LOAN AGREEMENT
First Union National Bank
00 Xxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
(Hereinafter referred to as the "Bank")
American Passage Media, Inc.,
Beyond The Wall, Inc. and
Campus Voice, Inc.
c/o Network Event Theater, Inc.
000 Xxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000-0000
(Individually and collectively "Borrower")
This Loan Agreement ("Agreement") is entered into the 30th day of December,
1997, by and between Bank and Borrower, each a corporation organized and
existing under the laws of the State of Delaware.
Borrower has applied to Bank for a loan or loans (individually and collectively,
the "Loan") evidenced by one or more promissory notes (whether one or more, the
"Note") as follows:
Term Loan - in the principal amount of $4,000,000 which is evidenced by a
promissory note dated December 30, 1997 (the "Term Promissory Note"). The Loan
proceeds are to be used solely for the purpose of first paying in full existing
indebtedness of American Passage Media, Inc. in the principal sum of $3,875,000
at September 30, 1997, and then to provide working capital to the Borrower.
Line of Credit - in the maximum principal amount of $1,000,000 which is
evidenced by a promissory note dated December 30, 1997 (the "Line of Credit
Note"), under which Borrower may borrow, repay and reborrow, from time to time,
so long as the total indebtedness at any one time does not exceed the lesser of
(i) $1,000,000 or (ii) the Maximum Principal Amount (as hereinafter defined).
The Loan proceeds are to be used by the Borrower solely for working capital
purposes. Bank's obligation to advance or readvance under the Line of Credit
Note shall terminate if Borrower is in Default under the Line of Credit Note or
the Term Promissory Note, a default in the payment of the Obligations occurs or
the Borrower is in Default (as defined in the Loan Documents) under any Loan
Document, or in any event, on June 30, 1999, unless renewed or extended by Bank
in writing upon such terms then satisfactory to the Bank.
This Agreement applies to the Loan and all Loan Documents. The terms "Loan
Documents" and "Obligations," as used in this Agreement, are defined in the
Note. The term "Borrower" shall include its Subsidiaries. As used in this
Agreement as to Borrower, "Subsidiary" shall mean any corporation of which more
than 50% of the issued and outstanding voting stock is owned directly or
indirectly by Borrower. As to Borrower, "Affiliate" shall have the meaning as
defined in 11 U.S.C. ss. 101, except that the term "debtor" therein shall be
substituted by the term "Borrower" herein. "NET" means Network Event Theater,
Inc. and "Guarantor" means NET and National Campus Media, Inc.
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Relying upon the covenants, agreements, representations and warranties contained
in this Agreement, Bank is willing to extend credit to Borrower upon the terms
and subject to the conditions set forth herein, and Bank and Borrower agree as
follows:
REPRESENTATIONS. Borrower and Guarantor represent or covenant that from the date
of this Agreement and until final payment in full of the Obligations: Accurate
Information. All information now and hereafter furnished to Bank, with respect
to the Borrower and the Guarantor is and will be true, correct and complete in
all material respects. Any such information relating to Borrower's and
Guarantor's financial condition will fairly present Borrower's and Guarantor's
financial condition as of the date(s) thereof, (including all present material
contingent liabilities of every type), and Borrower and Guarantor each further
represent that its financial condition has not changed materially or adversely
since the date(s) of such documents to the date hereof and, as to the loan
evidenced by the Line of Credit Note, the date of each borrowing hereunder.
