EXHIBIT 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of
July 1, 2004, is entered into among (1) POINT.360, a California corporation (the
"Borrower"), (2) the several banks and other financial institutions parties to
the Credit Agreement referred to below (the "Lenders") and (3) UNION BANK OF
CALIFORNIA, N.A. ("UBOC"), as agent for the Lenders (in such capacity, the
"Agent").
RECITALS
A. The Borrower, the Lenders and the Agent have entered into that
certain Credit Agreement dated as of March 12, 2004 (the "Credit Agreement").
Capitalized terms used herein and not defined shall have the meanings ascribed
to them in the Credit Agreement.
B. The Borrower desires to acquire (the "IVC Acquisition") all of the
issued and outstanding capital stock of International Video Conversions, Inc., a
California corporation ("IVC"), under that certain Stock Purchase Agreement
dated as of June 23, 2004 by and among the Borrower, IVC and the stockholders of
IVC identified therein (such Agreement, as it may be amended, the "IVC Stock
Purchase Agreement").
C. The Borrower has requested that the Lenders amend the Credit
Agreement to provide for an additional term loan facility for the purpose of
facilitating the IVC Acquisition, as well as make certain other changes to the
Credit Agreement. The Lenders have agreed to the foregoing requests, subject to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties hereto hereby agree as follows:
SECTION 1. Amendments to Credit Agreement. The Credit Agreement is
hereby amended as follows:
(a) The following new definitions are added to Section 1.1 of the Credit
Agreement, in each case in appropriate alphabetical order:
"Aggregate Term Loan B Commitment": the sum of the Term Loan B
Commitments set forth on the signature pages hereof.
"Aggregate Term Loan Commitment": the sum of the Aggregate Term Loan A
Commitment and the Aggregate Term Loan B Commitment.
"Aggregate Total Commitment": the sum of the Aggregate Revolving Loan
Commitment and the Aggregate Term Loan Commitment.
"Commitment": a Revolving Loan Commitment or a Term Loan Commitment, as
applicable.
"First Amendment": that certain First Amendment to Credit Agreement
dated as of July 1, 2004 among the Borrower, the Lenders and the Agent.
"First Amendment Closing Date": the date on which all conditions to
effectiveness of the First Amendment have been satisfied.
"IVC": International Video Conversions, Inc., a California corporation.
"IVC Acquisition": the Borrower's acquisition of all of the issued and
outstanding capital stock of IVC under the IVC Stock Purchase Agreement.
"IVC Stock Purchase Agreement": the Stock Purchase Agreement dated as of
June 23, 2004 by and among the Borrower, IVC and the stockholders of IVC
identified therein.
"Term B Note": as defined in Section 2.18(c).
"Term B Reduction Installment": as defined in Section 2.18(d).
"Term Loan": as applicable, a Term Loan A or a Term Loan B; and "Term
Loans" means the aggregate of all Term Loan As and all Term Loan Bs, as
applicable, outstanding at any given time.
"Term Loan B" or "Term B Loan": a term loan made to the Borrowers by the
Term Loan B Lenders on the First Amendment Closing Date pursuant to Section
2.18.
"Term Loan B Commitment": the commitment of a Lender listed on the
signature pages hereof to make a Term Loan B hereunder through its Applicable
Lending Office as set forth on the signature pages hereof, as the same may be
adjusted pursuant to the provisions hereof.
"Term Loan B Maturity Date": July 1, 2009, or such earlier date as the
Term Loan B Commitments shall expire in accordance with the terms hereof
(whether by acceleration or otherwise).
"Term Loan B Commitment Percentage": with respect to each Term Loan B
Lender, the percentage equivalent of the ratio which such Term Loan B Lender's
Term Loan B Commitment bears to the Aggregate Term Loan B Commitment.
"Term Loan B Lender": each Lender having a Term Loan B Commitment or a
Term Loan B outstanding.
"Term Loan Commitment": a Term Loan A Commitment or a Term Loan B
Commitment, as applicable.
"Term Loan Commitment Percentage": a Term Loan A Commitment Percentage
or a Term Loan B Commitment Percentage, as applicable.
"Term Loan Lender": each Lender having a Term Loan Commitment or Term
Loans outstanding.
"Term Note": a Term A Note or a Term B Note.
