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Exhibit 1
OVERRIDE AGREEMENT
This Override Agreement (the "Agreement") is made and entered into as of
November 19, 1996, by and among Xxx Video City, Inc., a California corporation
("VCI"); Xxxxxx X. Xxx ("Xxx"), an individual resident of California on behalf
of himself and as Trustee of the Xxxxxx X. Xxx Revocable Living Trust UDT 1/9/91
(the "Trust"); Prism Entertainment Corporation, a Delaware corporation
("Prism"); and Xxxxxx Entertainment Inc., a Tennessee corporation ("Xxxxxx"),
with reference to the following:
A. Prism is a public company which on December 1, 1995 filed for protection
under Chapter 11 of the United States Bankruptcy Code in the United States
Bankruptcy Court for the Central District of California (the "Bankruptcy
Court"), and is currently operating as debtor-in-possession.
B. Prism and VCI have entered into that certain Agreement and Plan of
Reorganization and Merger dated as of October 25, 1996, as amended by that
certain Amendment, dated as of November 19, 1996 (as amended, the "Merger
Agreement") with respect to a merger (the "Merger") of VCI into Prism.
C. As of the date of this Agreement, VCI is indebted to Xxxxxx in the
aggregate approximate amount of $4,500,000 (the "VCI Debt"). The obligations of
VCI to Xxxxxx with respect to the VCI Debt are secured by (a) a security
interest in substantially all of the personal property of VCI (the "Old
Collateral") pursuant to an Amended and Restated Security Agreement dated as of
February 7, 1995, as amended (the "Prior Security Agreement"); (b) a pledge
agreement dated as of February 7, 1995, as amended (the "Stock Pledge
Agreement") issued by the Trust in favor of Xxxxxx as to 5,500 shares of the
Common Stock of VCI (the "Pledged Shares"); (c) a Pledge Agreement dated
February 7, 1995, as amended (the "Note Pledge Agreement") issued by VCI in
favor of Xxxxxx as to a promissory note in favor of VCI (the "Pledged Note");
and (d) a Payment Guaranty issued by Xxx dated February 7, 1995 (the "Xxx
Guaranty").
D. VCI, Xxx and Xxxxxx have entered into that certain Workout Agreement
dated as of February 7, 1995 (the "Workout Agreement") with respect to the
rescheduling and payment of the then outstanding debt owed by VCI to Xxxxxx.
X. Xxxxxx is the holder of warrants issued by VCI dated November 14, 1996
to acquire shares of the Common Stock of VCI equal to 8.5% of the outstanding
shares of VCI (the "Old Warrants").
F. Subject to the terms and conditions set forth in this Agreement and the
consummation of the Merger, the parties have agreed to restructure the VCI Debt.
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NOW, THEREFORE, in consideration of the foregoing and the terms and
conditions hereof, the parties hereto hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Defined Terms. In addition to the definitions set forth in the
Recitals, for purposes of this Agreement, the following capitalized terms shall
have the following meaning:
"Additional Warrants" means warrants to purchase an aggregate of
852,750 shares of the Common Stock of Reorganized Prism substantially in
the form of Exhibit A attached hereto.
"Affiliate" means, as to any Person, any other Person which directly
or indirectly controls, or is under common control with, or is controlled
by, such Person. As used in this definition, "control" (and its correlated
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person that owns, directly or
indirectly, 10% or more of the securities having ordinary voting power for
the election of directors or other governing body of a corporation (other
than securities having such power only by reason of the happening of a
contingency), or 10% or more of the partnership or other ownership interest
of any other Person (other than as a limited partner of such other Person),
will be deemed to control such corporation or other Person.
"Assumed Options" means options of VCI to be assumed by Reorganized
Prism upon the Merger to purchase an aggregate of 1,685,000 shares of
Reorganized Prism.
"Business Day" means any Monday, Tuesday, Wednesday, Thursday or
Friday on which Xxxxxx is open for business at its address for notice
designated as provided herein.
"Closing" means the consummation of the transactions contemplated by
this Agreement, which shall be deemed to take place concurrently with the
effectiveness of the Merger.
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"Closing Date" means the date of Closing.
"Collateral Documents" means the New Security Agreement and Copyright
Mortgages.
"Xxxxxxx" means Xxxxx Xxxxxxx.
"Copyright Mortgage" means a mortgage agreement, in form and substance
satisfactory to Xxxxxx, granting to Xxxxxx a security interest and lien on
all right, title and interest of Reorganized Prism in and to the Film
Library and the Film Library Accounts Receivable, including, without
limitation, all copyrights with respect to the Film Library in form and
substance acceptable to Xxxxxx.
"Debt Documents" means, collectively, this Agreement, the Note, the
Collateral Documents, the Supply Agreement, the New Warrants, the
Additional Warrants and any other certificates, documents or agreement of
any type or nature heretofore or hereafter executed or delivered by
Reorganized Prism or any other Party to Xxxxxx in any way relating to or in
furtherance of this Agreement and/or the Note, and in each case either as
originally executed or as the same may from time to time be supplemented,
modified, amended, restated or extended.
"Disclosure Statement" means the Disclosure Statement for Prism's
Amended Plan of Reorganization dated September 23, 1996, as may be amended.
"Effective Time" means the consummation of the Merger.
"Escrow and Warrant Agreement" means, as to the New Warrants, the
Escrow and Warrant Agreement substantially in the form of Exhibit B
attached hereto.
"Event of Default" shall have the meaning provided in Section 7.1.
"Film Library" means the rights of Prism in the motion pictures listed
on Schedule 5.25 to the Merger Agreement.
"Film Library Accounts Receivable" means all present and future
accounts, accounts receivable, rights to payment, and all forms of
obligations owing to Reorganized Prism or in which Reorganized Prism may
have any interest, however created or arising, relating to the Film
Library.
"Governmental Agency" means (a) any international, foreign, federal,
state, county or municipal government, or political subdivision thereof,
(b) any
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governmental or quasi-governmental agency, authority, board, bureau,
commission, department, instrumentality or public body, or (c) any court,
administrative tribunal or public utility.
"Guaranty Release" means the release by Xxxxxx of the Xxx Guaranty,
the Stock Pledge Agreement and the Note Pledge Agreement to be executed and
delivered at the Closing substantially in the form of Exhibit C attached
hereto.
