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FIRST SCHEDULE
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of this _ day of
August, 1996 by and between OUT-TAKES, INC. (hereinafter called "Debtor"), a
Delaware corporation, with offices at 0000 Xxxxxxxx Xxxxxx, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, and Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxxxx-Xxxxxxx
(hereinafter collectively called "Creditor"), both of 00 Xxx Xxxxx, Xxx. X-000,
Xxxxxx, Xxxxxxxxxx 00000.
1. As used herein, the following terms shall have the following meanings.
Terms not otherwise defined herein shall have the meanings ascribed to them, if
any, under the California Commercial Code.
a. "Accounts" shall mean any and all rights now existing or hereafter
arising to payment for merchandise, goods, or commodities sold or leased or to
be sold or leased or for services rendered or to be rendered, no matter how
evidenced, including accounts, accounts receivable, general intangibles,
instruments, documents, purchase orders, notes, drafts, acceptances, chattel
paper and other forms of obligations owing to Debtor, all guaranties and
security therefor, all merchandise, goods, or commodities returned to or
reclaimed by Debtor and all of Debtor's Books (as that term is defined below)
relating to any of the foregoing.
b. "Books" shall mean all of Debtor's books and records, including,
without limitation: ledgers; records indicating, summarizing, or evidencing
Debtor's assets, Accounts, business operations or financial condition; computer
programs; computer discs or tape files; computer runs and other computer
printouts; and any other computer prepared information of any kind.
C. "Chattel Paper" shall mean a writing or writings of whatever sort
which evidence a monetary obligation and a security interest in or lease of
specific goods.
d. "Collateral" shall mean those items in which a security interest is
granted hereunder pursuant to Paragraph 2 below.
e. "Deposit Accounts" shall mean any demand, time, savings, passbook
or like accounts maintained with a bank, savings and loan association, credit
union or like organization and any renewals, extensions and/or replacements
thereof, and all proceeds and accretions, including, without limitation,
interest and
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other property at any time and from time to time receivable or otherwise
entitled to be received on account thereof.
f. "Documents" shall mean any and all documents of title, bills of
lading, dock warrants, dock receipts, and warehouse receipts and shall include,
without limitation, other documents which purport to be issued by a bailee and
purport to cover goods in the bailee's possession which are either identified or
are fungible portions of an identified mass.
g. "Equipment" shall mean any and all things moveable or which are
fixtures which are used or bought for use primarily in the business of Debtor,
wherever located, now or hereafter existing, including, but not limited to all
software applications, photography rigs, computer network systems, computer
hardware, printers, and office furniture and all parts thereof and all additions
and accessions thereto and replacements thereof.
h. "Event of Default" shall mean any of those events described in
Paragraph 9 below.
i. "Fixtures" shall mean all plant fixtures, business fixtures, and
other fixtures and storage, office facilities, wherever located, now or
hereafter existing, and all additions and accessions thereto and replacements
therefor and products thereof.
j. "Instruments" shall mean any and all negotiable instruments,
securities (certificated and uncertificated) and every other writing which
evidences a right to the payment of money.
k. "Insurance" shall mean any and all policies of Insurance and the
proceeds thereof on or covering any or all of the Collateral.
l. "Inventory" shall mean any and all of Debtor's goods, merchandise
and other personal property, wherever located, now or hereafter existing,
including, without limitation, those held for display or demonstration or out on
lease or consignment or to be furnished under a contract of service or are raw
materials, work in process, finished materials, or materials used or consumed,
or to be used or consumed, in Debtor's business, and shall include, without
limitation, all packing and shipping materials, wherever located; and all other
items hereafter acquired by Debtor by way of substitution, replacement, return,
repossession or otherwise, and all additions and accessions thereto, and the
resulting product or mass, and any documents of title representing any of the
above.
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m. "Obligations" shall mean any and all liabilities, debts, and
obligations of Debtor to Creditor pursuant to clauses 2 and 3 of the Settlement
and Mutual Release Agreement between the Debtor, the Creditor and Photo
Corporation Group Pty., Ltd. dated August _, 1996.
n. "Other Property" shall mean all of Debtor's personal property other
than Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment,
Instruments and Inventory, including, without limitation, patents, service
marks, trademarks, trade names, copyrights and proprietary rights, and general
intangibles.
2. As security for the payment by Debtor to Creditor of the Obligations,
Debtor hereby grants to Creditor a continuing security interest in all of the
following: Inventory, Accounts, Documents, Equipment, Deposit Accounts,
Instruments, Fixtures, Chattel Paper, Other Property, and goods and commodities,
whether now held or hereafter acquired (including all returns, rejections and
repossessions and whether raw materials, work in progress, or materials used or
consumed in Debtor's business), whether or not such be in the actual or
constructive possession of Debtor, and together with all proceeds arising from
any of the foregoing, and all Insurance proceeds of any and all of the
foregoing.
3. Debtor represents and warrants to Creditor that:
a. Debtor is duly organized and existing in good standing in the
jurisdiction of its incorporation without limit as to the duration of its
existence, and is duly qualified and in good standing in each jurisdiction in
which the character of the properties owned by it therein or in which the
transaction of its business makes such qualification necessary;
b. The execution, delivery and performance of this Security Agreement
are within Debtor's powers, have been duly authorized and are not in conflict
with applicable law or the terms of any charter, bylaws or other incorporation
papers;
c. Any and all financial information, including any and all Books,
records, Documents and other information relating to the Collateral, submitted
by Debtor to Creditor, whether previously or in the future, is or will be
genuine, true and correct and prepared in accordance with generally accepted
accounting principles, consistently applied, and no such financial information
omits or will omit any material facts necessary to make such information not
misleading;
d. All Accounts are and will, at all times pertinent hereto, be bona
fide existing obligations created by sale and delivery of merchandise or
rendition of services to customers in the ordinary course of business, free of
liens
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and security interests and unconditionally owed to Debtor without defenses,
disputes, offsets, counterclaims, rights of return or cancellation, and Debtor
has no knowledge of any fact, including, without limitation, any imminent or
threatened bankruptcy, insolvency, or financial embarrassment of any account
debtor, which would impair the validity or collectibility of any of the Accounts
or Instruments, and each obligor liable upon the Accounts or Instruments has and
will have capacity to contract;
e. Debtor shall keep Inventory at locations under its control.
f. Debtor's federal taxpayer number is 00-0000000;
g. The name of Debtor appearing in the first paragraph of this
Security Agreement is the true, complete and correct name of Debtor; and Debtor
conducts business only under the following trade names and styles:
Out-Takes
h. Debtor will not, without the prior written consent of Creditor
(which consent shall not be unreasonably withheld), sell, lease, or otherwise
dispose of, move or transfer, any of Debtor's assets, including, without
limitation, the Collateral, except in the ordinary course of business;
i. Debtor will not, without the prior written consent of Creditor
(which consent shall not be unreasonably withheld), change its name, business
structure, corporate identity or structure; add any new fictitious or trade
names; liquidate; merge or consolidate with or into any other business
organization;
j. Debtor will not, without the prior written consent of Creditor,
incur any debts outside the ordinary course of business, except renewals or
extensions of existing debts and interest thereon, nor make any advances or
loans except in the ordinary course of business as presently conducted;
k. Debtor does now keep and hereafter at all times shall keep and
furnish to Creditor on demand upon an Event of Default correct and accurate
records itemizing and describing the kind, type, quality and quantity of the
Inventory and Accounts, including, without limitation, the age and amount of
each account, the name and address of each account debtor, and the merchandise
giving rise to such account;
l. Inventory is not now and hereafter shall not be, without the prior
written consent of Creditor, stored with a bailee, warehouseman or similar
party, or in the event of such storage, Debtor will concurrently therewith cause
any such bailee, warehouseman or similar party to issue and deliver to Creditor,
in form
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and substance acceptable to Creditor, warehouse receipts in Creditor's name
evidencing the storage of such inventory;
m. There are no actions or proceedings pending by or against Debtor or
any guarantor of Debtor before any court or administrative agency, and Debtor
has no knowledge of any pending, threatened, or imminent litigation,
governmental investigations or claims, complaints, actions or prosecutions
involving Debtor or any guarantor of Debtor, except as heretofore specifically
disclosed in writing to Creditor or reflected in the Books.
