Exhibit 10.17
LOAN AGREEMENT
This Loan Agreement (the "Loan Agreement") is entered into as of this
2nd day of February, 1999, by and among Cinema Ride, Inc., a Delaware
corporation (the "Company"), and Xxxxx Xxxxxxx, an individual ("Xxxxxxx"), with
reference to the following:
A. After reviewing the Company's cash flow projections for the 1999
fiscal year, the directors of Company have concluded that, based on such
projections, including projected cash flow from operations and debt service, and
in view of the Company's current and anticipated cash position, the Company is
expected to have insufficient funds to satisfy its existing financial
obligations as well as to meet anticipated and unanticipated expenditures with
respect to the Company's business plan.
B. After an extensive search, management of the Company has been unable
to secure alternate sources of financing.
X. Xxxxxxx has offered to assist the Company to satisfy in part its
financial obligations by: (a) converting his existing note in the principal
amount of $80,000 (the "Existing Note") to a demand note and (b) providing a
line of credit to the Company in the amount of $120,000, all on the following
terms and conditions.
D. The outside directors of the Company deem it in the best interests
of the Company and its stockholders to enter into this Loan Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. CONVERSION OF EXISTING NOTE. The Existing Note is hereby amended to
provide that at any time prior to maturity and from time to time, the Company,
at the request of the Board of Directors has the right to demand a repayment of
all or a portion of the principal amount thereof, together with accrued and
unpaid interest, upon 90 days written notice to Xxxxxxx.
2. LINE OF CREDIT.
a. LOAN. Subject to the terms and conditions of this
Agreement, Xxxxxxx agrees to make a loan (the "Loan") to the Company as and when
the Company, through its Board of Directors may request at any time up to
February 2, 2002 (the "Termination Date"). The aggregate unpaid principal amount
of the Loan together with interest thereon shall be paid by the Company to
Xxxxxxx on the Termination Date. The Loan shall be evidenced by a Note
substantially in the form of Exhibit A attached hereto. Prior to or concurrently
with making a request hereunder, the Company shall require payment under the
existing Note as amended.
b. INTEREST ON LOAN. The Loan shall bear interest on the
unpaid principal amount thereof from time to time outstanding at 12% interest
per annum. Interest on the Loan shall be payable monthly commencing the first
day of the month following the date of the Loan. Interest shall be based upon a
360-day year and actual number of days elapsed.
c. DISBURSEMENT OF FUNDS. Whenever the Company desires to
receive the Loan hereunder, it shall give Xxxxxxx at least 90 days prior written
notice. The request shall be signed by the Company's Chief Financial Officer and
specify the amount of the Loan. Only one request may be made by the Company.
3. SECURITY.
x. XXXXX OF SECURITY INTEREST. To secure all of the Company's
obligations under the Loan, the Company hereby grants and transfers to Xxxxxxx a
continuing security interest in all of the assets of the Company except as set
forth below in Section 3.2. Subject to Section 3.2, such assets shall include
all of Company's
3.1 inventory,
3.2 accounts and other rights to receive the payment of money,
3.3 general intangibles,
3.4 business and office equipment,
3.5 business fixtures,
3.6 all other tangible personal property and physical properties,
3.7 rights in all motion pictures and programs (the "Ride Film
Library") whether recorded on film, videotape, cassettes, cartridge, disk or on
or by any other means, method, process or device whether now known or hereafter
developed,
3.8 all rights of every kind or nature of the Company in and to any and
all music and musical composition created for, used in or to be used in
connection with the Ride Film Library, including, all copyrights therein, all
copyrights, rights and copyrights,
3.9 All of the Company's interest in copyrights and renewals and
extensions of copyrights with respect to the Ride Film Library,
3.10 all rights of the Company to produce, acquire, release, sell,
distribute, lease, market, license, exhibit, transmit, or otherwise exploit the
Ride Film Library or any portion thereof,
3.11 all rights of the Company in any trademarks, service marks and
patents, and all applications, renewals and extensions therefor, and all know
how, trade secrets and other intellectual property rights, and
3.12 all cash and non-cash proceeds of the foregoing.
b. EXCLUDED PROPERTY. Notwithstanding anything to the
contrary, there shall be excluded from the security interest hereunder all
rights or property arising under
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agreements that prohibit (either expressly or under applicable law) the creation
of a security interest in such property or rights.
