the replaced equipment, provided further that (i) Lender shall be granted a
first and only perfected Lien covering such equipment, and (ii) if requested,
Borrower shall execute and deliver to Lender such financing statements as Lender
shall reasonably require in order to perfect Lender's first and only Lien
covering such equipment .
3.3.5 Borrower shall cause the Collateral to be maintained and
preserved in the same condition, repair and working order as when
-5-
new, ordinary wear and tear excepted, and shall promptly make or cause to be
made all repairs, replacements and other improvements in connection therewith
which are necessary or desirable to that end.
3.3.6 Borrower shall not affix or permit the Collateral to become
affixed to real estate or to any other goods, and such Collateral shall remain
personal property, whether or not so affixed.
3.4 Certain Covenants.
-----------------
Borrower covenants and agrees with Lender for the benefit of Lender that:
3.4.1 Borrower has and will have good and merchantable title to all
of its assets, including the Collateral, in each case as from time to time owned
or acquired by it, and shall keep the Collateral free and clear of all Liens,
other than those granted to Lender. Borrower will defend such title against the
claims and demands of all Persons whomsoever.
3.4.2 Borrower will faithfully preserve and protect Lender's Liens in
the Collateral and will, at its own cost and expense, cause said Liens to be
perfected and continued perfected, and for such purpose Borrower will from time
to time at the request of Lender and at the expense of Borrower, make, execute,
acknowledge and deliver, and file or record, or cause to be filed or recorded,
in the proper filing places, all such instruments, documents and notices,
including without limitation financing statements and continuation statements,
as Lender may deem necessary or advisable from time to time in order to perfect
and continue perfected said security interest. Borrower will do all such other
acts and things and make, execute, acknowledge and deliver all such other
instruments and documents, including without limitation further security
agreements, pledges, endorsements, assignments and notices, as Lender may deem
necessary or advisable from time to time in order to perfect and preserve the
priority of said Liens as a first and only Lien on and security interest in the
Collateral prior to the rights of all other Persons therein or thereto.
3.4.3 Borrower will not, without the prior written consent of Lender,
(i) borrow or permit any Person to borrow against the Collateral other than the
Loan to Borrower from Lender pursuant to this Agreement; (ii) create, incur,
assume or suffer to exist any Lien with respect to any of the Collateral; (iii)
permit any levy or attachment to be made against any of the Collateral except
any levy or attachment relating to this Agreement; or (iv) permit any financing
statement to be on file with respect to any of the Collateral, except financing
statements in favor of Lender and those relating to subordinate Liens held by
the Subordinated Creditor permitted hereunder.
3.4.4 Risk of loss of, damage to or destruction of the Collateral is
and shall remain upon Borrower. Borrower will insure the Collateral as provided
in Section 6.3 of this Agreement. If Borrower fails to effect and keep in full
force and effect such insurance or fails to pay the premiums thereon when due,
Lender may do so for the account of Borrower and add the cost thereof to the
Obligations and the same shall be payable to Lender on demand. Borrower hereby
assigns and sets over unto Lender for the benefit of Lender all moneys which may
become payable on account of such insurance, including without limitation any
return of unearned premiums which may be due upon cancellation of any such
insurance and directs the insurers to pay Lender any amount so due. Lender, its
officers, employees and authorized agents and its successors and assigns, are
hereby appointed attorneys-in-fact of Borrower, for the purpose of endorsing any
draft or check which may be payable to Borrower in order to collect the proceeds
of such insurance or any return of unearned premiums. Such appointment is
irrevocable and coupled with an interest. The proceeds of insurance shall be
applied to reduction of the Obligations in any order Lender may choose or, in
Lender's sole discretion, to the repair or replacement of the Collateral, or any
part thereof, in which case Lender may impose such conditions on the
disbursement of the proceeds as Lender in its sole discretion deems appropriate.
3.4.5 Upon the occurrence and during the continuation or existence of
any Event of Default, Borrower shall promptly upon demand by Lender assemble the
Collateral and make it available to Lender at the place or places to be
designated by Lender. The right of Lender to have
-6-
the Collateral assembled and made available to it is of the essence of this
Agreement and Lender may, at its election, enforce such right in equity for
specific performance.
3.4.6 Lender shall have no duty as to the collection or protection of
the Collateral or any part thereof or any income thereon, or as to the
preservation of any rights pertaining thereto, beyond exercising reasonable care
in the custody of any Collateral actually in the possession of Lender. Lender
shall be deemed to have exercised reasonable care in the custody and
preservation of such of the Collateral as may be in its possession if it takes
such action for that purpose as Borrower shall request in writing, provided that
such requested action shall not, in the judgment of Lender, impair Lender's
security interest in the Collateral or its rights in, or the value of, the
Collateral, and provided further that such written request is received by Lender
in sufficient time to permit it to take the requested action.
3.4.7 Cross Collateralization.
-----------------------
Borrower acknowledges and agrees that (a) all Obligations,
whether arising under or out of the Loan Documents, the October 1998 Loan
Documents, or otherwise, shall be secured by all Collateral granted by Borrower
to Lender under the Loan Documents and all collateral granted by Borrower to
Lender under the October 1998 Loan Documents, and (b) its grant of a Lien on and
security interest in and to all Collateral under the Loan Documents and all
collateral under the October 1998 Loan Documents secure all of the Obligations,
whether arising under or out of the Loan Documents, the October 1998 Loan
Documents, or otherwise.
ARTICLE 4. CONDITIONS OF CLOSING
The obligation of Lender to make the Loan hereunder is subject to the
accuracy, as of the date hereof and the Disbursement Date, of the
representations and warranties herein contained, to the performance by Borrower
of its obligations to be performed hereunder on or before such Disbursement Date
and to the fulfillment (to the satisfaction of Lender and its counsel) of the
following further conditions. If all conditions contained herein are not so
satisfied by the Outside Date, Lender shall have no obligation whatsoever to
make the Loan and shall have no liability for its refusal to do so.
4.1 Representations and Warranties.
------------------------------
The representations and warranties contained in Article 5 hereof shall be
true on the Closing Date and on and as of the Disbursement Date with the same
effect as if made on and as of such date.
4.2 Corporate Action.
----------------
On the Closing Date, Borrower shall deliver to Lender a certificate in form
and substance satisfactory to Lender, dated the Closing Date, signed by a duly
authorized officer of Borrower, certifying as to (a) true copies of the
Constituent Documents of Borrower, all as in effect on such date, (b) true
copies of all action taken by Borrower relative to this Agreement, the Note and
the other Loan Documents, and (c) the names, true signatures and incumbency of
the officer or officers of Borrower authorized to execute and deliver this
Agreement, the Note and the other Loan Documents on behalf of Borrower (and
Lender may conclusively rely on such certificate unless and until a later
certificate revising the prior certificate has been furnished to Lender).
Borrower shall also deliver to Lender good standing certificates for Borrower
issued by the Secretary of State of its State of incorporation and each state in
which it is required by Law to be qualified.
4.3 [INTENTIONALLY DELETED]
4.4 No Change of Law or Facts.
-------------------------
No change shall have occurred after the date of execution and delivery of
this Agreement in applicable Law or regulations thereunder or interpretations
thereof by appropriate regulatory authorities which, in the opinion of Lender or
its counsel, would make it illegal for Lender to acquire the Note, make the
Loan, or otherwise to participate in the Loan, nor shall any facts come to the
attention of Lender, concerning Borrower, its business or financial condition
which, in the opinion of Lender would increase the risk to Lender of repayment
of the Loan by Borrower.