"Xxxxxx Shares" means 1,500,000 shares of the Common Stock of
Reorganized Prism.
"Laws" means, collectively, all international, foreign, federal, state
and local statutes, treaties, rules, regulations, ordinances, codes and
administrative or judicial precedents.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment for security, security interest, encumbrance, lien or charge of
any kind, whether voluntarily incurred or arising by operation of Law or
otherwise, affecting any property, including any agreement to grant any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of a security interest, and/or the filing of, or
agreement to, give any financing statement (other than a precautionary
financing statement with respect to a lease that is not in the nature of a
security interest) under the Uniform Commercial Code or comparable Law of
any jurisdiction with respect to any property.
"Lock-Up Agreement" means an agreement to be executed and delivered at
the Closing between Xxx, Xxxxxxx and Xxxxxx pursuant to which Xxx (on his
own behalf and on behalf of the Trust) and Xxxxxxx agree to refrain from
selling, pledging or encumbering the Lock-Up Shares, substantially in the
form of Exhibit D attached hereto.
"Lock-Up Shares" means 1,026,983 shares of Common Stock of Reorganized
Prism, 721,983 shares of which will, upon the Closing, be held by Xxx and
305,000 shares by Xxxxxxx.
"New Collateral" means, collectively, a first lien on the property and
assets of Reorganized Prism described in Schedule A attached hereto (other
than the Film Library and the Film Library Accounts Receivable of
Reorganized Prism) and a second priority lien on the Film Library and the
Film Library Accounts Receivable of Reorganized Prism subject only to the
lien of Imperial Bank, all as more fully described in the New Security
Agreement.
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"New Security Agreement" means the Security Agreement, dated as of the
Closing Date, executed by Reorganized Prism in favor of Xxxxxx,
substantially in the form of Exhibit E attached hereto, either as
originally executed or as it may from time to time on or after the Closing
Date be supplemented, modified, amended, restated or extended.
"New Warrants" means warrants to purchase the New Warrant Shares to be
delivered to Xxxxxx at the Closing pursuant to the Escrow and Warrant
Agreement.
"New Warrant Shares" means an aggregate of 8 1/2% of the number of
shares of the Common Stock of Reorganized Prism to be received by the VCI
Shareholders pursuant to the Merger, provided, however, that the aggregate
number of shares to be received by the VCI Shareholders will not be less
than 4,930,000. The number of New Warrant Shares is currently estimated to
be 410,444.
"Note" means the promissory note of Reorganized Prism to be delivered
to Xxxxxx at the Closing evidencing the Remaining Debt, substantially in
the form of Exhibit F attached hereto.
"Party" means any Person (including Reorganized Prism and/or any
Affiliate of Reorganized Prism), other than Xxxxxx, which now or hereafter
is party to any of the Debt Documents.
"Person" means any entity, whether an individual, trustee,
corporation, general partnership, limited partnership, joint stock company,
trust, unincorporated organization, bank, business association, firm, joint
venture, governmental agency, or otherwise.
"Plan" means the Plan of Reorganization of Prism and its subsidiaries,
as may be amended.
"Registrable Securities" means the Xxxxxx Shares, the New Warrant
Shares and any securities issuable upon exercise of the Additional
Warrants.
"Registration Rights Agreement" means an agreement between Prism and
Xxxxxx regarding the registration of the Registrable Securities
substantially in the form of Exhibit G attached hereto.
"Remaining Debt" means the difference between the VCI Debt and
$3,000,000.
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"Reorganized Prism" means the surviving entity upon the consummation
of the Merger.
"Reorganized Prism Securities" means the Xxxxxx Shares, the New
Warrants, the New Warrant Shares, the Additional Warrants and any
securities issuable upon exercise of the Additional Warrants.
"Securities Act" means the Securities Act of 1933, as amended.
"Stockholders Agreement" means an agreement to be executed and
delivered at Closing among Reorganized Prism, Xxx, Xxxxxxx and Xxxxxx
substantially in the form of Exhibit H attached hereto.
"Supply Agreement" means the Supply Agreement between Reorganized
Prism and Xxxxxx to be executed and delivered at the Closing substantially
in the form of Exhibit I attached hereto.
"VCI Shareholders" means the shareholders of VCI immediately prior to
the Effective Time.
ARTICLE 2
RESTRUCTURING OF DEBT
2.1 Conversion of Debt; Release of Xxx Guaranty and Old Collateral.
At the Closing, Xxxxxx shall convert $3,000,000 of principal amount of the VCI
Debt into the Xxxxxx Shares. In connection therewith, at the Closing, Xxxxxx
shall release the Stock Pledge Agreement, the Note Pledge Agreement and the Xxx
Guaranty pursuant to the Guaranty Release, redeliver and reassign to Xxx the
Pledged Shares and to VCI the Pledged Note, and execute and deliver to
Reorganized Prism UCC-2 termination statements with respect to the Old
Collateral; and Reorganized Prism shall execute and deliver to Xxxxxx the Note,
the New Security Agreement and UCC-1 financing statements covering the New
Collateral pursuant to which Reorganized Prism shall grant to Xxxxxx first
priority liens and security interests in and to the New Collateral except that
the lien and security interest in the Film Library and the Film Library Accounts
Receivable shall be subject to and subordinate to the lien therein of Imperial
Bank.
2.2 Termination of Workout Agreement; Payment of Remaining Debt. The
Workout Agreement shall be terminated effective at the Closing, and Xxxxxx shall
thereupon release all of its future claims thereunder. The Remaining Debt shall
be evidenced by the Note and payable as follows:
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(a) Interest shall be payable on the outstanding daily unpaid principal
amount of the Remaining Debt from the Closing until payment in full is made,
shall accrue and be payable at the rate of 10% per annum and shall be payable
monthly. Any accrued interest not paid on a date scheduled for the payment of
interest shall be added to the principal of the Remaining Debt and all of such
principal, as so increased shall thereafter bear interest at the lesser of 4% in
excess of the existing rate or the maximum rate permitted by applicable law. All
proceeds from the exercise of all options or warrants to purchase capital stock
of Reorganized Prism shall be applied to the reduction of the Remaining Debt,
first to any accrued unpaid interest and then to principal.
(b) If not sooner paid, the Remaining Debt and all accrued interest
thereon shall be payable on the third anniversary of the Closing.
