EXHIBIT 10.1
PROMISSORY NOTE
December 30, 2005
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(Date)
2777 Ontario Street, Burbank, CA 91504
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(Address of Maker)
FOR VALUE RECEIVED, Point.360 ("Maker") promises, jointly and severally if more
than one, to pay to the order of General Electric Capital Corporation or any
subsequent holder hereof (each, a "Payee") at its office located at 2400 East
Katella Ave., Ste. 800, Anaheim, CA 92806, or at such other place as Payee or
the holder hereof may designate, the principal sum of Ten Million and No/100
Dollars ($10,000,000.00), with interest thereon, from the date hereof through
and including the dates of payment, at the floating per annum simple interest
rate ("Contract Rate") calculated as hereinafter set forth.
Until the Option to Convert (as defined below) is exercised, the Contract Rate
shall be adjusted once each calendar month, and such adjustment shall be
effective during the adjustment period ("Adjustment Period") as hereinafter
defined. Each Adjustment Period shall commence at the close of business on the
first day of a calendar month and shall continue through the same day of the
next succeeding calendar month. The "Contract Rate" for each Adjustment Period
shall be equal to the sum of (i) Three and Fifteen One Hundredths percent
(3.15%) per annum, plus (ii) a variable per annum interest rate, which shall be
equal to the rate listed for one month London Interbank Offered Rate (LIBOR)
which is published in the Money Rates Column of the Wall Street Journal, Eastern
Edition (or, in the event such rate is not so published, in such other
nationally recognized publication as Payee may specify) on the first Business
Day of the calendar month preceding the month in which the interest payment
being adjusted shall be due and payable. As used herein, the term "Business Day"
shall mean and include any calendar day other than a day on which all commercial
banks in the City of New York, New York are required or authorized to be closed.
So long as no default exists hereunder and all of the terms and conditions of
this Note are fulfilled, Maker may elect to convert (the "Option to Convert")
the Contract Rate to a fixed per annum simple interest rate as of any date on
which a Periodic Installment is due upon at least 30 but no more than 60 days
prior written notice (the "Notice Date") to Payee accompanied by a Conversion
Fee of $500.00 (which notice shall be irrevocable and shall be sent to the
attention of Payee's Business Center Manager, 2400 East Katella Ave., Ste. 800,
Anaheim, CA 92806). Such notice shall state the due date of a Periodic
Installment on which Maker elects the fixed Contract Rate to apply. Maker shall
pay to Payee, if necessary, prior to the effective date of the fixed Contract
Rate, an additional sum sufficient to amortize the unpaid principal over the
balance of the original term hereof at the Contract Rate applicable for the
first Periodic Installment. If Maker elects to exercise this Option to Convert,
the fixed Contract Rate shall be equal to the following applicable amount:
(a) If there are less than eighteen (18) months remaining before the Final
Installment of this Note is due, the sum of Three and Thirty Eight One
Hundredths percent (3.38%) per annum plus the Current Rate as provided herein.
The "Current Rate", as provided herein, shall be the per annum interest rate
listed for "1-Year" Treasury, constant maturity, under the column indicating an
average rate as stated in the Federal Reserve Statistical Release H.15 (519) for
the second calendar month preceding the calendar month in which the fixed
Contract Rate will be effective. If, for any reason whatsoever, the Federal
Reserve Statistical Release H.15 (519) is no longer published, the Current Rate
shall be equal to the latest annualized interest rate for "one year" U.S.
Treasury Bills as reported by the Federal Reserve Board on a weekly-average
basis, adjusted for constant maturity as indicated in the "Money Rates" column
of the Wall Street Journal, Eastern Edition, published on the first Business Day
of the calendar month preceding the month in which the fixed Contract Rate will
be effective.
(b) If there are more than eighteen (18) but less than forty-two (42) months
remaining before the Final Installment of this Note is due, the sum of Three and
Forty seven One Hundredths percent (3.47%) per annum plus the Current Rate as
provided herein. The "Current Rate", as provided herein, shall be determined in
the same manner as noted in subparagraph (a) above except it shall be based upon
the rate listed for "2-Year" Treasury bills.
(c) If there are more than forty-two (42) but less than sixty (60) months
remaining before the Final Installment of this Note is due, the sum of Three and
Fifty six One Hundredths percent (3.56%) per annum plus the Current Rate as
provided herein. The "Current Rate", as provided herein, shall be determined in
the same manner as noted in subparagraph (a) above except it shall be based upon
the rate listed for "3-Year" Treasury bills.
Subject to the other provisions hereof, the principal on this Note is payable in
lawful money of the United States in Sixty (60) consecutive monthly installments
of One Hundred Sixty-Six Thousand Six Hundred Sixty-Seven and 67/100 Dollars
($166,666.67) each ("Periodic Installment") and a final installment which shall
be in the amount of the total outstanding unpaid principal and interest. The
first Periodic Installment shall be due and payable on first and the following
Periodic Installments and the final installment shall be due and payable on the
same day of each succeeding period (each, a "Payment Date"). In addition to the
payments of principal provided above, interest at the Contract Rate shall be
payable on the Payment Date. All payments shall be applied first to interest and
then to principal. Each payment may, at the option of the Payee, be calculated
and applied on an assumption that such payment would be made on its due date.
The acceptance by Payee of any payment which is less than payment in full of all
amounts due and owing at such time shall not constitute a waiver of Payee's
right to receive payment in full at such time or at any prior or subsequent
time. Interest shall be calculated on the basis of a 365 day year (366 day leap
year).
The Maker hereby expressly authorizes the Payee to insert the date value is
actually given in the blank space on the face hereof and on all related
documents pertaining hereto.
This Note may be secured by a security agreement, chattel mortgage, pledge
agreement or like instrument (each of which being hereinafter called a "Security
Agreement").
Time is of the essence hereof. If any installment or any other sum due under
this Note or any Security Agreement is not received within ten (10) days after
the applicable due date, the Maker agrees to pay, in addition to the amount of
each such installment or other sum, a late payment charge of five percent (5%)
of said installment or other sum, but not exceeding any lawful maximum. If (i)
Maker fails to make payment of any amount due hereunder within ten (10) days
after the same becomes due and payable; or (ii) Maker is in default under or
fails to perform under any term or condition contained in any Security
Agreement, then the entire principal sum remaining unpaid, together with all
interest thereon and any other sum payable under this Note or the Security
Agreement, at the election of Payee, shall immediately become due and payable,
with interest thereon at the lesser of twelve percent (12%) per annum or the
highest rate not prohibited by applicable law from the date of such accelerated
maturity until paid (both before and after any judgment).
The Maker may prepay in full, but not in part, its entire indebtedness hereunder
upon payment of the entire indebtedness plus an additional sum as a premium
equal to the sum of:
(a) the following percentages of the outstanding principal balance for the
indicated period: Prior to the first annual anniversary date of this Note: Two
percent (2.0%) Prior to the second annual anniversary date of this Note: One
percent (1.0%) and zero percent (0%) thereafter, plus all other sums due
hereunder or under any Security Agreement; plus
(b) "the Make Whole Amount" (if applicable and determined as set forth below);
provided, however, that the Make Whole Amount shall only be applicable for a
Prepayment Date which occurs during a period when the Contract Rate has been
fixed ("Fixed Rate Period"). The Make Whole Amount shall be an amount equal to
the excess of (i) the net present value of the stream of remaining payments,
discounted to the Prepayment Date at a per annum interest rate equal to the then
Reinvestment Rate, over (ii) the principal balance outstanding as of the
Prepayment Date, before any such prepayment. For the purposes hereof, the stream
of remaining payments shall equal the sum of each payment of principal &
interest which would have been due following the Prepayment Date, for the Fixed
Rate Period, plus the principal balance that would have been remaining at the
end of the Fixed Rate Period. For the purposes hereof, the "Reinvestment Rate"
shall be the per annum interest rate that is equal to the sum of (a) three and
fifteenth one hundred percent (3.15%) plus (b) the stated yield of United States
Treasury Notes having a life equal to the remaining term of this Note (assuming
that this Note would have terminated at the end of the Fixed Rate Period)
published in the Wall Street Journal, Eastern Edition two Business Days prior to
the Prepayment Date. If no maturity exactly corresponds to such life, the yields
of the two United States Treasury Notes with lives immediately above and below
such life would be interpolated on a straight line basis to arrive at the
Reinvestment Rate. The Make Whole Amount shall be deemed zero if the calculation
results in a negative number.
Notwithstanding the foregoing, if Maker sells its property located at 2701 Media
Center Drive, Los Angeles, CA 90065, then within twelve (12) months of the
closing of such transaction, Maker shall make a partial prepayment of its
indebtedness under this Note of no less than $500,000 and no greater than
$4,000,000; and, provided there exists no default hereunder or under any
Security Agreement at such time (or there exists no event which with the giving
of notice, the passage of time, or both, would constitute a default under this
Note or any Security Agreement at such time), then such prepayment shall not
require the payment to Payee of the foregoing prepayment sum or Make-Whole
Amount.
Additionally, notwithstanding anything to the contrary contained herein,
provided that no default has occurred and is continuing hereunder or under the
Security Agreement, Maker may, upon no less than 30 days prior written notice to
Payee, sell any item of Collateral provided that the net proceeds of such sale
are paid directly to Payee and provided that the net proceeds of such sale are
equal to or greater than the then "pay-off value" which Payee, in its sole and
absolute discretion, has assigned to such item of Collateral on its books and
records, subject in all events, however, to a maximum annual a
ggregate amount of
all such sales of no greater than $250,000 per calendar year. Upon Payee's
receipt of the required pay-off value, Payee shall release its security interest
in such item of Collateral, and Maker shall have no obligation to Payee for any
prepayment premium or Make-Whole Amount on such amount so prepaid.
It is the intention of the parties hereto to comply with the applicable usury
laws; accordingly, it is agreed that, notwithstanding any provision to the
contrary in this Note or any Security Agreement, in no event shall this Note or
any Security Agreement require the payment or permit the collection of interest
in excess of the maximum amount permitted by applicable law. If any such excess
interest is contracted for, charged or received under this Note or any Security
Agreement, or if all of the principal balance shall be prepaid, so that under
any of such circumstances the amount of interest contracted for, charged or
received under this Note or the Security Agreement on the principal balance
shall exceed the maximum amount of interest permitted by applicable law, then in
such event (a) the provisions of this paragraph shall govern and control, (b)
neither Maker nor any other person or entity now or hereafter liable for the
payment hereof shall be obligated to pay the amount of such interest to the
extent that it is in excess of the maximum amount of interest permitted by
applicable law, (c) any such excess which may have been collected shall be
either applied as a credit against the then unpaid principal balance or refunded
to Maker, at the option of the Payee, and (d) the effective rate of interest
shall be automatically reduced to the maximum lawful contract rate allowed under
applicable law as now or hereafter construed by the courts having jurisdiction
thereof. It is further agreed that without limitation of the foregoing, all
calculations of the rate of interest contracted for, charged or received under
this Note or the Security Agreement which are made for the purpose of
determining whether such rate exceeds the maximum lawful contract rate, shall be
made, to the extent permitted by applicable law, by amortizing, prorating,
allocating and spreading in equal parts during the period of the full stated
term of the indebtedness evidenced hereby, all interest at any time contracted
for, charged or received from Maker or otherwise by Payee in connection with
such indebtedness; provided, however, that if any applicable state law is
amended or the law of the United States of America preempts any applicable state
law, so that it becomes lawful for the Payee to receive a greater interest per
annum rate than is presently allowed, the Maker agrees that, on the effective
date of such amendment or preemption, as the case may be, the lawful maximum
hereunder shall be increased to the maximum interest per annum rate allowed by
the amended state law or the law of the United States of America.
The Maker and all sureties, endorsers, guarantors or any others (each such
person, other than the Maker, an "Obligor") who may at any time become liable
for the payment hereof jointly and severally consent hereby to any and all
extensions of time, renewals, waivers or modifications of, and all substitutions
or releases of, security or of any party primarily or secondarily liable on this
Note or any Security Agreement or any term and provision of either, which may be
made, granted or consented to by Payee, and agree that suit may be brought and
maintained against any one or more of them, at the election of Payee without
joinder of any other as a party thereto, and that Payee shall not be required
first to foreclose, proceed against, or exhaust any security hereof in order to
enforce payment of this Note. The Maker and each Obligor hereby waive
presentment, demand for payment, notice of nonpayment, protest, notice of
protest, notice of dishonor, and all other notices in connection herewith, as
well as filing of suit (if permitted by law) and diligence in collecting this
Note or enforcing any of the security hereof, and agree to pay (if permitted by
law) all expenses incurred in collection, including Payee's reasonable
attorneys' fees.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
MAKER IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS LOCATED IN THE STATE OF CONNECTICUT TO HEAR AND DETERMINE ANY SUIT,
ACTION OR PROCEEDING AND TO SETTLE ANY DISPUTES, WHICH MAY ARISE OUT OF OR IN
CONNECTION HEREWITH AND WITH THE DEBT DOCUMENTS (COLLECTIVELY, THE
"PROCEEDINGS"), AND MAKER FURTHER IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO
REMOVE ANY SUCH PROCEEDINGS FROM ANY SUCH COURT (EVEN IF REMOVAL IS SOUGHT TO
ANOTHER OF THE ABOVE-NAMED COURTS). MAKER IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MIGHT NOW OR HEREAFTER HAVE TO THE ABOVE-NAMED COURTS BEING NOMINATED AS THE
EXCLUSIVE FORUM TO HEAR AND DETERMINE ANY SUCH PROCEEDINGS AND AGREES NOT TO
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF THE ABOVE-NAMED
COURTS FOR ANY REASON WHATSOEVER, THAT IT OR ITS PROPERTY IS IMMUNE FROM LEGAL
PROCESS FOR ANY REASON WHATSOEVER, THAT ANY SUCH COURT IS NOT A CONVENIENT OR
APPROPRIATE FORUM IN EACH CASE WHETHER ON THE GROUNDS OF VENUE OR FORUM
NON-CONVENIENS OR OTHERWISE. MAKER ACKNOWLEDGES THAT BRINGING ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY COURT OTHER THAN THE COURTS SET FORTH ABOVE WILL
CAUSE IRREPARABLE HARM TO PAYEE WHICH COULD NOT ADEQUATELY BE COMPENSATED BY
MONETARY DAMAGES, AND, AS SUCH, MAKER AGREES THAT, IN ADDITION TO ANY OF THE
REMEDIES TO WHICH PAYEE MAY BE ENTITLED AT LAW OR IN EQUITY, PAYEE WILL BE
ENTITLED TO AN INJUNCTION OR INJUNCTIONS (WITHOUT THE POSTING OF ANY BOND AND
WITHOUT PROOF OF ACTUAL DAMAGES) TO ENJOIN THE PROSECUTION OF ANY SUCH
PROCEEDINGS IN ANY OTHER COURT. Notwithstanding the foregoing, each of Maker and
Payee shall have the right to apply to a court of competent jurisdiction in the
United States of America or abroad for equitable relief as is necessary to
preserve, protect and enforce its respective rights under this Note and any
other Debt Document, including, but not limited to orders of attachment or
injunction necessary to maintain the status quo pending litigation or to enforce
judgments against Maker, any Obligor or the collateral pledged to Payee pursuant
to any Debt Document or to gain possession of such collateral. MAKER HEREBY
UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS NOTE, ANY DEBT
DOCUMENTS, ANY DEALINGS BETWEEN MAKER AND PAYEE RELATING TO THE SUBJECT MATTER
OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS
BEING ESTABLISHED BETWEEN MAKER AND PAYEE. THE SCOPE OF THIS WAIVER IS INTENDED
TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
(INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.) THIS WAIVER IS
IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND
THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS NOTE, ANY DEBT DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED TRANSACTION. IN THE EVENT
OF LITIGATION, THIS NOTE MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
This Note and any Security Agreement constitute the entire agreement of the
Maker and Payee with respect to the subject matter hereof and supersedes all
prior understandings, agreements and representations, express or implied.
No variation or modification of this Note, or any waiver of any of its
provisions or conditions, shall be valid unless in writing and signed by an
authorized representative of Maker and Payee. Any such waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given.
Any provision in this Note or any Security Agreement which is in conflict with
any statute, law or applicable rule shall be deemed omitted, modified or altered
to conform thereto.
Point.360
/s/ Yolanda Perez By: /s/ Alan Steel
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(Witness) (Signature)
Yolanda Perez Alan Steel, CFO
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(Print name) Print name (and title, if applicable)
2777 North Ontario Street
Burbank, CA 91504 95-4272619
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(Address) (Federal tax identification number)