(b) The following definitions in Section 1.1 of the Credit Agreement are
hereby restated to read in full as follows, in each case in appropriate
alphabetical order:
"Commitment Percentage": a Revolving Loan Commitment Percentage or a
Term Loan Commitment Percentage, as applicable.
"Loan": a Revolving Loan or a Term Loan, as applicable; and "Loans"
means the aggregate of all Revolving Loans and all Terms Loans, as applicable,
outstanding at any given time.
"Note": a Revolving Note or a Term Note; and "Notes" means the aggregate
of all Revolving Notes and all Term Notes.
(c) The definition of "Permitted Acquisition" contained in Section 1.1
of the Credit Agreement is amended by adding a proviso immediately prior to the
period at the end of such definition as follows: "; provided, that up to
$7,000,000 of the initial purchase price set forth in Section 2.2 of the IVC
Stock Purchase Agreement shall not be applied to such $9,000,000 limit (it being
understood that all Earn-out Payments made pursuant to Section 2.3 of the IVC
Stock Purchase Agreement shall continue to be applied to such limit); provided,
further, that, notwithstanding the foregoing, until the Agent has received the
Borrower's annual financial statements and Covenant Compliance Certificate for
the fiscal year ending December 31, 2004, as required by Sections 5.1(b) and
5.2(a) of this Agreement, the Borrower shall not, and shall not permit any
Subsidiary to, consummate any other Acquisition without the prior written
consent of all Lenders".
(d) In connection with Section 1.1 and Section 2.2 of the Credit
Agreement, the parties hereto agree that all references to "Aggregate Available
Term Loan Commitment," "Aggregate Term Loan Commitment," "Available Term Loan
Commitment," "Final Term Loan Maturity Date," "Term Loan," "Term Loan
Commitment," "Term Loan Commitment Expiration Date," "Term Loan Commitment
Percentage," "Term Loan Lender" and "Term Note" in the Credit Agreement, the
Exhibits thereto and each other Loan Document prior to the effectiveness of the
First Amendment shall be deemed to refer to "Aggregate Available Term Loan A
Commitment," "Aggregate Term Loan A Commitment," "Available Term Loan A
Commitment," "Final Term Loan A Maturity Date," "Term Loan A," "Term Loan A
Commitment," "Term Loan A Commitment Expiration Date," "Term Loan A Commitment
Percentage," "Term Loan A Lender" and "Term Note A," respectively.
(e) Section 2.5(d) of the Credit Agreement is hereby amended and
restated to read in full as follows:
"(d) If at any time the aggregate principal amount of all Revolving
Loans and Letters of Credit outstanding exceeds (i) the Borrowing Base (plus any
Overadvance Borrowings permitted at such time pursuant to Section 2.1(a)) or
(ii) the Aggregate Revolving Loan Commitment, the Borrower shall immediately,
without notice or request by the Agent, prepay the Revolving Loans (together
with accrued interest to the date of prepayment on the principal amount prepaid
and any payments required pursuant to Section 2.15) in an aggregate amount equal
to such excess. If at any time prior to the Term Loan A Commitment Expiration
Date the aggregate principal amount of all Term A Loans outstanding exceeds the
Aggregate Term Loan A Commitment, the Borrower shall immediately, without notice
or request by the Agent, prepay the Term A Loans (together with accrued interest
to the date of prepayment on the principal amount prepaid and any payments
required pursuant to Section 2.15) in an aggregate amount equal to such excess.
If at any time prior to the Term Loan B Maturity Date the aggregate principal
amount of all Term B Loans outstanding exceeds the Aggregate Term Loan B
Commitment, the Borrower shall immediately, without notice or request by the
Agent, prepay the Term B Loans (together with accrued interest to the date of
prepayment on the principal amount prepaid and any payments required pursuant to
Section 2.15) in an aggregate amount equal to such excess."
(f) The first sentence of Section 2.5(e) of the Credit Agreement is
hereby amended and restated to read in full as follows: "(e) Each prepayment of
the Loans pursuant to this Section 2.5 shall be applied first, to the
outstanding principal balance of the Term A Loans and the Term B Loans on a pro
rata basis (and, with respect to applications to the Term A Loans, by applying
such amount to the Original Term Loan Amortization Schedule and each Subsequent
Term Loan Amortization Schedule on a pro rata basis), in each case in inverse
order of maturity, second, to the outstanding principal balance of Revolving
Loans (with no reduction in the Aggregate Revolving Loan Commitment) and third,
to make a Cash Collateral Deposit with respect to outstanding Letters of
Credit."
