EX-10.6
2
v051937_ex10-6.htm
Exhibit
10.6
LOAN
AND SECURITY AGREEMENT
THIS
LOAN
AND SECURITY AGREEMENT, dated as of August 22, 2006, is entered into by and
between Gener8Xion
Entertainment, Inc., a
Delaware corporation (“GNXE”),
One
Night With The King, Inc.,
a
California corporation (“ONWK”;
ONWK,
together with GNXE, collectively, “Borrowers”),
Windfall Financial LLC, a
Delaware limited liability company (“Lender”),
and
Hope, Direction and Encouragement Ministries, Inc., a Louisiana corporation
(“HDEM”).
WITNESSETH:
WHEREAS,
Lender has agreed to make loans to Borrowers in an aggregate principal amount
of
Six Million Dollars ($6,000,000.00) (the “P&A
Commitment”),
plus
an “Additional P&A Commitment” (as defined herein) on the terms and
conditions set forth in this Agreement, to be used by Borrowers for the sole
purpose of paying (i) the cost of the release prints, advertising and promotion
for the distribution of the motion picture presently referred to as “One Night
with the King ” (the “Film”)
in the
Territory (as defined herein), (ii) customary marketing, releasing and
distribution and sub-distribution costs approved by Lender (including, without
limitation, marketing and media consultants, trailers, key-art, publicity
firms,
shipping and deliverable elements, costs and talent publicity services),
and
(iii) a Five Percent arrangement and advisory fee (the “Arrangement
and Advisory Fee”)
in the
amount of Three Hundred Thousand Dollars ($300,000.00) and, in the event
that
Lender makes the Additional P&A Commitment, an additional fee of One Hundred
Twenty-Five Thousand Dollars ($125,000), each payable to Xxxxxxx Xxxxxxxxxxx,
a.k.a. Crown Financial Management, and Xxxxx Xxxxx, Esq.; and
WHEREAS,
pursuant to that certain Consolidation Agreement, dated June 20, 2006, as
amended, by and between Trinity Christian Center of Santa Xxx, Inc., a church
and California non-profit religious corporation doing business as Trinity
Broadcasting Network (“TBN”)
and
Hope, Direction and Encouragement Ministries, Inc., a Louisiana corporation
(“HDEM”),
attached hereto as Exhibit
A,
TBN
agreed to fund the production costs of the Film at a budget of Eight Million
Dollars ($8,000,000.00) and the parties agreed that TBN would retain exclusive
worldwide Christian television broadcast distribution rights in the Film
and the
Episodes in perpetuity; and
WHEREAS,
pursuant to that certain Production and Distribution Agreement, dated January
8,
2004, by and between GNXE and HDEM, attached hereto as Exhibit
B,
HDEM
has licensed to GNXE worldwide distribution rights in the Film and the Episodes
in perpetuity;
WHEREAS,
pursuant to that certain Worldwide Distribution Agreement, dated
February 1, 2004, by and between HDEM and GNXE, attached hereto as
Exhibit
C,
HDEM
has licensed to GNXE worldwide distribution rights in the Film in any and
all
languages, by all pay and free television and home video usages (with the
exception of Christian Television) in perpetuity; and
WHEREAS,
pursuant to that certain Subdistribution Agreement for the Theatrical Release
of
“One Night With The King,” dated July 20, 2006, by and among GNXE, Rocky
Mountain Pictures, Inc., a Utah corporation (“Subdistributor”),
Xxx
Xxxxxxx and Xxxxx Xxxxxxxxx, Subdistributor has agreed to provide domestic
theatrical distribution services for the Film;
1
NOW
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, Borrowers and Lender hereby agree as follows:
SECTION
1. CERTAIN
DEFINITIONS
1.1 Defined
Terms.
All
terms defined in this Agreement shall have the defined meanings when used
herein
or in any agreement, note, certificate, report, or other document made or
delivered pursuant to this Agreement, unless otherwise defined or the context
otherwise requires. The following terms shall have the following
meanings:
“Additional
Distribution Agreements”
means
Distribution Agreements other than the Existing Distribution Agreements and
subject to Lender’s lien hereunder, that at all times meet all of the following
criteria, as determined by Lender in its sole discretion:
(a) Lender
has received a copy of the Distribution Agreement and an original Notice
of
Irrevocable Authority and Direction to Pay, substantially in the form attached
hereto as Exhibit
L,
which
has been duly executed and delivered by each party thereto (other than
Lender);
(b) the
Distribution Agreement complies with all of Borrowers’ representations,
warranties and covenants under this Agreement with respect to Distribution
Agreements; and
(c) the
Distributor is not subject to any insolvency proceedings under state or federal
law.
“Additional
Distributor(s)”
shall
mean each Distributor that enters into an Additional Distribution Agreement.
“Additional
P&A Commitment”
shall
have the meaning set forth in Section 2.1.1 hereof.
“Additional
P&A Commitment Secured Promissory Note”
shall
have the meaning set forth in Section 2.1.1 hereof.
“Affiliate”
shall
mean with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person, and
any
other Person who or which, directly or indirectly, has an equity interest
in
excess of twenty percent (20%) in such Person, or is a director, officer
or
employee of such Person.
“Agreement”
shall
mean this
Loan and Security Agreement as originally executed and as the same
may
hereafter from time to time be amended, supplemented, modified, extended,
renewed or replaced.
2
“Approved
Budget”
shall
mean the preliminary budget for the distribution expenses of the Film in
the
Territory, attached hereto as Schedule 1.
“Approved
Distribution Plan”
shall
mean the preliminary approved distribution plan for the distribution of the
Film
in the Territory, attached hereto as Schedule 2.
“Arrangement
and Advisory Fee”
shall
have the meaning set forth in Section 6.5 hereof.
“Base
Rate”
shall
mean, for any day, a rate per annum equal to the Prime Rate in effect on
such
day. Any change in the Base Rate due to a change in the Prime Rate shall
be
effective on the effective date of such change in the Prime Rate.
“Borrowing
Certificate”
shall
mean the certificate of Borrowers, substantially in the form attached hereto
as
Exhibit
D.
“Business
Day”
shall
mean any day on which banks are open for business in
Delaware.
“Cash”
shall
mean demand deposits with Lender, certificates of deposit with Lender and
such
Cash Equivalents as Lender may from time to time approve.
“Cash
Equivalents”
shall
mean (a) marketable direct obligations issued or unconditionally guaranteed
by
the United States Government or issued by any agency thereof and backed by
the
full faith and credit of the United States, in each case maturing within
thirty
(30) days from the date of acquisition thereof, (b) marketable direct
obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within thirty (30) days from the date of acquisition thereof and, at the
time of
acquisition, having the highest rating obtainable from either Standard &
Poor’s Corporation or Xxxxx’x Investors Service, Inc., (c) commercial paper
maturing no more than thirty (30) days from the date of acquisition thereof
and,
at the time of acquisition, having a rating of A-l or higher from Standard
&
Poor’s Corporation or P-l or higher from Moody’s Investor’s Service, Inc., and
(d) certificates of deposit or bankers’ acceptances maturing within thirty (30)
days from the date of acquisition thereof issued by a bank reasonably acceptable
to Lender.
“Chain-of-Title
Documents”
shall
mean the documents set forth on Schedule 3 hereto.
“Christian
Television”
shall
mean broadcast and cable television which airs predominantly Christian-based
programming such as the Trinity Broadcasting Network and other similar faith
based networks.
“Closing
Date”
shall
mean the date of this Agreement.
“Collateral”
shall
have the meaning set forth in Section 5.1 hereof.
3
“Collection
Account”
shall
mean account number ___________, established under the names of the parties
which shall include the name “Gener8Xion Entertainment,” reference
“___________,” through Escrow Agent and into which all Gross Receipts from the
exploitation of the Film (and/or any ancillary rights thereto) in the Territory
shall be remitted.
“Copyright
Mortgages and Assignments”
shall
mean the Copyright Mortgage and Assignment with respect to the Film from
HDEM in
favor of Lender, substantially in the form attached hereto as Exhibit
E,
the
Copyright Mortgage and Assignment with respect to the Episodes from HDEM
in
favor of Lender, substantially in the form attached hereto as Exhibit
F,
the
Copyright Mortgage and Assignment with respect to the Film from GNXE in favor
of
Lender, substantially in the form attached hereto as Exhibit
G,
the
Copyright Mortgage and Assignment with respect to the Episodes from GNXE
in
favor of Lender, substantially in the form attached hereto as Exhibit
H,
the
Copyright Mortgage and Assignment with respect to the Film from ONWK in favor
of
Lender, substantially in the form attached hereto as Exhibit
I,
and the
Copyright Mortgage and Assignment with respect to the Episodes from ONWK
in
favor of Lender, substantially in the form attached hereto as Exhibit
J.
“DBO”
shall
have the meaning set forth in Section 2.1.1 hereof.
“Delivery”
to
any
Existing Distributor or Additional Distributor shall have the meaning set
forth
in the applicable Distribution Agreement, or the applicable Notice of
Irrevocable Authority and Direction to Pay.
“Delivery
Date”
shall
mean with respect to any Existing Distributors and any Additional Distributors,
the date set forth as the “delivery date” (if any) in the applicable Notice of
Irrevocable Authority and Direction to Pay.
“Disbursement
Account”
shall
mean account number ___________, established under the names of the parties
which shall include the name “Gener8Xion Entertainment,” reference
“___________,” established by the parties pursuant to Section 2.6 hereof,
through Escrow Agent, and into which all Loan Proceeds shall be deposited
and
remitted to third parties pursuant to the instructions of the Borrowers as
approved by two P&A Designees.
“Distribution
Agreement”
shall
mean an agreement between Borrowers and a Distributor, or between a Distributor
and a sub-distributor, solely with respect to the Territory or any part thereof,
now or hereafter entered into, pursuant to which the Distributor has been
granted, sold, conveyed, licensed, sub-licensed, leased, sub-leased, or
otherwise transferred rights with respect to the distribution, sub-distribution,
sale, rental, lease, sub-lease, licensing, sub-licensing, exhibition, telecast,
broadcast, transmission (including, without limitation, by way of satellite
or
cable) or other use, exploitation or disposition of the Film or any elements
thereof (including, but not limited to, all music and musical compositions;
negatives; soundtracks; and Literary Property) and/or the copyright in any
of
the foregoing or any part thereof in any media existing now or in the future,
specified therein (including, without limitation, motion picture, television,
“home video” and all other audio-visual device rights, merchandising and
commercial tie-ups, soundtrack album, music publishing, novelization and
publishing rights, trailer rights, and all other allied, incidental, ancillary,
and subsidiary rights), and any permitted amendments, modifications and
supplements thereto.
4
“Distributor”
shall
mean a Person that regularly engages in the business of distributing,
sub-distributing and/or otherwise exploiting feature length motion pictures
and/or ancillary rights with respect thereto, and therefore shall include
any
sub-distributors.
“Dollars”
or
“$”
shall mean the lawful currency of the United States of America.
“Dollar
Amount of P&A Loan Commitment”
shall
mean the aggregate of the P&A Commitment and the Additional P&A
Commitment.
“Episodes”
shall
mean thirteen (13) episodes, 28:30 minutes in length, comprised of Xx. Xxxxxx
teaching from the book of Xxxxxx on location during the filming of the
Film.
“Escrow
Agent”
shall
mean Xxxxx Fargo Bank.
“Escrow
Agreement - Collection Account”
shall
have the meaning set forth in Section 2.5 hereof.
“Escrow
Agreement - Disbursement Account”
shall
have the meaning set forth in Section 2.6 hereof.
“Event
of Default”
shall
mean any of the events specified in Section 9 hereof.
“Excluded
Property”
shall
have the meaning, if any, set forth in Section 5.2 hereof.
“Existing
Distribution Agreements”
shall
mean any Distribution Agreement in existence as of the date of this Agreement,
including, without limitation the Production and Distribution Agreement,
the
Worldwide Distribution Agreement, the Fox Agreement and the Sub-Distribution
Agreement.
“Existing
Distributors”
shall
mean any of the Distributors who are parties to the Existing Distribution
Agreements.
“Film”
shall
have the meaning first set forth in the first WHEREAS clause of this Agreement.
“Fox”
shall
mean Twentieth Century Fox Home Entertainment LLC.
“Fox
Agreement”
shall
mean that certain Home Video Rights Acquisition Agreement by and between
Fox and
Borrowers, dated July 14, 2005, as amended by that certain First Amendment
dated
August 7, 2006.
“GNXE”
shall
mean Gener8Xion Entertainment, Inc.
“Governmental
Regulation”
shall
mean any (i) United States Federal, state or foreign law or regulation
(including, without limitation, Regulation D); and (ii) the adoption, issuance,
administration or making of any interpretation, application, directive, rule,
order or request, or under any United States, Federal, state or any foreign
law
or regulation (whether or not having the force of law) by any court or by
any
governmental, central banking, monetary or taxing authority charged with
the
interpretation or administration of such law or regulation.
5
“Gross
Receipts”
shall
mean any and all monies prior to any deduction or offset (with the exception
of
the international sales agent fee and any other Distributor’s or sales agent’s
fees which pursuant to the Distribution Agreements as approved by two P&A
Designees shall be deducted by the Distributor or sales agent prior to deposit
of the gross receipts into the Collection Account) paid or payable to Borrowers,
derived from the production, distribution and/or exploitation of the Film
or the
Episodes (and/or any ancillary rights thereto) in the Territory.
“Indebtedness”
for
any
Person shall mean all obligations, contingent and otherwise, which in accordance
with generally accepted accounting principles should be classified upon the
obligor’s balance sheet as liabilities for such Person, but in any event
including liabilities secured by any Lien upon property owned or acquired
by
such obligor, whether or not the liability secured thereby shall have been
assumed, obligations under leases required to be capitalized on the lessee’s
balance sheet under generally accepted accounting principles and all guarantees,
endorsements and other contingent obligations in respect of indebtedness
of
others whether or not reflected on the balance sheet of the
obligor.
“Individual
Investor Agreements”
shall
mean, collectively, that certain Post-Production Financing Agreement for
the
Film “One Night With The King” by and between ONWK and Xxxxxxx Xxxxxxx, dated
September 21, 2005, as amended by that certain Addendum to Post-Production
Agreement for the Film “One Night With The King,” as further amended by that
certain Non-Injunctive Relief Supplement to Post-Production Financing Agreement
Re “One Night With The King,” dated August 8, 2006; and that certain One Night
With The King Investment Agreement by and between ONWK, GNXE and Xxxxxx Xxxxxxx,
dated March 1, 2006, as amended by that certain Non-Injunctive Relief Supplement
to One Night With The King Investment Agreement, dated August 18, 2006, as
further amended by that certain One Night With The King, Inc. Amendment to
Investment Agreement, dated August 18, 2006.
“Individual
Investors”
shall
mean Xxxxxxx Xxxxxxx and Xxxxxx Xxxxxxx.
“Instruments”
shall
have the meaning set forth in Section 5.1.16 hereof.
“Interest
Accrual Date”
shall
have the meaning set forth in Section 2.1.2.
“Interest
Deficit”
shall
have the meaning set forth in Section 2.9 hereof.