-7-
4.5 Documents.
---------
The following documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto, shall be in form and
substance satisfactory to Lender and its counsel and shall be in full force and
effect on the Closing Date and on the Disbursement Date, and an executed
counterpart of each thereof shall have been delivered to Lender and its counsel:
4.5.1 this Agreement;
4.5.2 the Note;
4.5.3 insurance certificates or policies of insurance evidencing the
coverages required by Section 6.3 hereof;
4.5.4 the Schedule, whose terms and conditions are incorporated in
this Agreement as if fully stated in this Agreement; and
4.5.5 other Loan Documents, if any.
4.6 Collateral.
----------
Borrower shall provide to Lender a complete description of the Collateral,
together with evidence, in form and substance satisfactory to Lender in its sole
discretion, that Borrower owns legal title to the Collateral, free and clear of
all Liens, except for Liens granted to Lender.
4.7 Financing Statements.
--------------------
On the Closing Date, UCC financing statements covering the security
interest created by this Agreement in the Collateral shall have been duly filed
in the office of the Secretary of State of the State where the Collateral is
located and in all other places as, in the opinion of Lender, or its counsel,
are necessary or desirable to perfect such Liens, and Lender shall have been
granted a perfected first and only Lien covering the Collateral.
4.8 Licenses and Permits.
--------------------
All appropriate action shall have been taken prior to the Closing Date in
order to permit consummation of the transactions contemplated herein and hereby
and enforcement of all of the terms hereof and thereof, and all licenses,
permits, waivers, exemptions, authorizations and approvals required (or, in the
opinion of Lender or its counsel, advisable) to be in effect on the Closing Date
shall have been issued and shall be in full force and effect on such date, and
copies thereof shall have been delivered to Lender.
4.9 Additional Conditions.
---------------------
4.9.1 Lender shall have received all other agreements, instruments,
financing statements, certificates, waivers, searches, releases, terminations,
corporate or other action, agreements with suppliers of Collateral, ownership of
the Collateral and other documents as Lender or its counsel shall have requested
(each in form and substance satisfactory to Lender and its counsel).
4.9.2 After giving effect to the Loan, there shall be no Default or
Event of Default hereunder or under the other Loan Documents.
4.9.3 All legal matters incident to the Loan shall be satisfactory to
Lender and its counsel.
4.9.4 All additional conditions set forth on the Schedule shall have
been satisfied, true and in full force and effect.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
5.1 Organization and Qualification.
------------------------------
Borrower is duly organized, validly existing and in good standing as a
corporation under the Laws of the State set forth on the Schedule with full
power and authority to own its properties and to transact its business as now
transacted and as contemplated to be transacted. Borrower is
-8-
qualified and in good standing to transact business in each jurisdiction set
forth on the Schedule, which are all of the jurisdictions where the ownership of
its properties or the transaction of its business requires such qualification.
5.2 Authority and Authorization.
---------------------------
Borrower has full power and authority to execute, deliver and carry out the
provisions of this Agreement, the Note and the other Loan Documents to which it
is a party, to borrow hereunder and under the other Loan Documents and to create
the Liens provided for herein, and to perform its obligations hereunder and
thereunder, and all such action has been duly and validly authorized by all
necessary proceedings on its part.
5.3 Execution and Binding Effect.
----------------------------
This Agreement, the Note and the other Loan Documents to which Borrower is
a party have been duly and validly executed and delivered by Borrower and
constitute the legal, valid and binding obligation of Borrower enforceable in
accordance with their respective terms.
5.4 Authorizations and Filings.
--------------------------
Except for the filing of UCC financing statements, no authorization,
consent, approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any governmental
authority is or will be necessary or advisable in connection with the execution
and delivery of this Agreement, the Note and the other Loan Documents or the
consummation by Borrower of the transactions herein and therein contemplated, or
performance by Borrower of or compliance by Borrower with, the terms and
conditions hereof or thereof.
5.5 Absence of Conflicts.
--------------------
Neither the execution and delivery of this Agreement, the Note or the other
Loan Documents, nor consummation of the transactions herein or therein
contemplated nor performance of, or compliance with the terms and conditions
hereof or thereof will (a) result in any violation or breach of (i) the
provisions of Borrower's Constituent Documents, or (ii) any Law, or the order,
rule or regulation of any court or governmental agency or body having
jurisdiction over Borrower or any of its properties, or (iii) any agreement,
bond, note, instrument or indenture to which Borrower is a party or pursuant to
which any of its properties are affected, or (b) result in the creation or
imposition of any Lien upon any property (now owned or hereafter acquired) of
Borrower, except for the Lien created by this Agreement.
5.6 Financial Statements.
--------------------
Borrower has heretofore furnished to Lender certain financial statements
and related financial information ("Financial Statements"). Such Financial
Statements (including the notes thereto) present fairly the consolidated
financial condition of Holdings (which consolidated financial condition includes
Borrower) as of the dates of the balance sheets contained therein, and the
results of its operations for the periods then ended, all in conformity with
GAAP on a basis consistent with that of Financial Statements for corresponding
prior periods. Except as disclosed therein, Borrower has no material contingent
liabilities (including liabilities for taxes), unusual forward or long-term
commitments or unrealized or anticipated losses from unfavorable commitments.
5.7 No Defaults.
-----------
There is no Default under the Loan Documents.
5.8 Litigation.
----------
There is no pending or threatened claim or proceeding by or before any
court or governmental agency against or affecting Borrower which, if adversely
decided would have a material adverse effect on the business, operations or
financial condition of Borrower or on the ability of Borrower to perform its
obligations under this Agreement, the Note or the other Loan Documents or on the
Collateral.
5.9 Title to Collateral.
-------------------
Borrower has good title to all of the Collateral, free and clear of all
Liens covering the Collateral, other than the Liens granted hereunder to Lender
covering the Collateral, which are and
-9-
will at all times be perfected first Liens covering the Collateral.
5.10 Taxes.
-----
All tax returns required to be filed by Borrower have been properly
prepared, executed and filed. All taxes, assessments, fees and other
governmental charges upon Borrower or upon any of its properties, incomes, sales
or franchises which are due and payable have been paid.
5.11 Financial Accounting Practices.
------------------------------
Borrower makes and keeps books, records and accounts which, in reasonable
detail, accurately and fairly reflect Borrower's transactions and dispositions
of its assets.
5.12 Power To Carry On Business.
--------------------------
Borrower has all requisite power and authority to own and operate its
properties and to carry on its business as now conducted and as presently
planned to be conducted.
5.13 No Material Adverse Change.
--------------------------
Since the date of the Financial Statements referred to in Section 5.6,
there has been no material adverse change in the business, operations or
financial condition of Borrower.
5.14 Compliance with Laws.
--------------------
Borrower is not in violation of any Law, except for violations which in the
aggregate do not have a material adverse effect on the business, operations or
financial condition of Borrower or on the Collateral.
5.15 Compliance with Agreements.
--------------------------
Borrower is not in default under any agreement, bond, note, indenture or
contract, except for defaults which in the aggregate do not have a material
adverse effect on the business, operation or financial condition of Borrower or
on the Collateral.
5.16 Bankruptcy.
----------
Borrower has not made or contemplated an assignment for the benefit of
creditors. No application or petition has been filed for the appointment of a
custodian, trustee, receiver or agent to take possession of the Collateral, or
to take possession of any of the other properties or assets of Borrower.
