INTERIM FINANCING AND SECURITY AGREEMENT
THIS INTERIM FINANCING AND SECURITY AGREEMENT ("Security Agreement") is
dated as of September 13, 1996 and is entered into by and among TRADEWINDS
TELEVISION, LLC, a California limited liability company ("Debtor"), XXXX PACK,
an individual, who is the sole shareholder of Debtor, and AFFINITY
ENTERTAINMENT, INC., a Delaware corporation ("Lender").
WHEREAS, Debtor and Lender have been engaged in negotiations for a
possible acquisition or other business combination as contemplated by that
certain letter agreement dated September 13, 1996; and
WHEREAS, Debtor requires supplemental funding, and Debtor desires that
Lender continue with its due diligence and related efforts toward an acquisition
or business combination; and
WHEREAS, Lender is unwilling to provide funding and to continue with
its due diligence and related efforts toward an acquisition or business
combination unless Lender can obtain reasonable assurances that its funding will
be repaid.
NOW, THEREFORE, in consideration of the foregoing and the agreements
set forth below, Debtor and Lender agree as follows:
1. Interim Funding.
---------------
Lender may, in its sole discretion, upon Debtor's request,
loan funds from time to time to Debtor. In no event shall the outstanding
principal balance of the loans at any time exceed Four Hundred Thousand Dollars
($400,000). Such loans shall be evidenced by a Secured Promissory Note (the
"Note") in the form attached hereto as Exhibit "A," and payment of principal and
interest shall be governed by the terms of the Note.
2. Grant of Security.
-----------------
Debtor hereby assigns and pledges to Lender and hereby
irrevocably grants to Lender (a) a continuing first priority security interest
in and mortgage of copyright on the collateral described as "Episodes" set forth
in Exhibit "B" attached hereto and (b) a security interest in all presently
owned and after acquired assets, including, without limitation, cash, bank
accounts, accounts receivable, fixtures and equipment (the "General Assets") set
forth in Exhibit "B." (The Episodes and the General Assets shall hereinafter be
collectively referred to as the "Collateral".) The Collateral shall secure all
of Debtor's "Obligations" to Lender.
3. Obligations.
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For purposes of this Security Agreement, the term
"Obligations" means and includes the Note, related transaction costs (including
reasonable attorneys fees of Lender), and all other liabilities of Debtor to
Lender, whether absolute or contingent, due or to become due, now existing or
hereafter arising at any time.
4. Representations and Warranties. Debtor represents and warrants
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as follows:
(a) The principal place of business and principal executive office of
Debtor and the office where Debtor keeps its records concerning the
Collateral are located at 0000 Xxxxxxx Xxxxxx Xxxxxxxxx, Xxxxxxxx
Xxxxx, Xxxxxxxxxx 00000.
(b) Debtor owns the Collateral free and clear of any lien, security
interest, charge or encumbrance. No effective financing statement or
mortgage of copyright or other instrument similar in effect covering
all or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Lender relating to this
Security Agreement.
(c) This Security Agreement creates and grants to Lender (upon filing of
requisite financing statements and mortgage of copyright filings) a
valid and perfected first priority security interest in and mortgage of
copyright on the Episodes and a valid and perfected first priority
security interest in the General Assets.
(d) Debtor does not do business under any fictitious business names or
trade names and has not changed its name in the past five years.
(e) Except for the filing or recording of any financing statements or
mortgage of copyrights necessary to perfect the security interests
created hereunder, no authorization, approval or other action by, and
no notice to or filing with, any governmental authority or regulatory
body is required either (i) for the grant by Debtor of the security
interest granted hereby or for the execution, delivery or performance
of this Security Agreement by Debtor or (ii) for the perfection of or
the exercise by Lender of its rights and remedies hereunder.
5. Further Assurances.
------------------
(a) Debtor agrees to execute concurrently herewith that certain UCC-1
Financing Statement for the State of California and Copyright Mortgage
and Assignment attached hereto as Exhibits "C" and "D," respectively.
(b) Debtor agrees that from time to time, at the expense of Debtor, Debtor
will promptly execute and deliver all further instruments and
documents, and take all further action, that may be reasonably
necessary or desirable, or that Lender may reasonably request, in order
to perfect and protect any security interest
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granted or purported to be granted hereby or to enable Lender to
exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing,
Debtor will execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as Lender may request, in order to perfect
and preserve the security interests granted or purported to be granted
hereby.