“Interest
Rate”
shall
mean the Base Rate plus three percent (3%) until such time as the Interest
Rate
is adjusted pursuant to Section 2.1.2 hereof.
“Laboratory”
shall
mean any laboratory or laboratories approved by Lender which have entered
into a
Laboratory Agreement.
“Laboratory
Access Letters(s)”
shall
mean and include the Laboratory Access Letter(s) to be entered into with
each
laboratory, substantially in the form attached hereto as Exhibit
K.
6
“Lender”
shall
mean Windfall Financial LLC and each of its successors and assigns.
“Liens”
shall
mean any mortgage, deed of trust, pledge, hypothecation, assignment, charge,
deposit arrangement, encumbrance, lien (statutory or other), security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever intended to assure payment of any Indebtedness
or other obligation, including, without limitation, any conditional sale
or
other title retention agreement, the interest of a lessor under a capital
lease,
any financing lease having substantially the same economic effect as any
of the
foregoing, and the filing of any financing statement under the UCC or comparable
law of any jurisdiction, naming the owner of the asset to which such Lien
relates as debtor.
“Literary
Property”
shall
have the meaning specified in Section 5.1.2 hereof.
“Loan”
and “Loans”
shall
have the meaning set forth in Section 2.1 hereof.
“Loan
Documents”
shall
mean and include this Agreement, the Escrow Agreement - Collection Account,
the
Escrow Agreement - Disbursement Account, the Laboratory Access Letter(s),
the
Copyright Mortgage and Assignments, the Chain-of-Title Documents, the P&A
Subordination Agreement, the Notices of Irrevocable Authority and Direction
to
Pay, the
Power
of Sale, and
any
amendments, supplements, modifications, extensions, renewals and replacements
to
any such documents together with all exhibits, attachments, certificates
and
other documents related thereto or entered into in connection therewith.
“Margin
Stock”
shall
have the meaning assigned thereto in Regulation U of the Federal Reserve
Board.
“Maturity
Date”
shall
have the meaning set forth in Section 2.3 hereof.
“Notes”
shall
mean the Second Promissory Note and the Additional P&A Commitment Secured
Promissory Note.
“Notice
of Irrevocable Authority and Direction to Pay”
shall
mean a Notice
of
Irrevocable Authority and Direction to Pay,
substantially in the form attached hereto as Exhibit
L
(or in
such other form as is approved by Lender), executed, in each case, by Borrowers
and the respective Distributor who are parties to the Existing Distribution
Agreements or Additional Distribution Agreements, as applicable.
“Notice
to Insurer”
shall
mean that certain Notice to Insurer of even date herewith from Borrowers
and
Lender, substantially in the form of Exhibit
M
attached
hereto.
“Obligations”
shall
mean all of Borrowers’ obligations under this Agreement, including the due and
punctual payment of all of the Loans outstanding from time to time, interest
accrued thereon, all reasonable costs and attorneys’ fees and all other
Indebtedness, liabilities and obligations of Borrowers hereunder, under any
other Loan Document and any amendments, supplements, modifications, extensions,
renewals and replacements thereof and with regard to any other transactions
whatsoever arising out of this Agreement between Lender and Borrowers, and
the
performance of all representations, warranties, agreements, covenants and
other
obligations of Borrowers hereunder and under any other Loan Document.
7
“P&A
Commitment”
shall
have the meaning set forth in the first WHEREAS clause of this Agreement.
“P&A
Designees”
shall
mean Xxxxxxx Xxxxxxxxxxx (or his successor, appointed by Lender in Lender’s sole
discretion) and Xxxxxxx Xxxxxx who shall serve as advisors to the parties
pursuant to Section 2.12. In the event of a disagreement between the two
P&A
Designees, then “P&A Designees” shall also include Xxxxx Xxxxx,
Esq.
“P&A
Subordination Agreement”
shall
mean that certain P&A Subordination Agreement, of even date herewith, among,
Lender, Borrowers, TBN, HDEM and the Individual Investors, in the form attached
hereto as Exhibit
N.
“Permitted
Encumbrances”
shall
mean (i) the rights of Lender under this Agreement, the other Loan Documents,
the TBN Agreement, the Individual Investor Agreements, and (ii) the rights
granted to the Existing Distributors and Additional Distributors under the
Existing Distribution Agreements and Additional Distribution Agreements,
respectively (including, without limitation, Liens granted thereunder), and
(iii) statutory liens of landlords, carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, in each case incurred in the ordinary
course
of business for amounts not yet overdue; liens incurred in the ordinary course
of business in connection with workers’ compensation, unemployment insurance and
other types of social security, or to secure the performance of tenders,
statutory obligations, leases, and other similar obligations (exclusive of
obligations for the payment of borrowed money or other Indebtedness), so
long as
no foreclosure, sale or similar proceedings have been commenced with respect
to
any portion of the Collateral on account thereof; and liens in favor of customs
and revenue authorities arising as a matter of law to secure payment of customs
duties in connection with the importation of goods.
“Person”
shall
mean any natural person, corporation, partnership, limited liability company,
joint venture, association, trust or unincorporated organization or any other
entity, or a nation, state, government entity or any agency or political
subdivision thereof.
“Physical
Properties”
shall
have the meaning set forth in Section 5.1.3 hereof.
“Power
of Sale”
shall
mean that certain Power of Sale of even date herewith to be delivered by
Borrowers, substantially in the form of Exhibit
W
attached
hereto.
“Prime
Rate”
shall
mean the rate of interest quoted in The Wall Street Journal, Money Rates
Section
as the Prime Rate (currently defined as the base rate on corporate loans
posted
by at least seventy five percent (75%) of the nation’s thirty (30) largest
banks), as in effect from time to time or, in the event that such quotation
ceases to be available, the rate of interest quoted by the Escrow Agent at
its
“Prime Rate” or “Base Rate” for corporate loans. The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
charged
to any customer. Lender may make commercial loans or other loans at rates
of
interest at, above or below the Prime Rate.
8
“Production
and Distribution Agreement”
shall
mean that certain Production and Distribution Agreement, dated January 8,
2004,
by and between HDEM and GNXE, attached hereto as Exhibit
B.
“Regulation
D”
shall
mean Regulation D of the Board of Governors of the Federal Reserve System
as in
effect from time to time.
“Regulatory
Change”
shall
mean, with respect to Lender, any change on or after the date hereof in any
Governmental Regulations, including the introduction of any new Governmental
Regulation or the rescission of any existing Governmental Regulation, such
as,
for example, but not limited to (i) a change in the basis of taxation of
payments to Lender of the principal of or interest or any other amounts payable
hereunder (except for changes in the rate of tax on, or determined by reference
to, the net income or profits of Lender imposed by the jurisdiction in which
its
principal office is located) or (ii) a change in official reserve or capital
adequacy requirements applicable to Lender.
“Repayment
Amount”
shall
have the meaning set forth in Section 2.3.
“ROI
Interest Accrual Date”
shall
have the meaning set forth in Section 2.1.2.
“ROI
Theatrical Bumps”
shall
have the meaning set forth in Section 2.4 hereof.
“Russian
Distribution Agreement”
shall
have the meaning set forth in Section 2.11 hereof.
“Secured
Promissory Note”
shall
have the meaning set forth in Section 2.1 hereof.
“Subdistributor”
shall
mean Rocky Mountain Pictures, Inc., a Utah corporation.
“Subdistribution
Agreement”
shall
mean that certain Subdistribution Agreement, dated July 20, 2006, by and
between
GNXE, Subdistributor, Xxx Xxxxxxx and Xxxxx Xxxxxxxxx.
“Subsidiary”
shall
have the meaning set forth in Section 5.1.9 hereof.
“TBN”
shall
mean Trinity Christian Center of Santa Xxx, Inc., a church and California
non-profit religious corporation doing business as Trinity Broadcasting
Network.
“TBN
Agreement”
shall
mean that certain Consolidation Agreement, dated June 20, 2006, by and
between TBN and HDEM, attached hereto as Exhibit
A.
“Territory”
shall
mean the world.
“Worldwide
Distribution Agreement”
shall
mean that certain Worldwide Distribution Agreement, dated February 1, 2004,
by
and between HDEM and GNXE, attached hereto as Exhibit
C.
1.2 Approval.
The
word “approval” as used herein with reference to an approval right granted to
Lender shall mean that Lender shall have the right, in Lender’s sole discretion,
to approve or to withhold approval of the subject matter with respect to
which
the approval is required, provided that Lender agrees that it will exercise
its
approval rights in a diligent and timely manner reasonably and in good faith.
9
1.3 Accounting
Terms.
All
accounting terms not specifically defined herein, and each accounting term
partly defined herein to the extent not fully defined, shall be construed
in
accordance with generally accepted accounting principles consistently
applied.
SECTION
2. AMOUNT
AND TERMS OF LOAN
2.1 Commitment
to Lend.
Subject
to the terms and conditions of this Agreement, Lender hereby agrees to make
a
loan equal to the P&A Commitment to Borrowers, such loan shall be secured by
a promissory note in substantially the form attached hereto as Exhibit
U
(the
“Secured
Promissory Note”),
and,
if the conditions thereto specified herein are met, in the amount of the
Additional P&A Commitment (each of which is herein sometimes called a “Loan”
and all of which are herein sometimes collectively called either “Loan”
or
“Loans”
and
in
the aggregate herein sometimes called “Dollar
Amount of P&A Commitment”).
Subject to and upon fulfillment of the conditions set forth in Section 3
hereof,
which shall be applicable to each Loan, the Loan made pursuant to the Additional
P&A Commitment shall be made upon written or faxed notice from Borrowers to
Lender, specifying the date and amount of such Loan, which notice shall be
substantially in the form of the Borrowing Certificate. Each Borrowing
Certificate shall specify (i) the requested date of the proposed Loan, and
(ii)
the aggregate principal amount of the proposed Loan. Any Loan made hereunder
and
subsequently repaid or prepaid may not be re-borrowed.
2.1.1 Additional
P&A Commitment.
In the
event the Film shall gross Twelve Million Five Hundred Thousand Dollars
($12,500,000) or more of domestic theatrical box office as reported by Daily
Variety (“DBO”)
in its
initial domestic theatrical release weekend, then Lender will, upon written
request by Borrowers received within two (2) Business Days of the reporting
of
such DBO, finance an Additional P&A Commitment of Two Million Five Hundred
Thousand Dollars ($2,500,000) (the “Additional
P&A Commitment”),
such
loan shall be secured by a promissory note in substantially the form attached
hereto as Exhibit
V
(the
“Additional
P&A Commitment Secured Promissory Note”),
under
the same terms and conditions as the P&A Commitment. In the event the Film
shall gross less than Twelve Million Five Hundred Thousand Dollars ($12,500,000)
of DBO in its initial domestic theatrical release weekend, then Lender may
in
its sole and absolute discretion, upon written request by Borrowers received
within two (2) Business Days of the reporting of such DBO, finance an Additional
P&A Commitment of an amount less than Two Million Five Hundred Thousand
Dollars ($2,500,000), under the same terms and conditions as the P&A
Commitment.
2.1.2 Rate
of Interest on the Loans and ROI Theatrical Bumps.
The
Repayment Amount shall bear interest on the unpaid portion thereof from the
date
(the “Interest
Accrual Date”)
which
is nine months from the date of the funding of the initial Loan hereunder
and
the ROI Theatrical Bumps shall each bear interest on the unpaid amount thereof
from the later of the date such obligations arise or the Interest Accrual
Date
(the “ROI
Interest Accrual Date”)
(i.e.,
for the
sake of clarity, interest shall begin accruing on the first day following
the
Interest Accrual Date or ROI Interest Accrual Date, as applicable), at the
Interest Rate; provided, however, that upon the first anniversary of the
Interest Accrual Date, such Interest Rate shall increase to the Base Rate
plus
four percent (4%), and that upon the second anniversary of the Interest Accrual
Date, such Interest Rate shall increase to the Base Rate plus five percent
(5%),
and that the Interest Rate shall continue to increase by one percent (1%)
on
each anniversary of the Interest Accrual Date, until such time as the Repayment
Amount, any ROI Theatrical Bumps and all Obligations are repaid. However,
in no
event, shall the Interest Rate exceed the maximum lawful interest rate, if
any,
that at any time or from time to time may be contracted for, charged, or
received under the laws applicable to Lender which are presently in effect
or,
to the extent allowed by law, under such applicable laws which may hereafter
be
in effect and which allow a higher maximum non-usurious interest rate than
applicable laws now allow.
10
2.1.2.1 Withholding
Gross Up.
Lender’s agreement to lend funds to Borrowers at the Interest Rate and on the
terms specified herein is based upon the understanding that all payments
of
interest will be made on the basis that they will receive, net of any tax
or
withholding obligations which may otherwise exist, at Lender’s office set forth
in Section 11.5 hereof, the full amount of interest and fees set forth herein.
In the event that Borrowers are obligated to withhold such sum, Borrowers
shall
pay to Lender, such additional sums as are necessary in order to result in
Lender receiving the amount of fees and interest equal to that provided for
in
this Agreement. Borrowers shall indemnify and hold Lender harmless against,
and
shall reimburse Lender, upon demand, for any taxes, interest or penalties
that
may become payable by Lender as a result of any failure by Borrowers to pay
the
same when due.
2.2 Computation
of Interest and Fees.
All
computations of interest and fees made or called for hereunder shall be
calculated on the basis of a three hundred sixty (360) day year the actual
number of days elapsed. In computing interest on any Loan, the date of the
making of the Loan or the first day of an interest period, as the case may
be,
shall be included and the date of payment or the expiration date of an Interest
Period, as the case may be, shall be excluded; provided, however, that if
a Loan
is repaid on the Interest Accrual Date, one (1) day’s interest shall be paid on
that Loan.
2.3 Repayment
of Loans.
In
consideration of Lender’s agreement to provide the P&A Commitment and the
Additional P&A Commitment, Borrowers shall pay to the Collection Account,
for the benefit of Lender, on or before the earlier of the earliest dates
when
such amounts are available to be repaid out of the Gross Receipts of the
Film in
all media in the Territory in accordance with the Escrow Agreement - Collection
Account as set forth in Section 2.5 hereof, but in any event no later than
the
date which is the earlier of (x) five (5) years after the initial theatrical
release of the Film in the Territory, or (y) December 31, 2011 (the date
when
such Loan is required to be paid shall be the “Maturity
Date”):
(i) accrued
interest at the Interest Rate on the Repayment Amount of each Loan and ROI
Theatrical Bump still outstanding;
(ii) 120%
of
the total principal amount of all of the Loans actually funded by Lender
into
the Disbursement Account, including the P&A Commitment and any Additional
P&A Commitment (“Repayment
Amount”);
and
(iii) any
ROI
Theatrical Bumps payable to Lender.
11
2.4 ROI
Theatrical Bumps.
