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EXHIBIT 10.65
$1,500,000
LOAN AGREEMENT
Dated as of July 21, 1998
between
NEWSTAR MEDIA INC.
DOVE FOUR POINT, INC.
AND
APOLLO PARTNERS, LLC
======================
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LOAN AGREEMENT dated as of July 21, 1998 (the "Agreement") between
NEWSTAR MEDIA INC., a California corporation, having its principal place of
business at 8955 Beverly Boulevard, Los Angeles, California 90048
("NewStar"),and DOVE FOUR POINT, INC., a Florida corporation, having its
principal place of business at 8955 Beverly Boulevard, Los Angeles, California
90048 ("Four Point"; New Star and Four Point, individually and collectively,
"Borrower"), and APOLLO PARTNERS, LLC, a New York limited liability company,
having its principal place of business at 1 Stamford Plaza, 12th Floor,
Stamford, Connecticut 06901 (the "Lender").
WHEREAS, Four Point is a wholly-owned subsidiary of New Star; the
Borrower has requested the Lender to make a loan in the amount of $1,500,000,
the proceeds of which shall be used by the Borrower to finance working capital
needs. The Lender is willing to extend such credit to the Borrower, subject to
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing the parties hereto
agree to the following
I. DEFINITIONS
SECTION A. Definitions. As used herein, the following words and terms
shall have the following meanings:
"Affiliate" shall mean any corporation, partnership, limited
liability company, joint venture, trust or unincorporated organization which,
directly or indirectly, controls or is controlled by or is under common control
with the Borrower.
"Business Day" shall mean any day not a Saturday, Sunday or legal
holiday, on which the Lender is open for business in New York City.
"Closing Date" shall mean July 21, 1998.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean and include all of NewStar's right, title and
interest in and to the real property described on Exhibit A attached hereto,
together with all existing or subsequently erected or affixed buildings,
improvements and fixtures; all easements, rights of way and appurtenances; all
water, water rights and ditch rights (including stock in utilities with ditch or
irrigation rights); and all other rights, royalties and profits relating to the
real property including, without limitation, all minerals, oil, gas, geothermal
and similar matters.
"Contractual Obligation" shall mean as to any Person, any provision
of any security issued by such Person or any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Deed of Trust" shall mean a Deed of Trust, in substantially the form
attached hereto as Exhibit A, among New Star, Lender and the trustee thereunder,
pursuant to which New Star grants to Lender a lien on the collateral, as such
Deed of Trust may be amended, supplemental or otherwise modified from time to
time.
"Default" shall mean any of the events specified in Article VII
hereof, whether or not any requirement for the giving of notice or the lapse of
time or both or any other condition has been satisfied.
"Default Interest Rate" shall have the meaning set forth in Section
2.6 hereof.
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"Environmental Laws" shall mean any and all federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees
or requirements of any governmental authority regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous Material or
environmental protection or health and safety, as now or may at any time
hereafter be in effect, including without limitation, the Clean Water Act also
known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C. Section
1251 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Sections 7401 et seq., the
Federal Insecticide, Fungicide and Rodenticide Act ("FIFRA"), 7 U.S.C. Sections
136 et seq., the Surface Mining Control and Reclamation Act ("SMCRA"), 30 U.S.C.
Sections 1201 et seq., the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), Public Law 99-499, 100
Stat. 1613, the Emergency Planning and Community Right to Know Act ("ECPCRKA"),
42 U.S.C. Section 11001 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., the Occupational Safety and Health Act
as amended ("OSHA"), 29 U.S.C. Section 655 and Section 657, together, in each
case, with any amendment thereto, and the regulations adopted pursuant thereto.
"Event of Default" shall mean any Event of Default set forth in
Article VII.
"Hazardous Materials" shall mean any flammable materials, explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or similar materials defined in any Environmental Law.
"Indebtedness" shall have the meaning set forth in Section 6.2
hereof.
"Interest Payment Date" shall mean, the last day of each calendar
month during the term of the Loan, commencing August 31, 1998.
"Loan" shall mean the loan by the Lender to the Borrower pursuant to
Article II hereof.
"Loan Documents" shall mean collectively, this Agreement, the Note,
the Deed of Trust, any agreements or documents referred to in Article IV hereof
and all other documents, certificates and instruments executed in connection
therewith.
"Loan Maturity Date" shall mean the earlier of (a) the date which is
180 days following the date of this Agreement or (b) the date on which NewStar
sells the Collateral.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, operations, property, condition (financial or otherwise) or
prospects of the Borrower and its subsidiaries taken as a whole, (b) the ability
of the Borrower to perform its obligations under the Loan Documents, or (c) the
validity or enforceability of any of the Loan Documents or the rights or
remedies of the Lender hereunder or thereunder.
"Obligations" shall mean all obligations, liabilities and
indebtedness of every nature of the Borrower from time to time owed to the
Lender under this Agreement or any of the Loan Documents including the principal
amount of all debts, claims and indebtedness, accrued and unpaid interest and
all fees, costs and expenses, whether primary, secondary, direct, contingent,
fixed or otherwise, heretofore, now and/or from time to time hereafter owing,
due or payable whether before or after the filing of a proceeding under the
United States Bankruptcy Code by or against the Borrower.
"Permitted Encumbrances" shall have the meaning assigned to such term
in Section 6.1 hereof.
"Person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"Prime Rate" means the rate that The Chase Manhattan Bank announces
from time to time as its prime lending rate, as in effect from time to time.
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"Subsidiaries" shall mean any corporation, association or other
business entity more than 50% of the voting stock of which is at the time owned
or controlled, directly or indirectly, by the Borrower or one or more of its
Subsidiaries or a combination thereof.