n. The Debtor shall not allow any UCC-1 financing statement whether
now existing or hereafter filed to have priority over the UCC-1 financing
statement contemplated by the terms of the Settlement and Mutual Release
Agreement between the Debtor, the Creditor and Photo Corporation Group Pty. Ltd.
dated August _, 1996.
4. Until Creditor exercises its rights to collect proceeds and amounts
with respect to the Collateral, Debtor will collect with diligence any and all
proceeds with respect to the Collateral, at its own expense. Upon the occurrence
and continuance of any Event of Default, upon Creditor's written request, any
collection of proceeds with respect to the Collateral by Debtor, whether in the
form of cash, checks, notes or other instruments for the payment of money
(properly endorsed or assigned where required to enable Creditor to collect
same) or otherwise, shall be in trust for Creditor, and Debtor shall keep all
such collections separate and apart from all other funds and property so as to
be capable of identification as the property of Creditor and shall deliver them
together with the proceeds of all cash sales, daily to Creditor in the identical
form received.
5. Until Creditor exercises its rights to collect the Accounts, Inventory
and Instrument proceeds pursuant to Xxxxxxxxx 0, Xxxxxx may continue its
respective present policies with respect to returned merchandise and
adjustments. However upon an Event of Default and, upon request by Creditor,
Debtor shall immediately notify Creditor of all cases involving returns,
rejections, repossessions and loss or damage of or to merchandise represented by
the Accounts or Instruments or constituting Inventory and of any credits,
adjustments or disputes arising in connection with the goods or services
represented by the Accounts or Instruments or constituting Inventory in excess
of $5,000 and, in any of such events, Debtor will immediately pay to Creditor
from its own funds (and not from the proceeds of Accounts, Inventory or
Instruments) for application to any Obligation, the amount of any credit for
such returned or repossessed merchandise and adjustments made.
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6. Anything herein to the contrary notwithstanding:
a. Debtor shall remain liable under the contracts and agreements
included in the Collateral to perform all of its duties and obligations
thereunder to the same extent as if this Security Agreement had not been
executed.
b. The exercise by Creditor of any of the rights hereunder shall not
release Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral; and
c. Creditor shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Security
Agreement, nor shall Creditor be obligated to perform any of the obligations or
duties of Debtor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
7. Debtor shall upon an Event of Default (i) permit representatives of
Creditor to inspect the Collateral and the respective Books and records relating
to the Collateral and make extracts therefrom at any reasonable time and to
arrange for verification of the Accounts, under reasonable procedures,
acceptable to Creditor, directly with the account debtors or otherwise at
Debtor's expense; (ii) promptly notify Creditor of any attachment or other legal
process levied against any of the Collateral and any information received by
Debtor relative to the Collateral, the account debtors or other persons
obligated in connection therewith, which may in any way affect the value of the
Collateral or the rights and remedies of Creditor in respect thereto; (iii)
reimburse Creditor upon demand for any and all legal costs, including reasonable
attorney's fees and accountants' fees, and other expenses incurred in collecting
any sums payable by Debtor under any Obligation secured hereby, enforcing any
term or provision of this Security Agreement or otherwise or in the checking,
handling and collection of the Collateral and the preparation and enforcement of
any agreement relating thereto, whether by nonjudicial or judicial action; (iv)
promptly notify Creditor of each location at which the Collateral is or will be
kept, other than for temporary processing, storage or similar purposes, and of
any removal thereof to a new location, including, without limitation, each
office of Debtor at which Books or records relating to the Accounts are kept;
(v) maintain policies of Insurance insuring the Collateral against loss or
damage by such risks and in such amounts and forms as are reasonably determined
prudent by the Debtor; (vi) do all acts necessary to maintain, preserve and
protect all Collateral, keep all Collateral in good condition and repair and
prevent any waste or unusual or unreasonable depreciation thereof; and (vii)
execute and deliver to Creditor further documents and instruments and such other
acts and things as Creditor may reasonably request in order to effectuate fully
the purpose and intent of this Security Agreement. In the event of a failure by
the Debtor so to do, the Debtor hereby
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irrevocably makes and appoints Creditor (and any of Creditor's officers,
employees, or agents) as Debtor's true and lawful attorney-in-fact with power to
sign on behalf of Debtor on any financing statements, continuation statements,
security agreement, mortgage, assignment, certificate of title, affidavit,
letter of authority, notice or similar document which must be executed and/or
filed in order to perfect or continue perfected Creditor's security interest in
the Collateral. Debtor hereby recognizes and agrees that the power of attorney
herein granted is coupled with an interest and shall not be revocable until the
Obligations are fully repaid at which time such Power of Attorney shall
immediately cease.
8. Creditor may at any time, without prior notice to Debtor, collect
proceeds and amounts in respect of the Collateral and may give notice of
assignment to any and all account debtors, and Debtor hereby irrevocably
constitutes and appoints Creditor (and any of Creditor's officers, employees or
agents) its irrevocable, true and lawful attorney-in-fact to enforce in Debtor's
name or in Creditor's name or otherwise all rights of Debtor in the Collateral
and to do any and all things necessary and proper to carry out the purpose of
this Security Agreement, provided, however, that Creditor may exercise said
collection rights and its rights and powers as said attorney-in-fact only upon
the occurrence and continuance of an Event of Default. Debtor hereby recognizes
and agrees that the power of attorney herein granted is coupled with an interest
and shall not be revocable until the Obligations are fully repaid at which time
such Power of Attorney shall immediately cease.
