Exhibit 10.1 Form of Loan Agreement.
LOAN AGREEMENT
This LOAN AGREEMENT ("Agreement") is entered into and effective this
___ day of December, 2000 and is by and among ___________, and individual having
an address at ___________________ (the "Lender"), and MEDIA DROP-IN PRODUCTIONS,
INC., a Delaware corporation having a place of business at 201 Ann Street,
Hartford, CT 06103 ("Borrower"), and MDI ENTERTAINMENT, INC., a Delaware
corporation having a place of business at 201 Ann Street, Hartford, CT 06103
("Guarantor").
RECITALS
Borrower has requested, and Lender has agreed to make, a loan to
Borrower in the aggregate principal amount of $_________, on and subject to the
terms and conditions of this Agreement.
Guarantor is the parent company of Borrower and has agreed to guaranty
all of Borrower's obligations to Lender.
In consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Borrower, Guarantor and Lender hereby agree as follows:
ARTICLE 1
AMOUNTS AND TERMS OF THE LOANS
A. THE LOAN
1.01 Loan.
(a) Subject to the terms and conditions set forth in this Agreement, the Lender
agrees to make a loan to Borrower in the principal amount of ___________________
and 00/100 Dollars ($____________) (the "Loan"). The Loan shall be evidenced by,
and shall be repaid with interest in accordance with the terms and provisions
of, a convertible promissory note of Borrower in substantially the form attached
hereto as Exhibit A-1 (the "Convertible Note").
(b) The Loan shall be secured by a security interest in all of Borrower's
assets, pursuant to a Security Agreement by and between Borrower and the Lender,
of even date herewith (the "Security Agreement"), and shall be guaranteed by
Guarantor pursuant to a Guaranty Agreement by and between Guarantor and the
Lender, of even date herewith (the "Guaranty Agreement"). The Guaranty Agreement
shall be secured by a security interest in all of Guarantor's assets, pursuant
to a Security Agreement by and between Guarantor and the Lender, of even date
herewith (the "Guarantor Security Agreement").
(c) As further consideration for, and to induce the Lender to make, the Loan,
Guarantor shall issue to the Lender and/or their designees a warrant or warrants
having an exercise period of three (3) years and entitling the Lender and/or
their designees to purchase ________ shares of Guarantor's Common Stock, at an
exercise price equal to $1.75 (the "Warrant"). The Warrant shall be in the form
attached hereto as Exhibit A-2.
1.02 Loan Documents. For the purposes of this Agreement, the
Convertible Note, the Security Agreement, the Guaranty Agreement, the Guarantor
Security Agreement, and the Warrant, may hereinafter be referred to individually
as a "Loan Document" and collectively as the "Loan Documents."
1.03 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur simultaneously with the execution of this
Agreement by the parties hereto.
B. CERTAIN GENERAL PROVISIONS
1.01 Payments Free of Deductions. All payments by Borrower hereunder
and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes, levies,
imposts, duties, charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed or levied by
any jurisdiction or any political subdivision thereof of taxing or other
authority therein unless Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon Borrower with respect to any
amount payable by it hereunder or under any of the other Loan Documents,
Borrower will pay to Lender on the date on which such amount is due and payable
hereunder or under such other Loan Document, such additional amount in dollars
as shall be necessary to enable Lender to receive the same net amount which
Lender would have received on such due date had no such obligation been imposed
upon Borrower. Borrower will deliver promptly to Lender certificates or other
valid vouchers for all taxes or other charges deducted from or paid with respect
to payments made by Borrower hereunder or under such other Loan Document.
1.02 Computations. All computations of interest on the Loan or other
fees or other charges shall be based on a 360-day year and paid for the actual
number of days elapsed.
1.03 Obligations Absolute. The obligations of Borrower under this
Agreement shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and such other agreement or
instrument under all circumstances, and irrespective of, the following
circumstances:
(d) any lack of validity or enforceability of all or any portion of this
Agreement or any other agreement or any instrument relating hereto;
(e) any change in the time, manner or place of payment of, or in any other term
of, all or any of the obligations of Borrower;
(f) the existence of any claim, setoff, defense or other right that Borrower may
have;
(g) any amendment or waiver of or consent to departure from any of the Loan
Documents, or all or any of the obligations of Borrower in respect to the Loans
of this Agreement; or
(h) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including without limitation, any other circumstance that
might otherwise constitute a defense available to, or a discharge of, either
Borrower and Guarantor.
C. MISCELLANEOUS
1.01 Use of Proceeds. The proceeds of the Loan shall be used for
working capital purposes.