In the
event the Film reaches certain defined DBO targets, Borrower will pay Lender,
as
additional interest on the Loans, ROI Theatrical Bumps in the amounts calculated
at the DBO level commencing at Sixty Million Dollars ($60,000,000) and
thereafter set forth as follows:
|
DBO
| |
ROI
Theatrical Bumps
| |
Cumulative
ROI
Theatrical Bumps
|
|
$60,000,000
| |
$150,000
| |
$150,000
|
|
$70,000,000
| |
$200,000
| |
$350,000
|
|
$80,000,000
| |
$250,000
| |
$600,000
|
|
$90,000,000
| |
$300,000
| |
$900,000
|
For
example, in the event that DBO performance for the Film grosses Eighty Million
Dollars ($80,000,000), Lender, upon giving notice to Borrowers, will be entitled
to receive an additional sum of Six Hundred Thousand Dollars ($600,000) for
financing the print and advertising costs of the Film to be paid on the same
terms as the Repayment Amount.
2.5 Escrow
Agreement - Collection Account.
Borrowers and Lender shall enter into an escrow agreement (“Escrow
Agreement - Collection Account”)
substantially in the form attached hereto as Exhibit
O,
and
TBN, Fox, Subdistributor, HDEM and Borrowers shall each enter into a Notice
of
Irrevocable Authority and Direction to Pay with Lender pursuant to which
100% of
the Gross Receipts derived from the exploitation of the Film in all media
in the
Territory (including but not limited to any, theatrical, non-theatrical,
free or
pay television, home video and video on demand receipts and international
presales and overages) from the first dollar (net of any adjustments actually
made by the Distributors with theaters and other licensees) actually paid
by
Distributors, or their licensees, shall be paid by Distributors into the
Collection Account managed by the Escrow Agent, until such time as the Escrow
Agreement - Collection Account provides for such monies to be paid to a new
collection account or the Escrow Agent receives unanimous and consistent
written
instructions to the contrary. Borrowers shall cause each of the Existing
Distributors and each party to any Additional Distribution Agreements of
the
Film in the Territory and any other Person which has the right to exploit
the
Film or any part thereof in the Territory, to pay all amounts otherwise payable
to Borrowers to the Escrow Agent. The Escrow Agent shall collect and pay
such
sums and remit them as follows: (i) first, to the Escrow Agent for the payment
of the Escrow Agent’s fees, (ii) second, to Lender in the amount of all accrued
interest at the Interest Rate on the Repayment Amount of each Loan still
outstanding on the Interest Accrual Date, (iii) third, to the Lender until
such
time as the Repayment Amount of each Loan actually funded by Lender has been
repaid in full, (iv) fourth, to the various subordinated lenders pursuant
to the
P&A Subordination Agreement, until such time as an ROI Theatrical Bump
becomes due and payable to Lender, (v) fifth, to Lender in the amount of
all
accrued interest at the Interest Rate on ROI Theatrical Bumps payable to
Lender
still outstanding on the ROI Interest Accrual Date, (vi) sixth, to Lender
until
such time as the ROI Theatrical Bumps, if any, payable to Lender are paid
in
full, and (vii) seventh, to the various subordinated lenders pursuant to
the
P&A Subordination Agreement. Promptly following the execution and delivery
of this Agreement and any Borrowing Certificates, and in any event no later
than
the date that each Loan is made pursuant to this Agreement, Lender and Borrowers
shall execute and deliver to the Escrow Agent, a notice setting forth the
exact
total Repayment Amount of each Loan, provided that failure to deliver any
such
notice shall not in any way derogate from Borrowers’ Loan repayment obligations
and other Obligations hereunder.
12
2.5.1 Escrow
Agent Reporting.
Escrow
Agent shall provide Lender and Borrowers with periodic reports of payments
received and shall immediately notify Borrowers upon receipt of the total
amount
of all of Borrower’s Obligations, not including the ROI Theatrical Bumps and any
interest accrued thereon, and then again upon the receipt of the total amount
of
all of Borrowers’ Obligations, including the ROI Theatrical Bumps and any
interest accrued thereon.
2.6 Escrow
Agreement - Disbursement Account.
Borrowers and Lender shall enter into an escrow agreement (“Escrow
Agreement - Disbursement Account”)
substantially in the form attached hereto as Exhibit
P.
Pursuant to the Escrow Agreement - Disbursement Account and the terms and
conditions thereof, Lender shall pay all Loan amounts payable to Borrowers
to
the Escrow Agent for deposit in the Disbursement Account. Subject to the
terms
of this Agreement, the Escrow Agent shall collect and pay such sums and remit
them pursuant to the terms of the Escrow Agreement - Disbursement
Account.
2.7 Mandatory
Prepayments.
Borrowers shall be required to prepay the Loans without penalty or
premium:
(i) in
an
amount equal to all payments, proceeds or other consideration received by
Borrowers on account of any of the Collateral, including, without limitation,
all sums, moneys, royalties, fees, commissions, charges, payments, deposits,
advances, guarantees, income, profit, Gross Receipts and all other proceeds
paid
to or derived by or payable to Borrowers on account of the distribution and
exploitation of the Film or on account of any other item of Collateral
including, without limitation, Gross Receipts, deposits and all other proceeds
under the Existing Distribution Agreements and Additional Distribution
Agreements (inclusive, in each case, of all Distributor deposits), it being
agreed that all payments under the Existing Distribution Agreements and
Additional Distribution Agreements shall be paid directly into the Collection
Account, and after payment to Lender pursuant to the Escrow Agreement -
Collection Account, shall be applied to the repayment of the Loans and to
Borrowers’ Obligations in accordance with Section 2.5 hereof; provided, however,
that Lender shall have no obligation to convert any nonmonetary consideration
received by Borrowers or Lender on account of any of the Collateral to Cash
or
Cash Equivalents or otherwise to credit any such nonmonetary consideration
against the Obligations provided Lender returns such nonmonetary consideration
to Borrowers; and
(ii) as
otherwise provided hereunder.
13
All
prepayments under this Section 2.7 shall be paid directly to the Collection
Account to be applied to the repayment of the Loans and to Borrowers’
Obligations in accordance with Section 2.3 hereof.
2.8 Holiday
Payments.
Subject
to Section 2.2 hereof, if any payment to be made by Borrowers hereunder shall
become due on a day other than a Business Day, such payment shall be made
on the
next succeeding Business Day, and such extension of time shall be included
in
the computation of interest hereunder.
2.9 Interest
Adjustments.
If the
provisions of this Agreement would at any time otherwise require payment
to
Lender of an amount of interest in excess of the maximum amount then permitted
by the law applicable to the Loans, such interest payments to Lender shall
be
reduced to the extent necessary so as to ensure that Lender shall not receive
interest in excess of such maximum amount. To the extent that, pursuant to
the
foregoing sentence, Lender shall receive interest payments hereunder in an
amount less than the amount otherwise provided, such deficit (the “Interest
Deficit”)
will
cumulate and will be carried forward (without interest) until the termination
of
this Agreement. Interest otherwise payable to Lender hereunder for any
subsequent period shall be increased by the maximum amount of the Interest
Deficit that may be so added without causing Lender to receive interest in
excess of the maximum amount then permitted by the law applicable to the
Loans.
The amount of the Interest Deficit relating to the Loans shall be treated
as a
prepayment penalty and paid in full at the time of any optional prepayment
by
Borrowers to Lender of all the outstanding Loans. The amount of the Interest
Deficit relating to the Loans at the time of any complete payment of the
Loans
at that time outstanding (other than an optional prepayment thereof) shall
be
canceled and not paid (and if previously paid shall be refunded to Borrowers).
2.10 Security
Interest.
As
security for the due and punctual performance of all of Borrowers’ Obligations,
hereunder, under any other Loan Document and any amendments, supplements,
modifications, extensions, renewals and replacements thereof (including,
without
limitation, the payment in full of the amounts set forth in Sections 2.3
(i)
through (iii) hereof, Borrowers and HDEM are concurrently herewith granting
to
Lender, or causing to be granted to Lender, a first priority security interest
in the Collateral.
2.11 Additional
Consideration.
As
additional consideration for providing the P&A Commitment, Lender shall be
granted in perpetuity the licensing and distribution rights in all media,
excluding Christian Television, in the territory of Russia as defined by
the
Independent Film and Television Alliance pursuant to the terms of the Russian
Distribution Agreement, the form of which is attached hereto as Exhibit
Q.
2.12 P&A
Designees.
The
P&A Designees shall be responsible
for the use of proceeds of the Loans. Two P&A Designees’ written approval
shall be required in order to disburse the proceeds of the Loans from the
Disbursement Account.
14
2.13 P&A
Approvals.
P&A
Designees shall be entitled to review and approve any domestic subdistributor,
including the terms of any subdistribution agreements, any marketing
organization, and any international sales agent to be appointed by GNXE,
along
with the domestic theatrical release, booking and marketing plan. P&A
Designees shall be entitled to review and approve each expenditure from the
disbursement account. Decisions regarding the initial domestic theatrical
release date, the release pattern, marketing, and promotional campaign of
the
Film, release plans following initial theatrical release and other substantive
distribution, marketing, and promotional matters will be made mutually following
meaningful good faith consultation between GNXE, Subdistributor, and P&A
Designees. In the event of a disagreement between the foregoing parties,
any two
of the P&A Designees acting together will have the binding authority to make
final decisions in all business, distribution, and marketing
matters.
SECTION
3. CONDITIONS
OF LENDING
The
obligation of Lender to make any Loan hereunder shall be subject to the
following conditions precedent:
3.1 Delivery
to Lender of Documents.
On or
prior to the initial Loan hereunder, Lender shall have received, in form
and
substance reasonably satisfactory to Lender and its counsel, all of the
following:
(a) Duly
executed copies of the following agreements together with all amendments,
exhibits, schedules, attachments and supplementary documents thereto: this
Agreement, the Secured Promissory Note, the Additional P&A Commitment
Secured Promissory Note, the Russian Distribution Agreement, the TBN Agreement,
all Notices of Irrevocable Authority and Direction to Pay with respect to
the
Existing Distribution Agreements, the P&A Subordination Agreement, the
Escrow Agreement - Collection Account, the Escrow Agreement - Disbursement
Account, the Copyright Mortgage and Assignments, and all other Loan
Documents.
(b) Copies
of
fully executed documentation in form and substance satisfactory to Lender
and
Lender’s counsel, including, without limitation, the Chain-of-Title Documents,
evidencing that Borrowers and HDEM own all rights in and to the Film and
its
underlying and included properties throughout the world and all rights in
connection therewith that are necessary for Borrowers to perform their
obligations to TBN under the TBN Agreement, to the Existing Distributors
and any
Additional Distributors under the Existing Distribution Agreements and any
Additional Distribution Agreements, and, if requested by Lender, evidence
satisfactory to Lender to the effect that all appropriate documents in form
and
substance satisfactory to Lender and its counsel evidencing Borrowers’ said
rights and Lender’s security interest in the Collateral, have been duly
submitted to and accepted for recordation by the United States Register of
Copyrights, accompanied by the required fees, or, if not yet submitted, are
ready to be submitted, and, if accompanied by the required fees, will be
so
accepted, and that an examination of the records of the Register of Copyrights
reveals no Lien that is or is reasonably likely to be contrary to the rights
granted to Lender hereunder or under any other Loan Document.
(c) Uniform
Commercial Code financing statements for
Delaware and any other jurisdictions
reasonably specified by Lender, evidencing Lender’s security interest in the
Collateral, either ready to be filed with, or bearing filing marks from,
the
proper governmental authority, together with evidence satisfactory to Lender
from the proper governmental authorities to the effect that there is no prior
filing in any such jurisdiction with respect to the Collateral evidencing
a
prior or superior security interest of any other party in connection therewith.
15
(d) Certified
copy of resolutions of the Board of Directors of each Borrowers and a consent
of
the shareholders of each Borrowers authorizing the execution, delivery and
performance of this Agreement and the other Loan Documents, as applicable,
as
well as all of the transactions contemplated thereby, and such other documents
relating thereto as Lender reasonably may request, and duly executed
certificates, each dated a recent date prior to the date hereof, from the
appropriate authorities in each Borrowers’ jurisdiction of organization and in
each jurisdiction where each Borrowers conducts business confirming that
such
Borrowers is an organization in good standing and is duly qualified to conduct
all business activities in each such jurisdiction.
(e) True
copies of the Certificate of Incorporation of each Borrower together with
a
certificate of the date of filing thereof, and the Bylaws of each Borrowers,
certified by the Secretary of such Borrowers, and a Certificate of Good Standing
from the appropriate authority of each jurisdiction in which each Borrowers
is
qualified to do business, each dated a recent date prior to the date hereof.
(f) Signature
and incumbency certificates of each Borrower’s officers who are authorized to
execute this Agreement, the other Loan Documents, the Existing Distribution
Agreements, and any Additional Distribution Agreements.
(g) The
favorable written opinion of The Bayard Firm, special counsel for Borrowers,
addressed to Lender, in the form attached hereto as Exhibit
R.
(h) The
favorable written opinion of Stone Xxxxxxxxxx Cha PLC, counsel for GNXE,
addressed to Lender, in the form attached hereto as Exhibit
S.
(i) The
favorable written opinion of Xxxxxxx X. Xxxxx, counsel for ONWK, addressed
to
Lender, in the form attached hereto as Exhibit
T.
(j) Certificate(s)
of insurance with respect to the insurance coverage required to be obtained
and
maintained by Borrowers pursuant to Section 7.14 hereof and an executed Notice
to Insurer from Borrowers and Lender stating that Lender has a first priority
security interest in, to and under all policies of insurance required and
issued
pursuant to Section 7.14 hereof and the proceeds thereof.
(k) A
copy of
the Approved Budget, signed by or otherwise approved in writing by each Borrower
and two P&A Designees.
(l) A
copy of
the Approved Distribution Plan, signed by or otherwise approved in writing
by
each Borrower and two P&A Designees.
(m) A
copyright and title search report on the Film, dated a recent date, acceptable
to Lender and its counsel.
16
(n) Certified
copies of all consents or approvals of any governmental authority or other
Person which Lender determines is required in connection with the transactions
contemplated by this Agreement.
(o) Such
other requirements or documents as Lender may reasonably request in order
to
effect fully the purposes of this Agreement and the other Loan
Documents.
3.2 Borrowing
Certificate.
Lender
shall have received a request for each Loan in accordance with Section 2.1
above
and a fully executed Borrowing Certificate in connection with such Loan.
Lender
shall be entitled to rely conclusively on the authority of any person purporting
to request a Loan on behalf of Borrowers until Lender receives written notice to
the contrary. Lender shall have no duty to verify the authenticity of the
signature appearing on any Borrowing Certificate.
3.3 Representations
and Warranties.
At the
time of each Loan, Borrowers’ representations and warranties set forth in
Section 6 hereof and in each other Loan Document shall be true and correct
on
and as of such date (except to the extent that such representations and
warranties relate to an earlier date and except as affected by transactions
expressly contemplated hereby) with the same effect as though such
representations and warranties had been made on and as of the date of such
Loan.
3.4 No
Default.
At the
time of such Loan, no Event of Default or event which upon the giving of
notice
or lapse of time or both would constitute such an Event of Default, shall
have
occurred and be continuing or would result from the making of such Loan.
3.5 Legality.
The
making of such Loan shall not contravene any law or Governmental Regulation
applicable to Lender.
3.6 Proceedings;
Receipt of Documents.
All
proceedings in connection with the making of the Loans and the other
transactions contemplated by this Agreement, and all documents incidental
thereto, shall be reasonably satisfactory to Lender and its counsel, and
Lender
and its counsel shall have received all information and such counterpart
originals or certified or other copies of such documents as Lender or its
counsel may reasonably request.