9. Any one or more of the following events shall constitute an Event of
Default under this Security Agreement;
a. If any representation, statement, report or certificate made or
delivered by Debtor or any of its officers, directors, employees, or agents or
any guarantor of Debtor to Creditor is not materially true and correct;
b. If Debtor fails to pay when due and payable, or within seven (7)
calendar days of receipt of a written notice from the Creditor to the Debtor
detailing the amount payable and requesting payment, or otherwise fails to
perform when due, any of the Obligations;
c. If Debtor becomes insolvent or makes an assignment for the benefit
of creditors (whether with respect to Creditor or otherwise);
d. If any proceeding by or against Debtor or any guarantor of Debtor
is commenced under any bankruptcy, reorganization, arrangement, readjustment of
debt or moratorium law or statute, or for Debtor's dissolution or liquidation
and is not withdrawn or stayed within 28 days of commencement;
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e. Other than in respect of those accounts payable referred to in
Appendix 1, if any writ of attachment, garnishment, execution or other legal
process is issued against any property of Debtor or any guarantor of the
Obligations and is not timely and diligently contested, provided that (i) such
contest is permitted by law, (ii) such contest has the effect of staying any
further action against any property of Debtor or any guarantor of the
Obligations, (iii) Debtor posts any security required by law which security
shall be reasonably satisfactory to Creditor, and (iv) said contest does not
subject Creditor to civil or criminal penalties;
f. Other than in respect of those accounts payable referred to in
Appendix 1, if any assessment is made against Debtor or any guarantor of Debtor
for any taxes, other than on real property, by any federal or state government,
or any department thereof, and is not timely and diligently contested, provided
that such contest is permitted by law, has the effect of staying any further
action against Debtor or any guarantor of the Obligations, Debtor posts any
security required by law which security shall be reasonably satisfactory to
Creditor, and said contest does not subject Creditor to civil or criminal
penalties;
g. If Debtor is enjoined, restrained or in any way prevented by court
order from continuing to conduct all or any material part of its business
affairs, and Debtor does not timely and diligently contest the same, provided
that (i) such contest is permitted by law, (ii) such contest has the effect of
staying any further action against the Debtor's business affairs, (iii) Debtor
posts any security required by law which security shall be reasonably
satisfactory to Creditor, and (iv) said contest does not subject Creditor to
civil or criminal penalties;
h. Other than in respect of those accounts payable referred to in
Appendix 1, if there is a default in any agreement between Debtor and third
parties and such third parties accelerate the maturity of any of Debtor's
indebtedness;
i. If Debtor makes any payment on account of indebtedness which has
been subordinated to Debtor's Obligations to Creditor other than pay accounts
payable arising in the ordinary course of business consistent with past
practices; and
j. Unless otherwise specified above in this Paragraph 9, if Debtor
otherwise fails or neglects to perform, keep or observe in any material respect,
any term, condition, agreement, warranty or representation contained in this
Security Agreement or any other presently existing or future agreement between
Debtor and Creditor, within twenty one (21) days after written notice from
Creditor of such failure or neglect.
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10. Upon the occurrence of any Event of Default, Creditor may, at its
election, without notice of its election and without demand, do any one or more
of the following, successively or concurrently, all of which are authorized by
Debtor:
a. Declare all of Debtor's Obligations for payment of money, whether
evidenced by installment notes, demand notes or otherwise, immediately due and
payable.
b. Cease advancing money or extending credit to Debtor under any
agreement between Debtor and Creditor, and terminate any agreement for financial
accommodation to or for the benefit of Debtor.
c. Immediately or from time to time enter the premises where the
Collateral is located, take possession of all or any part of the Collateral,
wherever it may be found, using all necessary force to do so, and Debtor waives
all claims for damages due to or arising from or connected with any such taking.
d. Require Debtor to assemble the Collateral, or any part of it, at a
place designated by Creditor which is reasonably convenient to Debtor and
Creditor.
e. Pay, purchase, contest or compromise any encumbrance, charge or
lien which in the opinion of Creditor appears to be prior or superior to its
security interest and to pay all expenses incurred therewith. Any payment or
expense so incurred shall become part of Debtor's Obligations to Creditor,
payable on demand, and secured hereby.
f. Do such other acts as Creditor deems reasonable to protect its
interest in the Collateral, including, without limitation, repairing or
reconditioning, finishing, maintaining, preparing for sale, or storing such
Collateral. Any expenses thereof shall become part of Debtor's Obligations,
payable on demand, and secured hereby.
g. From time to time, by way of one or more contracts or
transactions, proceed in the foreclosure of Creditor's security interest and
sale of the Collateral or any part of it, in any manner permitted by law or
provided for herein.
h. Sell, lease, or otherwise dispose of the Collateral or any part of
it, with or without having the Collateral, or any part of it, at the place of
sale, upon terms and in such manner as Creditor may determine, and Creditor may
purchase same at any such sale. Any notice of sale, disposition or other
intended action sent to Debtor at least fourteen (14) days prior to such action
shall constitute reasonable notice.
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i. Apply to a court of competent jurisdiction for appointment of a
receiver of Debtor to take possession of, operate, manage, maintain, and
preserve Debtor's business and assets for the benefit of Creditor;
j. Apply to a court of competent jurisdiction for a writ of
possession or attachment against any of Debtor's assets notwithstanding the
existence or value of any security for the Obligations.
k. Exercise any remedies of a secured party under the California
Commercial Code, and any other remedies available at law, in equity, or by
separate agreement with the Debtor.
11. If sufficient sums are not realized upon any disposition of the
Collateral to pay all Obligations to Creditor and any expenses, including
reasonable attorneys' fees, of such disposition, Debtor hereby promises to pay
immediately any resulting deficiency.
12. Creditor shall in no way or manner be liable or responsible for: (a)
the safekeeping of the Collateral; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in value
thereof; or (d) any act of default of any carrier, warehouseman, bailee,
forwarding agency, or any other person whomsoever. All risk or loss, damage or
destruction of inventory shall be borne by Debtor.
13. No failure or delay on the part of Creditor in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law, in equity, or by separate agreement with Debtor.
14. No amendment, modification, termination, or waiver of any provision
of this Security Agreement nor consent to any departure by Debtor therefrom
shall in any event be effective unless the same shall be in writing and signed
by Creditor and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given. No notice to or
demand on Debtor in any case shall entitle Debtor to any other or further notice
or demand in similar or other circumstances.
15. All notices, requests, demands, directions and other communications
provided for hereunder shall be in writing and mailed, certified mail return
receipt requested, transmitted by telecopier, or personally delivered, as
elected by the party giving such notice, to the applicable party at the address
indicated below:
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If to Debtor:
Out-Takes, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier Number: (000) 000-0000
Attn: President
And with a copy to:
Xx. Xxxxxx X. Xxxx
Xxxxxx & Xxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopier Number: (000) 000-0000
If to Creditor:
Xxxxxx X. Xxxxxxx and Xxxx X. Xxxxxxxx
00 Xxx Xxxxx,
Xxx. X-000, Xxxxxx, Xxxxxxxxxx 00000
Telecopier Number: (000) 000-0000
and with a copy to:
Xxxxxxx X. Xxxxx
Xxxxxx Xxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopier Number: (000) 000-0000
or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party complying as to delivery with the terms
of this Paragraph. All such notices, requests, demands, directions and other
communications shall be effective (i), when mailed, five (5) days after being
deposited in the mails addressed as aforesaid with postage prepaid, (ii) when
delivered personally, upon delivery pursuant to this Paragraph, or (iii) on the
next business day after transmission if transmitted by telecopier (and
appropriate answerbacks have been received).
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16. Any provision of this Security Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
17. Debtor waives the right to plead the statute of limitations as a
defense to any and all obligations contained in this Security Agreement or
secured by it to the full extent permissible by law. Time and exactitude of each
of the terms, obligations, covenants and conditions are declared to be of the
essence of this Security Agreement.
18. This Security Agreement shall take effect immediately upon the
execution by Debtor, and the execution hereof by Creditor shall not be required
as a condition to the effectiveness of this Security Agreement. The provision
for execution of this Security Agreement by Creditor is only for purposes of
filing a Memorandum of this Security Agreement under the Uniform Commercial
Code, if execution hereof by Creditor is required for purposes of such filing.