ARTICLE 2
CONDITION PRECEDENT
2.01 Conditions Precedent to Effectiveness. The effectiveness of this
Agreement shall be subject to the prior satisfaction of each of the following
conditions:
(a) Lender shall have received each of the following, in form and
substance satisfactory to Lender and his counsel:
(1) This Agreement, duly executed and delivered by each of
Borrower and Guarantor;
(2) The Convertible Note, duly executed and delivered by Borrower;
(3) The Guaranty Agreement, duly executed and delivered by
Guarantor;
(4) The Security Agreement, duly executed and delivered by
Borrower together with such UCC-1 Financing Statements as are in the opinion of
Lender desirable or necessary to perfect the security interest created by the
Security Agreement;
(5) The Guarantor Security Agreement, duly executed and delivered
by Guarantor together with such UCC-1 Financing Statements as are in the opinion
of Lender desirable or necessary to perfect the security interest created by the
Guarantor Security Agreement;
(6) The Warrant (which shall be delivered prior to the close of
business on the first business day following the Closing);
(7) Copies of all corporate action taken by Borrower and
Guarantor, including resolutions of their respective Board of Directors,
authorizing the execution, delivery, and performance of the Loan Documents to
which it is party and each other document to be delivered pursuant to this
Agreement, certified as of the date of this Agreement by the Secretary of
Borrower and Guarantor, as the case may be;
(8) The Certificate of Incorporation (certified by the Secretary
of the State of Delaware) and Bylaws of each of Borrower and Guarantor;
(9) A certificate, dated as of the date of this Agreement, of the
Secretary of each of Borrower and Guarantor certifying the names and true
signatures of the officers of Borrower or the Guarantor, as the case may be,
authorized to sign the Loan Documents to which Borrower or Guarantor is a party
and the other documents to be delivered by Borrower or Guarantor under this
Agreement;
(10) Certificates of Good Standing issued by the Delaware
Secretary of the State evidencing that each of Borrower and Guarantor is a
Delaware corporation in good standing;
(11) A consent executed by each of Steven M. Saferin ("Saferin")
and Robert R. Sparacino ("Sparacino"), in substantially the form attached hereto
as Exhibit A-5.
(12) All other documents, instruments and agreements that Lender
shall require in connection with this Agreement.
(b) All representations and warranties contained in this Agreement
shall be true and correct in all material respects.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Borrower and Guarantor represent and warrant jointly and severally to
Lender that, except as otherwise publicly disclosed:
3.01 Financial Information. Any financial statements heretofore
delivered to Lender in connection with the loan transactions contemplated hereby
are true and correct in all respects, were prepared in accordance with generally
accepted accounting principles consistently applied and fairly present the
respective financial condition, market value and cash flow of the subject
thereof as of the respective dates thereof, no material adverse change has
occurred in the financial conditions reflected therein since the respective
dates thereof and no additional borrowings have been made by Borrower and
Guarantor since the date thereof which have not been fully repaid or which would
materially affect Borrower's and Guarantor's ability to perform its obligations
hereunder other than the borrowings contemplated hereby.
3.02 Litigation. There are no actions, suits or proceedings pending, or
to the best knowledge of Borrower and Guarantor threatened, against or affecting
Borrower or Guarantor or involving the validity or enforceability of the Loan
Documents, at law or in equity, or before or by any governmental authority,
which, if adversely determined against Borrower or Guarantor, would have a
material adverse effect on Borrower's or Guarantor's financial condition, and
Borrower and Guarantor is not in default with respect to any judgment, decision,
order, writ, injunction, decree or demand of any court or any governmental
authority.
3.03 Power and Authority. The consummation of the transactions hereby
contemplated and the performance of the Loan Documents are within the powers of
Borrower and Guarantor and have been duly authorized by all necessary corporate
action and do not and will not result in any breach of, or constitute a default
under, or conflict with any statute or other law, or any order, regulation or
ruling of any court or other tribunal or of any governmental or administrative
authority or agency, or any mortgage, lease, loan or credit agreement, corporate
charter or by-law, or other instrument or agreement to which Borrower or
Guarantor is a party or by which Borrower or Guarantor or its respective
properties may be bound or affected.
3.04 No Default. There is no default on the part of Borrower or
Guarantor under the Loan Documents and no event has occurred and is continuing
which with notice or the passage of time or both would constitute an Event of
Default hereunder. There is also no default on the part of Borrower or Guarantor
under any other agreement or instrument to which Borrower or Guarantor is a
party or by which Borrower or Guarantor is bound and no event has occurred and
is continuing which with notice or the passage of time or both would constitute
a default under any such instrument.