Authorization; Non-Contravention. The execution, delivery and performance by
Borrower and any guarantor, as applicable, of this Agreement and other Loan
Documents to which it is a party are within its power, have been duly authorized
by all necessary action taken by the duly authorized officers of Borrower and
any guarantors and, if necessary, by making appropriate filings with any
governmental agency or unit and are the legal, binding, valid and enforceable
obligations of Borrower and any guarantors; and do not (i) contravene, or
constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational
documents of Borrower or any guarantor, or a default under any agreement,
judgment, injunction, order, decree or other instrument binding upon or
effecting Borrower or any guarantor1 (ii) result in the creation or imposition
of any lien (other then the lien(s) created by the Loan Documents) on any of
Borrower's or guarantor's assets, or (iii) give cause for the acceleration of
any obligations of Borrower or any guarantor to any other creditor. Asset
Ownership. Borrower and Guarantor each has good and marketable title to all of
the properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets are
free and clear of mortgages, security deeds, pledges, liens, charges, and all
other encumbrances, except as otherwise disclosed to Bank by Borrower in writing
("Permitted Liens"). To Borrower's knowledge, no default has occurred under any
Permitted Liens and no claims or interests adverse to Borrower's present rights
in its properties and assets have arisen. Discharge of Liens and Taxes. Borrower
has duly filed, paid and/or discharged all taxes or other claims which may
become a lien on any of its property or assets, except to the extent that such
items are being appropriately contested in good faith and an adequate reserve
for the payment thereof is being maintained. Sufficiency of Capital. Borrower is
not, and after consummation of this Agreement and after giving effect to all
indebtedness incurred and liens created by Borrower in connection with the Loan,
will not be, insolvent within the meaning of 11 U.S.C. ss. 101(32). Compliance
with Laws. Borrower is in compliance in all material respects with all federal,
state and local laws, rules and regulations applicable to its properties,
operations, business, and finances, including, without limitation, any federal
or state laws relating to liquor (including 18 U.S.C. ss. 3617, et seq.) or
narcotics (including 21 U.S.C. ss. 801, et seq.) and/or any commercial crimes;
all applicable federal, state and local laws and regulations intended to protect
the environment; and the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), if applicable, Organization and Authority. Each corporate or
limited liability company Borrower and any guarantor, as applicable, is duly
created, validly existing and in good standing under the laws of the state of
its organization, and has all powers, governmental licenses, authorizations,
consents and approvals required to operate its business as now conducted. Each
corporate or limited liability company Borrower and any guarantor, if any, is
duly qualified, licensed and in good standing in each jurisdiction where
qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the
failure to so qualify or be licensed, as the case may be, in the aggregate,
could have a material adverse eftect on the business, financial position,
results of operations, properties or prospects of Borrower or any such
guarantor. No
Page 2
Litigation. There are no pending or threatened suits, claims or demands against
Borrower or any guarantor that have not been disclosed to Bank by Borrower in
writing.
AFFIRMATIVE COVENANTS. Borrower and Guarantor agree that from the date of this
Agreement and until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, Borrower and Guarantor will: Business Continuity.
Conduct its business in substantially the same manner as such business is now
and has previously been conducted. Maintain Properties. Maintain, preserve and
keep its property in good repair, working order and condition, making all needed
replacements, additions and improvements thereto, to the extent allowed by this
Agreement. Access to Books & Records. Allow Bank, or its agents, during normal
business hours, upon reasonable notice, access to the books, records and such
other documents of Borrower and Guarantor as Bank shall reasonably require, and
allow Bank to make copies thereof at Bank's expense. Insurance. Maintain
adequate insurance coverage with respect to its properties and business against
loss or damage of the kinds and in the amounts customarily insured against by
companies of established reputation engaged in the same or similar businesses
including, without limitation, commercial general liability insurance, workers
compensation insurance, and business interruption insurance; all acquired in
such amounts and from such companies as Bank may reasonably require. Notice of
Default and Other Notices. (a) Notice of Default. Furnish to Bank immediately
upon becoming aware of the existence of any condition or event which constitutes
a Default (as defined in the Loan Documents) or any event which, upon the giving
of notice or lapse of time or both, may become a Default, written notice
specifying the nature and period of existence thereof and the action which
Borrower and/or Guarantor is taking or proposes to take with respect thereto.
