Exhibit 10.2

 

TERM PROMISSORY NOTE

 

$5,000,000.00 Stamford, Connecticut April __, 2018

 

FOR VALUE RECEIVED, the undersigned, CHICKEN SOUP FOR THE SOUL ENTERTAINMENT
INC., a Delaware corporation, having an address at 132 East Putnam Avenue, Cos
Cob, Connecticut 06807 (“CSSE”) and SCREEN MEDIA VENTURES, LLC, a Delaware
limited liability company, having an address at 800 Third Avenue, 3rd Floor, New
York, New York 10022. (“SMV” and together with CSSE, the “Maker”), jointly and
severally, promises to pay to the order of PATRIOT BANK, N.A., (the “Lender”),
at its office located at 900 Bedford Street, Stamford, Connecticut 06901, the
principal sum of FIVE MILLION and 00/100 DOLLARS ($5,000,000.00) (the “Loan”),
together with interest payable at the rate and in the manner provided in Section
1.1 of this Term Promissory Note (this “Note”), together with all taxes assessed
upon said sum (other than income or franchise taxes) against Holder of this Note
(the “Holder”) and any costs and expenses, including reasonable attorneys’ fees,
incurred in the collection of this Note or in protecting or sustaining the lien
of the same.

 

1.1.INTEREST RATE.

 

Commencing the date hereof until the Maturity Date, the outstanding principal
balance of this Note shall bear interest, payable monthly in arrears, at a fixed
rate equal to five and three-quarters percent (5.75%) per annum (the “Interest
Rate”), on the outstanding balance of the Loan from time to time.

 

1.2.ADVANCES.

 

Lender shall advance the full amount of the Loan on the date hereof, upon the
request of Maker, in accordance with the terms of Section 3.3 of that certain
Loan and Security Agreement by and among Maker, BD Productions, LLC, a
Connecticut limited liability company (“BDP”), 757 Film Acquisition LLC, a
Delaware limited liability company, (“757”), and Screen Media Films, LLC, a
Delaware limited liability company (“SMF” and together with BDP and 757,
individually and collectively, the “Guarantor”), and Lender, dated of even date
herewith (as amended, amended and restated, supplemented or otherwise modified,
the “Loan Agreement”), subject to the terms stated herein and provided there has
been no Event of Default under the Loan Agreement.

 

2.1REPAYMENT.

 

The principal sum and interest shall be due and payable in installments as
follows:

 

a.       Interest on the outstanding principal balance from the date hereof to
and including the last day of the month in which this Note is dated shall be
payable on the date hereof.

 

 

 

 

b.       Commencing on June 1, 2018, and continuing on the same date of each
subsequent month thereafter during the term of the Loan up to and including the
Maturity Date, Maker shall make equal monthly payments of principal in the
amount of EIGHTY THREE THOUSAND THREE HUNDRED THIRTY THREE and 33/100 DOLLARS
($83,333.33), plus interest, amortized on a straight line basis, which is the
sum required to repay the outstanding balance of the Loan amortized over a
period of sixty (60) months at the Interest Rate, with a final installment in
the amount of the unpaid principal balance, together with all accrued and unpaid
interest and any other sums due on the Maturity Date.

 

c.       The entire principal balance of the indebtedness evidenced by this Note
and all interest and other amounts from time to time payable under this Note
shall be paid in full no later than May 1, 2023 (the “Maturity Date”).

 

d.       The annual Interest Rate for this Note is computed on a 360 day year
basis and charged according to the actual number of days the principal balance
is outstanding in any month or payment period.

 

e.       All payments of principal and interest shall be made in lawful money of
the United States which shall be legal tender in payment of all debts at the
time of payment. Any check, draft or money order remitted in settlement of this
Note, may be handled for collection in accordance with the practice of the
collecting bank or banks and shall not be deemed payment until the money is
actually received by Holder of this Note.

 

2.2USE OF LOAN PROCEEDS.

 

a.       Maker covenants and agrees that the proceeds of the Loan shall be used
for the purpose set forth in Section 3.4 of the Loan Agreement and for no other
purpose.

 

b.       Maker attests that the proceeds of this Note are to be used for
commercial purposes and that no part of such proceeds will be used, in whole or
in part, for purchasing or carrying any “margin security” as such term is
defined in Regulation U of the Board of Governors of the Federal Reserve System.

 

3.COVENANTS.

 

At no time during the term of the Loan shall Maker violate those certain
covenants as more particularly set forth in Sections 7 and 8 of the Loan
Agreement.

 

4.APPLICATION OF PAYMENTS.