3.05 ERISA. Neither Borrower nor Guarantor have a deferred benefit
pension plan under the Employee Retirement Income Security Act of 1974, as
amended from time to time, the unfunded liabilities of which upon termination
could be held to be a liability of Borrower or Guarantor by the Pension Benefit
Guaranty Corporation.
3.06 Incorporation, Good Standing and Due Qualification. Each of
Borrower and Guarantor (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware; (ii) has all corporate
power and authority necessary to own its properties and to carry on the business
in which it is now engaged or proposed to be engaged; and (iii) is duly
qualified and in good standing as foreign corporation under the laws of each
other jurisdiction in which the failure to qualify would have a material adverse
affect.
3.07 Environmental Laws. Borrower and Guarantor are in material
compliance with, and have not received any summons, citation, directive, letter,
or other communication from any governmental authority concerning any
intentional or unintentional violation or alleged violation of, any
Environmental Laws.
3.08 Taxes. Borrower and Guarantor have filed all tax returns (federal,
state and local) required to be filed and have paid all taxes, assessments, and
governmental charges and levies thereon to be due, including interest and
penalties.
3.09 Governmental Consents. Borrower and Guarantor have obtained all
consents, licenses and other approvals from all governmental authorities
required (i) in connection with the execution, delivery and performance by
Borrower or Guarantor of the Loan Documents and (ii) to conduct the business of
Borrower or Guarantor as now conducted and as presently proposed to be
conducted.
3.10 Compliance with Laws. Borrower and Guarantor are in compliance in
all material respects with all applicable laws, rules, regulations, and orders
of governmental authorities.
3.11 Conflicts with Proprietary Rights of Others. Except as set forth
on Schedule 3.11 or as provided for pursuant to any Permitted Loan (as defined
below), the Borrower and Guarantor possess and have good, valid and marketable
title, free and clear of all security interests, liens, claims, charges,
encumbrances or other defects in title of any nature whatsoever to, or has the
valid, enforceable right to use, all trademarks, trademark rights, trade names,
trade name rights, licenses, franchises, service marks, patents, patent
applications, copyrights, inventions, discoveries, improvements, processes,
trade secrets, formulae, proprietary rights or date, shop rights, ideas or
know-how necessary to conduct its business as now being conducted or as proposed
to be conducted, without known conflict with or known infringement upon any
valid rights of others and the lack of which could materially and adversely
affect the operations of condition, financial or otherwise, of Borrower and
Guarantor.
3.12 Patents and Other Intangible Rights. To the knowledge of Borrower
and Guarantor, Borrower and Guarantor are not infringing upon any known right or
claimed right of any person under or with respect to any patents, trademarks,
trademark rights, trade names, trade name rights or copyrights and rights with
respect to the foregoing.
3.13 Title to Assets; No Liens. Except as set forth on Schedule 3.13,
or as provided for pursuant to any Permitted Loan, the Borrower and Guarantor
have good and marketable title to all of its assets, and none of its assets is
subject to any security interest or lien except in favor of Lender.
3.14 Material Contracts. Borrower and Guarantor have no material
contracts, agreements or commitments which have not been publicly disclosed or
otherwise disclosed to Lender.
3.15 Subsidiaries. Borrower and Guarantor have no subsidiaries the
existence of which has not been publicly disclosed or otherwise disclosed to
Lender.
ARTICLE 4
COVENANTS OF BORROWER AND GUARANTOR
Each of Borrower and Guarantor shall:
4.01 Financial Reports. Deliver to the Lender (i) internally prepared
monthly cash flow projections, (ii) as soon as available, and in any event
within forty-five (45) days after the close of each of the first three (3)
fiscal quarters, an internally prepared balance sheet as at the end of such
quarter and an income statement for such quarter, certified by the chief
financial officer of Borrower or Guarantor, as the case may be, as being true,
complete and correct, and (iii) as soon as available, and in any event within
ninety (90) days after the close of each fiscal year, an internally prepared
balance sheet as at the end of such fiscal year and an income statement for such
fiscal year, certified by the chief financial officer of Borrower or Guarantor,
as the case may be, as being true, complete and correct.
4.02 Maintenance of Existence. Preserve and maintain its organizational
existence and good standing in the jurisdiction of its organization, and qualify
and remain qualified as a foreign corporation in each jurisdiction in which the
failure to qualify would have a material affect.
