LEASE INTENDED AS SECURITY ("Lease") dated as of November 3,
1997, between BA LEASING & CAPITAL CORPORATION, a California
corporation with its principal office at 555 California Street, San Francisco
, California, 94104 ("Lessor") and TODD-AO STUDIOS WEST, a
California corporation, with its principal office at 3000 Olympic Boulevard,
Building One, Santa Monica, CA 90404 ("Lessee").
Lessor agrees to acquire and lease and sell to Lessee and Lessee agrees to
hire and purchase from Lessor certain personal property (the "Units" and
individually a "Unit") described in the Appendix (the "Appendix") attached
hereto and made a part hereof, on the terms and conditions set forth herein
and in the Appendix.
Section 1. Procurement, Delivery and Acceptance.
1.1 On a date or dates to be agreed upon by Lessor and Lessee
(individually a "Delivery Date"), Lessor will purchase from and lease back
to Lessee for an amount equal to the agreed upon value of the Units, and
Lessee will sell to and lease back from Lessor each Unit, but all Delivery
Dates for such Units must be during the Utilization Period set forth in the
Appendix.
1.2 The obligation of Lessor to pay for each Unit is subject to the
following conditions:
(a) Lessee shall have delivered to Lessor not earlier than the tenth
(10th) and not later than the fifth (5th) Business Day (as defined in
Paragraph F of the Appendix) prior to the proposed Delivery Date, an
irrevocable notice (a "Delivery Date Notice") substantially in the form of
Exhibit A, specifying (i) the proposed Delivery Date, (ii) a description of
each Unit to be purchased on such Delivery Date and the location thereof,
(iii) the aggregate Purchase Price of such Units, and (iv) wire transfer
instructions for the disbursement of funds;
(b) At least three (3) Business Days prior to any Delivery Date, Lessor
shall have received an Appraisal to its satisfaction opining:
(i) as to the appraised value of the Units to be purchased on
such Delivery Date in each case on such Delivery Date and at the end of the
applicable Base Term and all applicable Renewal Terms; and
(ii) that the average remaining economic useful lives of Units
subject to each Schedule are not less than seven (7) years.
(c) Lessee shall have accepted the Unit on its Delivery Date
and executed and delivered to Lessor for each Unit accepted by Lessee, a
Lease Schedule and Acceptance Certificate in the form of Exhibit B (a
"Schedule") confirming the Delivery Date of the Unit and the acceptance of
the Unit as of its Delivery Date. Each Schedule to be executed and
delivered by Lessee on each Delivery Date shall set forth:
(i) in Annex I thereto, a description of and the Purchase Price
for the Units; and
(ii) in Annex II thereto, the Interim Rent, the Applicable
Percentage Amounts, a schedule of the installments of Fixed Rent, the
Payment Dates therefor payable during the Base Term and during each
Renewal Term, the Schedule Balance of such Schedule as of the Delivery
Date therefor and as of each Payment Date in the Base Term and each
Renewal Term, assuming in each case that all installments of Fixed Rent
due and payable thereunder to and including such Payment date have been
paid;
Annex I and II to each Schedule shall be prepared by Lessor, and the items
set forth by Lessor in such Schedules shall be conclusive and binding upon
Lessee for all purposes hereunder;
(d) Its Delivery Date shall be during the Utilization Period set forth in
the Appendix;
(e) On or prior to each Delivery Date, Lessor shall have
received from Lessee duly executed UCC financing statements, and such
financing statements shall have been filed in all places deemed necessary
or desirable by Lessor in order to perfect the security interest granted
pursuant to the Lease with respect to the Units and any related collateral
being delivered on such Delivery Date;
(f) a Consent to Removal in the form of Exhibit C for the
Units located on the Site applicable to each Delivery Date;
(g) There shall exist no Event of Default nor any event which,
with notice or lapse of time or both, would become an Event of Default (a
"Default");
(h) On or before its Delivery Date, Lessee shall execute and
deliver to Lessor a Bill of Sale in the form of Exhibit D with respect to the
Unit, dated that Delivery Date;
(i) Lessor shall receive evidence, satisfactory to Lessor, that
each Unit is free and clear of all claims, liens, security interests and
encumbrances;
(j) On or prior to each Delivery Date, Lessee shall have paid
to Lessor any Transaction Costs not previously paid;
(k) Each of the representations and warranties made by
Lessee hereunder shall be true on and as of each Delivery Date;
(l) no material adverse change in Lessee's financial condition
shall have occurred since the date hereof;
resolution of any environmental issues; and.
(n) Lessor shall have received a Guaranty (the "Guaranty") in the form
of Exhibit G executed by Todd-AO Corporation (the "Guarantor").
If any of the foregoing conditions is not met with respect to any such Unit,
Lessor shall have no obligation to either Lessee or any third party to pay the
purchase price for such Unit.
Any attempted or purported sale of a Unit by Lessee to Lessor after its
Delivery Date shall not be effective whether or not accepted by Lessor, and
Lessor shall not incur any obligations with respect to the Unit, including the
obligation to pay for the Unit.
1.3 Lessee represents, warrants and covenants with respect to each
Unit that (a) Lessee has the right to sell the Unit as set forth herein, (b)
both the Unit and Lessee's rights, title and interest in the Unit are, or
will be as of its Delivery Date, free from all claims, liens, security
interests and encumbrances, (c) Lessee will defend the sale against claims and
demands of all persons and (d) the Purchase Price of the Unit is equal to its
fair market value at the time of the sale.
1.4 As soon as possible, but no later than the first Delivery Date,
Lessee shall deliver to Lessor the following documents, in form and
substance satisfactory to Lessor:
(a) a certificate evidencing Lessee's authority to enter into and perform
its obligations under this Lease;
(b) a certificate as to the incumbency of the person or persons
authorized to execute and deliver this Lease and any other agreements or
documents required hereunder, including specimen signatures of such
persons;
(c) certificates of insurance, including loss payable and other
endorsements complying with, or other evidence acceptable to Lessor that
Lessee has complied with, Section 7;
(d) opinions of counsel to Lessee and Guarantor, substantially in the
forms of Exhibit E; and
(e) any other documents specified in the Appendix and such other
documents as Lessor may reasonably request.
Section 2. Term, Rent and Payment.
2.1 The term of this Lease as to each Unit shall commence on its
Delivery Date and continue as specified in the Appendix.
2.2 Lessee shall pay to Lessor rent for each Unit in the amounts and at
the times set forth in the Appendix.
2.3 Rent and all other sums due Lessor hereunder shall be paid at the
principal office of Lessor set forth above.
2.4 This Lease is a net lease and Lessee shall not be entitled to any
abatement or reduction of rent or any setoff against rent, whether arising by
reason of any past, present or future claim of any nature by Lessee against
Lessor or otherwise. Except as otherwise expressly provided herein, this
Lease shall not terminate, nor shall the obligations of Lessor or Lessee be
otherwise affected by reason of (a) any defect in, damage to, loss of
possession or use or destruction of any Unit, however caused, (b) the
attachment of any lien, encumbrance, security interest or other right or
claim of any third party to any Unit, (c) any prohibition or restriction
of or interference with Lessee's use of the Unit by any person or entity,
(d) the insolvency of or the commencement by or against Lessee of any
bankruptcy, reorganization or similar proceeding, or (e) any other cause,
whether similar or dissimilar to the foregoing, any present or future law to
the contrary notwithstanding. It is the intention of the parties that all
rent and other amounts payable by Lessee hereunder shall be payable in all
events in the manner and at the times herein provided unless Lessee's
obligations in respect thereof have been terminated pursuant to the express
provisions of this Lease.
2.5 Payments shall be applied in the following order: (a) expenses,
including allocated time charges of internal counsel for Lessor and any
other attorneys' fees; (b) interest on late payments; and (c) rent and all
other sums due hereunder. Payments shall be evidenced by entries in
records maintained by Lessor which shall be presumptively correct.
Section 3. Warranties.
LESSEE ACKNOWLEDGES AND AGREES THAT (a) EACH UNIT IS
OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE SELECTED
BY LESSEE, (b) LESSEE IS SATISFIED THAT THE SAME IS
SUITABLE FOR ITS PURPOSES, (c) LESSOR IS NOT A
MANUFACTURER THEREOF NOR A DEALER IN PROPERTY OF
SUCH KIND AND (d) LESSOR HAS NOT MADE, AND DOES NOT
HERE8Y MAKE, ANY REPRESENTATION, WARRANTY OR
COVENANT WITH RESPECT TO THE TITLE, MERCHANTABILITY,
CONDITION, QUALITY, DESCRIPTION, DURABILITY, FITNESS
FOR PURPOSE OR SUITABILITY OF ANY UNIT IN ANY RESPECT
OR IN CONNECTION WITH OR FOR THE PURPOSES AND USES OF
LESSEE. Lessor hereby assigns to Lessee, to the extent assignable, any
warranties, covenants and representations of any vendor with respect to any
Unit, to the extent assigned to Lessor, but any action taken by Lessee by
reason thereof shall be at Lessee's expense and shall be consistent with
Lessee's obligations under Section 2.
Section 4. Possession, Use and Maintenance.
4.1 Lessee shall not (a) use, operate, maintain or store any Unit
improperly, carelessly or in violation of any applicable law or regulation
of any government authority, (b) abandon any Unit, (c) sublease any Unit or
permit its use by anyone other than Lessee without the prior written consent
of Lessor, not to be unreasonably withheld, (d) permit any Unit to be
removed from the state specified in the Appendix without the prior written
consent of Lessor, (e) affix or place any Unit to or on any other personal
property or any real property without first obtaining and delivering to
Lessor such waivers as Lessor may reasonably require to assure Lessor's
legal title and security interest and right to remove the Unit free from any
lien, encumbrance right of distraint or any other claim that may be asserted
by any third party or (f) sell, assign or transfer, or directly or indirectly
create, incur or suffer to exist any lien, claim, security interest or
encumbrance of any kind on any of its rights hereunder or in any Unit.
4.2 Lessee shall at its expense at all times during the term of this Lease
maintain the Units in good operating order, repair, condition and
appearance and in accordance with the manufacturer's recommended
procedures. Lessee shall upgrade all Units to best available industry
standards from time to time consistent with its normal capital expenditure
policy.