 

At Lender’s election, payments will be applied first to fully pay costs and
expenses incurred by Lender in collecting this Note or in sustaining and/or
enforcing any security granted to secure this Note, if any, then to fully pay
any outstanding late charges or prepayment fees, then to fully pay accrued
interest and the remainder will be applied to principal.

 

 -2- 

 

 

5.LATE CHARGE.

 

Maker shall pay Holder a late charge of five percent (5%) of any payment not
received by Holder within ten (10) days after the installment is due, to cover
the additional expenses involved in handling such overdue installment. This
charge shall be in addition to, and not in lieu of, any other remedy Holder may
have and is in addition to any reasonable fees and charges of any agents or
attorneys which Lender is entitled to employ in the event of default hereunder,
whether authorized herein or by applicable law. Maker will pay this late charge
promptly, but only once for each late payment.

 

6.DEFAULT.

 

Upon the occurrence of any Event of Default, as defined in the Loan Agreement,
the entire outstanding balance of this Note shall, at the option of Holder,
become immediately due and payable without notice or demand, and in any event,
interest shall immediately accrue at a “default rate” which means the rate of
interest which is eighteen percent (18%) per annum, but in no event to exceed
the maximum rate allowed by applicable law.

 

Failure to exercise any option to accelerate upon the occurrence of an Event of
Default or other circumstance permitting the exercise of such option shall not
constitute a waiver of the default or of the right to exercise such option at a
later time so long as such default or other circumstance continues to exist, and
shall not constitute a waiver of the right to exercise such option in the event
of any other default or circumstance specified herein.

 

7.PREPAYMENT.

 

Maker may prepay the Loan in part or in full at any time without penalty or
premium provided it gives Lender at least ten (10) days’ prior written notice of
any such intended prepayment.

 

Any partial payments shall not affect Maker’s obligation to make the regular
installments required hereunder until the Loan is paid in full.

 

 -3- 

 

 

8.PREJUDGMENT REMEDY WAIVER.

 

MAKER ACKNOWLEDGES AND REPRESENTS THAT THE LOAN EVIDENCED BY THIS NOTE IS A
COMMERCIAL TRANSACTION AND THAT THE PROCEEDS OF THE LOAN SHALL NOT BE USED FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. MAKER AND ANY SUBSEQUENT ENDORSER OR
OTHER ACCOMMODATION MAKER HEREBY VOLUNTARILY WAIVES ANY RIGHTS TO NOTICE OR
HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES AS NOW OR
HEREAFTER AMENDED, OR AS OTHERWISE REQUIRED BY ANY LAW WITH RESPECT TO ANY
PREJUDGMENT REMEDY WHICH HOLDER MAY ELECT TO USE OR WHICH IT MAY AVAIL ITSELF.
MAKER FURTHER WAIVES, TO THE GREATEST EXTENT PERMITTED BY LAW, THE BENEFITS OF
ALL PRESENT AND FUTURE VALUATION, APPRAISEMENT, EXEMPTION, STAY, REDEMPTION AND
MORATORIUM LAWS. MAKER FURTHER WAIVES ANY REQUIREMENTS THAT LENDER OBTAIN A BOND
OR ANY SIMILAR DEVICE IN CONNECTION WITH THE EXERCISE OF ANY REMEDY OR THE
ENFORCEMENT OF ANY RIGHT HEREUNDER OR PERTAINING TO THE LOAN.

 

9.WAIVER OF RIGHT TO TRIAL BY JURY.

 

MAKER AND ANY SUBSEQUENT ENDORSER OR OTHER ACCOMMODATION MAKER (COLLECTIVELY,
THE “MAKER”) WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF THIS NOTE OR ANY CONDUCT RELATING TO
THE ADMINISTRATION OR ENFORCEMENT OF THIS NOTE OR ARISING FROM THE
DEBTOR/CREDITOR RELATIONSHIP OF THE PARTIES HERETO. THIS WAIVER IS KNOWINGLY,
INTENTIONALLY AND VOLUNTARILY MADE BY MAKER, AND MAKER ACKNOWLEDGES THAT LENDER
HAS NOT MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL BY JURY
OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. MAKER ACKNOWLEDGES THAT THIS
WAIVER MAY DEPRIVE MAKER OF AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS
KNOWINGLY AND VOLUNTARILY BEEN AGREED TO BY MAKER. MAKER FURTHER ACKNOWLEDGES
THAT MAKER HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED)
IN THE SIGNING OF THIS NOTE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT
LEGAL COUNSEL SELECTED BY MAKER AND THAT MAKER HAS HAD THE TIME TO DISCUSS THIS
WAIVER WITH HIS LEGAL COUNSEL.