Borrower is generally paying its debts as such debts become due. Borrower is
not "insolvent" as that term is defined in Section 101(26) of the "Bankruptcy
Code" (Title 11 of the United States Code, 11 U.S.C. Section 101, et seq.) or
would be insolvent after giving effect to the Loan and the transactions
contemplated by the Loan Documents. Borrower has not filed a petition with the
Bankruptcy Court under the Bankruptcy Code, or commenced any proceeding relating
to Borrower under any bankruptcy or reorganization statute or under any
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction. No petition or application of the type described above has
been filed or commenced against Borrower, in which (i) Borrower, by any act, has
indicated or intends to indicate its approval thereof, consent thereto, or
acquiescence therein; (ii) an order has been or is expected to be entered
appointing any such custodian, trustee, receiver or agent, adjudicating Borrower
bankrupt or insolvent, or approving such petition or application in any such
proceeding; (iii) the Bankruptcy Court has ordered or is expected to order
relief against Borrower under the Bankruptcy Code; or (iv) such petition or
application was not dismissed within ninety (90) days of such filing or
commencement.
5.17 Accurate and Complete Disclosure.
--------------------------------
No representation or warranty made by Borrower in this Agreement and no
statement made by Borrower in the Financial Statements furnished pursuant to
Section 5.6 hereof or otherwise, or any certificate, report, exhibit or document
furnished by Borrower to Lender pursuant to or in connection with this Agreement
or the Loan is false or misleading in any material respect (including by
omission of material information necessary to make such representation, warranty
or statement not misleading).
-10-
5.18 Regulations G and U.
-------------------
Borrower is not engaged in the business of extending credit for the purpose
of purchasing or carrying "margin stock", as such term is used in Regulations G
or U promulgated by the Board of Governors of the Federal Reserve System as
amended from time to time. No part of the proceeds of the Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any "margin stock". Borrower does not own any "margin
stock".
5.19 Perfection.
----------
Except for the filings under Article 9 of the UCC specified in Section 4.7
hereof (and continuation statements at periodic intervals), no further filing or
recording is necessary under the UCC or under any other Laws of any
jurisdiction, in order to perfect in all applicable jurisdictions the Liens of
Lender in the Collateral. Upon such filings, Lender will be granted a perfected
first Lien covering the Collateral. There are no other Liens covering the
Collateral.
5.20 Place of Business.
-----------------
Both the place of business (or chief executive office if there is more than
one place of business) of Borrower and the place where it keeps its corporate
records concerning the Collateral and all of its interest in, to and under this
Agreement are located at the address set forth at the beginning of this
Agreement.
5.21 Location of Collateral.
----------------------
For all purposes, including, without limitation, perfection of security
interests therein under Article 9 of the UCC, the Collateral is deemed located
and at all times shall be located at the Premises.
5.22 Name Changes, Mergers, Acquisitions.
-----------------------------------
Except as set forth in Borrower's 10K for 1996, in its 10Q for its fiscal
quarter ended March 1997 and except for the change of name from Live Film and
Media Works Inc. to Artisan Pictures Inc., Borrower has not within the six-year
period immediately preceding the Closing Date, changed its name, been the
surviving entity of a merger or consolidation, acquired all or substantially all
of the assets of any Person, acquired any asset from any Person not in the
business of selling such asset, or assumed any obligations of any other Person.
ARTICLE 6. COVENANTS
Borrower covenants that from and after the date hereof and until payment in
full of the Note and interest thereon and all other amounts due from Borrower
hereunder or under the Note or the other Loan Documents, unless Lender shall
otherwise consent in writing:
6.1 Reporting and Information Requirements.
--------------------------------------
6.1.1 Annual Financial Statements. As soon as practicable, and in
---------------------------
any event within ninety (90) days after the close of each fiscal year of
Borrower, Borrower shall furnish to Lender the annual audit reports for such
year for Holdings (which shall include Borrower), including audited consolidated
statements of income, retained earnings and changes in financial position of
Holdings (which shall include Borrower) for such fiscal year and audited
consolidated balance sheets of Holdings (which shall include Borrower) as of the
close of such fiscal year, and notes to each, all in reasonable detail, setting
forth in comparative form the corresponding figures for the preceding fiscal
year where such presentation is appropriate under GAAP, certified without
qualification by independent certified public accountants of recognized standing
selected by Holdings and satisfactory to Lender, together with (or included in
such certification) a written statement of such accountants substantially to the
effect that (i) such accountants examined such financial statements in
accordance with generally accepted auditing standards and accordingly made such
tests of accounting records and such other auditing procedures as they
considered necessary in the circumstances and (ii) in the opinion of such
accountants such financial statements present fairly the consolidated financial
position of Holdings (which shall include Borrower) as of the end of such fiscal
year and the results of its operations and
-11-
the changes in its financial position for the fiscal year then ended, in
conformity with GAAP applied on a basis consistent with that of the preceding
fiscal year (except for changes in application in which such accountants
concur).
6.1.2 Quarterly Financial Statements. Within forty-five (45) days
------------------------------
after the end of each of the first three fiscal quarters of each fiscal year,
Borrower shall furnish to Lender a copy of Holdings interim consolidated
financial statements (which shall include Borrower) of the type described in
Section 6.1.1 above, certified by an Executive Officer of Borrower.
6.1.3 Notice of Event of Default. Promptly upon becoming aware of
--------------------------
any Default or Event of Default, Borrower shall give Lender notice thereof,
together with a written statement of a Chief Executive Officer of Borrower
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by Borrower.
6.1.4 Notice of Material Proceedings. Promptly upon becoming aware
------------------------------
thereof Borrower shall give Lender written notice of the commencement, existence
or threat of any proceeding by or before any court or administrative agency
against or affecting Borrower or the Collateral which, if adversely decided,
would have a material adverse effect on the business, operations or financial
condition of Borrower or on the ability of Borrower to perform its obligations
under this Agreement, the Note, the other Loan Documents or on the Collateral.
6.1.5 Visitation. Borrower shall permit such persons as Lender may
----------
designate to visit and inspect the Collateral and to examine the books and
records of Borrower, at such reasonable times and as often as Lender may
reasonably request.
6.1.6 Other Deliveries. Promptly upon their becoming available,
----------------
Borrower shall furnish to Lender, copies of all registration statements and any
amendments and supplements thereto and any regular and periodic reports filed by
Borrower with any securities exchange or with the Securities and Exchange
Commission or any governmental authority succeeding to any or all of the
functions of said commissions.
6.2 Preservation of Existence and Franchises.
----------------------------------------
6.2.1 Borrower shall not enter into any merger, reorganization or
consolidation, or wind up, liquidate or dissolve, nor agree to do any of the
foregoing.
6.2.2 Borrower will qualify to do business and will remain in good
standing under the laws of each jurisdiction in which it is required to be
qualified by reason of the location of the properties owned or leased by it or
the conduct of its business.
6.2.3 Borrower shall do, or cause to be done, all things reasonably
necessary to preserve and keep in full force and effect its corporate existence
and all permits, licenses, rights and privileges necessary or appropriate for
the conducting of its business as now and hereafter conducted. Borrower shall
not change its name. Borrower shall continue to engage in the same kind of
business and shall not make any material change in its business or in the nature
of its operations or engage in any unrelated line of business.