(b) Other Notices. Notices. Promptly notify Bank in writing of (i) any material
adverse change in its financial condition or its business; (ii) any material
default under any material agreement, contract or other instrument to which it
is a party or by which any of its properties are bound, or any acceleration of
the maturity of any indebtedness owing by Borrower; (iii) any material adverse
claim against or affecting Borrower or any part of its properties; (iv) the
commencement of, and any material determination in, any litigation with any
third party or any proceeding before any governmental agency or unit affecting
Borrower; and (v) at least 30 days prior thereto, any change in Borrower's or
Guarantor's name or address as shown above, and/or any change in Borrower's
structure. Compliance with Other Agreements. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap
agreements, if applicable, as defined in the Note. Payrment of Debts. Pay and
discharge when due, and before subject to penalty or further charge, and
otherwise satisfy before maturity or delinquency, all obligations, debts, taxes,
and liabilities of whatever nature or amount, except those which Borrower in
good faith disputes. Reports and Proxies. Deliver to Bank, promptly, a copy of
all financial statements, reports, notices, and proxy statements, sent by
Borrower or Guarantor to stockholders, and all regular or periodic reports
required to be filed by Borrower or Guarantor with any governmental agency or
authority. Other Financial Information. Deliver promptly such other information
regarding the operation, business affairs, and financial condition of Borrower
or Guarantor which Bank may reasonably request. Non-Default Certificate From
Borrower. Deliver to Bank, with the Financial Statements required herein, a
certificate signed by Borrower or Guarantor, if Borrower or Guarantor is an
individual, or by a principal financial officer of Borrower or Guarantor
warranting that no "Default" as specified in the Loan Documents nor any event
which, upon the giving of notice or lapse of time or both would constitute such
a Default, has occurred. Estoppel Certificate. Furnish, within 15 days after
request by Bank, a written statement duly acknowledged of the amount due under
the Loan and whether offsets or defenses exist against the Obligations. Maintaln
Account: At Bank. Maintain their primary depository account and cash management
account at Bank, but may maintain their Payroll account at Chase Manhattan Bank.
NEGATIVE COVENANTS. Borrower and Guarantor agree that from the date of this
Agreement and until final payment in full of the Obligations, unless Bank shall
otherwise consent in writing, Borrower and Guarantor will not: Nonpayment;
Nonperformance. Fail to pay or perform the Obligations or Default
Page 3
(as defined in Loan Documents under any of the Loan Documents. Cross Default.
Default in payment of performance of any material obligation under any other
loans, or any other material contracts or agreements of Borrower or Guarantor,
any Subsidiary or Affiliate of Borrower or Guarantor ("Affiliate" shall have the
meaning as defined in 11 U.S.C. ss. 1101, except that the term debtor therein
shall be substituted by the term "Borrower or Guarantor" herein; "Subsidiary"
shell mean any corporation of which more then 50% of the issued and outstanding
voting stock is owned directly or indirectly by Borrower or Guarantor), any
general partner of or the holder(s) of the majority ownership interests of
Borrower or Guarantor with Bank or its affiliates; Material Capital Structure or
Business Alteration. Materially alter the type or kind of Borrower's or
Guarantor's business or that of its Subsidiaries, provided, however Guarantor
may make acquisitions of other businesses or assets; or suffer or permit the
acquisition of substantially all of Borrower's or Guarantor's business or
assets, or a material portion (10% or more) of such business or assets if such a
sale is outside Borrower's ordinary course of business, or more than 50% of its
outstanding stock or voting power in a single transaction or a series of
transactions; or enter into any merger or consolidation in which Borrower,
Guarantor or a Subsidiary is not the survivor or which would cause or result in
a Default hereunder, without prior written consent of Bank. Default on Other
Contracts or Obligations. Default on any material contract with or obligation
when due to a third party or default in the performance of any obligation to a
third party incurred for money borrowed. Judgment Entered. Permit the entry of
any monetary judgment or the assessment against, the filing of any tax lien
against, or the issuance of any writ of garnishment or attachment against any
property of or debts due Borrower or Guarantor and that is not discharged or
execution is not stayed within Thirty (30) days of entry. Government
Intervention. Permit the assertion or making of any seizure, vesting or
intervention by or under authority of any government by which the management of
Borrower or any guarantor is displaced of its authority in the conduct of its
respective business or such business is curtailed or materially impaired.
Prepayment of Other Debt. Retire any long-term debt entered into prior to the
date of this Agreement at a date in advance of its legal obligation to do so.
Retire or Repurchase Capital Stock. Retire or otherwise acquire any of its
capital stock. Create Additional Indebtedness. Directly or indirectly, create,
incur, assume or become liable for any additional indebtedness for borrowed
money, for the deferred purchase price of property or services, in respect of
any capitalized loan obligation or in respect of any other financing or credit
transaction, whether contingent or direct, excluding trade debt incurred in the
ordinary course of business and excluding the $1,000,000 term credit facility
provided to Pik:Nik Media, Inc. by Sirrom. Loans and Advances. Make loans or
advances, except in the ordinary course of business for travel and expenses
advances, to any person or entity. Change of Control. Except in the case of NET,
make a material change of ownership that effectively changes control of
Borrower. Change in Fiscal Year. Change their fiscal year without the prior
written consent of Bank. Investments. In the case of Borrower only, purchase any
stock, securities, or evidence of indebtedness of any person or entity except
investments in direct obligations of the United States Government and
certificates of deposit of United States commercial bunks having a tier 1
capital ratio of not less then 6%, and, then in an amount not exceeding 10% of
the issuing bank's unimpaired capital and surplus. Guarantees. Guarantee or
otherwise become responsible for obligations of any other person or entity,
other then the existing guarantee of Guarantor of Pik:Nik, Inc.'s $1,000,000
obligation to Sirrom. Encumbrances. Create, assume or permit to exist any
mortgage, security deed, deed of trust, pledge, lien, charge or other
encumbrance on any of their assets, whether now owned or hereafter acquired
other then the following liens ("Permitted Liens"): (i) security interests
permitted by the Loan Documents; (ii) liens for taxes contested in good faith;
(iii) liens accruing by law for employee benefits and (iv) the lien granted by
NET to Sirrom in the amount of $1,000,000. Distributions to Guarantor. Make any
excess cash distributions by Borrower to NET if any Default shall exist or would
occur from making such distribution and only after first paying to Bank the
additional principal payment required under the Term Promissory Note from Excess
Cash Flow.
Page 4
FINANCIAL COVENANTS OF BORROWER. Borrower, on a combined basis, agrees to the
following provisions from the date of this Agreement and until final payment in
full of the Obligations, unless Bank shall otherwise consent in writing: Current
Ratio. Borrower shall maintain a Current Ratio of not less than 1.25 to 1.00, to
be tested on a semi-annual basis commencing on June 30, 1998. "Current Ratio"
shall mean the ratio of current assets to current liabilities. "Current Assets"
shall mean the sum of cash and cash equivalents, short-term investments, trade
accounts receivable (net of any allowance for bad debt), inventory and prepaid
expenses (including prepaid advertising costs), deposits and other current
assets. Effective Tangible Net Worth. Borrower shall, at fiscal year end June
30. 1998, maintain an Effective Tangible Net Worth of at least $100,000, to be
tested on a semi-annual basis commencing on June 30, 1998. At the end of each
fiscal year thereafter, Effective Tangible Net Worth shall increase by not less
than 25% of the net income earned in that corresponding fiscal year. At the end
of the first six months in each fiscal year, Effective Tangible Net Worth shall
be no less than it was at the preceding fiscal year end. "Effective Tangible Net
Worth" shall mean total assets minus total liabilities. For purposes of this
computation, the aggregate amount of any intangible assets of Borrower,
including, without limitation, goodwill, franchise, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names shall be
subtracted from total assets, and total liabilities shall exclude debt
subordinated to Bank. Debt Service Coverage Ratio. Borrower shall maintain a
Debt Service Coverage Ratio of at least 2.00 to 1.00, calculated semi-annually
on a rolling four-quarter basis, commencing June 30, 1998. "Debt Service
Coverage Ratio" shall mean earnings before interest, taxes, depreciation and
amortization divided by the sum of interest expense and current maturities of
long term debt. Senior Funded Debt To Cash Row Ratio. Borrower shall maintain a
ratio of Senior Debt to Cash Row of not more than 1.50 to 1.00. "Senior Funded
Debt To Cash Row" shall mean the sum of all Senior Funded Debt divided by the
sum of earnings before interest, taxes, depreciation and amortization,
calculated semi-annually on a rolling four-quarter basis. "Senior Funded Debt"
shall mean, as applied to any person or entity, the sum of all indebtedness for
borrowed money including, without limitation, capital lease obligations and
unreimbursed drawings under letters of credit, as evidenced by a note, bond,
indenture or similar instrument of that person or entity, excluding any debt
subordinated to Bank.