19. Nothing herein shall in any way limit the effect of the conditions
set forth in any other security or other agreement executed by Debtor, but each
and every condition hereof shall be in addition thereof.
20. This Security Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties. Creditor may assign
this Security Agreement and its rights and duties hereunder without prior notice
to or consent of the Debtor.
21. DEBTOR AND CREDITOR HEREBY AGREE TO WAIVE THEIR RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECURITY
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this Security Agreement, including, without limitation, contract
claims, tort claims, breach of duty claims and all other common law and
statutory claims. Debtor and Creditor each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Security Agreement and that each will
continue to rely on the waiver in their related future dealings. Debtor and
Creditor further warrant and represent that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT
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AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS SECURITY AGREEMENT.
In the event of litigation, this Security Agreement may be filed as a written
consent to a trial by the court.
22. This Security Agreement is and shall be governed by and construed in
accordance with the laws of the state of California, except to the extent that
the validity or perfection of the security interests hereunder or remedies
hereunder in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the state of California.
23. Creditor and Debtor agree to file any action arising out of, or
relating to, this Security Agreement with the Superior Court of the State of
California for the County of Los Angeles, Central District (the "Court") and
waive all objections to personal jurisdiction and venue of the Court for such
purposes, except that Creditor and Debtor may file any action relating to the
disposition of any Collateral located beyond the territorial jurisdiction of the
Court with any court of competent jurisdiction.
24. Debtor hereby consents to service of process in any action, wherever
filed, arising out of, or relating to, this Security Agreement by first class
United States mail, postage prepaid, to the address of Debtor set forth in, or
that which Debtor designates pursuant to, Paragraph 15 of this Security
Agreement.
25. In the event either party files an action to enforce or interpret the
terms of this Security Agreement, the prevailing party shall be entitled to
receive its reasonable attorneys' fees and costs from the losing party.
IN WITNESS WHEREOF, the parties have executed this Security Agreement,
effective as of the date first written above.
DEBTOR: CREDITOR:
Out-Takes, Inc. Xxxxxx X. Xxxxxxx and
Xxxx X. Xxxxxxxx-Xxxxxxx
By:__________________________ _______________ _______________
Name:________________________
Title:_______________________
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APPENDIX I
NIL
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ATTACHMENT TO UCC-1 FINANCING STATEMENT
Debtor's Name: OUT-TAKES, INC.
Continuation of Item 6: DESCRIPTION OF COLLATERAL
This financing statement covers all right, title and interest in, to and
under the following, in each case whether now or hereafter existing and whether
now owned or hereafter acquired and regardless of where located (all of which
being hereinafter collectively called the "Collateral"):
Inventory, Accounts, Documents, Equipment, Deposit Accounts, Instruments,
Fixtures, Chattel Paper, Other Property, and goods and commodities, whether now
held or hereafter acquired (including all returns, rejections and repossessions
and whether raw materials, work in progress, or materials used or consumed in
Debtor's business), whether or not such be in the actual or constructive
possession of Debtor, and together with all proceeds arising from any of the
foregoing, and all Insurance proceeds of any and all of the foregoing.
As used herein, the following terms shall have the following meanings.
Terms not otherwise defined herein shall have the meanings ascribed to them, if
any, under the California Commercial Code.
a. "Accounts" shall mean any and all rights now existing or hereafter
arising to payment for merchandise, goods, or commodities sold or leased or to
be sold or leased or for services rendered or to be rendered, no matter how
evidenced, including accounts, accounts receivable, general intangibles,
instruments, documents, purchase orders, notes, drafts, acceptances, chattel
paper and other forms of obligations owing to Debtor, all guaranties and
security therefor, all merchandise, goods, or commodities returned to or
reclaimed by Debtor and all of Debtor's Books(as that term is defined below)
relating to any of the foregoing.
b. "Books" shall mean all of Debtor's books and records, including,
without limitation: ledgers; records indicating, summarizing, or evidencing
Debtor's assets, Accounts, business operations or financial condition; computer
programs; computer discs or tape files; computer runs and other computer
printouts; and any other computer prepared information of any kind.
c. "Chattel Paper" shall mean a writing or writings of whatever sort
which evidence a monetary obligation and a security interest in or lease of
specific goods.
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d. "Collateral" shall mean those items in which a security interest is
granted hereunder pursuant to Paragraph 2 of the Security Agreement.
e. "Deposit Accounts" shall mean any demand, time, savings, passbook or
like accounts maintained with a bank, savings and loan association, credit union
or like organization and any renewals, extensions and/or replacements thereof,
and all proceeds and accretions, including, without limitation, interest and
other property at any time and from time to time receivable or otherwise
entitled to be received on account thereof.
f. "Documents" shall mean any and all documents of title, bills of
lading, dock warrants, dock receipts, and warehouse receipts and shall include,
without limitation, other documents which purport to be issued by a bailee and
purport to cover goods in the bailee's possession which are either identified or
are fungible portions of an identified mass.
g. "Equipment" shall mean any and all things moveable or which are
fixtures which are used or bought for use primarily in the business of Debtor,
wherever located, now or hereafter existing, including, but not limited to all
software applications, photography rigs, computer network systems, computer
hardware, printers, and office furniture and all parts thereof and all additions
and accessions thereto and replacements thereof.
h. "Fixtures" shall mean all plant fixtures, business fixtures, and other
fixtures and storage, office facilities, wherever located, now or hereafter
existing, and all additions and accessions thereto and replacements therefor and
products thereof.
i. "Instruments" shall mean any and all negotiable instruments,
securities (certificated and uncertificated) and every other writing which
evidences a right to the payment of money.
j. "Insurance" shall mean any and all policies of Insurance and the
proceeds thereof on or covering any or all of the Collateral.
k. "Inventory" shall mean any and all of Debtor's goods, merchandise and
other personal property, wherever located, now or hereafter existing, including,
without limitation, those held for display or demonstration or out on lease or
consignment or to be furnished under a contract of service or are raw materials,
work in process, finished materials, or materials used or consumed, or to be
used or consumed, in Debtor's business, and shall include, without limitation,
all packing and shipping materials, wherever located; and all other items
hereafter acquired by Debtor by way of substitution, replacement, return,
repossession or
-16-
17
otherwise, and all additions and accessions thereto, and the resulting product
or mass, and any documents of title representing any of the above.
l. "Obligations" shall mean any and all liabilities, debts, and
obligations of Debtor to Creditor pursuant to clauses 2 and 3 of the Settlement
and Mutual Release Agreement between the Debtor, the Creditor and Photo
Corporation Group Pty. Ltd. dated August _, 1996.
m. "Other Property" shall mean all of Debtor's personal property other
than Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment,
Instruments and Inventory, including, without limitation, patents, service
marks, copyrights, proprietary rights, and general intangibles.
-17-
18
SECOND SCHEDULE
The purpose of this schedule is to list the major points the Parties anticipate
putting in place in order to "operationalize" the Fine Art Series. Subject to
further refinement, these are as follows:
Summary/ LPS and RHS are planning to produce approximately
Program Format ten (10) portraiture backgrounds "inspired by"
transparencies of classical 17th, 18th, 19th and
early-20th century impressionist paintings
licensed through the Xxxxxxxxx Art Library and
other sources (collectively, the "Properties").
