LOAN AGREEMENT
This LOAN AGREEMENT ("Agreement") is entered into and effective this
8th day of September, 2000 and is by and among XXXXXX X. XXXXXXXXX, an
individual having an address c/o Sparacino Associates, Inc., 000 Xxxxxxxxxx
Xxxxx, Xxxxxxxx, XX 00000 ("Xxxxxxxxx"), XXXXXX X. XXXXXXX, an individual having
an address at 0 Xxxx Xxxxxx Xxxx, Xxxxxxxxxx, XX 00000 ("Saferin"; Saferin and
Xxxxxxxxx are sometimes individually referred to as a "Lender" and collectively
as the "Lenders"), MEDIA DROP-IN PRODUCTIONS, INC., a Delaware corporation
having a place of business at 000 Xxx Xxxxxx, Xxxxxxxx, XX 00000 ("Borrower"),
and MDI ENTERTAINMENT, INC., a Delaware corporation having a place of business
at 000 Xxx Xxxxxx, Xxxxxxxx, XX 00000 ("Guarantor").
RECITALS
Borrower has requested, and Lenders have agreed to make, loans to
Borrower in the aggregate principal amount of $520,000, on and subject to the
terms and conditions of this Agreement.
Guarantor is the parent company of Borrower and has agreed to guaranty
all of Borrower's obligations to Lenders.
In consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower, Guarantor and Lenders hereby agree as follows:
ARTICLE 1
AMOUNTS AND TERMS OF THE LOANS
A. THE LOANS
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1.01 Loan from Xxxxxxxxx.
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(a) Subject to the terms and conditions set forth in this Agreement,
Xxxxxxxxx agrees to make a loan to Borrower in the principal amount of Two
Hundred Sixty Thousand and 00/100 Dollars ($260,000) (the "Xxxxxxxxx Loan"). The
Xxxxxxxxx Loan shall be evidenced by, and shall be repaid with interest in
accordance with the terms and provisions of, a promissory note of Borrower in
substantially the form attached hereto as Exhibit A-1 (the "Xxxxxxxxx Note").
(b) The Xxxxxxxxx Loan shall be secured by a security interest in all
of Borrower's assets, pursuant to a Security Agreement by and between Borrower
and Xxxxxxxxx, of even date herewith (the "Xxxxxxxxx Security Agreement"), and
shall be guaranteed by Guarantor pursuant to a Guaranty Agreement by and between
Guarantor and Xxxxxxxxx, of even date herewith (the "Xxxxxxxxx Guaranty
Agreement"). The Xxxxxxxxx Guaranty Agreement shall be secured by a security
interest in all of Guarantor's assets, pursuant to a Security Agreement by and
between Guarantor and Xxxxxxxxx, of even date herewith (the "Xxxxxxxxx Guarantor
Security Agreement").
(c) As further consideration for, and to induce Xxxxxxxxx to make, the
Xxxxxxxxx Loan, Guarantor shall issue to Xxxxxxxxx and/or his designees a
warrant or warrants having an exercise period of five (5) years and entitling
Xxxxxxxxx and/or his designees to purchase an aggregate number of shares of
Guarantor's Common Stock determined by dividing $50,000 by the closing bid price
of Guarantor's Common Stock (the "Closing Price") on the date hereof, at an
exercise price equal to the Closing Price on the date hereof. The warrant(s)
shall be in the form attached hereto as Exhibit A-2 (the "Warrant").
1.02 Loan from Saferin.
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(a) Subject to the terms and conditions set forth in this Agreement,
Saferin agrees to make a loan to Borrower in the principal amount of Two Hundred
Sixty Thousand and 00/100 Dollars ($260,000) (the "Saferin Loan"). The Saferin
Loan shall be evidenced by, and shall be repaid with interest in accordance with
the terms and provisions of, a promissory note of Borrower in substantially the
form attached hereto as Exhibit A-3 (the "Saferin Note").
(b) The Saferin Loan shall be secured by a security interest in all of
Borrower's assets, pursuant to a Security Agreement by and between Borrower and
Saferin, of even date herewith (the "Saferin Security Agreement"), and shall be
guaranteed by Guarantor pursuant to a Guaranty Agreement by and between
Guarantor and Saferin, of even date herewith (the "Saferin Guaranty Agreement").
The Saferin Guaranty Agreement shall be secured by a security interest in all of
Guarantor's assets, pursuant to a Security Agreement by and between Guarantor
and Saferin, of even date herewith (the "Saferin Guarantor Security Agreement").
(c) The parties expressly agree that no warrants will be issued to
Saferin in connection with the Saferin Loan.
1.03 Loan Documents.
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For the purposes of this Agreement, the Xxxxxxxxx Note, the Saferin
Note, the Xxxxxxxxx Security Agreement, the Saferin Security Agreement, the
Xxxxxxxxx Guaranty Agreement, the Saferin Guaranty Agreement, the Xxxxxxxxx
Guarantor Security Agreement, the Saferin Guarantor Security Agreement, and the
Warrant may hereinafter be referred to individually as a "Loan Document" and
collectively as the "Loan Documents."
1.04 Closing.
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The closing of the transactions contemplated by this Agreement (the
"Closing") shall occur simultaneously with the execution of this Agreement by
the parties hereto.
B. CERTAIN GENERAL PROVISIONS
1.01 Payments Free of Deductions. All payments by Borrower hereunder
and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof of taxing or other
authority therein unless Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon Borrower with respect to any
amount payable by it hereunder or under any of the other Loan Documents,
Borrower will pay to Lenders on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in dollars
as shall be necessary to enable Lenders to receive the same net amount which
Lenders would have received on such due date had no such obligation been imposed
upon Borrower. Borrower will deliver promptly to Lenders certificates or other
valid vouchers for all taxes or other charges deducted from or paid with respect
to payments made by Borrower hereunder or under such other Loan Document.
1.02 Computations. All computations of interest on the Loans or other
fees or other charges shall be based on a 360-day year and paid for the actual
number of days elapsed. 1.03 Obligations Absolute. The obligations of Borrower
under this Agreement shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and such other agreement
or instrument under all circumstances, and irrespective of, the following
circumstances:
(a) any lack of validity or enforceability of all or any portion of
this Agreement or any other agreement or any instrument relating hereto;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of Borrower;
(c) the existence of any claim, setoff, defense or other right that
Borrower may have;
(d) any amendment or waiver of or consent to departure from any of the
Loan Documents, or all or any of the obligations of Borrower in respect to the
Loans of this Agreement; or
(e) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, either Borrower and Guarantor.
C. MISCELLANEOUS
1.01 Use of Proceeds. The proceeds of the Loans shall be used to
refinance existing indebtedness to Fleet Bank (the "Fleet Debt") and for working
capital purposes. Borrower covenants and agrees to pay the Fleet Debt
immediately following the Closing.
1.02 Commitment Fee. At the Closing, Borrower shall pay to Xxxxxxxxx a
commitment fee with respect to the Xxxxxxxxx Loan of $5,200.00.
ARTICLE 2
CONDITION PRECEDENT
2.01 Conditions Precedent to Effectiveness. The effectiveness of this
Agreement shall be subject to the prior satisfaction of each of the following
conditions:
(a) Lenders shall have received each of the following, in form and
substance satisfactory to Lenders and their counsel:
(1) This Agreement, duly executed and delivered by each of Borrower
and Guarantor;
(2) The Xxxxxxxxx Note and the Saferin Note (collectively, the
"Notes") duly executed and delivered by Borrower;
(3) The Xxxxxxxxx Guaranty Agreement and the Saferin Guaranty
Agreement (collectively, the "Guaranty Agreements") duly executed and delivered
by Guarantor;
(4) The Xxxxxxxxx Security Agreement and the Saferin Security
Agreement (collectively, the "Borrower Security Agreements") duly executed and
delivered by Borrower together with such UCC-1 Financing Statements as are in
the opinion of Lenders desirable or necessary to perfect the security interest
created by the Borrower Security Agreements;
(5) The Xxxxxxxxx Guarantor Security Agreement and the Saferin
Guarantor Security Agreement (collectively, the "Guarantor Security Agreements")
duly executed and delivered by Guarantor together with such UCC-1 Financing
Statements as are in the opinion of Lenders desirable or necessary to perfect
the security interest created by the Guarantor Security Agreements;
(6) The Warrant(s) (which shall be delivered prior to the close of
business on the first business day following the Closing);
(7) Copies of all corporate action taken by Borrower and Guarantor,
including resolutions of their respective Board of Directors, authorizing the
execution, delivery, and performance of the Loan Documents to which it is party
and each other document to be delivered pursuant to this Agreement, certified as
of the date of this Agreement by the Secretary of Borrower and Guarantor, as the
case may be;
(8) The Certificate of Incorporation (certified by the Secretary of
the State of Delaware) and Bylaws of each of Borrower and Guarantor;
(9) A certificate, dated as of the date of this Agreement, of the
Secretary of each of Borrower and Guarantor certifying the names and true
signatures of the officers of Borrower or the Guarantor, as the case may be,
authorized to sign the Loan Documents to which Borrower or Guarantor is a party
and the other documents to be delivered by Borrower or Guarantor under this
Agreement;
(10) Certificates of Good Standing issued by the Delaware Secretary
of the State evidencing that each of Borrower and Guarantor is a Delaware
corporation in good standing;
(11) An opinion of Borrower's and Guarantor's counsel, in form and
substance satisfactory to Lenders; and
(12) All other documents, instruments and agreements that Lenders
shall require in connection with this Agreement.
(b) All representations and warranties contained in this Agreement
shall be true and correct in all material respects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Borrower and Guarantor represent and warrant jointly and severally to
Lenders that:
3.01 Financial Information. Any financial statements heretofore
delivered to Lenders in connection with the loan transactions contemplated
hereby are true and correct in all respects, were prepared in accordance with
generally accepted accounting principles consistently applied and fairly present
the respective financial condition, market value and cash flow of the subject
thereof as of the respective dates thereof, no material adverse change has
occurred in the financial conditions reflected therein since the respective
dates thereof and no additional borrowings have been made by Borrower and
Guarantor since the date thereof which have not been fully repaid or which would
materially affect Borrower's and Guarantor's ability to perform its obligations
hereunder other than the borrowings contemplated hereby.
3.02 Litigation. There are no actions, suits or proceedings pending, or
to the best knowledge of Borrower and Guarantor threatened, against or affecting
Borrower or Guarantor or involving the validity or enforceability of the Loan
Documents, at law or in equity, or before or by any governmental authority,
which, if adversely determined against Borrower or Guarantor, would have a
material adverse effect on Borrower's or Guarantor's financial condition, and
Borrower and Guarantor is not in default with respect to any judgment, decision,
order, writ, injunction, decree or demand of any court or any governmental
authority.
3.03 Power and Authority. The consummation of the transactions hereby
contemplated and the performance of the Loan Documents are within the powers of
Borrower and Guarantor and have been duly authorized by all necessary corporate
action and do not and will not result in any breach of, or constitute a default
under, or conflict with any statute or other law, or any order, regulation or
ruling of any court or other tribunal or of any governmental or administrative
authority or agency, or any mortgage, lease, loan or credit agreement, corporate
charter or by-law, or other instrument or agreement to which Borrower or
Guarantor is a party or by which Borrower or Guarantor or its respective
properties may be bound or affected.
3.04 No Default. There is no default on the part of Borrower or
Guarantor under the Loan Documents and no event has occurred and is continuing
which with notice or the passage of time or both would constitute an Event of
Default hereunder. There is also no default on the part of Borrower or Guarantor
under any other agreement or instrument to which Borrower or Guarantor is a
party or by which Borrower or Guarantor is bound and no event has occurred and
is continuing which with notice or the passage of time or both would constitute
a default under any such instrument.
3.05 ERISA. Neither Borrower nor Guarantor have a deferred benefit
pension plan under the Employee Retirement Income Security Act of 1974, as
amended from time to time, the unfunded liabilities of which upon termination
could be held to be a liability of Borrower or Guarantor by the Pension Benefit
Guaranty Corporation.
3.06 Incorporation, Good Standing and Due Qualification. Each of
Borrower and Guarantor (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware; (ii) has all corporate
power and authority necessary to own its properties and to carry on the business
in which it is now engaged or proposed to be engaged; and (iii) is duly
qualified and in good standing as foreign corporation under the laws of each
other jurisdiction in which the failure to qualify would have a material adverse
affect.
3.07 Environmental Laws. Borrower and Guarantor are in material
compliance with, and have not received any summons, citation, directive, letter,
or other communication from any governmental authority concerning any
intentional or unintentional violation or alleged violation of, any
Environmental Laws.
3.08 Taxes. Borrower and Guarantor have filed all tax returns (federal,
state and local) required to be filed and have paid all taxes, assessments, and
governmental charges and levies thereon to be due, including interest and
penalties.
3.09 Governmental Consents. Borrower and Guarantor have obtained all
consents, licenses and other approvals from all governmental authorities
required (i) in connection with the execution, delivery and performance by
Borrower or Guarantor of the Loan Documents and (ii) to conduct the business of
Borrower or Guarantor as now conducted and as presently proposed to be
conducted.
3.10 Compliance with Laws. Borrower and Guarantor are in compliance in
all material respects with all applicable laws, rules, regulations, and orders
of governmental authorities.
3.11 Conflicts with Proprietary Rights of Others. Borrower and
Guarantor possess and have good, valid and marketable title, free and clear of
all security interests, liens, claims, charges, encumbrances or other defects in
title of any nature whatsoever to, or has the valid, enforceable right to use,
all trademarks, trademark rights, trade names, trade name rights, licenses,
franchises, service marks, patents, patent applications, copyrights, inventions,
discoveries, improvements, processes, trade secrets, formulae, proprietary
rights or date, shop rights, ideas or know-how necessary to conduct its business
as now being conducted or as proposed to be conducted, without known conflict
with or known infringement upon any valid rights of others and the lack of which
could materially and adversely affect the operations of condition, financial or
otherwise, of Borrower and Guarantor.
3.12 Patents and Other Intangible Rights. To the knowledge of Borrower
and Guarantor, Borrower and Guarantor are not infringing upon any known right or
claimed right of any person under or with respect to any patents, trademarks,
trademark rights, trade names, trade name rights or copyrights and rights with
respect to the foregoing.
3.13 Title to Assets; No Liens. Borrower and Guarantor have good and
marketable title to all of its assets, and after the payment of the Fleet Debt,
as described in Section 1.02, none of its assets is subject to any security
interest or lien except in favor of Lenders.
3.14 Material Contracts. Borrower and Guarantor have no material
contracts, agreements or commitments which have not been publicly disclosed or
otherwise disclosed to Lenders.
3.15 Subsidiaries. Borrower and Guarantor have no subsidiaries the
existence of which has not been publicly disclosed or otherwise disclosed to
Lender.
ARTICLE 4
COVENANTS OF BORROWER AND GUARANTOR
Each of Borrower and Guarantor shall:
4.01 Financial Reports. Deliver to each Lender (i) internally prepared
monthly cash flow projections, and (ii) as soon as available, and in any event
within forty-five (45) days after the close of each fiscal quarter, an
internally prepared balance sheet as at the end of such quarter and an income
statement for such quarter, certified by the chief financial officer of Borrower
or Guarantor, as the case may be, as being true, complete and correct.
4.02 Maintenance of Existence. Preserve and maintain its organizational
existence and good standing in the jurisdiction of its organization, and qualify
and remain qualified as a foreign corporation in each jurisdiction in which the
failure to qualify would have a material affect.
4.03 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of Borrower and
Guarantor.
4.04 Maintenance of Properties. Maintain, keep, and preserve all of its
properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.
4.05 Conduct of Business. Continue to engage in a business of the same
general type as conducted and proposed to be conducted by it on the date of this
Agreement.
4.06 Maintenance of Insurance. (i) Keep its properties insured against
fire and other hazards (so-called "All Risk" coverage) in amounts and with
companies satisfactory to Lenders to the same extent in covering such risks as
is customary in the same or a similar business, but in no event in an amount
less than the replacement value of the insured property which policy shall name
each Lender as loss payee as its interest may appear, (ii) maintain public
liability coverage against claims for personal injuries, death or property
damage in an amount deemed reasonable by Lenders, which policy shall name each
Lender as an additional insured, and (iii) maintain all worker's compensation,
employment or similar insurance as may be required by applicable law. Such All
Risk property insurance coverage and such malpractice insurance coverage shall
provide for a minimum of thirty (30) days' written cancellation notice to each
Lender. Upon request of either Lender, Borrower and Guarantor agrees to deliver
copies of all of the aforesaid insurance policies to Lenders.
4.07 Compliance With Laws. Comply in all respects with all applicable
laws, rules, regulations, and orders of governmental authorities, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property.
4.08 Right of Inspection. At any reasonable time and from time to time
upon reasonable advance notice, permit each Lender or any agent or
representative of such Lender to examine and make copies of and abstracts from
the records and books of account of, and visit the properties of, Borrower and
Guarantor and to discuss the affairs, finances, and accounts of Borrower and
Guarantor with any of its officers and directors and Borrower and Guarantor's
independent accountants (who, by this reference, are authorized by Borrower and
Guarantor to discuss such matters with each Lender or any agent or
representative of such Lender).
4.09 Mergers, Etc. Not merge or consolidate with, or sell, assign,
lease, or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any person or entity, or acquire all or substantially all
of the assets or the business of any person or entity, without the prior written
consent of each Lender.
4.10 Sale of Assets. Not sell, lease, assign, transfer, or otherwise
dispose of any of its now owned or hereafter acquired assets except: (a) for
inventory disposed of in the ordinary course of business; and (b) the sale or
other disposition of assets no longer used or useful in the conduct of its
business.
4.11 Guaranties, Etc. Except as expressly permitted by this Agreement,
not assume, guaranty, endorse, or otherwise be or become directly or
contingently responsible or liable (including, but not limited to, an agreement
to purchase any obligation, stock, assets, goods, or services, or to supply or
advance any funds, assets, goods, or services, or to maintain or cause such
person or entity to maintain a minimum working capital or net worth, or
otherwise to assure the creditors of any person or entity against loss) for
obligations of any person or entity, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business
4.12 Transactions With Affiliates. Except for the Saferin Loan and any
additional loan made by Saferin in accordance with the provisions of Section
5.01 below, not enter into any transaction, including, without limitation, the
purchase, sale, or exchange of property or the rendering of any service, with
any Affiliate, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower and Guarantor's business and upon fair and reasonable
terms no less favorable to Borrower and Guarantor than would obtain in a
comparable arm's-length transaction with an independent third party.
4.13 Subsidiaries. Not create or otherwise acquire an interest in any
subsidiary.
4.14 Fiscal Year. Not change its fiscal year.
4.15 Notices. Notify each Lender (i) immediately upon becoming aware of
the occurrence of an Event of Default or (ii) if Borrower and Guarantor are
named a defendant in any litigation involving amounts greater than $50,000.
4.16 Debt. Not incur indebtedness except (i) in favor of Lenders, (ii)
trade indebtedness in the ordinary course of business, (iii) indebtedness, up to
$100,000 in the aggregate, to vendors of equipment purchased by Borrower, and
(iv) indebtedness specifically permitted by Section 5.01 below.
4.17 Liens. Except for (i) liens securing indebtedness described in
Section 5.01 below, (ii) liens for taxes, assessments or similar charges
incurred in the ordinary course of business which are not delinquent, (iii)
liens securing purchase money indebtedness permitted by Section 4.16 above, and
(iv) mechanic's, materialmen's, supplier's, vendor's and similar liens arising
under law in the ordinary course of business which are not delinquent, not cause
or suffer to permit any liens to be placed on any of its assets which secure the
Loans from time to time except liens in favor of Lenders.
ARTICLE 5
COVENANTS OF LENDERS
5.01 Additional Loans to Borrower. The Lenders hereby acknowledge and
agree that following the date hereof Borrower may borrow up to Four Hundred
Eighty Thousand Dollars ($480,000) from one or more other lenders (the
"Permitted Loan"); provided that (i) the Permitted Loans shall not have any
terms or conditions superior to the terms and conditions set forth in this
Agreement, the Notes and the other Loan Documents, and (ii) the lenders of the
Permitted Loan (the "Additional Lenders") shall agree to the provisions of
Section 5.02 below.
5.02 Intercreditor Agreement. Each of the Lenders hereby agrees that
each other Lender has the right to pursue, at any time and from time to time,
any and all rights and remedies he may have under the Loan Documents and, in the
event that a Lender elects to exercise any such rights and remedies (an
"Initiating Lender") each other Lender shall be obligated, upon request of the
Initiating Lender, to similarly exercise such other Lender's rights and remedies
and to cooperate with the Initiating Lender. In addition, the Lenders hereby
agree that, notwithstanding the provisions of any of the Loan Documents, the
security interest held by and the guaranty provided to, each Lender under the
Loan Documents shall have the same priority as the security interest held by,
and the guaranty provided to, each other Lender, including the Additional
Lenders, and all of the Lenders shall have the right to participate pari passu
in any recovery obtained as a result of the enforcement by any Lender of any of
his rights or remedies under the Loan Documents.
ARTICLE 6
EVENTS OF DEFAULT
Each of the following events shall constitute an "Event of Default"
hereunder:
6.01 Borrower or Guarantor fails to make payment to either Lender of
any amounts due under any Loan Documents when due;
6.02 Borrower or Guarantor shall fail to observe or perform any
covenant or agreement under any Loan Documents or any other agreement or
instrument executed by Borrower or Guarantor in favor of Lenders, other than, in
each case, a covenant or agreement relating to the payment of amounts due
thereunder, and such failure is not remedied within thirty (30) days;
6.03 (i) Borrower or Guarantor shall (A) admit, in writing, its
inability to pay its debts generally as they become due; (B) file a petition in
bankruptcy or a petition to take advantage of any insolvency act; (C) make an
assignment for the benefit of creditors; (D) consent to, or acquiesce in, the
appointment of a receiver, liquidator or trustee of itself or of the whole or
any substantial part of its properties or assets; or (E) file a petition or
answer seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under the federal bankruptcy laws or
any other applicable law; or (ii) (A) a court of competent jurisdiction shall
enter an order, judgment or decree appointing a receiver, liquidator or trustee
of Borrower or Guarantor and/or of the whole or any part of the property or
assets of Borrower or Guarantor and such order, judgment or decree shall remain
unvacated, or not set aside, or unstayed for 45 days, or (B) a petition shall be
filed against Borrower or Guarantor seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
federal bankruptcy laws or any other applicable law and such petition shall
remain undismissed for 60 days, or (C) under the provisions of any other law for
the relief or aid of debtors, any court of competent jurisdiction shall assume
custody or control of Borrower or Guarantor or of the whole or any part of their
property or assets and Such custody or control shall remain unterminated or
unstayed for 45 days; or (iii) an order shall be entered in any proceeding by or
against Borrower or Guarantor decreeing the dissolution of Borrower or Guarantor
or the winding up of the affairs of Borrower or Guarantor or (iv) an attachment
or execution is levied against any portion of the property of Borrower or
Guarantor and is not discharged within 60 days;
6.04 Any representation or warranty made by Borrower or Guarantor
herein or in any other agreement, report, certificate, statement or instrument
(including, without limitation, financial statements) relating to the Loans
shall be or become untrue, inaccurate or misleading in any material respect;
6.05 A default shall occur with respect to any other liabilities,
indebtedness or obligations of Borrower or Guarantor to either Lender, of every
kind and description, direct or indirect, absolute or contingent, due or to
become due, now existing of hereafter arising, liquidated or unliquidated,
regardless of how they arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument and also including
obligations to perform acts and to refrain from taking action as well as
obligations to pay money and such default shall continue beyond the applicable
cure period, if any;
6.06 The voluntary or involuntary dissolution or winding up of Borrower
or Guarantor;
6.07 One or more judgments, decrees, or orders for the payment of money
not covered by insurance shall be rendered against Borrower or Guarantor and
such judgments, decrees, or orders shall continue unsatisfied and in effect for
a period of thirty (30) consecutive days without being vacated, discharged,
satisfied, stayed or bonded pending appeal; or
6.08 The sale or other transfer in any form of fifty (50%) percent or
more of the beneficial ownership of Borrower.
6.09 Any Borrower Security Agreement or Guarantor Security Agreement
shall at any time after its execution and delivery and for any reason other than
an act or omission by a Lender cease to create a valid and perfected first
priority security interest (or such lesser priority security interest as may be
specifically set forth therein) in and to the property purported to be subject
to such agreement or otherwise to be in full force and effect, or any Borrower
Security Agreement or Guaranty Security Agreement shall be declared null and
void, or the validity or enforceability thereof shall be contested by Borrower
or Guarantor, or Borrower or Guarantor shall deny it has any further liability
or obligation under any such agreement, or Borrower or Guarantor shall fail to
perform any of its obligations under any such agreement subject to any notice
and cure provisions contained therein.
6.10 At any time after its execution and delivery and for any reason,
the Xxxxxxxxx Guaranty Agreement or the Saferin Guaranty Agreement shall cease
to be in full force and effect or shall be declared null and void, or the
validity or enforceability of the Xxxxxxxxx Guaranty Agreement or the Saferin
Guaranty Agreement shall be contested by, Guarantor or Guarantor shall deny that
it has any further liability or obligation under such agreement, or Guarantor
shall fail to perform any of its obligations under the Xxxxxxxxx Guaranty
Agreement or the Saferin Guaranty Agreement.
ARTICLE 7
REMEDIES
7.01 If an Event of Default has occurred and is continuing, either
Lender may, at his option, exercise any right, power or remedy permitted by law,
including, without limitation, any one or more of the following:
(a) Declare all of the obligations of Borrower and/or Guarantor
immediately due and payable, provided that upon the occurrence of any of the
events specified in Section 6.03 above affecting Borrower and Guarantor, all
obligations of Borrower or Guarantor shall become immediately due and payable
without declaration, notice or demand;
(b) Borrower and/or Guarantor will reimburse Lenders for all reasonable
fees of attorneys or collection agencies and all reasonable expenses, costs and
charges paid or payable to third persons or suffered or incurred by Lenders in
attempting or affecting the enforcement of any provision hereof, or the
enforcement of the Loan Documents or in the collection of the amounts secured
hereby or in the exercise of any authority, right or remedy conferred upon
Lenders herein or by law, together with interest thereon at the default rate of
interest in the Notes or the maximum rate permitted by law, whichever is lower;
and
(c) All rights, remedies and options conferred upon Lenders hereunder
or by law shall be cumulative and may be exercised successively or concurrently
and are not alternative or exclusive of any such rights, remedies or options. No
express waiver by a Lender of any default or Event of Default hereunder shall in
any way be, or construed to be, a waiver of any future or subsequent default of
Event of Default. The failure or delay of either Lender in exercising any rights
granted to it hereunder shall not constitute a waiver of any such right in the
future and any single or partial exercise of any particular right by such Lender
shall not exhaust such rights or constitute a waiver of any other right provided
herein or by law.
ARTICLE 8
MISCELLANEOUS
8.01 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one instrument.
8.02 Provisions of the Loan Documents. The Loan Documents are subject
to the conditions, stipulations, agreements and covenants contained herein to
the same extent and effect as if fully set forth therein until this Agreement is
terminated and all principal, interest and other sums due and owing to Lenders
under this Agreement and on the Notes and the other Loan Documents have been
paid in full.
8.03 Further Assurances. Borrower and/or Guarantor shall, on demand of
either Lender, do any act or execute any additional documents reasonably
required by a Lender to carry out the terms of the Loan Documents and to keep
each Lender informed of the status and affairs of Borrower and Guarantor.
8.04 Parties Bound, Etc. The provisions of this Agreement shall be
binding upon and inure to the benefit of Borrower and Guarantor and each Lender
and their respective heirs, beneficiaries, legal representatives, successors and
assigns (except as otherwise prohibited by this Agreement). This Agreement is a
contract between Lenders and Borrower and Guarantor for their mutual benefit and
no third person shall have any right, claim or interests against Lenders or
Borrower and Guarantor by virtue of any provision hereof or as a result of any
action or inaction of Lenders in connection therewith.
Each reference herein to a Lender shall be deemed to include his heirs,
beneficiaries, legal representatives, successors and assigns, and each reference
to Borrower and Guarantor and any pronouns referring thereto as used herein
shall be construed in the masculine, feminine, neuter, singular or plural as the
context may require, and shall be deemed to include successors and assigns of
Borrower and Guarantor, all of whom shall be bound by the provisions hereof.
8.05 Notices. All notices and directions to either party shall be in
writing and shall be deemed given when delivered or deposited in. the United
States mail, and if delivered by mail, shall be mailed by registered or
certified first class mail, return receipt requested, postage prepaid, and
addressed as follows:
(1) to Xxxxxxxxx at:
Xxxxxx X. Xxxxxxxxx
c/o Sparacino Associates, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
to Saferin at:
Xxxxxx X. Xxxxxxx
0 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
with a copy in each case to:
Pepe & Hazard LLP
00 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
(2) to Borrower and Guarantor at:
MDI Entertainment, Inc.
000 Xxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx Prsysiecki
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxx, Esq.
or, as to all of the foregoing, to such other address as the addressee shall
have indicated by prior notice (in accordance with the provisions of this
Section) to the one giving the notice or direction in question.
8.06 Survival of Representations and Warranties. All of the covenants
representations and warranties made in this Agreement shall survive the
execution and delivery hereof, and may be relied upon by each Lender regardless
of any inspection or investigation or lack thereof by such Lender, so long as
all or any portion of the Note remains unpaid. All covenants, representations
and warranties contained in the Loan Documents, and in any agreement,
certificate, statement, report or other document delivered by or on behalf of
Borrower and Guarantor as provided herein, or otherwise in connection with the
transactions contemplated hereby, shall be deemed to have been made in this
Agreement.
8.07 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid, such
invalidity shall not affect other provisions which can be given effect without
the invalid provision or application, and to this end, the provisions of this
Agreement shall be severable.
8.08 Waivers, Extensions and Releases. Each Lender may at any time and
from time to time waive any one or more of the conditions contained herein or
extend the time of payment amounts due to such Lender, but any such waiver or
extension shall be deemed to be made in pursuance and not in modification
hereof, and any such wavier in any instance or under any particular circumstance
shall not be considered a waiver of such condition in any other instance or any
other circumstance.
8.09 Governing Law; Jurisdiction. This Agreement and the other Loan
Documents shall be construed in accordance with and governed by the laws of the
State of Connecticut without regard to its conflict of laws rules and the Notes
shall take effect as an instrument under seal.
8.10 Termination. This Agreement shall terminate and be of no further
force and affect when Borrower and Guarantor have repaid the indebtedness
evidenced by the Notes fully and indefeasibly and Borrower and Guarantor have
otherwise satisfied all of their respective obligations to Lenders hereunder and
under the other Loan Documents.
8.11 Borrower and Guarantor/Lender Relationship. Nothing contained in
this Agreement shall be construed as creating a joint venture or partnership of
or between Lenders and Borrower and Guarantor or to create any other
relationship between the parties hereto other than as Borrower and Guarantor and
Lenders, and Borrower and Guarantor hereby indemnify and agree to hold harmless
Lenders from any and all damages resulting from such a construction of the
relationship of the parties hereto.
8.12 Borrower and Guarantor to Pay Fees and Charges. Borrower and
Guarantor shall pay, upon demand, all costs, damages, charges and expenses
incurred in the procuring, making, implementation and enforcement of the
Xxxxxxxxx Loan and/or the Saferin Loan, including, without limitation, the
reasonable fees and disbursements of Lenders' attorneys.
8.13 WAIVER OF TRIAL BY JURY. BORROWER AND GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND AFTER CONSULTATION WITH COUNSEL, WAIVE ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
WRITTEN OR ORAL) OR ACTIONS OF EITHER PARTY.
8.14 PREJUDGMENT REMEDY WAIVER. TO INDUCE LENDERS TO ACCEPT THIS
AGREEMENT, BORROWER AND GUARANTOR AGREE THAT THE LOANS EVIDENCED BY THE NOTES,
THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS ARE AND EVIDENCE A COMMERCIAL
TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO A NOTICE AND
HEARING UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS AMENDED, OR
OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND AUTHORIZES LENDERS'
ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT COURT ORDER, PROVIDED
THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER. BORROWER AND GUARANTOR
ACKNOWLEDGE AND STIPULATE THAT SUCH WAIVER AND AUTHORIZATION GRANTED ABOVE ARE
MADE KNOWINGLY AND FREELY AND AFTER FULL CONSULTATION WITH COUNSEL.
SPECIFICALLY, BORROWER AND GUARANTOR RECOGNIZE AND UNDERSTAND THAT THE EXERCISE
OF LENDERS' RIGHTS DESCRIBED ABOVE MAY RESULT IN THE ATTACHMENT OF OR LEVY
AGAINST BORROWER AND GUARANTOR'S PROPERTY, AND SUCH WRIT FOR A PREJUDGMENT
REMEDY WILL NOT HAVE THE PRIOR WRITTEN APPROVAL OR SCRUTINY OF A COURT OF LAW OR
OTHER JUDICIAL OFFICER NOR WILL BORROWER AND GUARANTOR HAVE THE RIGHT TO ANY
NOTICE OR PRIOR HEARING WHERE BORROWER AND GUARANTOR MIGHT CONTEST SUCH A
PROCEDURE. THE INTENT OF BORROWER AND GUARANTOR IS TO GRANT TO LENDERS FOR GOOD
AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN SUCH A PREJUDGMENT REMEDY AND TO
ASSURE THAT ANY SUCH PREJUDGMENT REMEDY OBTAINED IS VALID AND CONSTITUTIONAL.
8.15 Note Replacement. Upon receipt of an affidavit of a Lender as to
the loss, theft, destruction or mutilation of a Note or any other security
document which is not of public record, and, in the case of any such loss,
theft, destruction or mutilation upon surrender and cancellation of such Note or
other security document, Borrower will issue, in lieu thereof, a replacement
Note or other security document in the same principal amount thereof and
otherwise of like tenor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Loan
Agreement as of the day and year first above written.
LENDERS:
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
BORROWER:
Media Drop-In Productions, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Its Chief Financial Officer
Duly Authorized
GUARANTOR:
MDI Entertainment, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Its Chief Financial Officer
Duly Authorized
