LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), dated as of March
29, 2001 is made by TDK MEDIACTIVE, INC., a Delaware corporation ("Borrower"),
and TDK USA CORPORATION, a New York corporation ("Lender").
WHEREAS, Borrower has requested Lender to make a short-term revolving
loan to Borrower on the terms and conditions set forth in this Agreement in
the amount of up to Eight Million United States Dollars (US$8,000,000) (the
"Loan"), for working capital purposes;
WHEREAS, to induce Lender to make the Loan, Borrower has agreed to grant
Lender a security interest in certain personal property of Borrower more fully
described herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender hereby agree
as follows:
1. Subject to the terms and conditions of this Agreement, Lender
agrees to make cash advances (individually an "Advance" and collectively the
"Advances") to Borrower from the date hereof until March 31, 2002 (the
"Maturity Date"). The aggregate principal amount of (i) all outstanding
Advances, plus (ii) the outstanding undrawn balance of any outstanding letters
of credit that may be opened from time to time for the account of Lender, at
Lender's discretion, in favor of a third party for commercial transactions
between Borrower on one hand and such third party on the other hand ("Letters
of Credit") plus (iii) the outstanding amount that Lender has reimbursed the
issuing bank in connection with any Letter of Credit but for which Lender has
not been reimbursed by Borrower, shall not exceed at any one time the sum of
Eight Million United States Dollars (US$8,000,000). Each Advance shall be
made on a day (not including Saturday or Sunday) on which Lender's bank is
open for business ("Banking Day") and shall be requested by Borrower in
writing by a letter signed by an authorized officer of Borrower at least two
(2) Banking Day's prior written notice to the proposed date of borrowing.
Each written notice shall specify (i) the proposed date, (ii) the amount of
the Advance, and (iii) the account of Borrower to which funds are to be
disbursed. Each Advance must be at least $50,000, and Lender shall not be
obligated to make more than one (1) Advance in any calendar month. Borrower
may request Advances hereunder of not more than Four Hundred Thousand United
States Dollars (US$400,000) on or prior to April 1, 2001.
2. The Loan shall be evidenced by a promissory note in the form of
Exhibit "A" attached hereto (the "Note"). Lender shall maintain on its books
an account in Borrower's name showing the amount of Advances made hereunder,
repayments and reimbursements for drawings, computation and payment of
interest, and other amounts due and paid hereunder. This account shall be
conclusive and binding on Borrower as to the amount at any time due to Lender
except in the case of manifest error in computation.
3. Borrower shall repay the Loan in accordance with the Note.
Borrower shall use the Loan only for its working capital purposes.
4. As security for the due and punctual payment of each sum now or
hereafter due whether on the Maturity Date, by acceleration or otherwise
(including the payment of amounts which would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a)) from Borrower to Lender, and for the due and punctual
performance of each and every obligation now or hereafter existing of Borrower
to Lender, pursuant to the provisions of this Agreement and the Note for
principal, interest (including without limitation interest which, but for the
filing of a petition in bankruptcy with respect to Borrower, would accrue on
such obligations), expenses or otherwise, due or to become due, liquidated or
unliquidated, and arising by operation of law or otherwise, (collectively, the
"Obligations"), Borrower hereby grants to Lender a continuing security
interest in all of the following described property and any and all proceeds
and products thereof (all such property and proceeds being hereafter referred
to as the "Collateral"), whether now or hereafter existing, and in which
Borrower now has or hereafter has any right, title or interest:
(a) Inventory, Accounts, Documents, Equipment, Deposit Accounts,
Instruments, Fixtures, General Intangibles, Chattel Paper, 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
Borrower's business), whether or not such be in the actual or constructive
possession of Borrower, and all insurance proceeds of any and all of the
foregoing (all capitalized terms in this paragraph (a) shall have the
respective meanings assigned thereto in the California Commercial Code);
(b) Any and all of Borrower's books and records regarding any of
the foregoing Collateral;
(c) Any and all proceeds and products of any and all of the
foregoing.
5. Borrower represents and warrants that:
(a) The execution and delivery of this Agreement has been
authorized by all necessary corporate action of Borrower, including without
limitation the approval of the independent director (or directors, if more
than one) of the board of directors of Borrower.
(b) Borrower is (or, with respect to after-acquired property,
will be when acquired) the legal and beneficial owner of the Collateral free
and clear of any lien, security interest, charge or encumbrance except for the
security interest created by this Agreement. Without limiting the foregoing,
Borrower represents and warrants to Lender that the security interest of
Silicon Valley Bank (dba Silicon Valley Financial Services) in assets of
Borrower has been terminated.
