1
EXHIBIT 6.19
LOAN AND SECURITY AGREEMENT
BY AND BETWEEN
AMERICAN INDEPENDENT NETWORK, INC. ("AIN"),
A DELAWARE CORPORATION
AND
MIDAS FUND
This Loan and Security Agreement (the "Agreement") is entered into as of
this _________ day of ____________, 1997, by and between American Independent
Network, Inc., a Delaware corporation ("Debtor"), and Midas Fund ("Secured
Party"). Debtor and Secured Party may be independently referred to hereinafter
as "Party" or collectively as the "Parties."
RECITALS
WHEREAS, the Debtor is offering (the "Offering"), for sale a Promissory
Note, with a face value of $100,000, bearing interest at the flat rate of
$10,000, payable $5,000 at ninety (90) days and $5,000 at maturity, with a term
of one hundred eighty (180) days from the date of issuance (the "Maturity
Date").
WHEREAS, all Notes issued by Debtor under the Offering are secured by
the assets of the Company and other items set forth in Section 6 herein.
WHEREAS, Secured Party has purchased Notes in the amount set forth in
Section 1 herein.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this agreement, the receipt and
sufficiency of which is hereby mutually acknowledged, the Parties agree as
follows:
1. LOAN AMOUNT; TERMS OF NOTE
2
BRIDGE LOAN AND SECURITY AGREEMENT
Page 2 of 17
----------------------------------
1.1 Pursuant to the Promissory Note attached hereto as Exhibit 1 (the
"Note"), Secured Party has agreed to loan AIN the aggregate principal amount of
One Hundred Thousand Dollars ($100,000) (the "Loan").
1.2 In consideration thereof, AIN will issue, cause to be executed and
deliver to Secured Party, concurrent with its execution hereof, a Note equal to
the amount of the Loan, upon the terms and conditions specified therein, and in
the form attached hereto as Exhibit 1.
2. SINKING FUND.
AIN shall open an account and place on deposit $16,666.66 each month for
six (6) months to function as a Sinking Fund for payment of principal at term on
the Notes.
Furthermore, AIN shall provide Midas Fund with a quarterly Net Asset
Value which will include accrued interest on the Notes.
3. COMMON STOCK.
AIN will issue to Lender twenty thousand (20,000) shares of AIN Common
Stock in addition to the interest payments set forth in Section 1.1.
4. DEFAULT PROVISIONS.
The occurrence of one or more of the following events shall constitute
an event of default of this entire Agreement:
4.1 The nonpayment of any principal or interest by AIN on the Loan when
the same becomes due and payable which is not cured within twenty (20) days of
the due date.
4.2 The entry of a decree or order by a court having appropriate
jurisdiction adjudging AIN a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization or liquidation of AIN under the Federal
Bankruptcy Act or any other applicable federal or state law, or appointing a
receiver, liquidator, assignee or trustee over any substantial portion of the
Debtor's property or Collateral, as defined in Section 6, or ordering the
winding up or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of sixty (60) consecutive days.
4.3 The institution by AIN of proceedings to be adjudicated a bankrupt
or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under the Federal Bankruptcy Act or
any other applicable federal or state law, or consent by it to the filing of any
3
BRIDGE LOAN AND SECURITY AGREEMENT
Page 3 of 17
----------------------------------
such petition or to the appointment of a receiver, liquidator, assignee or
trustee of the Debtor, or of any substantial part of its property, or if the
Collateral, as defined in Section 6, shall become subject to the jurisdiction of
a federal bankruptcy court or similar state court, or if AIN shall make an
assignment for the benefit of its creditors, or if there is an attachment,
receivership, execution or other judicial seizure, or if there is an admission
in writing by AIN of its inability to pay its debts generally as they become
due, or the taking of corporate action by AIN in furtherance of any such action.
4.4 Default in the obligation of AIN for borrowed money, other than this
Loan, which shall continue for a period of sixty (60) days, or any event that
results in acceleration of the maturity of any indebtedness of AIN under any
note, indenture, contract, or agreement.
4.5 AIN's failure to comply with any material term, obligation,
covenant, or condition contained in this Agreement, within twenty (20) days
after receipt of written notice from the Secured Party demanding such
compliance.
4.6 Any warranty, covenant, or representation made to Secured Party by
AIN under this Agreement, or any related agreement executed in connection with
this Offering, proves to have been false in any material respect when made or
furnished.
4.7 Any levy, seizure, attachment, lien, or encumbrance of or on the
Collateral, as defined in Section 6.2, other than those existing as of the date
hereof, which is not discharged by AIN within ten (10) days.
4.8 Any sale, transfer, or disposition of any interest in the
Collateral, other than in the ordinary course of business, without the prior
written consent of Secured Party.
4.9 Any other default under the terms of the Note.
5. ACCELERATION.
At the option of Secured Party, and without demand or notice, all
principal and any unpaid interest shall become immediately due and payable upon
an event of default as set forth in Section 4 above, subject to the Secured
Party's right to cure any default within thirty (30) of occurrence. Any
reasonable attorneys' fees and other expenses incurred by Secured Party in
connection with enforcing any of its rights hereunder or from a bankruptcy
filing relating to AIN, whether a lawsuit is filed or not, shall be additional
indebtedness of AIN secured by this Agreement, and shall not be deemed a
penalty.