6.2.4 Borrower will comply with all Laws relative to the conduct of
its business or the location of the properties owned or leased by it, the non-
compliance with which could have a material adverse effect on the business,
operations, assets or financial or other condition of Borrower, as contemplated
hereby, or the ability of Borrower to perform its Obligations under this
Agreement, the Note or the other Loan Documents and will obtain or cause to be
obtained as promptly as possible any permit, license, consent, privilege or
approval of any governmental authority and make any filing or registration
therewith which at the time shall be required with respect to the performance of
its Obligations under this Agreement, the Note or the other Loan Documents or
for the operation of its business as presently conducted or as contemplated by
it.
6.2.5 Borrower shall not, except as otherwise permitted in this
Agreement, (a) convey, assign, sell, mortgage, encumber, pledge, hypothecate,
grant a security interest in, grant options with respect to, lease or otherwise
dispose of all or any part of any legal or beneficial interest
-12-
in any part or all of the Collateral or any interest therein; or (b) convey,
assign, transfer or otherwise dispose of all or substantially all of its assets
(other than the Collateral, the prohibition on transfer of which is governed by
subparagraph (a) above).
6.3 Insurance.
---------
Borrower shall, at its own expense, maintain and deliver evidence to Lender
of such insurance required by Lender, written by insurers and in amounts
satisfactory to Lender.
6.4 Maintenance of Properties.
-------------------------
Borrower shall maintain or cause to be maintained in good repair, working
order and condition the Collateral, and shall make or cause to be made all
needful and proper repairs, renewals, replacements and improvements thereto so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
6.5 Payment of Taxes and Other Potential Charges.
--------------------------------------------
Borrower shall pay or discharge
6.5.1 all taxes, assessments and other governmental charges or levies
imposed upon it or any of its properties, including the Collateral, or income
(including such as may arise under ERISA or any similar provision of law), on or
prior to the date on which penalties attach thereto; and
6.5.2 all lawful claims of materialmen, mechanics, carriers,
warehousemen, landlords and other like Persons which, if unpaid, might result in
the creation of a Lien upon any such property, on or prior to the date when due;
provided, that unless and until foreclosure, distraint, levy, sale or similar
--------
proceedings shall have been commenced, Borrower need not pay or discharge any
such tax, assessment, charge, levy, claim or current liability so long as (i)
the validity thereof is contested in good faith and by appropriate proceedings
diligently pursued, (ii) in Lender's sole judgment there is no reasonably
foreseeable risk of forfeiture of the Collateral, and (iii) such reserves or
other appropriate provisions as may be required by GAAP shall have been made
therefor, and so long as such failure to pay or discharge does not have a
material adverse effect on the business, operations or financial condition of
Borrower or the Collateral.
6.6 Financial Accounting Practices.
------------------------------
Borrower shall make and keep books, records and accounts which, in
reasonable detail, accurately and fairly reflect its business, including all
transactions and dispositions of its assets, all prepared in accordance with
GAAP.
6.7 Compliance with Laws.
--------------------
Borrower shall comply with all applicable Laws in all respects, provided,
--------
that Borrower shall not be deemed to be in violation of this Section 6.7 as a
result of any failures to comply which would not result in fines, penalties,
injunctive relief or other civil or criminal liabilities which, in the
aggregate, would not materially affect the business or operations of Borrower or
the ability of Borrower to perform its obligations under this Agreement, the
Note or the other Loan Documents or the Collateral.
6.8 Material Obligations.
--------------------
Borrower shall pay and satisfy, when due, all material liabilities and
obligations, including, without limitation, all obligations under all leases
(real or personal property) to which it is a party.
6.9 Maintenance of Collateral.
-------------------------
Borrower will maintain and preserve the Collateral in good condition,
repair and working order, promptly repairing, replacing or rebuilding any part
of the Collateral which may be destroyed by any casualty, or become damaged,
worn or dilapidated.
6.10 Maintenance of Principal Place of Business.
------------------------------------------
Borrower shall maintain and keep its principal place of business and chief
executive office at the address set forth at the beginning of this Agreement,
and at no other location without giving Lender written notice of any move.
Borrower shall maintain and keep its records at
-13-
such address and at no other location without giving Lender written notice of
any move.
6.11 Names.
-----
Borrower shall not use any corporate or fictitious name other than its
corporate name as set forth in its Articles or Certificate of Incorporation on
the date hereof or as set forth on the Schedule;
6.12 Margin Security.
---------------
Borrower shall not own, purchase or acquire (or enter into any contract to
purchase or acquire) any "margin security" as defined by any regulation of the
Federal Reserve Board as now in effect or as the same may hereafter be in
effect.
6.13 Satisfaction of Certain Obligations.
-----------------------------------
In the event Borrower fails to make any payment or do any act as herein
provided (including, but not limited to, maintaining any insurance required to
be maintained under the Loan Documents or paying all taxes in accordance with
the terms hereof) or there shall be a claim or Lien asserted or filed against
the Collateral, Lender may, but shall not be obligated to (and without releasing
Borrower from any obligation hereunder), make all such payments and perform all
such acts or otherwise satisfy such obligations. All sums paid by Lender in
respect thereof and all costs, fees and expenses, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, which
are incurred by Lender on account thereof, shall bear interest at the Default
Rate, shall be payable on demand by Borrower to Lender, and shall be additional
Obligations hereunder secured by the Collateral.
6.14 Transactions With Affiliates.
----------------------------
Borrower shall not, and shall not permit any of its subsidiaries, to,
directly or indirectly, enter into any purchase, sale, lease or other
transaction with any affiliate, except in the ordinary course of business on
terms that are no less favorable than those which might be obtained at the time
in a comparable arm's length transaction with any Person who is not an
affiliate.
6.15 Year 2000.
---------
Borrower shall take all action necessary to assure that there will be no
material adverse change to Borrower's business by reason of the advent of the
year 2000, including, without limitation, that all computer-based systems,
embedded microchips and other processing capabilities effectively recognize and
process dates after April 1, 1999. At Lender's request, Borrower shall provide
to Lender assurance reasonably acceptable to Lender that Borrower's computer-
based systems, embedded microchips and other processing capabilities are year
2000 compatible.
6.16 Further Assurances.
------------------
Borrower shall cause to be done, executed, acknowledged and delivered all
and every such further act, conveyance and assurance as Lender shall require for
accomplishing the purposes of this Agreement, the Note and the other Loan
Documents. Borrower will defend and protect its title with respect to the
Collateral and will indemnify Lender with respect thereto. Any payment in
respect of such indemnity shall be made directly to Lender on demand in
immediately available funds. Forthwith after notice from Lender, Borrower shall
promptly, without further consideration, execute, acknowledge and deliver such
further instruments and documents and will take such other actions as Lender may
deem necessary or advisable from time to time to ensure the enforceability or
priority of the Liens granted hereby, or otherwise to confirm and carry out the
intent and purpose of this Agreement.