The original painter's subject(s) will be removed
from all Properties, and a likeness of clients
will be substituted using photography and computer
retouching. These composite images will be printed
on silver-halide as well as watercolor paper, and
offered to the Company's customers as a "Signed
Edition" from sittings that LPS will personally
photograph during appointments scheduled in
offpeak hours at the Irvine Studio. To the extent
both Parties agree, the Properties may also be
offered at a reduced price as "Artist-Approved
Reproductions" that will be photographed by the
Company's permanent staff according to LPS'
training direction.
Preparation of RHS and LPS will be responsible for the selection
Backgrounds and preparation of the original backgrounds using
computer equipment made available by the Company
at times which do not interfere with normal
operation of the Irvine Studio. The Company will
also provide scanning services for the original
transparencies as well as assistance to
pre-program the motion control system. After
taking in account the Company's priority to first
browser all Christmas Card images shown in the
Company's card brochure, the Company will enter at
least four (4) of these backgrounds into the image
browser as and when the initial preparation work
has been completed. If a CD can be burned in order
to provide for temporarily loading the images into
the system so as not to deplete server space when
they are not in active use, the Company will
cooperate to browser the remaining images as and
when time permits. The tentative target date for
RHS and LPS to have the initial group of images
ready to be added to the browser is September 15,
1996.
Product Samples Once the images have been browsered, LPS and
Xxxxx Wersh will work to photograph test subjects
into each
-1-
19
image. When acceptable sample photographs have
been taken, RHS and LPS will be responsible for
retouching the subject foregrounds. The Company
will then print and display in a prominent studio
location 3-to-5 product samples printed in at
least a 16" x 20" size on watercolor paper. In
addition, the Company will have samples of all
other available images in sizes up to and
including 16" x 20" to show prospects who express
interest in the series.
Marketing Slick/ RHS will prepare a marketing slick and a pricing
Pricing Slick sheet that will describe the Fine Art Photography,
LPS and those painters whose work inspired
Properties in the series. These slicks will be
printed 2-sided on 8 1/2" x 11" 100# glossy stock
using a 5-color press, and copies will be kept in
a literature rack available to interested persons
who come into the studio.
Video Presentation The planned video presentation in the studio will
include at least one segment dedicated to Fine Art
Photography and including a testimonial from a
happy client.
Customer Interest-Cards The Company's permanent staff will encourage all
persons who express a possible interest in Fine
Art Photography to fill out and leave a Customer
Interest Card. The information from these cards
will be forwarded to LPS at least once a week.
LPS Follow-Up LPS will be responsible for following up with
these prospects by calling all of those persons
who filled out a Customer Interest Card, and
discussing with them their photographic needs. As
appropriate, LPS will schedule appointments for
photography sittings at the Irvine Studio
involving these prospects.
Photography Sittings All sittings will be scheduled for off-peak days
and hours (i.e., at times other than on weekdays
after 8 PM or on weekends during normal business
hours), or at times that have been agreed in
advance with the Irvine Studio manager. Customer
demand permitting, LPS is planning to schedule
appointments for approximately two (2) sitting
days per month for the next twelve (12) months,
each with multiple sittings spaced at 1-2 hour
intervals.
These will be high service level sessions; and LPS
will be responsible for overseeing all aspects of
make-up, wardrobe and the photography sitting. The
Company will
-2-
20
provide one photo assistant, the computer operator
and a greeter, each of whom will work with LPS to
hold distractions to a minimum and to assist
clients to have the best possible service and
experience while in the Irvine Studio.
Proofs and Sales All backgrounds and studio lighting will be
programmed into the image browser; and the
computer operator will prepare "Artist Proofs" for
review by the client immediately following the
session. LPS will also conduct the pre-sale and
order process; and the Company's sales personnel
will assist to ring up these sales or to collect
customer deposits to the extent double-bookings
make it impossible for LPS to adequately serve
all clients' needs.
Retouching Following the session, LPS will complete an order
form detailing the clients' retouching
instructions. The Company's computer operator will
be responsible for following these instructions
and painting those portions of the composite in
order to fit into the background artwork. This
work will be in accordance with a training manual
that will be prepared by RHS for each image and/or
supplemented by retouching support provided by
RHS/LPS or a person(s) hired by RHS/LPS, if
required. Retouching work requiring labor time to
be expended beyond normal staffing levels (whether
by the Company, RHS/LPS or artists hired by them)
will be treated as "Extra Personnel" costs and
therefore deducted prior to calculating all
revenue splits.
Printing After proofs from the retouching work are
approved, the Company will coordinate the printing
of each piece (both from Metrums and through
service bureaus for Iris prints) in accordance
with written instructions.
Completion After the work is printed, LPS will manually sign
and number it within the edition, and will
schedule an appointment to meet the client in
order to show them the piece(s) and collect the
balance. LPS will coordinate with the client the
timing for any follow-up meetings, and may use one
of the two conference rooms in the Irvine Studio
for such presentations at off-peak times or other
times agreed in advance with the Irvine Studio
manager.
Edition Length The pricing and discrete number of prints that
will be offered within each Signed Edition will be
subject to
-3-
21
mutual agreement, but is assumed to be
approximately 50+/- for each Property, at prices
that are somewhat lower than the pricing the
Company set for the Xxxxxxx Xxxxxxxx series --
probably closer to the prices set for unsigned
pieces associated with Xxxxxxx Xxxxxxxx.
Revenue Splits All Net Revenues, as calculated based on the
attached formula, will be split 50%/50% between
the Company and RHS/LPS. The costs associated with
preparing product samples, licensing rights,
design and printing of the marketing slick,
customer cards and other materials will be
regarded as "Reimbursable Amounts" in the attached
formula, and thereby repaid pro-rata to the
respective contribution by the Company and/or
RHS/LPS before any other splits of Net Revenues.
Artist-Approved LPS is concerned that "approved reproductions"
Reproductions such as those which we have contemplated for
Xxxxxxx Xxxxxxxx will hurt the ability to market
the series, particularly given her lower intended
prices on this work. At least initially,
therefore, the images will only appear on the
image browser and be used to photograph clients
when LPS is present in the studio and the work
will only be offered as Signed Editions
photographed by LPS.
To the extent the Company and RHS/LPS subsequently
agree to add a lower priced product line
photographed by the Company's permanent personnel
and offered at an even lower rate, LPS will train
such photographers, the backgrounds will be left
on the image browser at all times and the Company
will be permitted to offer under the license
contemplated in the Settlement Agreement "approved
reproductions" of the Properties using the
lighting and camera instructions, wardrobe, set
pieces and print retouching techniques RHS and LPS
develop for each.
Right to End In the event that the Irvine Studio is closed
the Series Early before the expiration of twelve (12) months or
that for any two (2) consecutive months, the
Signed Editions operate at a Net Loss based on the
attached formula, then either the Company or
RHS/LPS shall have the unilateral right to
discontinue pursuing the Fine Art Photography
work.