4.03 Maintenance of Records. Keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of Borrower and
Guarantor.
4.04 Maintenance of Properties. Maintain, keep, and preserve all of its
properties necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear and tear excepted.
4.05 Conduct of Business. Continue to engage in a business of the same
general type as conducted and proposed to be conducted by it on the date of this
Agreement.
4.06 Maintenance of Insurance. (i) Keep its properties insured against
fire and other hazards (so-called "All Risk" coverage) in amounts and with
companies satisfactory to Lender to the same extent in covering such risks as is
customary in the same or a similar business, but in no event in an amount less
than the replacement value of the insured property which policy shall name
Lender as loss payee as its interest may appear, (ii) maintain public liability
coverage against claims for personal injuries, death or property damage in an
amount deemed reasonable by Lender, which policy shall name Lender as an
additional insured, and (iii) maintain all worker's compensation, employment or
similar insurance as may be required by applicable law. Such All Risk property
insurance coverage and such malpractice insurance coverage shall provide for a
minimum of thirty (30) days' written cancellation notice to Lender. Upon request
of either Lender, Borrower and Guarantor agrees to deliver copies of all of the
aforesaid insurance policies to Lender.
4.07 Compliance With Laws. Comply in all respects with all applicable
laws, rules, regulations, and orders of governmental authorities, such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments, and governmental charges imposed upon it or
upon its property.
4.08 Right of Inspection. At any reasonable time and from time to time
upon reasonable advance notice, permit Lender or any agent or representative of
Lender to examine and make copies of and abstracts from the records and books of
account of, and visit the properties of, Borrower and Guarantor and to discuss
the affairs, finances, and accounts of Borrower and Guarantor with any of its
officers and directors and Borrower and Guarantor's independent accountants
(who, by this reference, are authorized by Borrower and Guarantor to discuss
such matters with Lender or any agent or representative of Lender).
4.09 Mergers, Etc. Not merge or consolidate with, or sell, assign,
lease, or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to any person or entity, or acquire all or substantially all
of the assets or the business of any person or entity, without the prior written
consent of Lender.
4.10 Sale of Assets. Not sell, lease, assign, transfer, or otherwise
dispose of any of its now owned or hereafter acquired assets except: (a) for
inventory disposed of in the ordinary course of business; and (b) the sale or
other disposition of assets no longer used or useful in the conduct of its
business.
4.11 Guaranties, Etc. Except as expressly permitted by this Agreement,
not assume, guaranty, endorse, or otherwise be or become directly or
contingently responsible or liable (including, but not limited to, an agreement
to purchase any obligation, stock, assets, goods, or services, or to supply or
advance any funds, assets, goods, or services, or to maintain or cause such
person or entity to maintain a minimum working capital or net worth, or
otherwise to assure the creditors of any person or entity against loss) for
obligations of any person or entity, except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business
4.12 Transactions With Affiliates. Except for the any additional loans
made to Saferin or Sparacino (together with Saferin, the "September Lenders")
pursuant to a Loan Agreement (the "September Loan Agreement"), dated September
8, 2000, by an among Sparacino, Saferin, Media Drop-In Productions, Inc. and MDI
Entertainment, Inc. ("Additional September Loans"), not enter into any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate, except in the
ordinary course of and pursuant to the reasonable requirements of Borrower and
Guarantor's business and upon fair and reasonable terms no less favorable to
Borrower and Guarantor than would obtain in a comparable arm's-length
transaction with an independent third party.
4.13 Subsidiaries. Not create or otherwise acquire an interest in any
subsidiary.
4.14 Fiscal Year. Not change its fiscal year, which is currently
January 1 through December 31.
4.15 Notices. Notify the Lender (i) immediately upon becoming aware of
the occurrence of an Event of Default or (ii) if Borrower and Guarantor are
named a defendant in any litigation involving amounts greater than $50,000.
4.16 Debt. Not incur indebtedness except (i) indebtedness permitted
pursuant to the September Loan Agreement (ii) in favor of Lender and lenders who
make loans on substantially the same terms as under this Agreement in an
aggregate principal amount not to exceed $_______, (iii) trade indebtedness in
the ordinary course of business, (iii) indebtedness, up to $100,000 in the
aggregate, to vendors of equipment purchased by Borrower, and (iv) indebtedness
specifically permitted by Section 5.01 below.