FINANCIAL COVENANTS OF GUARANTOR. NET agrees to the following provisions from
the date of this Agreement and until final payment in full of the Obligations,
unless Bank shall otherwise consent in writing: Current Ratio. NET and its
Subsidiaries shall, at all times, maintain on a consolidated basis a Current
Ratio of not less then 1.25 to 1.00. "Current Ratio" shall mean the ratio of
current assets to current liabilities. "Current Assets" shall mean the sum of
cash and cash equivalents, short-term investments, trade accounts receivable
(net of any allowance for bad debt), inventory and prepaid expenses (including
prepaid advertising costs) deposits and other current assets. Tangible Net
Worth. NET and its Subsidiaries shall, at fiscal year end June 30, 1998,
maintain on a consolidated basis a Tangible Net Worth of at least $1,000,000. At
the end of each fiscal year thereafter, Tangible Net Worth shall increase by not
less then 25% of the net income earned in that corresponding fiscal year. At the
end of the first six months in each fiscal year, Tangible Net Worth shall be no
less than it was at the preceding fiscal year end. "Tangible Net Worth" shall
mean total assets minus total liabilities. For purposes of this computation, the
aggregate amount of any intangible assets of Guarantor or its Subsidiaries,
including. without limitation, goodwill, franchise, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names, shall be
subtracted from total assets, and total liabilities shall exclude debt fully
subordinated to Bank.
ANNUAL FINANCIAL STATEMENTS. NET shall deliver to Bank, within 120 days after
the close of each fiscal year, audited financial statements of NET and its
subsidiaries reflecting its consolidated operations during such fiscal year,
including, without limitation, a balance sheet, profit and loss statement and
statement of cash flows, with supporting schedules; all on a consolidated and
consolidating (which may be unaudited) basis with the exception of the cash flow
statement which may be prepared on a
Page 5
consolidated basis only. Such statements shall be in reasonable detail and
prepared in conformity with generally accepted accounting principles, applied on
a basis consistent with that of the preceding year. All such statements, shall
be examined by an independent certified public accountant acceptable to Bank. In
addition to these statements, Guarantor shall also provide to Bank, management
prepared statements combining the operations of the three Borrowers. These
statements shall include a balance sheet, profit and loss statement and
statement of cash flow, and shall be delivered simultaneously with the above
annual statements,
PERIODIC FINANCIAL STATEMENTS. NET shall deliver to Bank unaudited
management-prepared quarterly financial statements of NET and its Subsidiaries,
including, without limitation, a balance sheet, profit and loss statement and
statement of cash flows, with supporting schedules, as soon as available and in
any event within 45 days after the close of each such period; all in reasonable
detail and prepared in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding year. Such statements
shall be Prepared on a consolidated and consolidating basis, with the exception
of the statement of cash flow which shall be prepared on a consolidated basis
only. Such statement. shall be certified as to their correctness by a principal
financial officer of Guarantor and in each case, if audited statements are
required, subject to audit and year-end adjustment. In addition to these,
Guarantor shall also provide to Bank, management prepared statements combining
the operations of the three Borrowers. These statement shall include a balance
sheet and profit and loss statement, and shall be delivered simultaneously with
the above quarterly statements.
TAX RETURNS. Borrower and Guarantor shall deliver to Bank, within 30 days of
filing, complete copies of federal tax returns and New York, California and
Washington state tax returns, as applicable, together with all schedules
thereto, each of which shall be signed and certified by the applicable Borrower
or Guarantor to be true, correct and complete copies of such returns. In the
event an extension is filed, Borrower and/or Guarantor shall also deliver a copy
of such extension to Bank within 30 days of filing.