ARTICLE 7. DEFAULTS AND REMEDIES
7.1 Events of Default.
-----------------
The occurrence of one or more of the following described events is an Event
of Default:
7.1.1 Borrower fails to make any payment of principal of or interest
on the Note, within ten (10) days after the date upon which the same shall be
due; or
7.1.2 Borrower fails to perform or observe any of its covenants or
agreements
-14-
contained herein or in any other Loan Documents which cannot be cured; or
7.1.3 Borrower fails to perform or observe any other covenant or
agreement to be performed or observed by it hereunder or under the other Loan
Documents and such failure continues unremedied for a period of thirty (30)
consecutive days after Borrower obtains knowledge of such occurrence; or
7.1.4 Borrower voluntarily creates, suffers to exist, incurs or
assumes any Lien, security interest, charge or encumbrance on, or with respect
to, any part of or all the Collateral, and such Lien shall not be removed within
thirty (30) days of its creation, or the Liens held by Lender in and to the
Collateral shall cease to be the first perfected Lien in and to the Collateral;
or
7.1.5 Except as otherwise permitted in this Agreement, Borrower
sells, assigns, leases, or otherwise disposes of or relinquishes possession of,
any Collateral; or
7.1.6 any representation or warranty made by Borrower herein or in
any other Loan Document or in any document or certificate furnished by Borrower
to Lender in connection herewith or therewith at any time proves to have been
incorrect in any material respect when made; or
7.1.7 this Agreement or any Loan Document at any time for any reason
ceases to be in full force and effect or is declared by a court or governmental
agency of competent jurisdiction to be null and void; or
7.1.8 Borrower breaches or defaults (after giving effect to any
applicable grace or cure periods) under the terms of any agreement, instrument
or document with or for the benefit of Lender which is not a Loan Document or
under any other loan, credit facility or other financial accommodation made by
Lender to Borrower, including, without limitation, the October 1998 Loan
Agreement and the other October 1998 Loan Documents, or other promissory notes,
guaranties, equipment leases, security agreements, mortgages and deeds of trust;
or
7.1.9 there is a material adverse change in the business,
operations or financial condition of Borrower or in the Collateral; or
7.1.10 a proceeding is instituted seeking a decree or order for
relief in respect of Borrower in an involuntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect or for
the appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or other similar official) of Borrower, or for any substantial
part of its properties or for the dissolution, winding-up or liquidation of its
affairs or any substantial part of any of its properties and such proceeding
remains undismissed or unstayed for a period of sixty (60) consecutive days or
such court enters a decree or order granting the relief sought in such
proceeding; or
7.1.11 Borrower voluntarily suspends transaction of its business,
commences a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, consents to the entry of an order for
relief in an involuntary case under any such law or consents to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Borrower for any substantial part of
any of its properties, or makes a general assignment for the benefit of
creditors, or takes any action in furtherance of any of the foregoing; or
7.1.12 final judgment(s) for the payment of money in excess of
$500,000 shall be rendered against Borrower which within thirty (30) days from
the entry of such judgment(s) shall not have been discharged or stayed pending
appeal or which shall not have been discharged or bonded in full within thirty
(30) days from the entry of a final order of affirmance on appeal; or
7.1.13 Borrower fails to perform or observe any of its covenants or
agreements contained in Section 6.3 hereof or in the letter regarding insurance
requirements delivered by Borrower in connection with the Loan or the Loan
Documents (the "Insurance Letter") or any such insurance shall at any time cease
to be in full force and effect; or
-15-
7.1.14 there shall be a default under or breach of any term or
condition contained in any of the Chase Loan Documents (or any loan or credit
documents executed in connection with any loan facility which replaces, is in
substitution for or whose proceeds are used to repay all or a portion of the
indebtedness covered or evidenced by the Chase Loan Documents or subsequent loan
documents) and all or a portion of such indebtedness shall have been declared
due and payable or otherwise accelerated prior to the date on which such
indebtedness would otherwise be due and payable; or
7.1.15 the Letter of Credit shall at any time cease to be in full
force and effect; or
7.1.16 Borrower ceases to operate its business at either of the
Premises.
7.2 Consequences of Event of Default.
--------------------------------
7.2.1 If an Event of Default occurs, Lender may, by notice to
Borrower, declare the unpaid principal amount of the Note and interest accrued
thereon and all other Obligations and liabilities of Borrower hereunder or under
the Note or the Loan Documents to be immediately due and payable and the same
shall thereupon become and be immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and an action therefor shall immediately accrue.
7.2.2 In addition, if an Event of Default occurs, Lender shall have
all rights and remedies granted herein and in the other Loan Documents and all
rights or remedies available at law (including, without limitation, the UCC) or
equity, whether as a secured party or otherwise (including specifically those
granted by the Uniform Commercial Code as in effect in the jurisdiction or
jurisdictions where the Collateral is located) and, except as limited by Law,
all remedies of Lender (i) shall be cumulative and concurrent; (ii) may be
pursued separately, successively or concurrently against Borrower or against all
or any portion of the Collateral, at the sole discretion of Lender; (iii) may be
exercised as often as occasion therefor shall arise, it being agreed by Borrower
that the exercise or failure to exercise any rights or remedies shall in no
event be construed as a waiver or release thereof or of any other right, remedy
or recourse; and (iv) are intended to be, and shall be, nonexclusive. To the
fullest extent permitted by applicable Law, Lender may resort to the rights,
remedies and recourses set forth herein and any other security therefor in such
order and manner as Lender may elect. In addition, if an Event of Default
occurs, Lender may draw upon the Letter of Credit for any or all of the amounts
thereunder.
7.2.3 Without limiting any of the foregoing, Borrower agrees that (i)
Lender may, with or without notice and without legal process, enter upon any
property owned, leased or otherwise under the real or apparent control of
Borrower or any agent thereof or any other location where the Collateral may be
located and disassemble, disconnect, render unusable or repossess all or any
item of the Collateral; (ii) written notice mailed to Borrower, as provided in
this Agreement for the giving of notice, shall be reasonable if given ten (10)
days prior to (a) any public sale or (b) the date after which a private sale may
be made; (iii) a sale of the Collateral may be made as a unit or in parcels and
for cash and upon terms; (iv) Lender may buy the Collateral at any public sale
and at any private sale as permitted by the UCC; and (v) such public or private
sale or sales may be held or adjourned from time to time, and Lender shall have
the right to conduct such sale or sales on Borrower's premises (including,
without limitation, the Premises) or elsewhere where the Collateral is located,
and shall have the right to use Borrower's premises without charge for such sale
or sales for such time or times as Lender may determine.
ARTICLE 8. EXPENSES AND INDEMNITIES
8.1 Expenses.
--------
Borrower shall promptly reimburse Lender for all costs, fees and expenses
incurred by Lender in connection with the negotiation, preparation, execution,
delivery, administration, operation and enforcement of each of the Loan
Documents, including, but not limited to, the attorneys' and paralegals' fees of
in-house and outside counsel, expert witness fees, lien, title search and
insurance fees, appraisal fees, all charges and expenses incurred in connection
with any and all environmental reports and environmental
-16-
remediation activities, and all other costs, expenses, taxes and filing or
recording fees payable in connection with the transactions contemplated by this
Agreement, including, without limitation, all such costs, fees and expenses as
Lender shall incur or for which Lender shall become obligated in connection with
(i) any inspection or verification of the Collateral, (ii) any proceeding
relating to the Loan Documents or the Collateral, (iii) actions taken with
respect to the Collateral and Lender's security interest therein, including,
without limitation, the defense or prosecution of any action involving Lender
and Borrower or any third party, (iv) enforcement of any of Lender's rights and
remedies with respect to the Obligations or Collateral, (v) consultation with
Lender's attorneys and participation in any workout, bankruptcy or other
insolvency or other proceeding involving Borrower or any affiliate of Borrower,
whether or not suit is filed, and (vi) any other matters relating to or arising
out of the Loan and/or the Loan Documents. Notwithstanding anything to the
contrary contained herein, Borrower's obligation for the payment or
reimbursement of the fees, costs and expenses of Lender's outside counsel
incurred in connection with the negotiation, preparation, execution, delivery
and closing of the Loan Documents and the transactions contemplated thereby
shall not exceed $6,000.