(c) Debtor will furnish to Lender from time to time statements and
schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as Lender may
reasonably request, all in reasonable detail and Debtor hereby agrees
that Lender or Lender's agents may enter upon Debtor's premises at any
reasonable time and from time to time for the purpose of inspecting the
Collateral and records pertaining thereto.
(d) Debtor will not make any change in its corporate name or conduct its
business operations under any fictitious business name or trade name
without giving to Lender at least 30 days' prior written notice.
6. Maintenance of Collateral and Related Matters.
---------------------------------------------
Debtor shall:
(a) keep the Collateral at the place therefor specified in Section 4(a) or,
upon 30 days' prior written notice to Lender, at such other places in
jurisdictions where all action required by Section 5 shall have been
taken with respect to the Collateral.
(b) cause the Collateral to be maintained and preserved in the same
condition, repair and working order as when acquired (other than
repairs or refurbishings by Debtor), ordinary wear and tear expected,
and in accordance with any manufacturer's manual, and shall forthwith,
or in the case of any loss or damage to any of the Collateral as
quickly as practicable after the occurrence thereof, make or cause to
be made all repairs, replacements, and other improvements in connection
therewith which are necessary or desirable to such end. Debtor shall
promptly furnish to Lender a statement respecting any loss or damage to
any of the Collateral.
(c) pay promptly when due all taxes, assessments and governmental charges
or levies imposed upon, and all claims (including claims for labor,
materials and supplies) against the Collateral, except to the extent
the validity thereof is being contested in good faith.
(d) maintain adequate insurance on the Collateral.
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7. Events of Default.
-----------------
Any one or more of the following shall be an Event of Default hereunder:
(a) Debtor shall fail to pay any indebtedness, transaction costs or other
monetary obligations to Lender when due, whether pursuant to the Note,
or otherwise;
(b) Debtor shall breach any nonpayment term, provision, warranty or
representation under this Security Agreement or the Note, not cured
within fifteen (15) days after written notice thereof;
(c) The appointment of any receiver or trustee of all or a substantial
portion of the assets of Debtor.
(d) Debtor shall make a general assignment for the benefit of creditors or
shall voluntarily file under any bankruptcy or similar law.
(e) Any involuntary petition in bankruptcy shall be filed against Debtor
and not be dismissed within 60 days.
(f) Should Debtor or any other party seek to place a lien, security
interest or other interest ahead of or equal to the security interest
of Lender in any of the Collateral;
(g) Should Debtor default with respect to its obligations to any other
party holding a lien, security interest or other interest in the
Collateral where such default, in Lender's opinion, jeopardizes or may
jeopardize its security interest in the Collateral;
(h) Should any levies of attachment, executions, tax assessments or similar
processes be issued against the Collateral which are not released
within ten (10) days after notice from the entity imposing such charge
against the Collateral or, if within said ten (10) day period,
proceedings are not commenced to contest such charge, and which
proceedings are not concluded within sixty (60) days;
(i) Should any statements, schedules or other documents (herein
"statements") furnished by Debtor to Lender prove false or incorrect in
any material respect and should such statements, as furnished, not be
rendered correct in all material respects within thirty (30) days after
written notice from Lender; or
(j) Should Debtor voluntarily or involuntarily discontinue business or
transfer substantially all of its assets, other than to an entity
controlled by Debtor.
8. Transfer and Other Liens.
------------------------
Debtor shall not:
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(a) Sell, assign (by operation of law or otherwise) or otherwise dispose of
any of the Collateral.
(b) Create or suffer to exist any lien, security interest or other charge
or encumbrance upon or with respect to any of the Collateral to secure
debt of any person or entity, except for the security interest created
by this Security Agreement and except for liens, security interests or
encumbrances subordinate thereto.
9. Lender Appointed Attorney-in Fact.
---------------------------------
Debtor hereby irrevocably appoints Lender as Debtor's
attorney-in-fact, with full authority in the place and stead of Debtor and in
the name of Debtor, Lender or otherwise, from time to time in Lender's
discretion upon the occurrence and during the continuance of an Event of
Default, to take any action and to execute any instrument which Lender may deem
necessary or advisable to accomplish the purpose of this Security Agreement
including, without limitation:
(a) to ask, demand, collect, xxx for, recover, compound, receive and give
acquaintance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse, and collect any drafts, documents or other
instruments in connection with clause (a) above; and
(c) to file any claims or take any action or institute any proceedings
which Lender may deem necessary or desirable to enforce the rights of
Lender with respect to any of the Collateral.
10. Lender May Perform.
------------------
If Debtor fails to perform any agreement contained herein,
Lender may itself perform, or cause performance of, such agreement, and the
expenses so incurred in connection therewith shall be payable by the Debtor
under Section 13(b).
11. Lender's Duties.
---------------
The powers conferred on Lender hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, Lender shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral.
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12. Remedies.
--------
If any Event of Default shall have occurred and be continuing:
(a) Lender may exercise in respect of the Collateral, in addition to other
rights and remedies provided for herein or otherwise available to it,
all rights and remedies of a secured party on default under the Uniform
Commercial Code (the "Code") (whether or not the Code applies to the
affected Collateral) and also may (i) require Debtor to, and Debtor
hereby agrees that it will at its expense and upon request of Lender
forthwith, assemble all or part of the Collateral as directed by Lender
and make it available to Lender at a place to be designated by Lender
which is reasonably convenient to both parties, (ii) without notice or
demand or legal process, enter upon any premises of Debtor and take
possession of the Collateral, and (iii) without notice except as
specified below, sell the Collateral or any part thereof in one or more
parcels at public or private sale, at any of Lender's offices or
elsewhere, at such time or times, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as
Lender may deem commercially reasonable. Debtor agrees that, to the
extent notice of sale shall be required by law, at least five (5) days'
notice to Debtor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. At any sale of the Collateral, if permitted by law,
Lender may bid (which bid may be, in whole or in part, in the form of
cancellation of indebtedness) for and purchase the Collateral or any
portion thereof for the account of Lender. Lender shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. Lender may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to
which it was so adjourned.
(b) All cash proceeds received by Lender in respect of any sale of,
collection from, or other realization upon all or any part of the
Collateral may only be held by Lender as collateral for, and/or then or
at any time thereafter applied (after payment in any amounts payable to
Lender pursuant to Section 13) in whole or in part by Lender against
all or any part of the obligations in the Note and/or this Agreement.
Any surplus of such cash or cash proceeds held by Lender and remaining
after payment in full of all of the obligations under the Note and/or
this Agreement shall be paid over to the Debtor or to whomsoever may be
lawfully entitled to receive such surplus.
13. Indemnity and Expenses.
----------------------
(a) Debtor agrees to indemnify Lender from and against any and all claims,
losses and liabilities arising out of or resulting from this Security
Agreement (including, without limitation, enforcement of this Security
Agreement), except claims,
6
losses or liabilities resulting from Lender's gross negligence or
willful misconduct or breach of this Security Agreement.
(b) Debtor will upon demand pay to Lender the amount of any and all
expenses, including the reasonable fees and disbursements of counsel
and of any experts and agents, which Lender may incur in connection
with (i) the custody, preservation, use or operation of, or the sale
of, collection from, or other realization upon, any of the Collateral,
(ii) the exercise or enforcement of any of the rights of Lender
hereunder or (iii) the failure by the Debtor to perform or observe any
of the provisions hereof.
14. Amendments, Etc.
----------------
No amendment or waiver of any provision of this Agreement nor
consent to any departure by the Debtor herefrom, shall in any event be effective
unless the same shall be in writing and signed by Lender, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.
15. Notices.
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Notices given under this Security Agreement shall be in
writing and shall be served personally, by telecopy or mailed by first class
registered mail, return receipt requested and postage prepaid. Notices shall be
deemed received at the earlier of actual receipt or date of telecopy or three
(3) days following deposit in U.S. mail. Notices shall be directed to the
addresses as follows:
If to Debtor:
Tradewinds Television, LLC
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Pack
Telecopier: 818/592-7626
with a copy to:
Xxxx X. Xxxxx, Xxx.
Xxxx, Xxxxxxxx & Xxxxxx
One Peachtree Center, Suite 5300
000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Telecopier: 404/527-4198
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If to Lender:
Affinity Entertainment, Inc.
00000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attention: _______________
Telecopier: ______________
with a copy to
Xxxxxxxxx, Xxxxx & Xxxxxx, LLP
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxxx, Esq.
Telecopier: 310/271-6430
The parties to this Security Agreement may change their
addresses for notice by giving written notice to the other party in accordance
with this section.
16. Continuing Security Interest; Transfer of Note.
----------------------------------------------
This Security Agreement shall create a continuing security
interest in the Collateral and shall (i) remain in full force and effect until
payment in full of the Note and all other Obligations of Debtor to Lender have
been satisfied, (ii) be binding upon Debtor, its successors and assigns and
(iii) inure to the benefit of Lender and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), Lender
may assign or otherwise transfer the Note held by it to any other person or
entity, and such other benefits in respect thereof granted to Lender herein or
otherwise. Upon the payment in full of the Note and full satisfaction of all
other Obligations of Debtor to Lender, the security interest granted hereby
shall terminate and all rights to the Collateral shall revert to Debtor. Upon
any such termination, Lender will, at Debtor's expense, execute and deliver to
Debtor such documents as Debtor shall reasonably request to evidence such
termination.
17. Severability.
------------
In the event that any one or more of the provisions of this
Agreement shall be declared to be illegal or unenforceable under any law, rule
or regulation, such illegality or unenforceability shall not affect the validity
and enforceability of the other provisions of this Security Agreement.
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18. Governing Law; Terms.
--------------------
This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of California. Unless
otherwise defined herein, terms used in Article 9 of the Uniform Commercial Code
in the State of California are used herein as therein defined.
IN WITNESS WHEREOF, each party hereto has caused this Security
Agreement to be duly executed and delivered by its officers hereunto duly
authorized as of the date first above written.
TRADEWINDS TELEVISION, LLC
By:
------------------------
Title:
---------------------
AFFINITY ENTERTAINMENT, INC.
By:
-------------------------
Title:
---------------------
9
Exhibit "A"
SECURED PROMISSORY NOTE
$400,000 Los Angeles, California
September 13, 1996
FOR VALUE RECEIVED, the undersigned, TRADEWINDS TELEVISION, LLC, a
California limited liability company (the "Borrower") hereby promises to pay to
AFFINITY ENTERTAINMENT, INC., a Delaware corporation (the "Lender"), or order,
on the Maturity Date (as such term is defined herein) the principal sum of Four
Hundred Thousand Dollars ($400,000) or so much thereof as may be borrowed
hereunder, with interest thereon in accordance with the terms set forth herein.
The Maturity Date shall be the date upon which Lender makes written
demand for payment to Borrower which may be made after the earlier of (i) the
date which is 90 days following receipt of written notice ("Demand Notice") by
Borrower from Lender that Lender has determined that the conditions to the
Transaction contemplated by that certain letter agreement dated September 13,
1996 among Borrower, Lender and Xxxx Pack could not be satisfied, and the
Transaction will not be consummated; or (ii) January 31, 1997 ("Outside Date").
Advances may be made under this Note prior to the Maturity Date on the condition
that at the time of any such borrowing, such borrowing has been approved by
Lender in its sole discretion regarding the use of such advances, and no Event
of Default exists under the Security Agreement referred to herein, and provided
further that the aggregate principal amount of all sums borrowed hereunder shall
not exceed the sum of Four Hundred Thousand Dollars ($400,000). Each borrowing
hereunder shall be recorded by the Lender and, prior to any transfer of this
Note, shall be endorsed on the schedule annexed to this Note. The aggregate
unpaid amount of principal set forth on the schedule annexed to this Note shall
be presumptive evidence of the principal amount owing and unpaid on this Note.
However, the failure to record any such amount on such schedule shall not limit
or otherwise affect the obligations of Borrower hereunder to repay the principal
amount of all advances hereunder together with interest accruing thereon.
Amounts repaid hereunder may not be reborrowed.
The undersigned promises to pay, on the Maturity Date, interest on the
unpaid principal balance hereof from time to time outstanding from the date of
the first disbursement hereunder until paid, at a rate per annum of eight
percent (8%).
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This Note is entitled to the benefits and subject to all of the terms
and conditions of the Interim Financing and Security Agreement dated September
13, 1996 among Lender, Borrower and Xxxx Pack ("Security Agreement").
The undersigned agrees to pay all expenses of Lender incurred in
collection of this Note, including reasonable attorneys' fees in connection
therewith, irrespective of whether suit is brought hereon.
All principal and interest hereunder shall be payable in lawful money
of the United States of America and shall be paid at such place as the holder
hereof may from time to time designate.
Upon the occurrence of any default in the payment of principal or
interest hereunder or upon any Event of Default under the Security Agreement or
any material breach of any other term or condition set forth in the Security
Agreement, the principal hereof with interest accrued thereon shall become, or
may be declared to be, at the option of the Lender, forthwith due and payable.
Borrower hereby waives diligence, presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note and assents to extensions of time of
payment, or forbearance or other indulgence without notice. The right to plead
any and all statutes of limitation as a defense to any demand hereunder is
hereby waived to the full extent permitted by law.
Borrower shall have no right to prepay all or any portion of this Note
until the first to occur of (i) receipt by Borrower of the Demand Notice or (ii)
the Outside Date.
This Note shall be governed by and be construed in accordance with the
laws of the State of California.
IN WITNESS WHEREOF, this Note has been executed and delivered at Los
Angeles, California, on the date set forth above.
TRADEWINDS TELEVISION, LLC
By:
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Its:
-------------------------
A-2
SCHEDULE OF ADVANCES OF PRINCIPAL
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Unpaid
Amount of Interest Rate Principal Notation
Date Advance (8%) Balance Made by
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EXHIBIT "B"
DESCRIPTION OF COLLATERAL
As security for the due and punctual payment and performance of the Debtor's
obligations under that certain Promissory Note dated September 13, 1996 and the
Security Agreement, Debtor has pledged, hypothecated, assigned, transferred,
conveyed, delivered and set over unto Lender as security, and has granted to
Lender, a continuing first priority security interest in and mortgage of
copyright on, all of the Debtor's right, title and interest of every kind and
nature, if any, in and to the following, including all products and proceeds
thereof, including insurance proceeds (collectively, the "Collateral"):
(i) all episodes currently or hereafter in existence of the following television
series: "Bounty Hunter," "Ghost Writer," "Madison's Adventures, Growing Up
Wild," "Premiere One," and the motion picture entitled "The Night They Saved
Christmas," and all collateral, allied, ancillary, subsidiary and merchandising
rights therein, and all properties and things of value pertaining thereto and
all products and proceeds thereof whether now in existence or hereafter made,
acquired or produced (as used herein, the term "Episodes" shall mean and include
the foregoing episodes and motion picture, all of the aforesaid rights and the
rights and property set forth in a subparagraphs (ii) through (xviii) below),
which includes, without limitation:
(ii) All rights of every kind and nature including, without limitation,
copyrights) in and to any literary, musical, dramatic or other material of any
kind or nature upon which, in whole or in part, the Episodes are or may be
based, or from which they are, or may be adapted or inspired, or which may be or
has been used or included in the Episodes including, without limitation, all
scripts, scenarios, screenplays, bibles, stories, treatments, novels, outlines,
books, titles, concepts, manuscripts or other properties or materials of any
kind or nature in whatever state of completion and all drafts, versions and
variations thereof (collectively, the "Literary Property");
(iii) All physical properties of every kind or nature of relating to the
Episodes and all versions thereof, including, without limitation, all physical
properties relating to the development, production, completion, delivery,
exhibition, distribution or other exploitation of the Episodes, and all versions
thereof or any part thereof, including, without limitations, the Literary
Property, exposed film, developed film, positives, negatives, prints, answer
prints, special effects, pre-print materials (including interpositives,
negatives, duplicate negatives, internegatives, color reversals, intermediates,
lavenders, fine grain master prints and matrices and all other forms of preprint
elements which may be necessary or useful to produce prints or other copies or
additional preprint elements, whether now known or hereafter devised),
soundtracks, recordings, audio and video tapes and discs of all types and
gauges, cutouts, trims and
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any and all other physical properties of every kind and nature relating to the
Episodes in whatever state of completion, and all duplicates, drafts, versions,
variations and copies of each thereof (collectively, the "Physical Properties");
(iv) All rights of every kind or nature in and to any and all music and musical
compositions created for, used in or to be used in connection with the Episodes
including, without limitation, all copyrights therein and all rights to perform,
copy, record, re-record, produce, publish, reproduce or synchronize any or all
of said music and musical compositions as well as all other rights to exploit
such music including record, soundtrack recording, and music publishing rights;
(v) All collateral, allied, ancillary, subsidiary, publishing and merchandising
rights of every kind and nature, without limitation, derived from, appurtenant
to or related to the Episodes or the Literary Property, including, without
limitation, all production, exploitation, reissue, remake, sequel, serial or
series production rights by use of film, tape or any other recording devices now
known or hereafter devised, whether based upon, derived from or inspired by the
Episodes, the Literary Property or any part thereof; all rights to use, exploit
and license others to use or exploit any and all novelization, publishing,
commercial tie-ups and merchandising rights of every kind and nature, including,
without limitation, all novelization, publishing, merchandising rights and
commercial tie-ups arising out of or connected with or inspired by the Episodes
or the Literary Property, the title or titles of the Episodes, the characters
appearing in the Episodes or said Literary Property and/or the names or
characteristics of said characters, and including further, without limitation,
any and all commercial exploitation in connection with or related to the
Episodes, all remakes or sequels thereof and/or said Literary Property;
(vi) All rights of every kind or nature, present and future, in and to all
agreements relating to the development, production, completion, delivery and
exploitation of the Episodes, including, without limitation, all agreements for
personal services, including the services of writers, directors, cast,
producers, special effects personnel, animators, cameramen and other creative,
artistic and technical staff and agreements for the use of studio space,
equipment, facilities, locations, animation services, special effects services
and laboratory contracts;
(vii) All insurance and insurance policies heretofore or hereafter placed upon
the Episodes or the insurable properties thereof and/or any person or persons
engaged in the development, production, completion, delivery or exploitation of
the Episodes and the proceeds thereof;
(viii) All copyrights, rights in copyrights, interests in copyrights and
renewals and extensions hereafter obtained upon the Episodes or the Literary
Property or any part thereof, and the right (but not the obligation) to make
publication thereof for copyright purposes, to register claims under copyright,
and the right (but not the obligation) to
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renew and extend such copyrights, and the right (but not the obligation) to xxx
in the name of Debtor or in the name of Lender for past, present and future
infringements of copyright;
(ix) All rights to produce, acquire, release, sell, distribute, subdistribute,
lease, sublease, market, license, sublicense, exhibit, broadcast, transmit,
reproduce, publicize or otherwise exploit the Episodes, the Literary Property
and any and all rights therein (including, without limitation, the rights
referred to in subsection (iv) above) in perpetuity, without limitation, in any
manner and in any media whatsoever throughout the universe, including, without
limitation, by projection, radio, all forms of television (including, without
limitation, free, pay, toll, cable, sustaining subscription, sponsored and
direct satellite broadcast), in theatres, non-theatrically, on cassettes,
cartridges and discs and by any and all other scientific, mechanical or
electronic means, methods, processes or devises now known or hereafter
conceived, devised or created;
(x) All rights of Debtor of any kind or nature, direct or indirect, to acquire,
produce, develop, reacquire, finance, release, sell, distribute, subdistribute,
lease, sublease, market, license, sublicense, exhibit, broadcast, transmit,
reproduce, publicize, or otherwise exploit the Episodes, or any rights in the
Episodes, including, without limitation, pursuant to agreements between Debtor
and any company controlling, controlled by, or under common control with Debtor
(a "Subsidiary") which relate to the ownership, production or financing of the
Episodes;
(xi) All contract rights and general intangibles which grant to any person any
right to acquire, produce, develop, reacquire, finance, release, sell,
distribute, subdistribute, lease, sublease, market, license, sublicense,
exhibit, broadcast, transmit, reproduce, publicize, or otherwise exploit the
Episodes or any rights in the Episodes including, without limitation, all such
rights pursuant to agreements between Debtor and any Subsidiary which relate to
the ownership, production or financing of the Episodes;
(xii) All rent, revenues, income, compensation, products, increases, proceeds
and profits or other property obtained or to be obtained from the production,
release, sale, distribution, subdistribution, lease, sublease, marketing,
licensing, sublicensing, exhibition, broadcast, transmission, reproduction,
publication, ownership, exploitation or other uses or disposition of the
Episodes and the Literary Property (or any rights therein or part thereof), in
any and all media, without limitation, the properties thereof and of any
collateral, allied, ancillary, merchandising and subsidiary rights therein and
thereto, and amounts recovered as damages by reason of unfair competition, the
infringement of copyright, breach of any contract or infringement of any rights,
or derived therefrom in any manner whatsoever;
(xiii) Any and all general intangibles, contract rights, chattel paper
documents, instruments and goods, including inventory (as those terms are
defined in the California Commercial Code), not elsewhere included in this
definition, which may
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arise in connection with the creation, production, completion, delivery,
financing, ownership, possession or exploitation of the Episodes;
(xiv) Any and all documents, receipts or books and records, including, without
limitation, documents or receipts of any kind or nature issued by a
pledgeholder, warehouseman or bailee with respect to the Episodes and any
element thereof;
(xv) All accounts receivable, all contracts rights, all general intangibles (as
such terms are defined above) in connection with or relating to the Episodes
including, without limitation, all accounts receivable, all contract rights and
general intangibles constituting rights to receive the payment of money, or
other valuable consideration, all receivables and all other rights to receive
the payment of money including, without limitation, under present or future
contracts or agreements (whether or not earned by performance), from the sale,
distribution, exhibition, disposition, leasing, subleasing, licensing,
sublicensing or other exploitation of the Episodes or the Literary Property or
any part thereof or any rights therein or related thereto in any medium, whether
now known or hereafter developed, by any means, method, process or device in any
market, including Debtor's rights to receive payments thereunder, and all other
rights to receive film rentals, license fees, distribution fees, producer's
shares, royalties and other amounts of every description including, without
limitation, from (a) theatrical exhibitors, exhibitors, television networks and
stations and airlines, cable television systems, pay television operators,
whether on a subscription, per program charge basis or otherwise, and other
exhibitors, (b) distributors, subdistributors, lessees, sublessees, licensees
and sublicensees (including any Subsidiary) and (c) any other person or entity
that distributes, exhibits or exploits the Episodes or the Literary Property or
elements or components of the Episodes or the Literary Property or rights
relating thereto;
(xvi) All proceeds, products, additions and accessions (including insurance
proceeds) of the Episodes, as defined and referred to in subsections (i) through
(xv) above; and
(xvii) The following personal property, whether now owned or hereafter acquired:
(i) the title or titles of the Episodes and all of Debtor's rights to the
exclusive use thereof including rights protected pursuant to trademark, service
xxxx, unfair competition and/or other laws, rules or principles of law or equity
or industry practice, and (ii) all inventions, processes, formulae, licenses,
patents, patent rights, trademarks, trademark rights, service marks, service
xxxx rights, trade names, trade name rights, logos, indicia, corporate and
company names, business source or business identifiers and renewals and
extensions thereof, domestic and foreign, whether now owned or hereafter
acquired, and the accompanying good will and other like business property rights
relating to the Episodes, and the right (but not the obligation) to register
claims under trademark or patent and to renew and extend such trademarks or
patents and the right (but not the obligation) to xxx in the name of Debtor or
in the name of Lender for past, present or future infringement of trademark or
patent;
B-4
(xviii) all other presently owned and after acquired assets and interests of the
Debtor including, but not limited to accounts, contract rights, general
intangibles, notes, instruments, chattel paper, machinery, equipment, furniture,
fixtures, leasehold improvements, leases (real property and personal property),
tax refunds, deposit accounts, cash, bank accounts, any and all avoidance rights
and powers existing under the Bankruptcy Code and the proceeds and products of
all of the foregoing (collectively "General Assets").
B-5
SECURED PROMISSORY NOTE
$100,000.00 Los Angeles, California
November 19,1996
FOR VALUE RECEIVED, the undersigned, TRADEWINDS TELEVISION, LLC, a
California limited liability company (the "Borrower") hereby promises to pay to
AFFINITY ENTERTAINMENT, INC., a Delaware corporation (the "Lender"), or order,
on the Maturity Date (as such term is defined herein) the principal sum of One
Hundred Thousand Dollars ($100,000.00) or so much thereof as may be borrowed
hereunder, with interest thereon in accordance with the terms set forth herein.