SECTION 1.2 ACCOUNTING TERMS. Except as otherwise herein specifically
provided, each accounting term used herein shall have the meaning given to it
under Generally Accepted Accounting Principles. "Generally Accepted Accounting
Principles" shall mean those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through the Financial Accounting Standards Board
("FASB") or through other appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the financial
condition, and the results of operations and changes in financial position, of
the Borrower, except that any accounting principle or practice required to be
changed by the FASB (or other appropriate board or committee of the FASB) in
order to continue as a generally accepted accounting principle or practice may
be so changed. Any dispute or disagreement between the Borrower and the Lender
relating to the determination of Generally Accepted Accounting Principles shall,
in the absence of manifest error, be conclusively resolved for all purposes
hereof by the written opinion with respect thereto, delivered to the Lender, of
independent accountants selected by the Borrower and approved by the Lender.
II. LOAN
SECTION 2.1. LOAN. Subject to the following terms and conditions, and
relying upon the representations and warranties set forth herein, the Lender
agrees to make a "Loan" to the Borrower in an amount equal to $1,500,000.
Subject to the terms and conditions of this Agreement the Loan shall be made on
the closing date. NewStar and Four Point confirm and agree that all obligations
hereunder shall be joint and several and Four Point confirm that any and all
amounts loaned hereunder may be loaned to NewStar for the benefit of New Star
Four Point.
SECTION 2.2. NOTE.
The Loan by the Lender shall be evidenced by a promissory note (the
"Note"), substantially in the form attached hereto as Exhibit B, appropriately
completed, duly executed and delivered on behalf of the Borrower and payable to
the order of the Lender in the principal amount The aggregate principal amount
outstanding on the Note shall be payable on the Loan Maturity Date and all
accrued and unpaid interest thereon shall be payable on each Interest Payment
Date and on the Loan Maturity Date; provided, however, that if any such day is
not a Business Day, such principal and accrued interest, if any, shall be
payable on the next succeeding Business Day with additional accrued interest
until paid.
SECTION 2.3. INTEREST ON LOANS. The Loan shall bear interest on its
principal amount outstanding from time to time at a rate (computed on the basis
of the actual number of days elapsed over a year of 360 days) the Prime Rate
plus 2%.
SECTION 2.4. PAYMENT AND PREPAYMENT OF LOANS.
(a) The Borrower shall repay the principal amount of the
Loan plus all accrued and unpaid interest on the Loan Maturity Date.
(b) The Borrower may, at any time prepay the outstanding
amount of the Loan in whole or in part with accrued interest to the date of such
prepayment on the amount prepaid without premium or penalty; provided, however,
that each partial prepayment of the Loan shall be in a minimum amount of
$25,000.
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(c) Each partial prepayment of the Loan shall be permanent.
SECTION 2.5. OVERDUE INTEREST; ALTERNATE RATE OF INTEREST. Any amount
of principal, interest or any other amounts due hereunder which is not paid when
due ("Overdue Payment"), whether at stated maturity, by acceleration or
otherwise, shall, to the extent permitted by law, bear interest from such due
date until the Overdue Payment is paid in full, which interest shall be payable
on demand, at an interest rate per annum equal to two percent (2%) in excess of
the rate of interest on the Loan (the "Default Interest Rate").
SECTION 2.6. COMPUTATIONS. All computations of the interest rate
shall be made by the Lender on the basis of a year of 360 days, for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest is payable.
III. REPRESENTATIONS AND WARRANTIES
Each of NewStar and Four Point represents and warrants to the Lender,
that:
SECTION 3.1. ORGANIZATION, CORPORATE POWERS, ETC. NewStar is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of California. Four Point is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Florida has
the power and authority to own its properties and to carry on its business as
now being conducted, is duly qualified to do business in every jurisdiction
wherein the conduct of its business or the ownership of its properties is such
as to require such qualification and (iii) has the corporate power to execute,
deliver and perform the Loan Documents.
SECTION 3.2. CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by each of NewStar and
Four Point of the Loan Documents and the borrowing by New Star and/or Four Point
hereunder (a) have been duly authorized, (b) will not violate (i) any provision
of law or any governmental rule or regulation applicable to Borrower or, (ii)
any order of any court or other agency of government binding on Borrower or any
indenture, agreement or other instrument either to which Borrower is a party, or
by which Borrower or any of its property is bound, and (c) will not be in
conflict with, result in a breach of or constitute (with due notice and/or lapse
of time) a default under, any such indenture, agreement or other instrument, or
result in the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever upon any of their property or assets other than as
contemplated by the Loan Documents. Each person executing the Loan Documents has
full authority to execute and deliver same for and on behalf of the Borrower.
SECTION 3.3. SEC DOCUMENTS. The Borrower has furnished the following
information to the Lender: (a) the Report on Form 10-KSB of New Star and it
wholly-owned subsidiaries for the year ended December 31, 1997, (b) New Star's
Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31, 1998, and
(c) all other documents that New Star was required to file, which it represents
and warrants it did timely file with SEC under Section 13 or 14(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), since March
31, 1998 (collectively, the "SEC Documents"). As of their respective filing
dates, the SEC Documents complied in all material respects with the requires of
the Exchange Act or the Securities Act of 1933, as amended (the "Securities
Act"), as applicable. The SEC Documents as of their respective dates did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading. The
financial statements of New Star included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. Except as may be indicated in the notes to the Financial
Statements or, in the case of unaudited statements, as permitted by Form 10-QSB,
the Financial Statements have been prepared in accordance with Generally
Accepted Accounting Principles consistently applied and fairly present the
consolidated financial position
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of New Star and any subsidiaries at the dates thereof and the consolidated
result of their operations and consolidated cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, recurring
adjustments). The SEC Documents, this Agreement, the exhibits and schedules
hereto, and any certificates or documents to be delivered to the Lender pursuant
to this Agreement, when taken together, do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements contained herein and therein, in light of the circumstances under
which statements were made, not misleading.