(c) The chief place of business of Borrower and the books and
records relating to the Collateral are located at the address set forth below
and Borrower will not change any of the same without prior written notice to
Lender;
00000 Xxxxxx Xxxx, Xxxxx X, Xxxxxxxxx, Xxxxxxxxxx 00000-0000
6. Borrower shall:
(a) prior to the first Advance, provide evidence satisfactory to
Lender that the security interest of Silicon Valley Bank (dba Silicon Valley
Financial Services) has been terminated and that the financing statement of
Lender has been filed in the Office of the Secretary of State of California in
first priority position.
(b) as soon as available, but in any event within 90 days after
the end of each its fiscal year, provide to Lender a copy of its balance sheet
as at the end of such year and the related statements of earnings and
stockholders' equity and of cash flows for such year, setting forth in each
case in comparative form the figures for the previous year, audited by an
independent certified public accounting firm of nationally recognized
standing; notwithstanding the foregoing, Lender hereby agrees that the
financial information filed with the Securities and Exchange Commission (the
"SEC") by Borrower pursuant to a Form 10K shall satisfy the requirement in
this Section 6(b), provided that Lender is furnished with a copy of such
filing within such 90 day period;
(c) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of each
fiscal year, (A) its unaudited balance sheet as at the end of such quarter and
in comparative form the figures for the end of such quarter for the previous
fiscal year, (B) its unaudited statement of earnings for such quarter and the
portion of the fiscal year through the end of such quarter, and in comparative
form the figures of such quarter for the previous year and (C) its statement
of cash flows for the portion of the fiscal year through the end of such
quarter, and in comparative form the figures of such quarter for the previous
year, certified by the chief financial officer of Borrower as fairly
presenting in all material respects the assets, liabilities, financial
condition and results of operations of Borrower (subject to normal year-end
audit adjustments); notwithstanding the foregoing, Lender hereby agrees that
the financial information filed with the SEC by Borrower pursuant to a Form
10Q shall satisfy the requirement in this Section 6(c), provided that Lender
is furnished with a copy of such filing within such 45 day period;
(d) keep proper books of records and account in which full,
true and correct entries in conformity with generally accepted accounting
principles, consistently applied ("GAAP"), of all dealings and transactions in
relation to its business and activities; and, upon reasonable prior notice
from Lender to Borrower and when reasonably deemed advisable by Lender, permit
(i) Lender to visit and inspect any of its properties and examine and make
abstracts from any of its books and records at any reasonable time and as
often as may reasonably be desired and (ii) Borrower's officers and employees
and its independent certified public accountants to discuss with Lender
Borrower's business, operations, properties and financial and other condition;
(e) promptly after the commencement thereof, give notice to
Lender of all actions, attachments, suits, proceedings or other legal process
before any court or governmental department, commission, board, bureau,
agency, or instrumentality, domestic or foreign, affecting Borrower, which, if
determined adversely to Borrower, could have a material adverse effect on the
financial condition, properties, liabilities, or operations of Borrower or in
any way affect the value of the Collateral or the rights and remedies of
Lender in respect thereto;
(f) notify Lender within ten (10) days of any (and any change
in) trade names or fictional business names used by Borrower;
(g) comply with (i) all applicable statutes, regulations,
franchises, and orders of, and all applicable restrictions imposed by, any
governmental body, in respect of the conduct of its business and the ownership
of its properties (including, without limitation, all environmental laws and
all applicable statutes, rules, ordinances, regulations and orders relating to
fair labor standards, equal employment opportunities and occupational health
and safety) and (ii) all terms of any material mortgage, indenture, contract,
agreement or instrument, applicable to Borrower or any of its properties,
except in either case for such instances of non-compliance as could not
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on Borrower;
(h) cause Indebtedness not to exceed Twenty Million Dollars
($20,000,000) at any time while the Loan is outstanding;
(i) maintain a Current Ratio of at least 1.00:1.00 for the
annual fiscal period commencing on January 1, 2001 and each subsequent annual
fiscal period of Borrower;
(j) maintain an Interest Coverage Ratio of not less than
1.50:1.0 for the annual fiscal period commencing on January 1, 2001 and each
subsequent annual fiscal period of Borrower;
(k) reimburse Lender upon demand for any and all costs,
including without limitation reasonable attorneys' and accountants' fees, and
other expenses incurred in collecting any sums payable by Borrower under any
Obligation, enforcing or defending any term or provision of this Agreement or
otherwise or in the checking, custody, preservation, use, handling and
collection of the Collateral (from any person whomsoever) and the negotiation,
preparation, enforcement, and defense of any agreement relating thereto;
(l) notify Lender within ten (10) days of each location at
which the Collateral is or will be kept and of any removal thereof to a new
location, including without limitation each office of Borrower at which
records relating to the Collateral are kept;
(m) promptly give notice to Lender of the occurrence of any
Event of Default (as defined below) or any event which with the giving of
notice or the lapse of time, or both, would constitute an Event of Default,
and the action Borrower proposes to take with respect thereto;
(n) after an Event of Default shall occur and be continuing,
segregate the Collateral and all proceeds of the Collateral, and hold the same
in trust as the exclusive property of Lender, and promptly deliver to Lender
the Collateral received, the same to be held by Lender as Collateral hereunder
or, at Lender's option, to be applied to payment of any of the Obligations,
whether or not due and in any order;
(o) join with Lender at its request from time to time in
executing financing statements, amendments thereto and continuation
statements, and execute and deliver to Lender further documents and
instruments and do such other acts and things as Lender may reasonably request
in order to effectuate fully the purpose and intent of this Agreement, and for
such purpose, Lender is hereby appointed as Borrower's attorney-in-fact for
the purposes described in this paragraph, such power of attorney being coupled
with an interest and accordingly irrevocable;
(p) account to Lender in reasonable detail for Borrower's
expenditures of Advances, including without limitation Borrower's expenditures
on software titles on or after the date of this Agreement using proceeds of
Advances;
(q) furnish to Lender, upon request, such other information
relating to the affairs, operations and/or the financial condition of Borrower
as Lender may from time to time reasonably request, including without
limitation details of Borrower's selling, general and administrative expenses,
research and development expenses, and cash flows, in form satisfactory to
Lender.
7. Borrower shall not, without the prior consent of Lender:
(a) sell, lease, assign, transfer, or otherwise dispose of any of
its now owned or hereafter acquired assets in excess of $100,000 except: (1)
inventory disposed of in the ordinary course of business; and (2) assets no
longer used or useful in the conduct of its business;
(b) 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 an agreement to
maintain or cause such person to maintain a minimum working capital or net
worth, or otherwise to assure the creditors of any person against loss) for
obligations of any person, except (i) guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business and (ii) guaranties that would not have a materially
adverse effect on the ability of Borrower to carry out its obligations under
the Loan Documents;
(c) not create or suffer to exist any lien, security interest or
other charge or encumbrance upon or with respect to any of the Collateral to
secure debt or other obligations of any person or entity, except for security
interests in favor of Lender.
8. All such financial statements furnished by Borrower hereunder shall
be complete and correct in all material respects and to be prepared in
reasonable detail and in accordance with GAAP applied consistently throughout
the periods reflected therein and with prior periods (except as disclosed
therein).
9. Except as otherwise permitted by this Agreement, Borrower shall
not: sell, assign (by operation of law or otherwise) or otherwise dispose of,
or grant any option with respect to, any of the Collateral, except that prior
to the exercise of rights by Lender during the continuance of an Event of
Default hereunder, Borrower may sell inventory and otherwise use the
Collateral in the ordinary course of its business and in accordance with its
past practices.
10. Any of the following events shall constitute a default (each an
"Event of Default") under this Agreement:
(a) failure of Borrower to perform any of Borrower's
obligations under this Agreement (other than failure to pay amounts owed under
the Note) that continue unremedied for a period of thirty (30) days after
notice thereof to the Borrower; or
(b) failure of Borrower to pay amounts owed under the Note that
continues unremedied for a period of five (5) days;
(c) Any representation or warranty made by Borrower in this
Agreement shall prove to have been incorrect, incomplete, or misleading in
any material respect on or as of the date made; or
(d) Borrower (a) shall make an assignment for the benefit of
creditors, or petition or apply to any tribunal for the appointment of a
custodian, receiver, or trustee for it or a substantial part of its assets; or
(b) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (c) shall have had
any such petition or application filed or any such proceeding commenced
against it in which an order for relief is entered or an adjudication or
appointment is made, and which remains undismissed for a period of sixty (60)
days or more; or (d) shall take any corporate action indicating its consent
to, approval of, or acquiescence in any such petition, application,
proceeding, or order for relief or the appointment of a custodian, receiver,
or trustee for all or any substantial part of its properties; or (e) shall
suffer any such custodianship, receivership, or trusteeship to continue
undischarged for a period of sixty (60) days or more; or (f) make any bulk
sale of its property; or (g) suspend active business operations; or
(e) Borrower (a) fails to pay any Indebtedness for borrowed money
in excess of $100,000 (other than the Note) of Borrower or any interest or
premium thereon, when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) after the expiration of any applicable
cure period, or (b) fails to perform or observe any term, covenant, or
condition on its part to be performed or observed under any agreement or
instrument relating to any such Indebtedness, when required to be performed or
observed, if the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, after the giving of notice or
passage of time, or both, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment), prior to
the stated maturity thereof.
Upon the occurrence and during the continuance of an Event of Default
under this Agreement, Lender at its option and without notice to Borrower may
do any one or more of the following:
(i) immediately or from time to time take possession of any
or all of the Collateral, wherever it may be found, using all reasonable force
to do so, or from time to time require Borrower, at Borrower's expense, to
assemble any or all of the Collateral, and make it available to Lender at a
place designated by Lender which is reasonably convenient to Borrower and
Lender;
(ii) terminate any obligation to make further Advances or
renew existing Advances hereunder;
(iii) from time to time proceed in the foreclosure of Lender's
security interest in any or all of the Collateral in any manner permitted by
law or provided for herein;
(iv) sell, lease or otherwise dispose of any or all of the
Collateral at public or private sale, with or without having any or all of the
Collateral at the place of sale, upon terms and in such manner as Lender may
reasonably determine, and Lender may purchase any or all of the Collateral
sold at any such sale;
(v) retain all or any of the Collateral in full satisfaction
of the Obligations;
(vi) appropriate, set off and apply to the payment of any or
all of the Obligations, any or all Collateral in or coming into the possession
of Lender or its agents and belonging or owing to Borrower, without notice to
Borrower, and in such manner as Lender may in its reasonable discretion
determine;
(vii) receive, take, endorse, assign, deliver, accept and
deposit, in its or Borrower's name, any or all checks, notes, drafts,
remittances and other instruments and documents relating to the Collateral;
(viii) take or bring, in Lender's or Borrower's name, all steps,
actions, suits or proceedings reasonably deemed by Lender necessary or
desirable to effect collection of the Collateral;
(ix) execute in Borrower's name and on Borrower's behalf any
UCC financing statements or amendments thereto relating to the Collateral;
(x) settle, compromise or release, in whole or in part, any
amounts owing on the Collateral, prosecute any action, suit or proceeding with
respect to the Collateral, extend the time of payment of any and all
Collateral, make allowances and adjustments with respect thereto, issue
credits in Lender's or Borrower's name;
(xi) exercise any or all other rights or remedies available to
Lender in accordance with the Uniform Commercial Code as from time to time in
effect in the state in which the Collateral is located; and
(xii) exercise any or all rights of Lender pursuant to this
Agreement, or now or hereafter existing at law, in equity or by statute in
such order, at such times and in such manner as Lender, may, in its reasonable
judgment, determine.
If a sufficient sum is not realized from any disposition of Collateral to
pay all obligations secured hereby, Borrower hereby promises and agrees to pay
Lender any deficiency upon demand. If any of the Collateral is sold by Lender
upon credit or for future delivery, Lender shall not be liable for the failure
of the purchaser to pay for same and in such event Lender may resell such
Collateral. To the extent permitted by law, Lender may buy any part or all of
the Collateral at any public sale (free from any right of redemption, which is
expressly waived).
11. Any cash held by Lender as Collateral after and during the
continuance of an Event of Default, and any cash held by Lender as Collateral
and all cash proceeds received by Lender (all such cash being "Proceeds") in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral, shall be applied promptly from time to time by Lender:
First, to the payment of the reasonable costs and expenses of such sale,
collection or other realization, including reasonable compensation to Lender
and its agents and counsel, and all reasonable expenses, liabilities and
advances made or incurred by Lender in connection therewith;
Second, to the payment of the Obligations; and
Third, after payment in full of all Obligations, to Borrower or its
successors or assigns, or to whomsoever may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct, of any surplus
then remaining from such Proceeds.
12. No waiver of any breach of or default under any provision of this
Agreement shall constitute or be construed as a waiver by Lender of any
subsequent breach of or default under that or any other provision of this
Agreement.
13. No remedy herein conferred upon Lender is intended to be exclusive
of any other remedy herein or in any other agreement between the parties
hereto or by law provided or permitted, but each shall be cumulative and shall
be in addition to every other remedy given hereunder or now or hereafter
existing at law, in equity or by statute.
14. Lender shall not be deemed to assume any responsibility for, or
obligation or duty with respect to, any part or all of the Collateral, of any
nature or kind, or any matter or proceedings arising out of or relating
thereto, including without limitation any obligation or duty to take any
action to collect, preserve or protect its or Borrower's rights in the
Collateral or against any prior parties thereto, but the same shall be at
Borrower's sole risk at all times. Except as to gross negligence or willful
misconduct, Borrower hereby releases Lender from any claims, causes of action
and demands at any time arising out of or with respect to this Agreement, the
Obligations, the use of the Collateral and/or any actions taken or omitted to
be taken by Lender with respect thereto, and Borrower hereby agrees to hold
Lender harmless from and with respect to any and all such claims, causes of
action and demands. All risk or loss, damage or destruction of the Collateral
shall be borne by Borrower.
15. Borrower hereby waives presentment, notice of dishonor and protest
of all instruments included in or evidencing any of the Obligations or the
Collateral, and any and all other notices and demands whatsoever (except as
expressly provided herein).
16. After an Event of Default shall occur and be continuing, Lender
without notice to or demand on Borrower may, but is not obliged to, make any
payments and do any acts that Lender may consider necessary to protect
Lender's security interest in the Collateral, and Borrower hereby authorizes
Lender to take possession of any or all of the Collateral and to pay,
purchase, contest and compromise any encumbrance, charge or lien that in the
reasonable judgment of Lender is or may be prior or superior to Lender's
security interest.
17. All judicial proceedings brought against Borrower with respect to
this Agreement may be brought in any state or federal court of competent
jurisdiction in Los Angeles County in the State of California, and, by
execution and delivery of this Agreement, Borrower accepts for itself and in
connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.
Borrower irrevocably waives any right it may have to assert the doctrine of
forum non conveniens or to object to venue to the extent any proceeding is
brought in accordance with this Section. Borrower hereby agrees that service
upon it by mail at the address set forth in beside its signature to this
Agreement shall constitute sufficient notice. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of Lender to bring proceedings against Borrower in courts of any
jurisdiction.
18. BORROWER AND LENDER HEREBY AGREE TO WAIVE THEIR RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OBLIGATION OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT
MATTER OF THE LOAN TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. 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 transaction,
including without limitation contract claims, tort claims, breach of duty
claims and all other common law and statutory claims. Borrower and Lender
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 Agreement and that each will continue to rely on the waiver in their
related future dealings. Borrower and Lender 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 EXCEPT BY MUTUAL AGREEMENT AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE LOANS CONTEMPLATED BY THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
19. Upon the payment in full of all then outstanding principal under
the Note and all interest accrued thereon, this Agreement shall terminate and
be of no further force or effect (except the provisions of Section 14 of this
Agreement, which shall survive), and all rights to the Collateral shall revert
to Borrower, and Lender shall promptly execute and deliver to Borrower such
documents and instruments reasonably requested by Borrower as shall be
necessary to evidence termination of all security interests given by Borrower
to Lender hereunder. In addition, at any time from time to time prior to such
termination if any Collateral is sold, leased, exchanged, assigned or
otherwise disposed of in accordance with and as not prohibited by this
Agreement, the security interests created hereby in such item (but not in any
proceeds arising from such sale or exchange) shall terminate immediately
without any further action on the part of Borrower and such Collateral shall
no longer be deemed to be "Collateral" for purposes of this Agreement and the
20. In case any provision of this Agreement shall be invalid, illegal
or unenforceable, such provision shall be severable from the rest of this
Agreement, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
21. This Agreement cannot be changed, modified or supplemented except
in a writing signed by the party against whom enforcement of such change,
modification or supplement is sought.
22. THIS 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. Unless otherwise defined
herein, terms used in Division 9 of the Uniform Commercial Code of California
are used herein as therein defined.
23. All notices, approvals, requests, demands and other
communications hereunder shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail or sent by
telecopy to the address set forth on the signature page hereto. Any party
hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices
and other communications given to any party hereto in accordance with the
provisions of this Agreement shall be deemed to have been given on the date of
receipt, provided that delivery by hand shall be deemed delivered on the first
Banking Day after the date of receipt.
24. This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this Agreement by signing any such
counterpart.
25. This Agreement is for the benefit of Lender and its successors
and assigns, and in the event of an assignment of all or any of the
Obligations, the rights hereunder, to the extent applicable to the
Indebtedness so assigned, may be transferred with such Indebtedness. This
Agreement shall be binding on Borrower and its successors and permitted
assigns, and the rights of Borrower hereunder shall inure to the benefit of
Borrower's successors and permitted assigns.
26. As used in this Agreement, the following terms shall have the
following meanings:
"California Commercial Code" means the Uniform Commercial Code as in
effect from time to time in the State of California.
"Capital Expenditures" means expenditures made or liabilities incurred
for the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than one
year, including the total principal portion of Capitalized Lease Obligations.
"Capitalized Lease Obligations" means any indebtedness represented by
obligations under a lease that it required to be capitalized for financial
reporting purposes in accordance with GAAP.
"Cash Flow" means, for any period, EBIT, plus depreciation and
amortization less Capital Expenditures for such period.
"Current Assets" means, at any date, the amount at which all of the
current assets of Borrower would be properly classified as current assets on a
balance sheet of Borrower at such date in accordance with GAAP.
"Current Liabilities" means, at any date, the amount at which all of the
current liabilities of Borrower would be properly classified as current
liabilities on a balance sheet of Borrower at such date in accordance with
GAAP.
"Current Ratio" means, for any period, the ratio of Current Assets to
Current Liabilities as at the end of such period.
"EBIT" means, with respect to any fiscal period, the sum of Borrower's
net earnings (or loss) before Interest Expense and taxes for such period as
determined in accordance with GAAP.
"Indebtedness" means, at any date, (i) all indebtedness of Borrower for
borrowed money or for the deferred purchase price of property or services
(other than current trade liabilities incurred in the ordinary course of
business and payable in accordance with customary practices) or which is
evidenced by a note, bond, debenture or similar instrument, (ii) all
obligations of Borrower under financing leases, (iii) all obligations of
Borrower in respect of acceptances issued or created for the account of
Borrower, (iv) all liabilities secured by any lien on any property owned by
Borrower even though Borrower has not assumed or otherwise become liable for
the payment thereof and (v) contingent obligations of Borrower under GAAP in
respect of another Person's indebtedness, obligations and liabilities of the
type described in the foregoing clauses (i) through (iv).
"Interest Coverage Ratio" means, as at any date, the ratio of (i) Cash
Flow for the fiscal year of Borrower ending on or most recently ended prior to
such date to (ii) Interest Expense for such period.
"Interest Expense" means, for any period, total interest expense payable
during such period with respect to all outstanding Indebtedness of Borrower,
including all commissions, discounts and other fees and charges owed with
respect to letter of credit and bankers acceptance financing, prepayment
charges, agency fees, administrative fees, commitment fees (but excluding
amortization of capitalized transaction costs allocated to interest expense),
payments owed under any interest rate hedging, cap or similar agreement or
arrangement, all as determined for such period in accordance with GAAP.
"Net Income (Loss)" means, for any period, the net income (or loss) of
Borrower for such period taken as a single accounting period, determined in
accordance with GAAP (provided that in determining Net Income (Loss) there
shall be excluded (i) the proceeds of any life insurance policy, (ii) gains
and losses from the sale, exchange, transfer or other disposition of property
or assets not in the ordinary course of business, and related tax effects in
accordance with GAAP, (v) any other extraordinary or non-recurring gains and
losses, and related tax effects in accordance with GAAP.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, unincorporated organization, association or other
entity.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
TDK MEDIACTIVE, INC., a Delaware corporation
By: /s/ Shin Tanabe
-----------------------------
Name: Shin Tanabe
Title: Its President
Address:
00000 Xxxxxx Xxxx, Xxxxx X
Xxxxxxxxx, Xxxxxxxxxx 00000-0000
TDK USA CORPORATION,
a New York corporation
By: /s/ Kenichi Aoshima
----------------------------------
Name: Kenichi Aoshima
Its: President
Address:
000 Xxxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxx 00000
EXHIBIT A TO UCC-1 FINANCING STATEMENT
Name of Debtor: TDK MEDIACTIVE, INC.
Name of Secured Party: TDK USA CORPORATION
Continuation of Item 4, Description of Collateral:
All of the following described property and any and all proceeds and products
thereof, whether now or hereafter existing, and in which Debtor now has or
hereafter has any right, title or interest:
Inventory, Accounts, Documents, Equipment, Deposit Accounts, Instruments,
Fixtures, General Intangibles, Chattel Paper, 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 (all capitalized terms
in this paragraph shall have the respective meanings assigned thereto in the
California Commercial Code).