SECTION
4. DELIVERY
OF THE FILM
4.1 Delivery
of the Film.
Borrowers shall produce the Film and duly and timely deliver it to the
Distributors on or before the Delivery Date (as the same may be defined and
extended by the Distributors), in accordance with the Distribution Agreements,
and otherwise consistent with the provisions of this Agreement, the TBN
Agreement, the P&A Subordination Agreement, the Escrow Agreement -
Collection Account, the Escrow Agreement Disbursement Account, and the Notice
of
Irrevocable Authority and Direction to Pay. Borrowers shall submit to Lender
a
copy of the Approved Budget and the Approved Distribution Plan for the Film
as
approved by, as applicable, Borrowers, two P&A Designees and any other
parties having approval rights with respect thereto concurrently herewith
and,
in all events, not later than prior to the making of the initial Loan hereunder.
Lender shall not have any obligation to make any Loan hereunder until, as
applicable, Borrowers and any other third parties having approval rights
with
respect thereto have approved in writing the same Approved Budget and Approved
Distribution Plan for the Film. Borrowers shall not, without the prior written
consent of Lender, make, agree to make or permit to be made any variation
or
modification in any of the elements of the Film which are subject to Lender’s
approval or consent pursuant to this Agreement or any other Loan Document
or in
the personnel or other details of production which are subject to such approval
or consent, other than minor variations or modifications arising as a result
of
the normal exigencies of film production and not resulting in a material
increase in the cost of production or a delay in Delivery of the Film or
in a
violation of this Agreement or any other Loan Document.
17
4.2 Authority
to Collect.
Borrowers agree to use best efforts to cause all sums, moneys, royalties,
fees,
commissions, charges, payments, advances, income, profit and other proceeds
paid
to or derived by or payable to or for the benefit of Borrowers on account
of the
distribution and exploitation of the Film in the Territory (including, without
limitation, payments under the Existing Distribution Agreements and Additional
Distribution Agreements), or on account of any other item of the Collateral,
to
be paid directly by the obligor thereof into the Collection Account to be
applied to the payment of the Obligations until such Obligations are paid
in
full in accordance with Section 2.5 hereof. Upon receipt by Borrowers of
any
revenue, income, profits or other sums in which a security interest is granted
hereunder, payable pursuant to any agreement or otherwise, or of any check,
draft, note, trade acceptance or other instrument evidencing an obligation
to
pay any such sum, Borrowers agree to hold the same in trust for Lender and
forthwith, without any notice or demand whatsoever (all such notices, demands
or
other actions being expressly waived), to endorse, transfer and deliver any
such
sums or instruments, or both, into the Collection Account to be applied to
the
payment of the Obligations in accordance with Section 2.5 hereof.
4.3 Attorney-in-Fact.
Borrowers hereby constitute and appoint Lender as their true and lawful
attorney, in their place and stead and with full power of substitution, either
in Lender’s own name or in the name of Borrowers, upon the occurrence of any
Event of Default to: ask for, demand, collect, receive, receipt and give
acquittance for any and all monies due or to become due under and by virtue
of
any of the Collateral; execute, file and refile any or all of the documents
recited in Section 6.7 hereof; and endorse checks, drafts, orders and other
instruments for the payment of monies payable to Borrowers on account thereof,
and to settle, compromise, prosecute or defend any action, claim or proceeding
with respect thereto and to sell, assign, pledge, transfer and make any
agreement respecting or affecting, or otherwise deal with, the same until
the
Obligations are paid in full; provided, however, that nothing herein contained
shall be construed as requiring or obligating Lender to make any demand,
or to
make any inquiry as to the nature or sufficiency of any payment received
by it,
or to present or file any claim or notice or take any action with respect
to any
of the Collateral or the monies due or to become due thereunder or the property
covered thereby, and no action taken or omitted to be taken by Lender with
respect to any of the Collateral shall give rise to any defense, counterclaim
or
setoff in favor of Borrowers or to any claim or action against Lender; and
further provided that any cost or expense borne by Lender pursuant to this
Section 4.3 shall be immediately paid to Lender by Borrowers. Lender shall
provide Borrowers with prior written notice if it intends to act as either
Borrower’s attorney-in-fact pursuant hereto and shall promptly provide such
Borrowers with copies of any documents or other instruments that Lender executes
in such Borrower’s name.
18
4.4 Remittances.
Borrowers agree that all cash, proceeds and instruments received by Borrowers
on
account of any of the Collateral, or as a result of the sale, lease or other
disposition of any of the Collateral, whether received by Borrowers in the
exercise of their collection rights hereunder or otherwise, shall be remitted
to
the Collection Account in the form received (properly endorsed by Borrowers
for
deposit into the Collection Account or for collection in accordance with
Lender’s instructions) not later than the Business Day following the day of
receipt, to be applied against the Obligations as provided in Section 2.5
hereof.
SECTION
5. PLEDGE
AND GRANT OF SECURITY INTEREST
5.1 As
security for the due and punctual payment and performance of the Obligations,
Borrowers and HDEM hereby pledge, hypothecate, assign, transfer, convey,
deliver
and set over unto Lender as security, and hereby grant to Lender a continuing
first priority security interest in, all of Borrowers’ and HDEM’s right, title
and interest of every kind and nature, if any, in and to the following, whether
now owned or hereafter acquired or created, including all products and proceeds
thereof, including insurance proceeds (collectively, the “Collateral”)
(to
the extent any materials and/or rights in and to the Film, the Episodes or
any
other Collateral are not yet in existence or not yet acquired, such materials
and rights are (to the extent applicable) hereby assigned and conveyed to
Lender
by way of present assignment of future interests):
5.1.1 All
rights of Borrowers and HDEM of every kind and nature in and to the Film
and the
Episodes in the Territory 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 in this Section 5, the term
the
“Film” and the term the “Episodes” shall mean and include the Film, the Episodes
and all of the aforesaid rights and the rights and property set forth in
subparagraphs 5.1.2 through 5.1.18 below) including, without
limitation:
5.1.2 All
rights of Borrowers and HDEM in the Territory of every kind and nature
(including, without limitation, copyrights) in and to the Approved Screenplay
(copyright registration number ______________), any literary, musical, dramatic
or other material of any kind or nature upon which, in whole or in part,
the
Film or 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
Film or
the Episodes including, without limitation, all scripts, scenarios, screenplays,
bibles, stories, treatments, outlines, titles, concepts or other properties
or
materials of any kind or nature in whatever state of completion and all drafts,
versions and variations thereof, excluding the book “Hadassah” written by Xxxxx
Xxxxxx and any drafts thereof (collectively, the “Literary
Property”);
5.1.3 All
rights of Borrowers and HDEM of every kind and nature in and to all physical
properties of every kind or nature of or relating to the Film and 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 Film and the Episodes, and all
versions thereof or any part thereof, including, without limitation, the
Literary Property, exposed film, developed film, positives, negatives, prints,
answer prints, special effects, preprint 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 pre-print elements, whether now known or hereafter devised),
soundtracks, recordings, audio and video tapes and discs of all types and
gauges, cutouts, trims and any and all other physical properties of every
kind
and nature relating to the Film in whatever state of completion, and all
duplicates, drafts, versions, variations and copies of each thereof
(collectively, the “Physical
Properties”)
needed
for the exploitation of the Film in the Territory;
19
5.1.4 All
rights of Borrowers and HDEM 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 exploitation of the Film and/or the Episodes in the Territory including,
without limitation, all copyrights therein and all rights to perform, copy,
record, rerecord, 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 in the
Territory;
5.1.5 All
collateral, allied, ancillary, subsidiary, publishing and merchandising rights
of Borrowers and HDEM of every kind and nature in the Territory, without
limitation, derived from, appurtenant to or related to the Film 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 Film and/or the Episodes, the Literary Property
or any part thereof; all rights of Borrowers and HDEM to use, exploit and
license others to use or exploit in the Territory any and all novelization,
publishing, commercial tieups and merchandising rights of every kind and
nature,
including, without limitation, all novelization, publishing, merchandising
rights and commercial tieups arising out of or connected with or inspired
by the
Film, the Episodes or the Literary Property, the title or titles of the Film
or
the Episodes, the characters appearing in the Film or 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 Film and/or the Episodes, all remakes or
sequels thereof and/or said Literary Property;
5.1.6 All
rights of Borrowers and HDEM of every kind or nature, present and future,
in and
to all agreements relating to the development, production, completion, delivery
and exploitation of the Film and the Episodes in the Territory, 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;
5.1.7 All
copyrights, rights in copyrights, interests in copyrights and renewals and
extensions of copyrights, heretofore or hereafter obtained upon the Film,
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 renew and
extend such copyrights, and the right (but not the obligation) after prior
notice, to xxx in the name of either Borrower or HDEM and/or in the name
of
Lender for past, present and future infringements of copyright in the
Territory;
20
5.1.8 All
rights to produce, acquire, release, sell, distribute, subdistribute, lease,
sublease, market, license, sublicense, exhibit, broadcast, transmit, reproduce,
publicize or otherwise exploit the Film, the Episodes, the Literary Property
and
any and all rights therein in the Territory (including, without limitation,
the
rights referred to in subsection 5.1.5 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, nontheatrically, on cassettes,
cartridges and discs and by any and all other scientific, mechanical or
electronic means, methods, processes or devices now known or hereafter
conceived, devised or created;
5.1.9 All
rights of Borrowers and HDEM 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 Film or the Episodes
in
the Territory, or any rights in the Film or the Episodes, including, without
limitation, pursuant to agreements between Borrowers and HDEM and any Person
controlling, controlled by, or under common control with Borrowers and HDEM
(each, a “Subsidiary”)
which
relate to the ownership, production or financing of the Film or the
Episodes;
5.1.10 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 Film or the Episodes
in
the Territory or any rights in the Film or the Episodes in the Territory
including, without limitation, all such rights pursuant to agreements between
either Borrower or HDEM and any Subsidiary which relate to the ownership,
production or financing of the Film or the Episodes;
5.1.11 All
rent,
revenues, income, compensation, products, increases, proceeds and profits
or
other property obtained or to be obtained by Borrowers or HDEM 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 Film or the Episodes in the Territory and the Literary Property in
the
Territory (or any rights therein or part thereof), in any and all media,
including, 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 whatever;
5.1.12 Any
and
all accounts, accounts receivable, general intangibles, contract rights,
chattel
paper, documents, instruments and goods, including inventory (as those terms
are
defined in the
Delaware Uniform Commercial Code), not elsewhere included
in this
definition, which may arise in connection with the creation, production,
completion, delivery, financing, ownership, possession or exploitation of
the
Film or the Episodes in the Territory;
21
5.1.13 All
accounts receivable, all contract rights, all general intangibles (as such
terms
are defined in the
Delaware Uniform Commercial Code) in connection with or
relating to the exploitation of the Film or the Episodes in the Territory
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 and other exploitation of the Film or the Episodes in the Territory
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, without limitation, all
of
Borrowers’ and HDEM right, title and interest in, to and under the Existing
Distribution Agreements, the Additional Distribution Agreements, and any
other
existing or future agreements for the distribution or other exploitation
of the
Film or the Episodes in the Territory, as the same may presently exist or
hereafter from time to time come into existence, be amended, renewed, modified,
supplemented, extended or replaced, including Borrowers’ and HDEM’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, nontheatrical 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 Film, the Episodes or the Literary
Property or elements or components of the Film, the Episodes or the Literary
Property or rights relating thereto;
5.1.14 All
proceeds, products, additions and accessions (including insurance proceeds)
of
the Film and the Episodes, as defined and referred to in subsections 5.1.1
through 5.1.13 above.
5.1.15 The
following personal property, whether now owned or hereafter acquired: (i)
the
title or titles of the Film and the Episodes and all of Borrowers’ and HDEM’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 Borrowers and HDEM names, business source or
business identifiers and renewals and extensions thereof, domestic and foreign,
whether now owned or hereafter acquired, and the goodwill and other like
business property rights relating to the exploitation of the Film or the
Episodes in the Territory, and the right (but not the obligation) to register
claims in the Territory 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 either Borrower or HDEM or in the name of Lender for past, present or
future
infringement of trademark or patent;
5.1.16 All
Cash
and Cash Equivalents of Borrowers and HDEM derived from or relating to the
exploitation of the Film or the Episodes in the Territory and all drafts,
checks, certificates of deposit, notes, bills of exchange and other writings
derived from or relating to the Film or the Episodes which evidence a right
to
the payment of money and are not themselves security agreements or leases
and
are of a type which is in the ordinary course of business transferred by
delivery with any necessary endorsement or assignment whether now owned or
hereafter acquired (all such drafts, checks, certificates of deposit, notes,
bills of exchange and other writings, whenever acquired, collectively are
called
“Instruments”);
22
5.1.17 To
the
extent not included in the items described in subsections 5.1.1 through 5.1.16
above, all accounts, contract rights, general intangibles, documents,
instruments, chattel paper, goods, inventory and equipment (as such terms
are
defined in the
Delaware Uniform Commercial Code) now owned or hereafter acquired
by Borrowers or HDEM in connection with the exploitation of the Film or the
Episodes in the Territory, and the proceeds and products thereof.
5.1.18 All
security interests granted by this Agreement shall terminate upon payment
in
full of all of Borrowers’ Obligations. At such time Lender shall take all
necessary steps to terminate such security interests by filing appropriate
documentation wherever necessary.
5.2 Notwithstanding
anything to the contrary contained in subsections 5.1.1 through 5.1.17 above,
there shall be excluded from the Collateral described in this Section 5:
(a) the
interest of Borrowers or HDEM, whether as owner or lessee, in any property
constituting real property under the laws of the jurisdiction in which such
property is located, (b) the written work entitled, “Hadassah - One Night With
The King” (the “Book”),
by
Xxxxx Xxxxxx (the “Author”),
first
published in the United States by Xxxxxxx House Publishers (the “Publisher”),
(c)
any publication rights to the Book, (d) the right to sell, distribute or
license
for sale or resale of a graphic novelization, comic book version, picture
book,
children's edition, study guides or any other text, print or display
exploitation based on the Book, and (e) any other so-called “Subsidiary Rights”
granted to the Publisher by HDEM pursuant to the Publishing Agreement, as
amended, entered into between HDEM and the Publisher on or about December
17,
2001 (“Excluded
Property”).
5.3 Additional
Distribution Agreements.
Until
payment and Borrowers’ performance in full of the Obligations hereunder and
under the other Loan Documents, with respect to any proposed Additional
Distribution Agreement:
5.3.1 Borrowers
shall send or shall cause to be sent to Lender a copy of each Additional
Distribution Agreement, within five (5) days of the entering into of such
Additional Distribution Agreement.
5.3.2 As
a
condition to Borrowers entering into any Additional Distribution Agreement,
and
concurrently therewith, Borrowers shall cause each such Additional Distributor
to (1) execute and deliver to Lender a Notice of Irrevocable Authority and
Direction to Pay, substantially in the form attached hereto as Exhibit
L,
and (2)
enter into a deal memo or long-form agreement in the forms furnished to,
and
approved by, Lender and Lender’s counsel (or enter into such other form of deal
memo agreement as shall be approved in writing by Lender and Lender’s
counsel).