4.3 Lessee shall not alter any Unit or affix or place any accessory,
equipment or device on any Unit if such alteration or addition would impair
the originally intended function or use or reduce the value of the Unit. All
repairs, parts, accessories, equipment and devices furnished, affixed or
installed to or on any Unit, excluding temporary replacements, shall
thereupon become subject to the security interest of Lessor.
4.4 If Lessor supplies Lessee with labels, plates or other markings
stating that the Units are leased from Lessor, Lessee shall affix and keep
the same on a prominent place on the Units during the term of this Lease.
4.5 Upon prior notice to Lessee, Lessor shall have the right at all
reasonable times to inspect any Unit, observe its use and inspect records
related thereto.
Section 5. General Tax Indemnity.
5.1 Lessee shall pay or reimburse Lessor for, and indemnify and hold
Lessor harmless from, all fees (including, but not limited to, license,
documentation, recording or registration fees), and all sales, use, gross
receipts, property, occupational, value-added or other taxes, levies,
imposts, duties, assessments, charges or withholdings of any nature
whatsoever, together with any penalties, fines or additions to tax, or
interest thereon (all of the foregoing being hereafter referred to as
"Impositions"), arising at any time before or during the term of this Lease,
or upon any termination of this Lease or return of the Units to Lessor, and
levied or imposed on Lessor, directly or otherwise, by any federal, state or
local government or taxing authority in the United States or by any foreign
country or foreign or international taxing authority on or with respect to
(a) any Unit, (b) the exportation, importation, registration, purchase,
ownership, delivery, leasing, possession, use, operation, storage,
maintenance, repair, transportation, return, sale, transfer of title or other
disposition thereof, (c) the rents, receipts, or earnings arising from any
Unit or (d) this Lease or any payment made hereunder, excluding, however,
taxes measured by Lessor's net income imposed or levied by the United
States or any state thereof but not excluding any such net income taxes that
by the terms of the statute imposing such tax expressly relieve Lessee or
Lessor from the payment of any Impositions Lessee would otherwise have
been obligated to pay, reimburse or indemnify.
5.2 Lessee shall pay on or before the time or times prescribed by law
any Impositions (except any Impositions excluded by Section 5.1), but
Lessee shall have no obligation to pay any such Imposition while Lessee is
contesting such Imposition in good faith and by appropriate legal
proceedings and the nonpayment thereof does not, in the opinion of Lessor,
adversely affect the title, property, use, disposition or other rights of
Lessor with respect to the Units. If any Impositions (except any Imposition
excluded by Section 5.1) is charged or levied against Lessor directly and
paid by Lessor, Lessee shall reimburse Lessor on presentation of an invoice
therefor.
5.3 If Lessor is not entitled to a corresponding and equal deduction
with respect to any Imposition Lessee is required to pay or reimburse under
Section 5.1 or 5.2 and the payment or reimbursement constitutes income to
Lessor, then Lessee shall also pay to Lessor the amount of any Imposition
Lessor is obligated to pay in respect of (a) such payment or reimbursement
by Lessee and (b) any payment by Lessee made pursuant to this Section 5.3.
5.4 Lessee shall prepare and file, in a manner satisfactory to Lessor,
any reports or returns required with respect to the Units. Lessee shall
furnish on Lessor's request reports or returns so filed.
Section 6. Risk of Loss Waiver and Indemnity.
6.1 If any Unit is worn out, lost, stolen, destroyed or irreparably
damaged, from any cause whatsoever, or taken or requisitioned by
condemnation or otherwise (any such occurrence being hereinafter called a
"Casualty Occurrence") before or during the term of this Lease as to such
Unit, Lessee shall give Lessor prompt notice thereof. Subject to Paragraph
O of the Appendix, on the first rent payment date after such Casualty
Occurrence or, if there is no such rent payment date, 30 days after the
Casualty Occurrence, Lessee shall pay to Lessor an amount equal to the
Unit Balance (as hereinafter defined) for the Unit plus any termination
charges and interest on late payments required under the Appendix ("Other
Charges"). The Unit Balance for each Unit is the product of (a) the Lease
Balance on the date of such Casualty Occurrence and (b) the Allocation
Fraction of such Unit.
"Allocation Fraction" for any Unit shall mean, (a) with respect to any
Schedule, a fraction, the numerator of which is the Purchase Price of such
Unit and the denominator of which is the aggregate Purchase Price of all of
the Units then subject to such Schedule, including such Unit, and (b) with
respect to the Lease, a fraction, the numerator of which is the Purchase
Price of such Unit and the denominator of which is the aggregate Purchase
Price of all of the Units then subject to the Lease, including such Unit.
"Lease Balance" shall mean, as of any determination date, the aggregate
Purchase Price of all of the Units, minus all amounts of Fixed Rent (as
defined in Paragraph F of the Appendix) actually paid to the date of
determination and all Reduction Amounts actually paid to the date of
determination.
"Reduction Amounts" shall mean amounts paid by Lessee to Lessor for the
purchase of any Unit pursuant to this Section 6.1, provided, that Reduction
Amounts shall not include any Rent, Other Charges or any costs, expenses
or taxes to be paid by Lessee in connection with any such purchase, sale or
transfer.
Upon the making of such payment by Lessee in respect of any Unit, the rent
for the Unit shall cease to accrue, the term of this Lease as to such Unit
shall terminate and Lessee shall be entitled to possession of such Unit. If
Lessor receives the Unit Balance and Other Charges for a Unit, Lessee shall
be entitled to the proceeds of any recovery in respect of the Unit, from
insurance or otherwise, and Lessor, subject to the rights of any insurer
insuring the Units as provided herein, shall execute and deliver, to Lessee,
or to its assignee or nominee, a bill of sale (without representations or
warranties except that the Unit is free and clear of all claims, liens,
security interests and other encumbrances by or in favor of any person
claiming by, through or under Lessor) for the Unit, and such other
documents as may be required to release the Unit from this Lease and to
transfer title thereto to Lessee or such assignee or nominee, in such form as
may reasonably be requested by Lessee, all at Lessee's expense. Except as
provided in this Section 6.1, Lessee shall not be released from its
obligations hereunder in the event of, and shall bear the risk of, any
Casualty Occurrence to any Unit before or during the term of this Lease
with respect to the Unit.
6.2 Lessee waives and releases any claim now or hereafter existing
against Lessor, any company controlled by, controlling, or under common
control with Lessor and all of their directors, officers, employees, agents,
attorneys, successors and assigns (each, an "Indemnified Person") on
account of, and shall indemnify, reimburse and hold each Indemnified
Person harmless from, any and all claims (including, but not limited to,
claims based on or relating to copyright, trademark or patent infringement,
environmental liability, negligence, strict liability in tort, statutory
liability or violation of laws), losses, damages, obligations, penalties,
liabilities, demands, suits, judgments or causes of action, and all legal
proceedings, and any reasonable costs or expenses in connection therewith,
including reasonable attorneys' fees, including reasonable allocated time
charges of internal counsel, in each case imposed on, incurred by or
asserted against the Indemnified Person in any way relating to or arising in
any manner out of (a) the registration, purchase, taking or foreclosure of a
security interest in, or the ownership, delivery, condition, lease,
assignment, storage, transportation, possession, use, operation, return,
repossession, sale or other disposition of, any Unit, before or during the
term of this Lease as to the Unit, (b) any alleged or actual defect in any
Unit (whether arising from the material or any article used therein, the
design, testing, use, maintenance, service, repair or overhaul thereof or
otherwise) regardless of when such defect is discovered or alleged, whether
or not the Unit is in Lessee's possession and no matter where it is located
or (c) this Lease or any other related document, the enforcement hereof or
thereof or the consummation of the transactions contemplated hereby or
thereby.
Section 7. Insurance.
Lessee, at its own cost and expense, shall keep each Unit insured against all
risks, in no event for less than the amount set forth in Section 6.1 with
respect to such Unit, and shall maintain public liability insurance against
such risks and for such amounts as Lessor may require. All such insurance
shall be in such form and with such companies as Lessor shall approve,
shall specify Lessor and Lessee as insureds and shall provide that such
insurance may not be canceled as to Lessor or altered in any way that would
affect the interest of Lessor without at least 30 days prior written notice
to Lessor (10 days in the case of nonpayment of premium). All insurance
shall be primary, without right of contribution from any other insurance
carried by Lessor and shall not be invalidated by the action or inaction of
Lessee or any other person. All insurance shall contain a "breach of
warranty" provision satisfactory to Lessor, and shall provide that all
amounts payable by reason of loss or damage to the Units shall be payable
solely to Lessor.
Section 8. Default.
8.1 The following shall constitute events of default ("Events
of Default") hereunder:
(a) Lessee fails to make any payments to Lessor
when due hereunder;
(b) Any representation or warranty of Lessee or Guarantor contained
herein or in any document furnished to Lessor in connection herewith is
incorrect or misleading in any material respect when made;
(c) Lessee fails to observe or perform any other covenant, agreement
or warranty made by Lessee hereunder and such failure continues for 10
days after written notice thereof to Lessee;
(d) Any default occurs under any other agreement for borrowing
money or receiving credit under which Lessee or Guarantor may be
obligated as borrower or guarantor, if such default consists of the failure to
pay any indebtedness when due or if such default gives the holder of the
indebtedness the right to accelerate the indebtedness;
(e) Lessee or Guarantor makes an assignment for the benefit of
creditors or files any petition or action under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for
the relief of, or relating to, debtors;
(f) Any involuntary petition is filed under any bankruptcy statute
against Lessee or Guarantor or any receiver, trustee, custodian or similar
official is appointed to take possession of the properties of Lessee or
Guarantor, unless such petition or appointment is set aside or withdrawn or
ceases to be in effect within 60 days from the date of the filing or
appointment;
(g) Lessee or Guarantor liquidates, dissolves, or enters into any
partnership, joint venture, (other than in its ordinary course of business)
consolidation, merger, or other combination, or sells, leases or dispose of
a substantial portion of its business or assets; or
(h) Any default occurs under the Guaranty.