ARTICLE 9. MISCELLANEOUS
9.1 Further Assurances.
------------------
Borrower shall at any time and from time to time upon the written request
of Lender, execute and deliver such further agreements, instruments and
documents and do such further acts and things as Lender may reasonably request
in order to effect the purposes of this Agreement.
9.2 General Indemnity.
-----------------
Borrower shall indemnify, defend and hold harmless Lender from and
against, and, upon demand, reimburse Lender for, all claims, demands,
liabilities, losses, damages, judgments, penalties, costs and expenses,
including, without limitation, reasonable attorneys' fees and disbursements,
which may be imposed upon, asserted against or incurred or paid by Lender, on
account of any act performed or omitted to be performed under this Agreement,
the Note or the other Loan Documents or on account of any transaction arising
out of or in any way connected with the Collateral or this Agreement, the Note
or the other Loan Documents (including, without limitation, any litigation
matter involving claims or alleged claims by or disputes with third parties,
said indemnity expressly including, without limitation, any claim, damage or
loss arising out of a breach by Borrower of any environmental law, rule or
regulation), except as a result of the willful misconduct or gross negligence of
Lender.
9.3 No Implied Waiver; Cumulative Remedies.
--------------------------------------
No course of dealing and no delay or failure of Lender in exercising any
right, power or privilege under this Agreement, the Note or any of the other
Loan Documents shall affect such right, power or privilege except as and to the
extent that the assertion of any such right, power or privilege shall be barred
by an applicable statute of limitations; nor shall any single or partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right, power or privilege preclude any further exercise thereof or of any other
right, power or privilege. The rights and remedies of Lender under this
Agreement, the Note or the other Loan Documents are cumulative and not exclusive
of any rights or remedies which Lender would otherwise have.
9.4 Taxes.
-----
Borrower agrees to pay or reimburse Lender for any and all stamp, document,
transfer, recording or filing taxes or fees and all similar impositions payable
or hereafter determined by Lender to be payable in connection with this
Agreement, the Note or the other Loan Documents (including but not limited to
those necessary or advisable to record or to ensure the enforceability or
priority of this Agreement, the Note or the other Loan Documents), as determined
by Lender in its sole discretion from time to time, and any other documents,
instruments or transactions pursuant to or in connection herewith, and Borrower
agrees to save Lender harmless from and against any and all present or future
claims or liabilities with respect to
-17-
or resulting from any delay in paying or omission to pay any such taxes, fees or
similar impositions.
9.5 Time of Essence.
---------------
Time is of the essence for the performance by Borrower of the Obligations
set forth in this Agreement and the other Loan Documents.
9.6 Modifications, Amendments or Waivers.
------------------------------------
Lender and Borrower may from time to time enter into written agreements
amending, modifying or supplementing this Agreement, the Note or the other Loan
Documents or changing the rights of Lender or Borrower hereunder or thereunder,
and Lender may from time to time grant waivers or consents to a departure from
the due performance of the obligations of Borrower thereunder. Any such
agreement, waiver or consent must be in writing and shall be effective only to
the extent set forth in such writing. In the case of any such waiver or
consent, any Event of Default so waived or consented to shall be deemed to be
cured and not continuing, but no such waiver or consent shall extend to any
subsequent or other Event of Default or impair any right consequent thereto.
9.7 Holidays.
--------
Except as otherwise provided herein, whenever any payment or action to be
made or taken hereunder or the Note or any other Loan Document shall be stated
to be due on a day which is not a Business Day, such payment or action shall be
made or taken on the next following Business Day (and such day shall be included
in the calculation of interest due), unless such next succeeding Business Day
falls in a different calendar month, in which case payment or action shall be
made or taken on the next preceding Business Day.
9.8 Notices.
-------
9.8.1 Except as otherwise provided herein, all notices and other
communications required under the terms and provisions of this Agreement, the
Note or the other Loan Documents shall be in writing and shall become effective
when delivered by hand or received by overnight courier, telex, facsimile,
telegram or registered first class mail, postage prepaid, addressed as follows:
If to Lender, at:
FINOVA Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President
with a copy to:
FINOVA Capital Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: Vice President
Law Department
and
Winick & Rich, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
If to Borrower, at the address set forth on the Schedule.
or at such other address as either party may, from time to time, designate in
writing to the other party hereto.
9.8.2 If any notice is given by telex, facsimile transmission, or
telegram, the party giving such notice shall confirm such notice by a writing
delivered by hand or overnight courier; provided, however, that for all purposes
-------- -------
hereunder, notice shall be deemed effective at the time given by telex,
telecopier or telegram.
9.9 Governing Law.
-------------
THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE
-18-
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
9.10 Personal Jurisdiction and Service of Process.
---------------------------------------------
BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST
BORROWER UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO THIS AGREEMENT, THE
NOTE OR THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN ANY ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇ ▇▇▇▇ LOCATED IN NEW YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK. BORROWER, BY ITS EXECUTION AND DELIVERY
OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE
PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING.
BORROWER FURTHER AGREES THAT ANY LEGAL ACTION OR PROCEEDING BORROWER MAY BRING,
ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, SHALL ONLY BE BROUGHT IN ANY ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
LOCATED IN NEW YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK. BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE
OF ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR
PROCEEDING BY DELIVERY THEREOF TO BORROWER IN THE MANNER PROVIDED FOR NOTICES IN
THIS AGREEMENT. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS.
----- --- ----------
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW
YORK, UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
NEW YORK. NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT
THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
BORROWER IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.
9.11 Waiver of Jury Trial.
--------------------
BORROWER AND LENDER HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY AGREEMENT, INSTRUMENT
OR DOCUMENT EXECUTED AND DELIVERED IN CONNECTION HEREWITH OR THEREWITH,
INCLUDING THE LOAN DOCUMENTS.
9.12 Severability.
------------
The provisions of this Agreement, the Note and any other Loan Document are
intended to be severable. If any such provision is held invalid or
unenforceable in whole or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without in any manner affecting the validity or enforceability
thereof in any other jurisdiction or the remaining provisions hereof in any
jurisdiction.
9.13 Prior Understandings.
--------------------
This Agreement and the other Loan Documents supersede all prior
understandings and agreements, whether written or oral, between the parties
hereto relating to the transactions provided for herein or therein.
9.14 Survival.
--------
All representations and warranties of Borrower contained in this Agreement
or any other Loan Document or made in writing in connection herewith or
therewith shall survive the execution and delivery of this Agreement, the Note
and the
-19-
other Loan Documents, any investigation or inspection by Lender, the making of
the Loan hereunder, the payment of the Note or the expiration of this Agreement.
All covenants and agreements of Borrower contained herein shall continue in full
force until payment in full of the Obligations. Borrower's obligation to pay the
principal of and interest on the Note and all such other amounts shall be
absolute and unconditional under any and all circumstances.