23
5.4 Benefits
Only.
Upon
the assignment to Lender for security purposes of all of Borrowers’ and HDEM’s
right, title and interest in and to the Distribution Agreements, and all
other
agreements subject to Lender’s security interest hereunder, Lender shall take an
assignment only of the benefits of and shall not assume the obligations and
liabilities under any such agreement, and Borrowers shall (and hereby agree
to)
perform or cause to be performed all of Borrowers’ obligations under each such
agreement, and Borrowers shall not be released from such obligations by making
such assignment.
5.5 The
respective rights of the parties with respect to the Collateral are subject
to
the TBN Agreement, the P&A Subordination Agreement, the Existing
Distribution Agreements, the Escrow Agreement - Collection Account, the Escrow
Agreement - Disbursement Account and the other Loan Documents.
SECTION
6. BORROWERS’
REPRESENTATIONS AND WARRANTIES
In
order
to induce Lender to enter into this Agreement, each of ONWK and GNXE
makes the
following representations and warranties, each of which shall be deemed to
be
made again as of the date of each request for a Loan hereunder:
6.1 Existence
and Rights.
GNXE is
a
Delaware corporation, and ONWK is a California corporation, and each is
duly
organized, validly existing and in good standing under the laws of applicable
laws of such jurisdictions, and each maintains its respective chief executive
office at the address listed in Section 11.5 hereof. Each Borrower has all
necessary powers and authority, rights and franchises to own its properties
and
to carry on its business as now conducted, and is duly qualified to do business
and is in good standing in each jurisdiction in which the conduct of its
business or the ownership of its properties makes such qualification necessary.
Each Borrower possesses or will possess, as the case may be, all necessary
licenses or permissions necessary to conduct its business as now conducted
or as
such business may be conducted, as the case may be; and each Borrower has
all
requisite right, power and authority to enter into, deliver and perform its
obligations under this Agreement and the other Loan Documents.
6.2 Film.
The
Film is based on the book “Hadassah” by Xxxxx Xxxxxx and screenplay by Xxxxxxx
Xxxxx, and features an ensemble cast including Xxxxx X’Xxxxx, Xxxx Xxxxxx, Xxxx
Xxxx-Xxxxxx, and Xxxxxxx Xxxxxx as Xxxxxx; the Film was photographed on 35mm
color film in the English language and will have an MPAA rating of “PG” and will
not exceed one hundred twenty five (125) minutes in length including main
and
end titles.
6.3 Agreement,
Loan Document and Related Agreements Authorized.
The
execution, delivery and performance of this Agreement, the Existing Distribution
Agreements, the P&A Subordination Agreement, the Escrow Agreement -
Collection Account, the Escrow Agreement - Disbursement Account, the Notices
of
Irrevocable Authority and Direction to Pay and the other Loan Documents to
which
Borrowers are parties, and the payment of principal of and interest on the
Loans, have been duly authorized by Borrowers by all necessary action of
Borrowers’ directors and shareholders, and do not and will not (i) require the
consent or approval of any governmental body or other regulatory authority,
(ii)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Borrowers, or (iii) contravene or conflict with any term
or
provision of Borrowers’ Certificates
of Incorporation; and this Agreement, the Existing Distribution Agreements,
the
Additional Distribution Agreements, the P&A Subordination Agreement, the
Escrow Agreement - Collection Account, the Escrow Agreement - Disbursement
Account, the Notices of Irrevocable Authority and Direction to Pay and each
other Loan Document to which Borrowers are parties, is, are, or will be and
constitute, as the case may be, the legal, valid and binding obligations
of
Borrowers, enforceable in accordance with their respective terms.
24
6.4 Security
Interest.
This
Agreement creates a valid, first priority security interest and Lien in and
to
the Collateral securing the payment and performance of the Obligations to
be
secured hereby, and all action now required which can be taken by Borrowers
to
perfect Lender’s Lien in and to the Collateral has been or will be promptly
following execution and delivery hereof taken and completed. Borrowers and
HDEM
are and will be the owner of all Collateral whenever acquired or arising
free
and clear of all Liens, of any kind and nature except for the Permitted
Encumbrances. All rents, royalties and other amounts due and payable by
Borrowers under contracts, leases, license agreements and other instruments
relating to the Collateral, including, without limitation, contracts, leases or
license agreements relating to the Film, the Episodes and the Literary Property,
the services of all persons or entities rendering services in connection
with
the Film or the Episodes, and the furnishing of goods, processing, equipment
and
materials used in connection with the Film and the Episodes have been paid
if
due, or will be paid when due, and Borrowers are not in default under any
such
contract, lease, license agreement or other instrument; and Borrowers will
appear in, contest and defend against any action or proceeding purporting
to
affect title to or any other interest in any portion of the Collateral, or
the
rights or powers of Lender, its successors or assigns, or the right or interest
of Lender, legal or beneficial, in any portion of the Collateral; and will
pay
all reasonable costs and expenses, including costs of evidence of title and
reasonable outside attorneys’ fees, in any such action or proceeding in which
Lender may appear. Borrowers will not sell, offer to sell, hypothecate or
otherwise dispose of any Collateral (including proceeds thereof) subject
hereto,
or any part thereof or interest therein, at any time, except for Permitted
Encumbrances or with the prior written consent of Lender; provided that
Borrowers may enter into licenses to exploit the Film or the Episodes in
the
Territory in the ordinary course of its business.
6.5 Arrangement
and Advisory Fee.
With
respect to the loan transaction herein contemplated, no Person is entitled
to
any brokerage fee or other finder’s fee or commission and Borrowers agree to
indemnify and hold Lender harmless against any and all such claims.
Notwithstanding the foregoing, Borrowers shall pay a Five Percent fee in
the
amount of Three Hundred Thousand Dollars ($300,000.00) and, in the event
that
Lender makes the Additional P&A Commitment, an additional fee of One Hundred
Twenty-Five Thousand Dollars ($125,000), each payable jointly to Xxxxxxx
Xxxxxxxxxxx, a.k.a. Crown Financial Management, and Xxxxx Xxxxx, Esq. (the
“Arrangement
and Advisory Fee”)
upon
receipt of the respective Loans made under this Agreement.
6.6 Compliance.
Borrowers will comply with all laws, rules and regulations relating to, and
shall pay, or cause to be paid, prior to delinquency, as applicable, all
license
fees, registration fees, taxes, guild or union pension, health and welfare
payments, required guild or union residual, supplemental market, reuse and
other
required payments and assessments, and all other charges including, without
limitation, non-governmental levies or assessments, which may be levied upon
or
assessed against, or which may become Liens on, the ownership, operation,
possession, maintenance, exploitation, exhibition or use of the Collateral,
or
which create or may create a Lien upon the Collateral, or any part thereof.
25
6.7 Filings.
Borrowers will execute at Lender’s request such financing statements,
continuation statements, copyright assignments and other documents as Lender
may
deem necessary or appropriate in order to perfect or preserve Lender’s first
priority security interest and Lien in the Collateral, and will deliver copies
of such financing statements, continuation statements, copyright assignments
and
other documents to Lender. Borrowers hereby authorize Lender to file financing
statements and amendments thereto and copyright assignments relative to all
or
any part of the Collateral where necessary or desirable in Lender’s judgment to
perfect or to continue the Lien and first priority security interest granted
herein without the signature of Borrowers where permitted by law, and agree
to
do such further acts and things and to execute and deliver to Lender such
additional conveyances, assignments, agreements and instruments as Lender
may
require or deem advisable to carry into effect the purposes of this Agreement
or
to better assure and confirm unto Lender its rights, powers and remedies
hereunder.
6.8 Inspection
of Collateral.
Borrowers will at all times keep accurate books and records with respect
to the
Collateral which are as complete and comprehensive as those customarily
maintained by others engaged in the production of first-class theatrical
motion
pictures, and agrees to make available to Lender or its representatives on
Lender’s reasonable request all books, records, contracts, production notes and
other information and data of every kind relating to the Film, the Episodes,
the
Collateral and the production, distribution or exploitation thereof, and
Lender
shall have the right to examine such books, records, contracts and other
information and to make abstracts therefrom or copies thereof. Borrowers
further
agree that Lender shall have access, at all reasonable times and upon notice,
to
any and all of Borrowers’ computer hardware or software, whether maintained by
Borrowers or by third parties on behalf of Borrowers which pertains to, or
reflects, such records. At such time or times as Lender may reasonably request,
Borrowers will, at their cost and expense, prepare a list or lists in such
form
as shall be reasonably satisfactory to Lender, certified by a duly authorized
officer of each Borrower, describing in such detail as Lender shall reasonably
require, the Collateral, and specifying the location of such Collateral and
Borrowers’ records pertaining thereto and permit Lender upon reasonable notice
to inspect such Collateral or any part thereof at such place as the Collateral
may be held or located or at such other reasonable place.
6.9 No
Conflict.
The
execution, delivery and performance of this Agreement and the other Loan
Documents to which Borrowers are parties, the Existing Distribution Agreements,
and the Additional Distribution Agreements will not result in a breach of
or
constitute a default under any agreement, indenture, loan, credit agreement,
lease, undertaking or other instrument to which Borrowers are parties or
by
which it or any of its properties may be bound or affected, and such execution,
delivery and performance will not result in or require the creation or
imposition of (or the obligation to create or impose) any Lien of any nature
upon or with respect to the Collateral or other property of Borrowers except
for
the Permitted Encumbrances.
6.10 Related
Agreements.
Borrowers have obtained and have delivered or will deliver to Lender by the
Closing Date copies of true and complete fully executed copies of the Existing
Distribution Agreements (and the Notices of Irrevocable Authority and Directors
to pay relating thereto), the P&A Subordination Agreement, the Escrow
Agreement - Collection Account, the Escrow Agreement - Disbursement Account,
the
Power of Sale, and the Chain-of-Title Documents. Each such document is a
valid,
binding and subsisting agreement. Each such document has been executed by
all
parties thereto and is in full force and effect. Borrowers will notify Lender
of
each proposed modification to the Existing Distribution Agreements and the
Additional Distribution Agreements but only with respect to modifications
which
materially affect Lender’s rights hereunder or under any of the other Loan
Documents).
26
6.11 Claims.
There
is no pending or threatened action, suit or proceeding at law or in equity
or by
or before any governmental instrumentality or other agency or any investigation
of the affairs of either Borrowers (or any Affiliate thereof) or any of either
Borrower’s TV shareholders, directors, officers, properties or rights which, if
adversely determined, would adversely affect (a) the ability of either Borrower
to perform its obligations concerning the production and exploitation of
the
Film as contemplated hereby (including, but not limited to, the ability of
either Borrower to perform its obligations under the Existing Distribution
Agreements or the Additional Distribution Agreements or to conduct its business
substantially as being conducted on the date hereof), (b) the financial
condition of either Borrower, (c) the Liens granted to Lender hereunder and
under any of the other Loan Documents, or (d) the Collateral; and Borrowers
are
not in default with respect to any judgment, writ, injunction, decree, rule
or
regulation of any court or governmental instrumentality or other agency which
might impair the rights of Borrowers to carry on Borrowers’ business
substantially as now being conducted or which might adversely affect the
financial condition of Borrowers.
6.12 Disclosure.
None of
the statements, representations or warranties made by Borrowers in this
Agreement or any of the other Loan Documents to which either Borrower is
a
party, as of the respective dates of such statements, representations and
warranties, contains any untrue statement of a material fact or omits any
material fact necessary to make the statements made not misleading.
6.13 Margin
Stock.
6.13.1 Borrowers
are not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulation U of
the
Board of Governors of the Federal Reserve System of the United States), and
no
part of the proceeds of any Loan will be used to purchase or carry any margin
stock or to extend credit to others for the purpose of purchasing or carrying
any margin stock.
6.13.2 None
of
the proceeds from the Loans have been or will be used, directly or indirectly,
for the purpose of purchasing or carrying any Margin Stock, for the purpose
of
reducing or retiring any indebtedness which was originally incurred to purchase
or carry any Margin Stock or for any other purpose which might cause any
of the
Loans to be considered a “purpose credit” within the meaning of Regulation T, U
or X of the Federal Reserve Board.
6.14 Breach
of Related Agreements.
Neither
Borrower is in default under the Existing Distribution Agreements, the
Additional Distribution Agreements, the Chain-of-Title Documents, or any
other
Loan Document to which Borrowers is a party.
27
6.15 Rights
in the Film, the Episodes and Collateral.
Borrowers own all rights in the Film, the Episodes and the Collateral necessary
to enable Borrowers to fully perform all of their Obligations, under this
Agreement and the other Loan Documents to which a Borrower is a party. Borrowers
and HDEM have acquired, now own and will own during production of the Film
and
the Episodes and continuing through satisfaction of all Obligations, all
right,
title and interest, including copyrights in and to the Film and the Episodes
including all right, title and interest necessary to make, distribute, exhibit
and otherwise exploit the Film and the Episodes worldwide, including, without
limitation, all necessary rights in the literary, musical or other property
or
ideas used therein and the right to exhibit the Film and the Episodes in
theatres, on television, by means of videocassettes and videodiscs and in
each
other media or manner contemplated by the Existing Distribution Agreements
and
any Additional Distribution Agreements, including, without limitation, all
rights granted pursuant to the Existing Distribution Agreements (and to be
granted pursuant to the Additional Distribution Agreements), subject to the
Chain-of-Title Documents, payment of necessary performing rights fees in
respect
of the music in the Film and the Episodes and such rights as are granted
pursuant to the Existing Distribution Agreements and any Additional Distribution
Agreements. To the best of Borrowers’ knowledge, any and all material or matter
used in or in connection with the Film and the Episodes, including dialogue,
characters, titles, episodes and events, shall be original with or owned
by or
licensed to a Borrower, or in the public domain, and shall not infringe any
copyrights, statutory or common law, and shall not constitute a libel, slander
or invasion of privacy of any party, or otherwise infringe on or violate
the
rights of any other party whomsoever.
6.16 Insurance.
ONWK
has obtained and, no later than when due, has paid or will pay the premiums
for,
and shall hereafter maintain in force, such insurance coverage relating to
the
Film as is required by Section 7.14
hereof.
6.17 Additional
Distribution Agreement Acceptance Process.
GNXE
shall use its best efforts, consistent with industry practice, to enter into
Additional Distribution Agreements with respect to all customary media and
ancillary rights in the Territory. Until the Obligations have been satisfied,
Borrowers shall only enter into Additional Distribution Agreements which
meet
all of the requirements for an Additional Distribution Agreement.
28
6.18 Additional
Representations.