8.2 If any Event of Default occurs, Lessor, at its option, may:
(a) proceed by appropriate court action or actions either at law or in
equity, to enforce performance by Lessee of the applicable covenants of
this Lease or to recover damages for the breach thereof; or
(b) by notice in writing to Lessee terminate this Lease, whereupon
Lessee shall remain liable as hereinafter provided, and Lessor may, at its
option, do any one or more of the following: (i) declare the Lease Balance
and all Other Charges immediately due and payable and recover any
damages and expenses in addition thereto Lessor sustains by reason of the
breach of any covenant, representation or warranty contained in this Lease
other than for the payment of rent; (ii) enforce the security interest given
hereunder pursuant to the Uniform Commercial Code or any other law; (iii)
enter upon the premises where any of the Units may be and take possession
of all or any of such Units; and (iv) require Lessee to return the Units as
provided in Section 9.
8.3 Lessor shall have any and all rights given to a secured party by law,
and may, but is not required to, sell the Units in one or more sales. Lessor
may purchase at such sale. Lessee acknowledges that sales for cash or on
credit to a wholesaler, retailer or user of the Units, or at public or
private auction, are all commercially reasonable. The proceeds of such sale
shall be applied in the following order: First, to the reasonable expenses
of retaking, holding, preparing for sale and selling, including the allocated
time charges, costs and expenses of internal counsel of or for Lessor and
any other attorneys' fees and expenses incurred by Lessor; Second, to the
amounts, except those specified below, which under the terms of this Lease
are due or have accrued; Third, to Other Charges; and Fourth, to the Lease
Balance. Any surplus shall be paid to the person or persons entitled
thereto. If there is a deficiency, Lessee will promptly pay the same to
Lessor.
8.4 Lessee agrees to pay all allocated time charges, costs and expenses
of internal counsel for Lessor and any other attorneys' fees, expenses or
out-of-pocket costs incurred by Lessor in enforcing this Lease.
8.5 The remedies hereunder provided in favor of Lessor shall not be
deemed exclusive, but shall be cumulative, and shall be in addition to all
other remedies in its favor existing at law or in equity.
8.6 If Lessee fails to perform any of its agreements contained herein,
Lessor may perform such agreement, and Lessee shall pay the expenses
incurred by Lessor in connection with such performance, upon demand.
Section 9. Return of Units.
If Lessor rightfully demands possession of any Unit pursuant to this Lease
or otherwise, Lessee, at its expense, shall forthwith deliver possession of
the Unit to Lessor, at the option of Lessor (a) by delivering the Unit,
appropriately protected and in the condition required by Section 4, to
Lessor at such place as may be specified by Lessor within the county in
which the Unit was originally delivered or, if the Unit has been moved to
another county in accordance with this Lease, within such other county, (b)
by loading the Unit, appropriately protected and in the condition required
by Section 4, on board such carrier as Lessor shall specify and shipping the
same, freight collect, to the destination designated by Lessor, or (c) by
surrendering possession of such Unit in the location set forth in the
Schedule for such Unit and providing the Support Rights described in
Paragraph M of the Appendix.
Section 10. Assignment.
Lessor may at any time assign or transfer all or any of the right, title or
interest of Lessor in and to this Lease, and the rights, benefits and
advantages of Lessor hereunder, including the rights to receive payment of
rent or any other payment hereunder, Lessor's title to the Units and any and
all obligations of Lessor in connection herewith. Lessor may disclose to
any potential or actual assignee or transferee any information in the
possession of Lessor or any Affiliate relating to Lessee or this Lease. Any
such assignment or transfer shall be subject and subordinate to this Lease
and the rights and interests of Lessee hereunder. No assignment of this
Lease or any right or obligation hereunder may be made by Lessee or any
assignee of Lessee without the prior written consent of Lessor, provided
that the acquisition of voting control of Lessee by any person or persons
shall not be deemed an assignment of this Lease.
Section 11. Ownership, Security Interest and Further Assurances.
Unless assigned by Lessor, or applicable law otherwise provides, title to and
ownership of the Units shall remain in Lessor as security for the obligations
of Lessee hereunder until Lessee has fulfilled all of its obligations
hereunder. Lessee hereby grants to Lessor a continuing security interest in
the Units to secure the payment of all sums due hereunder. Lessee
confirms there is no pending litigation, tax claim, proceeding or dispute
that may adversely affect its financial condition or impair its ability to
perform its obligations hereunder. Lessee will, at its expense, maintain
its legal existence in good standing and do any further act and execute,
acknowledge, deliver, file, register and record any further documents
Lessor may reasonably request in order to protect Lessor's title to and
security interest in the Units and Lessor's rights and benefits under this
Lease.
Section 12. Late Payments.
Lessee shall pay to Lessor, on demand, interest at the rate set forth in the
Appendix on the amount of any payment not made when due hereunder
from the date due until payment is made.
Section 13. Effect of Waiver.
No delay or omission to exercise any right, power or remedy accruing to
Lessor upon any breach or default of Lessee hereunder shall impair any such
right, power or remedy nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein or of or in any similar breach
or default thereafter occurring, nor shall any waiver of any single breach
or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind
or character on the part of Lessor of any breach or default under this Lease
must be in writing specifically set forth.
Section 14. Survival of Covenants.
All obligations of Lessee under Sections 1, 2, 4, 5, 6, 7, 8, 9, 12 and the
Appendix shall survive the expiration or termination of this Lease to the
extent required for their full observance and performance.
Section 15. Applicable Law.
This Lease shall be governed by and construed under the laws of California,
to the jurisdiction of which, and of federal courts in California, the
parties hereto submit.
Section 16. Financial Information.
Lessee shall
(a) keep its books and records in accordance with generally
accepted accounting principles and practices consistently applied and shall
deliver to Lessor its annual audited financial statements, including without
limitation Lessee's and Guarantor's SEC form 10-K within 30 days of filing,
and such other financial statements and information as Lessor may
reasonably request;
(b) as soon as available but not later than 60 days after the
end of each of the first 3 fiscal quarters of the Lessee and Guarantor the
unaudited consolidated balance sheet of Lessee and Guarantor and its and
their subsidiaries as at the end of such fiscal quarter, and the unaudited
consolidated statement of income and retained earnings and of changes in
cash flow of Lessee and Guarantor and its and their subsidiaries for such
fiscal quarter and that portion of the fiscal year ending with such quarter,
certified by a responsible officer of Lessee and Guarantor as being prepared
in accordance with generally accepted accounting principles and complete
and correct and fairly presenting the financial condition and results of
operations of Lessee and Guarantor and its and their subsidiaries;
(c) as soon as available but no later than 120 days after the
end of each of its fiscal years, a complete copy of an audit report of Lessee
and Guarantor and its and their subsidiaries which shall include at least the
consolidated balance sheet of Lessee and Guarantor and its and their
subsidiaries as of the close of such year, and the consolidated statement of
income and retained earnings and of changes in cash flows of Lessee and
Guarantor for such year, prepared in accordance with generally accepted
accounting principles and fairly presenting the Lessee's and Guarantor's
financial position and results of operations, certified by Deloitte-Touche,
or other independent public accounting firm of recognized national standing
selected by Lessee and Guarantor and satisfactory to Lessor. Such
certificate shall not be qualified or limited because of restricted or
limited examination by such accountant of any material portion of Lessee's
or Guarantor's records.
Credit information relating to Lessee and Guarantor may be disseminated
among Lessor and any of its affiliates and any of their respective successors
and assigns.
Section 17. Notices.
All demands, notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when personally
delivered, when received by facsimile or when deposited in the mail, first
class postage prepaid, or delivered to a telegraph office, charges prepaid,
addressed to each party at the address set forth below the signature of such
party on the signature page, or at such other address as may hereafter be
furnished in writing by either party to the other.
Section 18. Counterparts.
Two counterparts of this Lease have been executed by the parties hereto.
One counterpart has been prominently marked "Lessor's Copy". One
counterpart has been prominently marked "Lessee's Copy". Only the
counterpart marked "Lessor's Copy" shall evidence a monetary obligation
of Lessee.
Section 19. Transaction Costs.
Lessee agrees to reimburse any legal expenses of Lessor (including allocated
time charges of internal counsel for Lessor and other attorneys fees) and
any out-of-pocket costs incurred in connection with the preparation and
negotiation of lease documents (whether or not a lease is ever executed by
Lessee) and any documents required in connection therewith.
Section 20. Effect and Modification of Lease.
This Lease exclusively and completely states the rights of Lessor and Lessee
with respect to the leasing of the Units and supersedes all prior agreements,
oral or written, with respect thereto. No variation or modification of this
Lease shall be valid unless in writing.
The parties hereto have executed this Lease as of the day and year first above
written.
BA LEASING & CAPITAL CORPORATION
By
Title
By
Title
Address: 555 California Street
4th Floor
San Francisco, CA 94104
Attn: Contract Administration #15811
Fax: (415) 765-7373
TODD-AO STUDIOS WEST
By
Title
By
Title
Address: 3000 Olympic Boulevard Building One
Santa Monica, CA 90404 Fax: (310) 315-5069
Lease No. 970265
APPENDIX to LEASE INTENDED AS SECURITY dated as of November
3, 1997 between BA LEASING & CAPITAL CORPORATION and
TODD-AO STUDIOS WEST.
BY ITS ACCEPTANCE OF THIS LEASE, LESSEE
ACKNOWLEDGES AND AGREES THAT LESSOR HAS MADE NO
REPRESENTATIONS OR WARRANTIES CONCERNING THE TAX,
ACCOUNTING OR LEGAL CHARACTERIZATION OF THIS LEASE
AND THAT LESSEE HAS OBTAINED AND RELIED ON SUCH TAX,
ACCOUNTING AND LEGAL ADVICE AS IT DEEMS APPROPRIATE.
A. Units.
The Units to be leased hereunder consist of personal property
comprising sound stage, video, audio and related equipment more
particularly described in Annex I to each Schedule to be executed and
delivered pursuant to the Lease and all modifications, replacements and
substitutions; provided that Lessor reserves the right to disapprove any
equipment for leasing hereunder.