5.1 CURE
4
BRIDGE LOAN AND SECURITY AGREEMENT
Page 4 of 17
----------------------------------
Debtor shall be provided a period of thirty (30) days from the
date of an event of default, as defined in Section 4 hereinabove, to cure a
default. In the event Debtor fails to cure any default within such time period,
including the payment of all costs and expenses provided for in this Agreement
and the Note, Secured Party may immediately enforce any and all rights provided
to him under this Agreement and the Note.
6. SECURITY AGREEMENT.
6.1 GRANT OF SECURITY INTEREST.
AIN, in consideration of the loan described in this Agreement,
hereby grants, conveys, and assigns to Secured Party, as security, all of AIN's
existing and future right, title and interest in the property listed in Section
6.2 of this Agreement. This security interest is granted to Secured Party to
secure the following: (a) the payment of the indebtedness evidenced by the Note
attached hereto as Exhibit 1, including all renewals, extensions, and
modification thereof; (b) the payment, performance and observance of all
warranties, obligations, covenants and agreements to be paid, performed or
observed by under this Agreement; and (c) the payment of all other sums, with
interest thereon, advanced or otherwise due or payable under the terms of this
Agreement.
6.2 PROPERTY.
The property subject to the security interest (the "Collateral")
is as follows:
6.2.1 EQUIPMENT.
All equipment of AIN.
6.2.2 ACCOUNTS RECEIVABLE.
All account receivable accounts, chattel paper, contract
rights, commissions, warehouse receipts, bills of lading, delivery orders,
drafts, acceptances, notes, securities and other instruments, documents, all
other forms of receivables, and all guaranties and securities therefor of AIN.
6.2.3 INVENTORY AND OTHER TANGIBLE PERSONAL PROPERTY.
All inventory of AIN, including all goods, merchandise,
materials, raw materials, work in progress, finished goods, now owned or
hereafter acquired and held for sale or lease or furnished or to be furnished
under contracts or service agreements or to be used or consumed in AIN's
business and all other tangible personal property of AIN.
5
BRIDGE LOAN AND SECURITY AGREEMENT
Page 5 of 17
----------------------------------
6.2.4 ALL GENERAL INTANGIBLES.
All general intangibles now owned by AIN or hereafter
acquired by AIN.
6.2.5 AFTER-ACQUIRED PROPERTY.
All property of the types described in Sections 6.2.1 -
6.2.4, or similar thereto, that at any time hereafter may be acquired by AIN,
including but not limited to all accessions, parts, additions, and replacements.
6.2.6 PROCEEDS.
All proceeds, in any type or form arising from the sale
or other disposition of any of the Collateral described or referred to in
Sections 6.2.1 - 6.2.5.
6.2.7 TECHNOLOGY.
All technology assigned or otherwise transferred by any
subsidiary, whether a corporation or other entity, of AIN, wherever domiciled,
evidencing such entities' ownership of the technology utilized by AIN.
6.3. COVENANTS OF AIN.
AIN agrees and covenants, and acknowledges that Secured Party is
reasonably relying upon these agreements and covenants, as follows:
6.3.1 PAYMENT OF PRINCIPAL AND INTEREST.
AIN shall promptly pay when due the principal and interest
evidenced by the Note, any prepayment and late charges provided in the Note, and
all other sums secured by this Agreement and the Note.
6.3.2 CORPORATE EXISTENCE.
AIN is a corporation duly organized and existing under the
laws of the State of Delaware and is duly qualified in every other state in
which it must qualify to do business.
6.3.3 CORPORATE AUTHORITY.
6
BRIDGE LOAN AND SECURITY AGREEMENT
Page 6 of 17
----------------------------------
The execution, delivery, and performance of this
Agreement, and the execution and payment of the Note is within the corporate
powers of AIN, has been duly authorized, is not in contravention of law or the
terms of the AIN articles of incorporation and bylaws, or of any indenture,
agreement, or undertaking to which AIN is a party or by which it is bound.
6.3.4 OWNERSHIP OF COLLATERAL.
AIN is the sole owner of the Collateral and will defend
the Collateral against the claims and demands of all other persons at any time
claiming the same or any interest therein.
6.3.5 ISSUANCE OF SHARES OF COMMON STOCK.
The shares of Common Stock of AIN contemplated to be
issued by Secured Party are duly authorized and, when issued, will be fully paid
and non-assessable.
6.4 ATTORNEY CERTIFICATION.
Within ten (10) days of receipt of written request therefor, AIN
agrees to deliver to Secured Party an opinion, from counsel competent to provide
such opinion, that provides substantially as described in Section 6.3.2 - 6.3.5
above.
6.5 REMOVAL OF COLLATERAL PROHIBITED.
AIN shall not remove the Collateral from its premises, or
otherwise dispose of it, other than utilizing it in the ordinary course of
business, without the prior written consent of Secured Party.
6.6 TAXES AND ASSESSMENTS.
AIN will pay or cause to be paid promptly when due all taxes and
assessments on the Collateral. AIN may, however, withhold payment of any tax
assessment or claim if a good faith dispute exists as to the obligation to pay
so long as funds sufficient to pay the taxes and assessments are set aside for
such purpose either in cash or by surety bond issued in form of the appropriate
taxing authority.
6.7 INSURANCE.
AIN shall have and maintain, or cause to be maintained, insurance
at all times with respect to all Collateral except accounts receivable, against
such risks, and in such form, for such
7
BRIDGE LOAN AND SECURITY AGREEMENT
Page 7 of 17
----------------------------------
periods, and written by such companies as are satisfactory to Secured Party. All
policies of insurance shall have endorsed a loss payable clause evidencing the
Secured Party and shall be acceptable to the Secured Party. AIN will promptly
provide Secured Party, if requested in writing, with the original policies or
certificates of such insurance. AIN shall promptly notify Secured Party of any
loss or damage that may occur to the Collateral. Secured Party is hereby
authorized to make proof of loss if it is not made promptly by AIN. All proceeds
of any insurance on the Collateral shall be held by Secured Party as a part of
the Collateral. Such proceeds shall be paid out from time to time upon order of
AIN for the purpose of paying the reasonable cost of repairing or restoring the
property damaged. Any proceeds that have not been so paid out within 120 days
following their receipt by Secured Party shall be applied to the prepayment of
principal on the Notes according to the terms set forth herein. In the event of
failure to provide insurance as provided herein, Secured Party may, at its
option, provide such insurance at AIN's expense.
6.8 PROTECTION OF SECURED PARTY'S SECURITY.
If AIN fails to perform the covenants and agreements contained or
incorporated in this Agreement, or if any action or proceeding is commenced
which affects the Collateral or title thereto or the interest of Secured Party
therein, including, but not limited to, eminent domain, insolvency, code
enforcement, or arrangements or proceedings involving a bankrupt or decedent,
then Secured Party may make such appearance, disburse such sums, and take such
action as Secured Party deems necessary, in its sole discretion, to protect
Secured Party's interest, including, but not limited to the following: (i)
disbursement of attorneys' fees; (ii) entry upon AIN's property to make repairs
to the Collateral; and (iii) procurement of satisfactory insurance. Any amounts
disbursed by Secured Party pursuant to this Section 6.8, with interest thereon,
shall become additional indebtedness of AIN secured by this Agreement. Unless
AIN and Secured Party agree to other terms of payment, such amounts shall be
immediately due and payable and shall bear interest from the date of
disbursement at the default rate stated in the Note unless collection from AIN
of interest at such rate would be contrary to applicable law, in which event
such amounts shall bear interest at the highest rate which may be collected from
AIN under applicable law. Nothing contained in this Section 6.8 shall require
Secured Party to incur any expense or take any action.
6.9 INSPECTION.
Secured Party may make or cause to be made reasonable entries
upon and inspections of AIN's premises to inspect the Collateral, and AIN shall
cooperate with Secured Party to accommodate such reasonable entries.
6.10 LIEN NOT RELEASED.
8
BRIDGE LOAN AND SECURITY AGREEMENT
Page 8 of 17
----------------------------------
From time to time, Secured Party may, at Secured Party's option,
without giving notice to or obtaining the consent of AIN or its successors or
assigns or of any other lienholders, without liability on Secured Party's part,
and notwithstanding a breach by AIN of any covenant or agreement set forth in
this Agreement, extend the time for payment of said indebtedness or any part
thereof, reduce the payments thereon, release anyone liable on any of said
indebtedness, accept a renewal note or notes therefor, modify the terms and the
time of payment of said indebtedness, release from the lien of this Agreement
any part of the Collateral, take or release other or additional security,
reconvey any part of the Collateral, consent to any map or plan of the
Collateral, consent to the granting of any easement, join in any extension or
subordination agreement, and agree in writing with AIN to modify the rate of
interest or period of amortization of the Note or change the amount of any
installments payable thereunder. Any actions taken by Secured Party pursuant to
the terms of this Section shall be in writing, shall not affect the obligation
of AIN or its successors or assigns to pay the sums secured by this Agreement
and to observe the covenants of AIN contained herein, shall not affect the
guaranty of any person, corporation, partnership, or other entity for payment of
the indebtedness secured hereby, and shall not affect the lien or priority of
lien hereof on the Collateral. AIN shall pay Secured Party a reasonable service
charge, together with such title insurance premiums and attorneys' fees as may
be incurred, at Secured Party's option, to secured Party for any such action
taken at the request of or consent of AIN.
6.11 FORBEARANCE BY SECURED PARTY NOT A WAIVER.
Any forbearance by Secured Party in exercising any right or
remedy hereunder, or otherwise afforded by applicable law, shall not be a waiver
of, or preclude the exercise of, any right or remedy. The acceptance by Secured
Party of payment of any sum secured by this Agreement after the due date of such
payment shall not be a waiver of Secured Party's right to either require prompt
payment when due of all other sums so secured or to declare a default for
failure to make prompt payment. The procurement of insurance or the payment of
taxes, rents or other liens or charges by Secured Party shall not be a waiver of
Secured Party's right to accelerate the maturity of the indebtedness secured by
this Agreement, nor shall Secured Party's receipt of any awards, proceeds or
damages as provided in this Agreement operate to cure or waive any default by
AIN in payment of sums secured by this Agreement.
6.12 UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.
This Agreement is intended to be a security agreement pursuant to
the Uniform Commercial Code for each of the items specified in Section 6.2 as
Collateral. AIN hereby grants Secured Party a security interest in said items.
AIN agrees to execute and file financing statements, as well as extensions,
renewals and amendments thereof, and reproductions of this Agreement, and do
whatever may be necessary under the applicable Uniform Commercial Code in the
state where the Collateral is located, to perfect and continue Secured Party
interest in the
9
BRIDGE LOAN AND SECURITY AGREEMENT
Page 9 of 17
----------------------------------
Collateral, all at the expense of AIN. The Parties agree that such financing
statements will be filed in the name of Secured Party. AIN shall pay all costs
of filing such financing statements and any extensions, renewals, amendments,
and releases thereof, and shall pay all reasonable costs and expenses of any
record searches for financing statements requested by Secured Party. Without the
prior written consent of Secured Party, AIN shall not create or allow to be
created, pursuant to the Uniform Commercial Code, any other security interest in
the Collateral, including replacements and additions thereto. Upon the
occurrence of an event of default, Secured Party shall have the remedies of a
secured party under the Uniform Commercial Code and, at Secured Party's option,
may also invoke any other remedy provided for in this Agreement. In exercising
any of said remedies, Secured Party may, at its sole option, utilize an agent
and may proceed against any part of the Collateral separately or together and in
any order whatsoever, without in any way affecting the availability of Secured
Party's remedies under the Uniform Commercial Code, or of Secured Party's other
remedies provided in this Agreement.
6.13 ACCELERATION IN CASE OF DEBTOR'S INSOLVENCY.
If the Debtor shall voluntarily file a petition under the Federal
Bankruptcy Act, or under any similar or successor federal statute relating to
bankruptcy, insolvency, arrangements or reorganizations, or under any state
bankruptcy or insolvency act, or file an answer in an involuntary proceeding
admitting insolvency or inability to pay debts, or if the Debtor shall be
adjudged a bankrupt, or if a trustee or receiver shall be appointed for the
Debtor's property, or if the Collateral shall become subject to the jurisdiction
of a federal bankruptcy court or similar state court, or if the Debtor shall
make an assignment for the benefit of its creditors, or if there is an
attachment, receivership, execution or other judicial seizure, then Secured
Party may, at Secured Party's option, declare all of the sums secured by this
Agreement immediately due and payable without prior notice to the Debtor, and
Secured Party may invoke any remedies permitted by this Agreement and/or the
Note. Any reasonable attorneys' fees and other expenses incurred by Secured
Party in connection with the Debtor's bankruptcy or any of the other events
described in this Section shall be additional indebtedness of the Debtor secured
by this Agreement, and shall not be deemed a penalty.
6.14 RIGHTS OF SECURED PARTY.
6.14.1 Upon default, Secured Party may require AIN to assemble
the Collateral and make it available to Secured Party at the place to be
designated by Secured Party which is reasonably convenient to the Parties.
Secured Party may sell all or any part of the Collateral, as reasonably
necessary to satisfy the obligations of AIN hereunder to Secured Party, as a
whole or in parcels either by public auction, private sale, or any other
reasonable method of disposition. Nothing in this Section 6.14.1 shall be
construed to limit any of Secured Party's rights in connection with any of the
Collateral as provided herein. Secured Party may bid at any public sale on all
or any portion of the Collateral. Unless the Collateral is perishable or
threatens
10
BRIDGE LOAN AND SECURITY AGREEMENT
Page 10 of 17
----------------------------------
to rapidly decline in value or is of the type customarily sold on a recognized
market, Secured Party shall give AIN reasonable notice of the time and place of
any public sale, or of the time after which any private sale or other
disposition of the Collateral is to be made. Notice must be provided at least
ten (10) days prior to the time of the sale or other disposition. A public sale
in the following fashion shall be conclusively presumed to be reasonable:
6.14.2 Notice shall be given at least ten (10) days before the
date of sale by publication, at least once, in a newspaper of general
circulation published in the county in which the sale is to be held;
6.14.3 The sale shall be held in a county in which the
Collateral or any part is located or in a county in which AIN has a place of
business;
6.14.4 Payment shall be in cash or by certified check
immediately following the close of the sale;
6.14.5 The sale shall be by auction, but it need not be by a
professional auctioneer;
6.14.6 The Collateral may be sold as is and without any
preparation for sale.
6.15 OBLIGATION TO SELL COLLATERAL.
Notwithstanding any provision of this Agreement, Secured Party
shall be under no obligation to offer to sell the Collateral. In the event any
Secured Party offers to sell the Collateral, there will be no obligation to
consummate a sale of the Collateral if, in Secured Party's reasonable business
judgment, none of the offers received by it reasonably approximate the fair
value of the Collateral. In the event Secured Party elects not to sell the
Collateral, Secured Party may elect to follow the procedures set forth in the
Uniform Commercial Code for retaining the Collateral in satisfaction of the
obligation of AIN, subject to the rights of AIN under such procedures.
6.16 RECEIVER.
In addition to the rights under this Agreement, upon the
occurrence of an event of default, Secured Party shall be entitled to the
appointment of a receiver for the Collateral as a matter of right whether or not
the apparent value of the Collateral exceeds the outstanding principal amount of
the Note, and AIN agrees to entry of an order therefor by any court in the State
of California upon petition therefor.
11
BRIDGE LOAN AND SECURITY AGREEMENT
Page 11 of 17
----------------------------------
6.17 WAIVER OF MARSHALLING.
Notwithstanding the existence of any other security interest in
the Collateral held by Secured Party or by any other party, Secured Party shall
have the right to determine the order in which any or all of the Collateral
shall be subjected to the remedies provided by this Agreement. Secured Party
shall have the right to determine the order in which any or all portions of the
indebtedness secured by this Agreement are satisfied from the proceeds realized
upon the exercise of the remedies provided in this Agreement. AIN, any party who
consents to this Agreement, and any party who now or hereafter acquires a
security interest in the Collateral and who has actual or constructive notice of
this Agreement, hereby waive any and all rights to require the marshalling of
assets in connection with the exercise of any of the remedies permitted by
applicable law or by this Agreement.
6.18 PROVISIONS OF AGREEMENT.
AIN agrees to comply with the covenants and conditions of this
Agreement. All sums disbursed by Secured Party to protect the security of this
Agreement up to the principal amount of the Note shall be treated as
disbursements pursuant to such Agreements. All such sums shall bear interest
from the date of disbursement at the rate stated in the Note, unless collection
from AIN of interest at such rate would be contrary to applicable law in which
event such amount shall bear interest at the highest rate which may be collected
from AIN under applicable law. In case of a breach by AIN of the covenants and
conditions of the Agreement, Secured Party (i) may invoke any of the rights or
remedies provided in the Agreement, (ii) may accelerate the sums secured by this
Agreement and invoke the remedies provided in this Agreement, or (iii) may do
both.
7. REMEDIES CUMULATIVE.
Each remedy provided in this Agreement is distinct and cumulative to all
other rights or remedies under this Agreement or afforded by law or equity, and
may be exercised concurrently, independently, or successively, in any order.
8. WAIVER OF STATUTE OF LIMITATIONS.
AIN hereby waives the right to assert any statute of limitations as a
bar to the enforcement of this Agreement or to any action brought to enforce the
Note or any other obligation secured by this Agreement.
9. NOTICES AND DELIVERY.
12
BRIDGE LOAN AND SECURITY AGREEMENT
Page 12 of 17
----------------------------------
Any notices permitted or required under this Agreement shall be deemed
given upon the date of personal delivery or forty eight (48) hours after deposit
in the United States mail, postage fully prepaid, return receipt requested,
addressed as follows:
if to Debtor:
Xxxxx Xxxxxxx
President, CFO
American Independent Network, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxx, XX 00000
if to Secured Party:
Midas Fund
Bank of Xxxxxxxxxxx International
Cayman LTD
P.O. Box 705
Grand Cayman
Cayman Islands, B.W.I.
Fax # (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxxxx & Xxxxxx, a professional law corporation
000 X. Xxxxx Xxxx., 00xx Xxxxx
Xxxxxxxx, XX 00000
or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section. Any deliveries required under this
Agreement must be made by personal delivery at the applicable address listed
above.
10. INDEMNIFICATION.
10.1 GENERAL.
13
BRIDGE LOAN AND SECURITY AGREEMENT
Page 13 of 17
----------------------------------
AIN agrees to indemnify, reimburse, and hold harmless Secured
Party, or any agent of the Secured Party (Secured Party is referred to as the
"Indemnitee" throughout Section 10) from and against all claims, damages,
losses, liabilities, demands, suits, judgments, causes of action, civil and
criminal proceedings, penalties, fines, and other sanctions, and any attorney
fees and other reasonable costs and expenses, arising out of the Debtor's
negligence or under the doctrine of strict liability (collectively "Claims"), or
relating to or arising in any manner out of:
10.1.1 this Agreement or the breach of any representation,
warranty, or covenant made by AIN under this Agreement;
10.1.2 any issuance, offering, or sale of securities of AIN;
10.1.3 any transaction, approval, or document contemplated by
the Agreement.
The parties hereto intend that this Agreement shall provide for
indemnification in excess of that expressly provided for by statute, including
but not limited to, any indemnification provided by the AIN articles of
incorporation, its bylaws, a vote of its shareholders or disinterested
directors, or applicable law.