-4-
22
Gross Revenues from:
Sale of portraits $
Sponsorship payments
Reproduction of Signature Series
Sales of frames and accessories for the above
Sub-total, Gross Revenues ___________
Deductions for:
Sales Taxes
Percentage rent (7%) to Irvine Company
Out-lab costs (prints, mounts, frames)
In-house direct consumables @ $0.50 per sheet used
Make-up artist
Extra personnel (over normal shift staffing for day)
Payroll Taxes and indirect costs of above personnel
Sub-Total, Deductions ___________
Net Revenue (Gross Revenues - Deductions) $
Adjusted by (if applicable):
Reimburse advances by one Party to the other
Reimburse amounts advanced by either Party for --
Brochures
Paid Advertising
Payments to third-parties relating to Fine Art Series
Sub-total, Adjustments ___________
Available for Distribution (Net Revenue - Adjustments) $
Split of the "Available for Distribution" Amount
50% to Xxxxxx X. Xxxxxxx and Xxxx. X. Xxxxxxxx Xxxxxxx
50% to Out-Takes
23
THIRD SCHEDULE
--------------
PAYMENT DATE CONTRACT OBLIGATIONS DISCOUNTED OBLIGATIONS
---------------- --------------------------------------------------------------- ----------------------------------------------
Contractual Pmt (Excludes benefit of discount available if there has been no Default) RHS LRS
Date Due # RHS LRS Total Cum Total 15.1020% 16.7365% Total Cum Total
------------ --- -------------- ----------- ------------- ------------- --------- ----------- ---------- -----------
6-Sep-96 1 29,447.10 18,015.10 47,462.20 47,462.20 25,000.00 15,000.00 40,000.00 40,000.00
20-Sep-96 2 5,698.31 3,641.75 9,340.06 56,802.26 4,837.75 3,032.25 7,870.00 47,870.00
4-Oct-96 3 5,698.31 3,641.75 9,340.06 66,142.32 4,837.75 3,032.25 7,870.00 55,740.00
18-Oct-96 4 5,698.31 3,641.75 9,340.06 75,482.38 4,837.75 3,032.25 7,870.00 63,610.00
1-Nov-96 5 5,698.31 3,641.75 9,340.06 84,822.44 4,837.75 3,032.25 7,870.00 71,480.00
15-Nov-96 6 5,698.31 3,641.75 9,340.06 94,162.50 4,837.75 3,032.25 7,870.00 79,350.00
29-Nov-96 7 5,698.31 3,641.75 9,340.06 103,502.56 4,837.75 3,032.25 7,870.00 87,220.00
13-Dec-96 8 5,698.31 3,641.75 9,340.06 112,842.62 4,837.75 3,032.25 7,870.00 95,090.00
27-Dec-96 9 5,698.31 3,641.75 9,340.06 122,182.68 4,837.75 3,032.25 7,870.00 102,960.00
10-Jan-97 10 9,776.44 6,245.23 16,021.67 138,204.35 8,300.00 5,200.00 13,500.00 116,460.00
24-Jan-97 11 9,776.44 6,245.23 16,021.67 154,226.02 8,300.00 5,200.00 13,500.00 129,960.00
7-Feb-97 12 3,332.23 2,145.00 5,477.23 159,703.25 2,829.00 1,786.00 4,615.00 134,575.00
21-Feb-97 13 3,332.23 2,145.00 5,477.23 165,180.49 2,829.00 1,786.00 4,615.00 139,190.00
7-Mar-97 14 3,332.23 2,145.00 5,477.23 170,657.72 2,829.00 1,786.00 4,615.00 143,805.00
21-Mar-97 15 3,332.23 2,145.00 5,477.23 176,134.95 2,829.00 1,786.00 4,615.00 148,420.00
4-Apr-97 16 3,332.23 2,145.00 5,477.23 181,612.18 2,829.00 1,786.00 4,615.00 153,035.00
18-Apr-97 17 3,332.23 2,145.00 5,477.23 187,089.41 2,829.00 1,786.00 4,615.00 157,650.00
2-May-97 18 3,332.23 2,145.00 5,477.23 192,566.64 2,829.00 1,786.00 4,615.00 162,265.00
16-May-97 19 3,332.23 2,145.00 5,477.23 198,043.87 2,829.00 1,786.00 4,615.00 166,880.00
30-May-97 20 3,332.23 2,145.00 5,477.23 203,521.11 2,829.00 1,786.00 4,615.00 171,495.00
13-Jun-97 21 3,332.23 2,145.00 5,477.23 208,998.34 2,829.00 1,786.00 4,615.00 176,110.00
27-Jun-97 22 3,332.23 2,145.00 5,477.23 214,475.57 2,829.00 1,786.00 4,615.00 180,725.00
11-Jul-97 23 3,332.23 2,145.00 5,477.23 219,952.80 2,829.00 1,786.00 4,615.00 185,340.00
24
THIRD SCHEDULE, CONTINUED--
PAYMENT DATE CONTRACT OBLIGATIONS DISCOUNTED OBLIGATIONS
---------------- --------------------------------------------------------------- ----------------------------------------------
Contractual Pmt(Excludes benefit of discount available if there has been no Default) RHS LRS
Date Due # RHS LRS Total Cum Total 15.0000% 15.0000% Total Cum Total
------------ --- -------------- ----------- ------------- ------------ --------- ----------- ---------- -----------
25-Jul-97 24 3,332.23 2,145.00 5,477.23 225,430.03 2,829.00 1,786.00 4,615.00 189,955.00
8-Aug-97 25 3,332.23 2,145.00 5,477.23 230,907.26 2,829.00 1,786.00 4,615.00 194,570.00
22-Aug-97 26 3,332.23 2,145.00 5,477.23 236,384.50 2,829.00 1,786.00 4,615.00 199,185.00
5-Sep-97 27 3,332.23 2,145.00 5,477.23 241,861.73 2,829.00 1,786.00 4,615.00 203,800.00
19-Sep-97 28 3,332.23 2,145.00 5,477.23 247,338.96 2,829.00 1,786.00 4,615.00 208,415.00
3-Oct-97 29 3,332.23 2,145.00 5,477.23 252,816.19 2,829.00 1,786.00 4,615.00 213,030.00
17-Oct-97 30 3,332.23 2,145.00 5,477.23 258,293.42 2,829.00 1,786.00 4,615.00 217,645.00
31-Oct-97 31 3,332.23 2,145.00 5,477.23 263,770.65 2,829.00 1,786.00 4,615.00 222,260.00
14-Nov-97 32 3,332.23 2,145.00 5,477.23 269,247.88 2,829.00 1,786.00 4,615.00 226,875.00
28-Nov-97 33 3,332.23 2,145.00 5,477.23 274,725.12 2,829.00 1,786.00 4,615.00 231,490.00
12-Dec-97 34 3,332.23 2,145.00 5,477.23 280,202.35 2,829.00 1,786.00 4,615.00 236,105.00
26-Dec-97 35 3,332.23 2,145.00 5,477.23 285,679.58 2,829.00 1,786.00 4,615.00 240,720.00
9-Jan-98 36 3,332.23 2,145.00 5,477.23 291,156.81 2,829.00 1,786.00 4,615.00 245,335.00
23-Jan-98 37 3,332.23 2,145.00 5,477.23 296,634.04 2,829.00 1,786.00 4,615.00 249,950.00
6-Feb-98 38 3,332.23 2,145.00 5,477.23 302,111.27 2,829.00 1,786.00 4,615.00 254,565.00
20-Feb-98 39 3,332.23 2,145.00 5,477.23 307,588.50 2,829.00 1,786.00 4,615.00 259,180.00
6-Mar-98 40 3,332.23 2,145.00 5,477.23 313,065.74 2,829.00 1,786.00 4,615.00 263,795.00
20-Mar-98 41 3,332.23 2,145.00 5,477.23 318,542.97 2,829.00 1,786.00 4,615.00 268,410.00
3-Apr-98 42 3,332.23 2,145.00 5,477.23 324,020.20 2,829.00 1,786.00 4,615.00 273,025.00
17-Apr-98 43 769.16 833.50 1,602.66 325,622.86 653.00 694.00 1,347.00 274,372.00
---------- ---------- ---------- ========== ---------- ---------- ---------- ==========
Total of Above 198,654.86 126,968.00 325,622.86 168,654.00 105,718.00 274,372.00
========== ========== ========== ========== ========== ==========
Note: All amounts shown exclude interest and payroll tax withholdings, which
will be computed as provided for in the Settlement Agreement.
25
THIRD SCHEDULE
--------------
PAYMENT DATE CONTRACT OBLIGATIONS (REQUIRED IF ANY PAYMENT IS EVER IN DEFAULT)
---------------- ------------------------------------------------------------------------------------------------------------------
(Excludes benefit of discount available if there has been no Default)
Contractual Pmt Withholdings Interest at Interest Total Anticipated
Date Due # RHS LRS Pre-Tax Total Cum Total Tax @ 35% 8.25% Payment Payment
------------ --- -------------- ----------- ------------- ------------- ----------- ----------- -------- -----------------
6-Sep-96 1 29,447.10 18,015.10 47,462.20 47,462.20 16,611.77 204.33 204.33 31,054.76
20-Sep-96 2 5,698.31 3,641.75 9,340.06 56,802.26 3,269.02 552.92 6,071.04
4-Oct-96 3 5,698.31 3,641.75 9,340.06 66,142.32 3,269.02 533.71 6,071.04
18-Oct-96 4 5,698.31 3,641.75 9,340.06 75,482.38 3,269.02 514.50 6,071.04
1-Nov-96 5 5,698.31 3,641.75 9,340.06 84,822.44 3,269.02 495.29 2,096.43 8,167.47
15-Nov-96 6 5,698.31 3,641.75 9,340.06 94,162.50 3,269.02 476.08 6,071.04
29-Nov-96 7 5,698.31 3,641.75 9,340.06 103,502.56 3,269.02 456.87 6,071.04
13-Dec-96 8 5,698.31 3,641.75 9,340.06 112,842.62 3,269.02 437.66 6,071.04
27-Dec-96 9 5,698.31 3,641.75 9,340.06 122,182.68 3,269.02 418.45 1,789.05 7,860.09
10-Jan-97 10 9,776.44 6,245.23 16,021.67 138,204.35 5,607.58 385.49 10,414.09
24-Jan-97 11 9,776.44 6,245.23 16,021.67 154,226.02 5,607.58 352.54 10,414.09
7-Feb-97 12 3,332.23 2,145.00 5,477.23 159,703.25 1,917.03 341.27 3,560.20
21-Feb-97 13 3,332.23 2,145.00 5,477.23 165,180.49 1,917.03 330.01 1,409.31 4,969.51
7-Mar-97 14 3,332.23 2,145.00 5,477.23 170,657.72 1,917.03 318.74 3,560.20
21-Mar-97 15 3,332.23 2,145.00 5,477.23 176,134.95 1,917.03 307.47 3,560.20
4-Apr-97 16 3,332.23 2,145.00 5,477.23 181,612.18 1,917.03 296.21 3,560.20
18-Apr-97 17 3,332.23 2,145.00 5,477.23 187,089.41 1,917.03 284.94 1,207.36 4,767.57
2-May-97 18 3,332.23 2,145.00 5,477.23 192,566.64 1,917.03 273.68 3,560.20
16-May-97 19 3,332.23 2,145.00 5,477.23 198,043.87 1,917.03 262.41 3,560.20
30-May-97 20 3,332.23 2,145.00 5,477.23 203,521.11 1,917.03 251.14 3,560.20
13-Jun-97 21 3,332.23 2,145.00 5,477.23 208,998.34 1,917.03 239.88 1,027.11 4,587.31
27-Jun-97 22 3,332.23 2,145.00 5,477.23 214,475.57 1,917.03 228.61 3,560.20
11-Jul-97 23 3,332.23 2,145.00 5,477.23 219,952.80 1,917.03 217.35 3,560.20
26
THIRD SCHEDULE, CONTINUED --
PAYMENT DATE CONTRACT OBLIGATIONS (CONTINUED FROM PREVIOUS PAGE)
---------------- -----------------------------------------------------------------------------------------------------------------
(Excludes benefit of discount available if there has been no Default)
Contractual Pmt Withholdings Interest at Interest Total Anticipated
Date Due # RHS LRS Total Cum Total Tax @ 35% 8.25% Payment Payment
----------- ------- ------------ ------------ ----------- ------------- ------------- --------- --------- -----------------
25-Jul-97 24 3,332.23 2,145.00 5,477.23 225,430.03 1,917.03 206.08 3,560.20
8-Aug-97 25 3,332.23 2,145.00 5,477.23 230,907.26 1,917.03 194.82 846.86 4,407.06
22-Aug-97 26 3,332.23 2,145.00 5,477.23 236,384.50 1,917.03 183.55 3,560.20
5-Sep-97 27 3,332.23 2,145.00 5,477.23 241,861.73 1,917.03 172.28 3,560.20
19-Sep-97 28 3,332.23 2,145.00 5,477.23 247,338.96 1,917.03 161.02 3,560.20
3-Oct-97 29 3,332.23 2,145.00 5,477.23 252,816.19 1,917.03 149.75 666.60 4,226.80
17-Oct-97 30 3,332.23 2,145.00 5,477.23 258,293.42 1,917.03 138.49 3,560.20
31-Oct-97 31 3,332.23 2,145.00 5,477.23 263,770.65 1,917.03 127.22 3,560.20
14-Nov-97 32 3,332.23 2,145.00 5,477.23 269,247.88 1,917.03 115.95 3,560.20
28-Nov-97 33 3,332.23 2,145.00 5,477.23 274,725.12 1,917.03 104.69 486.35 4,046.55
12-Dec-97 34 3,332.23 2,145.00 5,477.23 280,202.35 1,917.03 93.42 3,560.20
26-Dec-97 35 3,332.23 2,145.00 5,477.23 285,679.58 1,917.03 82.16 3,560.20
9-Jan-98 36 3,332.23 2,145.00 5,477.23 291,156.81 1,917.03 70.89 3,560.20
23-Jan-98 37 3,332.23 2,145.00 5,477.23 296,634.04 1,917.03 59.63 306.10 3,866.30
6-Feb-98 36 3,332.23 2,145.00 5,477.23 302,111.27 1,917.03 48.36 3,560.20
20-Feb-98 39 3,332.23 2,145.00 5,477.23 307,588.50 1,917.03 37.09 3,560.20
6-Mar-98 40 3,332.23 2,145.00 5,477.23 313,065.74 1,917.03 25.83 3,560.20
20-Mar-98 41 3,332.23 2,145.00 5,477.23 318,542.97 1,917.03 14.56 125.84 3,686.04
3-Apr-98 42 3,332.23 2,145.00 5,477.23 324,020.20 1,917.03 3.30 3,560.20
17-Apr-98 43 769.16 833.50 1,602.66 325,622.86 560.93 0.00 3.30 1,045.02
---------- ---------- ---------- ========== ========== ========= ========= ==========
Total of Above 198,654.86 126,968.00 325,622.86 113,968.00 10,168.64 10,168.64 221,823.50
========== ========== ========== ========== ========= ========= ==========
27
PAYMENT DATE DISCOUNTED OBLIGATIONS (APPLICABLE SO LONG AS PAYMENTS ARE MADE IN A TIMELY MANNER)
---------------- ----------------------------------------------------------------------------------------------------------------
Contractual Pmt RHS LRS Withholdings Interest at Interest Total Anticipated
Date Due # 15.1020% 16.7365% Total Cum Total Tax @ 35% 8.25% Payment Payment
----------- ------- ------------ ------------ ----------- --------------- ------------ --------- --------- ----------------
6-Sep-96 1 25,000.00 15,000.00 40,000.00 40,000.00 14,000.00 172.17 172.17 26,172.17
20-Sep-96 2 4,837.75 3,032.25 7,870.00 47,870.00 2,754.50 465.88 5,115.50
4-Oct-96 3 4,837.75 3,032.25 7,870.00 55,740.00 2,754.50 449.69 5,115.50
18-Oct-96 4 4,837.75 3,032.25 7,870.00 63,610.00 2,754.50 433.51 5,115.50
1-Nov-96 5 4,837.75 3,032.25 7,870.00 71,480.00 2,754.50 417.32 1,766.40 6,881.90
15-Nov-98 6 4,837.75 3,032.25 7,870.00 79,350.00 2,754.50 401.13 5,115.50
29-Nov-96 7 4,837.75 3,032.25 7,870.00 87,220.00 2,754.50 384.94 5,115.50
13-Dec-96 8 4,837.75 3,032.25 7,870.00 95,090.00 2,754.50 368.76 5,115.50
27-Dec-96 9 4,837.75 3,032.25 7,870.00 102,960.00 2,754.50 352.57 1,507.40 6,622.90
10-Jan-97 10 8,300.00 5,200.00 13,500.00 116,460.00 4,725.00 324.80 8,775.00
24-Jan-97 11 8,300.00 5,200.00 13,500.00 129,960.00 4,725.00 297.03 8,775.00
7-Feb-97 12 2,829.00 1,786.00 4,615.00 134,575.00 1,615.25 287.54 2,999.75
21-Feb-97 13 2,829.00 1,786.00 4,615.00 139,190.00 1,615.25 278.05 1,187.43 4,187.18
7-Mar-97 14 2,829.00 1,786.00 4,615.00 143,805.00 1,615.25 268.56 2,999.75
21-Mar-97 15 2,829.00 1,786.00 4,615.00 148,420.00 1,615.25 259.06 2,999.75
4-Apr-97 16 2,829.00 1,786.00 4,615.00 153,035.00 1,615.25 249.57 2,999.75
18-Apr-97 17 2,829.00 1,786.00 4,615.00 157,650.00 1,615.25 240.08 1,017.27 4,017.02
2-May-97 18 2,829.00 1,786.00 4,615.00 162,265.00 1,615.25 230.59 2,999.75
16-May-97 19 2,829.00 1,786.00 4,615.00 166,880.00 1,615.25 221.09 2,999.75
30-May-97 20 2,829.00 1,786.00 4,615.00 171,495.00 1,615.25 211.60 2,999.75
13-Jun-97 21 2,829.00 1,786.00 4,615.00 176,110.00 1,615.25 202.11 865.39 3,865.14
27-Jun-97 22 2,829.00 1,786.00 4,615.00 180,725.00 1,615.25 192.62 2,999.75
11-Jul-97 23 2,829.00 1,786.00 4,615.00 185,340.00 1,615.25 183.13 2,999.75
28
THIRD SCHEDULE
PAYMENT DATE DISCOUNTED OBLIGATIONS (CONTINUED FROM PREVIOUS PAGE)
---------------- ----------------------------------------------------------------------------------------------------------------
Contractual Pmt RHS LRS Withholdings Interest at Interest Total Anticipated
Date Due # 15.1020% 16.7365% Total Cum Total Tax @ 35% 8.25% Payment Payment
----------- ------- ------------ ------------ ----------- -------------- ------------ ---------- --------- ----------------
25-Jul-97 24 2,829.00 1,786.00 4,615.00 189,955.00 1,615.25 173.63 2,999.75
8-Aug-97 25 2,829.00 1,786.00 4,615.00 194,570.00 1,615.25 164.14 713.52 3,713.27
22-Aug-97 26 2,829.00 1,786.00 4,615.00 199,185.00 1,615.25 154.65 2,999.75
5-Sep-97 27 2,829.00 1,786.00 4,615.00 203,800.00 1,615.25 145.16 2,999.75
19-Sep-97 28 2,829.00 1,786.00 4,615.00 208,415.00 1,615.25 135.66 2,999.75
3-Oct-97 29 2,829.00 1,786.00 4,615.00 213,030.00 1,615.25 126.17 561.64 3,561.39
17-Oct-97 30 2,829.00 1,786.00 4,615.00 217,645.00 1,615.25 116.68 2,999.75
31-Oct-97 31 2,829.00 1,786.00 4,615.00 222,260.00 1,615.25 107.19 2,999.75
14-Nov-97 32 2,829.00 1,786.00 4,615.00 226,875.00 1,615.25 97.69 2,999.75
28-Nov-97 33 2,829.00 1,786.00 4,615.00 231,490.00 1,615.25 88.20 409.76 3,409.51
12-Dec-97 34 2,829.00 1,786.00 4,615.00 236,105.00 1,615.25 78.71 2,999.75
26-Dec-97 35 2,829.00 1,786.00 4,615.00 240,720.00 1,615.25 69.22 2,999.75
9-Jan-98 36 2,829.00 1,786.00 4,615.00 245,335.00 1,615.25 59.72 2,999.75
23-Jan-98 37 2,829.00 1,786.00 4,615.00 249,950.00 1,615.25 50.23 257.88 3,257.63
6-Feb-98 38 2,829.00 1,786.00 4,615.00 254,565.00 1,615.25 40.74 2,999.75
20-Feb-98 39 2,829.00 1,786.00 4,615.00 259,180.00 1,615.25 31.25 2,999.75
6-Mar-98 40 2,829.00 1,786.00 4,615.00 263,795.00 1,615.25 21.76 2,999.75
20-Mar-98 41 2,829.00 1,786.00 4,615.00 268,410.00 1,615.25 12.26 106.01 3,105.76
3-Apr-98 42 2,829.00 1,786.00 4,615.00 273,025.00 1,615.25 2.77 2,999.75
17-Apr-98 43 653.00 694.00 1,347.00 274,372.00 471.45 0.00 2.77 878.32
---------- ---------- ---------- ========== ========= ======== ======== ==========
Total of Above 168,654.00 105,718.00 274,372.00 96,030.20 8,567.63 8,567.63 186,909.43
========== ========== ========== ========= ======== ======== ==========