(i) The
Film is, or when delivered will be, completely finished, fully edited and
titled
and fully synchronized with language, dialogue, sound and music, recorded
with
sound equipment pursuant to valid licenses, and in all respects ready and
of a
first-class technical quality adequate for general release in all respective
media in the Territory, (ii) Borrowers are, or will be the owners of, all
rights, licenses and privileges to the Film and the Episodes and Borrowers
are,
or will be the owner of, all distribution rights and other exploitation rights
in the Film and the Episodes in the Territory, (iii) as between Borrowers
and
Lender, all of the following have been fully paid or discharged, or will
be
fully paid or discharged by Borrowers: (a) all costs of producing and completing
the Film for delivery, all claims and rights with respect to the use,
distribution, synchronization, performance (other than sums payable to music
performing rights societies, such as ASCAP and BMI, on account of the public
performance of the Film), exhibition and exploitation of the Film, and any
music
or other element contained therein throughout the Territory, and (b) all
such
costs of producing and completing the Episodes, (iv) there are not, and will
not
be, outstanding at any time during the Term any Liens granted to, or contracts,
licenses, arrangements or agreements with any Person, or any obligation (past,
present or future), or any breaches of any contract, license, arrangement
or
agreement, which in any way will interfere with, impair, abrogate, or adversely
affect Lender, and that (except to the extent hereinafter expressly provided,
there are and will not be payments of any of any kind required to be made
by
Lender, in respect, or as a result, of any use of the Film or Episodes, (v)
neither the Film or the Episodes, nor any part thereof, nor any materials
contained therein or synchronized therewith, nor the title thereof, violates
or
will violate, or infringes or will infringe, any trademark, trade name,
contract, license, arrangement, agreement, copyright (whether common law
or
statutory), patent, literary, artistic, dramatic, personal, private, civil,
property or privacy right or “moral rights of authors” or any other right of (or
slander or libel) any Person, (vi) Borrowers have not sold, assigned,
transferred, encumbered or conveyed, and will not sell, assign, transfer
or
convey, to any party any right, title or interest in or to the Film or the
Episodes inconsistent with the rights of Lender granted hereunder,
(vii) Borrowers own and control, or will own and control, without any
limitations or restrictions whatsoever, all motion picture, performance and
other servicing rights of Borrowers in or to the Film and the Episodes and
all
the soundtracks thereof, and have obtained (or will obtain prior to delivery
of
each) all necessary licenses required for the production, synchronization,
exhibition, performance, distribution, marketing and exploitation of the
Film
and the Episodes (including the music contained therein, subject only to
the
payment of such performing rights fees, if any, customarily payable by
exhibitors to such performing rights society having jurisdiction) throughout
the
Territory and during the Term for all purposes licensed under any Distribution
Agreement and by every means, method and device now or hereafter known or
required for full, complete and unlimited exercise and enjoyment by the
Distributors of the rights granted; the performing rights to all musical
compositions contained in the Film and the Episodes are controlled by the
American Society of Composers, Authors and Publishers (ASCAP), Broadcast
Music,
Inc. (BMI) or their affiliates, or in the public domain, or controlled by
Borrowers, (viii) there will be no restrictions which would or could
prevent the Distributors from distributing the Film or Episodes (other than
customary name and likeness restrictions or approval rights for actors and
director of which the Distributors shall have been notified as of the Delivery
Date), and there are not and will not be any payments (out of any part of
any
revenues from the distribution or exploitation of the Film or Episodes or
otherwise) which must be made to any actors, musicians, directors, writers
or
other persons who participated in the Film for any right to exhibit the Film
or
the Episodes or as compensation in connection with such exhibition or for
any
other use of the Film or Episodes or any of the rights granted under the
Distribution Agreements, any such payments (including, without limitation,
any
participations in gross receipts or net profits) being solely the responsibility
of Borrowers, (ix) the copyrights in the Film, and the Episodes and the
literary, dramatic and musical material upon which they are based or which
is
contained in the Film and the Episodes will be valid and subsisting during
the
Term throughout the Territory, and the Film and the Episodes are not in the
public domain anywhere in the Territory, and (x) Borrowers have provided
in
writing all material information in connection with the Film and the Episodes
to
Lender all of which is accurate and true.
6.19 Additional
Distribution Agreement Terms and Conditions.
(a) In
connection with any and all Additional Distribution Agreements entered into
by
Borrowers after the date hereof, Borrowers shall deliver to Lender, a fully
executed Notice of Irrevocable Authority and Direction to Pay.
29
(b) No
Additional Distribution Agreement will be entered into with an Affiliate
of
either Borrower, without the prior written consent of Lender.
SECTION
7. BORROWERS’
AFFIRMATIVE COVENANTS
Each
Borrower covenants and agrees that, until payment and Borrowers’ performance in
full of the Obligations hereunder and under the other Loan Documents to which
either Borrower is a party, Borrowers shall:
7.1 Legal
Rights and Facilities.
Maintain and preserve each Borrower’s legal existence and all rights,
privileges, franchises and other authority adequate for the conduct of each
Borrower’s business; maintain the Collateral in good order and repair; conduct
its business in an orderly manner without interruption; and refrain from
any
material change in the nature of its business.
7.2 Use
of
Loan Proceeds.
Use the
proceeds of the Loans made hereunder only for the purposes of paying those
items
of cost and expense included in the Approved Budget for the Film as each
such
expenditure is approved by two P&A Designees, or such other costs as are
approved in writing by two P&A Designees or as the Lender and Borrowers may
agree in writing.
7.3 First
Priority Security Interest.
Maintain the security interests created pursuant to this Agreement and the
other
Loan Documents with respect to the Collateral at all times in place and
perfected with first priority in favor of Lender. Borrowers shall not directly
or indirectly create, incur or suffer to exist, and shall promptly discharge
or
cause to be discharged, any other Lien on or with respect to the Collateral
other than the Permitted Encumbrances.
7.4 Related
Agreements.
Perform
and observe, and cause each Borrower’s employees to perform and observe, all
agreements, covenants, representations and warranties of Borrowers under
the
Existing Distribution Agreements, the Additional Distribution Agreements,
the
Notices of Irrevocable Authority and Direction to Pay, the P&A Subordination
Agreement, the Collection Account Agreement, and any other Loan Document
to
which a Borrower is a party.
7.5 Expenses
and Fees.
Pay to
Lender, whether or not the Loans contemplated by this Agreement shall be
consummated, all actual reasonable out-of-pocket costs and expenses, including
the reasonable outside attorneys’ fees of Xxxxxx Xxxxxx Xxxxxxxx LLP incurred by
Lender in connection with this Agreement, the other Loan Documents and the
Film,
including, without limitation, all reasonable costs and expenses incurred
in
connection with the negotiation, preparation, execution, delivery, filing,
recording and administration of this Agreement, the other Loan Documents
and the
other agreements and documents referred to herein and therein and in connection
with the enforcement of the rights of Lender hereunder or thereunder, in
connection with the making of the Loans or in connection with the realization
upon any Collateral. Such costs and expenses (including, without limitation,
court costs and outside attorneys’ fees and disbursements), shall be secured
hereunder, provided that any attorneys’ fees and disbursements, court costs and
out-of-pocket expenses incurred by Lender in connection with this Agreement,
the
other Loan Documents or the Film shall be payable by Borrower to Lender
immediately upon demand by Lender.
30
7.6 Taxes
and Other Liabilities.
Pay and
discharge, before the same become delinquent and before penalties accrue
thereon, all taxes, assessments and governmental charges upon or against
it or
upon its income or profits or upon any of its properties, and all its other
liabilities at any time existing, except to the extent and so long
as:
(i) the
same
are being contested in good faith and by appropriate proceedings in such
manner
as not to cause any materially adverse effect upon its financial condition
or
the loss of any right of redemption from any sale thereunder; and
(ii) it
shall
have set aside on its books reserves adequate with respect thereto; and further
to pay all governmental charges or taxes (except income, franchise or other
similar taxes on Lender) at any time payable or ruled to be payable in respect
of the existence, execution or delivery of this Agreement or any other Loan
Document by reason of any existing or hereafter enacted federal or state
statute.
7.7 Records
and Reports.
Permit
representatives of Lender to have access to and to examine its Physical
Properties, books and records during business hours and with reasonable notice
to such Borrower; and furnish to Lender, at Borrowers’ expense, such other
information relating to the affairs of Borrowers as Lender reasonably may
request from time to time. Without limiting the generality of the foregoing,
Borrowers shall, at any time when any Obligation remains unpaid or not performed
hereunder, supply Lender promptly with, or cause Lender to be promptly supplied
with monthly sales reports, setting forth the status of all presales entered
into with respect to the Film.
7.8 Notice
of Certain Events.
Promptly notify Lender in writing of the occurrence of any of the following:
(a)
any Event of Default hereunder or of any event which would be an Event of
Default hereunder but for the giving of notice, the lapse of time, or both;
(b)
any default under any other agreement to which a Borrower is a party or by
which
a Borrower or any of its respective properties may be bound; or (c) the
commencement of all actions, suits or proceedings which assert claims of
infringement in respect of the Film or which are in an aggregate amount of
greater than Fifty Thousand Dollars ($50,000.00) against either Borrower
or with
respect to its properties before or by any court, governmental department,
commission, board, arbitrator, bureau, agency or instrumentality, domestic
or
foreign.
7.9 Approvals.
Obtain,
from time to time, all approvals, permits and consents necessary to allow
Borrowers to remit payments to Lender in Dollars from any and all appropriate
governmental authorities having jurisdiction thereof.
7.10 Accounting
Methods and Financial Records.
Maintain a system of accounting as customarily applied in the motion picture
industry in Los Angeles, California to the production of first-class theatrical
motion pictures and keep adequate records and books of account in which complete
entries in accordance with such accounting principles will be made.
31
7.11 Compliance.
Comply
with all laws, rules and regulations relating to, and pay, or cause to be
paid,
prior to delinquency all license fees, registration fees, taxes, guild or
union
pension, health and welfare payments, supplemental market, reuse and other
required payments and assessments, and all other charges, including without
limitation non-governmental levies or assessments, which may be levied upon
or
assessed against, or which may become Liens on, the ownership, operation,
possession, maintenance, exploitation, exhibition or use of, the Collateral,
or
which create or may create a lien upon the Collateral, or any part thereof.
Borrowers shall pay, or cause to be paid, prior to delinquency all material
required guild or union residual payments, if any, arising prior to Delivery
and
Borrowers shall cause Distributors to pay prior to delinquency all material
required guild or union residual payments arising after Delivery.
7.12 Informational
Covenants.
Furnish
or cause to be furnished to Lender such information relating to the distribution
and exploitation of the Film in the Territory as Lender may reasonably request
from Borrowers from time to time.
7.13 Indemnification.
At all
times defend and indemnify and hold Lender (which for the purposes of this
paragraph shall include Lender’s, owners, members, shareholders, officers,
directors, employees, consultants, brokers, representatives and agents),
and
their successors and assigns free and harmless from and against any and all
liabilities, claims, demands, causes of action, losses, damages, settlements,
judgments or recoveries resulting from any breach of any of the warranties,
representations, agreements or covenants made by Borrowers herein or by reason
of the occurrence of an Event of Default, and from any suit or proceeding
of any
kind or nature whatsoever against Lender arising from or connected with the
transactions contemplated by this Agreement, any other Loan Document or any
of
the documents, instruments or agreements to be executed pursuant hereto or
any
of the rights and properties assigned to Lender hereunder, including reasonable
outside attorneys’ fees and costs and expenses incurred by Lender, all of which
shall be charged to and paid by Borrowers and shall be secured by the Collateral
hereunder; provided, however, that Borrowers shall have no obligation under
this
Section 7.13 with respect to any such event resulting from an indemnified
party’s gross negligence or willful misconduct. Lender shall consult with
Borrowers with respect to the selection of attorneys to prosecute any such
litigation and with respect to any settlement thereof, but Lender’s decision in
such regard shall be final.
7.14 Insurance.
7.14.1 “Producer’s
Package” Coverage.
Borrowers shall at their own cost and expense obtain and keep in full force
and
effect in amount, kind and form reasonably satisfactory to Lender and with
insurers approved by Lender, the following types of insurance providing such
coverage as is customarily provided by such types of insurance: Cast Insurance
in an amount equal to at least the P&A Commitment covering the director, the
producer and the principal cast members, among others; Negative Insurance
in an
amount equal to the amount of the Budget and projected interest hereunder;
Faulty Stock, Camera and Processing Insurance; Props, Sets and Wardrobe
Insurance; Miscellaneous Equipment Insurance; Property Damage Liability
Insurance; Worker’s Compensation Insurance and any insurance coverage required
by applicable collective bargaining agreements, and any Essential Element
endorsements required by Lender.
32
7.14.2 Errors
and Omissions Insurance.
Borrowers shall at their own cost and expense obtain and keep in full force
and
effect in amount, kind and form reasonably satisfactory to Lender, and with
insurers approved by Lender, Errors and Omissions Insurance covering, among
other things, the legal liability and defense of the producer of the Film
against lawsuits alleging the unauthorized use of title, format, ideas,
characters, plots, plagiarism, copyright infringement and unfair competition.
Such insurance shall also protect against alleged libel, slander, defamation
of
character and invasion of privacy. The Errors and Omissions Insurance shall
be
in the minimum amount of Five Million Dollars ($5,000,000.00) per occurrence
and
Five Million Dollars ($5,000,000.00) in the aggregate and a period of coverage
of not less than three (3) years from the date of the first Loan.
7.14.3 Naming
Lender as “Additional Insured”.
The
insurance enumerated in subsection 7.14.2 shall name Lender (including Lender’s
members, agents, officers, directors and employees) as an additional insured
thereunder with a maximum deductible of Fifty Thousand Dollars ($50,000)
and
Lender shall be a first priority beneficiary.
7.14.4 Payment
of Premiums.
The
policies of insurance (or the Certificates of Insurance reflecting that such
coverage is in effect) referred to in this Section 7.14 shall (a) contain
an endorsement which negates the “other insurance” clause in said policies and a
statement that the insurance being provided is primary and any insurance
carried
by Lender is neither primary nor contributory and (b) be delivered to Lender.
Lender shall not have any liability to pay for any premiums or calls with
respect to any of the insurance policies referred to in this Section
7.14.
7.15 Name
and Location Changes.
If (a)
the title or titles of the Film or the name or any trade name of either Borrower
is to be changed or modified in any manner, (b) either Borrower proposes
to
acquire or use a new trade name, (c) the chief executive office of either
Borrower is to be relocated to a place other than its present address as
stated
in Section 11.5 hereof, or (d) there is proposed to be a change in location
or
name of any laboratory, special effects studio, sound studio, other processing
or storage entity or any sound studio, other processing or storage entity
or any
bailee which holds, or which is expected to process, any original negative,
sound, optical or other special effects material including, without limitation,
the final, complete composite master negative of the Film, then Borrowers
shall
promptly so notify Lender in writing and, prior to taking any such action,
shall
execute and deliver to Lender such further documents and do such other acts
and
things as Lender may reasonably request in order to carry out the purposes
of
this Agreement including, without limitation, the execution and delivery
of
financing statements, amendments and copyright assignments and mortgages
necessary or desirable to continue and/or perfect Lender’s first priority
security interest in the Collateral.
7.16 Copyrights.
If, at
the time, there are any Obligations outstanding and unpaid, as soon as the
copyright in the Film can be registered with the United States Copyright
Office,
Borrowers shall take any and all actions necessary to register such copyright
in
the Film in the name of Borrowers for the United States territory in conformity
with the laws of the United States, and contemporaneously therewith to execute
and record a copyright mortgage and assignment and power of attorney in favor
of
Lender for security with respect to the Collateral and Lender’s Lien thereon and
Borrowers immediately shall in form and substance satisfactory to Lender
deliver
to Lender written evidence of any and all such copyright registrations and
recording of said mortgages and assignments.