9.15 Successors and Assigns.
----------------------
This Agreement shall be binding upon and shall inure to the benefit of
Lender and Borrower and their respective successors and permitted assigns,
except that Borrower may not assign, delegate or transfer any of its rights or
obligations hereunder or any interest herein without the written consent of
Lender which Lender may withhold in its absolute discretion. Any actual or
attempted assignment by Borrower without Lender's consent shall be null, void
and of no effect whatsoever. Lender may assign or otherwise transfer any or all
of its rights, title, interests and obligations hereunder and under the Note and
the other Loan Documents in whole or in part. If Lender makes such an
assignment, the assignee shall have all of the rights of the Lender and Borrower
shall not assert against the assignee any defense, counterclaims or setoff which
Borrower may have against Lender. Except to the extent otherwise required by
its context, the word "Lender" where used in this Agreement shall mean and
include the holder of the Note originally issued to Lender, and the holder of
such Note shall be bound by and have the benefits of this Agreement to the same
extent as if such holder had been a signatory hereto, except that no assignee
shall be deemed to assume any obligation or duty imposed upon Lender hereunder
or the other Loan Documents and Borrower shall look only to Lender for
performance thereof. As used in this Section 9.16, "assign" shall be deemed to
include a pledge, sale of, or grant of a mortgage on, or a security interest in,
any of the Collateral or this Agreement or the other Loan Documents by Lender
and the term "assignee" shall be deemed to refer to the recipient of such
pledge, sale, mortgage or security interest.
9.16 Counterparts.
------------
This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts each of which, when so
executed and delivered by the parties, constituting an original but all such
counterparts together constituting but one and the same instrument.
9.17 Publicity.
---------
Lender is hereby authorized to issue appropriate press releases and to
cause a tombstone to be published announcing the consummation of the
transactions contemplated in this Agreement, including the aggregate amount of
the Loan. All such press releases and tombstones shall be subject to the prior
approval of Borrower.
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto
duly authorized, have executed and delivered this Agreement effective as of the
day and year first above written.
ARTISAN PICTURES INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: Chief Executive Officer
----------------------------
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: Chief Executive Officer
____________________________
FINOVA CAPITAL CORPORATION
By: /s/ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇. ▇▇▇▇▇▇▇
-----------------------------
Title: Director, Cont. Admin.
----------------------------
-20-
EXHIBIT A
---------
Note
----
See attached.
SECURED PROMISSORY NOTE
$1,200,000
December __, ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
FOR VALUE RECEIVED, the undersigned, ARTISAN PICTURES INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of FINOVA CAPITAL
CORPORATION ("Lender"), the principal sum of One Million Two Hundred Thousand
Dollars ($1,200,000), together with interest on the unpaid principal balance
hereof from time to time outstanding at the rate per annum and on the dates and
all as otherwise provided in that certain Loan and Security Agreement of even
date herewith (the "Loan Agreement") by and between Lender and Borrower.
This Note is the Note referred to in the Loan Agreement, is secured as set
forth in the Loan Agreement, may not be prepaid except as provided in the Loan
Agreement and is entitled to the benefits of the Loan Agreement. All
capitalized terms used in this Note which are not otherwise defined herein shall
have the respective meanings ascribed to them in the Loan Agreement.
All payments of principal and interest on this Note are to be made in
lawful money of the United States of America in immediately available funds,
without setoff, counterclaim or deduction of any nature, at the office of Lender
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ (or such other place as the
holder hereof shall designate to Borrower in writing), prior to 12:00 Noon,
local time, on the day when due.
If any payment of principal or interest becomes due on a day which is not a
Business Day, that payment shall be made on the next Business Day unless such
next Business Day falls in another calendar month in which event that payment
shall be made on the next preceding Business Day.
Lender and Borrower intend this Note to comply in all respects with all
provisions of law and not to violate, in any way, any legal limitations on
interest charges. Accordingly, if, for any reason, Borrower is required to pay,
or has paid, interest at a rate in excess of the highest rate of interest which
may be charged by Lender or which Borrower may legally contract to pay under
applicable law (the "Maximum Rate"), then the interest rate shall be deemed to
be reduced, automatically and immediately, to the Maximum Rate, and interest
payable hereunder shall be computed and paid at the Maximum Rate and the portion
of all prior payments of interest in excess of the Maximum Rate shall be deemed
to have been prepayments of the outstanding principal of this Note and applied
to the installments in the inverse order of their maturities.
If Borrower fails to make any payment of principal or interest within ten
(10) days after the payment is due, Borrower shall pay a late charge of two and
one-half percent (2.5%) of the unpaid amount, but in no event more than the
maximum amount permitted by applicable law, and such amount shall be payable
upon demand. Such payment is not interest for the use of money, but is intended
to cover Lender's administrative costs occasioned by such delay.
Upon the occurrence of an Event of Default, Lender shall have all of the
rights and remedies contained in the Loan Agreement, including, without
limitation, the right, at its option, to declare all indebtedness under this
Note to be immediately due and payable.
Borrower hereby expressly waives presentment for payment, demand for
payment, notice of dishonor, protest, notice of protest, notice of non-payment,
and all lack of diligence or delays in collection or enforcement of this Note or
the Loan Agreement.
Lender may extend the time of payment of this Note, postpone the
enforcement hereof, release any Collateral, or grant any other indulgences
whatsoever, without affecting or diminishing Lender's right of
recourse against Borrower, as provided herein and in the Loan Agreement and in
the other Loan Documents, which right is hereby expressly reserved. The failure
to assert any right by Lender shall not be deemed a waiver thereof.
Borrower agrees to pay all costs, fees and expenses of collection,
including, without limitation, Lender's reasonable attorneys' fees and
disbursements, in the event that any action, suit or proceeding is brought by
the holder hereof to collect this Note or if an Event of Default occurs.
THIS NOTE IS DEEMED TO HAVE BEEN MADE IN, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF, THE STATE OF NEW YORK. BORROWER IRREVOCABLY
CONSENTS THAT ANY LEGAL ACTION OR PROCEEDING AGAINST BORROWER UNDER, ARISING OUT
OF, OR IN ANY MANNER RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN ANY ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ LOCATED IN
NEW YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK. BORROWER, BY ITS EXECUTION AND DELIVERY OF THIS NOTE, EXPRESSLY
AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH
COURTS IN ANY SUCH ACTION OR PROCEEDING. BORROWER FURTHER AGREES THAT ANY LEGAL
ACTION OR PROCEEDING BORROWER MAY BRING, ARISING OUT OF OR IN ANY MANNER
RELATING TO THIS NOTE, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS, SHALL
ONLY BE BROUGHT IN ANY ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ LOCATED IN NEW YORK
COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK. BORROWER ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF ANY COMPLAINT,
SUMMONS, NOTICE OR OTHER PROCESS RELATING TO SUCH ACTION OR PROCEEDING BY
DELIVERY THEREOF TO BORROWER IN THE MANNER PROVIDED FOR NOTICES IN THE LOAN
AGREEMENT. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR
DEFENSE IN ANY SUCH ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS.
----- --- ----------
BORROWER SHALL NOT BE ENTITLED IN ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY
DEFENSE GIVEN OR ALLOWED UNDER THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW
YORK, UNLESS SUCH DEFENSE IS ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF
NEW YORK. NOTHING HEREIN SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT
THE RIGHT OF LENDER TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
BORROWER IN ANY OTHER JURISDICTION OR TO SERVE PROCESS IN ANY MANNER PERMITTED
BY LAW.
IN WITNESS WHEREOF, Borrower has duly executed this Note on the date first
above written.