 

10.DELAY IN ENFORCEMENT.

 

The liability of Maker and any subsequent endorser or other accommodation maker
under this Note is unconditional and shall not be affected by an extension of
time, renewal, waiver or any other modification whatsoever, granted or consented
to by Holder. Any failure by Holder to exercise any right it may have under this
Note is not a waiver of Holder’s right to exercise the same or any other right
at any other time.

 

11.CHANGES.

 

No agreement by Holder to change, waive or release the terms of this Note will
be valid unless it is in writing and signed by Maker and Holder.

 

 -4- 

 

 

12.WAIVER.

 

MAKER AND ANY SUBSEQUENT ENDORSER OR OTHER ACCOMMODATION MAKER WAIVES
PRESENTMENT, DEMAND FOR PAYMENT AND NOTICE OF DISHONOR.

 

13.CONNECTICUT LAW.

 

The provisions of this Note shall be governed by the laws of the State of
Connecticut.

 

14.JURISDICTION AND VENUE.

 

Any action or proceeding to enforce or defend any rights under this Note or
under any agreement, instrument or other document contemplated hereby or related
hereto; directly or indirectly related to or connected with the Loan or the
administration or enforcement thereof; or arising from the debtor/creditor
relationship of Maker and Lender shall be brought only in the Superior Court of
Connecticut or the United States District Court for the District of Connecticut.
The parties hereto agree that any proceeding instituted in either of such courts
shall be of proper venue, that such courts shall have personal jurisdiction over
the parties and that any and all pleadings, summons, motions and other process
in such proceeding shall be fully and effectively served when transmitted by
United States Mail (registered or certified), postage and registry fees prepaid.
Any judgment or decree obtained in any such action or proceeding may be filed or
enforced in any other appropriate court.

 

15.RIGHT OF SET-OFF.

 

Upon the occurrence of any Event of Default, Lender shall have the right to
set-off against the Loan all of Maker’s deposits, credit and property now or
hereafter in the possession or control of Lender, its agent or bailee or in
transit to it. Lender may apply the same, or any part thereof, to the Loan
balance without prior notice or demand.

 

16.INVALIDITY.

 

If any provision of this Note or the application of any provision to any person
or circumstance shall be invalid or unenforceable, neither the balance of this
Note nor the application of the provision to other persons or circumstances
shall be affected.

 

17.JOINT AND SEVERAL LIABILITY, BINDING EFFECT.

 

This Note and all obligations hereunder, to the extent signed by more than one
party, shall be the joint and several obligations of each Maker, and any
endorsers or other accommodation makers, and each provision hereof shall apply
to each and all jointly and severally. The provisions of this Note are binding
on the successors and assigns of Maker and shall inure to the benefit of Lender,
its successors and assigns and to subsequent Holders of this Note.

 

 -5- 

 

 

18.INTERPRETATION.

 

Captions and headings used in this Note are for convenience only. The term
“Maker” and any pronoun referring thereto as used herein shall be construed in
the masculine, feminine or neuter as the context may require. The singular
includes the plural and the plural includes the singular. “Any” means any and
all.

 

19.RECOVERY OF PAYMENT.

 

To the extent the Loan is reduced or paid in full by reason of any payment to
Lender by any subsequent accommodation maker or endorser, and all or any part of
such payment is rescinded, avoided or recovered from Lender for any reason
whatsoever, including, without limitation, any proceedings in connection with
the insolvency, bankruptcy or reorganization of such accommodation maker or
endorser, the amount of such rescinded, avoided or refused payment shall be
added to or, in the event the Note has been previously-paid in full, shall
revive the principal balance of this Note upon which interest may be charged at
the applicable rate set forth in this Note and shall be considered part of the
Loan and all terms and provisions herein shall thereafter apply to same.

 

20.NO VIOLATIONS OF GOVERNMENTAL PROHIBITIONS.