4.17 Liens. Except for (i) liens securing indebtedness described in
Section 5.01 below, (ii) liens for taxes, assessments or similar charges
incurred in the ordinary course of business which are not delinquent, (iii)
liens securing purchase money indebtedness permitted by Section 4.16 above, and
(iv) mechanic's, materialmen's, supplier's, vendor's and similar liens arising
under law in the ordinary course of business which are not delinquent, not cause
or suffer to permit any liens to be placed on any of its assets which secure the
Loans from time to time except liens in favor of Lenders.
ARTICLE 5
REPRESENTATIONS, WARRANTIES, AND COVENANTS OF LENDER
5.01 Additional Loans to Borrower. The Lender hereby acknowledges and
agrees that following the date hereof, the Borrower may borrow up to an
aggregate principal amount of _______________ and 00/100 dollars ($___________)
from one or more other lenders (the "Permitted Loan"); provided that (i) the
Permitted Loans shall not have any terms or conditions superior to the terms and
conditions set forth in this Agreement, the Convertible Notes and the other Loan
Documents, and (ii) the lenders of the Permitted Loan (the "Additional Lenders")
shall agree to the provisions of Section 5.02 below.
5.02 Intercreditor Agreement. The Lender hereby agrees that each other
lender has the right to pursue, at any time and from time to time, any and all
rights and remedies he may have under the Loan Documents and, in the event that
a lender elects to exercise any such rights and remedies (an "Initiating
Lender") each other lender shall be obligated, upon request of the Initiating
Lender, to similarly exercise such other lender's rights and remedies and to
cooperate with the Initiating Lender. In addition, the Lender hereby agrees
that, notwithstanding the provisions of any of the Loan Documents, the security
interest held by, and the guaranty provided to, the Lender under the Loan
Documents shall have the same priority as the security interest held by, and the
guaranty provided to, each other lender, including the Additional Lenders, the
September Lenders, and the lenders under the Loan Agreement, dated November 28,
2000 (together with the Lenders, the Additional Lenders and the September
Lenders, the "Permitted Lenders"), by and among David Jacobs, Jay Leonard, Scott
Williams, the Borrower and the Guarantor, and all of the Permitted Lenders shall
have the right to participate pari passu in any recovery obtained as a result of
the enforcement by any Permitted Lender of any of his rights or remedies under
their respective Loan Documents.
5.03 Representations and Warranties. The Lender hereby represents and
warrants, as follows:
(i) Such Lender is acquiring their respective warrant and
convertible note hereunder for its own account with the present
intention of holding such securities for purposes of investment, and
that it has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any
applicable state securities laws. Such Lender understands that the
warrant, convertible note, and any securities issued in connection with
the exercise or conversion of such warrant or convertible note, as
applicable, have not been registered under the Securities Act, by
reason of their issuance in a transaction exempt from the registration
requirements of the Securities Act, and that they must be held
indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration. Each
certificate or instrument representing such warrant, convertible note,
and any securities issued in connection with the exercise or conversion
of such warrant or convertible note, as applicable, shall be imprinted
with a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
UNITED STATES FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE OFFERED
FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED FOR VALUE, DIRECTLY
OR INDIRECTLY, NOR MAY THE SECURITIES BE TRANSFERRED ON THE BOOKS OF
THE COMPANY, WITHOUT REGISTRATION OF SUCH SECURITIES UNDER ALL
APPLICABLE UNITED STATES FEDERAL SECURITIES LAWS OR COMPLIANCE WITH AN
APPLICABLE EXEMPTION THEREFROM, SUCH COMPLIANCE AT THE OPTION OF THE
COMPANY, TO BE EVIDENCED BY AN OPINION OF STOCKHOLDER'S COUNSEL, IN
FORM ACCEPTABLE TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
(ii) Such Lender is an "accredited investor," as defined in Rule 501
(the provisions of which are known to such Lender) promulgated under
the Securities Act and has been advised by individuals with such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment in the
Guarantor, has the ability to bear the economic risks of its investment
for an indefinite period of time, has been furnished with and has had
access to such information as reasonably requested and has had the
opportunity to ask, and has received satisfactory answers for,
questions of the Borrower and the Guarantor.