ARTISAN PICTURES INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Title: CEO
-----------------------------
By: /s/ ▇▇▇▇▇▇ ▇.▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: SVP
-----------------------------
Federal Tax Identification No ▇▇-▇▇▇▇▇▇▇
-2-
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
Borrower: Artisan Pictures Inc.
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Date: December 21, 1999
This Schedule forms an integral part of the Loan and Security Agreement between
the above Borrower and FINOVA Capital Corporation dated the above date, and all
references herein and therein to "this Agreement" shall be deemed to refer to
said Agreement and to this Schedule (as each of the same may be amended,
modified or supplemented from time to time.)
================================================================================
Additional Definitions (Section 1.1):
"Chase Loan Documents" means the Amended and Restated Credit and Guaranty
Agreement dated as of July 9, 1998 by and among Borrower, the Guarantors named
therein, the Lenders named therein and The Chase Manhattan Bank, as
Administrative Agent and Fronting Bank, and all agreements, instruments and
documents executed in connection therewith (as all of the same has heretofore
been amended, modified or supplemented).
"Interest Rate" means the Index Rate plus six and seventy-four hundredths
(6.74%) percent. The "Index Rate" shall be the highest yield, as published in
The Wall Street Journal, on the first (1st) Business Day preceding the
Disbursement Date, for Treasury Notes having a maturity date on or closest to
the Maturity Date. Interest shall be calculated on the basis of a year of 360
days and twelve months of thirty (30) days each and charged on a daily basis.
"Maturity Date" means the date upon which the forty-second (42nd)
consecutive monthly payment of principal and interest is scheduled to be due.
"Outside Date" means November 30, 1999.
"Premises" means ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
================================================================================
The Loan (Section 2.1):
"Principal Amount of the Loan: $1,200,000
================================================================================
Use of Proceeds (Section 2.2):
The proceeds of the Loan shall be used by Borrower solely to pay to
suppliers thereof the purchase price of equipment located at the Premises
and which is Collateral hereunder or to reimburse Borrower for its payment
to such supplier, the purchase price of such equipment:
================================================================================
Payments of Principal and Interest (Section 2.7.2):
The Loan, together with interest thereon at the Interest Rate, shall be
repaid in forty-two (42) equal consecutive monthly payments of principal
and interest each in an amount which will fully amortize the Loan at the
Interest Rate over the Term. If the Disbursement Date is the thirtieth
(30th) day of a month, the first such monthly payment of principal and
interest shall be due and payable on the Disbursement Date. If the
Disbursement Date is not the thirtieth (30th) day of a month, the first
such monthly payment of principal and interest shall be due and payable on
the thirtieth (30th) day of the month in which the Disbursement Date
occurs, provided that in such event, Borrower shall also pay on such
thirtieth (30th) day, interest on the outstanding principal of the Loan, at
the Interest Rate, from the Disbursement Date to the thirtieth (30th) day
of the month in which the Disbursement Date occurs. Payments of principal
and interest shall continue to be due and payable on the thirtieth (30th)
day of each and every month thereafter through and including the Maturity
Date, when the entire unpaid principal balance which was not payable
earlier, whether due to regularly scheduled payments, acceleration or
otherwise, together with any unpaid interest, fees, costs and charges shall
be due and payable. Lender shall compute the amount of each payment and
advise Borrower of such amount. After the maturity of all or any part of
the Loan (by acceleration or otherwise), interest on the Loan or such part
thereof shall be due and payable at the Default Rate on demand.
Contemporaneously herewith, Lender will deliver to Borrower an amortization
schedule.
================================================================================
Prepayments (Section 2.8):
Borrower may not prepay the Loan, in whole or in part, prior to the
first regularly scheduled payment date occurring after the first
anniversary of the Disbursement Date. Borrower shall have the right,
upon not less than ten (10) days prior written notice to Lender, on
any regularly scheduled payment date occurring after the first
anniversary of the Disbursement Date, to prepay the outstanding
principal balance of the Loan in whole, but not in part, provided that
Borrower shall pay to Lender, together with the principal balance of
the Loan, (i) all accrued and unpaid interest on the amount prepaid
through the date of prepayment, (ii) all outstanding fees, charges and
other amounts then due under the Loan Documents, and (iii) a
prepayment fee in an amount equal to the product of (A) the
outstanding principal balance of the Loan at the time of prepayment,
times (B) the applicable percentage set forth opposite the year of the
Term in which the prepayment is made, as set forth below:
-2-
Year of Term of Loan in
Which Prepayment is Made Percentage
------------------------ ----------
1 No prepayment permitted
2 5%
3 4%
4 2%
Once given, the notice of prepayment shall be irrevocable. Any
acceleration of the Loan as a consequence of the occurrence of an Event of
Default shall be presumed to be a mechanism to avoid the requirements of
this provision and shall be deemed a prepayment and subject to the
appropriate prepayment premium set forth above, in addition to all damages
and other amounts otherwise due under this Agreement and the other Loan
Documents. If the Loan is accelerated prior to the date upon which
prepayment is permitted to be made hereunder, the applicable percentage
shall be 5.5%.
If Borrower shall prepay its Obligations under this Agreement and the other
Loan Documents, simultaneously therewith, Borrower must also prepay all of
its Obligations under the October 1998 Loan and the October 1998 Loan
Documents (including, without limitation, all prepayment premiums). If
Borrower shall prepay its Obligations under the October 1998 Loan and the
October 1998 Loan Documents, simultaneously therewith, it must also prepay
all of its Obligations under this Agreement and the other Loan Documents
(including, without limitation, all prepayment premiums).
================================================================================
Additional Conditions (Section 4.11):
The obligation of Lender to make the Loan hereunder is subject to the
fulfillment, to the satisfaction of Lender and its counsel, of each of the
following conditions, in addition to the other conditions set forth in
Article 4 above:
(a) There shall have been no material adverse change in the business,
operations or financial condition of Borrower or in the Collateral
since the date of the October 1998 Loan Agreement.
(b) Additional conditions:
(i) Borrower irrevocably acknowledges and confirms that Letter of
Credit No. 5-381686 in the face amount of $1,000,000 issued by
Chase Manhattan Bank in favor of Lender (the "Letter of Credit")
in connection with the October 1998 Loan Agreement, secures all
Obligations of Borrower to Lender under the Loan Documents and
the October 1998 Loan Documents, and that if there is an Event of
Default under either this Agreement or the October 1998 Loan
Agreement, or both, Lender may draw upon the Letter of Credit for
all sums due. Notwithstanding the foregoing, the term of the
Letter of Credit may expire when all of the Obligations under the
October 1998 Loan Documents are paid and satisfied in full.
================================================================================
Organization and Qualification (Section 5.1):
Borrower:
State of Organization, etc.: Delaware
States of Qualification, etc.: California, New York
================================================================================
-3-
Names (Section 6.12): None
================================================================================
Notices (Section 9.9.1)
Address of Notices to Borrower:
Artisan Pictures Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
================================================================================
IN WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have executed and delivered this Schedule effective as of the day
and year first above written.
ARTISAN PICTURES INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: Chief Executive Officer
-----------------------------------
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title:___________________________________
Federal Tax Identification No. ▇▇-▇▇▇▇▇▇▇
FINOVA CAPITAL CORPORATION
By: /s/ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇. ▇▇▇▇▇▇▇
------------------------------------
Title: Director, Cont. Admin.
-----------------------------------
-4-
SCHEDULE A
----------
See Attached.