 

Neither the making of the Loan, nor the receipt of Loan proceeds by Maker,
violates any Law applicable to Maker, including, without limitation, any of the
Terrorism Laws. Neither the making of the Loan, nor the receipt of Loan proceeds
by Maker (a “Principal Party”) violates any of the Terrorism Laws applicable to
any of the Principal Parties. To Maker’s best knowledge, no holder of any direct
or indirect equitable, legal or beneficial interest in Maker or any Principal
Party is the subject of any of the Terrorism Laws. No portion of the Loan
proceeds will be used, disbursed or distributed by Maker for any purpose, or to
any Person, directly or indirectly, in violation of any Law including, without
limitation, any of the Terrorism Laws. As used in this Agreement, the term
“Terrorism Laws” means Executive Order 13224 issued by the President of the
United States of America, the Terrorism Sanctions Regulations (Title 31 Part 595
of the U.S. Code of Federal Regulations), the Terrorism List Governments
Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal
Regulations), and the Foreign Terrorist Organizations Sanctions Regulations
(Title 31 Part 597 of the U.S. Code of Federal Regulations), and all other
present and future federal, state and local laws, ordinances, regulations,
policies and any other requirements of any Governmental Agency (including,
without limitation, the United States Department of the Treasury Office of
Foreign Assets Control) addressing, relating to, or attempting to eliminate,
terrorist acts and acts of war, each as hereafter supplemented, amended or
modified from time to time, and the present and future rules, regulations and
guidance documents promulgated under any of the foregoing, or under similar
laws, ordinances, regulations, policies or requirements of other States or
localities.

 

 -6- 

 

 

21.SERVICE OF PROCESS.

 

MAKER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED
WITHIN THE STATE OF CONNECTICUT AND WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON MAKER, AND CONSENT THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO MAKER AT THE ADDRESSES AS SET FORTH IN THIS NOTE AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
MAKER WAIVES ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER AND
CONSENT TO THE GRANTING OF ANY SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY THE COURT.

 

22.COMPLIANCE WITH GOVERNMENTAL PROHIBITIONS.

 

No portion of the Loan proceeds will be used, disbursed or distributed by Maker
for any purpose, or to any Person, in violation of any Law including, without
limitation, any of the Terrorism Laws. Maker shall provide Lender with immediate
written notice (a) of any failure of any of the representations and warranties
set forth in Section 20 of this Note to be true, correct and complete in all
respects at any time, or (b) if Maker obtains knowledge that Maker, or any
holder at any time of any direct or indirect equitable, legal or beneficial
interest in Maker is the subject of any of the Terrorism Laws. Maker shall
immediately and diligently take, or cause to be immediately and diligently
taken, all necessary action to comply with all Terrorism Laws and to cause the
representations and warranties set forth in Section 20 of this Note to be true,
correct and complete in all respects.

 

23.NOTICES.

 

A demand upon or notice to Maker hereunder shall be deemed sufficient and
commercially reasonable notice and shall be effective if given in accordance
with Section 11.9 of the Loan Agreement.

 

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

 

SIGNATURE PAGE FOLLOWS

 

 -7- 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Term Promissory Note as
of the date and year first written above.

 

SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF: 

                  MAKER:                 Name:  

CHICKEN SOUP FOR THE SOUL ENTERTAINMENT INC.,

a Delaware corporation

                Name:           By:         Name: Scott W. Seaton       Title:
Vice Chairman       Duly Authorized                    

SCREEN MEDIA VENTURES, LLC,

Name:   a Delaware limited liability company   By:

Chicken Soup for the Soul Entertainment Inc.,

a Delaware corporation

      Its Manager                 Name:   By:         Name: Scott W. Seaton    
  Title: Vice Chairman       Duly Authorized

 

[Signature Page to Term Promissory Note]

 

 

 

 

STATE OF CONNECTICUT )   ) ss:  Cos Cob COUNTY OF FAIRFIELD )

 

On this the ____ day of April, 2018 before me, the undersigned officer,
personally appeared Scott W. Seaton, who acknowledged himself to be the Vice
Chairman of Chicken Soup for the Soul Entertainment Inc., a Delaware
corporation, and that he, as such officer, being authorized so to do executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as Vice Chairman.

 

In Witness Whereof, I hereunto set my hand.

 

      Notary Public   My Commission Expires:   Commissioner of the Superior
Court

 

STATE OF CONNECTICUT )   ) ss:  Cos Cob COUNTY OF FAIRFIELD )

 

On this the ____ day of April, 2018 before me, the undersigned officer,
personally appeared Scott W. Seaton, who acknowledged himself to be the Vice
Chairman of Chicken Soup for the Soul Entertainment Inc., a Delaware
corporation, the Manager of Screen Media Ventures, LLC, a Delaware limited
liability company, and that he, as such officer, being authorized so to do
executed the foregoing instrument for the purposes therein contained, by signing
the name of the limited liability company by himself as Vice Chairman.

 

In Witness Whereof, I hereunto set my hand.