4. ISSUANCE OF WARRANT. In consideration for the agreements of Xxxxxxx
hereunder, including the amendment of the Existing Note and the provision of the
Loan, the Company shall issue to Xxxxxxx a warrant, substantially in the form of
Exhibit B hereto to purchase an aggregate of 1,538,461 shares at $.13 per share,
representing the per share market price on the date hereof.
5. MISCELLANEOUS.
a. APPLICABLE LAW. This Agreement and the rights and
obligations of the parties hereunder shall be governed by and interpreted and
construed in accordance with the laws of the State of California.
b. NOTICES. Any notice required or permitted to be given
hereunder shall be given in writing and shall be deemed to have been given when
deposited in the United States mail, certified, return receipt requested, with
first-class postage prepaid, properly addressed or by personal delivery or
recognized overnight courier to the following addresses:
Xxxxxxx:
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
The Company:
00000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxxxx 00000
Attention: Chief Financial Officer
c. ASSIGNMENTS. The provisions of this Agreement are hereby
made applicable to and shall inure to the benefit of each parties' successors
and assignors; provided, however, that the Company may not assign or transfer
its rights or obligations under this Agreement without the prior written consent
of Xxxxxxx.
d. COMPLETE AGREEMENT. This Agreement, together with the
exhibits to the Agreement, is intended by the parties hereto as a final
expression of their agreement and is intended as a complete statement of the
terms and conditions of this Agreement.
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IN WITNESS WHEREOF, Xxxxxxx and Company have caused this Agreement to
be executed on the date and year first written at the head of this Agreement.
CINEMA RIDE, INC., a Delaware corporation
By: /s/ X. Xxxxxxxxx
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Its: Director
By: /s/ X. Xxxxxxx
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Its: Director
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
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EXHIBIT A
PROMISSORY NOTE
$________________ Studio City, California
FOR VALUE RECEIVED, Cinema Ride, Inc. ("Borrower" or "Company"),
promises to pay to the order of Xxxxx Xxxxxxx ("Lender"), the principal sum of
_____________________________ ($_____________), together with interest at the
rate specified in Section 1.1 from the date of this Note and computed on the
unpaid principal sum from time to time outstanding, the same to be paid in
lawful money of the United States of America. Principal, interest and other
amounts payable hereunder to Lender are payable at the Company's offices in
Studio City, California.
1. INTEREST AND PAYMENTS.
1.1 INTEREST.
Interest hereunder shall accrue from the date of this Note at a per
annum rate equal to twelve percent (12%) (calculated on the basis of a
360-day-year composed of twelve 30-day months). Interest shall be payable
monthly commencing the first day of the month following the date of this Note.
1.2 DUE DATE.
The entire principal balance, and all accrued interest thereon, shall
be paid in full by the Borrower on February 2, 2002.
2. PREPAYMENTS.
Borrower may prepay all or any portion of the principal balance of this
Note at any time provided that such prepayment is accompanied by the payment of
all default interest and accrued interest under this Note to the date of such
prepayment.
3. DEFAULT.
3.1 EVENTS OF DEFAULT.
An Event of Default shall have occurred under this Note if any amount
due (including principal and interest) is not paid within ten (10) days after
written notice that such amount is delinquent, in which case the entire amount
due hereunder shall be due and payable..
3.2 COSTS OF DEFAULT.
Borrower shall pay all costs of collection when incurred by Lender,
including, but not limited to, reasonable attorney's fees whether incurred in
connection any trial or appeal of a trial court decision.
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4. MISCELLANEOUS.
This Note shall be governed by the laws of the State of California.
CINEMA RIDE, INC.
By:
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Its:
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