(c) The Remaining Debt may, at any time and from time to time, be
paid or prepaid in whole or in part without premium or penalty, provided that
each prepayment of principal shall be accompanied by payment of interest accrued
through the date of payment on the amount of principal paid.
(d) Should any installment of principal or interest not be paid when
due, a late charge equal to 5% of the payment then due, payable on demand,
shall be charged with respect to such payment.
(e) All computations of interest shall be calculated on the basis of
a year of 360 days and the actual number of days elapsed.
(f) If any payment to be made by Reorganized Prism shall become due on
a day other than a Business Day, payment shall be made on the next succeeding
Business Day and the extension of time shall be reflected in computing interest.
(g) Each payment hereunder shall be made by Reorganized Prism by wire
transfer to Xxxxxx or to such other account as Xxxxxx may direct in writing. All
payments shall be made in lawful money of the United States of America and shall
be deemed made when verified by the receiving bank.
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ARTICLE 3
ISSUANCE OF NEW WARRANTS
At the Closing, certain of the VCI shareholders shall issue to Xxxxxx the
New Warrants to purchase the New Warrant Shares pursuant to the Escrow and
Warrant Agreement. It is understood that certificates representing the New
Warrant Shares shall be issued at the Closing in the names of the VCI
Shareholders, but shall be delivered to an escrow agent acceptable to the
parties to be held pending exercise of the New Warrants by Xxxxxx or the
expiration of the Warrant Period. For such time as the New Warrant Shares are
held in escrow, the VCI Shareholders shall be entitled to vote the New Warrant
Shares. Upon expiration of the Warrant Period, the escrow agent will be
authorized and instructed to deliver to the VCI Shareholders all New Warrant
Shares to the extent that the New Warrants have not been exercised therefor. Any
exercise by Xxxxxx of the New Warrants shall be done on a ratable basis with
respect to the New Warrant Shares with the exercise price(s) therefor to be paid
to Reorganized Prism.
ARTICLE 4
ADDITIONAL WARRANTS
At the Closing, Reorganized Prism shall issue to Xxxxxx the Additional
Warrants.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
5.1 Representations and Warranties of VCI. VCI hereby represents and
warrants to the other parties hereto as follows:
(a) VCI has the full right, power and authority to enter into, execute
and deliver this Agreement and all the other Debt Documents to which VCI is a
party.
(b) VCI is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has the corporate power
to own and operate its properties and to carry on its business as now conducted.
VCI is duly qualified to do business and in good standing in each state in which
a failure to be so
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qualified would have a material adverse effect on VCI's financial position
or its ability to conduct its business in the manner now conducted.
(c) VCI has taken all action necessary to authorize the entering into
and performance of its obligations under this Agreement and all other related
documents to which VCI is a party. This Agreement and all the other agreements,
documents, and instruments contemplated hereby to which VCI is a party, are,
and as of the Closing will be, the legal, valid and binding obligation of VCI,
enforceable in accordance with their respective terms.
(d) The representations and warranties of VCI set forth in the Merger
Agreement are true and correct as of the date hereof.
(e) The execution, delivery and performance by VCI of this Agreement
and the other Debt Documents does not and will not (i) contravene or conflict
with the Articles of Incorporation or bylaws of VCI, (ii) contravene or
conflict with or constitute a violation of any provision of any law, statute,
rule, regulation, judgment, injunction, order, writ or decree binding upon or
applicable to VCI or any part of its business, or (iii) contravene or conflict
with or constitute a violation, breach, or default under any agreement to which
VCI is bound.
5.2 Representations and Warrants of Prism. Prism hereby represents and
warrants to the other parties as follows:
(a) Prism is a corporation duly organized, validly existing and in good
standing under the laws of the State of California, and has the corporate power
to own and operate its properties and to carry on its business as now conducted.
Prism is duly qualified to do business and in good standing in each state in
which a failure to be so qualified would have a material adverse effect on
Prism's financial position or its ability to conduct its business in the manner
now conducted.
(b) Prism has the full right, power and authority to enter into,
execute and deliver this Agreement and all other related documents to which
Prism is a party.
(c) Prism has taken all action necessary to authorize the entering
into and performance of its obligations under this Agreement and all other
related documents to which Prism is a party. This Agreement and all other
agreements, documents, and instruments contemplated hereby are, and as of the
Closing will be, the legal, valid and binding obligation of Prism, enforceable
in accordance with their respective terms.
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(d) The representations and warranties of Prism set forth in the Merger
Agreement are true and correct as of the date hereof.
(e) The Reorganized Prism Securities, when issued, shall be duly
authorized, validly issued, fully paid and non-assessable.
(f) The execution, delivery and performance by Prism of this Agreement
and the Debt Documents to which Prism is a party does not and will not (i)
contravene or conflict with the Certificate of Incorporation or bylaws of
Prism, (ii) contravene or conflict with or constitute a violation of any
provision of any law, statute, rule, regulation, judgment, injunction, order,
writ or decree binding upon or applicable to Prism or any part of its business,
except that the consummation of the transactions contemplated herein is subject
to the confirmation of the Plan, or (iii) contravene or conflict with or
constitute a violation, breach, or default under any agreement to which Prism
is bound.
(g) The Plan provides for sufficient number of shares of Common Stock
of Reorganized Prism in connection with the issuance of the New Warrant Shares,
the Xxxxxx Shares and any securities issuable upon exercise of the Additional
Warrants.
(h) Place of Business. The records with respect to all intangible
personal property constituting a part of the New Collateral are and will be
maintained at Reorganized Prism's chief place of business and chief executive
office, which has the address of 0000 XxXxxxxx Xxxxx, Xxxxx X, Xxxxxxxxxxx,
Xxxxxxxxxx 00000. All tangible personal property constituting a part of the New
Collateral is or will be located at Reorganized Prism's chief place of business
and chief executive office and/or at any specific store locations.
(i) Imperial Bank. As of the date hereof, the total outstanding
principal amount of the indebtedness of Prism to Imperial Bank (the "Imperial
Indebtedness"), is no more than $3,100,000.
5.3 Representations and Warranties of Xxxxxx. Xxxxxx hereby represents and
warrants as follows:
(a) Xxxxxx has the full right, power and authority to enter into,
execute and deliver this Agreement and all other related documents to which
Xxxxxx is a party.
(b) Xxxxxx has taken all action necessary to authorize the entering
into and performance of its obligations under this Agreement and all other
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related documents to which Xxxxxx is a party. This Agreement and such related
documents are, and as of the Closing will be, the legal, valid and binding
obligation of Xxxxxx, enforceable in accordance with their respective terms.
(c) Xxxxxx understands and agrees that (subject to the Registration
Rights Agreement):
(i) The Reorganized Prism Securities shall not have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
or the securities laws of any state, based upon an exemption from such
registration requirements under the Securities Act and applicable state
securities law;
(ii) The Reorganized Prism Securities are and will be "restricted
securities" as said term is defined in Rule 144 of the Rules and Regulations
promulgated under the Securities Act;
(iii) The Reorganized Prism Securities may not be sold or otherwise
transferred unless they have been first registered under the Securities Act and
applicable state securities laws, or unless exemption from such registration
provisions are available with respect to said resale or transfer;
(iv) Prism is relying on the representation by Xxxxxx that Xxxxxx
has such knowledge and experience in financial or business matters that Xxxxxx
is capable of evaluating the merits and risks involved in the investment in the
Reorganized Prism Securities;
(v) The Reorganized Prism Securities are and will be acquired by
Xxxxxx for Xxxxxx'x own account and not with a view to, or for resale in
connection with, any distribution other than resales made in compliance with
the Securities Act and applicable state securities laws.
(vi) Xxxxxx acknowledges that it has received the Disclosure
Statement, together with a copy of the Plan. Xxxxxx has been, or will be prior
to Closing, furnished with such information and documents pertaining to
Reorganized Prism as Xxxxxx has requested, and has been, or will be prior to
Closing, given the opportunity to meet with officials of Prism and VCI and to
have such persons answer questions regarding Reorganized Prism's affairs and
conditions.
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ARTICLE 6
COVENANTS BY PRISM
Unless Xxxxxx otherwise consents in writing, which consent may be exercised
or withheld in Xxxxxx'x sole discretion, so long as Reorganized Prism is
indebted to Xxxxxx under this Agreement, and until the payment in full of the
Remaining Debt (as to all covenants in this Article) and until the later to
occur of the termination of the Stockholders Agreement or the payment in full of
the Remaining Debt (as to Sections 6.11, 6.12, 6.14, 6.16, 6.17 and 6.18), Prism
covenants as follows:
6.1 Punctual Payment. Reorganized Prism shall punctually pay the interest
and principal of the Remaining Debt at the times and place and in the manner
specified herein and in the Note.
6.2 Accounting Records. Reorganized Prism shall maintain full and
complete books and accounts and other records reflecting all of its properties
and the results of its business in accordance with generally accepted
accounting principles consistently applied.
6.3 Financial Information. Reorganized Prism shall deliver, or cause to
be delivered, to Xxxxxx, in form and detail satisfactory to Xxxxxx:
(a) As soon as available, but in any event not later than 105 days
after the end of each fiscal year, an audited balance sheet of Reorganized
Prism as at the end of such fiscal year, and statements of income and cash flow
for such fiscal year, together with the equivalent information for the prior
fiscal year, all in detail reasonably satisfactory to Xxxxxx. Such balance
sheet and statements shall be prepared in accordance with generally accepted
accounting principles applied on a basis consistently maintained throughout the
periods involved and accompanied by a report of a certified public accountant
of recognized national standing reasonably satisfactory to Xxxxxx.
(b) As soon as available, but in any event not later than 50 days
after the end of each fiscal quarter (except for the fourth quarter), an
unaudited balance sheet of Reorganized Prism as at the end of such fiscal
quarter (except for the fourth quarter) and a statement of income for such
fiscal quarter (except for the fourth quarter) and the year to date, together
with the equivalent information for the same period in the prior fiscal year,
all in accordance with generally accepted accounting principles consistently
maintained throughout the period involved, except for the absence of footnotes.
Such financial statements shall be certified by the chief financial officer of
Reorganized Prism as fairly presenting the financial condition and results of
operations of Reorganized Prism in accordance with generally accepted
accounting principles,
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consistently applied, as at such date and for such periods, except for the
absence of footnotes. The foregoing may be satisfied by delivery of the
applicable Form 10-Q Report.
6.4 Existence. Reorganized Prism shall (a) preserve and maintain its
existence and all of its material rights, licenses, privileges and franchises,
(b) continue to operate in substantially the same line of business as VCI
presently engages in, namely, the business of renting and selling prerecorded
video entertainment for consumer use, (c) comply with the requirements of all
applicable Laws of any Governmental Agency, and (d) use its best efforts to
conduct its business in an orderly, efficient, and regular manner.
6.5 Maintenance of Properties. Reorganized Prism shall maintain, preserve
and protect all of its properties and equipment in good order and condition,
subject to wear and tear in the ordinary course of business, and not permit any
waste of its properties, except that the failure to maintain, preserve and
protect a particular item of property or equipment that is not of significant
value, including property not of significant value due to its technological
obsolescence, either intrinsically or due to the operation of Reorganized Prism,
shall not constitute a violation of this covenant.
6.6 Taxes and Other Liabilities. Reorganized Prism shall pay and
discharge when due any and all indebtedness, obligations, assessments and taxes
including without limitation federal and state income taxes, and all such
obligations imposed by any Governmental Agency which are or may become a Lien
affecting Reorganized Prism's properties or any part thereof, except such as
Reorganized Prism may in good faith contest by appropriate proceedings, so long
as Reorganized Prism has established and maintains reserves adequate to pay any
such contested liabilities in accordance with generally accepted accounting
principles and, by reason of non-payment, none of Reorganized Prism's property
or the Liens of Xxxxxx thereon are in danger of being lost or forfeited.
6.7 Reporting Requirements. Reorganized Prism shall cause to be delivered
to Xxxxxx, in form and detail satisfactory to Xxxxxx:
(a) promptly upon Reorganized Prism's learning thereof, notice of:
(i) any material litigation affecting or relating to Reorganized
Prism, or any of its properties;
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(ii) any dispute between Reorganized Prism and any Governmental
Agency relating to Reorganized Prism's property, the adverse
determination of which might materially adversely affect such
property;
(iii) any change in senior management of Reorganized Prism;
(iv) any Default or Event of Default.
(b) written notice of any change in the location of Reorganized
Prism's principal place of business or any other place in which it
maintains any of the New Collateral or its books and records at least 30
days prior to the date of such change;
(c) such other information relating to Reorganized Prism, and/or its
properties as Xxxxxx may reasonably request from time to time.
6.8 Insurance. Reorganized Prism shall provide or cause to be provided
the following policies of insurance:
(a) public liability insurance in an amount deemed reasonably
necessary from time to time by Xxxxxx;
(b) property damage and casualty insurance in an amount deemed
reasonably necessary from time to time by Xxxxxx; and
(c) such other policies of insurance as Xxxxxx may reasonably require
from time to time.
All insurance policies (i) shall be maintained throughout the term of the
Remaining Debt at Reorganized Prism's sole expense, (ii) shall be issued by
insurers of recognized responsibility which are reasonably satisfactory to
Xxxxxx, (iii) shall be in form and substance reasonably satisfactory to Xxxxxx,
and (iv) with respect to insurance coverage damage to the New Collateral, (A)
shall name Xxxxxx as an additional insured and/or loss payee, as appropriate,
and (B) shall contain a "lender's loss payable" endorsement in form and
substance reasonably satisfactory to Xxxxxx. Reorganized Prism shall deliver or
cause to be delivered to Xxxxxx, from time to time at Xxxxxx'x reasonable
request, originals or copies of such policies or certificates in form reasonably
satisfactory to Xxxxxx, evidencing the same. Such certifications shall provide
that such insurance coverage shall not be reduced, cancelled or terminated
without 30 days prior written notice to Xxxxxx.
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6.9 Inspection Rights. At any time during regular business hours and as
often as reasonably requested, Reorganized Prism shall permit Xxxxxx, or any
employee, agent or representative of Xxxxxx, to examine, audit and make copies
and abstracts from the records and books of account of, and to visit and inspect
the Properties of, Reorganized Prism and to discuss the affairs, finances and
accounts of Reorganized Prism with any of its officers and key employees, and,
upon request, furnish promptly to Xxxxxx true copies of all financial
information and internal management reports made available to the management of
Reorganized Prism. As used herein, "key employees" means all employees at least
of Regional Manager or department head rank.
6.10 Compliance with Agreements, Duties and Obligations. Reorganized
Prism shall promptly and fully comply with all of its agreements, duties and
obligations under the Debt Documents and, in all material respects, under any
other material agreements, indentures, leases and/or instruments to which it
and Xxxxxx are each a party. Reorganized Prism shall use its best efforts to
promptly and fully comply with all of its agreements, duties and obligations
under any material agreements, indentures, leases and/or instruments to which
it and another Person (other than Xxxxxx) are each a party.
6.11 Mergers, Consolidations and Acquisitions. Reorganized Prism shall
not (a) enter into any transaction of merger or consolidation or contemplating
the sale or transfer of all or substantially all of its assets; or (c) make any
material change in the nature of its business as conducted and presently
proposed to be conducted; or (d) change the form of organization of its
business; provided, however, that nothing herein shall prevent Reorganized
Prism from selling the Film Library (subject, however, to the conditions set
forth in Section 6 of the Security Agreement), or from entering into a
transaction of merger where (i) Reorganized Prism is the surviving party; (ii)
upon the consummation of such merger, 50% or more in interest of the
stockholders of Reorganized Prism own and control 50% or more of the voting
equity of the combined company; (iii) a majority of the board of directors of
the combined company consist of directors of Reorganized Prism immediately
prior to such merger; and (iv) the terms of the Supply Agreement will continue
to apply.
6.12 Redemption, Dividends, Distributions. Reorganized Prism shall not
redeem or repurchase stock or other ownership interests, declare or pay any
dividends or make any other distribution, whether of capital, income or
otherwise, and whether in cash or other property.
6.13 Application of Exercise Prices. Reorganized Prism shall apply all
proceeds from the exercise of any options or warrants to purchase capital stock
of Reorganized Prism to the reduction of the Remaining Debt, first to any
accrued, unpaid interest and then to principal.
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6.14 Restriction on Employee Stock Options. Except for the Assumed
Options and the option in favor of Xxxxxxx to purchase 175,000 shares (the
"Xxxxxxx Option"), Reorganized Prism shall not issue any employee stock options
or warrants (a) at exercise prices below the greater of the book value per
share or the fair market value per share on the date of grant or (b) to the
extent that the total amount of shares issuable pursuant to the exercise of
such new stock options plus 461,000 shares exceeds 10% of the then issued and
outstanding shares of Reorganized Prism's Common Stock and Common Stock
equivalents. No options or warrants (including the Assumed Options and Xxxxxxx
Option) will be repriced at an exercise price below the greater of the book
value per share or the fair market value on the date of original grant (subject
to adjustments for any stock splits, combinations, etc.) and provisions of
vesting and forfeiture of any such options shall not be amended or modified.
6.15 Imperial Indebtedness. In no event shall Reorganized Prism allow the
aggregate principal amount of Imperial Indebtedness to exceed the amount
outstanding as of the date hereof except as to accrued interest and for costs
and expenses incurred by Imperial Bank from the date hereof. Reorganized Prism
shall promptly provide and deliver to Xxxxxx any and all notices received from
the holder(s) of the Imperial Indebtedness of any default or Event of Default
under the documents, instruments and agreements evidencing, securing or
otherwise relating to the Imperial Indebtedness or of the exercise of remedies
with respect to any collateral therefor.
6.16 Employee Matters. Reorganized Prism shall not amend or modify the
employment agreements with Xxxxxxx, Xxx and Xxxxx Xxxxx attached as exhibits to
the Merger Agreement. Reorganized Prism shall not extinguish, forgive or reduce
(except for payment made) any debt owed to Reorganized Prism from any employee.
6.17 Reservation of Shares. Reorganized Prism shall reserve a sufficient
number of shares of its Common Stock issuable upon exercise of any Additional
Warrants.
6.18 Board Approval. Without the unanimous approval of the Board of
Directors of Reorganized Prism, Reorganized Prism shall not enter into any line
of business other than (i) the sale and rental of video product and related
goods and accessories, (ii) completion of the sole film Prism currently has
under way expected to be titled "When the Bough Breaks II," and (iii) the
exploitation of the Film Library.