B. Purchase Price.
"Purchase Price" with respect to each Unit means the amount
Lessor pays for such Unit. Without the prior approval and written consent
of Lessor, the sum of the Purchase Price of all Units leased hereunder shall
not exceed $10,000,000, the Purchase Price of each Unit shall not exceed
the fair market value of such Unit as determined by appraisal and the
aggregate amount of installation, transportation and any similar costs with
respect to any Unit, and any software, licensing and similar costs, shall
not exceed 20% of the total Purchase Price for the Unit.
In no event will any Schedule contain Units with an aggregate
Purchase Price of less than $1,000,000.
There will be no more than three Schedules.
C. Term.
The Lease Term for each Unit shall consist of an Interim Term, a
Base Term and any applicable Renewal Terms. The "Interim Term" for
each Unit will begin on, and include, its Delivery Date and continue until,
and include, the day before its "Base Date". The "Base Date" for each Unit
will be (i) in the case of Units leased on the first Delivery Date the first
day of the month during or immediately following the month in which such
Delivery Date occurs, and (ii) in the case of Units leased after the first
Delivery Date, the first day of the next Rent Period beginning after such
Unit's Delivery Date, in each case as specified by Lessor in the relevant
Schedule. The Base Term for each Unit shall commence on its Base Date
and continue (i) in the case of Units leased on the first Delivery Date, for
one year, and (ii) in the case of Units leased after the first Delivery Date,
until the expiration of the Base Term for Units leased on the first Delivery
Date. The Base Term for each Unit shall be followed consecutively by up
to four Renewal Terms. Each Renewal Term will be for a period of one
year. Lessee may elect up to four Renewal Terms for a Unit, provided the
last Renewal Term for any Unit shall terminate five years from the Base
Date of Units leased on the first Delivery Date.
D. Utilization Period.
All Delivery Dates for Units leased hereunder must occur between
the date of this Lease and the earlier of April 30,1998 and the exercise by
Lessee of the Sale Option pursuant to paragraph I (the "Utilization
Period").
E. Location.
The Units shall at all times be located in the state of California and,
on the Schedule relating to each Unit, Lessee shall give Lessor notice of
the state, county and city in which such Unit is to be principally located
and a description of the Site where such Unit will be located (as to each
Unit its "Site"). Lessee shall not change the location of any Unit without
the prior written consent of Lessor. Each Schedule will include all Units
to be financed at the location set forth on such Schedule.
F. Rent.
Lessee shall pay to Lessor the amounts of Base Rent or Renewal
Rent, as applicable, determined in accordance with this Paragraph and each
Schedule. Scheduled installments of Base Rent and Renewal Rent may be
adjusted pursuant to Section 6.1 of the Lease. Base Rent and Renewal Rent
are determined in part, on the basis of a 360-day year and actual days
elapsed, which may result in higher Rent than if a 365-day year is used.
1. Interim Rent. Lessee shall pay rent for each Unit ("Interim Rent")
for each day of its Interim Term. Interim Term shall be computed on the
full amount of the Purchase Price of the Unit at a rate per annum equal to
the Reference Rate. The "Reference Rate" is the rate of interest publicly
announced from time to time by Bank of America National Trust and
Savings Association in San Francisco, California ("Bank") as its Reference
Rate, with any change in the Reference Rate to take effect on the day
specified in the public announcement of such change. The Reference Rate
is set by Bank based on various factors, including Bank's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans. Loans may be priced at, above or
below the Reference Rate.
Interim rent is determined, in part, on the basis of a 360-day year
and actual days elapsed which results in a higher rent than if a 365-day year
is used. Interim Rent is due and payable when billed by Lessor.
2. Base Rent. On each Payment Date during the Base Term,
Lessee shall pay to Lessor Base Rent under each Schedule consisting of the
amount of Fixed Rent set forth opposite the applicable Payment Date on
Annex II to each such Schedule and Variable Rent accrued on the Schedule
Balance of each such Schedule during the Rent Period ending on such
Payment Date.
3. Renewal Rent. On each Payment Date during any
Renewal Term in effect, Lessee shall pay to Lessor, Renewal Rent under
each Schedule consisting of the amount of Fixed Rent set forth opposite the
applicable Payment Date on Annex II to each such Schedule and Variable
Rent accrued on the Schedule Balance of each such Schedule during the
Rent Period ending on such Payment Date.
"Base Rent" shall mean, with respect to the Lease or any
Schedule (as the context may require) all installments of Fixed Rent and
Variable Rent due and payable by Lessee on each Payment Date during the
Base Term.
"Renewal Rent" shall mean, with respect to the Lease or
any Schedule (as the context may require), all payments of Fixed Rent and
Variable Rent due and payable by Lessee on each Payment Date occurring
during the applicable Renewal Term.
"Variable Rent" shall mean, with respect to each Rent
Period, an amount equal to interest accrued on the Lease Balance (or, with
respect to a Schedule, on the Schedule Balance) outstanding during such
period at the Interest Rate.
"Fixed Rent" shall mean, for each Payment Date during a
Base Term and each Renewal Term, that portion of the installment of Rent
payable on such Payment Date set forth on Annex II to the applicable
Schedule or Schedules.
"LIBO Rate" shall mean, relative to any Rent Period with
respect to the Lease Balance and each Schedule Balance, the rate of interest
equal to the average (rounded upwards, if necessary, to the nearest 1/16 of
1%) of the rates per annum at which Dollar deposits in immediately
available funds are offered by Bank of America National Trust & Savings
Association's LIBOR Office in the London interbank market as at or about
11:00 a.m. London time two Business Days prior to the beginning of such
Rent Period for delivery on the first day of such Rent Period, and in an
amount approximately equal to the amount of the Lease Balance or the
applicable Schedule Balance and for a period approximately equal to such
Rent Period.
"LIBOR Office" shall mean Bank of America National
Trust & Savings Association's London, England branch, or such other
office of Bank of America National Trust & Savings Association as
designated from time to time by notice from Lessor to Lessee, whether or
not outside the United States, which shall be used for purposes of
establishing LIBO Rates hereunder.
"Rent Period" shall mean, for the Base Term and any
Renewal Term the period beginning on the first day of such Base Term and
ending on (but excluding) the date which numerically corresponds to such
date three months thereafter and each consecutive three-month period
thereafter, with each such period ending on the date which numerically
corresponds to the date on which such period commenced; provided,
however, that (a) if such Rent Period would otherwise end on a day which
is not a Business Day, then such Rent period shall end on the next following
Business Day, unless (solely for purposes of determining Rent periods in
connection with calculating Variable Rent on a LIBO Rate basis) such next
following Business Day is the first Business Day of a calendar month, in
which case such Rent period shall end on the Business Day immediately
preceding such numerically corresponding day, and (b) no Rent Period may
end later than the last day of the Lease Term.
"Business Day" shall mean any day on which
(a) Federal and state chartered banks in San Francisco,
California are open for commercial banking business; and
(b) solely with respect to determinations of Variable Rent and
Rent Periods, dealings in Dollars are carried on in the London interbank
market.
"Interest Rate" shall mean, with respect to any Rent Period, the rate
per annum equal to the sum of the LIBO Rate for such Rent Period plus the
number of basis points set forth below opposite Lessee's Leverage Ratio (as
defined in that certain Credit Agreement dated as of October 20, 1997
between Todd-AO Corporation and Bank of America National Trust and
Savings Association, the "Credit Agreement") at the date Lessor sets the
LIBO Rate for the immediately succeeding Rent Period:
Leverage Ratio Basis Points
greater than 2.50 2.00
greater than 2.00 and less than 2.50 1.50
greater than 1.50 and less than 2.00 1.25
greater than 1.00 and less than 1.50 1.00
greater than 1.00 0.75
"Payment Date" shall mean the last day of each Rent Period.
G. Other Charges.
1. Late Payment Charges. The interest rate on late payments
shall be 2% per annum in excess of the Interest Rate computed daily on the
basis of a 360-day year and actual days elapsed, which results in more
interest than if a 365-day year is used.
2. Termination Charges. Upon any termination or expiration
of this Lease before the scheduled expiration of the last Renewal Term as to
any Unit, a casualty occurrence or a default, in addition to all other
amounts to be paid by Lessee, Lessee shall pay Lessor an amount equal to a
percentage set forth below of the Lease Balance, Schedule Balance or Unit
Balance as applicable together with all costs incurred by Lessor for
breakage:
Base Term 2%
First Renewal Term 1.5 %
Second Renewal Term 1.0%
Third Renewal Term 0.5%
Fourth Renewal Term 0
H. Early Termination.
If no Event of Default exists, Lessee may, by notice to Lessor,
terminate this Lease with respect to all but not less than all the Units for
which the Lease expires on the same date. Such notice shall specify a date
(the "Termination Date") with respect to each such Unit, not more than 120
and not less than 30 days after such notice is given, which shall be a Rent
Payment Date on or after the later of the fourth Payment Date with respect
to such Unit. On the Termination Date, with respect to each Unit Lessee
shall pay to Lessor the Unit Balance for the Unit computed as of such date
and any Other Charges required hereunder. Upon such payment, the
obligation of Lessee to pay rent hereunder with respect to the Unit after
the Termination Date shall cease, the term for the Unit shall end on the
Termination Date, and Lessor shall execute and deliver to Lessee or its
assignee or nominee a bill of sale (without representations or warranties
except that the Unit is free and clear of all claims, liens, security
interests and other encumbrances by or in favor of any person claiming by,
through or under Lessor) for the Unit, and such other documents as may be
required to release the Unit from the terms of this Lease and to transfer
title thereto to Lessee or such assignee or nominee, in such form as may
reasonably be requested by Lessee, all at Lessee's expense.