ARTICLE 6
EVENTS OF DEFAULT
Each of the following events shall constitute an "Event of Default"
hereunder:
6.01 Borrower or Guarantor fails to make payment to either Lender of
any amounts due under any Loan Documents when due;
6.02 Borrower or Guarantor shall fail to observe or perform any
covenant or agreement under any Loan Documents or any other agreement or
instrument executed by Borrower or Guarantor in favor of Lender, other than, in
each case, a covenant or agreement relating to the payment of amounts due
thereunder, and such failure is not remedied within thirty (30) days;
6.03 (i) Borrower or Guarantor shall (A) admit, in writing, its
inability to pay its debts generally as they become due; (B) file a petition in
bankruptcy or a petition to take advantage of any insolvency act; (C) make an
assignment for the benefit of creditors; (D) consent to, or acquiesce in, the
appointment of a receiver, liquidator or trustee of itself or of the whole or
any substantial part of its properties or assets; or (E) file a petition or
answer seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under the federal bankruptcy laws or
any other applicable law; or (ii) (A) a court of competent jurisdiction shall
enter an order, judgment or decree appointing a receiver, liquidator or trustee
of Borrower or Guarantor and/or of the whole or any part of the property or
assets of Borrower or Guarantor and such order, judgment or decree shall remain
unvacated, or not set aside, or unstayed for 45 days, or (B) a petition shall be
filed against Borrower or Guarantor seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
federal bankruptcy laws or any other applicable law and such petition shall
remain undismissed for 60 days, or (C) under the provisions of any other law for
the relief or aid of debtors, any court of competent jurisdiction shall assume
custody or control of Borrower or Guarantor or of the whole or any part of their
property or assets and Such custody or control shall remain unterminated or
unstayed for 45 days; or (iii) an order shall be entered in any proceeding by or
against Borrower or Guarantor decreeing the dissolution of Borrower or Guarantor
or the winding up of the affairs of Borrower or Guarantor or (iv) an attachment
or execution is levied against any portion of the property of Borrower or
Guarantor and is not discharged within 60 days;
6.04 Any representation or warranty made by Borrower or Guarantor
herein or in any other agreement, report, certificate, statement or instrument
(including, without limitation, financial statements) relating to the Loans
shall be or become untrue, inaccurate or misleading in any material respect;
6.05 A default shall occur with respect to any other liabilities,
indebtedness or obligations of Borrower or Guarantor to either Lender, of every
kind and description, direct or indirect, absolute or contingent, due or to
become due, now existing of hereafter arising, liquidated or unliquidated,
regardless of how they arise or by what agreement or instrument they may be
evidenced or whether evidenced by any agreement or instrument and also including
obligations to perform acts and to refrain from taking action as well as
obligations to pay money and such default shall continue beyond the applicable
cure period, if any;
6.06 The voluntary or involuntary dissolution or winding up of Borrower
or Guarantor;
6.07 One or more judgments, decrees, or orders for the payment of money
not covered by insurance shall be rendered against Borrower or Guarantor and
such judgments, decrees, or orders shall continue unsatisfied and in effect for
a period of thirty (30) consecutive days without being vacated, discharged,
satisfied, stayed or bonded pending appeal; or
6.08 The sale or other transfer in any form of fifty (50%) percent or
more of the beneficial ownership of Borrower.
6.09 Any Borrower Security Agreement or Guarantor Security Agreement
shall at any time after its execution and delivery and for any reason other than
an act or omission by a Lender cease to create a valid and perfected first
priority security interest (or such lesser priority security interest as may be
specifically set forth therein) in and to the property purported to be subject
to such agreement or otherwise to be in full force and effect, or any Borrower
Security Agreement or Guaranty Security Agreement shall be declared null and
void, or the validity or enforceability thereof shall be contested by Borrower
or Guarantor, or Borrower or Guarantor shall deny it has any further liability
or obligation under any such agreement, or Borrower or Guarantor shall fail to
perform any of its obligations under any such agreement subject to any notice
and cure provisions contained therein.
6.10 At any time after its execution and delivery and for any reason,
the Guaranty Agreement, shall cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability of the Guaranty
Agreement shall be contested by, Guarantor or Guarantor shall deny that it has
any further liability or obligation under such agreement, or Guarantor shall
fail to perform any of its obligations under the Guaranty Agreement.