SECTION 3.4. ABSENCE OF CHANGES. Except as otherwise disclosed in the
SEC Documents, since March 31, 1998, there has not been:
(a) any changes in the assets, liabilities, financial
condition or operations of the Borrower from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either in any individual case or in the aggregate, materially adverse,
(b) any material change, except in the ordinary course of
business, in the aggregate contingent obligations of the Borrower, whether by
way of guarantee, endorsement, indemnity, warrant or otherwise,
(c) any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the properties or business of
the Borrower;
(d) any declaration or payment of any dividend or other
distribution of the assets of the Borrower, or any stock split, stock dividend,
reclassification, reorganization, combination or the like;
(e) any labor organization activity;
(f) any transfer or grant of a right other than in the
ordinary course of business or any material change in the patents, patent
applications, copyrights, trade secrets, trademarks, proprietary information,
proprietary rights, and processes necessary for the Borrower's business as
currently conducted without any conflict with or infringement of the rights of
others;
(g) any notification or communication received by the
Borrower alleging that the Borrower, by conducting its business as currently
conducted, would violate any of the patents, trademarks, service marks, trade
names, copyrights, or trade secrets or other proprietary rights of any other
person or entity;
(h) any notification or communication received by the
Borrower that any of its employees or consultants is obligated under any
contract (including licenses, covenants, or commitments of any nature) or other
agreement, or subject to any judgment, decree or order of any court or
administrative agency, that is violated by or would materially interfere with
the current or prospective services provided to the Borrower by the employee or
consultant or the use of his best efforts to promote the interests of the
Borrower or that would materially conflict with the Borrower's business as
currently conducted and proposed to be conducted;
(i) any claim or legal action or other proceeding
threatened or brought before any court, any arbitrator of any kind or any
administrative agency, or any governmental investigation, which could have a
Material Adverse Effect; or
(j) any other event or condition of any character which has
materially and adversely affected the Borrower's assets, liabilities, financial
condition or operations or prospects.
SECTION 3.5. TAXES. All assessed deficiencies resulting from Internal
Revenue Service examinations of the Federal income tax returns of the Borrower
have been discharged or reserved against. The Borrower has filed or caused to be
filed all Federal, state and local tax returns which are required to be filed,
and has paid or has caused to be paid all taxes as shown on said returns or on
any assessment received by it, to the extent that such taxes have become due,
except any such taxes that are immaterial in amount or are being contested in
good faith with appropriate reserves set aside therefor.
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SECTION 3.6. TITLE TO PROPERTIES. The Borrower has good and
marketable title to its properties and assets reflected in the Financial
Statements referred to in Section 3.3 hereof, except for equipment leases in the
ordinary course of business and such properties and assets as have been disposed
of since the date of such balance sheet as no longer used or useful in the
conduct of its business or as have been disposed of in the ordinary course of
business, and all such properties and assets are free and clear of mortgages,
pledges, liens, charges and other encumbrances, except as required or permitted
by the provisions hereof or as disclosed in the Financial Statements referred to
in Section 3.3 hereof.
SECTION 3.7. LITIGATION.
(a) There are no actions, suits or proceedings (whether or
not purportedly on behalf of the Borrower) pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any material property
of the Borrower, at law or in equity or before or by any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which involve any of the transactions
contemplated herein or which, if adversely determined against the Borrower,
would in the opinion of management have a Material Adverse Effect, other than as
shown in the SEC Documents;
(b) The Borrower is not in default with respect to any
judgment, writ, injunction, decree, rule or regulation of any court or Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, which would have a Material
Adverse Effect.
SECTION 3.8. AGREEMENTS; NO DEFAULT. The Borrower is not a party to
any agreement or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree or regulation
materially and adversely affecting its business, properties or assets,
operations or condition (financial or otherwise). The Borrower is not in default
in any manner which would have a Material Adverse Effect or materially and
adversely affect the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any other agreement or
instrument to which it is a party.
SECTION 3.9. PROCEEDS OF THE LOAN. The proceeds of the Loan shall be
used by the Borrower only for the purpose described in the preamble hereto.
SECTION 3.10. FEDERAL RESERVE REGULATIONS.
(a) The Borrower is not engaged principally in, nor has as
one of its important activities, the business of extending credit for the
purpose of purchasing or carrying any "margin stock" (within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System of the
United States, as amended to the date hereof). No part of the proceeds of the
Borrowing hereunder will be used to purchase or carry any margin stock or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock. No part of the proceeds of the borrowing hereunder will be used
for any purpose which violates or which is inconsistent with the provisions of
Regulation X of said Board of Governors. If requested by the Lender, the
Borrower will furnish to the Lender a statement on Federal Reserve Form U-1.
(b) No part of the proceeds of the Loans will be used,
whether directly or indirectly, and whether immediately, incidentally or
ultimately, (i) to purchase or to carry margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock, or to refund
indebtedness originally incurred for such purpose, or (ii) for any purpose which
violates or is inconsistent with the provisions of the Regulations G, T, U, or X
of the Board of Governors of the Federal Reserve System.
SECTION 3.11. SUBSIDIARIES. The Borrower has no Subsidiaries other
than those set forth on Schedule 3.11 attached hereto.
SECTION 3.12. ENVIRONMENTAL MATTERS
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(a) The Borrower has not used, stored, treated,
transported, manufactured, refined, handled, produced or disposed of any
Hazardous Materials on, under, at or from any of its properties or assets owned
or leased by the Borrower, in any manner which at the time of the action in
question violated any Environmental Law governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials and which violation would have a material adverse effect on
the business or financial condition of the Borrower and to the best of the
Borrower's knowledge, no prior owner of such property or asset or any tenant,
subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials
on or affecting such property or asset, or otherwise, in any manner which at the
time of the action in question violated any Environmental Law governing the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of Hazardous Materials.
