SECURED PROMISSORY NOTE $600,000 Los Angeles, California September 13, 1996 FOR VALUE RECEIVED, the undersigned, TRADEWINDS TELEVISION, LLC, a California limited liability company (the "Borrower") hereby promises to pay to AFFINITY ENTERTAINMENT, INC., a Delaware corporation (the "Lender"), or order, on the Maturity Date (as such term is defined herein) the principal sum of Six Hundred Thousand Dollars ($600,000) or so much thereof as may be borrowed hereunder, with interest thereon in accordance with the terms set forth herein. The Maturity Date, unless mutually extended by Borrower and Lender, shall be the date upon which Lender makes written demand for payment to Borrower which may be made after the date which is 90 days following receipt of written notice (60 days following receipt of written notice on or after December 1, 1996) by Borrower from Lender ("Demand Notice") that Lender has determined that the conditions to the Transaction contemplated by that certain letter agreement dated September 13,1996 among Borrower, Lender and Rick Pack could not be satisfied, and the Transaction will not be consummated; provided, however, that notwithstanding the foregoing, this Note shall become immediately due and payable without any notice if either of the following conditions are not met at any time prior to the Maturity Date: (i) all payments due from Borrower to third parties with respect to the production, distribution, marketing and other exploitation of the television series "Bounty Hunters" (the "Series") are not made promptly when due or otherwise Borrower defaults in any monetary or contractual obligation relating to the Series, or (ii) Borrower shall not have (a) provided Lender with a two (2) week cash budget of expenditures, acceptable to Lender, due with respect to the Series by the close of business on the date of the "Demand Notice" and on each Friday thereafter, and (b) deposited in an escrow account, approved by Lender, sufficient cash to meet the monetary obligations set forth in the budget, initially for the next two (2) week period and thereafter for the next one (1) week period. Advances may be made under this Note prior to the Maturity Date on the condition that at the time of any such borrowing, such borrowing has been approved by Lender in its sole discretion regarding the use of such advances, and no Event of Default exists under the Security Agreement referred to herein, and provided further that the aggregate principal amount of all sums borrowed hereunder shall not exceed the sum of Six Hundred Thousand Dollars ($600,000). Each borrowing hereunder shall be recorded by the Lender and, prior to any transfer of this Note, shall be endorsed on the schedule annexed to this Note. The aggregate unpaid amount of principal set forth on the schedule annexed to this Note shall be presumptive evidence of the principal amount owing and unpaid on this Note. However, the failure to record any such amount on such schedule shall not limit or otherwise affect the obligations of Borrower hereunder to repay the principal amount of all advances hereunder together with interest accruing thereon. Amounts repaid hereunder may not be reborrowed. The undersigned promises to pay, on the Maturity Date, interest on the unpaid principal balance hereof from time to time outstanding from the date of the first disbursement hereunder until paid, at a rate per annum of eight percent (8%). This Note is entitled to the benefits and subject to all of the terms and conditions of the Interim Financing and Security Agreement dated September 13,1996 among Lender, Borrower and Rick Pack, as amended from time to time ("Security Agreement"). The undersigned agrees to pay all expenses of Lender incurred in collection of this Note, including reasonable attorneys' fees in connection therewith, irrespective of whether suit is brought hereon. All principal and interest hereunder shall be payable in lawful money of the United States of America and shall be paid at such place as the holder hereof may from time to time designate. Upon the occurrence of any default in the payment of principal or interest hereunder or upon any Event of Default under the Security Agreement or any material breach of any other term or condition set forth in the Security Agreement, the principal hereof with interest accrued thereon shall become, or may be declared to be, at the option of the Lender, forthwith due and payable. Borrower hereby waives diligence, presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note and assents to extensions of time of payment, or forbearance or other indulgence without notice. The right to plead any and all statutes of limitation as a defense to any demand hereunder is hereby waived to the full extent permitted by law. Borrower shall have no right to prepay all or any portion of this Note until the receipt by Borrower of the Demand Notice. This Note shall be governed by and be construed in accordance with the laws of the State of California. IN WITNESS WHEREOF, this Note has been executed and delivered at Los Angeles, California, on the date set forth above. TRADEWINDS TELEVISION, LLC By: Roy Park --------------------- Its: President/CEO --------------------- SCHEDULE OF ADVANCES OF PRINCIPAL ============================================================================================== Unpaid Amount of Interest Rate Principal Notation Date Advance (8%) Balance Made by ============================================================================================== 9/16/96 $118,249.76 (BHP) - ---------------------------------------------------------------------------------------------- 9/16/96 47,552.40 (Acct.Pay) - ---------------------------------------------------------------------------------------------- 9/16/96 104,050.75 (Contractors) - ---------------------------------------------------------------------------------------------- 9/16/96 36,161.61 (ADP) - ---------------------------------------------------------------------------------------------- 9/16/96 19,240.00 (Stations) - ---------------------------------------------------------------------------------------------- 9/17-10/3/96 211,478.71 - ---------------------------------------------------------------------------------------------- 10/4-10/17/96 48,437.12 (Payables) - ---------------------------------------------------------------------------------------------- 10/4-10/17/96 14,829.65 (PayroLL) - ---------------------------------------------------------------------------------------------- TOTAL $600,000.00 - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------- TRADEWINDS TELEVISION & BPH PRODUCTIONS Tradewinds' payables 152,641.05 Tradewinds' contractors 191,293.13 Tradewinds'employees 50,816.00 BHP Productions 141,983.05 ---------- Grand total 536,733.23 ========== Tradwinds' Payables Adam Weston Graphics 431.65 Airtouch Cellular 368.36 All Post 9,987.59 Ameritech 88.74 Arrowhead Mt Spring Water 212.30 AT&T 68.31 Camerry Consultants 3,000.00 Century Parking 148.50 Coast Communications 135.00 Compuserve 50.04 Designatory 11,250.00 Entertainment Comm Network 1,136.71 Federal Express 1,077.00 Furst Group 933.39 General Parking 480.00 Guardian Insurance 9,661.00 Lon Materna 729.29 NAPTE 11,000.00 Neopost Leasing 448.18 Nowell Color Lab 946.32 Nielsen 42,650.00 Omni-Ch 12,272.34 Omni-Ny 9,243.47 Pacific Bell 2,315.01 Pacific Communications 1,008.61 Pryor & Associates 3,500.00 Shari Jennings 21.60 Sharp Electronics 470.31 Silver Star Information Systems 270.00 Topanga Warner 10,320.00 Video Central 10,467.25 WCIU-TV 6,500.00 Western Office Interiors 911.10 Woodland Printing 351.71 Xerox 187.27 ---------- 152,641.05 ========== Tradewinds' contractors Chris Rovtar 43,250.00 expenses 1,167.94 Bette Alofsin 14,000.00 expenses 408.43 Diana Foster 7,000.00 expenses 554.33 Jon Ferro 13,333.32 expenses 249.35 bonus 7,500.00 Jan Mansfield 6,000.00 expenses 829.76 Stan Singer 10,000.00 Mark Rafalowski 12,000.00 Rick Pack 75,000.00 ---------- 191,293.13 ========== Tradewind Employees Karen Osterheldt 4,506.00 Chris Dahl 4,374.99 Shari Jennings 3,500.00 vacation 184.13 Milie Sheets 590.00 Yolanda Wright 3,912.48 Len Materna 18,124.98 William Gallie-BHP 3,400.00 Jane Roundy 2,200.00 Gerallie Legaspi 2,250.00 --------- 43,042.58 Payroll taxes 7,773.42 --------- Total to ADP 50,816.00 ========= BHP Productions AGK Studios 1,315.00 Band Pr 216.50 Broatch Berry 100.00 Courtesy Printing 244.65 Crystal Patent 169.50 Don Morea 1,264.50 Flower Power 4,200.00 Forever Blue 51,153.31 Fresno Shoot 3,975.25 Gabriel Miller 150.00 Gary Cates 600.00 Harris Tulchin 1,500.00 Jerry Petemon 10,575.00 John Young 600.00 Kuhn & Miller 2,010.00 Lewinter Rosman 1,960.45 Logo Edition 4,800.00 Mark Jeanette 5,548.00 Michael Hawks 800.00 Nicholas Blair 1,167.00 Nick Richards Ent. 3,500.00 NK & Associates 567.00 Outlaw Hunter 3,922.00 Peter Jordan 150.00 Robert Clark 300.00 Scott Bernstein 300.00 Sharpshooters 32,902.84 Sherwood Animatiori 125.00 Steve Sanzeri 1,965.23 Tom Drew 250.00 Video Central 3,409.72 Visionary Music 202.10 William Gallie 2,040.00 ------------ 141,983.05 ============ SCHEDULE OF ADVANCES OF PRINCIPAL ================================================================================================================= Unpaid Amount of Interest Rate Principal Notation Date Advance (8%) Balance Made by ================================================================================================================= 9/16/96 $118,249.76 (BHP) - ----------------------------------------------------------------------------------------------------------------- 9/16/96 47,552.40 (Acct.Pay) - ----------------------------------------------------------------------------------------------------------------- 9/16/96 104,050.75 (Contractors) - ----------------------------------------------------------------------------------------------------------------- 9/16/96 36,161.61 (ADP) - ----------------------------------------------------------------------------------------------------------------- 9/16/96 19,240.00 (Stations) - ----------------------------------------------------------------------------------------------------------------- 9/17-10/3/96 211,478.71 - ----------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------