ARTICLE 7
REMEDIES
7.01 If an Event of Default has occurred and is continuing, Lender may,
at his option, exercise any right, power or remedy permitted by law, including,
without limitation, any one or more of the following:
(a) Declare all of the obligations of Borrower and/or Guarantor
immediately due and payable, provided that upon the occurrence of any of the
events specified in Section 6.03 above affecting Borrower and Guarantor, all
obligations of Borrower or Guarantor shall become immediately due and payable
without declaration, notice or demand;
(b) Borrower and/or Guarantor will reimburse Lender for all reasonable
fees of attorneys or collection agencies and all reasonable expenses, costs and
charges paid or payable to third persons or suffered or incurred by Lender in
attempting or affecting the enforcement of any provision hereof, or the
enforcement of the Loan Documents or in the collection of the amounts secured
hereby or in the exercise of any authority, right or remedy conferred upon
Lender herein or by law, together with interest thereon at the default rate of
interest in the Convertible Notes or the maximum rate permitted by law,
whichever is lower; and
(c) All rights, remedies and options conferred upon Lender hereunder or
by law shall be cumulative and may be exercised successively or concurrently and
are not alternative or exclusive of any such rights, remedies or options. No
express waiver by Lender of any default or Event of Default hereunder shall in
any way be, or construed to be, a waiver of any future or subsequent default of
Event of Default. The failure or delay of Lender in exercising any rights
granted to him hereunder shall not constitute a waiver of any such right in the
future and any single or partial exercise of any particular right by Lender
shall not exhaust such rights or constitute a waiver of any other right provided
herein or by law.
ARTICLE 8
MISCELLANEOUS
8.01 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one instrument.
8.02 Provisions of the Loan Documents. The Loan Documents are subject
to the conditions, stipulations, agreements and covenants contained herein to
the same extent and effect as if fully set forth therein until this Agreement is
terminated and all principal, interest and other sums due and owing to Lender
under this Agreement and on the Convertible Notes and the other Loan Documents
have been paid in full.
8.03 Further Assurances. Borrower and/or Guarantor shall, on demand of
either Lender, do any act or execute any additional documents reasonably
required by a Lender to carry out the terms of the Loan Documents and to keep
each Lender informed of the status and affairs of Borrower and Guarantor.
8.04 Parties Bound, Etc. The provisions of this Agreement shall be
binding upon and inure to the benefit of Borrower and Guarantor and each Lender
and their respective heirs, beneficiaries, legal representatives, successors and
assigns (except as otherwise prohibited by this Agreement). This Agreement is a
contract between Lender and Borrower and Guarantor for their mutual benefit and
no third person shall have any right, claim or interests against Lender or
Borrower and Guarantor by virtue of any provision hereof or as a result of any
action or inaction of Lender in connection therewith.
Each reference herein to a Lender shall be deemed to include his heirs,
beneficiaries, legal representatives, successors and assigns, and each reference
to Borrower and Guarantor and any pronouns referring thereto as used herein
shall be construed in the masculine, feminine, neuter, singular or plural as the
context may require, and shall be deemed to include successors and assigns of
Borrower and Guarantor, all of whom shall be bound by the provisions hereof.
8.05 Notices. All notices and directions to either party shall be in
writing and shall be deemed given when delivered or deposited in. the United
States mail, and if delivered by mail, shall be mailed by registered or
certified first class mail, return receipt requested, postage prepaid, and
addressed as follows:
(1) to the Lender at:
(2) to Borrower and Guarantor at:
MDI Entertainment, Inc.
201 Ann Street
Hartford, CT 06103
Attn: Kenneth Przysiecki
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Chrysler Center
666 Third Avenue
New York, NY 10017
Attn: Kenneth R. Koch, Esq.
or, as to all of the foregoing, to such other address as the addressee shall
have indicated by prior notice (in accordance with the provisions of this
Section) to the one giving the notice or direction in question.
8.06 Survival of Representations and Warranties. All of the covenants
representations and warranties made in this Agreement shall survive the
execution and delivery hereof, and may be relied upon by Lender regardless of
any inspection or investigation or lack thereof by Lender, so long as all or any
portion of the Convertible Note remains unpaid. All covenants, representations
and warranties contained in the Loan Documents, and in any agreement,
certificate, statement, report or other document delivered by or on behalf of
Borrower and Guarantor as provided herein, or otherwise in connection with the
transactions contemplated hereby, shall be deemed to have been made in this
Agreement.
8.07 Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is held invalid, such
invalidity shall not affect other provisions which can be given effect without
the invalid provision or application, and to this end, the provisions of this
Agreement shall be severable.
8.08 Waivers, Extensions and Releases. Lender may at any time and from
time to time waive any one or more of the conditions contained herein or extend
the time of payment amounts due to Lender, but any such waiver or extension
shall be deemed to be made in pursuance and not in modification hereof, and any
such wavier in any instance or under any particular circumstance shall not be
considered a waiver of such condition in any other instance or any other
circumstance.
8.09 Governing Law; Jurisdiction. This Agreement and the other Loan
Documents shall be construed in accordance with and governed by the laws of the
State of Connecticut without regard to its conflict of laws rules and the
Convertible Notes shall take effect as an instrument under seal.