I. Lease Termination.
1. Lessee's Options. Not later than 360 days prior to the last
day of the Base Term or any Renewal Term then in effect for each
Schedule, Lessee shall by delivery of written notice to Lessor exercise one
of the following options (provided that paragraph (a) below shall not be
applicable with respect to the last Renewal Term applicable to any Unit):
(a) renew this Lease with respect to all, but not less than all,
of the Units then subject to such Schedule for an additional one year
Renewal Term (the "Renewal Option") on the terms and conditions set
forth herein; or
(b) purchase for cash for the Purchase Option Exercise
Amount all, but not less than all, of the Units then subject to such Schedule
on the last day of the Base Term or Renewal Term with respect to which
such option is exercised (the "Fixed Price Purchase Option"); or
(c) sell on behalf of Lessor for cash to a purchaser or
purchasers not in any way affiliated with Lessee all, but not less than all,
of the Units then subject to such Schedule on the last day of the Base Term
or of any Renewal Term then in effect with respect to which such option is
exercised (the "Sale Option"). Simultaneously with a sale pursuant to the
Sale Option, Lessee shall pay to Lessor, from the gross proceeds of sale of
Units subject to such Schedule, without deductions or expense
reimbursements (the "Proceeds"), the Schedule Balance with respect to
such Schedule as of the termination date (as determined after any payment
of Rent on such date). If the Proceeds exceed the Schedule Balance for
such Schedule together with all other amounts owed by Lessee under the
Lease but do not exceed the Lease Balance, the excess will be retained by
Lessor to secure the remaining obligations of Lessee under the Lease. If
the Proceeds exceed the Lease Balance, together with all other amounts
owed by Lessee under the Lease, Lessee will retain the portion of the
Proceeds in excess thereof. If the Proceeds are less than the applicable
Schedule Balance as of such date, Lessee will pay or will cause to be paid
to Lessor on the termination date in addition to all other amounts owed
under the Lease: (i) the Proceeds; and (ii) at Lessor's option either:
(x) the Applicable Percentage Amount with respect to such Schedule or (y)
the Recourse Deficiency Amount with respect to such Schedule (the
amount determined pursuant to this clause (ii) shall be referred to as the
"Sale Recourse Amount" as to any Schedule); provided that in no event
shall the Sale Recourse Amount exceed the Schedule Balance with respect
to any Schedule (after taking into account all payments of Rent and
Proceeds applied against such Schedule Balance on such date), it being
understood, however, that the amount payable pursuant to this Paragraph I
shall in no event be construed to limit any other obligation of Lessee under
the Lease. Lessor shall exercise the options with respect to each Schedule
in the preceding sentence by written notice to Lessee not later than five
Business Days prior to the last day of the Lease Term for Units subject to
such Schedule. The obligation of Lessee to pay the Sale Recourse Amount
shall be a recourse obligation of Lessee and shall be payable on the date
provided for in the preceding sentence without regard to the amount of
Proceeds.
2. Election of Options. Lessee's election of the Fixed Price
Purchase Option will be irrevocable at the time made, but if Lessee fails to
make a timely election, Lessee will be deemed, in the case of the Base Term
and each Renewal Term then in effect (other than the last Renewal Term)
to have irrevocably elected the Renewal Option and, in the case of the last
Renewal Term applicable to each Unit, Lessee will be deemed to have
irrevocably elected the Fixed Price Purchase Option with respect to such
Unit. In addition, the Sale Option shall automatically be revoked if there
exists an Event of Default at any time after the Sale Option is properly
elected and Lessor shall be entitled to exercise all rights and remedies
provided in the Lease. Lessee may not elect the Sale Option if there exists
on the date the election is made an Event of Default or a Default. Election
of the Fixed Price Purchase Option for any Schedule shall be deemed to be
Lessee's election of the Fixed Price Purchase Option for all Schedules.
3. Sale Option Procedures. If Lessee elects the Sale Option,
Lessee shall use its best commercial efforts to obtain the highest all cash
purchase price for the Units covered by Schedules as to which such option
is exercised. All costs related to such sale and delivery, including,
without limitation, the cost of sales agents, removal of the Units, provision
of the Support Rights, delivery of documents and Units, certification and
testing of the Units in any location chosen by the buyer or prospective
buyer, legal costs, costs of notices, any advertisement or other similar
costs, or other information and of any parts, configurations, repairs or
modifications desired by a buyer or prospective buyer shall be borne
entirely by Lessee, without regard to whether such costs were incurred by
Lessor, Lessee or any potentially qualified buyer, and shall in no event be
paid from any of the Proceeds. Lessor shall have no responsibility for
procuring any purchaser. If, nevertheless, Lessor undertakes any sales
efforts, Lessee shall promptly reimburse Lessor for any charges, costs and
expenses incurred in such effort, including any allocated time charges, costs
and expenses of internal counsel or other attorneys' fees. Upon a sale
pursuant to the Sale Option, the Units shall be in the condition required by
the Lease and shall be upgraded to the best available industry standards
from time to time. Lessor shall determine whether to accept the highest all
cash offer for the Units. Any purchaser or purchasers of the Units shall not
in any way be affiliated with Lessee.
4. Appraisals. If Lessee exercises the Sale Option and the
Proceeds from the sale of all Units subject to the applicable Schedule are
less than the applicable Schedule Balance, Lessor, at its option, shall
engage an appraiser of nationally recognized standing, at Lessee's expense,
to determine (by appraisal methods satisfactory to Lessor) the fair market
value of the Units that were subject to the Schedule as of (a) the first day
of the Renewal Term in which the Sale Option was elected, and (b) the
termination date. The appraiser's conclusion relating to the first day of
the Renewal Term shall be used in calculating the "Recourse Deficiency
Amount." In addition, if the appraisal concludes that the fair market value
of such Units as of the termination date was in excess of the Proceeds from
the sale of all Units subject to such Schedule, Lessee shall promptly pay to
Lessor, such excess, which together with such Proceeds so paid to Lessor
shall not exceed the Schedule Balance.
"Applicable Percentage". With respect to each Schedule, as of the end of
the Base Term and each Renewal Term, the percentage set forth opposite
each such date on Annex II to such Schedule.
"Applicable Percentage Amount". With respect to each Schedule, the sum
of the products obtained by multiplying the Purchase Price of the Units
covered by such Schedule by the Applicable Percentage.
"Purchase Option Exercise Amount". On the last day of the Base Term and
each Renewal Term with respect to each Schedule, the sum of (i) the
Schedule Balance and (ii) any applicable Other Charges, and (iii) all other
amounts then due and payable under the Lease related to such Schedule.
"Recourse Deficiency Amount". With respect to the
exercise of the Sale Option, (a) for each Schedule, the difference of (i) the
Purchase Option Exercise Amount at the end of any Renewal Term in
which such Sale Option was elected minus (ii) the product obtained by
multiplying (i) a percentage to be set forth on Annex II to such Schedule by
(ii) the appraised value of the Units covered by such Schedule as of the
first day of the Renewal Term in which the Sale Option was elected, and (b)
for the Lease, the aggregate of all amounts determined pursuant to the
foregoing clause (a) for all Schedules then in effect.
J. Financial Covenants.
Lessee shall at all times comply, and shall cause each of its
subsidiaries and affiliates to comply, with the covenants set forth in the
Credit Agreement (giving effect to any applicable grace and cure periods),
and in determining compliance with such covenants for purposes of this
Agreement at any time following the termination of such facility (1) each
covenant in effect immediately prior to the termination of such facility shall
be deemed to have survived such termination and be incorporated herein,
and (2) any action that would require consent or approval thereunder shall
require the consent or approval of Lessor.
K. Negative Pledge.
During the Lease Term Lessee shall not create, assume or suffer to
exist any security interest, encumbrance or lien (including the lien of an
attachment, judgment or execution), securing a charge or obligation, on or
of any of its current assets, as such term is defined under general accepted
accounting principles, whether now owned or hereafter acquired.
L. Excessive Use Indemnity.
In the event that at the end of the Lease Term as to any Schedule:
(a) Lessee elects the Sale Option; and (b) after paying to Lessor any
amounts due under Paragraph 1 of the Appendix of the Lease, Proceeds and
the Sale Recourse Amount, Lessor does not have sufficient funds to reduce
the applicable Schedule Balance to zero, then Lessee shall promptly pay
over to Lessor the shortfall unless Lessee delivers a report from the
Appraiser in form and substance satisfactory to the Lessor which
establishes that the decline in value in each Unit which was sold pursuant
to the Sale Option from that amount anticipated for such date in the
Appraiser's report delivered with respect to such Unit on the applicable
Delivery Date was not due to extraordinary use, failure to maintain or
replace, failure to use, workmanship or method of installation or removal
or any other cause or condition within the power of Lessee to control or
effect (each an "Excessive Use").
M. Support Rights.
Lessee shall promptly upon the request of Lessor at any time after
(a) a material adverse change in the business, financial condition or
prospects of Lessee, (b) a Default or Event of Default, or (c) the exercise
by Lessee of the Sale Option with respect to any Units, but no later than the
expiration or termination of the Lease (i) enter into an easement or similar
agreement on terms and conditions acceptable to Lessor and any purchaser
providing for the benefit of Lessor and any purchaser of a Unit, for the use
of such Unit at the applicable Site and for the use of any Ancillary
Facilities, (ii) provide indemnity or hold harmless agreements (including an
environmental indemnity) in form satisfactory to Lessor and any purchaser
agreeing to indemnify and hold harmless Lessor and any purchaser from
any imposition, claim or damage arising from or in connection with the
Units, any Ancillary Facilities, the Site or the operation by Lessee, Lessor
or any purchaser of the Units, any Ancillary Facilities or the Site other
than impositions, claims or damages arising as a result of the willful
misconduct of such person, (iii) to the extent assignable, assign or grant to
Lessor or purchasers of the Units any and all supply, sales, utility, service
or similar contracts, licenses, agreements or rights which Lessee may have
entered into or have for the supply of material or services to, or for the
operation of the Units, any Ancillary Facilities or the Site or for the sale
or transportation of products stored, processed or handled by the Units, any
Ancillary Facilities or the Site, (iv) grant or assign or cause to be granted
or assigned to Lessor or any purchaser of the Units all other rights
necessary or convenient in the judgment of Lessor or any purchaser to
operate the Units at the Site and any Ancillary Facilities; and (v) take all
actions requested by Lessor or any purchaser to permit operation of the
Units, the Site and any Ancillary Facilities, in-place or otherwise, by
Lessor or any purchaser for the remaining useful life of the Units including
the provision of services requested by Lessor or any purchaser at Lessee's
cost.