(g) A new Section 2.18 is added to the Credit Agreement to read as
follows:
"2.18 Term B Loans; Term B Loan Commitments.
(a) Subject to the terms and conditions hereof, each Term Loan B Lender
severally agrees to make a Term Loan B to the Borrower on the First Amendment
Closing Date in an aggregate principal amount equal to the amount of the Term
Loan B Commitment of such Term Loan B Lender. After the funding of the Term Loan
B on the First Amendment Closing Date, the Term Loan B Commitments shall expire.
(b) Subject to Sections 2.10 and 2.12, the Term B Loans may from time to
time be (i) LIBOR Loans, (ii) Reference Rate Loans or (iii) a combination
thereof, as determined by the Borrower and notified to the Agent in accordance
with either Section 2.2(e) or 2.6. Each Term Loan B Lender may make or maintain
its Term B Loan to the Borrowers by or through any Applicable Lending Office.
(c) The Term Loan B made by each Term Loan B Lender to the Borrower
shall be evidenced by a promissory note of the Borrower, substantially in the
form of Exhibit A-3 (a "Term B Note"). Each Term B Note shall include
appropriate insertions therein as to payee, date and principal amount, shall be
payable to the order of the applicable Term Loan B Lender and shall represent
the obligation of the Borrower to pay the aggregate unpaid principal amount of
the Term Loan B made by such Term Loan B Lender to the Borrower pursuant to
Section 2.18(a), with interest thereon as prescribed in Sections 2.8 and 2.9.
Each Term Loan B Lender is hereby authorized (but not required) to record the
date and amount of each payment or prepayment of principal of its Term Loan B
made to the Borrower, each continuation thereof, each conversion of all or a
portion thereof to another Type and, in the case of LIBOR Loans, the length of
each Interest Period with respect thereto, in the books and records of such Term
Loan B Lender, and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded. The failure of any Term Loan B
Lender to make any such recordation or notation in the books and records of the
Term Loan B Lender (or any error in such recordation or notation) shall not
affect the obligations of the Borrower hereunder or under the Term B Notes. Each
Term B Note shall (i) be dated the First Amendment Closing Date, (ii) provide
for the payment of interest in accordance with Sections 2.8 and 2.9 and (iii) be
stated to be payable in installments of principal in accordance with, and
subject to the provisions of, Section 2.18(d).
(d) The Borrower shall repay the principal of the Term B Loans in equal
monthly installments of $78,333.33 (each such amount a "Term B Reduction
Installment") on the last day of each month, commencing with the month in which
the First Amendment Closing Date occurs. The aggregate amount payable to any
Term Loan B Lender with respect to any Term B Reduction Installment as set forth
in this Section 2.18(d) shall be determined in accordance with the provisions of
Section 2.11.
(e) The Borrower shall give the Agent irrevocable written notice,
substantially in the form of a Borrowing Notice (which notice must be received
by the Agent prior to 10:00 a.m., Los Angeles time, one Business Day prior to
the First Amendment Closing Date) requesting that the Term Loan B Lenders make
the Term Loan B in accordance with their respective Term Loan B Commitments on
the First Amendment Closing Date. Notwithstanding any term of this Agreement to
the contrary, the Term B Loan shall initially be a Reference Rate Loan, subject
to conversion thereafter in accordance with Section 2.6. Upon receipt of such
notice the Agent shall promptly notify each Term Loan B Lender thereof on the
date of receipt of such notice. Not later than 12:00 noon, Los Angeles time, on
the First Amendment Closing Date each Term Loan B Lender shall make available to
the Agent the amount of such Term Loan B Lender's Term Loan B Commitment in
immediately available funds by wiring such amount to such account as the Agent
shall specify.
(f) Neither the Agent nor any Term Loan B Lender shall be responsible
for the obligations or Term Loan B Commitment of any other Term Loan B Lender
hereunder, nor will the failure of any Term Loan B Lender to comply with the
terms of this Agreement relieve any other Term Loan B Lender or the Borrower of
its obligations under this Agreement and the Term B Notes."