8.10 Termination. This Agreement shall terminate and be of no further
force and affect when Borrower and Guarantor have repaid the indebtedness
evidenced by the Convertible Notes fully and indefeasibly and Borrower and
Guarantor have otherwise satisfied all of their respective obligations to Lender
hereunder and under the other Loan Documents.
8.11 Borrower and Guarantor/Lender Relationship. Nothing contained in
this Agreement shall be construed as creating a joint venture or partnership of
or between Lender and Borrower and Guarantor or to create any other relationship
between the parties hereto other than as Borrower and Guarantor and Lender, and
Borrower and Guarantor hereby indemnify and agree to hold harmless Lender from
any and all damages resulting from such a construction of the relationship of
the parties hereto.
8.12 Borrower and Guarantor to Pay Fees and Charges. Borrower and
Guarantor shall pay, upon demand, all costs, damages, charges and expenses
incurred in the procuring, making, implementation and enforcement of the Loan,
including, without limitation, the reasonable fees and disbursements of Lender's
attorneys.
8.13 WAIVER OF TRIAL BY JURY. BORROWER AND GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND AFTER CONSULTATION WITH COUNSEL, WAIVE ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN ANY LITIGATION BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT AND ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
WRITTEN OR ORAL) OR ACTIONS OF EITHER PARTY.
8.14 PREJUDGMENT REMEDY WAIVER. TO INDUCE LENDER TO ACCEPT THIS
AGREEMENT, BORROWER AND GUARANTOR AGREE THAT THE LOANS EVIDENCED BY THE
CONVERTIBLE NOTES, THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS ARE AND EVIDENCE
A COMMERCIAL TRANSACTION AND NOT A CONSUMER TRANSACTION, AND WAIVES ANY RIGHT TO
A NOTICE AND HEARING UNDER CHAPTER 903A OF THE CONNECTICUT GENERAL STATUTES, AS
AMENDED, OR OTHER STATUTE OR STATUTES AFFECTING PREJUDGMENT REMEDIES AND
AUTHORIZES LENDERS' ATTORNEY TO ISSUE A WRIT FOR A PREJUDGMENT REMEDY WITHOUT
COURT ORDER, PROVIDED THE COMPLAINT SHALL SET FORTH A COPY OF THIS WAIVER.
BORROWER AND GUARANTOR ACKNOWLEDGE AND STIPULATE THAT SUCH WAIVER AND
AUTHORIZATION GRANTED ABOVE ARE MADE KNOWINGLY AND FREELY AND AFTER FULL
CONSULTATION WITH COUNSEL. SPECIFICALLY, BORROWER AND GUARANTOR RECOGNIZE AND
UNDERSTAND THAT THE EXERCISE OF LENDER'S RIGHTS DESCRIBED ABOVE MAY RESULT IN
THE ATTACHMENT OF OR LEVY AGAINST BORROWER AND GUARANTOR'S PROPERTY, AND SUCH
WRIT FOR A PREJUDGMENT REMEDY WILL NOT HAVE THE PRIOR WRITTEN APPROVAL OR
SCRUTINY OF A COURT OF LAW OR OTHER JUDICIAL OFFICER NOR WILL BORROWER AND
GUARANTOR HAVE THE RIGHT TO ANY NOTICE OR PRIOR HEARING WHERE BORROWER AND
GUARANTOR MIGHT CONTEST SUCH A PROCEDURE. THE INTENT OF BORROWER AND GUARANTOR
IS TO GRANT TO LENDER FOR GOOD AND VALUABLE CONSIDERATION THE RIGHT TO OBTAIN
SUCH A PREJUDGMENT REMEDY AND TO ASSURE THAT ANY SUCH PREJUDGMENT REMEDY
OBTAINED IS VALID AND CONSTITUTIONAL.
8.15 Convertible Note Replacement. Upon receipt of an affidavit of
Lender as to the loss, theft, destruction or mutilation of a Convertible Note or
any other security document which is not of public record, and, in the case of
any such loss, theft, destruction or mutilation upon surrender and cancellation
of such Convertible Note or other security document, Borrower will issue, in
lieu thereof, a replacement Convertible Note or other security document in the
same principal amount thereof and otherwise of like tenor.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have executed this Loan
Agreement as of the day and year first above written.
LENDER:
By: ________________________
BORROWER:
Media Drop-In Productions, Inc.
By: ________________________
Name:
Title:
GUARANTOR:
MDI Entertainment, Inc.
By: ________________________
Name:
Title: