EXHIBIT 10.29
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT ("Agreement") is made this 5th day of December,
1996 by and between FOUR MEDIA COMPANY, a Delaware corporation ("Borrower"), and
TOKAI BANK OF CALIFORNIA, a California banking corporation ("Lender").
A. Borrower has applied to Lender for a loan in the principal amount of
Eight Million Four Hundred Thousand and No/100 Dollars ($8,400,000.00).
B. Lender has agreed to make the loan to Borrower upon the terms and
conditions hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
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DEFINITIONS AND INTERPRETATIONS
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For purposes of this Agreement, the following terms shall have the
following meanings:
1.1 DEFINITIONS. The definitions set forth in the Recitals are
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incorporated herein by reference.
"Agreement" shall mean this Loan Agreement, either as originally
executed or as it may from time to time be supplemented, modified, or amended.
"Affiliate" shall mean any person or business entity, directly or
indirectly, in control of, controlled by or under the common control of
Borrower, or of a successor thereof, whether through merger, consolidation,
transfer of assets or otherwise.
"Assets" shall have the meaning usually given that term in
accordance with GAAP, but shall exclude sums due to Borrower from Affiliates
(other than subsidiaries).
"Assignment of Leases" shall mean the Absolute Assignment of
Leases and Rents in form and content satisfactory to Lender to be delivered by
Borrower to Lender covering the Property.
"Business Day" shall mean a day of the year on which banks are
not required or authorized to close in California.
"Contingent Liabilities" shall mean all contingent liabilities as
determined and computed in accordance with GAAP.
"Current Assets" shall mean all current assets as determined and
computed in accordance with GAAP (excluding loans to officers and employees).
"Current Liabilities" shall mean all current liabilities as
determined and computed in accordance with GAAP.
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"Deed of Trust" shall mean the Deed of Trust, Assignment of
Rents, Security Agreement and Fixture Filing given by Borrower, as Trustor, to
North American Title Company, as Trustee for the benefit of Lender, as
Beneficiary.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time, and, unless the context
otherwise requires, the regulations thereunder.
"Event of Default" shall mean any of those events specified in
Article 5 hereof.
"Financial Statements" means balance sheets, income statements,
reconciliation of capital structure, statements of sources and applications of
funds together with appropriate notes and footnotes in accordance with GAAP.
"Financing Statement" shall mean a financing statement (Form
UCC-1) given by Borrower to Lender and dated concurrent herewith.
"Fixed Rate" shall mean the Fixed Rate as defined in the Note.
"Fixtures" shall mean the fixtures as defined in the Deed of
Trust.
"GAAP" shall mean generally accepted accounting principles
consistently applied and maintained throughout the period indicated and
consistent with the prior financial practice of Borrower, except for changes
mandated by the Financial Accounting Standards Board or any similar accounting
authority of comparable standing.
"Governmental Agency" or "Government Agency" shall mean any
federal, state or local governmental or quasi-governmental agency, authority,
board, bureau, commission, department, instrumentality or public body, court,
administrative tribunal, or public utility.
"Guarantor" shall mean, collectively, 4MC-Burbank, Inc., a
Delaware corporation and Digital Magic Company, a Delaware corporation.
"Guaranty" shall mean the continuing guaranty of each Guarantor
guaranteeing payment of the Loan.
"Hazardous Substances Indemnity Agreement" shall mean the
Hazardous Substances Indemnity Agreement dated the date hereof between the
Borrower and the Lender.
"Insurance Policies" shall mean any of the policies of insurance
specified in Article 4 Section 4.1. hereof.
"Laws" shall mean, collectively, all federal, state, and local
laws, rules, regulations, ordinances, and codes.
"Liabilities" shall have the meaning usually given that term in
accordance with GAAP.
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"Libor Rate" shall mean the Libor Rate as defined in the Note.
"Loan" shall mean the loan described in Article 3 of this
Agreement in the principal amount of $8,400,000.00.
"Loan Documents" shall mean the Note, Deed of Trust, Financing
Statement, this Agreement, and such other documents as Lender may require
Borrower to give to Lender as evidence of and/or security for the Loan and the
Guaranty.
"Loan Proceeds" shall mean all funds advanced by Lender as a Loan
to Borrower under this Agreement.
"Maturity Date" shall mean December 31, 2003.
"Net Profit" shall have the meaning usually given that term in
accordance with GAAP.
"Note" shall mean the Promissory Note of Borrower payable to the
order of Lender, evidencing the Loan.
"Organizational Documents" shall mean:
(i) Borrower's Certificate of Incorporation and By-Laws.
(ii) An affidavit of Borrower signed by an officer of
Borrower, where applicable, in form and substance satisfactory to Lender
affirming the authority of Borrower to borrow the Loan and enter into the Loan
Documents, and affirming the names and signatures of all officers of Borrower
authorized to execute documents in connection with the Loans.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor established under ERISA.
"Permitted Encumbrances" shall mean the matters approved by
Lender shown in the report of title of the Title Company.
"Person" shall mean an individual, corporation, partnership,
joint venture, trust or unincorporated organization or a Government Agency.
"Personalty and Fixtures" shall mean the personalty and fixtures
as defined in the Deed of Trust.
"Plan" means an employee benefit plan or other plan maintained
for employees of Borrower and covered by Title IV of ERISA.
"Prime Rate" shall mean Lender's Prime Rate which is the rate
announced from time to time by Lender to be the Prime Rate as reflected in the
books and records of Lender. The Prime Rate may
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vary from time to time and the interest rate shall automatically change on the
same day the Prime Rate changes.
"Property" shall mean the Property as defined in the Deed of
Trust.
"Tangible Net Worth" shall mean the excess of Assets over
Liabilities, excluding, however, from the determination of Assets: (i) all
assets that would be classified as intangible assets under GAAP, including
without limitation, goodwill (whether representing the excess of cost over book
value of assets acquired or otherwise), negative goodwill, patents, trademarks,
trade names, copyrights, franchises and deferred charges (including, without
limitation, unamortized debt discount and expense, organization costs and
research and development costs); and (ii) subordinated debt.
"Title Company" shall mean North American Title Company.
"Title Policy" shall mean a standard American Land Title
Association Lender's policy of title insurance for the Property, insuring Lender
in the amount of the Loans and with such other endorsements as Lender may
request.
"Working Capital" shall mean the existence of Current Assets,
excluding LIFO reserves, over Current Liabilities as those terms are understood
in accordance with GAAP.
1.2 ACCOUNTING TERMS. All accounting terms not specifically defined
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herein shall be construed in accordance with GAAP consistent with those applied
in the preparation of the Financial Statements referred to in Article 4 Section
4.14 and all financial data submitted pursuant to this Agreement shall be
prepared in accordance with such principles.
1.3 USE OF DEFINED TERMS. Any defined terms used in the plural shall
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include the singular and such terms shall encompass all members of the relevant
class.
1.4 SCHEDULES AND EXHIBITS. All schedules and exhibits to this
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Agreement, either as originally existing or as the same may from time to time be
supplemented, modified or amended, are incorporated herein by reference.
1.5 REFERENCES. Any reference to this Agreement or any other
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document shall include such document both as originally executed and as it may
from time to time be supplemented and modified. References herein to Articles,
Sections and Exhibits shall be construed as references to this Agreement unless
a different document is named.
1.6 OTHER TERMS. The term "document" is used in its broadest sense
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and encompasses agreements, certificates, opinions, consents, instruments and
other written material of every kind. The terms "including" and "include" shall
mean "including (include), without limitation."
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ARTICLE 2
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REPRESENTATIONS AND WARRANTIES OF THE BORROWER
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Borrower hereby represents and warrants to Lender as of the date of
this Agreement, the date the Loan Proceeds are disbursed to Borrower, and each
and every date during the existence of the Loan, or any portion thereof, as the
context admits or requires, that:
2.1 BORROWER'S CAPACITY. Borrower is and shall continue to be a
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corporation duly organized and existing under the Laws of the State of Delaware,
and duly qualified to do business in any state in which the nature of its
business requires it to be so qualified.
2.2 VALIDITY OF LOAN DOCUMENTS. The Loan Documents are and shall
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continue to be in all respects valid and binding upon Borrower according to
their terms, subject to all Laws, including equitable principles, insolvency
laws, and other matters applying to creditors generally; provided, however, that
the implementation of such Laws do not and will not affect the ultimate
realization of the security afforded thereby. The execution and delivery by
Borrower of and the performance by Borrower of all its obligations under the
Loan Documents have been duly authorized by all necessary action and do not and
will not:
(a) Require any consent or approval not heretofore obtained or
any other person holding any interest or entitled to receive any interest issued
or to be issued by Borrower or otherwise;
(b) Violate any provision of the Organizational Documents or
other agreements to which Borrower is bound;
(c) Result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge, right
of others or other encumbrance of any nature (other than under the Loan
Documents) upon or with respect to any property now owned or leased or hereafter
acquired by Borrower;
(d) Violate any provision of any Laws, or of any order, writ,
judgment, injunction, decree, determination, or award;
(e) Result in a breach of or constitute a default under, cause
or permit the acceleration of any obligation owed under, or require any consent
under any indenture or loan or credit agreement or any other agreement, lease,
or instrument to which Borrower is a party or by which Borrower or any property
of Borrower is bound or affected.
2.3 BORROWER NOT IN DEFAULT OR VIOLATION. Borrower is not in default
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under or in violation of any Laws, order, writ, judgment, injunction, decree,
determination or award. Borrower is not in default under any obligation,
agreement, instrument, loan, or indenture, whether to Lender or otherwise, or
any lease. No event has occurred and is continuing, or would result from the
making of the Loans or an Advance, which constitutes an Event of Default, or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
2.4 NO GOVERNMENTAL APPROVALS REQUIRED. Borrower does not require
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any authorization, consent, approval, order, license, exemption from, or filing,
registration, or qualification
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with, any Governmental Agency in connection with the execution and delivery by
Borrower, and the performance by Borrower, of all or any of its obligations
under, the Loan Documents, except that filing and/or recording with Governmental
Agencies may be required to perfect liens, security interest, or other charges
or encumbrances granted Lender by Borrower.
2.5 TAX LIABILITY. Borrower has filed and shall file all tax returns
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(federal, state, and local) required to be filed and has paid and shall pay all
taxes shown thereon to be due and all property taxes due, including interest and
penalties, if any.
2.6 FINANCIAL STATEMENTS. All Financial Statements, tax returns and
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other financial information of Borrower which have heretofore been submitted to
Lender fairly present the financial position of Borrower at the respective dates
of their preparation. Since the dates of such Financial Statements, tax returns
and other financial information, there has been no material adverse change in
the financial condition of Borrower.
2.7 PENDING LITIGATION. There are no actions, suits, or proceedings
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pending, or to the knowledge of Borrower threatened, against or affecting the
Borrower, or involving the validity or enforceability of any of the Loan
Documents or the priority of the lien thereof, at Law or in equity, or before or
by any Governmental Agency, except actions, suits, and proceedings that are
fully covered by insurance or which, if adversely determined, would not
substantially impair the ability of Borrower to perform each and every one of
its obligations under and by virtue of the Loan Documents; and Borrower is not
in default with respect to any order, writ, injunction, decree, or demand of any
court or any Governmental Agency.
2.8 VIOLATION OF LAWS. Borrower has no knowledge of any violations
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or notices of violations of any Laws relating to the Property.
2.9 COMPLIANCE WITH ZONING ORDINANCES AND ENVIRONMENTAL LAWS.
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Borrower and the Property presently comply with, and will in the future comply
fully with, all applicable Laws, and all permits and approvals issued
thereunder, affecting the improvements to be located upon the Property, the
sale, operation, leasing or financing of the Property and the intended
occupancy, use and enjoyment of the Property, including, but not limited to, all
applicable subdivision Laws, licenses and permits, building codes, zoning
ordinances, environmental protection Laws, flood disaster Laws, and all Laws
pertaining to industrial hygiene and the environmental conditions on, under or
about the Property, including, but not limited to, soil and groundwater
condition. Borrower does not presently, and will not in the future, use, store,
manufacture, generate, transport to or from, or dispose of any toxic substances,
hazardous materials, hazardous wastes, radioactive materials, flammable
explosives or related material on or in connection with the Property or the
business of Borrower on the Property. Borrower does not presently, and will not
in the future, permit any lessee on the Property to use, store, manufacture,
generate, transport to or from, or dispose of any toxic substances, hazardous
materials, hazardous waste, radioactive materials, flammable explosives, related
material on or in connection with the Property or the business on the Property.
("Toxic substances," "hazardous materials" and "hazardous waste" shall include
"Hazardous Substances" as defined in the Hazardous Substances Indemnity
Agreement.) Borrower shall not seek, make or consent to any change in the
zoning, conditions of use, or any other applicable land use permits, approvals
or regulations pertaining to the Property, or any portion thereof, which would
constitute a violation of the warranties and representations herein contained,
or would otherwise impair the ability of Borrower to complete construction of
any improvements now underway constituting the Property, or would change the
nature of the use or occupancy of the Property.
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2.10 COMPLIANCE WITH ERISA. Borrower does not and shall not maintain
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any employee benefit plan or other plan maintained for employees of Borrower
which is or might be deemed to be covered by Title IV or ERISA, except plans
that are or shall be in compliance with all applicable provisions of ERISA. No
Reportable Event has occurred or is continuing with respect to any Plan.
2.11 SOLVENCY. Borrower is and shall continue to be able to pay its
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debts as they mature and the realizable value of its Assets is, and at all times
that it may have obligations hereunder shall continue to be, sufficient to
satisfy any and all obligations hereunder.
2.12 PRINCIPAL PLACE OF BUSINESS. The principal place of business of
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Borrower is as set forth under Section 7.11 of this Agreement. In the event
that Borrower hereafter intends to move its principal place of business, it
shall first give at least thirty (30) days' prior written notice to Lender of
its intention so to move, the date that such move is anticipated, and its new
address. No later than ten (10) days after commencement of the move by
Borrower, Borrower will deliver such new Financing Statements (on Form UCC-1),
Continuation Statements (on Form UCC-2) or other instruments as Lender may
require.
2.13 PERMITS. Borrower possesses all licenses, permits, franchises,
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patents, copyrights, trademarks, and trade names, or rights thereto, that are
necessary to conduct its business substantially as now conducted and as
presently proposed to be conducted, and Borrower is not in material violation of
any valid rights of others with respect to any of the foregoing.
ARTICLE 3
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THE LOAN
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3.1 THE LOAN. Lender agrees, on the terms and conditions hereinafter
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set forth, to make the Loan provided for in this Article. Borrower may repay or
prepay the Loan Proceeds pursuant to this Article.
3.2 NOTE. The Loan shall be evidenced by the Note. Each payment
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under the Loan shall be evidenced and recorded by Lender upon Lender's Loan
Records, which recordation shall be prima facie evidence of such payment;
provided, however, that the failure by Lender to make any such recordation shall
not limit or otherwise affect the obligation of Borrower hereunder or under the
Note.
3.3 INTEREST. Interest on the outstanding principal balance under
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the Note shall accrue at the rate provided for in the Note and shall be paid as
provided for in the Note.
3.4 USE OF PROCEEDS. The Loan Proceeds shall be used by Borrower to
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purchase the Property.
3.5 CONDITIONS PRECEDENT TO LOAN. The obligation of Lender to make
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the Loan is subject to and expressly conditioned upon the following:
(a) Borrower, at its sole expense, shall deliver to Lender, at
its office in Los Angeles, California, on or before the date of the first
Advance the following, in form and substance satisfactory to Lender, in Lender's
sole opinion and judgment:
(i) The Note;
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(ii) The Guaranty;
(iii) The Deed of Trust;
(iv) The Assignment of Leases;
(v) The UCC-1 Financing Statement;
(vi) This Agreement;
(vii) The Loan Disbursement Instructions;
(viii) The Agreement to Furnish Insurance;
(ix) The Hazardous Substances Indemnity Agreement;
(x) The Non-Disturbance and Attornment Agreements;
(xi) The Tenant Estoppels;
(xii) The Title Policy or evidence of a commitment thereof;
(xiii) The Insurance Policies;
(xiv) Such additional assignments, agreements,
certificates, reports, approvals, instruments, documents, financing statements,
consents, and opinions as Lender may reasonably request;
(b) Review and approval by Lender, its counsel, or both, of true
and correct copies of Borrower's Organizational Documents, matters affecting the
Property, and all other Loan Documents;
(c) Review and approval by Lender of true and correct copies of
Financial Statements of Borrower;
(d) No suit, action, or other proceeding of material consequence
shall be pending or threatened which seeks to restrain or prohibit the
consummation of the transactions contemplated by this Agreement, or to obtain
damages or other relief in connection therewith;
3.6 LIMITATIONS ON ADVANCES AND PAYMENTS.
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(a) The Loan Proceeds shall be disbursed in accordance with the
provisions of Section 3.4 above;
(b) Borrower shall have the right at any time to prepay any
portion of the Principal Balance bearing interest at the Prime Rate without
premium or penalty. Borrower shall have no right to prepay any portion of the
Principal Balance bearing interest at the Libor Rate or Fixed Rate. Any such
prepayment shall not result in a reamortization, deferral, postponement,
suspension or waiver of any and all other payments due under the Note.
(c) Payments shall be as provided for in the Note;
(d) Borrower hereby authorizes Lender, if and to the extent any
payment of principal or interest or sum otherwise due hereunder is not promptly
made pursuant to the Note, and to the extent of any obligation of Borrower to
Lender under this Agreement or any other agreement, to charge against any
account of Borrower with Lender an amount equal to part or all of the principal
costs and expenses, and accrued interest from time to time due and payable to
Lender under the Note or otherwise. Lender is under no obligation to charge such
past due payments against any account of Borrower, but may elect to do so in
Lender's sole and absolute opinion and judgment;
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(e) If, with respect to the Loan there is, due to either (i) the
introduction of or any change (including, without limitation, any change by way
of imposition or increase of reserve requirements) in any Law or regulation or
in the interpretation thereof, or (ii) the compliance by Lender with any new
guidelines or request from any central bank or other governmental authority
(whether or not having the force of Law), any increase in the cost of Lender of
agreeing to make or making, funding or maintaining such Loan, then Borrower
shall from time to time, upon demand by Lender, pay to Lender additional amounts
sufficient to indemnify Lender against such increased costs. A certificate as to
the amount of such increased costs submitted to Borrower by Lender shall be
prima facie evidence of the increased costs, and shall be immediately due and
payable upon demand.
3.7 SECURITY. The Loan shall be secured by the following, in each case,
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subject only to the Permitted Encumbrances:
(a) The Property;
(b) Any leases, subleases, and consession rights now or in the future
affecting the Property or any part thereof;
3.8 GUARANTY. As further support for the repayment of the Loan, each
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Guarantor shall guarantee repayment thereof pursuant to the Guaranty.
3.9 DEPOSIT ACCOUNT. Borrower shall maintain its operating account with
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Lender at all times during the term of this Agreement.
ARTICLE 4
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BORROWER'S COVENANTS
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In addition to anything else herein stated, Borrower agrees:
4.1 INSURANCE. To obtain and at all times maintain hazard and liability
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insurance in amount and form satisfactory to Lender and issued by a company or
companies rated B+ or better in Best's Key Rating Guide. The insurance is to
include business interruption, boiler and machinery and glass insurance. Lender
is to be a loss payable payee under the hazard insurance and an additional
insured under said liability insurance. Said liability insurance is to include,
but not be limited to, ▇▇▇▇▇▇▇'▇ compensation and employer's liability
insurance. In the event any portion of the Property is determined to be in a
Flood Hazard Area at any time as reported by the U.S. Secretary of the
Department of Housing and Urban Development, Borrower shall obtain and at all
times maintain flood hazard insurance satisfactory to Lender. All policies or a
certificate acceptable to Lender shall be delivered to Lender together with
evidence of payment of premium thereon and an agreement to give Lender at least
thirty (30) days' prior notice of any material changes, termination, or
expiration of the policies. All insurance policies provided under any lease with
tenants of the Property shall be assigned to Lender as additional security.
4.2 RIGHT OF ENTRY. Lender and Lender's employees or agents shall have the
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right upon twenty four (24) hours prior notice to enter upon Borrower's premises
during normal business hours for whatever purpose Lender deems appropriate,
including, without limitation, inspection of the premises and the posting of
such notices and other written or printed material thereon as Lender may deem
appropriate or desirable.
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4.3 LENDER MAY EXAMINE BOOKS AND RECORDS. Lender shall have the right,
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from time to time, acting by and through its employees or agents, to examine the
books, records, and accounting data of Borrower, and to make extracts therefrom
or copies thereof. Borrower shall promptly make such books, records, and
accounting data available to Lender, as stated above, upon written request, and
upon like request shall promptly advise Lender, in writing, of the location of
such books, records, and accounting data.
4.4 NO AUTOMATIC SET-OFF. The existence of the deposit account described
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in Article 3 Section 3.9 and/or the fact of any sum or sums being on deposit in
said account shall in no way constitute a set-off against or be deemed to
compensate the obligation of the Loan or any payment or performance due under
this Agreement or any of the other Loan Documents, unless and until the Lender,
by affirmative action, shall so apply said account or any portion thereof and
then only to the extent thereof so designated by Lender.
4.5 PAYMENT OF TAXES. Borrower shall pay and discharge all taxes,
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assessments, and governmental charges or levies imposed upon Borrower or upon
its income or profits, or upon any properties belonging to it prior to the date
on which penalties attach thereto, and all lawful claims which, if unpaid might
become a lien or charge of a material nature upon any of its properties,
provided that Borrower shall not be required to pay any such tax, assessment,
charge, levy or claim which is being contested in good faith and by proper
proceedings if it maintains adequate reserves with respect thereto.
4.6 PRESERVATION OF CORPORATE EXISTENCE. Borrower shall preserve and
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maintain its respective corporate existence, right, franchises and privileges in
the jurisdiction of incorporation, and qualify and remain qualified as a foreign
corporation in any jurisdiction in which such qualification is or may be
necessary, in view of Borrower's business and operations or the ownership of its
properties, including the Property.
4.7 COMPLIANCE WITH LAWS AND CONTRACTS. Borrower shall comply with the
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requirements of all applicable Laws and orders of any Governmental Agency,
provided that if Borrower has not so complied by the date prescribed in any such
Law or order, regulation, Borrower shall comply therewith by the date set forth
in any order of the Governmental Agency charged with the enforcement of such
Law, rule or regulation if such date is later, and comply with all contracts,
agreements, indentures or instruments by which it is bound.
4.8 MAINTENANCE OF PROPERTIES. Borrower shall use its best efforts to
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maintain and preserve, or cause to be maintained and preserved, all of its
properties, necessary or useful in the proper conduct of its business, including
such as may be under lease, in good working order and condition, ordinary wear
and tear excepted.
4.9 Intentionally deleted.
4.10 Intentionally deleted.
4.11 Intentionally deleted.
4.12 Intentionally deleted.
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4.13 Intentionally deleted.
4.14 REPORTING REQUIREMENTS. So long as Borrower shall have any obligation
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to Lender under this Agreement, Borrower shall deliver to the Lender the
following financial statements and reports:
(a) As soon as practicable and in any event within fifteen (15) days
after Borrower knows or should reasonably have known of the commencement of any
legal action against it, except actions seeking money judgement that are fully
insured or bonded or reasonably estimated to involve less than $100,000.00, a
report of the commencement of such action containing a statement signed by the
chief financial officer of Borrower setting forth details such legal action and
any action Borrower proposes to take with respect thereto;
(b) Within fifteen (15) days of the occurrence of any Event of Default
or event which, with the giving of notice or lapse of time, or both, would
constitute an Event of Default, a report regarding such Event of Default or
event setting forth details and describing any action which Borrower proposes to
take with respect thereto, signed by an officer of Borrower;
(c) Any change in name of Borrower or use of any trade names or trade
styles not presently used;
(d) As soon as practicable and in any event within forty five (45)
days after the end of each quarter of each fiscal year of Borrower, balance
sheets of Borrower as of end of each such quarter and a statement of earnings
and surplus for each such quarter, setting forth in each case in comparative
form the corresponding figures for the corresponding period of the preceding
fiscal year, all in reasonable detail and duly certified (subject to year-end
audit adjustments) by the chief financial officer of Borrower as having been
prepared in accordance with GAAP consistent with those applied in the
preparation of the Financial Statements referred to in subsection 4.14(e),
together with a certificate of said officer stating that he/ she has no
knowledge that an Event of Default, or any event which, with notice or lapse of
time, or both, would constitute an Event of Default or such event has occurred
and is continuing or, if an Event of Default or such event has occurred and is
continuing, a statement as to the nature thereof and the action which Borrower
proposes to take with respect thereto and a certificate of the said officer
certifying to the best of such officer's knowledge after reasonable inquiry
Borrower's compliance with all covenants contained herein:
(e) As soon as available and in any event within ninety (90) days
after the end of each fiscal year of Borrower, a copy of the (unqualified)
Financial Statements for such year, audited by an independent certified public
accountant of recognized standing acceptable to Lender and within fifteen (15)
days of filing each year, a copy of Borrower's federal and state income tax
returns, complete with supporting schedules and exhibits;
(f) Within sixty (60) days after the end of each fiscal year, a
certificate of the president and chief financial officer of Borrower stating
that neither such officer has any knowledge that an Event of Default or any
event which, with notice or lapse of time, or both, would constitute an Event of
Default, has occurred and is continuing, or if, in the opinion of either such
officer, an Event of Default or such an event has occurred and is continuing, a
statement as to the nature thereof;
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(g) Promptly upon receipt thereof, one (1) copy of any other report
submitted to Borrower by independent accountants in connection with any annual,
interim or special audit made by them of the books of Borrower;
(h) Within five (5) days of (i) any contact from any Governmental
Agency concerning any environmental protection Laws, including, but not limited
to, any notice of any proceeding or inquiry with respect to the presence of any
hazardous waste, toxic substances or hazardous materials on the Property or the
migration thereof from or to other property, (ii) any and all claims made or
threatened by any third party against or relating to the Property concerning any
loss or injury resulting from toxic substances, hazardous waste, or hazardous
materials, or (iii) Borrower's discovery of any occurrence or condition on any
property adjoining or in the vicinity of the Property that could cause the
Property, or any part thereof, to be subject to any restrictions on the
ownership, occupancy, transferability, or loss of the Property under any Law,
Borrower shall deliver to Lender a report regarding such contact and setting
forth in detail and describing any action which Borrower proposes to take with
respect thereto, signed by an officer of Borrower (Lender acknowledges that
Borrower has advised Lender that the Property is located within the San ▇▇▇▇▇▇▇▇
SuperFund site);
(i) Within five (5) business days of becoming aware of any
developments or other information which may materially and adversely affect
Borrower's properties, business, prospects, profits or condition (financial or
otherwise) or Borrower's ability to perform this agreement or the other Loan
Documents, telephonic or telegraphic notice specifying the nature of such
development or information and such anticipated effect, which shall be promptly
confirmed in writing;
(j) As soon as available and in any event within forty five (45) days
after the end of each semi-annual period of Borrower, copies of the rent roll
and operating statements on the Property, in form and substance satisfactory to
Lender;
(k) As soon as available and in any event within fifteen (15) days of
filing and release, in the event the company goes public, copies of the 10Q and
10K financial statements of Borrower, in form and substance satisfactory to
Lender; and
(l) Such other information respecting the business, properties or the
condition or operations, financial or otherwise, of Borrower as the Lender may
from time to time reasonably request.
ARTICLE 5
---------
EVENTS OF DEFAULT
-----------------
An "Event of Default" shall be deemed to have occurred hereunder if:
5.1 DEFAULT UNDER LOAN DOCUMENTS. Borrower shall fail to pay principal or
----------------------------
interest, or both, when due under the terms of the Notes; or Borrower shall fail
to perform or observe any term, covenant, or agreement contained in this
Agreement or in any of the other Loan Documents, which failure may be cured by
the payment of money, and, in any of such events, such failure shall continue
for a period of ten (10) days from the date such payment or performance was due;
or Borrower shall fail to perform or observe any term, covenant or agreement
contained in this Agreement or in any of the other Loan Documents, which failure
cannot be cured by the payment of money and such failure shall continue for a
period of fifteen (15) days after the Lender shall have given written notice to
Borrower specifying such
12
default; provided however, that if such non-monetary default is curable but is
of a nature that such cure cannot be completed within such fifteen (15) day
period, Borrower shall be allowed to cure such default if Borrower shall
promptly commence such cure after receipt of such notice and diligently
prosecutes the same to completion after receipt of such notice, (provided
further, however, that in no event shall such extension operate to extend the
Maturity Date); or
5.2 BREACH OF WARRANTY. Any warranties or representations made or agreed
------------------
to be made in this Agreement or in any of the other Loan Documents shall be
breached in any material respect or shall prove to be false or misleading in any
respect when made; or
5.3 LITIGATION AGAINST BORROWER. Any suit shall be filed against Borrower,
---------------------------
which, if adversely determined, could substantially impair the ability of
Borrower to perform any or all of its obligations under and by virtue of this
Agreement or any of the other Loan Documents, unless Borrower's counsel
furnishes to Lender its opinion, to the satisfaction of Lender and Lender's
counsel, that, in its judgment the suit is essentially without merit; or
5.4 LEVY UPON PROPERTY. A levy shall be made on the Property under any
------------------
process and such levy shall not be bonded over or shall continue unstayed for
thirty (30) days or more.
5.5 ACCELERATION OF OTHER DEBTS. Borrower does, or omits to do, any act,
---------------------------
or any event occurs, as a result of which any material obligation of Borrower,
whether or not arising hereunder and/or relating to or affecting the Property or
Borrower's ability to perform hereunder, may be declared immediately due and
payable by the holder thereof; or
5.6 TRANSFER OF PROPERTY. Borrower shall, without the prior written
--------------------
consent of Lender, which consent the Lender may either give or withhold in its
sole and absolute opinion and judgment voluntarily, involuntarily or by
operation of law, sell, transfer, convey, lease (except for leases on
commercially reasonable terms at current market rents for similar property), or
encumber the Property, or any interest therein except as permitted herein, or
shall contract for such sale, transfer, conveyance, or encumbrance unless the
contract provides for repayment of the Loan in full at the time of conveyance;
or
5.7 BANKRUPTCY. Borrower shall fail to pay its debts as they become due,
----------
or shall make an assignment for the benefit of its creditors, or shall admit, in
writing, its inability to pay its debts as they become due, or shall file a
petition under any chapter of the Federal Bankruptcy Code or any similar law,
now or hereafter existing, or shall become "insolvent" as that term is generally
defined under the Federal Bankruptcy Code, or shall in any involuntary
bankruptcy case commenced against it file an answer admitting insolvency or
inability to pay its debts as they become due, or shall fail to obtain a
dismissal of such case within sixty (60) calendar days after its commencement or
convert the case from one chapter of the Federal Bankruptcy Code to another
chapter, or be the subject of an order for relief in such bankruptcy case, or be
adjudged a bankrupt or insolvent, or shall have a custodian, trustee, or
receiver appointed for, or have any court take jurisdiction of, its properties,
or any part thereof, in any voluntary or involuntary proceeding, including, but
not limited to, those for the purpose of reorganization, arrangement,
dissolution, or liquidation, and such custodian, trustee, or receiver shall not
be discharged, or such jurisdiction shall not be relinquished, vacated, or
stayed within sixty (60) days after the appointment; or
5.8 BORROWER STATUS. Without Lender's prior written consent, Borrower
---------------
shall be liquidated, dissolved, or fail to maintain its status as a going
concern; or
13
5.9 EXECUTION LEVY. Execution shall have been levied against the
--------------
Property or any lien creditor shall commence suit to enforce a judgment lien
against the Property and such action or suit shall not have been bonded or shall
continue unstayed for a period of thirty (30) days or more;
5.10 ATTACHMENT. Any proceeding shall be brought, the object of which is
----------
that any part of the Lender's commitment to make the Advances hereunder shall at
any time be subject or liable to attachment or levy by any creditor of Borrower;
or
5.11 DESTRUCTION. Any part or all of the Property is materially damaged or
-----------
destroyed by fire or other casualty and the loss shall prove to be inadequately
covered by insurance actually collected or in the process of collection to
restore the Property to its condition prior to such fire or other casualty
unless Borrower deposits with Lender the amount, in the form of cash or a letter
of credit acceptable to Lender, as estimated by Lender which together with
available insurance proceeds will be adequate to restore the Property to its
condition prior to such fire or casualty; or
5.12 EMINENT DOMAIN. Any material part or all of the Property shall be the
--------------
subject of an eminent domain proceeding or a taking adverse to the interest of
Lender; or
5.13 MISREPRESENTATION AND/OR NON-DISCLOSURE. Borrower has made certain
---------------------------------------
statements and disclosures in order to induce Lender to make the Loan and enter
into this Agreement, and, in the event Borrower has made material
misrepresentations or failed to disclose any material fact, Lender may treat
such misrepresentation or omission as a breach of this Agreement. Such action
shall not affect any remedies Lender may have for such misrepresentation or
non-disclosure, as such, or under its Deed of Trust for such misrepresentation
or concealment; or
5.14 ERISA. Any of the following events occur or exist with respect to
-----
Borrower:
(a) Any Reportable Event with respect to any Plan;
(b) The filing under Title IV of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan;
(c) Any event or circumstance that might constitute grounds
entitling the PBGC to institute proceedings for the termination of, or for the
appointment of a trustee to administrate any Plan, or the institution by the
PBGC of any such proceeding; or
5.15 FINANCIAL CONDITION. There shall be any material adverse changes in
-------------------
Borrower's financial condition.
5.16 DEFAULT UNDER GUARANTY. Any Guarantor is declared to be in default
----------------------
under the terms of its Guaranty.
ARTICLE 6
---------
REMEDIES
--------
6.1 CEASE PAYMENT AND/OR ACCELERATE. Upon, or at any time after, the
-------------------------------
occurrence of an Event of Default or upon the occurrence of a default in any
other joint and/or several
14
obligation or obligations of the Borrower, to Lender, Lender shall have no
obligation to make any further Advances, all sums disbursed or advanced by
Lender and all accrued and unpaid interest thereon shall, at the option of
Lender, become immediately due and payable, and Lender shall be released from
any and all obligations to Borrower under the terms of this Agreement.
6.2 RIGHTS AND REMEDIES NON-EXCLUSIVE. In addition to the specific rights
---------------------------------
and remedies hereinabove mentioned, Lender shall have the right to avail itself
of any other rights or remedies to which it may be entitled, at Law or in
equity, including, but not limited to, the right to realize upon any or all of
its security and/or the right to enforce the Guaranty, and to do so in any
order. Furthermore, the rights and remedies set forth above are not exclusive,
and Lender may avail itself of any individual right or remedy set forth in this
Agreement, or available at Law or in equity, without utilizing any other right
or remedy.
ARTICLE 7
---------
GENERAL CONDITIONS AND MISCELLANEOUS
------------------------------------
7.1 NONLIABILITY OF LENDER. Borrower acknowledges and agrees that by
----------------------
accepting or approving anything required to be observed, performed, fulfilled,
or given to Lender pursuant to this Agreement or the other Loan Documents,
including any certificate, Financial Statement, appraisal or insurance policy,
Lender shall not be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision,
or condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation to anyone with respect thereto by
Lender.
7.2 NO THIRD PARTIES BENEFITTED. This Agreement is made for the purpose of
---------------------------
defining and setting forth certain obligations, rights, and duties of Borrower
and Lender in connection with the Loan. It shall be deemed a supplement to the
Note and the other Loan Documents, and shall not be construed as a modification
of the Note or the other Loan Documents, except as provided herein. It is made
for the sole protection of Borrower and Lender, and Lender's successors and
assigns. No other person shall have any rights of any nature hereunder or by
reason hereof or the right to rely hereon. In the event of a conflict between
this Agreement and the Note, the provisions of the Note shall control. In the
event of a conflict between this Agreement and the Deed of Trust, the provisions
of this Agreement shall control.
7.3 INDEMNITY BY BORROWER. Borrower hereby indemnifies and agrees to hold
---------------------
harmless Lender and its directors, officers, agents and employees (individually
and collectively the "Indemnitee(s)") from and against:
(a) Any and all claims, demands, actions or causes of actions that
are asserted against any Indemnitee by any person if the claim, demand, action
or cause of action, directly or indirectly, relates to a claim, demand, action
or cause of action that the person has or asserts against Borrower; and
(b) Any and all liabilities, losses, costs or expenses (including
court costs and attorneys' fees) that any Indemnitee suffers or incurs as a
result of the assertion of any claim, demand, action or cause of action
specified in this Section 7.3.
7.4 CHANGE IN LAWS. In the event of the enactment, after the date of this
--------------
Agreement, of any Laws: (a) deducting from the value of property for the purpose
of taxation of any lien or
15
security interest thereon; (b) imposing upon Lender the payment of the whole or
any part of the taxes or assessments or charges or liens herein required to be
paid by Borrower; (c) changing in any way the Laws relating to the taxation of
deeds of trust or mortgages or security agreements, or the interest of the
mortgagee or secured party in the property covered thereby; or (d) the manner of
collection of such taxes so as to affect the Deed of Trust secured thereby or
Lender, then, and in any such event, Borrower, upon demand by Lender, shall
promptly pay such taxes, assessments, charges or liens, or reimburse Lender
therefor. If Borrower shall be prohibited from paying such tax or from
reimbursing Lender for the amount thereof, Borrower shall execute a modification
to the Loan Documents which modification shall increase the interest rate
payable pursuant to the Note so as to permit Lender to maintain its yield as if
such tax had not been imposed. If Borrower shall be prohibited from executing
the above-referenced modifications, Lender may, in Lender's sole opinion and
judgment, declare the principal of all amounts disbursed and owing under the
Note, this Agreement, and the other Loan Documents (including all obligations
secured by this Agreement or the other Loan Documents) and all other
indebtedness of Borrower to Lender, together with interest thereon, to be
forthwith due and payable, regardless of any other specified maturity or due
date.
7.5 TIME IS OF THE ESSENCE. Time is of the essence of this Agreement and
----------------------
of each and every provision hereof. The waiver by Lender of any breach or
breaches hereof shall not be deemed, nor shall the same constitute, a waiver of
any subsequent breach or breaches.
7.6 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
--------------------------
inure to the benefit of Borrower and Lender and their respective successors and
assigns, except that Borrower may not assign its rights hereunder or any
interest herein without the prior written consent of Lender. Lender shall have
the right to assign its rights under this Agreement or the other Loan Documents
and to grant participations in the Loan to others, but all waivers or
abridgements of Borrower's obligations that may be granted from time to time by
Lender in writing, shall be binding upon such assignees or participants.
7.7 EXECUTION IN COUNTERPARTS. This Agreement and any other Loan
-------------------------
Document, except the Note and the Deed of Trust, may be executed in any number
of counterparts, and any party hereto or thereto may execute any counterpart,
each of which, when executed and delivered, will be deemed to be an original,
and all of which counterparts of this Agreement or any other Loan Document, as
the case may be, taken together will be deemed to be but one and the same
instrument. The execution of this Agreement or any other Loan Document by any
party hereto or thereto will not become effective until counterparts hereon or
thereof, as the case may be, have been executed by all the parties hereto or
thereto.
7.8 INTEGRATION; AMENDMENTS; CONSENTS. This Agreement, together with the
---------------------------------
documents referred to herein, constitutes the entire agreement of the parties
touching upon the subject matter hereof, supersedes any prior negotiations or
agreements on such matter. No amendment, modification or supplement of any
provision of this Agreement or any of the other Loan Documents shall be
effective unless in writing, signed by Lender and Borrower; and no waiver of any
of Borrower's obligations under this Agreement or any of the other Loan
Documents or consent to any departure by Borrower therefrom shall be effective
unless in writing, signed by Lender, and then only in the specific instance and
for the specific purpose given.
7.9 COSTS, EXPENSES AND TAXES. Borrower shall pay to Lender, on demand:
-------------------------
(a) The reasonable attorneys' fees and out-of-pocket expenses
incurred by Lender in connection with the negotiation, preparation, execution,
delivery and administration of the
16
Agreement and any other Loan Document and any matter related thereto, including,
but not limited to, appraisals of the Property;
(b) The reasonable costs and expenses of Lender in connection with
the enforcement of this Agreement and any other Loan Document and any matter
related thereto, including the reasonable fees and out-of-pocket expenses of any
legal counsel, independent public accountants, and other outside experts
retained by Lender; and
(c) All costs, expenses, fees, premiums and other charges relating to
or arising from this Agreement or any of the other Loan Documents or any
transactions contemplated hereby or thereby or the compliance with any of the
terms and conditions hereof or thereof, including, but not limited to, recording
fees, filing fees, credit report fees, release or reconveyance fees, title
insurance premiums and the cost of realty tax service for the term of the Loan.
All sums paid or expended by Lender under the terms of this Agreement
shall be considered to be, and shall be, a part of the Loan. All such sums,
together with all amounts to be paid by Borrower pursuant to this Agreement,
shall bear interest from the date of expenditure at the default rate provided in
the Note, shall be secured by the Deed of Trust and shall be immediately due and
payable by Borrower upon demand.
7.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
-----------------------------------------
warranties of Borrower contained herein or in any other Loan Document shall
survive the making of the Loan and the execution and delivery of the Note, and
are material and have been or will be relied upon by Lender, notwithstanding any
investigation made by Lender or on behalf of Lender. For the purpose of this
Agreement, all statements contained in any certificate, agreement, Financial
Statement, or other writing delivered by or on behalf of Borrower pursuant
hereto or to any other Loan Document or in connection with the transactions
contemplated hereby or thereby shall be deemed to be representations and
warranties of Borrower contained herein or in the other Loan Documents, as the
case may be.
7.11 NOTICES. All notices, requests, demands, directions, and other
-------
communications provided for hereunder and under any other Loan Document (a
"Notice"), must be in writing and must be mailed by registered mail,
telegraphed, delivered or sent by telex, cable or other form of electronic
written communication to the appropriate party at its respective address set
forth below or, as to any party, at any other address as may be designated by it
in a written notice sent to the other parties in accordance with this Section.
Any notice given by telegram, telex, cable or other form of electronic
written communication must be confirmed within forty-eight (48) hours by letter
mailed or delivered to the appropriate party at its respective address. If any
notice is given by mail, it will be effective three (3) calendar days after
being deposited in the mails with registered postage prepaid; if given by
telegraph or cable, when delivered to the telegraph company with charges
prepaid; if given by telex or other form of electronic written communication,
when sent; or if given by personal delivery, when delivered.
17
Such notices will be given to the following:
To Lender: TOKAI BANK OF CALIFORNIA
Attention: Commercial Banking Department
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Borrower: FOUR MEDIA COMPANY
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
7.12 FURTHER ASSURANCES. Borrower shall, at its sole expense and without
------------------
expense to Lender, do, execute and deliver such further acts and documents as
Lender from time to time may reasonably require for the purpose of assuring and
confirming unto Lender the rights hereby created or intended, now or hereafter
so to be, or for carrying out the intention or facilitating the performance of
the terms of any Loan Documents, or for assuring the validity of any security
interest.
7.13 GOVERNING LAW. The Loan shall be deemed to have been made in
-------------
California, and this Agreement and the other Loan Documents shall be governed by
and construed and enforced in accordance with the Laws of the State of
California.
7.14 SEVERABILITY OF PROVISIONS. If any provision of this Agreement or of
--------------------------
any of the other Loan Documents is held to be inoperative, unenforceable or
invalid, such provision shall be inoperative, unenforceable or invalid without
affecting the remaining provisions; this Agreement and the other Loan
Documents shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of this Agreement or the
other Loan Documents; and to this end the provisions of this Agreement and the
other Loan Documents are declared to be severable, remaining in full force and
effect.
7.15 JOINT AND SEVERAL OBLIGATIONS. If this Agreement is executed by more
-----------------------------
than one person as Borrower, the obligations of each of such persons hereunder
shall be joint and several obligations.
7.16 CONSTRUCTION. Whenever the context of this Agreement requires, the
------------
singular shall include the plural and the masculine gender shall include the
feminine and/or neuter.
7.17 HEADINGS. Article and Section headings in this Agreement are included
--------
for convenience of reference only and are not part of this Agreement for any
other purpose.
18
IN WITNESS WHEREOF, Borrower and Lender have hereunto caused this Agreement
to be executed on the date first above written.
"Lender" "Borrower"
TOKAI BANK OF CALIFORNIA, a California FOUR MEDIA COMPANY, a Delaware
banking corporation corporation
By: By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------- ----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Vice President Vice President/Chief Financial
Commercial Banking Department Officer
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
Vice President
19