 

      Notary Public   My Commission Expires:   Commissioner of the Superior
Court

 

[Acknowledgment Page to Term Promissory Note]

 

 

 

 

AUTOMATIC PAYMENT ADDENDUM TO

TERM PROMISSORY NOTE

 

Loan No.   Qualifying Account No. 890166911 Maker CHICKEN SOUP FOR THE SOUL
ENTERTAINMENT INC. and SCREEN MEDIA VENTURES, LLC, jointly and severally Loan
Amount $5,000,000.00

 

This Automatic Payment Addendum to Term Promissory Note (this “Addendum”) is
made as of the day of April, 2018 and is incorporated into and shall be deemed
to amend and supplement that certain Term Promissory Note (the “Note”), dated of
even date herewith, as executed by the undersigned (the “Maker”) in favor of
PATRIOT BANK, N.A. (the “Lender”) in connection with the loan (“Loan”) described
above. Capitalized terms not otherwise defined herein shall have such meaning as
given in the Note.

 

Lender is authorized to increase the Interest Rate now in effect on the above
described Loan by one half of one percent (0.50%) (i) if Maker has not
established and continues to maintain the above designated account and to
authorize automatic debits from that account (the “Qualifying Account”) for the
purpose of making loan payments within ten (10) days of such payment being due,
or (ii) if Maker fails to maintain the Minimum Deposit in the Qualifying
Account, as required under the terms of Section 7.20 of the Loan Agreement.

 

This arrangement may be terminated upon the occurrence of any of the following:

 

1.       There are insufficient collected funds in the Qualifying Account to
make the full payment on the due date of any monthly payment. In such event,
Maker may also be subject to the possible late charges and other consequences of
a late payment as stated in my Qualifying Account.

 

Effective on the first day of the month following the occurrence of any of the
foregoing events, Lender will be entitled to increase the Interest Rate and any
floor rate on my loan by one-half of one percentage point (0.50%). This increase
will not be subject to any interest rate limitation stated in the Loan Documents
except that the Interest Rate may not exceed the maximum interest rate allowed
by applicable law.

 

In its sole discretion, Lender may decide not to exercise its right to increase
the Interest Rate. In such case, Lender shall not waive its right to do so
later. Once this arrangement is terminated it will not be reinstated.

 

Except as expressly stated in this Addendum, all other terms of the Loan
Documents shall remain in full force and effect.

 

SIGNATURE PAGE FOLLOWS

 

 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Automatic Payment
Addendum to Term Promissory Note as of the date and year first written above.

 

SIGNED, SEALED AND DELIVERED IN THE PRESENCE OF:   BORROWER:           CHICKEN
SOUP FOR THE SOUL ENTERTAINMENT INC.,   a Delaware corporation Name:          
By:       Name:  Scott W. Seaton Name:     Title:  Vice Chairman       Duly
Authorized                     SCREEN MEDIA VENTURES, LLC,     a Delaware
limited liability company   By: Chicken Soup for the Soul Entertainment Inc.,
Name:     a Delaware corporation       Its Manager       Name:   By:        
Name:  Scott W. Seaton       Title:  Vice Chairman       Duly Authorized

 

[Signature Page to Automatic Payment Addendum to Term Promissory Note]

 

 

 

 

STATE OF CONNECTICUT )   ) ss:  Cos Cob COUNTY OF FAIRFIELD )

 

On this the ____ day of April, 2018 before me, the undersigned officer,
personally appeared Scott W. Seaton, who acknowledged himself to be the Vice
Chairman of Chicken Soup for the Soul Entertainment Inc., a Delaware
corporation, and that he, as such officer, being authorized so to do executed
the foregoing instrument for the purposes therein contained, by signing the name
of the corporation by himself as Vice Chairman.

 

In Witness Whereof, I hereunto set my hand.

 

      Notary Public   My Commission Expires:   Commissioner of the Superior
Court

 

STATE OF CONNECTICUT )   ) ss:  Cos Cob COUNTY OF FAIRFIELD )

 

On this the ____ day of April, 2018 before me, the undersigned officer,
personally appeared Scott W. Seaton, who acknowledged himself to be the Vice
Chairman of Chicken Soup for the Soul Entertainment Inc., a Delaware
corporation, the Manager of Screen Media Ventures, LLC, a Delaware limited
liability company, and that he, as such officer, being authorized so to do
executed the foregoing instrument for the purposes therein contained, by signing
the name of the limited liability company by himself as Vice Chairman.

 

In Witness Whereof, I hereunto set my hand.

 

      Notary Public   My Commission Expires:   Commissioner of the Superior
Court

 

[Acknowledgment Page to Automatic Payment Addendum to Term Promissory Note]