(b) To the best of the Borrower's knowledge (i) the
Borrower has no obligations or liabilities, known or unknown, matured or not
matured, absolute or contingent, assessed or unassessed, which would reasonably
be expected to have a materially adverse effect on the business or condition
(financial or otherwise) of the Borrower and (ii) no claims have been made
against the Borrower during the past five years and no presently outstanding
citations or notices have been issued against the Borrower which could
reasonably be expected to have a materially adverse effect on the business or
condition (financial or otherwise) of the Borrower taken as a whole which in
either case have been or are imposed by reason of or based upon any provision of
any Environmental Law, including, without limitation, any such obligations or
liabilities relating to or arising out of or attributable, in whole or in part,
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of any Hazardous Materials by the Borrower, or any of
its employees or predecessors in interest in connection with or in any way
arising from or relating to the Borrower or any of its owned or leased
properties, or relating to or arising from or attributable, in whole or in part,
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transportation or handling of any such substance, by any other Person at or on
or under any of the real properties owned or used by the Borrower or any other
location where such could have materially adverse effect on the business or
condition (financial or otherwise) of the Borrower.
SECTION 3.13. NOT AN INVESTMENT COMPANY. The Borrower is not an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended. The Borrower is not subject to regulation under any Federal or State
statute or regulation which limits its ability to incur Indebtedness.
SECTION 3.14. GOVERNMENTAL APPROVAL. No registration with or consent
or approval of, or other action by, any Federal, state or other governmental
authority or regulatory body is required in connection with the execution,
delivery and performance of the Loan Documents or the borrowings hereunder.
SECTION 3.15. FULL DISCLOSURE. All written information heretofore
furnished by the Borrower to the Lender for purposes of or in connection with
this Agreement is true and accurate in all material respects on the date as of
which such information is stated or certified. The Borrower has disclosed to the
Lender in writing any and all facts which, in the reasonable judgment of the
Borrower, have or would be reasonably likely to cause a Material Adverse Effect.
SECTION 3.16. BINDING EFFECT. This Agreement and each other Loan
Document to which the Borrower is a party constitute the legal, valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization or similar laws affecting
the enforcement of creditors' rights generally or by equitable principles
relating to enforceability.
SECTION 3.17. DEED OF TRUST. The Deed of Trust, attached hereto as
Exhibit A creates a valid, binding and enforceable security interest in and lien
on the Collateral.
IV. CONDITIONS OF LENDING
The obligation of the Lender to make the Loan hereunder is subject to
the following conditions precedent:
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SECTION 4.1. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. At the time
of the making of the Loan: (i) the representations and warranties set forth in
Article III hereof shall be true and correct in all material respects on and as
of such time with the same effect as though such representations and warranties
had been made on and as of such time; (ii) the Borrower shall be in compliance
with all the terms and provisions set forth herein and no Default or Event of
Default shall have occurred and be continuing; and (iii) in the judgment of
Lender, no Material Adverse Effect shall have occurred and be continuing and the
prospect of repayment shall not have been impaired.
SECTION 4.2. DEED OF TRUST. On or prior to the Closing Date, the
Lender shall have received the Mortgage from the Borrower substantially in the
form attached hereto as Exhibit A.
SECTION 4.3. NO DEFAULT CERTIFICATE; DEEMED REPRESENTATION. On the
Closing Date, the Borrower shall deliver to the Lender a certificate, dated such
date and signed by the Chief Financial Officer of the Borrower confirming
compliance with the conditions precedent set forth in clauses (i) and (ii) of
Section 4.1 hereof.
SECTION 4.4. BORROWER DOCUMENTS. On or before the Closing Date, the
Borrower shall deliver to the Lender (i) copies of its Articles of Incorporation
and By-laws, certified as of the Closing Date by its corporate secretary and
(ii) resolutions of the Board of Directors approving and authorizing the
execution, delivery and performance of this Agreement and the other Loan
Documents, certified as of the Closing Date by its corporate secretary as being
in full force and effect without modification or amendment.
SECTION 4.5. OPINION OF BORROWER'S COUNSEL. The Lender shall have
received on originally executed copy of a favorable written opinion of Robert C.
Murray, counsel for the Borrower, in form and substance reasonably satisfactory
to the Lender and its counsel, dated as of the Closing Date.
SECTION 4.6. OTHER INFORMATION, DOCUMENTATION. The Lender shall
receive such other and further information and documentation as it may
reasonably require.
V. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or any of the principal of or interest on
the Note remain unpaid, it will:
SECTION 5.1. CORPORATE EXISTENCE, PROPERTIES, INSURANCE, ETC. Except
as permitted in Section 5.2, do or cause to be done all things necessary to
preserve and keep in full force and effect its existence as a corporation, its
rights and franchises and comply, in all material respects, with all laws
applicable to it; at all times maintain, preserve and protect all franchises,
trade names licenses, patents, trademarks and copyrights and preserve all
material property used or useful in the conduct of its business and keep the
same in good repair, working order and condition, reasonable wear and tear
excluded, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, replacements, betterments and improvements thereto so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; at all times keep its insurable
properties adequately insured and maintain (i) insurance to such extent and
against such risks, including fire, public liability and business interruption,
as is customary with companies in the same or similar business, (ii) workmen's
compensation insurance in the amount required by applicable law, (iii)
professional liability insurance in the amount customary with companies in the
same or similar business and (iv) such other insurance as may be required by law
or as may be reasonably required in writing by the Lender.