If Lessor requests the Lessee actions described in this Paragraph
M, Lessee shall throughout the economic useful life of the Units: (I)
provide all required governmental and other approvals for the continued
operation of the Units, the Site and any Ancillary Facilities, (ii) to the
extent permitted by law, provide access at Lessee's cost to all Ancillary
Facilities including any waste treatment systems used by Lessee for the
benefit of Lessor or any purchaser of the Units, and warrant that any and
all waste or other products of or from the operation of the Units, any
Ancillary Facilities and the Site will comply with all applicable regulations
and requirements of the Units, the Ancillary Facilities and the Site are
used in the service in which they were used at the time of delivery to
Lessor or such purchaser, (iii) provide use of Lessee's facilities, if any,
at the Site to Lessor or purchasers of the Units or their agents, on a
nondiscriminatory basis so as to permit unimpeded access to such
facilities, (iv) maintain in Lessee's inventory at all times a sufficient
number of replacement parts to ensure the continued and uninterrupted
operation of the Units and any Ancillary Facilities and provide such parts
to Lessor or purchasers of the Units at direct cost without profit
to Lessee, (v) provide operational daily maintenance and preventative
major maintenance for the Units, the Site and any Ancillary Facilities
to the Lessor or purchasers of the Units at Lessee's cost (vi) provide
quality control procedures to the Lessor or purchasers of the Units to
ensure that all product in process, all final product and all incoming
raw materials meet such standards as lessor or purchasers may
require at Lessee's cost, (vii) maintain the Units, the Site and any
Ancillary Facilities in the condition specified in the Lease, (viii) at the
request of and as directed by Lessor or any purchaser operate the Units, and
Ancillary Facilities and the Site at Lessee's sole cost, and (ix) certify
annually in a form acceptable to Lessor or any purchaser, and with such
supporting evidence and documentation acceptable to Lessor and any
purchaser, that the Units, any Ancillary Facilities and the Site are in
compliance with all appropriate federal, state and local environmental and
workplace regulations and standards.
All of the rights and benefits of Lessor and any purchaser described
in this Paragraph M are referred to herein as the "Support Rights".
The "Site" with respect to any Unit will be the location described
for such Unit on Annex III to the Schedule for such Unit.
"Ancillary Facilities" includes all property, including intellectual
property, owned or leased by or available to Lessee and in any way used in
connection with or related to the Units or any Site.
N. Substitution of Units.
1. Except (i) during any period when there exists an Event of
Default or Default and (ii) at any time after Lessee elects any Sale Option,
Lessee may substitute a unit of equipment of similar age, quality and
manufacture, and of equal or greater utility and value (including residual
value at expirations), for any Unit. For this purpose, the value of any Unit
and any proposed substitute unit shall be mutually agreed by Lessor and
Lessee. If Lessor and Lessee are not able to agree upon such values, an
independent appraiser mutually acceptable to Lessor and Lessee shall be
selected to determine such values, at Lessee's expense.
2. Lessor shall release Units from this Lease pursuant to this
Paragraph upon the following conditions:
(a) Lessor shall deliver to Lessee a quitclaim bill of sale
(without representations or warranties except that the Unit is free and
clear of all claims, liens, security interests and other encumbrances by or
in favor of any person claiming by, through or under Lessor) for such Units,
and such other documents as may be required to release such Units from
the terms of this Lease, in such form as may reasonably be requested by
Lessee, all at Lessee's expense;
(b) Lessee shall provide evidence that Lessor has a prior
perfected first priority lien and security interest in a qualified substitute
unit, including appropriate UCC financing statement filings;
(c) Lessee shall deliver such other documents, instruments,
showings and opinions as reasonably may be requested by Lessor.
Upon satisfaction of clauses (a) through (c) of this Section, (i) each such
substitute unit shall be a "Unit" for all purposes of the Lease, and (ii) the
Schedule, Lease Term, Rent, Payment Dates, and termination options
applicable to each such substitute Unit shall be the same as those applicable
to the Unit for which it was substituted.
O. Direct Payment to Participants.
If Lessor notifies Lessee that it has participated a portion of its
interest in the Lease to another party, and if Lessor so requests, Lessee
will (i) make its payments of Rent, Purchase Option Exercise Amount and
Sale Recourse Amount in the proportions identified in writing by Lessor
both to Lessor and directly to any such identified participant; and (ii)
provide copies of all reports, financial information, notices or other
communications required by or relating to the Lease directly to any such
identified participant.
Year 2000
(a) Lessee is in the process of (i) undertaking a detailed review and
assessment of all areas within its business and operations that could be
adversely affected by the "Year 2000 problem" (that is, the risk that
computer applications used by Lessee may be unable to recognize and
perform properly date-sensitive functions involving certain dates prior to
and any date after December 31, 1999), (ii) developing a detailed plan and
timeline for addressing the year 2000 problem on a timely basis, and (iii)
will implement that plan in accordance with that timetable but in no event
later than December 31, 1998. Lessee reasonably anticipates that all
computer applications that are material to its business and operations will
on a timely basis be able to perform properly date-sensitive functions for
all dates before and after January 1, 2000 (i.e., be "Year 2000 compliant").
Lessee will use its best efforts to inquire of each of its key suppliers,
vendors and customers as to whether such persons will on a timely basis be
Year 2000 compliant in all material respects and to take appropriate
remedial action with respect to any of such persons who are not expected to
be so compliant. For purposes hereof "key suppliers, vendors and
customers" refers to those suppliers, vendors and customers of Lessee the
business failure of which would with reasonable probability result in a
material adverse change in the business, properties, condition (financial or
otherwise) or prospects of Lessee.
Completion Covenant
Lessee has ordered from various vendors the equipment set forth in Exhibit
F (the "New Bundy Equipment"). Lessee hereby represents, warrants and
covenants to and with Lessor that, during the Utilization Period, Lessee will
acquire, sell to and leaseback from Lessor the New Bundy Equipment and
will install and make the New Bundy Equipment operational at Lessee's
facility at 1861 South Bundy Drive, West Los Angeles, California 90025.
EXHIBIT A
TO
LEASE INTENDED AS SECURITY
FORM OF
DELIVERY DATE NOTICE
(Date)
TO: BA Leasing & Capital Corporation, a California
corporation ("Lessor") under that certain Lease Intended as Security dated
as of , 1997, (the "Lease") between Lessor and Todd-AO Studios West
(all capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Lease, unless the context otherwise
requires).
FROM: Todd-AO Studios West
REGARDING: Delivery Date Closing
1. A Delivery Date closing is scheduled for , 1997 at the
offices of Lessor, 555 California Street, 4th Floor, San Francisco, CA
94104.
2. The Units to be acquired and accepted on such date are
identified on Annex I hereto.
3. The aggregate Purchase Price for the Units to be acquired
is $ , to be funded by Lessor in accordance with the Lease. The
Purchase Price for each Unit is listed on Annex I hereto.
The Purchase Price shall be sent by wire transfer to Lessee at the
following account:
[Lessee's Wire Instructions].
Todd-AO Studios West
By:
Name Printed:
Title:
ANNEX I
TO
EXHIBIT A
Description of Units
Make Model Serial# Purchase Price
Location**
EXHIBIT B
TO
LEASE INTENDED AS SECURITY
LEASE SCHEDULE AND ACCEPTANCE CERTIFICATE NO.
Reference is made to the Lease Intended as Security dated as of
, 19 between BA LEASING & CAPITAL CORPORATION, as
Lessor, and TODD-AO STUDIOS WEST, as Lessee (together with the
Appendix thereto, the "Lease"; capitalized terms not otherwise defined
herein having the same meanings as in the Lease). The Lease is
incorporated herein by reference.
1. ACCEPTANCE; CONFIRMATIONS. Lessee confirms that (A)
the equipment described in Annex I (the "Units") has been delivered to, is
in the possession of and are accepted by Lessee for leasing under, and
constitutes "Units" subject to and governed by, the Lease, (B) the Units
(i) have been fully inspected by qualified agents of Lessee and are in good
order, operating condition and repair, (ii) have been properly installed,
(iii) meet all recommended or applicable safety standards, (iv) are, as of
the Delivery Date set forth below, available for use and service by Lessee
and Lessor, and (v) have been marked or labeled showing Lessor's interest
in the form and to the extent required by the Lease; and (C) Lessee must
pay the rent and all other sums provided for in the Leases with respect to
such Units.
2. TERM, DELIVERY DATE, APPLICABLE PERCENTAGE
AND SCHEDULE BALANCE. The Lease Term of this Schedule shall
commence on the date hereof. The Delivery Date, the Base Date, the
Applicable Percentage and the Schedule Balance as of each Payment Date,
assuming the payment of all scheduled installments of Fixed Rent
hereunder through such Payment Date, are set forth, respectively, in the
appropriate portions of Annex II hereto. Lessee may renew the Lease with
respect to the Units for up to 4 consecutive one-year Renewal Terms.
3. RENT. On each Payment Date during the Base Term and
during each Renewal Term in effect, Lessee shall pay to Lessor, the amount
of the Fixed Rent set forth at Annex II hereto and the applicable amount of
Variable Rent. Lessee hereby confirms its agreement, in accordance with
the Lease as supplemented by this Lease Schedule, to pay Rent to Lessor,
for each Unit leased hereunder. Nothing herein shall reduce Lessee's
obligation to make all other payments required under the Lease, including
those payments to be made on the last day of the Lease Term pursuant to
Paragraph I of the Appendix to Lease.
4. WARRANTY. Lessee hereby represents and warrants that (I)
no event which would constitute a Casualty Occurrence under the Lease
has occurred with respect to the Units set forth on Annex I hereto as of the
date hereof, and (ii) no Default or Event of Default exists on the date
hereof. Lessee hereby reaffirms each of the representations and warranties
set forth in the Lease as if made on the date hereof, including that the
Units set forth on Annex I hereto are free and clear of all liens other than
liens in favor of Lessor.
5. CHATTEL PAPER COUNTERPARTS. Two counterparts of
this Lease Schedule and Acceptance Certificate have been executed by the
parties hereto. One counterpart has been prominently marked "Lessor's
Copy". One counterpart has been prominently marked "Lessee's Copy".
Only the counterpart marked "Lessor's Copy" shall evidence a monetary
obligation of Lessee.
IN WITNESS WHEREOF, Lessor and Lessee have executed this
Lease Schedule and Acceptance Certificate as of the Delivery Date set forth
above.
Lessor:
BA LEASING & CAPITAL CORPORATION
By
Title:
Lessee:
TODD-AO STUDIOS WEST
Dated as of: , 19
ANNEX I
TO
LEASE SCHEDULE AND ACCEPTANCE
CERTIFICATE NO. __
Units Purchased by Lessor
and Subject to this Lease Schedule
and Acceptance Certificate Purchase Price
ANNEX II
TO
LEASE SCHEDULE AND ACCEPTANCE
CERTIFICATE NO. __
Delivery Date: ____________
Aggregate Purchase Price ____________
Base Date: ____________
"Applicable Percentage" shall mean, with respect to the end of the
Base Term and each Renewal Term, the percentage set forth below
opposite each such date:
End of Applicable Percentage
Base Term __%
First Renewal Term __%
Second Renewal Term __%
Third Renewal Term __%
Fourth Renewal Term __%
The percentage used to calculate the Recourse Deficiency Amount
with respect to the Units described in this Schedule shall be 15%.
Fixed Rent Payments & Schedule Balance:
Payment Fixed
Number Rent Payment Schedule Balance
TOTALS:
ANNEX III
TO
LEASE SCHEDULE AND ACCEPTANCE
CERTIFICATE NO. __
Location of Units:
[street address, state, county, city]
[legal description of Site]
EXHIBIT C
TO
LEASE INTENDED AS SECURITY
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Name
Street
Address
City,
State, Zip
SPACE ABOVE THIS LINE FOR RECORDER'S USE
CONSENT TO REMOVAL OF PERSONAL PROPERTY
KNOW ALL MEN BY THESE PRESENTS:
(i)The undersigned has an interest
as
(OWNER, MORTGAGE HOLDER, TRUST DEED
HOLDER, LESSOR, SELLER UNDER CONDI-
TIONAL CONTRACT OF PURCHASE AND SALE)
in the real property, described in Annex 1 (the "Real Property"):
(ii) ("Lessee") has entered into or will enter into a Lease
Intended as Security with BA Leasing & Capital Corporation ("Lessor");
the Lease covers certain personal property (the "Personal Property") which
is or will be located upon the Real Property, and is described as follows:
(iii) Lessor, as a condition to entering into the Lease, requires that
the undersigned consent to the removal by Lessor of the Personal Property
from the Real Property, no matter how it is affixed thereto, and to the other
matters set forth below.
NOW, THEREFORE, for a good and sufficient consideration,
receipt of which is hereby acknowledged, the undersigned consents to the
placing of the Personal Property on the Real Property, and agrees with
Lessor as follows:
1. The Personal Property shall be considered to be personal property
and shall not be considered part of the Real Property regardless of whether
or by what means it is or may become attached or affixed to the Real
Property.
2. The undersigned has not and will not claim any interest in the
Personal Property.
3. The undersigned will permit Lessor to enter upon the Real Property
for the purpose of exercising any right it may have under the terms of the
Lease, or otherwise including, without limitation, the right to remove the
Personal Property from the Real Property; provided, however, that if
Lessor, in removing the Personal Property damages any improvements of
the undersigned on the Real Property, Lessor will at its expense, cause
same to be repaired.
4. This agreement shall be binding upon the heirs, successors
and assigns of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this
instrument on , 19 .
By: By:
The foregoing Consent must be
acknowledged before a Notary
Public and returned to
BA LEASING & CAPITAL CORPORATION
ANNEX 1
TO
EXHIBIT C
That certain real property in the County of _________,
State of ______________, legally described as:
EXHIBIT D
TO
LEASE INTENDED AS SECURITY
BILL OF SALE
For valuable consideration TODD-AO STUDIOS WEST ("Seller")
sells to BA LEASING & CAPITAL CORPORATION ("Buyer"), the
property listed on Annex A (the "Property").
Seller covenants and warrants that:
(1) it is the owner of, and has absolute title to, the Property
which is free and clear of all claims, liens and encumbrances;
(2) it has the present right, power, and authority to sell the
Property to Buyer; and
(3) this Bill of Sale is a legal, valid and binding obligation of
Seller.
Seller shall forever warrant and defend the sale of the Property to
Buyer, its successors and assigns, against any person claiming an interest in
the Property.
This Bill of Sale is binding on the successors and assigns of Seller
and inures to the benefit of the successors and assigns of Buyer.
Executed on , 19 , at
TODD-AO STUDIOS WEST
By
Title
ANNEX A
TO
BILL OF SALE
Description of Units Location Purchase Price
EXHIBIT E-1
TO
LEASE INTENDED AS SECURITY
OPINION OF LESSEE'S COUNSEL
BA Leasing & Capital Corporation
Two Embarcadero Center
San Francisco, California
Attention:
Re: Lease Intended as Security dated as of
BA Leasing & Capital Corporation, as Lessor, and
, as Lessee
Ladies and Gentlemen:
The undersigned is counsel for Todd-AO Studios West ("Lessee"),
a California corporation, having its principal place of business at ,
and in such capacity have examined counterparts of the documents
executed by Lessee in connection with leasing of certain personal property
pursuant to the Lease Intended as Security (the "Lease") dated as of
19, , between Lessee and BA Leasing & Capital Corporation
("Lessor"). We have examined the Lease, the certificates of officers and
representatives of Lessee and such other documents and papers as we have
deemed necessary for the expression of the opinions contained herein. In
such examinations we have assumed the authenticity of all documents
submitted to us as originals, conformity to the original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents.
Based on our examinations mentioned above and relying upon
statements of fact contained in the documents we have examined, we are of
the opinion that:
(1) Lessee is a corporation duly organized and existing under
the laws of Delaware, is qualified to do business in every state in which the
quantity or nature of its business or property make such qualification
necessary, is in good standing in each such state and has full and adequate
corporate powers to carry on and conduct its business as now conducted.
(2) The Lease has been duly authorized, executed and
delivered by Lessee and is a legal, valid and binding agreement of Lessee.
(3) Lessee has full right, power and authority to execute and
deliver the Lease and perform its obligations thereunder; and the execution
and delivery of the Lease by Lessee does not, and performance by Lessee
thereof will not, contravene any charter or by-law provision of Lessee or of
any indenture, covenant, instrument or agreement of to which Lessee is a
party or by which Lessee or any of its properties is bound or affected.
(4) No approval, consent, exemption, authorization or other
action by, or notice to or filing with, any government authority is necessary
in connection with the execution, delivery, performance by Lessee or
enforcement by Lessor of the Lease, or if necessary the same has been
obtained as described in Annex A.
(5) There is no law, rule or regulation that would be
contravened by the execution, delivery, performance by Lessee or
enforcement by Lessor of the Lease, nor are there, as of the date hereof,
any actions, suits, or proceedings (whether or not purportedly on behalf of
Lessee) pending, or to our knowledge, threatened against or affecting
Lessee, at law or in equity or before any Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, which involve the possibility of any judgment, or liability,
which items are not fully covered by insurance, or which may result in any
material adverse change in the business, operations, properties or assets or
in the condition, financial or otherwise, of Lessee, and we have no
knowledge of any default on Lessee's part with respect to any order, writ,
injunction or decree of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, that may result in such material adverse change.
(6) The Units to be leased in accordance with the Lease will
be personal property.
(7) The Lease is enforceable against Lessee in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization or other similar laws affecting creditors' rights generally
now or hereafter in effect and to the application of equitable principles if
equitable remedies are sought.
Very truly yours,
EXHIBIT E-2
TO
LEASE INTENDED AS SECURITY
OPINION OF GUARANTOR'S COUNSEL
BA Leasing & Capital Corporation
555 California Street, 4th Floor
San Francisco, California 94104
Attention:
Re: Lease Intended as Security dated as of
BA Leasing & Capital Corporation ("Lessor")
and Todd-AO Studios West ("Lessee").
Ladies and Gentlemen:
The undersigned is counsel for Todd-AO Corporation
("Guarantor"), a Delaware corporation, having its principal place of
business at , and in such capacity has examined counterparts
of the Guaranty dated , 19 executed by Guarantor
(the "Guaranty") in connection with leasing of certain personal property
pursuant to a Lease Intended as Security dated as of (the "Lease")
between Lessee and Lessor. I have examined the Lease and the Guaranty,
the certificates of officers and representatives of Guarantor and such other
documents and papers as I have deemed necessary for the expression of the
opinions contained herein. In such examinations I have assumed the
authenticity of all documents submitted to me as originals, conformity to
the original documents of all documents submitted to me as certified or
photostatic copies and the authenticity of the originals of such latter
documents.
Based on my examinations mentioned above and relying upon
statements of fact contained in the documents I have examined, I am of the
opinion that:
1. Guarantor is a corporation duly organized and existing in
good standing under the laws Delaware, is qualified to do business in every
state in which the quantity or nature of its business or property make such
qualification necessary, is in good standing in each such state and has full
and adequate corporate powers to carry on and conduct its business as now
conducted.
2. The Guaranty has been duly authorized, executed and
delivered by Guarantor and is a legal, valid and binding agreement of
Guarantor.
3. Guarantor has full right, power and authority to execute
and deliver the Guaranty and perform its obligations thereunder; and the
execution and delivery of the Guaranty by Guarantor does not, and the
performance by Guarantor thereof will not, contravene any charter or
by-law provision of Guarantor or any indenture, covenant, instrument or
agreement to which Guarantor is a party or by which Guarantor or any of its
properties is bound or affected.
4. No approval, consent, exemption or other action by, or
notice to or filing with, any government authority is necessary in connection
with the execution, delivery, performance by Guarantor or enforcement by
Lessor of the Guaranty, or if necessary the same has been obtained as
described in Annex A.
5. There is no law, rule or regulation that would be
contravened by the execution, delivery, performance by Guarantor or
enforcement by Lessor of the Guaranty, nor are there, as of the date hereof,
any actions, suits, or proceedings (whether or not purportedly on behalf of
Guarantor) pending, or to my knowledge, threatened against or affecting
Guarantor, at law or in equity or before any Federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, which involve the possibility of any judgment, or liability,
which items are not fully covered by insurance, or which may result in any
material adverse change in the business, operations, properties or assets or
in the condition, financial or otherwise, of Guarantor, and I have no
knowledge of any default on Guarantor's part with respect to any order,
writ, injunction or decree of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, that may result in such material adverse change.
6. The Guaranty is enforceable against Guarantor in
accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization or other similar laws affecting creditors' rights
generally now or hereafter in effect and to the application of equitable
principles if equitable remedies are sought.
Very truly yours,
EXHIBIT F
TO
LEASE INTENDED AS SECURITY
New Bundy Equipment
EXHIBIT G
TO
LEASE INTENDED AS SECURITY
GUARANTY
WHEREAS, BA Leasing & Capital Corporation ("Lessor"), as a
condition precedent to entering into a lease agreement dated as of
November __, 1997 (the "Lease") between Lessor and Todd-AO Studios
West ("Lessee") has requested that Todd-AO Corporation ("Guarantor")
unconditionally guarantee the obligations of Lessee under the Lease and
under any other agreement executed in connection with the Lease (the
"Obligations").
NOW, THEREFORE, Guarantor unconditionally guarantees and
promises to pay to Lessor, or order, on demand any and all of the
Obligations.
The liabilities of Guarantor are and separate and independent of the
Obligations, and a separate action may be brought and prosecuted against
Guarantor whether action is brought against Lessee or whether Lessee is
joined in any such action; and Guarantor waives the benefit of any Statute
of Limitations affecting their liability hereunder or the enforcement thereof.
The liability under this Guaranty is exclusive of liability under any
other guaranties executed by Guarantor for the benefit of Lessor or any
company related to Lessor.
Guarantor authorizes Lessor, without notice or demand and without
affecting its liability hereunder, from time to time, to:
(a) renew, compromise, extend, accelerate or
otherwise change the time for payment of, or otherwise change the terms of
the Obligations or any part thereof;
(b) accept and hold security for the payment of this
Guaranty or the Obligations, and exchange, enforce, waive, release, fail to
perfect, sell or otherwise dispose of any such security;
(c) apply such security and direct the order and
manner of sale thereof as Lessor in its discretion may determine; and
(d) release or substitute any one or more of the
endorsers or guarantors.
Guarantor waives any right to require Lessor to (a) proceed against
Lessee, (b) proceed against or exhaust any security held from Lessee, or (c)
pursue any other remedy in Lessor's power whatsoever. Guarantor waive
any defense arising by reason of any disability or other defense of Lessee
or by reason of the cessation from any cause whatsoever of the liability of
Lessee or any claim that Guarantor's obligations exceed or are more
burdensome than those of Lessee. Guarantor shall have no right of
subrogation, and waive any right to enforce any remedy Lessor now has or
may hereafter have against Lessee, and waives any interest in the property
leased and any benefit of, and any right to participate in any security now
or hereafter held by Lessor. Lessor may foreclose, either by judicial
foreclosure or by exercise of power of sale, any deed of trust securing the
Obligations and, even though the foreclosure may destroy or diminish
Guarantors' rights against Lessee, Guarantor shall be liable to Lessor for
any part of the Obligations remaining unpaid after the foreclosure.
Guarantor waives all presentments, demands for performance, notices of
non-performance, protests, notices of protests, notices of dishonor, and
notices of acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional Obligations. Guarantor expressly waives any
and all rights of subrogation, reimbursement and contribution (contractual,
statutory or otherwise), including without limitation, any "claim" or right
of subrogation under Title 11 of the U.S. Code, against Lessee/Debtor
arising from the existence or performance of this guaranty or the Lease and
Guarantor irrevocably waives any right to enforce any remedy Lessor now
has or may hereafter have against Lessee/Debtor, and waives any benefit of,
and any right to participate in, any security now or hereafter held by
Lessor.
In addition to all liens upon, and rights of setoff against the
moneys, securities and other property of Guarantor given to Lessor by law,
Lessor shall have a lien upon and a right of setoff against all moneys,
securities and other property of Guarantor now or hereafter in the
possession of or on deposit with Lessor whether held in a general or special
account or deposit, or for safekeeping or otherwise, and every such lien and
right of setoff may be exercised without demand upon or notice to
Guarantor. No lien or right of setoff shall be deemed to have been waived
by any act or conduct on the part of Lessor, or by any neglect to exercise
such right of setoff or to enforce such lien, or by any delay in so doing,
and every right of setoff and lien shall continue in full force and effect
until such right of setoff or lien is specifically waived or released by an
instrument in writing executed by Lessor.
Any obligations of Lessee to Guarantor, now or hereafter existing,
including but not limited to any obligations to Guarantor as subrogees of
Lessor or resulting from Guarantor' s performance under this Guaranty, are
hereby subordinated to the Obligations and any other indebtedness of
Lessee to Lessor. Such Obligations of Lessee to Guarantors, if Lessor shall
so request, shall be enforced and performance received by Guarantor as
trustees for Lessor and shall be paid over to Lessor on account of the
Obligations and any other indebtedness of Lessee to Lessor, but without
reducing or affecting the liability of Guarantor under the other provisions
of this Guaranty.
Guarantor understands and acknowledges that, by virtue of this
Guaranty, it have specifically assumed any and all risks of a bankruptcy or
reorganization case or proceeding with respect to Lessee. As an example
and not by way of limitation, a subsequent assignment, rejection or
modification of the Lease in any reorganization case concerning Lessee
shall not affect the obligation of Guarantors to pay the amounts in
accordance with the Lease. If any amount guaranteed hereunder is paid by
Lessee and the payee is required by court order to return such payment to
Lessee or any trustee, receiver, custodian, liquidator or other similar
officer of either of them (and is so returned) then Guarantor shall,
notwithstanding any termination or cancellation of this Guaranty, remain
fully liable with respect to any such amount as if such amount had not been
paid by Lessee.
Guarantor agrees to pay all allocated time charges, costs and
expenses of the Legal Department of Bank of America National Trust and
Savings Association and any other attorneys' fees, expenses or
out-of-pocket costs and expenses incurred by Lessor in enforcing this
Guaranty.
Guarantor acknowledges and agrees that it shall have the sole
responsibility for obtaining from Lessee such information concerning
Lessee's financial condition or business operations as Guarantors may
require, and that Lessor has no duty at any time to disclose to Guarantor
any information relating to the business operations or financial condition
of Lessee.
Lessor may, without notice to Guarantor and without affecting
Guarantor's obligations hereunder, assign the Obligations and this
Guaranty, in whole or in part. Guarantor agrees Lessor may disclose to any
prospective purchaser and any purchaser of all or part of the Obligations
any and all information in Lessor's possession concerning Guarantor, this
Guaranty and any security for this Guaranty.
Guarantor shall
(a) keep its books and records in accordance with
generally accepted accounting principles and practices consistently applied
and shall deliver to Lessor its annual audited financial statements,
including without limitation Guarantor's SEC form 10-K within 30 days of
filing, and such other financial statements and information as Lessor may
reasonably request.;
(b) as soon as available but not later than 60 days after the
end of each of the first three fiscal quarters of the Guarantor the unaudited
consolidated balance sheet of Guarantor and its subsidiaries as at the end of
such fiscal quarter, and the unaudited consolidated statement of income and
retained earnings and of changes in cash flow of Guarantor and its
subsidiaries for such fiscal quarter and that portion of the fiscal year
ending with such quarter, certified by a responsible officer of Guarantor as
being prepared in accordance with generally accepted accounting principles
and complete and correct and fairly presenting the financial condition and
results of operations of Guarantor and its subsidiaries;
(c) as soon as available but no later than 120 days after the
end of each of its fiscal years, a complete copy of an audit report of
Guarantor and its subsidiaries which shall include at least the consolidated
balance sheet of guarantor and its subsidiaries as of the close of such year,
and the consolidated statement of income and retained earnings and of
changes in cash flows of Guarantor for such year, prepared in accordance
with generally accepted accounting principles and fairly presenting the
Guarantor's financial position and results of operations, certified by
Deloitte-Touche, or other independent public accounting firm of recognized
national standing selected and satisfactory to Lessor. Such certificate
shall not be qualified or limited because of restricted or limited
examination by such by Guarantor accountant of any material portion of
Guarantor's records.
Guarantor shall at all times comply, and shall cause each of its subsidiaries
and affiliates to comply, with the covenants set forth in the Credit
Agreement dated as of October 20, 1997 between Guarantor and Bank of
America National Trust and Savings Association (giving effect to any
applicable grace and cure periods), and in determining compliance with
such covenants for purposes of this Agreement at any time following the
termination of such facility (1) each covenant in effect immediately prior to
the termination of such facility shall be deemed to have survived such
termination and be incorporated herein, and (2) any action that would
require consent or approval thereunder shall require the consent or approval
of Lessor.
While any Obligation remains outstanding, Guarantor shall not
create, assume or suffer to exist any security interest, encumbrance or lien
(including the lien of an attachment, judgment or execution), securing a
charge or obligation, on or of any of its current assets, as such term is
defined under general accepted accounting principles, whether now owned
or hereafter acquired.
Credit information relating to Guarantor may be disseminated among Lessor
and any of its affiliates and any of their respective successors and assigns.
Lessor shall have no duty to inquire into the powers of Lessee or
the officers, directors, partners, or agents acting or purporting to act on
its behalf and any obligations made or created in reliance upon the
professed exercise of such powers shall be Obligations guaranteed
hereunder.
This Guaranty shall be governed by and construed according to the
laws of California, to the jurisdiction of which the parties hereto submit.
IN WITNESS WHEREOF, the undersigned Guarantor has
executed this Guaranty this day of November, 1997.
Todd-AO Corporation
(Guarantor)
By:
Name:
Title:
900 N. Seward Street
Hollywood, CA 90038
**Please provide street address, county and State.