The Maturity Date, unless mutually extended by Borrower and Lender, shall
be the date upon which Lender makes written demand for payment to Borrower which
may be made after the date which is 90 days following receipt of written notice
(60 days following receipt of written notice on or after December 1, 1996) by
Borrower from Lender ("Demand Notice") that Lender has determined that the
conditions to the Transaction contemplated by that certain letter agreement
dated September 13,1996 among Borrower, Lender and Xxxx Pack could not be
satisfied, and the Transaction will not be consummated; provided, however, that
notwithstanding the foregoing, this Note shall become immediately due and
payable without any notice if either of the following conditions are not met at
any time prior to the Maturity Date: (i) all payments due from Borrower to third
parties with respect to the production, distribution, marketing and other
exploitation of the television series "Bounty Hunters" (the "Series") are not
made promptly when due or otherwise Borrower defaults in any monetary or
contractual obligation relating to the Series, or (ii) Borrower shall not have
(a) provided Lender with a two (2) week cash budget of expenditures, acceptable
to Lender, due with respect to the Series by the close of business on the date
of the 'Demand Notice" and on each Friday thereafter, and (b) deposited in an
escrow account, approved by Lender, sufficient cash to meet the monetary
obligations set forth in the budget, initially for the next two (2) week period
and thereafter for the next one (1) week period. Advances may be made under this
Note prior to the Maturity Date on the condition that at the time of any such
borrowing, such borrowing has been approved by Lender in its sole discretion
regarding the use of such advances, and no Event of Default exists under the
Security Agreement referred to herein, and provided further that the aggregate
principal amount of all sums borrowed hereunder shall not exceed the sum of One
Hundred Thousand Dollars ($100,000.00). Each borrowing hereunder shall be
recorded by the Lender and, prior to any transfer of this Note, shall be
endorsed on the schedule annexed to this Note. The aggregate unpaid amount of
principal set forth on the schedule annexed to this Note shall be presumptive
evidence of the principal amount owing and unpaid on this Note. However, the
failure to record any such amount on such schedule shall not limit or otherwise
affect the obligations of Borrower hereunder to repay the principal amount of
all advances hereunder together with interest accruing thereon. Amounts repaid
hereunder may not be reborrowed.
The undersigned promises to pay, on the Maturity Date, interest on the
unpaid principal balance hereof from time to time outstanding from the date of
the first disbursement hereunder until paid, at a rate per annum of eight
percent (8%).
This Note is entitled to the benefits and subject to all of the terms and
conditions of the Interim Financing and Security Agreement dated September
13,1996 among Lender, Borrower and Xxxx Pack, as amended from time to time
("Security Agreement").
The undersigned agrees to pay all expenses of Lender incurred in collection
of this Note, including reasonable attorneys' fees in connection therewith,
irrespective of whether suit is brought hereon.
All principal and interest hereunder shall be payable in lawful money of
the United States of America and shall be paid at such place as the holder
hereof may from time to time designate.
Upon the occurrence of any default in the payment of principal or interest
hereunder or upon any Event of Default under the Security Agreement or any
material breach of any other term or condition set forth in the Security
Agreement, the principal hereof with interest accrued thereon shall become, or
may be declared to be, at the option of the Lender, forthwith due and payable.
Borrower hereby waives diligence, presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance and enforcement of this Note and assents to extensions of time of
payment, or forbearance or other indulgence without notice. The right to plead
any and all statutes of limitation as a defense to any demand hereunder is
hereby waived to the full extent permitted by law.
Borrower shall have no right to prepay all or any portion of this Note
until the receipt by Borrower of the Demand Notice.
This Note shall be governed by and be construed in accordance with the laws
of the State of California.
IN WITNESS WHEREOF, this Note has been executed and delivered at Los
Angeles, California, on the date set forth above.
TRADEWINDS TELEVISION, LLC
By:________________________
Its:_______________________
SCHEDULE OF ADVANCES OF PRINCIPAL
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Unpaid
Amount of Interest Rate Principal Notation
Date Advance (8%) Balance Made by
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