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ARTICLE 7
EVENTS OF DEFAULT
7.1 Events of Default. The occurrence of any one or more of the following,
whatever the reason therefor, shall constitute an "Event of Default" hereunder
in addition to any event of default described in any other document relating to
other transactions between the parties thereto:
(a) Reorganized Prism shall fail to pay any installment of principal or
interest on the Note when due, or any other amount owing under this Agreement,
the Note or the other Debt Documents when due; provided, however, Reorganized
Prism shall be allowed two times in any 12 month period to pay an installment of
principal or interest due under the Note not more than five days after the due
date for such payment provided that the late charge imposed by Section 2.2 is
paid; or
(b) Reorganized Prism shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or in any of the Debt
Documents on its part to be performed or observed, within 30 days after the date
the same was to have been performed or observed; provided, however, that if the
failure to perform is capable of being cured, but cannot reasonably be cured
within 30 days after the date the same was to have been performed or observed,
no Event of Default shall be deemed to have occurred if Reorganized Prism shall
have commenced to perform the same within 30 days after the date the same was to
have been performed or observed and shall diligently continue to complete the
performance or observance; or
(c) any representation or warranty in any of the Debt Documents or in any
certificate, agreement, instrument or other document made or delivered pursuant
to or in connection with any of the Debt Documents proves to have been incorrect
when made in any material respect; or
(d) Reorganized Prism (i) shall fail to pay the principal, or any
principal installment, of any present or future indebtedness for borrowed money
of $100,000 or more, or to fulfill its obligations under any guaranty of
present or future indebtedness for borrowed money of $100,000 or more, on its
part to be paid, when due (or within any stated grace period), whether at the
stated maturity, upon acceleration, by reason of required prepayment or
otherwise or (ii) shall fail to perform or observe any other term, covenant or
agreement on its part to be performed or observed in connection with any
present or future indebtedness for borrowed money of $100,000 or more, or of
any guaranty of present or future indebtedness for borrowed money of $100,000
or more, if as a result of such failure any holder or holders thereof (or an
agent or trustee on its or
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their behalf) has the right to declare such indebtednessdue before the date on
which it otherwise would become due, or has commenced judicial or nonjudicial
action to collect such indebtedness or to foreclose or otherwise realize upon
security held therefor, or has taken or is taking such other actions as might
materially adversely affect the Collateral, the interests of Xxxxxx under the
Debt Documents or the ability of Reorganized Prism to perform its obligations
under the Debt Documents; or
(e) Any Debt Document, at any time after its execution and delivery and
for any reason other than the agreement of Xxxxxx or satisfaction in full of
all the obligations of Reorganized Prism thereunder, ceases to be in full force
and effect or is declared by a court of competent jurisdiction to be null and
void, invalid or unenforceable in any respect; or any Party thereto denies that
it has any or further liability or obligation under any Debt Document, or
purports to revoke, terminate or rescind same; or
(f) A final judgment against Reorganized Prism is entered for the payment
of money in excess of $250,000 and such judgment remains unsatisfied without
procurement of a stay of execution for 30 calendar days after the date of entry
of judgment; or
(g) All or a substantial portion of Reorganized Prism's property is
seized or appropriated by any Governmental Agency; or
(h) Reorganized Prism is dissolved or liquidated or all or substantially
all of the property of Reorganized Prism is sold or otherwise transferred
without Xxxxxx'x written consent; or
(i) Reorganized Prism is the subject of an order for relief by a
bankruptcy court that is not stayed within 30 days, or is unable or admits in
writing its inability to pay its debts as they mature, or makes an assignment
for the benefit of creditors; or Reorganized Prism applies for or consents to
the appointment of any receiver, trustee, custodian, conservator, liquidator,
rehabilitator or similar officer for it or for all or any part of its property;
or any receiver, trustee, custodian, conservator, liquidator, rehabilitator or
similar officer is appointed without the application or consent of Reorganized
Prism and the appointment continues undischarged or unstayed for 60 calendar
days; or Reorganized Prism institutes or consents to any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
custodianship, conservatorship, liquidation, rehabilitation or similar
proceedings relating to it or to all or any part of its property under the Laws
of any jurisdiction; or any similar proceeding is instituted without the
consent of Reorganized Prism and continues undismissed or unstayed for 60
calendar days; or any judgment, writ, attachment, execution or similar process
is issued or levied against all or any part of the property of Reorganized
Prism
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and is not released, vacated or fully bonded within 30 calendar days after its
issue or levy; or Reorganized Prism voluntarily ceases to transact business for
more than five consecutive days; or
(j) Reorganized Prism shall claim that any Debt Document is ineffective
or unenforceable, in whole or in part, for any reason.
ARTICLES 8
RIGHTS AND REMEDIES UPON DEFAULT
8.1 Remedies Generally. If an Event of Default shall occur, Xxxxxx may, at
its option and without demand or notice to Reorganized Prism, which notice is
expressly waived, do any one or more of the following:
(a) accelerate and declare the principal of all amounts owing under this
Agreement, the Note and the other Debt Documents, including without limitation
all obligations secured by the Collateral Documents, together with interest
thereon, to be immediately due and payable, regardless of any other specified
maturity or due date, without presentment or demand for payment, protest or
notice of nonpayment or dishonor, or other notices or demands of any kind or
character, and without the necessity of prior recourse to any security;
(b) to the extent permitted by applicable Laws, proceed to protect,
exercise and enforce any or all of its rights and remedies under any or all of
the Debt Documents, including without limitation the right to notify any account
debtor of Xxxxxx'x security interest in all of Reorganized Prism's accounts and
effect collection of any account directly from such debtor, the right to take
possession of and protect, enforce and exercise its rights with respect to the
New Collateral, and such other rights and remedies as are provided by Law or
equity, all in such order and manner as Xxxxxx in its sole discretion may
determine; and/or
(c) to the extent permitted by applicable Laws, exercise any and all
legal or equitable remedies afforded to Xxxxxx as provided in any Collateral
Documents heretofore or hereafter entered into between Xxxxxx, Reorganized
Prism, or as provided for under the Uniform Commercial Code, or under any other
applicable law.
8.2 Cumulative Remedies. The rights and remedies granted to Xxxxxx are
cumulative, and Xxxxxx shall have the right to exercise any one or more of such
rights and remedies alternatively, successively or concurrently as Xxxxxx may,
in its sole discretion, deem advisable.
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ARTICLE 9
CONDITIONS PRECEDENT TO XXXXXX'X OBLIGATIONS
The obligations of Xxxxxx to consummate the transactions contemplated
herein on the Closing Date shall be subject to the performance by Reorganized
Prism of all of its covenants to be performed hereunder, to the accuracy of the
representations and warranties herein contained, and to the fulfillment to
Xxxxxx'x satisfaction, on or before the Closing Date, of each of the following
conditions, unless waived by Xxxxxx, in its sole discretion, in writing:
(a) Delivery to Xxxxxx of an executed original of this Agreement, of
each of the following documents and of each of the exhibits, documents, and
ancillary agreements contemplated therein:
(i) the Note;
(ii) the New Security Agreement;
(iii) the Copyright Mortgages;
(iv) the Escrow and Warrant Agreement;
(v) the Additional Warrants;
(vi) the Lock-Up Agreement;
(vii) the Supply Agreement;
(viii) the Stockholders Agreement;
(ix) the Registration Rights Agreement;
(x) UCC-1 financing statements covering the New Collateral;
(xi) any other filings deemed necessary by Xxxxxx to perfect its
lien and security interest in the Film Library and Film Library
Accounts Receivable;
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(xii) opinion of counsel to Prism as to matters, and in such
form, as reasonably requested by Xxxxxx;
(xiii) evidence satisfactory to Xxxxxx as to insurance coverage;
(xiv) incumbency certificate as to the officers of Reorganized
Prism;
(xv) certified copy of the Certificate of Incorporation and
Bylaws of Reorganized Prism and resolutions of Reorganized Prism, good
standing certificates of Reorganized Prism, authorizing the
transactions contemplated herein;
(xvi) any other instruments or documents reasonably requested by
Xxxxxx in connection with the transactions contemplated hereby.
(b) The representations and warranties of VCI and Prism contained in
Sections 5.1 and 5.2 and in the Merger Agreement shall be true on and as of
the Closing Date with the same effect as though such representations and
warranties had been made on the Closing Date.
(c) All corporate and other proceedings, including adoption by the
Board of Directors of Prism and VCI of resolutions authorizing the
consummation of the transactions contemplated herein and authorizing the
performance by Prism and VCI of the covenants hereunder, and all actions
required to be taken in connection with the transactions contemplated
herein, and all documents incident thereto, shall be satisfactory in form
and substance to Xxxxxx and its counsel and Xxxxxx shall have received
certified copies of the same.
(d) All legal matters with respect to and all legal documents executed
in connection with the transactions contemplated by this Agreement and the
other Debt Documents shall be reasonably satisfactory to counsel for
Xxxxxx.
(e) The entry of an order or orders of the Bankruptcy Court confirming
the Plan on terms reasonably acceptable to Xxxxxx.
(f) The effectiveness of the Merger, pursuant to a Merger Agreement in
form and substance satisfactory to Xxxxxx.
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(g) No provision of any applicable law or regulation, and no judgment,
injunction, order or decree shall prohibit the consummation of the
transactions contemplated herein.
(h) Immediately after the Closing, the Board of Directors of
Reorganized Prism shall consist of eight members, two of which shall be
designees of Xxxxxx.
(i) Xxxxxx shall have received satisfactory evidence that, upon
execution of the Debt Documents, Reorganized Prism will be the owner of the
New Collateral and that Xxxxxx has a second priority lien (subject only to
the first lien of Imperial Bank) on the Film Library and the Film Library
Accounts Receivable and a first priority lien as to all other collateral.
(j) Xxxxxx shall have been given a full and complete opportunity to
review the books, records, and operations of Prism and to review the
collateral security that will be the subject of the Collateral Documents
and shall be satisfied, in its reasonable discretion, with such review and
investigation.
ARTICLE 10
CONDITIONS PRECEDENT TO PRISM'S AND VCI'S OBLIGATIONS
The obligations of Prism and VCI to consummate the transactions
contemplated herein on the Closing Date shall be subject to the performance by
Xxxxxx of all of its covenants to be performed hereunder, to the accuracy of the
representations and warranties herein contained, and to the fulfillment to
Prism's and VCI's satisfaction, on or before the Closing Date, of each of the
following conditions, unless waived by Prism and VCI, in their sole discretion,
in writing:
(a) Delivery by Xxxxxx of an executed original of this Agreement and
of each of the following documents and of each of the exhibits, documents
and ancillary agreements contemplated therein:
(i) the Stockholders Agreement;
(ii) UCC-2 Termination Statements with respect to the Old
Collateral; and
(iii) the Guaranty Release.
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(b) Delivery and reassignment by Xxxxxx to Xxx of the Pledged Shares
and to VCI of the Pledged Note.
(c) The representations and warranties of Xxxxxx contained in Section
5.3 shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on the Closing
Date.
(d) All corporate and other proceedings, including adoption by the
Board of Directors of Xxxxxx of resolutions authorizing the consummation of
the transactions contemplated herein and authorizing the performance by
Xxxxxx of the covenants hereunder, and all actions required to be taken in
connection with the transactions contemplated herein, and all documents
incident thereto, shall be satisfactory in form and substance to
Reorganized Prism and its counsel and Xxxxxx shall have delivered certified
copies of the same to Reorganized Prism.
(e) All legal matters with respect to and all legal documents executed
in connection with the transactions contemplated by this Agreement and the
other Debt Documents shall be reasonably satisfactory to counsel for
Reorganized Prism.
(f) The entry of an order or orders of the Bankruptcy Court confirming
the Plan.
(g) The effectiveness of the Merger.
(h) No provision of any applicable law or regulation, and no judgment,
injunction, order or decree shall prohibit the consummation of the
transactions contemplated herein.
ARTICLE 11
MISCELLANEOUS
11.1 Notices. All notices, requests and other communications to any party
hereunder shall be in writing and shall be given to such party at its address or
telecopier number set forth below, or such other address or telecopier number as
such party may hereinafter specify by notice to each other party hereto:
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if to Prism, to:
Prism Entertainment Corporation
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to:
Loeb & Loeb LLP
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
if to VCI:
(prior to the Effective Time)
Xxx Video City, Inc.
0000 XxXxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxx
Telecopy: (000) 000-0000
with a copy to:
Xxxx & Xxxxx
0000 Xxxxxxx Xxxx Xxxx, 00xx Xx.
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
if to Xxxxxx:
Xxxxxx Entertainment, Inc.
Two Xxxxxx Xxxxxxxxx
Xx Xxxxxx, Xxxxxxxxx 00000
Attention: Xxxx Xxxxxxxx, Esq., General Counsel
Telecopy: (000) 000-0000
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Each such notice, request or other communication shall be effective (i) if given
by telecopy, when such telecopy is transmitted to the telecopy number specified
herein and the appropriate answerback is received or, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, properly addressed or, (iii) if given by any other means, when
delivered at the address specified herein.
11.2 Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by each party hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No failure or delay by any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
11.3 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
11.4 Governing Law. This Agreement shall be construed in accordance with
and governed by the laws of the State of California, without giving effect to
the conflict of laws principles thereof.
11.5 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original and all of which
shall be deemed to be one and the same instrument, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
11.6 Entire Agreement. This Agreement (and all attached Exhibits and
Schedules, which are hereby incorporated herein) constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, understandings and negotiations, both written
and oral, between the parties with respect to the subject matter of this
Agreement, including without limitation, the Letter of Intent dated September
16, 1996 the Workout Agreement, the Stock Pledge Agreement, the Note Pledge
Agreement, the prior Supply Agreement, the Old Warrants and the Old Security
Agreements. No representation, inducement, promise, understanding, condition or
warranty not set forth herein, or in the Merger Agreement, or in any
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other Debt Document has been made or relied upon by any party hereto.
Neither this Agreement nor any provision hereof is intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
11.7 Severability. If any one or more provisions of this Agreement shall,
for any reasons, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement, but this Agreement shall be construed as if such
invalid, illegal or unen- forceable provision had never been contained herein.
11.8 Captions and Section References. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof. All references to "Sections" without further citation
refer to sections of this Agreement.
11.9 Interpretation. Where the context or construction requires, all words
applied in the plural shall be deemed to have been used in the singular, and
vice versa; the masculine shall include the feminine and neuter, and vice versa;
and the present tense shall include the past and future tense, and vice versa.
11.10 Attorneys' Fees. In the event of any litigation or legal proceedings
(including arbitration) between the parties hereto, the nonprevailing party
shall pay the expenses, including reasonable attorneys' fees and court costs, of
the prevailing party in connection therewith. Reorganized Prism shall pay the
attorneys' fees (up to $15,000) and expenses for Xxxxxx'x outside counsel in
connection with this Agreement and the other Debt Documents.
11.11 No Third-Party Rights. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the parties to it and their respective
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successors and assigns, nor is anything in this Agreement intended to relieve
or discharge the obligation or liability of any third Persons to any party to
this Agreement, nor shall any provision give any third Persons any right of
subrogation or action over against any party to this Agreement.
Xxx Video City, Inc., a California
corporation
By________________________________
Its______________________________
__________________________________
Xxxxxx X. Xxx
Prism Entertainment Corporation, a
Delaware corporation
By________________________________
Its______________________________
Xxxxxx Entertainment Inc., a Tennessee
corporation
By________________________________
Its______________________________
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SCHEDULE A
All present and future right, title and interest of Reorganized Prism in or
to any property or assets whatsoever, and all rights and powers of Reorganized
Prism to transfer any interest in or to any property or assets whatsoever,
including, without limitation, any and all of the following property, whether in
existence, owned or held, or hereafter acquired, entered into, created or
arising, and wherever located:
(a) The Film Library;
(b) The Film Library Accounts Receivable and all other accounts
receivable, including, all present and future accounts, accounts
receivable, agreements, contracts, leases, contract rights, rights to
payment, instruments, documents, chattel paper, security agreements,
guaranties, undertakings, surety bonds, insurance policies, notes and
drafts, and all forms of obligations owing to Reorganized Prism or in which
Reorganized Prism may have any interest, however created or arising;
(c) All present and future accounts, accounts receivable, contract
rights, chattel paper, instruments, general intangibles, all tax refunds of
every kind and nature to which Reorganized Prism now or hereafter may
become entitled, however arising, all other refunds, and all deposits,
goodwill, choses in action, trade secrets, computer programs, software,
customer lists, trademarks, trade names, patents, licenses, copyrights,
technology, processes, proprietary information and insurance proceeds;
(d) All present and future deposit accounts of Reorganized Prism,
including, without limitation, any demand, time, savings, passbook or like
account maintained by Reorganized Prism with any bank, savings and loan
association, credit union or like organization, and all money, cash and
cash equivalents of Reorganized Prism, whether or not deposited in any such
deposit account;
(e) All present and future books and records, including without
limitation, books of account and ledgers of every kind and nature, all
electronically recorded data relating to Reorganized Prism or the business
thereof, all receptacles and containers for such records, and all files and
correspondence;
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(f) All present and future goods, including, without limitation,
all consumer goods, farm products, inventory, equipment, machinery,
tools, molds, dies, furniture, furnishings, fixtures, trade fixtures,
motor vehicles and all other goods used in connection with or in the
conduct of Reorganized Prism's business, including without limitation,
all goods as defined in the Uniform Commercial Code;
(g) All present and future inventory and merchandise including,
without limitation, all present and future goods held for sale or
lease or to be furnished under a contract of service, all raw
materials, work in process and finished goods, all packing materials,
supplies and containers relating to or used in connection with any of
the foregoing, and all bills of lading, warehouse receipts or
documents of title relating to any of the foregoing;
(h) All present and future accessions, appurtenances, components,
repairs, repair parts, spare parts, replacements, substitutions,
additions, issue and/or improvements to or of or with respect to any
of the foregoing;
(i) All other tangible and intangible property of Reorganized
Prism;
(j) All rights, remedies, powers and/or privileges of Reorganized
Prism with respect to any of the foregoing; and
(k) Any and all proceeds and products of any of the foregoing,
including, without limitation, all money, accounts, general
intangibles, deposit accounts, documents, instruments, chattel paper,
goods, insurance proceeds, and any other tangible or intangible
property received upon the sale or disposition of any of the
foregoing;
provided that the term "New Collateral" shall not include the interest of
Reorganized Prism in real property or real property leases ("real property" for
the purposes hereof having the same meaning as such term is used in California
Code of Civil Procedure Section 726).
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