10.2 DEFINITIONS
10.2.1 EXPENSES.
For purposes of Section 10, the term "expenses" shall mean (i)
any expense, liability, or loss, including attorney fees, judgments, fines,
ERISA excise taxes and penalties, and amounts paid or to be paid in settlement;
(ii) any interest, assessments, or other charges imposed on any of the items in
part (i) of this subsection; and (iii) any federal, state, local, or foreign
taxes imposed as a result of the actual or deemed receipt of any payments under
this Agreement paid or incurred in connection with investigating, defending,
being a witness in, participating in (including on appeal), or preparing for any
of the foregoing in any proceeding relating to any indemnifiable event.
10.3 PARTIAL INDEMNIFICATION.
If the Indemnitee is entitled under any provision of this
Agreement to indemnification by AIN for a portion of expenses, but not for the
total amount of expenses, AIN shall indemnify the Indemnitee for the portion to
which the Indemnitee is entitled.
10.4 INDEMNIFICATION PAYMENT.
14
BRIDGE LOAN AND SECURITY AGREEMENT
Page 14 of 17
----------------------------------
The Indemnitee shall receive indemnification of expenses from AIN
in accordance with this Agreement as soon as practicable after the Indemnitee
has made written demand on AIN for indemnification. If the Indemnitee has not
received full indemnification within thirty (30) days after making a demand in
accordance with the terms hereof, the Indemnitee shall have the right to enforce
its indemnification rights under this Agreement by commencing litigation in any
court in the State of California seeking an initial determination by the court.
AIN hereby consents to service of process and to appear in any such proceeding.
The remedy provided for in this Section shall be in addition to any other
remedies available to the Indemnitee in law or in equity. If requested by
Indemnitee, AIN shall, within 10 business days after such request, advance to
the Indemnitee such expenses as are incurred by the Indemnitee in connection
with any claim asserted against or action brought by the Indemnitee for:
10.4.1 Indemnification of expenses or advances of expenses by AIN
under this Agreement, or any other agreement, or under applicable law, or under
the AIN articles of incorporation or bylaws now or hereafter in effect relating
to indemnification for indemnifiable events.
10.5 SETTLEMENT.
AIN shall not settle any proceeding in any manner that would
impose any penalty or limitation on the Indemnitee without the express written
consent of Indemnitee. Neither AIN nor the Indemnitee will unreasonably withhold
their consent to any proposed settlement. AIN shall not be liable to indemnify
the Indemnitee under this Agreement with regard to any judicial award if AIN was
not given a reasonable and timely opportunity, at its expense, to participate in
the defense of such action; provided, however, the liability of AIN under this
Agreement shall not be excused if participation in the proceeding by AIN was
barred by this Agreement.
10.6 TENDER BY SECURED PARTY.
In the event of any controversy or claim arising out of this
Agreement or the breach of the Agreement, Secured Party may tender a defense to
AIN, who hereby agrees to promptly accept Secured Party's tender, so long as
Secured Party notifies AIN within thirty (30) days of Secured Party's receipt of
any written instrument or pleading relating to any controversy or claim arising
out of this Agreement or the breach of this Agreement. If timely acceptance of
tender is not forthcoming, Secured Party may, at the expense of AIN, retain its
own counsel. AIN hereby agrees to advance any and all costs and expenses to
Secured Party in connection with Secured Party's retention of counsel. In the
event that AIN fails to advance the necessary costs and expenses, AIN shall not
be released of its obligations to otherwise indemnify Secured Party.
11. ENTIRE AGREEMENT.
15
BRIDGE LOAN AND SECURITY AGREEMENT
Page 15 of 17
----------------------------------
This Agreement, the Note, all exhibits and attachments hereto and other
related agreements, contain the entire understanding between and among the
Parties and supersedes any prior understandings and agreements among them
respecting the subject matter of this Agreement.
12. AGREEMENT BINDING.
This Agreement shall be binding upon the heirs, executors,
administrators, successors and assigns of the Parties hereto.
13. AMENDMENT AND MODIFICATION.
Subject to applicable law, this Agreement may be amended, modified, or
supplemented only by a written agreement signed by the Parties.
14. ATTORNEYS' FEES.
In the event arbitration, suit or action is brought by any party under
this Agreement to enforce any of its terms, and in any appeal therefrom, it is
agreed that the prevailing party shall be entitled to reasonable attorneys; fees
to be fixed by the arbitrator, trial court, or appellate court.
15. ARBITRATION.
Any controversy or claim between or among the parties, including but not
limited to those arising out of or relating to this Agreement or any agreements
or instruments relating hereto or delivered in connection herewith and based on
or arising in contract or in tort, shall, at the request of any party be
determined by arbitration. The arbitration shall be conducted in Los Angeles,
California, United States of America, in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"), not later than 60 days after appointment of an
arbitrator. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). The arbitrator shall have not the authority to
award punitive damages. Judgement upon the arbitration award may be entered in
any court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
16. LAW GOVERNING.
16
BRIDGE LOAN AND SECURITY AGREEMENT
Page 16 of 17
----------------------------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
17. SAVINGS CLAUSE.
If any provision of this Agreement, or the application of such provision
to any person or circumstance, shall be held invalid, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
18. TITLES AND CAPTIONS.
All section titles or captions contained in this Agreement are for
convenience only and shall not be deemed part of the context nor effect the
interpretation of this Agreement.
19. FURTHER ACTION.
The Parties hereto shall execute and deliver all documents, provide all
information and take or forbear from all such action as may be necessary or
appropriate to achieve the purposes of the Agreement, including, but not limited
to, executing such financing statements, as the Secured party may deem necessary
and appropriate to protect its interests.
20. COUNTERPARTS.
The terms of the Agreement are contractual and not merely recital. The
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. Furthermore, facsimile copies shall be deemed the same as
originals. The Agreement shall be deemed fully executed and effective when all
Parties have executed at least one of the counterparts, even though no single
counterpart bears all such signatures.
[The remainder of this page is intentionally left blank.]
17
BRIDGE LOAN AND SECURITY AGREEMENT
Page 17 of 17
----------------------------------
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first written above.
"SECURED PARTY"
Midas Fund
By: _________________________________
(Signature)
_____________________________________
(Print Name)
Title: ______________________________
"DEBTOR"
American Independent Network, Inc.,
a Delaware corporation
_____________________________________
Xxxxx Xxxxxxx
President, Chief Financial Officer
18
EXHIBIT 1
PROMISSORY NOTE
19
AMERICAN INDEPENDENT NETWORK, INC.
PROMISSORY NOTE
THIS PROMISSORY NOTE HAS BEEN ACQUIRED FOR INVESTMENT FOR THE HOLDER'S OWN
ACCOUNT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION
OF SECURITIES. THE SECURITIES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT") OR UNDER ANY STATE
SECURITIES LAWS ("BLUE SKY LAWS"). AN OFFER TO SELL OR TRANSFER OR THE SALE OR
TRANSFER OF THESE SECURITIES IS UNLAWFUL UNLESS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR PERMIT, AS APPLICABLE, UNDER THE SECURITIES ACT OR
APPLICABLE BLUE SKY LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION AND/OR
QUALIFICATION UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY LAWS IS AVAILABLE
OR AN OPINION OF COUNSEL, OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE
COMPANY, IS PROVIDED TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION OR
QUALIFICATION IS NOT REQUIRED UNDER THE SECURITIES ACT AND APPLICABLE BLUE SKY
LAWS.
20
AMERICAN INDEPENDENT NETWORK, INC.
PROMISSORY NOTE
Amount:$100,000 Dated: ______________, 1997
FOR VALUE RECEIVED, the undersigned, American Independent Network, Inc.,
a Delaware corporation ("Maker"), promises to pay to the order of Midas Fund
("Lender"), the principal sum of One Hundred Thousand Dollars ($100,000) (the
"Amount Advanced") on or before one hundred eighty (180) days from the date set
forth above (the "Maturity Date").
1. INTEREST RATE AND TERM.
The unpaid principal under this Promissory Note (the
"Note") shall bear interest at the flat rate of $10,000, payable $5,000 at
ninety (90) days and $5,000 at the Maturity Date.
2. COMPUTATION.
Interest not paid when due shall be added to the unpaid
principal balance and shall thereafter bear interest at the same rate as
principal. All payments (including prepayments) hereunder are to be applied
first to the payment of accrued interest and the remaining balance shall be
applied to the payment of principal. Accrued interest shall be computed on the
basis of a three hundred sixty (360) day year, based on the actual number of
days elapsed.
3. PAYMENTS.
Interest payments are due and payable to Lender, at
Lender's address of record, at ninety (90) and one hundred eighty (180) days
from the date of this Note. Except as otherwise set forth herein, the unpaid
principal under this Note, plus all accrued but unpaid interest thereon, shall
be due and payable at the Maturity Date. All principal and interest payments are
due at 5:00 P.M. Pacific Standard Time on the date due, payable in lawful money
of the United States.
4. VOLUNTARY PREPAYMENT.
Maker may, at any time, prepay the unpaid Amount Advanced
evidenced by this Promissory Note, or any interest due hereunder, in whole or in
part, without penalty or premium, by paying to Lender, in cash or by wire
transfer or immediately available federal funds, the amount of such prepayment.
If any such prepayment is less than a full repayment, then such
1
21
prepayment shall be applied first to the payment of accrued interest and the
remaining balance shall be applied to the payment of principal.
5. USURY MATTERS
It is expressly stipulated and agreed to be the intent of
Maker and Lender to comply with, at all times, the applicable state law
governing the maximum rate or amount of interest payable on the Note (or
applicable federal law to the extent that it permits the Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under
applicable state law). In the event the applicable law is judicially interpreted
so as to render usurious any amount called for under the Note or contracted for,
charged, taken, reserved or received with respect to such indebtedness, or if
Lender's exercise of his, her or its option to accelerate the maturity of the
Note, or if any prepayment by Maker results in Maker having paid any interest in
excess of that permitted by applicable law, then it is the express intent of
both Maker and Lender that all excess amounts theretofore collected by Lender be
credited to the principal balance of the Note (or, if this Note has been or
would thereby be paid in full, refunded to Maker). In the event such judicial
interpretation is applied to this Note, the provisions of this Note shall
immediately be deemed amended and the amounts thereafter collectible hereunder
reduced, without the necessity of the execution of any new, or amendment to any
existing, document, so as to comply with the applicable law, but so as to permit
the recovery of the fullest amount legally permitted.
6. WAIVERS.
Except as set forth elsewhere herein, Maker, for itself
and its legal representatives, successors, and assigns, expressly waives
presentment, protest, demand, notice of dishonor, notice of nonpayment, notice
of maturity, notice of protest, notice of intent to accelerate, notice of
acceleration, presentment for the purpose of accelerating maturity, and
diligence in collection.
7. DEFAULT.
Maker shall be deemed in default if any of the following
events occur: (a) Maker fails to make any payments hereunder when due and fails
to make such payment within twenty (20) days of such due date; (b) the entry of
a decree or order by a court having appropriate jurisdiction adjudging Maker a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization or liquidation of Maker under the Federal Bankruptcy Act or any
other applicable federal or state law, or appointing a receiver, liquidator,
assignee or trustee over any substantial portion of Maker's property, or
ordering the winding up or liquidation of Maker's affairs, and the continuance
of any such decree or order unstayed and in effect for a period of sixty (60)
consecutive days; (c) the institution by Maker of proceedings to be adjudicated
a bankrupt or insolvent, or the consent by it to the institution of bankruptcy
or insolvency proceedings against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under the Federal Bankruptcy
Act or any other applicable federal or state law, or the consent by it to the
filing of any such petition or to the appointment of a receiver, liquidator,
assignee or trustee of
2
22
Maker; (d) default in the obligation of Maker for borrowed money, other than
this Note, which shall continue for a period of sixty (60) days, or any event
that results in acceleration of the maturity of any indebtedness of Maker under
any note, indenture, contract, or agreement; (e) Maker fails to comply with any
material term, obligation, covenant, or condition contained in that certain Loan
and Security Agreement, by and between the Parties relating to this Note, within
twenty (20) days after receipt of written notice from Lender demanding such
compliance; (f) any representation or statement made or furnished to Lender by
Maker or on Maker's behalf is false or misleading in any material respect; (g)
any levy, seizure, attachment, lien, or encumbrance of or on Maker's property,
other than those existing as of the date hereof, which is not discharged by
Maker within twenty (20) days; and (h) any sale, transfer, or disposition of a
material amount of Maker's property, other than in the ordinary course of
business, without the written consent of the Lender.
7.1 CURE
Maker shall be provided a period of thirty (30)
days from the date of an event of default, as defined in Section 7 hereinabove,
to cure a default. In the event Maker fails to cure any default within such time
period, including the payment of all costs and expenses provided for in this
Note and under the Loan and Security Agreement by and among Maker and Lender,
Lender may immediately enforce any and all rights provided to him under this
Note and the Loan and Security Agreement.
8. LATE PAYMENT FEES.
It would be impracticable to fix the amount of Lender's
extra expense involved in handling a delinquent payment if any amounts due under
this Note are not paid when due. Accordingly, Maker agrees to pay to Lender a
late payment charge equal to three percent (3%) of the amount due on any payment
required under this Note which is received by Lender more than ten (10) days
after the due date. Maker agrees that this charge is a reasonable estimate of
extra expenses the Lender will incur, and is not a penalty.
9. ACCELERATION; ATTORNEYS' FEES.
At the option of the Lender, and without demand or notice,
all principal and any unpaid interest shall become immediately due and payable
upon an event of default as set forth in Section 8 hereinabove. Any reasonable
attorneys fees and other expenses incurred by the Lender in enforcing any of its
rights hereunder or from a bankruptcy filing relating to the Maker, or any of
the other events described in Section 7 and 8 hereinabove, shall be deemed
additional indebtedness of the Maker and added to the principal amount of the
Note, irrespective of whether Lender files suit against Maker.
10. SECURITY INTERESTS.
3
23
It is further understood that this Note is secured by the
security interests granted to Lender pursuant to the Loan and Security Agreement
between the Parties.
11. SECTION HEADINGS.
Headings and numbers have been set forth for convenience
only. Unless the contrary is compelled by the context, the language set forth in
each paragraph applies equally to the entire Note.
12. AMENDMENTS IN WRITING.
This Note may only be changed, modified or amended in
writing signed by the Parties.
13. CHOICE OF LAW.
The Note and all transactions hereunder and evidenced
hereby shall be governed by, construed under, and enforced in accordance with
the laws of the State of California.
14. WAIVER OF TRIAL BY JURY.
For separate and legal consideration received, Maker
hereby waives, to the extent permitted under applicable law, any right to trial
by jury in any action or proceeding relating to the Note.
Made and Executed at
Haltom City, TX
-----------------------------------
American Independent Network, Inc.,
a Delaware Corporation
-----------------------------------
Xxxxx Xxxxxxx
President, Chief Financial Officer
4