33
7.17 Physical
Properties and the Laboratory.
All
Physical Properties relating to the Film shall be deposited with a Laboratory.
Prior to such deposit(s), Laboratory Access Letters shall be executed by
each
Laboratory and Borrowers and delivered to Lender promptly upon execution
thereof. No print, preprint, sound or other Physical Properties of the Film
shall be deposited at any laboratory or maintained at any place other than
a
Laboratory without the prior written consent of Lender (which consent shall
not
be unreasonably withheld) and compliance with the requirements of this Section
7.17.
SECTION
8. BORROWERS’
NEGATIVE COVENANTS
Each
Borrower covenants and agrees that, until all Obligations of Borrowers have
been
paid or performed hereunder and under the other Loan Documents to which a
Borrower is a party, Borrowers shall not, without first having obtained the
written consent of Lender:
8.1 Indebtedness,
Liens.
Make
any borrowing or incur any Indebtedness of any nature whatsoever for any
purpose
related to the Collateral, other than pursuant to this Agreement or create,
assume or suffer to exist any security interest, mortgage, pledge, encumbrance,
assignment, lien or charge of any kind upon the Collateral other than (i)
the
Permitted Encumbrances, (ii) indebtedness incurred in the ordinary course
of
business up to $50,000, and (iii) agreements by Borrowers on terms reasonably
satisfactory to Lender, to pay any residuals, profit participations or other
deferred compensation to any Person rendering services in connection with
the
production of the Film which arise in the ordinary course of production of
the
Film. There shall be no additional or secondary financing permitted with
respect
to the Collateral without Lender’s prior written approval which in any manner
could result in any other Person having a right to receive any monies from
the
exploitation of the Film in the Territory in advance of Lender’s right to recoup
in the first-priority position ahead of all other financiers of the Film,
and
Borrowers and Distributors shall not permit any Lien upon the Collateral,
except
liens which are subordinate in all respects to the Lien of Lender and as
to
which the holder of such Lien has entered into an intercreditor agreement
with
Lender on terms satisfactory to the Lender in its sole discretion.
8.2 Amendments.
Amend,
alter, supplement, renew, replace, terminate or modify (or consent to such
amendment, alteration, supplementation, renewal, replacement, termination
or
modification of) the Existing Distribution Agreements or any future Distribution
Agreements or enter into or do any of the foregoing with respect to any other
agreement, that would adversely affect or lessen any of the rights granted
to
Lender under this Agreement, any other Loan Document or any instrument, document
or agreement executed by Borrowers in connection therewith.
8.3 Dissolution
or Sale of Assets.
Wind
up, liquidate or dissolve its affairs, or sell, transfer, or otherwise dispose
of or grant an interest in the Collateral or, without ten (10) business days’
prior written notice to Lender, change its corporate or trade name.
8.4 Use
of
Proceeds.
Use any
Loans made by Lender hereunder for any purpose or thing other than the items
set
forth in Section 7.2 hereof.
34
8.5 Transactions
With Affiliates.
Effect
any transaction with any Affiliate on a basis less favorable to Borrowers
than
would be the case if such transaction had been effected with a
non-Affiliate.
8.6 Consolidation
or Merger.
Consolidate with or merge into any other Person or entity.
SECTION
9. EVENTS
OF
DEFAULT
Until
all
of the Obligations have been paid in full, the
occurrence of any of the following events (each an “Event
of Default”)
shall,
subject to Borrowers’ right to cure any such event within the applicable period,
if any, following written notice thereof at the option of Lender,
(i) terminate all obligations of the Lender in respect of the P&A
Commitment and/or to make any Loan hereunder; and (ii) make all sums of
principal and interest then remaining unpaid and all other amounts payable
hereunder or under any of the Loan Documents, immediately due and payable,
all
without demand, presentment or notice, all of which hereby are expressly
waived.
For the avoidance of doubt, an Event of Default shall not be deemed to have
occurred until the cure period set forth in the applicable paragraph below,
if
any, shall have expired.
9.1 Failure
to Pay.
Failure
to pay the principal of or the interest on any Loan or any fee or expense
to
Lender on the Maturity Date.
9.2 Breach
of this Agreement and/or Related Agreements.
Any
material failure by a Borrower to perform any agreement, covenant,
representation or warranty under this Agreement, or any other Loan Document,
which failure is not cured within thirty (30) days after notice thereof by
Lender to Borrowers or such other party (with a copy to Borrowers), as
applicable.
9.3 Breach
of Representation.
Any of
Borrowers’ representations in this Agreement, in any other Loan Document, or any
statement, agreement or certificate at any time given in writing pursuant
thereto or in connection therewith shall be false or misleading in any material
respect when made.
9.4 Insolvency,
Receiver or Trustee.
Either
Borrower shall become insolvent; or shall be unable to or admit in writing
its
or their inability to pay its or their debts as they mature; or make an
assignment for the benefit of creditors or to an agent authorized to liquidate
any substantial amount of its or their properties or assets; or apply for
or
consent to the appointment of a receiver or trustee for it or them or for
a
substantial part of its or their property or business, or if such a receiver
or
trustee otherwise shall be appointed and shall not be discharged within sixty
(60) days after such appointment.
9.5 Judgments;
Attachments.
Any
judgment, writ or warrant of attachment, reference proceeding award, or similar
process shall be entered or filed against a Borrower or any material portion
of
a Borrower’s assets, or a Borrower enters into any settlement agreements with
respect to any litigation or reference proceeding, in each of the foregoing
events in an aggregate amount of greater than Two Hundred Fifty Thousand
Dollars
($250,000.00) which shall remain unvacated, unbonded or unstayed for a period
of
thirty (30) days or in any event later than five (5) days prior to the date
of
any proposed sale thereunder.
35
9.6 Bankruptcy
or Dissolution.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief
of
debtors shall be instituted by or against a Borrower or any order, judgment
or
decree decreeing a party’s dissolution or division, which is not discharged
within thirty (30) days thereafter (provided that Lender shall not be obligated
to extend any Loans to such Borrower during such period) shall be entered
against a Borrower.
9.7 Related
Agreements.
Any of
the following events shall occur: this Agreement, any Existing Distribution
Agreement or any other Loan Document, shall at any time after its execution
and
delivery and for any reason cease to be in full force and effect, or shall
be
declared to be null and void; or the validity or enforceability thereof shall
be
contested by any party thereto other than Lender, or any party other than
Lender
shall deny that it has any further obligation hereunder or thereunder or
under
any other instrument delivered hereunder or thereunder and such event is
not
cured within ten (10) Business Days after Borrowers have knowledge of such
event.
9.8 Cross-Default.
Any
material default occurs under any agreement in respect of Indebtedness of
greater than Two Hundred Fifty Thousand Dollars ($250,000.00) of a Borrower
or
which a Borrower has guaranteed.
9.9 Lien
Priority.
Lender
fails to have an enforceable first lien (except for Permitted Encumbrances)
on
the Collateral.
9.10 Failure
to Effect Delivery.
Borrowers and HDEM shall have failed to notify, within five (5) business
days
following the date of the making of the initial Loan hereunder, all of the
Existing Distributors to pay all amounts otherwise payable to Borrowers and
HDEM
pursuant to the Existing Distribution Agreements to the P&A Collection
Account.
9.11 Abandonment
of Production; Termination of Existing Distribution Agreements.
The
abandonment of the production of the Film or the termination of any Existing
Distribution Agreement.
9.12 Failure
to Effect Delivery.
The
failure of Borrowers to effect Delivery of the Film and the required materials
to the Distributors in accordance with the Distribution Agreements.
SECTION
10. REMEDIES
ON DEFAULT
10.1 Remedies.
If any
Event of Default shall occur and be continuing, then, and in every such event
and at any time thereafter during the continuance of such Event of Default,
Lender may by notice to the Borrowers, take either or both of the following
actions, at the same or different times: (i) terminate the P&A Commitment
and the Additional P&A Commitment, and (ii) declare the Loans then
outstanding to be due and payable, and, thereupon, the Obligations shall
become
due and payable immediately, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by Borrowers; and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of Borrowers accrued under this Agreement,
shall automatically become due and payable, without presentment, demand,
protest
or other notice of any kind, all of which are hereby waived by Borrowers;
and
Lender shall be entitled to exercise, in respect of the Collateral, all of
the
rights and remedies available to a secured party upon default under the
Delaware
Uniform Commercial Code (or applicable Uniform Commercial Code) at the time
which shall be applicable for the purpose of establishing the relative rights
of
Lender and of Borrowers, and under procedures to be followed in the event
this
Section shall become operative including, without limitation, the right to
sell
the Collateral or any portion thereof and, in addition thereto, the rights
and
remedies provided for herein and such other rights and remedies as may be
provided by law or in equity. Lender shall in addition have the following
rights
and remedies which may, in Lender’s discretion, be exercised either cumulatively
or in the alternative:
36
(i) Lender
may require Borrowers to assemble the Collateral and make it available to
Lender
at a place or places to be designated by Lender and with respect to any
Collateral consisting of intellectual property, on demand, Lender may cause
the
security interest therein to become an assignment, transfer and conveyance
of
any of or all such Collateral by Borrowers, or license or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any such Collateral throughout the Territory on such terms and conditions
and in such manner as Lender shall determine (other than in violation of
any
then existing licensing arrangements to the extent that waivers cannot be
obtained);
(ii) Lender
may, in its sole discretion, in its name or in the name of Borrowers, or
otherwise, demand, xxx for, collect or receive any money or property at any
time
payable or receivable on account of or in exchange for, or make any compromise
or settlement reasonably deemed desirable with respect to any of the Collateral,
but shall be under no obligation so to do. Lender shall consult with Borrowers
with regard to such matters, provided that in all cases Lender’s decision shall
be final. Lender may extend the time of payment, arrange for payment in
installments, or otherwise modify the term of, or release, any of the
Collateral, without thereby incurring responsibility to, or discharging or
otherwise affecting the liability of Borrowers, Lender shall not be required
to
take any steps to preserve any rights of or against any party which in any
way
relate to the Collateral. If Borrowers fails to make payment or take any
action
required under this Agreement, any other Loan Document, any Existing
Distribution Agreement, or any Additional Distribution Agreement, and such
failure results in the occurrence of an Event of Default, Lender may make
such
payments and take all such actions as Lender reasonably deems necessary to
protect Lender’s security interests in the Collateral and/or the value thereof,
and Lender is hereby authorized (without limiting the general nature of the
authority hereinabove conferred) to pay, purchase, contest or compromise
any
Liens which in the good faith judgment of Lender appear to be equal to, prior
to
or superior to the security interests of Lender in the Collateral;
(iii) Lender
may, without notice or demand or legal process, enter upon any premises,
or
wherever any portion of the Collateral may be, and take possession of the
Collateral together with all additions and accessories thereto, demand and
receive such possession from any person who has possession thereof, remove,
keep
and store the Collateral or any portion thereof, or put a custodian in charge
thereof, and take such other measures as it reasonably may deem necessary
or
proper for the care or protection thereof;
37
(iv) Lender
may, with or without taking possession thereof, sell or cause to be sold,
at
such price or prices as Lender, in its sole and absolute discretion, shall
determine, and for cash or on credit or for future delivery, without assumption
of any credit risk, all or any portion of the Collateral, at any public or
private sale for cash, upon credit or for future delivery, without demand
of
performance or notice of intention to sell or of time or place of sale;
provided, however, that unless the Collateral in Lender’s possession is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Lender shall give Borrowers reasonable notice
of
the time and place of any public sale thereof or of the time after which
any
private sale or other intended disposition thereof is to be made. The
requirement of reasonable notice shall be met if notice of the sale or other
intended disposition is delivered or mailed, by registered mail, postage
prepaid, to Borrowers as set forth in this Agreement or such other address
as
Borrowers may by notice have furnished Lender in writing for such purpose,
at
least five (5) Business Days prior to the time of such sale or other intended
disposition (which Borrowers agrees is reasonable notice within the meaning
of
Sections 9-610 and 9-611 of the Uniform Commercial Code as in effect in the
State of
Delaware or its equivalent in other jurisdictions). Such purchaser
at
any such sale (including, if applicable, Lender) shall hold the property
sold
absolutely free from any claim or right of whatever kind including any equity
of
redemption and Borrowers hereby waive (to the extent permitted by law) all
rights of redemption, stay, valuation and/or appraisal which it now has or
may
have at any time in the future under any rule of law or statute now existing
or
hereafter enacted. Any public or private sale of the Collateral or any part
thereof shall be held at such time or times within ordinary business hours
and
at such place or places as Lender may fix in the notice of such sale. At
any
such sale, the Collateral, or any portion thereof, to be sold may be sold
in one
lot as an entirety or in separate parcels, as Lender may (in its sole
discretion) determine and, 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 the whole or any part of the
Collateral if it shall determine not to do so, regardless of the fact that
notice of sale of the Collateral may have been given. Lender may by announcement
at the time and place fixed for sale, without prior notice or publication,
adjourn any public or private sale of the Collateral or cause the same to
be
adjourned from time to time, and such sale may, without further notice, be
made
at the time and place to which the same was so adjourned. In case sale of
all or
any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Lender until the sale price is paid
by the
purchaser or purchasers thereof, but Lender shall not incur any liability
in
case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may
be sold
again upon like notice. For purposes hereof, (i) a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof, (ii) Lender shall be free to carry out such sale pursuant to such
agreement and (iii) Borrowers shall be entitled to the return of the
Collateral or any portion thereof subject thereto, notwithstanding the fact
that
after Lender shall have entered into such an agreement all Events of Default
shall have been remedied and the Obligations paid in full. Any sale pursuant
to
the provisions of this Section shall be deemed to conform to the commercially
reasonable standards as provided in Sections 9-610 and 9-611 of the Uniform
Commercial Code as in effect in the State of Delaware
or its equivalent in other jurisdictions;
(v) Any
laboratory which has possession of any of the Collateral is hereby constituted
and appointed by Borrowers as pledgeholder for Lender and Lender may authorize
each such pledgeholder to sell all or any portion of the Collateral upon
the
order and direction of Lender, and Borrowers hereby waive any and all claims
for
damages, or otherwise, for any action taken by such pledgeholder. Pursuant
to
this subsection, Lender, Borrowers and Laboratory shall enter into the
Laboratory Access Letters;
38
(vi) Lender
shall be entitled to the appointment of a receiver to take possession of
all or
any portion of the Collateral and to exercise such powers as the court shall
confer upon the receiver, and Borrowers, to the fullest extent permitted
by law,
hereby waive notice and the right to receive notice of any application by
Lender
for such appointment; provided, however, that Lender shall endeavor to send
Borrowers a courtesy notice of such application although the failure to send
such notice shall not affect Lender’s rights under this section or elsewhere
hereunder and provided further that, notwithstanding any such application
or
appointment, Lender shall be entitled to apply, without notice to Borrowers,
any
cash or cash items constituting Collateral in the possession of Lender to
payment of Borrowers’ Obligations;
(vii) Upon
any
sale of any item of Collateral by Lender hereunder (whether by virtue of
the
Power of Sale herein granted, pursuant to judicial process or otherwise),
the
receipt of Lender or the officer making the sale shall be a sufficient discharge
to the purchaser or purchasers of such item or items of Collateral so sold
and
such purchaser or purchasers shall not be obligated to see to the application
of
any part of the purchase money paid over to Lender or such officer or be
answerable in any way for the misapplication or nonapplication thereof;
(viii) Lender
is
hereby authorized at any time and from time to time, without notice to Borrowers
(any such notice being expressly waived by Borrowers), to set off and apply
any
and all deposits (general or special, time or demand, provisional or final)
at
any time held, including any certificate of deposit, and any other Indebtedness
at any time owing by Lender to or for the credit or the account of Borrowers
against any and all of the then due (including, but not limited to those
due by
reason of acceleration) Obligations of Borrowers now or hereafter existing
under
this Agreement or any other Loan Document, irrespective of whether or not
Lender
shall have made any demand under this Agreement or any other Loan Document.