ANNUAL PROJECTIONS. NET shall deliver to Bank, within 120 days after the close
of each fiscal year, management prepared projections reflecting its projected
operations for each of its fiscal year remaining under the Term Promissory Note,
including, without limitation, a profit and loss statement and forecast of cash
flows, with supporting assumptions, all on a consolidated and consolidating
basis.
REPORTS AND PROXIES. Borrower and Guarantor shall promptly deliver to Bank, a
copy of all financial statements, reports, notices and Proxy statements sent by
Guarantor to stockholders, and all regular or periodic reports required to be
filed with any governmental agency or authority.
NON-DEFAULT CERTIFICATE NET shall deliver to Bank, with the financial statements
required by this Agreement, a certificate signed by a principal financial
officer of Borrower and NET warranting that no Default, as defined in the Loan
Documents, nor any event which, upon giving of notice or lapse of time or both,
would constitute such a Default, has occurred.
CERTIFICATE OF FULL COMPLIANCE FROM ACCOUNTANT. NET shall deliver to Bank, with
the annual financial statements required herein, a certification by NET's
independent certified public accountant, in reviewing the audited financial
statements of NET they did not become aware of any Default under the Loan
Documents or event which with the giving of notice and/or the lapse of time
would become a Default.
FINANCIAL AND OTHER INFORMATION. Borrower and Guarantor shall deliver to Bank
such information as Bank may reasonably request from time to time, including
without limitation, financial state-
Page 6
ments and information pertaining to Borrower's and Guarantor's financial
condition. Such information, to the extent factual in nature, shall be true,
complete, and accurate in all material respects.
BORROWING BASE. As to the Line of Credit Note in the principal amount of
$1,000,000, the following provisions shall apply:
Borrowing Limitation. The maximum principal amount that Borrower may borrow
shall be the lesser of (i) the principal amount stated in the Line of Credit
Note or (ii) the Maximum Principal Amount, as defined below.
The Maximum Principal Amount shall mean an amount equal to 75% of Eligible
Accounts, excluding pre-billed receivables, less the amount of any Reserve
required by Bank.
"Eligible Account" refers to an account receivable not more than 90 days from
the date of the original invoice that arises in the ordinary course of
Borrower's business and meets the following eligibility requirements: (a) the
sale of goods or services reflected in such account is final and such goods and
services have been delivered or provided and accepted by the account debtor and
payment for such is owing; (b) the invoices comprising an account are not
subject to any claims, returns or disputes of any kind; (c) the account debtor
is not insolvent; (d) the account debtor has its principal place of business in
the United States; (e) the account debtor is not an affiliate of Borrower and is
not a supplier to Borrower and the account is not otherwise exposed to risk of
set-off; (f) not more then thirty percent of the original invoices owing
Borrower by the account debtor are more than ninety days from the date of the
original invoice.
"Reserves" may be required at any time and from time to time by Bank without
prior notice to Borrower in amounts deemed by Bank to be adequate to reserve
against outstanding letter of credit, outstanding bankers acceptances,
Borrower's obligations to Bank or its affiliates or any guaranties or other
contingent debt of Borrower.
Required Reports. Borrower shall certify to Bank, by the fifteenth day of each
month, as of the first day of each month, and (at the request of the Bank) with
each borrowing request as of a reasonably recent date, on forms required by Bank
certifying that the Borrower is in compliance with the borrowing base formula,
together with all detail and supporting documents requested by Bank. Bank may at
any time and from time to time, during Bank's normal business hours on
reasonable notice to Borrower, enter upon any business premises of Borrower and
audit Borrower's books and records. Bank's determination of the amount of
eligible Accounts shall at all times be indisputable and deemed correct. The
Borrower, at all times, shall cooperate with Bank without limitation by
providing Bank information and access to Borrower's premises and business
records and shall be courteous to Bank's agents.
Continuing Representations. Borrower warrants and represents as a continuing
warranty, that so long as principal is outstanding under the Line of Credit
Note, the outstanding principal balance shall not exceed the lesser of the
Maximum Principal Amount or the principal amount stated in the Line of Credit
Note (the "Borrowing Limit"). Borrower agrees to pay any advances in excess of
the Borrowing Limit immediately upon receipt by Borrower of written notice that
the Borrowing Unit has been exceeded.