(h) Section 3.21(b) of the Credit Agreement is amended in its entirety
to read as follows:
"(b) All proceeds of the (i) Term A Loans shall be used by the Borrower
for the purposes of (x) repaying unpaid principal and interest outstanding under
the Prior Agreement and (y) funding equipment purchases subject to Section
2.2(e)(iv), and (ii) Term B Loans shall be used by the Borrower for the
acquisition of all of the issued and outstanding capital stock of IVC under the
IVC Stock Purchase Agreement."
(i) A new Section 3.23 is added to the Credit Agreement to read as
follows:
"3.23 Certain Representations and Warranties regarding the IVC
Acquisition.
(a) The IVC Stock Purchase Agreement has been duly executed and
delivered by IVC and, to the best knowledge of the Borrower, each stockholder of
IVC. To the best of the Borrower's knowledge, no stockholder of IVC has
defaulted with respect to, and there has not occurred any event which with the
giving of notice or lapse of time would constitute a default by any such
stockholder with respect to its representations, warranties or covenants in the
IVC Stock Purchase Agreement. There is no default by IVC with respect to, nor
has there occurred any event which with the giving of notice or lapse of time
would constitute a default by IVC with respect to, its representations,
warranties or covenants in the IVC Stock Purchase Agreement.
(b) To the best of the Borrower's knowledge, (i) IVC has the corporate
power and authority, and the legal right, to make, deliver and perform the IVC
Stock Purchase Agreement and to consummate the IVC Acquisition under the IVC
Stock Purchase Agreement, and has taken all necessary corporate action to
authorize the execution, delivery and performance of the IVC Stock Purchase
Agreement and the consummation of the IVC Acquisition, (ii) no material consent
or authorization of, filing with or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with the
consummation of the IVC Acquisition, or the execution, delivery, performance,
validity or enforceability of the IVC Stock Purchase Agreement except for any
consent, authorization, filing or other act which has been made or obtained and
is in full force and effect and (iii) the IVC Stock Purchase Agreement
constitutes the legal, valid and binding obligation of IVC, enforceable against
it in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law). The execution, delivery and performance of the IVC Stock Purchase
Agreement and the consummation of the IVC Acquisition will not violate in any
material respect any Requirement of Law or Contractual Obligation of the
Borrower or any Subsidiary, and will not result in, or require, the creation or
imposition of any Lien on any of its properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation, except pursuant to the Loan
Documents. No litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of any
Borrower, threatened by or against the Borrower or any Subsidiary or against any
of its or their properties or revenues with respect to the IVC Acquisition."
(j) Section 5.14 is amended to add the following proviso to the end
thereof: "provided, further that the Borrower shall not be obligated to deliver
a Landlord Consent with respect to its premises located at 10741 Sherman Way,
Unit 4, Sun Valley, California."
(k) Section 7(i) is amended to add the following proviso to the end
thereof: "provided that, with respect to the dispute surrounding the Alliance
Atlantis Warrant, a judgment against the Borrower permitting Alliance Atlantis
to retain and exercise such Warrant and/or permitting Alliance Atlantis to
retain the $300,000 deposit previously transferred by the Borrower to Atlantis
Alliance, shall not be deemed an Event of Default under this Section 7(i)."
(l) Section 9.5 is amended as follows: (i) the words "and each Lender"
in clause (a) are hereby deleted and (ii) the words "each Lender and" in clause
(c) are hereby deleted.
(m) The two lines below UBOC's signature block to the Credit Agreement
are restated in their entirety to read as follows:
"Revolving Loan Commitment: $5,555,555.56
Term Loan A Commitment: $4,444,444.44
Term Loan B Commitment: $4,700,000.00".
(n) The two lines below U.S. Bank's signature block to the Credit
Agreement are restated in their entirety to read as follows:
"Revolving Loan Commitment: $4,444,444.44
Term Loan A Commitment: $3,555,555.56
Term Loan B Commitment: $0".
(o) A new Exhibit A-3 is added to the Credit Agreement, in the form of
Exhibit A-3 attached hereto.
(p) The Schedules attached to the Credit Agreement shall be deemed to be
replaced by the Schedules delivered therefor pursuant to Section 2 of this
Amendment.