SECTION 5.2. PAYMENT OF INDEBTEDNESS, TAXES, ETC.
(a) Pay, and cause each of its Subsidiaries to pay, all
indebtedness and obligations in the manner consistent with its operations over
the past 6 months; and
(b) Pay and discharge or cause to be paid and discharged
promptly all taxes, assessments and governmental charges or levies imposed upon
it or any of its Subsidiaries or upon their income and profits, or upon
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any of their property, real, personal or mixed, or upon any part thereof, before
the same shall become in default, as well as all lawful claims for labor,
materials and supplies or otherwise which, if unpaid, might become a lien or
charge upon such properties or any part thereof; provided, however, that neither
the Borrower nor any of its Subsidiaries shall be required to pay and discharge
or cause to be paid and discharged any such tax, assessment, charge, levy or
claim so long as the validity thereof shall be contested in good faith by
appropriate proceedings, and the Borrower or its Subsidiaries, as the case may
be, shall have set aside on its books adequate reserves with respect to any such
tax, assessment, charge, levy or claim so contested; and further provided that,
subject to the foregoing provision, the Borrower or its Subsidiaries, as the
case may be, will pay or cause to be paid all such taxes, assessments, charges,
levies or claims upon the commencement of proceedings to foreclose any lien
which has attached as security therefor.
SECTION 5.3. ACCESS TO PREMISES AND RECORDS. Maintain financial
records in accordance with Generally Accepted Accounting Principles and permit
representatives of the Lender to have access to such financial records, the
Collateral and the premises of the Borrower upon five (5) Business Days notice,
and to make such excerpts from such records or to conduct such audits and field
examinations as such representatives deem reasonably necessary, the costs
thereof to be borne by the Borrower.
SECTION 5.4. NOTICE OF ADVERSE CHANGE. Promptly, but not later than
ten (10) Business Days after any change or information shall have come to the
attention of any executive officer of the Borrower, notify the Lender in writing
of (a) any change in the business or the operations which, in the good faith
judgment of such Person, would be reasonably likely to have a Material Adverse
Effect, and (b) any information which indicates that any financial statements
which are the subject of any representation contained in this Agreement, or
which are furnished to the Lender pursuant to this Agreement, fail, to any
material extent, to present fairly the financial condition and results of
operations purported to be presented therein, disclosing the nature thereof.
SECTION 5.5. NOTICE OF DEFAULT. Promptly, in the event any executive
officer of the Borrower knows of any Default or Event of Default, or knows of an
event of default under any other of the Loan Documents, furnish to the Lender a
written statement as to such occurrence, specifying the nature and extent
thereof and the action (if any) which is proposed to be taken with respect
thereto.
SECTION 5.6. COMPLIANCE WITH CONTRACTUAL OBLIGATIONS AND REQUIREMENTS
AND REQUIREMENTS OF LAW; APPLICABLE LAWS. Comply, in all material respects, with
all Contractual Obligations and all applicable requirements of law, the breach
of which would be reasonably likely to have a Material Adverse Effect.
SECTION 5.7. INSURANCE.
(a) Keep its assets which are of an insurable character
insured (to the extent and for the time periods consistent with normal industry
practices) by financially sound and reputable insurers against loss or damage by
fire, explosion, theft or other hazards which are included under extended
coverage in amounts not less than the insurable value of the property insured or
such lesser amounts, and with such self-insured retention or deductible levels,
as are consistent with normal industry practices.
(b) Maintain with financially sound and reputable insurers,
insurance against other hazards and risks and liability to Persons and property
to the extent and in the manner customary for companies in similar business.
SECTION 5.8. TITLE INSURANCE. Promptly after the Closing Date, cause
to be issued to the Lender a standard coverage form policy of title insurance
covering the real property described in the Deed of Trust issued by a title
company reasonably satisfactory to the Lender in the full amount of the Loan.
11
VI. NEGATIVE COVENANTS
The Borrower covenants and agrees with the Lender that, so long as
this Agreement shall remain in effect or any of the principal of or interest on
the Note remain unpaid, it will not, directly or indirectly, and it will not,
directly or indirectly cause or permit any Subsidiary to:
SECTION 6.1. LIENS. Incur, create, assume or suffer to exist any
mortgage, pledge, lien, charge or other encumbrance or restriction of any nature
whatsoever (including conditional sales or other title retention agreements) on
the Collateral, other than the following "Permitted Encumbrances":
(a) liens existing on the Closing Date;
(b) deposits under workmen's compensation, unemployment
insurance and social security laws, or to secure the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases or
to secure statutory obligations or surety, appeal bonds or discharge of lien
bonds, or to secure indemnity, performance or other similar bonds in the
ordinary course of business;
(c) statutory liens of landlords and other liens imposed by
law, such as carriers', warehousemen's or mechanic's liens, incurred in good
faith in the ordinary course of business (provided that the Borrower will pay or
cause to be paid or bonded any such liens in an amount greater than or equal to
$25,000) and deposits made or bonds filed in the ordinary course of business to
obtain the release of such liens.
SECTION 6.2. INDEBTEDNESS. Incur, create, assume or permit to exist
or otherwise become liable in respect of any indebtedness or liability for
borrowed money evidenced by notes, bonds, debentures, or similar obligations, or
accept any deposits, advances or progress payments under contracts (excluding
unearned retainers and advances) ("Indebtedness"), other than:
(a) Indebtedness outstanding as of the Closing Date
(b) Indebtedness to the Lender outstanding as of the
Closing Date or hereafter incurred; or
(c) Indebtedness incurred under the Credit, Security and
Guarantee Agreement, dated as of November 4, 1997, among New Star, the
guarantors named therein and The Chase Manhattan Bank As it may be amended,
supplemented or otherwise modified from time to time
(d) Short-term unsecured Indebtedness incurred in the
ordinary course of business, not in excess of $150,000 in the aggregate
outstanding at any time;
SECTION 6.3. GUARANTEES. Guarantee, endorse, become surety for, or
otherwise in any way become or be responsible for any obligations of any Person
(other than NewStar's Subsidiaries) in excess of $50,000 in the aggregate,
provided, however, that the Borrower may endorse negotiable instruments in the
ordinary course of business and make guarantees to the Lender.
SECTION 6.4. SALE OF ASSETS, CONSOLIDATION OR MERGER, SALE AND
LEASEBACK.
(a) Sell, lease transfer or otherwise dispose of all or a
substantial portion of its properties, capital stock and assets or
(b) consolidate with or merge into any other corporation,
or permit another corporation to merge into it, or acquire all or substantially
all of the property or assets of any Person, unless the Borrower is the
surviving entity and there exists no Default or Event of Default hereunder, both
before and after such merger or acquisition or
12
(c) enter into any arrangement, directly or indirectly,
with any Person whereby the Borrower shall sell or transfer property, real or
personal, whether now owned or hereafter acquired, if the Borrower, at the time
of such sale or disposition, intends to lease or otherwise acquire the right to
use or possess (except by purchase) such property or like property for a
substantially similar purpose; provided that NewStar may sell the Collateral for
an amount not less than $3,850,000 if net proceeds are used first, to repay the
indebtedness owing to Asahi Bank of California under that certain Business Loan
Agreement dated April 24, 1996, and second to repay the Loan.
SECTION 6.5. SALE OF NOTES. Sell, transfer, discount or otherwise
dispose of notes, accounts receivable or other rights to receive payment with or
without recourse, except for the purpose of collection in the ordinary course of
business.
SECTION 6.6. CHANGE IN BUSINESS. Materially change or alter the
nature of its business from the business currently engaged in.
SECTION 6.7. DISTRIBUTIONS. Declare or pay any dividends or
distribution to the shareholders of the Borrower other than for accrual of
dividends on Preferred Stock.
SECTION 6.8. AMENDMENT TO CERTIFICATE OF INCORPORATION OR BY-LAWS.
Amend its Certificate of Incorporation or By-Laws in a material manner without
the prior written consent of the Lender.
VII. EVENTS OF DEFAULT
SECTION 7.1. EVENTS OF DEFAULT. In the case of the happening of any
of the following events ("Events of Default"):
(a) default shall occur (i) in the payment of the principal
or interest on the Note when due or (ii) in the payment of any other amounts due
hereunder;
(b) any representation or warranty herein or in any of the
Loan Documents, in any certificate or report furnished in connection herewith or
in any amendment to this Agreement, shall prove to be false or misleading in any
material respect when made or given or deemed made or given;
(c) default shall be made in respect of any agreement or
obligation relating to any obligation of the Borrower in excess of $100,000 for
borrowed money (other than the Note), if the effect of such default or the
result of any action by the obligee is to accelerate the maturity of such
obligation or to permit the holder or obligee thereof (or a trustee on behalf of
such holder or obligee) to cause such obligation to become due prior to the
stated maturity thereof or which, with the passage of time, the giving of notice
or both would constitute an event of default under any agreement, or any such
obligation shall not be paid when due after giving effect to any applicable
grace period;
(d) default shall be made in the due observance or
performance of any covenant, condition or agreement to be performed pursuant to
this Agreement or any of the Loan Documents and such default continues for at
least thirty (30) days;
(e) the Borrower (i) voluntarily commences any case,
proceeding or other action or file any petition seeking relief under Title 11 of
the United States Code or any other existing or future Federal domestic or
foreign Bankruptcy, insolvency or similar law, (ii) consents to the institution
of, or fails to controvert in a timely and appropriate manner, any such
proceeding or the filing of any such petition, (iii) applies for or consents to
the employment of a receiver, trustee, custodian, sequestrator or similar
official for the Borrower or for a substantial part of it's property, (iv) files
an answer admitting the material allegations of a petition filed against it in
any such proceeding, (v) makes a general assignment for the benefit of
creditors, (vi) becomes unable, admits in writing its inability or fails
generally to pay its debts as they become due or (vii) takes corporate action
for the purpose of effecting any of the foregoing;
13
(f) an involuntary case, proceeding or other action shall
be commenced or an involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Borrower or of a substantial
part of it's property, under Title 11 of the United States Code or any other
existing or future Federal, domestic or foreign bankruptcy, insolvency or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator or similar official for the Borrower or for a substantial part of
its property, or (iii) the winding-up or liquidation of the Borrower; and such
proceeding or petition shall continue undismissed for sixty (60) days or an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for sixty (60) days;
(g) there shall be commenced against the Borrower, any
case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged or stayed or bonded pending appeal
within sixty (60) days from the entry thereof;
(h) final judgments or orders for the payment of money in
excess of $100,000 in the aggregate shall be rendered against the Borrower, and
the same shall remain undischarged, unsatisfied or unbonded for a period of
thirty (30) days during which execution shall not be effectively stayed;
(i) dissolution of the Borrower (without automatic
reconstitution) and no successor acceptable to the Lender shall have acquired
substantially all the assets and assumed substantially all the liabilities of
the Borrower including, without limitation, the Obligations;
(j) termination, expiration or cancellation of, or re-entry
of dispossession by summary proceedings or otherwise by the landlord with
respect to any lease material to the business of Borrower unless, at such time,
the Borrower is in possession of alternate leased premises reasonably approved
by the Lender;
then, at any time thereafter during the continuance of any such event, the
Lender may, by written notice to the Borrower (i) declare the Note to be
forthwith due and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything contained herein or in the Note to the
contrary notwithstanding, and (iii) charge the Default Interest Rate for the
days that the Event of Default continues provided, however, that if an event
specified in Section 7.1 (e), (f) or (g) hereof shall have occurred, the Loan
shall automatically terminate and the Note shall immediately become due and
payable, and the Lender in each instance shall have the right to exercise its
rights under the Loan Documents as permitted by law.