Lender agrees to promptly notify Borrowers after any such setoff and application
made by it. The rights of Lender under this subsection are in addition to
all
other rights and remedies (including, without limitation, other rights of
setoff) which Lender may have; and/or
(ix) Lender
may, at its option, accelerate the maturity of any outstanding Loans and
all
interest thereon.
10.2 Application
of Proceeds.
Except
as expressly provided elsewhere in this Agreement, all proceeds of the sale
of
Collateral by Lender hereunder, and all other monies received by Lender pursuant
to the terms of this Agreement (whether through the exercise by Lender of
its
rights of collection or otherwise), including, without limitation, any awards
or
other amounts payable upon any condemnation or taking by eminent domain,
shall
be applied, as promptly as is practicable after the receipt thereof by Lender,
as follows:
39
FIRST:
to the
equal and ratable payment of all reasonable fees, costs and expenses incurred
by
Lender or any custodian or nominee appointed hereunder which are payable
by
Borrowers hereunder, if any, if not previously paid by Borrowers, and all
reasonable costs and expenses incurred by Lender in connection with any sale
of
Collateral, including, but not limited to, the expenses of taking, advertising,
processing, preparing and storing the Collateral to be sold, all court costs
and
fees and expenses of outside counsel to Lender in connection therewith, and
to
the payment of all amounts for which Lender is entitled to indemnification
hereunder and all Loans made by Lender hereunder to the account of Borrowers
and
the payment of all reasonable costs and expenses paid or incurred by Lender
in
connection with the exercise of any right or remedy hereunder, to the extent
that such advances, costs and expenses shall not theretofore have been
reimbursed to Lender by Borrowers;
SECOND:
to the
payment to Lender of the interest then due and payable on the
Loans;
THIRD:
to the
payment to Lender of the Repayment Amount then due and payable on the Loans;
and
FOURTH:
to the
payment to Lender of any other amount owing to Lender under this Agreement
and
any other Loan Document.
SECTION
11. MISCELLANEOUS
11.1 Survival
of Warranties.
All
covenants, agreements, representations and warranties made under this Agreement
or in any of the other Loan Documents shall survive the execution and delivery
of this Agreement and the making of the Loans hereunder, and shall continue
in
full force and effect until the full and final payment and performance of
all of
the Obligations of Borrowers to Lender under this Agreement and all of the
other
Loan Documents.
11.2 Appointment
of Agents.
Lender
shall have the right to appoint or constitute one or more Persons to act
as
Lender’s agent in exercising any of Lender’s rights hereunder whenever Lender
shall deem it necessary or desirable to do so; provided, however, that such
appointment shall not increase Borrowers’ Obligations hereunder except to the
extent: (a) such agent is required to enforce or protect Lender’s rights
hereunder, or (b) the acts of the agent if undertaken directly by Lender
would
have resulted in an increase in Borrowers’ Obligations hereunder.
11.3 Failure
or Delay Not Waiver.
No
failure or delay on the part of Lender in the exercise of any power, right,
remedy or privilege under this Agreement or any of the other Loan Documents
shall operate as a waiver thereof, nor shall any single or partial exercise
of
any such power, right, remedy or privilege preclude any other or further
exercise thereof or of any other right, power, remedy or privilege. All rights
and remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
11.4 Modification.
This
Agreement and each of the other Loan Documents shall constitute the entire
agreement between the parties thereto with respect to the matters set forth
therein and may not be amended, waived or modified in any manner without
the
written consent of Lender and Borrowers.
11.5 Notices.
Any
notice, consent or other communication required or which may be given hereunder
shall be in writing and shall be delivered personally, telecopied or sent
by
certified, registered or express mail or overnight courier service, postage
prepaid, and shall be deemed given when delivered to the addresses, as
follows:
40
|
To
Borrowers:
|
Gener8Xion
Entertainment Inc.
0000
Xxxxxxxx Xxxx. Xxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx Xxxxxx
Fax
No.: (323) 874 -5888
And
One
Night With The King, Inc
0000
Xxxxxxxx Xxxx. Xxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxx Xxxx
Fax
No.: (323) 874 -5888
|
| | |
|
With
a Copy to:
|
Xxxxxxx
X. Xxxxx
Law
Offices
0000
Xxxxxxxx Xxxx. Xxxx
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxx, Esq.
Fax
No.: (000) 000-0000
|
| | |
|
To
HDEM:
|
If
via mail or fax:
Hope,
Direction and Encouragement Ministries
X.X.
Xxx 0000
Xxxxxxxxx,
Xxxxxxxxx 00000
Attention:
Xxxxx Xxxxxx
Fax
No.: (000) 000-0000
If
via overnight courier:
Hope
Direction and Encouragement Ministries, Inc.
000
Xxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxxx 00000
|
| | |
|
With
a Copy to:
|
Xxxxxxx,
Xxxx & Associates, Inc.
0000
Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxx,
Xxxxxxxx 00000-0000
Attention:
Xxxxxx Xxxxxxx, Esq.
Fax
No.: (000) 000-0000
|
| | |
|
To
Lender:
|
Windfall
Financial LLC
0000
Xxxxxxxx Xxxxxx
Xxxxx
000
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxx Xxxxxxxxxx, Esq.
Fax
No.: (000) 000-0000
|
41
| | |
|
With
a Copy to:
|
Xxxxxx
Xxxxxx Rosenman LLP
0000
Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn.
Xxxx X. XxXxxxx, Esq.
Fax
No.: (000) 000-0000
|
11.6 Severability.
In case
any provision of this Agreement or of any other Loan Document shall be invalid,
illegal or unenforceable in any jurisdiction then, as to such jurisdiction
only,
such provision shall, to the minimum extent of such prohibition or
unenforceability, be deemed severed from the remainder of such agreement,
and
the validity, legality and enforceability of the remaining provisions shall
not
in any way be affected or impaired thereby.
11.7 Applicable
Law.
This
Agreement, the other Loan Documents and all other agreements, documents and
instruments provided for therein and the rights and obligations of the parties
thereto shall be governed by and construed and enforced in accordance with,
the
laws of the State of Delaware.
11.8 Service
of Process.
Each of
the parties to this Agreement irrevocably consents to service of process
in the
manner provided for notices in Section 11.5 hereof. In addition, (i) ONWK
hereby irrevocably designates and appoints Xxxxxxx X. Xxxxx, Esq., with an
address at 0000 Xxxxxxxx Xxxxxxxxx Xxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 as
their
agent for service of process in California; (ii) GNXE hereby irrevocably
designates and appoints Xxxxxxx Xxxxxxx, Esq., with an address at c/o Stone,
Xxxxxxxxxx & Cha, PLC, 00000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx Xxxxx,
Xxxxxxxxxx 00000 as their agent of service of process in California; and
(iii) Borrowers hereby irrevocably designate and appoint Paracorp,
Incorporated with an address at 00 Xxxx X Xxxxxxxx Xxxxxx, Xxxxx X, Xxxxx,
Xxxxxxxx 00000 as their agent for service of process in Delaware (collectively,
the “Process
Agents”)
to
accept legal process on behalf of Borrowers relating to any complaint, legal
filing or response, or similar notice with respect to any claim or dispute
arising out of or relating to this Agreement or any other Loan Document.
Borrowers acknowledge and agree that Lender is relying upon Borrowers’ agreement
to so designate and appoint the Process Agents on behalf of Borrowers before
entering into this Agreement and establishing the terms herein and Borrowers
agree that it is in the parties, mutual interests to establish a means in
which
their disputes may be more expeditiously resolved in Los Angeles, California
as
provided below. Borrowers will not change or terminate the Process Agents
without the written consent of Lender. Nothing in this Agreement will affect
the
right of any party to this Agreement to serve process in any other manner
permitted by law.
11.9 WAIVER
OF JURY TRIAL.
EACH OF
THE PARTIES TO THIS AGREEMENT WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING
TO
THIS AGREEMENT OR ANY OTHER LOAN AGREEMENT IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF AND FOR ANY COUNTERCLAIM
THEREIN.
42
11.10 Assignability.
Lender
may assign any or all of its rights or obligations hereunder or any interest
herein without the consent of Borrowers, so long as Lender remains primarily
liable for its obligations hereunder. Borrowers may not assign any of their
rights or obligations hereunder or any interest herein, or in or under any
Loan
Document, without the prior written consent of Lender and any purported
assignment by a Borrower shall be void and of no force or effect. This Agreement
shall be binding upon the parties hereto and their respective successors
and
assigns, and shall inure to the benefit of the parties hereto and the successors
and assigns of Lender.
11.11 Costs.
If
Lender incurs any out-of-pocket expenses in connection with administering
or
enforcing this Agreement, or any other Loan Document, or if Lender takes
collection action under this Agreement or any other Loan Agreement, it is
entitled to costs and reasonable outside attorneys’ fees.
11.12 Attorneys’
Fees.
In the
event of an arbitration proceeding with respect to this Agreement, the
prevailing party is entitled to recover costs and reasonable outside attorneys’
fees incurred in connection with the proceeding, as determined by the
arbitrator.
11.13 One
Agreement.
This
Agreement and any related security or other agreements required by this
Agreement, collectively:
(a) represent
the sum of the understandings and agreements between Lender and Borrowers
concerning the Loans;
(b) replace
any prior oral or written agreements between Lender and Borrowers concerning
the
Loans; and
(c) are
intended by Lender and Borrowers as the final, complete and exclusive statement
of the terms agreed to by them.
In
the
event of any conflict between this Agreement and any other agreements required
by this Agreement, this Agreement will prevail.
11.14 Arbitration
of Disputes.
The
parties agree that any dispute relating to this Agreement shall be resolved
by
binding arbitration with a single arbitrator (experienced in the entertainment
industry) to be selected by mutual agreement of the parties, under arbitration
rules of the American Arbitration Association, in Los Angeles, California,
and
that any arbitration award (including reimbursement of reasonable legal fees
and
costs) may be entered for judgment in Los Angeles County Superior
Court.
43
11.15 Counterparts.
This
Agreement and the other Loan Documents may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed
to be
an original and all of which taken together shall constitute one and the
same
instrument, respectively. Executed copies of the signature pages of this
Agreement sent by facsimile or transmitted electronically in either Tagged
Image
Format Files (“TIFF”)
or
Portable Document Format (“PDF”)
shall
be treated as originals, fully binding and with full legal force and effect,
and
the parties waive any rights they may have to object to such treatment. Any
party delivering an executed counterpart of this Agreement by facsimile,
TIFF or
PDF also shall deliver a manually executed counterpart of this Agreement
but the
failure to deliver a manually executed counterpart shall not affect the
validity, enforceability, and binding effect of this Agreement.
11.16 Section
Headings.
The
various headings used in this Agreement are inserted for convenience of
reference only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
11.17 Further
Assurances.
At any
time or from time to time upon the request of Lender, Borrowers will duly
execute and deliver, or cause to be executed and delivered, at the cost and
expense of Borrowers, such further documents and do such other acts and things
as Lender may reasonably request in order to effect fully the purposes of
this
Agreement and the other Loan Documents and to provide for the payment and
performance of the Obligations of Borrowers in accordance with the terms
of this
Agreement and the other Loan Documents.
11.18 Further
Documents.
Each of
the parties hereto shall execute such further documents, not inconsistent
herewith, as may be necessary to effectuate the terms and provisions
hereof.
[SIGNATURES
ON FOLLOWING PAGE]
44
WITNESS
the due execution hereof as of the date first above written.
| |
GENER8XION
ENTERTAINMENT, INC.
|
| | |
| |
By:
_________________________________
Its: _________________________________
|
| | |
| |
ONE
NIGHT WITH THE KING, INC.
|
| |
By:
_________________________________
Its: _________________________________
|
| | |
| |
WINDFALL
FINANCIAL LLC
|
| | |
| |
By:
_________________________________
Its: _________________________________
|
| | |
| |
HOPE,
DIRECTION AND ENCOURAGEMENT MINISTRIES, INC.
|
| | |
| |
By:
_________________________________
Its: _________________________________
|
45
LIST
OF EXHIBITS
|
EXHIBIT
A
|
TBN
Agreement
|
|
EXHIBIT
B
|
Production
and Distribution Agreement
|
|
EXHIBIT
C
|
Worldwide
Distribution Agreement
|
|
EXHIBIT
D
|
Form
of Borrowing Certificate
|
|
EXHIBIT
E
|
Form
of Copyright Mortgage and Assignment
|
|
EXHIBIT
F
|
Form
of Copyright Mortgage and Assignment
|
|
EXHIBIT
G
|
Form
of Copyright Mortgage and Assignment
|
|
EXHIBIT
H
|
Form
of Copyright Mortgage and Assignment
|
|
EXHIBIT
I
|
Form
of Copyright Mortgage and Assignment
|
|
EXHIBIT
J
|
Form
of Copyright Mortgage and Assignment
|
|
EXHIBIT
K
|
Form
of Laboratory Access Letter
|
|
EXHIBIT
L
|
Form
of Notice of Irrevocable Authority and
|
| |
Direction
to Pay
|
|
EXHIBIT
M
|
Notice
to Insurer
|
|
EXHIBIT
N
|
Form
of P&A Subordination Agreement
|
|
EXHIBIT
O
|
Form
of Escrow Agreement - Collection Account
|
|
EXHIBIT
P
|
Form
of Escrow Agreement - Disbursement Account
|
|
EXHIBIT
Q
|
Form
of Russian Distribution Agreement
|
|
EXHIBIT
R
|
Form
of Opinion of Special Counsel to Borrowers
|
|
EXHIBIT
S
|
Form
of Opinion of Counsel to GNXE
|
|
EXHIBIT
T
|
Form
of Opinion of Counsel to ONWK
|
|
EXHIBIT
U
|
Form
of Secured Promissory Note
|
|
EXHIBIT
V
|
Form
of Additional P&A Commitment Secured Promissory
Note
|
|
EXHIBIT
W
|
Form
of Power of Sale
|
46
LIST
OF
SCHEDULES
|
SCHEDULE
1.
|
Approved
Budget
|
|
SCHEDULE
2.
|
Approved
Distribution Plan
|
|
SCHEDULE
3.
|
Chain
of Title Documents
|
|
SCHEDULE
4.
|
P&A
Designee Fees
|
47
