LOAN AGREEMENT
AGREEMENT made this 12 day of May, 1997, by and between AUDIO BOOK
CLUB, INC., having an office at 0000 Xxxxxxxxx Xxxxxxxxx, X.X., Xxxxx 000, Xxxx
Xxxxx, Xxxxxxx 00000 (hereinafter "Borrower") and XXXXXX XXXXXXX,as Trustee of
the M.E. Xxxxxxx Irrevocable Trust maintaining an office at 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000 (hereinafter "M.E. Xxxxxxx Trust").
W I T N E S E T H :
WHEREAS, M.E. Xxxxxxx Trust is the assignee of a loan agreement dated
the first day of June 1994 which was duly assigned to M.E. Xxxxxxx Trust by
assignment dated November 29, 1996 (the "Loan Agreement"), which loan agreement
was in the principal amount of $50,000; and
WHEREAS, Borrower is further indebted to M.E. Xxxxxxx Trust in
the amount of $350,000 by reason of cash advances made by M.E.
Xxxxxxx Trust to Borrower; and
WHEREAS, the above noted Loan Agreement indebtedness and additional
indebtedness aggregating $400,000 are to be consolidated and repaid as herein
provided, and are hereinafter collectively referred to as the "Indebtedness";
and
WHEREAS, the parties hereto wish to restate the Loan Agreement
in its entirety;
NOW, THEREFORE, in consideration of the mutual covenants and provisions
herein contained, it is agreed as follows:
1. Acknowledgement of Indebtedness. Borrower acknowledges
and agrees to pay the Indebtedness in accordance with the terms
hereinafter set forth.
2. Terms of Payment. The Indebtedness shall be paid by
Borrower to M.E. Xxxxxxx Trust as follows:
(a) No interest shall be paid or accrued until August 1,
1997; and
(b) Interest shall be accrued on the principal balance from
time to time outstanding calculated from August 1, 1997 at a rate which is equal
to the greater of 10% per annum or the prime rate of interest charged by
Citibank, N.A. of New York, adjusted monthly, which Indebtedness, together with
accrued interest thereon shall be due and payable on the earlier of:
(i) 15 months from the consumation of an initial public
offering of Borrowers stock; or
(ii) December 31, 1998
(c) Notwithstanding the provisions of subparagraph (b) above,
in no event shall the rate (commencing August 1, 1997) ever be lower than the
minimum interest rate (and compounding frequency) that would be required to
bring the Indebtedness into compliance with the provisions of Internal Revenue
Code Section 7872 or any successor provision.
3. Prepayment. The Indebtedness may be prepaid by Borrower
at any time, and from time to time, in whole or in part, without
penalty.
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4. Events of Default. The following events shall be deemed
defaults pursuant to the terms of this Loan Agreement:
(a) A binding decree or order of a court shall have been
entered adjudging Borrower bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization, readjustment, arrangements, composition or
similar relief for Borrower under the Bankruptcy Laws of any jurisdiction, or
any other similar applicable law, and such decree or order shall have continued
undischarged or unstayed for a period of thirty (30) days; and
(b) Borrower shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking
reorganization, readjustment, arrangement, composition or similar relief under
the Bankruptcy Laws, or any other similar applicable law, or shall consent to
the appointment of a receiver or liquidator or trustee or assignee in bankruptcy
or insolvency of a substantial part of its property, or shall make an assignment
for the benefit of creditors, or shall admit in writing its inability to pay its
debts generally, as they become due; or.
5. Remedies. In the event of a default hereunder as hereinabove
defined, M.E. Xxxxxxx Trust shall have the right to declare the entire unpaid
balance of the Indebtedness immediately due and payable; the right to seek all
remedies available to him under law for the collection of the Indebtedness and
shall be
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entitled to recover all of the reasonable costs of collection, including
attorney's fees.
6. Non-Waiver. No course of dealing on the part of M.E. Xxxxxxx Trust,
its agents or employees, nor any failure or delay on the part of M.E. Xxxxxxx
Trust with respect to the exercise of any right, power or privilege given or
granted hereunder shall operate as a waiver thereof as to any future default,
nor shall any single or partial exercise by M.E. Xxxxxxx Trust of any right,
power or privilege granted or contained herein preclude M.E. Xxxxxxx Trust from
later or future exercise of any right, power or privilege as to any future
defaults. The rights and remedies of M.E. Xxxxxxx Trust are cumulative to and
not exclusive of any remedies under the law.
7. Binding Effect. In the event that any part or parts of
this Agreement are found to be void, the remaining provisions shall
nevertheless be binding with the same effect as though the void part or parts
were deleted.
8. Modifications. This Agreement may not be changed orally, but only by
a writing signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought; this Agreement contains the entire
understanding of the parties hereto and all prior agreements or understandings,
whether written or oral, are merged herein.
9. Controlling Law. This Agreement has been executed by
Borrower in the State of Florida and shall be construed and interpreted under
the laws of that State.
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IN WITNESS WHEREOF the parties hereto have signed this Agreement the
day and year first above written.
AUDIO BOOK CLUB, INC.
by: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx - Chairman
/s/ Xxxxxx Xxxxxxx
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XXXXXX XXXXXXX as Trustee of the
M.E. Xxxxxxx Irrevocable Trust
Dated 11/29/96
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