VIII. MISCELLANEOUS
SECTION 8.1. NOTICES. All notices, requests and other communications
provided for hereunder shall be in writing and shall be deemed to have been duly
given or made when delivered by certified mail with a return receipt requested,
three days after the day on which mailed, or, in the case of overnight courier
service, one business day after delivery to such courier service, addressed as
set forth below, or to such other address as may be hereafter notified by the
respective parties hereto:
if to the Lender, at:
Apollo Partners, LLC
One Stamford Plaza, 12th Floor
Stamford, CT 06901
Attention: Terrence Elkes and Ken Gorman
with a copy to:
Morrison Cohen Singer & Weinstein
750 Lexington Avenue
New York, NY 10022
Attention: Joel Feldman
14
if to the Borrower, at
NewStar Media Inc.
8955 Beverly Boulevard
Los Angeles, California 90048
Attention: Chief Financial Officer
SECTION 8.2. SURVIVAL OF AGREEMENT; SUCCESSORS AND ASSIGNS.
(a) All covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto shall
survive the making by the Lender of the Loan herein contemplated and the
execution and delivery to the Lender of the Note evidencing the Loan and shall
continue in full force and effect so long as the Note is outstanding and unpaid.
(b) Whenever in this Agreement any of the parties hereto is
referred to, such reference shall be deemed to include the successors and
assigns of such party. All covenants, promises and agreements by or on behalf of
the Borrower which are contained in this Agreement shall bind and inure to the
benefit of the respective successors and assigns of the Lender. No other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with this Agreement or any of
the other Loan Documents. The Lender shall not have any obligation to any Person
not a party to this Agreement or other Loan Documents.
SECTION 8.3. EXPENSES OF THE LENDER; INDEMNIFICATION.
(a) The Borrower will pay all reasonable out-of-pocket
costs and expenses incurred by the Lender in connection with the preparation,
development and execution of the Loan Documents and any amendment, supplement or
modification to this Agreement, the Note and the other Loan Documents including,
without limitation, the fees and disbursements of counsel to the Lender incurred
in connection with the preparation, negotiation, execution, waiver, modification
and enforcement of this Agreement or any of the Loan Documents.
(b) The Borrower agrees to indemnify the Lender and its
respective directors, officers, employees and agents against, and to hold the
Lender and each such person harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against the Lender or any such person arising
out of, in any way connected with, or as a result of (i) the use of any of the
proceeds of the Loans, (ii) this Agreement or other Loan Documents, (iii) the
performance by the parties hereto and thereto of their respective obligations
hereunder and thereunder and consummation of the transactions contemplated
hereby and thereby, (iv) breach of any representation or warranty or (v) any
claim, litigation, investigation or proceedings relating to any of the
foregoing, whether or not the Lender or any such person is a party thereto;
provided, however, that such indemnity shall not, as to the Lender, apply to any
such losses, claims, damages, liabilities or related expenses to the extend that
they result from the gross negligence or willful misconduct of the Lender.
(c) The Borrower agrees to indemnify, defend and hold
harmless the Lender and its respective officers, directors, shareholder, agents
and employees (collectively, the "Indemnitees") from and against any loss, cost,
damage, liability, lien, deficiency, fine, penalty or expense (including,
without limitation, reasonable attorney's fees and reasonable expenses for
investigation, removal, cleanup and remedial costs and modification costs
incurred to permit continue or resume normal operations of any property or
assets or business of the firm) arising from a violation of, or failure to
comply with any Environmental Laws and to remove any lien arising therefrom
except to the extent caused by the gross negligence or willful misconduct of any
Indemnitee, which any of the Indemnitees may incur of which may be claimed or
recorded against any of the Indemnitees by any Person.
(d) The provisions of this Section 8.3 shall remain
operative and in full force and effect regardless of the expiration of the term
of this Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or any of the Loan Documents, or any investigation
made by or on behalf of the Lender. All amounts due under this Section 8.3 shall
be payable on written demand therefor.
15
SECTION 8.4. APPLICABLE LAW. This Agreement, the Note and the other
Loan Documents (other than those containing a contrary express choice of law)
shall be governed and construed by and interpreted in accordance with the laws
of the State of California.
SECTION 8.5. WAIVER OF RIGHTS BY THE LENDER; WAIVER OF JURY TRIAL,
ETC.
(a) Neither any failure nor any delay on the part of the
Lender in exercising any right, power or privilege hereunder or under the Loan
Documents shall operate as a waiver thereof, nor shall a single or partial
exercise thereof preclude any other or further exercise of any other right,
power or privilege. Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in this
Section any special, exemplary, punitive or consequential damages or any damages
other than, or in addition to, actual damages. Each party hereto (i) certifies
that neither any representative, agent or attorney of the Lender has
represented, expressly or otherwise, that the Lender would not, in the event of
litigation, seek to enforce the foregoing waivers and (ii) acknowledges that it
has been induced to enter into this Agreement or the Loan Documents, as
applicable, by, among other things, the mutual waivers and certifications
herein.
(b) THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE, AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM OR ACTION IN ANY WAY, INVOLVING OR ARISING, DIRECTLY
OR INDIRECTLY, OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE
RELATIONSHIP ESTABLISHED THEREUNDER.
SECTION 8.6. ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, the Note and the other Loan Documents;
(b) no joint venture exists among the Borrower and the
Lender.
SECTION 8.7. CONSENT TO JURISDICTION.