AVAILABILITY FEE. Borrower shall pay to Bank, quarterly, in arrears on the last
day of each calendar quarter, an availability fee equal to 1/8% per annum on the
average daily unused available principal under the Line of Credit Note for the
preceding calendar quarter or portion thereof.
ERISA. Each employee pension benefit plan, as defined in ERISA, maintained by
Borrower and Guarantor meets, as of the date hereof, the minimum funding
standards of ERISA and all applicable
Page 7
regulations thereto and requirements thereof, and of the Internal Revenue Code
of 1954, as amended. No "Prohibited Transaction" or "Reportable Event" (as both
terms are defined by ERISA) has occurred with respect to any such plan.
CONTROLLING LAW. This Agreement, the Note and the other Loan Documents executed
and delivered in connection herewith shall be governed by and construed in
accordance with the laws of the State of New York.
CONDITIONS PRECEDENT. The obligations of Bank to make the Loan and any advances
pursuant to this Agreement are subject to the following conditions precedent:
Additional Documents. Receipt by Bank of such additional supporting documents as
Bank or its counsel may reasonably request. Opinion of Counsel. On or prior to
the date of the initial borrowing hereunder, Bank shall have received a written
opinion of the counsel of Borrower acceptable to Bank that includes; subject to
customary limitations and exclusions, confirmation of the following: (a) The
accuracy of the representations set forth in this Agreement in the
Representations Subparagraphs entitled "Authorization; Non-Contravention"; and
"Organization and Authority". (b) This Agreement and other Loan Documents have
been duly executed and delivered by Borrower and constitute the legal, valid and
binding obligations of Borrower, enforceable in accordance with their terms. (c)
No registration with, consent of, approval of, or other action by, any federal,
state or other governmental authority or regulatory body to the execution and
delivery of this Agreement, the borrowing under this Agreement or other Loan
Documents, is required by law, or, if so required, such registration has been
made, and consent or approval given or such other appropriate action taken. (d)
The Loan is not usurious. (e) The Loan Documents create the security interest in
the Collateral (as defined in the Loan Documents) that is contemplated by the
Loan Documents.
IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above,
have caused this Agreement to be executed under seal.
FIRST UNION NATIONAL BANK,
a national banking association
By XXXX X. XXXXXX
-----------------------------------------
XXXX X. XXXXXX, Senior Vice President
AMERICAN PASSAGE MEDIA, INC., a Delaware
corporation, Borrower
By XXXXX X. XXXXXX
-----------------------------------------
XXXXX X. XXXXXX,Executive Vice President
& Chief Financial Officer
TAXPAYER ID#
BEYOND THE WALL, INC., a Delaware
corporation, Borrower
By XXXXX X.XXXXXX
-----------------------------------------
XXXXX X. XXXXXX, Executive Vice President
& Chief Financial Officer
TAXPAYER ID#
Page 8
CAMPUS VOICE, INC., a Delaware corporation,
Borrower
By XXXXX X. XXXXXX
-----------------------------------------
XXXXX X. XXXXXX,Executive Vice President
& Chief Financial Officer
TAXPAYER ID#
BY EXECUTING THIS AGREEMENT BELOW,
NETWORK EVENT THEATER, INC. AND
NATIONAL CAMPUS MEDIA, INC. (COLLECTIVELY
"GUARANTOR"), HAVE AGREED TO BE
BOUND BY THOSE PROVISIONS THEREIN
APPLICABLE TO GUARANTOR
NETWORK EVENT THEATER, INC.,
a Delaware corporation
By XXXXX X. XXXXXX
----------------------------------------
XXXXX X. XXXXXX,Executive Vice President
& Chief Financial Officer
NATIONAL CAMPUS MEDIA, INC.,
a Delaware corporation
By XXXXX X. XXXXXX
-------------------------------------------
XXXXX X. XXXXXX,Executive Vice President
& Chief Financial Officer
Page 9