SECTION 2. Conditions Precedent. This Amendment shall become effective
as of the date first set forth above upon receipt by the Agent of the following,
in each case in form and substance reasonably satisfactory to the Agent:
(a) this Amendment, duly executed by the Borrower, the Lenders and the
Agent;
(b) a Term B Note, duly executed by the Borrower in favor of UBOC;
(c) such amendments to the other Loan Documents as may be appropriate to
reflect the amendments effected by this Amendment, including replacement
Schedules to the Credit Agreement, as appropriate;
(d) a Guarantee, duly executed by IVC in favor of the Agent;
(e) a Guarantor Security Agreement, duly executed by IVC in favor of the
Agent;
(f) with respect to IVC, the documents and certificates contemplated by
Sections 4.1(c) and (d) of the Credit Agreement;
(g) such UCC and Patent & Trademark Office searches, and other Lien
searches, as the Agent shall request;
(h) original stock certificates representing all outstanding shares of
stock of IVC, together with an undated stock power for each of such
certificates, duly executed in blank by an authorized officer of the Borrower;
(i) evidence that all Liens (other than those permitted by Section 6.3)
encumbering the assets acquired in connection with the IVC Acquisition have been
terminated and evidence of IVC's payoff of its secured debt owed to Citibank
(West) and termination of all Liens and security documents related thereto,
including, but not limited to, (i) California UCC-1 filing #0115060603 made by
Citibank (West) against IVC's personal property assets, (ii) each Landlord
Consent and (iii) each Control Agreement;
(j) evidence of property and liability insurance covering IVC and the
assets acquired pursuant to the IVC Acquisition;
(k) with respect to each deposit or securities account maintained by IVC
on the First Amendment Closing Date with an institution other than the Agent,
either a Control Agreement, or evidence reasonably satisfactory to the Agent
indicating that such account has been closed;
(l) a Landlord Consent with respect to all leased property acquired in
connection with the IVC Acquisition;
(m) evidence that the IVC Acquisition shall have been consummated in
accordance with the IVC Stock Purchase Agreement, including a copy of the IVC
Stock Purchase Agreement, certified as true and correct and in full force and
effect by a Responsible Officer of the Borrower;
(n) evidence that IVC has positive pro forma EBITDA during the twelve
month period immediately prior to the closing of the IVC Acquisition, as
contemplated by clause (a) of the definition of "Permitted Acquisition,"
certified by a Responsible Officer of the Borrower as true and correct;
(o) a Covenant Compliance Certificate as of the First Amendment Closing
Date showing the Borrower's compliance with covenants both prior to the IVC
Acquisition and on a pro forma basis assuming consummation of such Acquisition,
neither of which indicate a Default;
(p) the Micor Media appraisal of IVC, which shall be in form and
substance satisfactory to the Agent;
(q) the executed legal opinion of Troy & Gould Professional Corporation,
counsel to the Borrower and IVC, in form and substance reasonably satisfactory
to the Agent;
(r) receipt by the Agent, for the pro rata benefit of the Term Loan B
Lenders, of a fee in immediately available funds in an amount of 0.25% of the
Aggregate Term Loan B Commitment (which shall be deemed earned in full on the
First Amendment Closing Date);
(s) payment of the Agent's fees, costs and expenses, including legal
fees and reimbursement of due diligence expenses, owing pursuant to Section 9.5;
and
(t) such other approvals, opinions, evidence and documents as any
Lender, through the Agent, may reasonably request; and the Agent's reasonable
satisfaction as to all legal matters incident to this Amendment.
SECTION 3. Reference to and Effect on the Credit Agreement and the Other
Loan Documents.
(a) Upon the effectiveness of this Amendment, each reference in the
Credit Agreement to "this Agreement," "hereunder," "hereof," "herein" or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to "the Credit Agreement," "thereunder," "thereof,"
"therein" or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement, as amended hereby.
(b) Except as specifically amended herein, the Credit Agreement and all
other Loan Documents are and shall continue to be in full force and effect and
are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or the
Lenders under the Credit Agreement or any other Loan Documents, nor constitute a
waiver of any provision of the Credit Agreement or any other Loan Documents.
SECTION 4. Representations and Warranties. The Borrower represents and
warrants, for the benefit of the Lenders and the Agent, as follows: (i) it has
all requisite power and authority under applicable law and under its charter
documents to execute, deliver and perform this Amendment, and to perform the
Credit Agreement as amended hereby; (ii) all actions, authorizations and
consents (corporate, regulatory and otherwise) required for it to execute,
deliver and perform this Amendment, and to perform the Credit Agreement as
amended hereby, have been taken and/or received; (iii) this Amendment, and the
Credit Agreement, as amended by this Amendment, constitute the legal, valid and
binding obligation of it enforceable against it in accordance with the terms
hereof, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law); (iv) the execution,
delivery and performance of this Amendment, and the performance of the Credit
Agreement, as amended hereby, will not (a) violate or contravene any Requirement
of Law, (b) result in any material breach or violation of, or constitute a
material default under, any agreement or instrument by which it or any of its
property may be bound, or (c) result in or require the creation of any Lien upon
or with respect to any of its properties, whether such properties are now owned
or hereafter acquired, except pursuant to the Loan Documents; (v) the
representations and warranties contained in the Credit Agreement and the other
Loan Documents are correct in all material respects on and as of the date of
this Amendment, before and after giving effect to the same, as though made on
and as of such date, except to the extent that such representations and
warranties expressly relate to an earlier date; and (vi) no Default has occurred
and is continuing.
SECTION 5. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment and the rights and obligations
of the parties under this Amendment shall be governed by, and construed and
interpreted in accordance with, the law of the State of California (without
reference to its choice of law rules).
* * * *
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
POINT.360, a California corporation
By: /s/ Alan R. Steel
---------------------------------
Name: Alan R. Steel
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Title: Chief Financial Officer
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UNION BANK OF CALIFORNIA, N.A.,
as Agent and as a Lender
By: /s/ Gina West
---------------------------------
Name: Gina West
-------------------------------
Title: Vice President
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U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Gregory A. Weinberg
---------------------------------
Name: Gregory A. Weinberg
-------------------------------
Title: Vice President
------------------------------
EXHIBIT A-3
FORM OF TERM B NOTE
$____________ Dated as of ___________, _____
FOR VALUE RECEIVED, the undersigned, POINT.360 (the "Borrower"), hereby
unconditionally promises to pay to the order of __________________________ (the
"Lender"), in lawful money of the United States and in immediately available
funds, the aggregate unpaid principal amount of all Term B Loans made by the
Lender to the undersigned pursuant to Section 2.18 of the Credit Agreement (as
hereinafter defined), in installments and in amounts in accordance with, and
subject to, the provisions of Section 2.18(d) of the Credit Agreement. Such
payment shall be made for the account of the Lender at the office of Union Bank
of California, N.A. located at 445 South Figueroa Street, 10th Floor, Los
Angeles, California 90071 or at such other office as the holder of this Term B
Note may notify the undersigned and as agreed to by Union Bank of California,
N.A. The undersigned further agrees to pay interest in like money at such office
or such other office on the unpaid principal amount hereof from time to time at
the rates per annum and on the dates specified in Sections 2.8 and 2.9 of the
Credit Agreement until paid in full (both before and after judgment to the
extent permitted by law).
This Term B Note is one of the Term B Notes referred to in that certain
Credit Agreement dated as of March 12, 2004 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
undersigned, the Lender, the other Lenders parties thereto and Union Bank of
California, N.A., as Agent, is entitled to the benefits thereof and of the other
Loan Documents and is subject to optional and mandatory prepayment in whole or
in part as provided therein. Reference is hereby made to the Credit Agreement
for a more complete statement of the terms and conditions under which the Term B
Loans evidenced hereby are made and are to be repaid. Capitalized terms used
herein which are defined in the Credit Agreement shall have such meanings unless
otherwise defined herein or unless the context otherwise requires.
Upon the occurrence of any one or more of the Events of Default
specified in the Credit Agreement, all amounts then remaining unpaid on this
Term B Note shall become, or may be declared to be, immediately due and payable,
all as provided therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
IN WITNESS WHEREOF, the party hereto has caused this Term B Note to be
duly executed and delivered by its proper and duly authorized officer as of the
day and year first above written.
BORROWER
POINT.360, a California corporation
By:
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Name:
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Title:
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Schedule 3.7
Subsidiaries and Affiliates
Global Medical Solutions, Ltd., including its Subsidiaries, is an Affiliate of
the Borrower.
International Video Conversions, Inc., is a Subsidiary of the Borrower.