(a) The Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of any United States federal or California state
court sitting in Los Angeles in any action or proceedings arising out of or
relating to any Loan Documents and the Borrower hereby irrevocably agrees that
all claims in respect of such action or proceeding may be heard and determined
in any such court and irrevocably waives any objection it may now or hereafter
have as to the venue of any such action or proceeding brought in such a court or
the fact that such court is an inconvenient forum.
(b) The Borrower irrevocably and unconditionally consents
to the service or process in any such action or proceeding in any of the
aforesaid courts by the mailing of copies of such process to them by certified
or registered mail at its address specified in Subsection 8.1.
SECTION 8.8. EXTENSION OF MATURITY. Except as otherwise expressly
provided herein, whenever a payment to be made hereunder shall fall due and
payable on any day other than a Business Day, such payment may be made on the
next succeeding Business Day, and such extension of time shall be included in
computing interest.
SECTION 8.9. MODIFICATION OF AGREEMENT. No modification, amendment or
waiver of any provision of this Agreement or the Note, nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be in writing and signed by the Lender and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in the same, similar or
other circumstance.
16
SECTION 8.10. PARTICIPATION AND ASSIGNMENTS.
(a) The Borrower may not assign or transfer any of their
interests under this Agreement, the Note or the Loan Documents without the prior
written consent of the Lender.
(b) The Lender reserves the right to grant participation in
or to sell and assign its rights, duties or obligations with respect to the Loan
or the Commitment to such lending institutions or other parties as it may
choose, without the consent of the Borrower, which consent is deemed to be
granted.
SECTION 8.11. SEVERABILITY. In case any one or more of the provisions
contained in this Agreement or in the Note should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
SECTION 8.12 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument.
SECTION 8.13. ENTIRE AGREEMENT; CUMULATIVE REMEDIES.
(a) This Agreement and the other Loan Documents constitute
the entire agreement among the parties hereto and thereto as to the subject
matter hereof and thereof and supersede any previous agreement, oral or written,
as to such subject matter.
(b) The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by law.
SECTION 8.14. HEADINGS. Section headings used herein are for
convenience of reference only and are not to affect the construction of or be
taken into consideration in interpreting this Agreement.
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17
IN WITNESS WHEREOF, the Borrower and the Lender have caused this
Agreement to be duly executed by their duly authorized officers, all of the day
and year first above written.
NEWSTAR MEDIA INC.
By: /s/ NEIL TOPHAM
------------------------------------------
Name: Neil Topham
Title: Vice President and Chief Financial Officer
DOVE FOUR POINT, INC.
By: /s/ NEIL TOPHAM
------------------------------------------
Name: Neil Topham
Title: Vice President
APOLLO PARTNERS, LLC
By: /s/ KENNETH GORMAN
------------------------------------------
Name:
Title:
18
Schedule 3.11 - Subsidiaries
Dove Four Point, Inc.
NewStar Worldwide Inc.
NewStar Television Inc.
Dove Entertainment, Inc.
Dove Audio, Inc.
Dove Retail, Inc.
19
EXHIBIT A
PARCEL 1:
LOT 332 OF TRACT NO. 5125, IN THE CITY OF WEST HOLLYWOOD, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 62 PAGES 39 AND 40 OF MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT THE SOUTHERLY 55 FEET THEREOF.
PARCEL 2:
LOT 331 AND THE SOUTHERLY 55 FEET OF LOT 332 OF TRACT NO. 5125, IN THE CITY OF
WEST HOLLYWOOD, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED
IN BOOK 62 PAGES 39 AND 40 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
PARCEL 3:
LOTS 284, 285, 286, 329 AND 330 OF TRACT 5125, IN THE CITY OF WEST HOLLYWOOD,
COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 62 PAGES
39 AND 40 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 4:
LOT 282 OF TRACT. 5125, IN THE CITY OF WEST HOLLYWOOD, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 62 PAGE 39 OF MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
PARCEL 5:
LOT 283 OF TRACT NO. 5125, IN THE CITY OF WEST HOLLYWOOD, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 62 PAGES 39 AND 40 OF MAPS, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
20
EXHIBIT B
$1,500,000 Los Angeles, California
July ____, 1998
FOR VALUE RECEIVED, the undersigned, NEWSTAR MEDIA INC., a California
corporation, and DOVE FOUR POINT, INC., a Florida corporation, DO HEREBY JOINTLY
AND SEVERALLY PROMISE to pay to the order of Apollo Partners, LLC (the
"Lender"), at the office of the Lender 1 Stamford Plaza, 12th Floor, Stamford,
Connecticut 06901, or such other address as may be designated in writing by the
Lender, on the Loan Maturity Date (as such term and all other capitalized terms
in this Note are defined in the Loan Agreement (the "Agreement") dated as of
July 21, 1998 between the Borrower and the Lender) in lawful money of the United
States of America, in immediately available funds, (i) the principal amount of
One Million Five Hundred Thousand Dollars ($1,500,000) and (ii) interest from
the date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rate provided in accordance with Article II of
the Agreement and, upon default, on demand from time to time, on any overdue
principal and on any overdue charge or fee, and, to the extent permitted by law,
on any overdue interest, for each day from the due date thereof (by acceleration
or otherwise) until such sum is paid in full, at a rate of two percent (2%) per
annum in excess of the rate in effect from time to time on the Loan.
This Note is the Note referred to in Section 2.2 of the Agreement,
and is subject to prepayment and acceleration of maturity as set forth in the
Agreement.
This Note shall be governed by and construed in accordance with the
laws of the State of California and any applicable laws of the United States of
America.
NEWSTAR MEDIA INC.
By:
-------------------------------------
Name:
Title:
DOVE FOUR POINT, INC.
By:
-------------------------------------
Name:
Title: