Exhibit 10.8
LOAN AGREEMENT
DATED AS OF July 30, 2004
BETWEEN
X.X. XXXXXX HOLDINGS, INC.
AND
URBAN TELEVISION NETWORK CORPORATION
LOAN AGREEMENT
This Loan and Security Agreement (this "Agreement") is made and entered
into as of July 30, 2004, by and between Urban Television Network Corporation, a
Nevada corporation (the "Company"), and X.X. Xxxxxx Holdings, Inc., a Nevada
corporation (the "Lender").
ARTICLE 1
AMOUNT AND TERMS OF CREDIT
1.1. SECURED TERM LOAN. Subject to the terms and conditions of this Agreement,
at the Closing, periodically Lender agrees to lend and the Company agrees to
borrow an amount pursuant to a promissory note in the form of Exhibit A, with
appropriate insertions (herein called Lender's "Note") to be dated as of the
Closing Date (as defined herein). Additional amounts may be loaned to the
Company by Lender during the Commitment Period, so long as the aggregate amount
of the Loans outstanding at any time does not exceed the Maximum Loan Amount. No
additional amounts may be loaned to the Company hereunder after the expiration
of the Commitment Period. At the time that additional amounts are loaned
hereunder, the Company shall (a) prepare a promissory note to Lender for the
additional amount loaned.
1.2 CLOSING. The funding of the initial Loan (the "Closing") shall occur upon
the satisfaction of all conditions to Closing specified in Article 4 hereof
("Closing Date"), and may be accomplished via the exchange of all requisite
documentation by overnight mail, messenger, e-mail or telecopy.
1.2. DOCUMENTATION EXPENSES. The Company shall pay all reasonable fees and
expenses relating to the negotiation and preparation of this Agreement and the
consummation of the transactions contemplated hereby. To the extent the same are
known, the Company shall pay all such fees and expenses on the Closing Date.
ARTICLE 2
NOTE PAYMENTS AND CONVERSION PRIVILEGES
2.1. INTEREST PAYMENTS. The principal balance due and owing on the Loan(s) shall
bear interest as stated in the Note and shall be due and payable as stated in
the Note.
2.2. PRINCIPAL PAYMENTS. Principal payments shall be due and payable as stated
in the Note(s).
2.3. VOLUNTARY PREPAYMENT. The Company may from time to time, without premium or
penalty, prepay the Loan(s) in whole or in part. Any prepayment of the full
amount of the Loan(s) shall include all accrued interest thereon. All payments
and prepayments of the Loan(s) shall be first applied to accrued and unpaid
interest on the unpaid principal balance of the Loan(s)and the remainder, if
any, to any unpaid principal balance.
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2.4 PAYMENTS TO LENDER. All payments, distributions, collections or recoveries
made hereunder and under the other Loan Documents shall be made to the Lender at
the time of any such payment.
2.5 CONVERSION PRIVILEGES. The Lender shall be entitled to convert the
outstanding balance of the Loan(s) and accrued interest thereon, at any time
before the maturity date of the Loan(s) or date the Company announces intent to
prepay the Loan(s), at the rate of five shares of the Company's common stock for
each $1.00 of Loan balance and accrued interest thereon.
ARTICLE 3
WARRANTIES AND REPRESENTATIONS
The Company represents and warrants to Lender as follows:
3.1. CORPORATE ORGANIZATION AND AUTHORITY. The Company,
(a) is a corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation;
(b) has all requisite power and authority and all necessary licenses and
permits to own and operate its properties and to carry on its business as now
conducted and as presently proposed to be conducted;
(c) has duly taken all action necessary to authorize the execution and
delivery by it of the Loan Documents and to authorize the consummation of the
transactions contemplated thereby and the performance of its obligations
hereunder;
(d) is duly authorized to borrow funds hereunder;
(e) the Company is duly licensed or qualified and is in good standing as a
foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes such
licensing or qualification necessary; and
3.2. FULL DISCLOSURE. All filings of the Company with the Securities and
Exchange Commission ("SEC Filings") have been timely made, are true and correct
and are not being investigated, challenged or supplemented or amended in any
way.
3.3. PENDING LITIGATION. Except as may be set forth in the SEC Filings, there
are no proceedings or governmental investigations pending or, to the best
knowledge of the Company, threatened against or affecting the Company in any
court or before any governmental authority or arbitration board or tribunal, (b)
there are no outstanding judgments, injunctions, writs, rulings or orders by any
such court, governmental authority, arbitration board or tribunal against the
Company or any of the Company's stockholders, partners, directors or officers
and counsel which could cause a Material Adverse Change, and (c) the Company is
not in default with respect to contracts or agreements to which it is a party or
any order of any court or governmental authority or arbitration board or
tribunal.
3.4. NO CONFLICTS. The borrowing under the Loan(s) and the issuance of the
Note(s) and compliance by the Company with all of the provisions of this
Agreement, the Note(s) and the other Loan Documents do not and will not (i)
violate any provisions of any law or any order of any court or governmental
authority or agency, (ii) conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default under the
Certificate of Incorporation or Bylaws of the Company or any indenture or other
contract or agreement or instrument to which the Company is a party or by which
it may be bound, (iii) result in the acceleration of any Indebtedness owed by
the Company, or (iv) result in the imposition of any liens or encumbrances on
any property of the Company, except as expressly contemplated or permitted in
the Loan Documents.
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3.5. This section left blank intentionally.
3.6. GOVERNMENTAL CONSENT. No approval, consent or withholding of objection on
the part of any regulatory body, state, Federal or local, is necessary in
connection with the execution and delivery by the Company of this Agreement, the
Note(s) or the Loan Documents or compliance by the Company with any of the
provisions of this Agreement, the Note(s) or the Loan Documents.
3.7. USE OF PROCEEDS. The Company will use the Loan(s) proceeds as follows:
(a) to fund the Company's operations.
3.8. ENFORCEABLE OBLIGATIONS. This Agreement is, and the other Loan Documents
when duly executed and delivered will be, legal, valid and binding obligations
of the Company, enforceable in accordance with their terms except as such
enforcement may be limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights.
3.9. OTHER OBLIGATIONS. The Company has outstanding Liabilities of the following
kind, including, but not limited to programming contracts, affiliation
agreements, and satellite space and satellite uplink agreements which are, in
the aggregate, material to the Company or material with respect to the Company's
consolidated financial condition which have been disclosed in the company's last
10K.
3.10. LABOR DISPUTES AND ACTS OF GOD. Except as disclosed in this Loan Agreement
or other Schedules to this Loan Agreement, neither the business nor the
properties of the Company have been affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance), which could cause a Material Adverse Change.
3.11. NAMES AND PLACES OF BUSINESS. The Company has not, during the preceding
five years, had, been known by, or used any other trade or fictitious name,
except as disclosed in the Company's SEC filings. Except as otherwise indicated
in the SEC filings, the chief executive office and principal place of business
of the Company is (and for the preceding five years has been) located at the
address of the Company set out on the signature pages hereto.
3.12. GOVERNMENT REGULATION. The Company is not subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act, the
Investment Company Act of 1940 (as any of the preceding acts have been amended)
or any other law which regulates the incurring by the Company of indebtedness,
including laws relating to common contract carriers or the sale of electricity,
gas, steam, water or other public utility services.
3.13. SOLVENCY. Upon giving effect to the issuance of the Note(s), the execution
of the Loan Documents by the Company and the consummation of the transactions
contemplated hereby, the Company will be solvent (as such term is used in
applicable bankruptcy, liquidation, receivership, insolvency or similar laws).
3.14. TITLE TO PROPERTIES; LICENSES. The Company has good and defensible title
to all of the Collateral and to all of its material properties and assets, free
and clear of all Liens, encumbrances, or adverse claims, everything is free and
clear of all impediments to the use of such properties and assets in the
Company's business. The Company possesses all licenses, permits, franchises,
patents, copyrights, trademarks and trade names, and other intellectual property
(or otherwise possesses the right to use such intellectual property without
violation of the rights of any other Person) which are necessary to carry out
its business as presently conducted and as presently proposed to be conducted
hereafter, and the Company is not in violation in any material respect of the
terms under which it possesses such intellectual property or the right to use
such intellectual property.
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3.15. SECURITY DOCUMENT REPRESENTATIONS AND WARRANTIES. Capitalized terms used
in this section, not otherwise defined in this Agreement, and defined in the
Security Documents shall when used in this section have the meanings given them
in the Security Documents. Exhibit 10.8
(a) OWNERSHIP FREE OF LIENS. No effective financing statement, other than
the financing statements relative to the bridge loans from Xxxxxxx Xxxxxx, or
other registration or instrument similar in effect covering all or any part of
the Collateral is on file in any recording office except any, which have been
filed in favor of Lender relating to the Security Documents and any which have
been filed to perfect or protect any Permitted Lien. None of the Collateral is
in the possession of any Person other than the Company or the Lenders, except
for Collateral being transported in the ordinary course of business.
(b) RECEIVABLES. Each Receivable represents the valid and legally binding
indebtedness of a bona fide account debtor arising from the sale or lease by the
Company of goods or the rendition by the Company of services and is not subject
to contra-accounts, setoffs, defenses or counterclaims by or available to
account debtors obligated on the Receivables, except for those for which
adequate reserves have been taken in substantially the same amount as is shown
on the Initial Financial Statements.
(c) DOCUMENTS AND INSTRUMENTS. All Documents and Instruments included
within the Collateral are valid and genuine. Any such document or Instrument has
only one original counterpart, which constitutes collateral within the meaning
of the UCC or the law of any applicable jurisdiction, and all such original
counterparts (other than checks delivered in payment of Receivables in the
ordinary course of business) have been delivered into the possession of such
Person designated by Lender as agent pursuant to the Security Agreement.
(d) ADDRESS. The chief executive office and principal place of business and
the office where all records concerning the Collateral are kept at the Company's
address set forth on its signature page hereto.
The representations and warranties contained in this Agreement, the Note(s) and
the other Loan Documents are made by the Company as an inducement to Lender to
make its Loan(s), and the Company understands that Lender is relying on such
representations and warranties, and that such representations and warranties are
true and correct at the time of the first disbursement hereunder and shall
remain true and correct at all times thereafter so long as any part of the
Loan(s) shall remain outstanding.
ARTICLE 4
CONDITIONS TO DISBURSEMENT
4.1. DOCUMENTS TO BE DELIVERED. Lender has no obligation to make its Loan(s)
unless Lender shall have received all of the following, at Lender's office as
set forth in this Agreement, duly executed and delivered and in form, substance
and date satisfactory to Lender:
(a) This Agreement.
(b) The Note(s).
Each Security Document listed in the Security Schedule.
4.2. ADDITIONAL CONDITIONS PRECEDENT. Lender has no obligation to make its
Loan(s) unless the following conditions precedent have been satisfied:
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(a) All representations and warranties made by the Company in any Loan
Document shall be true on and as of the date of the Loan(s) (except to the
extent that the facts upon which such representations are based have been
changed by the extension of credit hereunder) as if such representations and
warranties had been made as of the date of the Loan(s).
(b) No Material Adverse Change shall have occurred since the date of last
10K.
(c) The Company shall have performed and complied with all agreements and
conditions required in the Loan Documents to be performed or complied with by it
on or prior to the date of the Loan(s).
(d) The making of the Loan(s) shall not be prohibited by any law and shall
not subject the Lender to any penalty or other onerous condition under or
pursuant to any such law.
(e) Lender shall have received all documents and instruments which Lender
has then requested, in addition to those described in Section 4.1 (including
corporate documents and records; certificates of officers and representatives of
the Company; and all reports, records, certificates and other documents
requested in relation to any Security Document delivered pursuant hereto), as to
the accuracy and validity of or compliance with all representations, warranties
and covenants made by the Company in this Agreement and the other Loan
Documents, the satisfaction of all conditions contained herein or therein, and
all other matters pertaining hereto and thereto. All such additional documents
and instruments shall be satisfactory to Lender in form, substance and date.
ARTICLE 5
COMPANY COVENANTS
From and after the date hereof and continuing so long as any amount remains
unpaid on the Note(s).
5.1. CORPORATE EXISTENCE, ETC. The Company will preserve and keep in force and
effect its corporate existence, its rights and franchises and all licenses and
permits that it currently has, which are necessary to the proper conduct of its
business and will qualify to do business in all states or jurisdictions where
required by applicable law, except where the failure to so qualify will not
cause a Material Adverse Change.
5.2. INSURANCE. The Company will at all times maintain casualty and liability
insurance coverage by financially sound and reputable insurers in such forms and
amounts and against such risks as are customary for corporations of established
reputation engaged in the same or a similar business and owning and operating
similar properties with limits and scope of coverage reasonably acceptable to
Lender. All policies evidencing such insurance shall name the Lender as an
additional insured and shall contain a loss payable endorsement to the Lender in
form and substance acceptable to Lender that will become effective upon the
occurrence of an Event of Default.
5.3. TAXES, CLAIMS FOR LABOR AND MATERIALS. The Company will pay or discharge or
cause to be paid or discharged, before the same shall become delinquent (i) all
taxes, assessments and governmental charges levied or imposed upon it or upon
the income, profits or property of the Company, and (ii) all lawful claims for
labor, materials and supplies which, if unpaid might by law become a Lien upon
the property of the Company; PROVIDED, HOWEVER, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceeding. The Company will promptly pay
and discharge when due all other Liabilities now or hereafter owed by it.
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5.4. MAINTENANCE, ETC. The Company will maintain, preserve and keep all
Collateral and all other property used or useful in the conduct of its business
in good repair and working order, ordinary wear and tear excepted, in compliance
with all applicable laws, and from time to time will, as determined in the
reasonable judgment of the Company, make all necessary repairs, replacements,
renewals and additions thereto needed to enable the business and operations
carried on in connection therewith to be promptly and advantageously conducted
at all times.
5.5. NATURE OF BUSINESS. The Company will not engage in any business if, as a
result, the general nature of the business which would then be engaged in by the
Company would be substantially changed from the general nature of the business
engaged in by the Company on the date of this Agreement. Exhibit 10.8
5.6. SEC FILINGS. The Company shall at all times make all SEC Filings required
pursuant to the Securities Exchange Act of 1934, as amended, and the rules of
any stock exchange upon which the Company shall have listed its securities, and
shall notify Lender of any inquiries from the SEC or any stock exchange with
respect to all of its SEC Filings, to the extent permitted by law. The Company
shall provide Lender with copies of all such SEC Filings.
5.7. REPORTS. The Company will keep proper books of record and account in which
full and correct entries will be made of all dealings or transactions of or in
relation to the business and affairs of the Company in accordance with GAAP.
(a) As soon as available, and in any event within ninety-one (91) days
after the end of each Fiscal Year, complete consolidated and consolidating
financial statements of the Company together with all notes thereto, prepared in
reasonable detail in accordance with GAAP based on an audit using generally
accepted auditing standards, by an independent certified public accountant
selected by the Company stating that such consolidated financial statements have
been so prepared. These financial statements shall contain a consolidated and
consolidating balance sheet as of the end of such Fiscal Year and consolidated
and consolidating statements of earnings, of cash flows, and of changes in
owners' equity for such Fiscal Year, each setting forth in comparative form the
corresponding figures for the preceding Fiscal Year.
(b) As soon as available, and in any event within forty-five (45) days
after the end of each Fiscal Quarter, the Company's consolidated and
consolidating balance sheet as of the end of such Fiscal Quarter and
consolidated and consolidating statements of the Company's earnings and cash
flows for the period from the beginning of the then current Fiscal Year to the
end of such Fiscal Quarter, all in reasonable detail and prepared in accordance
with GAAP, subject to changes resulting from normal year-end adjustments.
5.8. PAYMENT AND PERFORMANCE. The Company will pay all amounts due under the
Loan Documents in accordance with the terms thereof and will observe, perform
and comply with every covenant, term and condition expressed or implied in the
Loan Documents.
5.9. PERFORMANCE ON BORROWER'S BEHALF. If the Company fails to pay any taxes,
insurance premiums, expenses, attorneys' fees or other amounts it is required to
pay under any Loan Document, Lender may pay the same. The Company shall
immediately upon written notice of any such payment reimburse Lender for any
such payments and each amount paid by Lender shall constitute an Obligation owed
hereunder which is due and payable on the date such amount is paid by Lender.
5.9. INTEREST. The Company hereby promises to Lender to pay interest at the
Default Rate on all Obligations (including Obligations to pay fees or to
reimburse or indemnify Lender) that the Company has in this Agreement promised
to pay to the Lender and which are not paid when due. Such interest shall accrue
from the date such Obligations become due until they are paid.
(a) IMPAIRMENT OF SECURITY INTEREST. The Company will not take or fail to
take any action that would in any manner impair the value or enforceability of
the Lender's first priority security interest in any Collateral.
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(b) COMPROMISE OF COLLATERAL. The Company will not adjust, settle,
compromise, amend or modify any of its rights in the Collateral.
(c) EQUIPMENT. The Company will use its best efforts to maintain, preserve,
protect and keep all Equipment included within the Collateral in good condition,
repair and working order and will use its best efforts to cause such Equipment
to be used and operated in a good and workmanlike manner to the extent
commercially reasonable, in accordance with applicable law and in a manner which
will not make void or cancelable any insurance with respect to such Equipment.
ARTICLE 6
DEFAULTS AND REMEDIES
6.1. EVENTS OF DEFAULT. Any one or more of the following shall constitute an
"Event of Default" as the term is used herein:
(a) Default shall occur in the observance or performance of any covenant or
agreement contained herein or in the other Loan Documents that are not remedied
within 30 days after notice thereof to the Company by Lender's Agent; or
(b) If any representation or warranty made by the Company herein or in any
Loan Document, or made by the Company in any statement or certificate furnished
by the Company pursuant hereto, is untrue or incorrect in any material respect
as of the date of the making thereof or subsequently becomes untrue or incorrect
and such inaccuracy is not immediately disclosed to Lender; or
(c) The Company becomes insolvent or bankrupt or makes an assignment for
the benefit of creditors, or the Company causes or suffers an order for relief
to be entered with respect to it under applicable Federal bankruptcy law or
applies for or consents to the appointment of a custodian, trustee, liquidator,
or receiver for the Company or for the major part of the property of either; or
(d) A custodian, trustee, liquidator, or receiver is appointed for the
Company or for the major part of the property of either and is not discharged
within 30 days after such appointment; or
(e) Bankruptcy, reorganization, arrangement or insolvency proceedings, or
other proceedings for relief under any bankruptcy or similar law or laws for the
relief of debtors, are instituted by or against the Company and, if instituted
against the Company, are consented to or are not dismissed within 60 days after
such institution; or
6.2. REMEDIES. When any Event of Default described in Section 6.1 has occurred
and is continuing, the Lender's obligation to make the Loan(s) shall terminate
and the principal balance and all accrued interest as well as other costs, fees
and expenses due and owing on the Loan(s) shall immediately become due and
payable, without presentment, demand, notice of acceleration, notice of intent
to accelerate, protest or further notice of any kind or nature whatsoever, all
of which are hereby expressly waived, and the Default Rate shall commence to
accrue. In addition, Lender may pursue any or all of the rights available to
them at law or in equity or as provided herein and in the Note(s), including,
without limitation, all rights and remedies of a secured party under the UCC. In
connection therewith, the Company agrees that a ten (10) day notice period is
commercially reasonable for the conduct of a public or private sale under the
UCC, and the Company hereby irrevocably makes, constitutes and appoints Lender
or any other Person designated by Lender for that purpose as the Company's true
and lawful attorney and agent-in-fact to sign the name of the Company on any
continuation statement or other document necessary to further perfect the
Lender" security interest or foreclose and/or take possession of the Collateral.
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6.3 COSTS OF REMEDIES. Any and all costs and expenses (including reasonable
attorney's fees) incurred by Lender in pursuing its remedies hereunder shall be
an additional indebtedness due and owing by the Company to Lender and shall be
governed by this Agreement, the Note(s) and the other Loan Documents.
ARTICLE 7
CERTAIN DEFINITIONS
"Affiliate" shall mean a Person (a) which, directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, another Person (b) which beneficially owns or holds 10% or more of any
class of the voting interests of such Person, or (c) 10% or more of the voting
interests of which is beneficially owned or held by such Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting interests, by contract or otherwise.
"Business Day" means a day other than a Saturday or Sunday, on which commercial
banks are open for business with the public in Fort Worth, Texas.
"Change of Control" means the occurrence of either of the following events: (a)
any Person or two or more Persons acting as a group shall acquire beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Act of 1934, as amended, and including holding
proxies to vote for the election of directors other than proxies held by the
Company's management or their designees to be voted in favor of Persons
nominated by the Company's Board of Directors) of 50% or more of the outstanding
voting securities of the Company, measured by voting power (including both
common stock and any preferred stock or other equity securities entitling the
holders thereof to vote with the holders of common stock in elections for
directors of the Company) or (b) one-third or more of the directors of the
Company shall consist of Persons not nominated by the Company's Board of
Directors (not including as Board nominees any directors which the Board is
obligated to nominate pursuant to shareholders' agreements, voting trust
arrangements or similar arrangements).
"Closing" and "Closing Date" are defined in Section 1.2.
"Collateral" means the specific property that is subject to a UCC-1 financing
statement on accounts receivable, notes receivable and the Company's personal
property in favor of Lender.
"Commitment Period" means the period from and including the Closing Date until
and including the date that is one year after the Closing Date.
"Default" shall mean any event or condition, the occurrence of which would, with
the lapse of time or the giving of notice, or both, constitute an Event of
Default as defined in Section 6.1.
"Default Rate" shall mean 10% per annum (or the maximum rate allowed by law)
calculated on the basis of a 360 day year.
"Distribution" means (i) any dividend or other distribution made by the Company
on or in respect of any stock, partnership interest, or other equity interest in
the Company or any subsidiary of the Company (including any option or warrant to
buy such an equity interest), or (ii) any payment made by the Company to
purchase, redeem, acquire or retire any stock, partnership interest, or other
equity interest in the Company or any subsidiary of the Company (including any
such option or warrant).
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"Existing Credit Facility" means certain credit facilities between the Company
and Xxxxxxx Xxxxxx Lending Group as evidenced by a Business Loan Agreement,
between the Company and Xxxxxxx Xxxxxx, together with all promissory notes made
by the Company hereunder and all other agreements, documents, instruments and
writings at any time delivered to Xxxxxxx Xxxxxx in connection therewith.
"Fiscal Quarter" means a three-month period ending on March 31, June 30,
September 30 or December 31 of any year.
"Fiscal Year" means a twelve-month period ending on September 30 of any year.
"GAAP" means those generally accepted accounting principles and practices which
are recognized as such by the Financial Accounting Standards Board (or any
generally recognized successor) and which, in the case of the Company, are
applied for all periods after the date hereof in a manner consistent with the
manner in which such principles and practices were applied to the Initial
Financial Statements. If any change in any accounting principle or practice is
required by the Financial Accounting Standards Board (or any such successor) in
order for such principle or practice to continue as a generally accepted
accounting principle or practice, all reports and financial statements required
hereunder with respect to the Company shall be prepared in accordance with such
change.
"Indebtedness" of any Person means Liabilities in any of the following
categories:
(a) Liabilities for borrowed money,
(b) Liabilities constituting an obligation to pay the deferred purchase
price of property or services,
(c) Liabilities evidenced by a bond, debenture, note or similar instrument,
(d) Liabilities which would under GAAP be shown on such Person's balance
sheet as a liability, and are payable more than one year from the date of
creation thereof (other than reserves for taxes and reserves for contingent
obligations),
(e) Liabilities owing under direct or indirect guaranties of Liabilities of
any other Person or otherwise constituting obligations to purchase or acquire or
to otherwise protect or insure a creditor against loss in respect of Liabilities
of any other Person (such as obligations under working capital maintenance
agreements, agreements to keep-well, or agreements to purchase Liabilities,
assets, goods, securities or services), but excluding endorsements in the
ordinary course of business of negotiable instruments in the course of
collection,
(f) Liabilities (for example, repurchase agreements, mandatorily redeemable
preferred stock and sale/leaseback agreements) consisting of an obligation to
purchase or redeem securities or other property, if such Liabilities arises out
of or in connection with the sale or issuance of the same or similar securities
or property,
(g) Liabilities with respect to letters of credit or applications or
reimbursement agreements therefor, or
(h) Liabilities with respect to other obligations to deliver goods or
services in consideration of advance payments therefore; provided, however, that
the "Indebtedness" of any Person shall not include (i) Liabilities that were
incurred by such Person on ordinary trade terms to vendors, suppliers, or other
Persons providing goods and services for use by such Person in the ordinary
course of its business, unless and until such Liabilities are outstanding more
than 90 days past the original invoice or billing date therefore.
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"Investment" means any investment, made directly or indirectly, in any Person or
any property, whether by purchase, acquisition of shares of capital stock,
indebtedness or other obligations or securities or by loan, advance, capital
contribution or otherwise and whether made in cash, by the transfer of property,
or by any other means.
"Law" means any statute, law, regulation, ordinance, rule, treaty, judgment,
order, decree, permit, concession, franchise, license, agreement or other
governmental restriction of the United States or any state or political
subdivision thereof or of any foreign country or any department, province or
other political subdivision thereof.
"Lenders' Agent" shall be elected by the Lender.
"Liabilities" means, as to any Person, all indebtedness, liabilities and
obligations of such Person, whether matured or unmatured, liquidated or
unliquidated, primary or secondary, direct or indirect, absolute, fixed or
contingent, and whether or not required to be considered pursuant to GAAP.
"Lien" means, with respect to any property or assets, any right or interest
therein of a creditor to secure Liabilities owed to it or any other arrangement
with such creditor which provides for the payment of such Liabilities out of
such property or assets or which allows such creditor to have such Liabilities
satisfied out of such property or assets prior to the general creditors of any
owner thereof, including any lien, mortgage, security interest, pledge, deposit,
production payment, rights of a vendor under any title retention or conditional
sale agreement or lease substantially equivalent thereto, tax lien, mechanic's
or material man's lien, or any other charge or encumbrance for security
purposes, whether arising by Law or agreement or otherwise,
but excluding any right of offset which arises without agreement in the ordinary
course of business. "Lien" also means any filed financing statement, any
registration of a pledge (such as with an issuer of uncertificated securities),
or any other arrangement or action which would serve to perfect a Lien described
in the preceding sentence, regardless of whether such financing statement is
filed, such registration is made, or such arrangement or action is undertaken
before or after such Lien exists.
"Loan(s)" has the meaning given to such term in Section 1.1.
"Loan Documents" means this Agreement, the Notes, the Subscription Agreement,
the Questionnaire, the UCC-1 financing statement, and all amendments,
modifications and restatements of such documents and instruments.
"Material Adverse Change" means a material and adverse change, from the state of
affairs presented in the Initial Financial Statements or as represented or
warranted in any Loan Document, to (a) the Company's financial condition, (b)
the Company's operations, properties or prospects, considered as a whole, (c)
the Company's ability to timely pay the Obligations, (d) the enforceability of
the material terms of any Loan Documents, or (e) the Collateral or Lenders'
Liens on the Collateral.
"Maximum Loan Amount" means the amount equal to $1,000,000.
"Maximum Rate" means, at any time and with respect to Lender, the maximum rate
of nonusurious interest under applicable law that Lender may contract for, take,
charge or receive with respect to the Obligations.
"Note(s)" has the meaning given to such term in Section 1.1.
"Obligations" means all Liabilities from time to time owing by the Company to
Lender under or pursuant to this Agreement, the Note(s) or any Security Document
(including any modifications, amendments or restatements of any such documents
or instruments). "Obligation" means any part of the Obligations.
10
"Permitted Investments" means
(a) property used in the ordinary course of business of the Company;
(b) current assets arising from the sale or lease of goods and services in
the ordinary course of business by the Company or from sales permitted under
Section 5.23; and
(c) Investments by the Company in any Additional Stations.
"Permitted Liens" means:
(a) statutory Liens for taxes, assessments or other governmental charges or
levies which are not yet delinquent or which are being contested in good faith
by appropriate action and for which adequate reserves have been maintained in
accordance with GAAP;
(b) landlords', operators', carriers', warehousemen's, repairmen's,
mechanics', material men's, or other like Liens which do not secure
Indebtedness, in each case only to the extent arising in the ordinary course of
business and only to the extent securing obligations which are not delinquent or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves have been maintained in accordance with GAAP;
(c) minor defects and irregularities in title to any property, so long as
such defects and irregularities neither secure Indebtedness nor materially
impair the value of such property or the use of such property for the purposes
for which such property is held;
(d) deposits of cash or securities to secure the performance of bids, trade
contracts, leases, statutory obligations and other obligations of a like nature
(excluding appeal bonds) incurred in the ordinary course of business;
(e) Liens under the Security Documents;
(f) Liens securing purchase money Indebtedness, provided that such
Indebtedness shall be secured only by the acquired asset;
(g) Liens securing Indebtedness outstanding under the instruments and
agreements described in Schedule I;
(h) with respect only to property subject to any particular Security
Document, Liens burdening such property that are expressly allowed by such
Security Document.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
"Security Agreement" means the security agreement of even date herewith
delivered by the Company to the Lender in connection with this Agreement and
listed on the Security Schedule.
"Security Documents" means the instruments listed in the Security Schedule and
all other security agreements, deeds of trust, mortgages, chattel mortgages,
pledges, guaranties, financing statements, continuation statements, extension
agreements and other agreements or instruments now, heretofore, or hereafter
delivered by the Company to any Lender in connection with this Agreement or any
transaction contemplated hereby to secure or guarantee the payment of any part
of the Obligations or the performance of the Company's other duties and
obligations under the Loan Documents.
"Security Schedule" means Schedule II hereto.
11
"Subsidiary" means, with respect to any Person, any corporation, association,
partnership, limited liability company, joint venture, or other business or
corporate entity, enterprise or organization that is directly or indirectly
(through one or more intermediaries) controlled by or owned fifty percent or
more by such Person.
"UCC" means the Uniform Commercial Code in effect in the State of Texas, as
amended.
ARTICLE 8
INTERCREDITOR PROVISIONS
8.1. This Section Intentionally Left Blank.
8.2. This Section Intentionally Left Blank.
8.3. This Section Intentionally Left Blank.
ARTICLE 9
MISCELLANEOUS PROVISIONS
9.1. WAIVERS AND AMENDMENTS; ACKNOWLEDGMENTS.
WAIVERS AND AMENDMENTS. No failure or delay (whether by course of conduct or
otherwise) by Lender in exercising any right, power or remedy which Lender may
have under any of the Loan Documents shall operate as a waiver thereof or of any
other right, power or remedy, nor shall any single or partial exercise by Lender
of any such right, power or remedy preclude any other or further exercise
thereof or of any other right, power or remedy. No waiver of any provision of
any Loan Document and no consent to any departure there from shall ever be
effective unless it is in writing and signed as provided below in this section,
and then such waiver or consent shall be effective only in the specific
instances and for the purposes for which given and to the extent specified in
such writing. No notice to or demand on the Company shall in any case of itself
entitle the Company to any other or further notice or demand in similar or other
circumstances. This Agreement and the other Loan Documents set forth the entire
understanding between the parties hereto with respect to the transactions
contemplated herein and therein and supersede all prior discussions and
understandings with respect to the subject matter hereof and thereof, and no
waiver, consent, release, modification or amendment of or supplement to this
Agreement or the other Loan Documents shall be valid or effective against any
party hereto unless the same is in writing and signed by (i) if such party is
the Company, by the Company, and (ii) if such party is Lender, by Lender.
(b) ACKNOWLEDGMENTS AND ADMISSIONS. The Company hereby represents,
warrants, acknowledges and admits that (i) it has been advised by counsel in the
negotiation, execution and delivery of the Loan Documents, (ii) it has made an
independent decision to enter into this Agreement and the other Loan Documents,
without reliance on any representation, warranty, covenant or undertaking by any
Lender, whether written, oral or implicit, other than as expressly set out in
this Agreement or in another Loan Document delivered on or after the date
hereof, (iii) there are no representations, warranties, covenants, undertakings
or agreements by Lender as to the Loan Documents except as expressly set out in
this Agreement or in another Loan Document delivered on or after the date
hereof, (iv) Lender has no fiduciary obligation toward the Company with respect
to any Loan Document or the transactions contemplated thereby, (v) the
relationship pursuant to the Loan Documents between the Company and the Lender
12
is and shall be solely that of debtor and creditor, respectively, (vi) no
partnership or joint venture exists with respect to the Loan Documents between
the Company and the Lenders, (vii) should an Event of Default occur or exist,
Lender will determine in its sole discretion and for its own reasons what
remedies and actions it will or will not exercise or take at that time, (viii)
without limiting any of the foregoing, the Company is not relying upon any
representation or covenant by Lender, or any representative thereof, and no such
representation or covenant has been made, that Lender will, at the time of an
Event of Default, or at any other time, waive, negotiate, discuss, or take or
refrain from taking any action permitted under the Loan Documents with respect
to any such Event of Default or any other provision of the Loan Documents, and
(ix) Lender has relied upon the truthfulness of the acknowledgments in this
section in deciding to execute and deliver this Agreement and to become
obligated hereunder.
(c) JOINT ACKNOWLEDGMENT. THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
9.2. SET-OFF. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and continuance of any Event of Default or any condition, event or
act which, with the giving of notice or lapse of time, or both, would constitute
such an Event of Default, the Lender is hereby authorized at any time or from
time to time, without prior notice to the Company or to any other Person, any
such prior notice being hereby expressly waived, to set-off and to appropriate
and apply any and all deposits (general or special) and any other indebtedness
at any time held or owing by any office of the Lender or their Affiliates to or
for the credit of the account of the Company, regardless of the currency of such
deposits or other indebtedness, against and on account of the obligations and
liabilities of the Company to the Lender under this Agreement and the other Loan
Documents, including, without limitation, all claims of any nature or
description arising out of or connected with this Agreement and the other Loan
Documents, irrespective of whether or not the Lender shall have made any demand
hereunder and although such obligations, liabilities or claims, or any of them,
shall be contingent or unmatured. The Lender shall provide Company with notice
of such set-off within a reasonable time after the occurrence of any such
set-off.
9.3. SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. The Company's various
representations, warranties, covenants and agreements in the Loan Documents
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the performance hereo and thereof, including the making or
granting of the Loan(s) and the delivery of the Note(s) and the other Loan
Documents, and shall further survive until all of the Obligations are paid in
full to the Lender and all of Lender's obligations to the Company are
terminated. All statements and agreements contained in any certificate or other
instrument delivered by the Company to Lender under any Loan Document shall be
deemed representations and warranties by the Company or agreements and covenants
of the Company under this Agreement. The representations, warranties,
indemnities, and covenants made by the Company in the Loan Documents, and the
rights, powers, and privileges granted to the Lender in the Loan Documents, are
cumulative, and, except for expressly specified waivers and consents, no Loan
Document shall be construed in the context of another to diminish, nullify, or
otherwise reduce the benefit to the Lender of any such representation, warranty,
indemnity, covenant, right, power or privilege. In particular and without
limitation, no exception set out in this Agreement to any representation,
warranty, indemnity, or covenant herein contained shall apply to any similar
representation, warranty, indemnity, or covenant contained in any other Loan
Document, and each such similar representation, warranty, indemnity, or covenant
shall be subject only to those exceptions which are expressly made applicable to
it by the terms of the various Loan Documents.
13
9.4. INDEMNITY. THE COMPANY AGREES TO INDEMNIFY LENDER, UPON DEMAND, FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, BROKER'S FEES, CLAIMS, LOSSES,
DAMAGES, PENALTIES, FINES, ACTIONS, JUDGMENTS, SUITS, SETTLEMENTS, COSTS,
EXPENSES OR DISBURSEMENTS (INCLUDING REASONABLE FEES OF ATTORNEYS, ACCOUNTANTS,
EXPERTS AND ADVISORS) OF ANY KIND OR NATURE WHATSOEVER (IN THIS SECTION
COLLECTIVELY CALLED "LIABILITIES AND COSTS") WHICH TO ANY EXTENT (IN WHOLE OR IN
PART) MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST LENDER GROWING OUT OF,
RESULTING FROM OR IN ANY OTHER WAY ASSOCIATED WITH ANY OF THE COLLATERAL, THE
LOAN DOCUMENTS AND THE TRANSACTIONS AND EVENTS (INCLUDING THE ENFORCEMENT OR
DEFENSE THEREOF) AT ANY TIME ASSOCIATED THEREWITH OR CONTEMPLATED THEREIN
(WHETHER ARISING IN CONTRACT OR IN TORT OR BY STATUTE OR OTHERWISE). AMONG OTHER
THINGS, THE FOREGOING INDEMNIFICATION COVERS ALL LIABILITIES AND COSTS INCURRED
BY LENDER RELATED TO ANY BREACH OF A LOAN DOCUMENT BY THE COMPANY, ANY BODILY
INJURY TO ANY PERSON OR DAMAGE TO ANY PERSON'S PROPERTY, OR ANY VIOLATION OR
NONCOMPLIANCE WITH ANY ENVIRONMENTAL LEGAL REQUIREMENTS BY LENDER OR ANY OTHER
PERSON OR ANY LIABILITIES OR DUTIES OF LENDER OR ANY OTHER PERSON WITH RESPECT
TO HAZARDOUS MATERIALS FOUND IN OR RELEASED INTO THE ENVIRONMENT.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND
COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM
OR THEORY OF STRICT LIABILITY OR CAUSED, IN WHOLE OR IN PART BY ANY NEGLIGENT
ACT OR OMISSION OF ANY KIND BY LENDER,
provided only that Lender shall not be entitled under this section to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by its own individual gross negligence or willful misconduct,
as determined in a final judgment. If any Person (including the Company or any
of its Affiliates) ever alleges such gross negligence or willful misconduct by
Lender, the indemnification provided for in this section shall nonetheless be
paid upon demand, subject to later adjustment or reimbursement, until such time
as a court of competent jurisdiction enters a final judgment as to the extent
and effect of the alleged gross negligence or willful misconduct. As used in
this section the term "Lender" shall include each director, officer, agent,
trustee, attorney, employee, representative and Affiliate of or for Lender.
9.5. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto or thereto-in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
instrument.
9.6. NOTICES. Any notices to be served pursuant hereto shall be deemed properly
delivered if delivered personally, by United States certified or registered
mail, postage prepaid, or by Federal Express or comparable overnight courier
service fare prepaid, or by legible facsimile transmission, to set forth on its
signature page hereto or to such other address as the Company may direct in
writing and to Lender at its address set forth in this Agreement or at such
other address as Lender may direct in writing. Such notices shall be deemed
received the same day if delivered personally or by legible facsimile, three
business days after delivery by certified or registered mail, and the next
business day if delivered by overnight courier.
9.7. GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT THAT THE LAW OF
ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT, THE LOAN DOCUMENTS
SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF
TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW. CHAPTER 346 OF THE TEXAS FINANCE CODE
(WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY
ACCOUNTS) DOES NOT APPLY TO THIS AGREEMENT OR TO THE NOTE(S). THE COMPANY HEREBY
IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND
14
FEDERAL COURTS SITTING IN THE STATE OF TEXAS AND AGREES AND CONSENTS THAT
SERVICE OF PROCESS MAY BE MADE UPON IT IN ANY LEGAL PROCEEDING RELATING TO THE
LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY MEANS ALLOWED UNDER TEXAS OR FEDERAL
LAW. IN ADDITION TO THE PLACES OF PAYMENT SPECIFIED IN THE NOTES, THE COMPANY
AND LENDER STIPULATE AND AGREE THAT TARRANT COUNTY, TEXAS IS AN APPROPRIATE AND
ACCEPTABLE VENUE FOR ANY STATE OR FEDERAL COURT ACTION CONCERNING THE LOAN
DOCUMENTS.
9.8. CONSTRUCTION. This Agreement shall not be construed more strictly against
Lender than against the Company merely by virtue of the fact that the same has
been prepared by counsel for Lender, it being recognized that both the Company
and the Lender have contributed substantially and materially to the preparation
of this Agreement.
9.9. CAPTIONS. The captions of various articles herein are for convenience only
and are not to be utilized in construing the content or meaning of the
substantive provisions hereof.
9.10. POTENTIAL INVALIDITY. In the event of any inconsistency among the terms
hereof (including incorporated terms) or between such terms and the terms of the
Notes, the terms of this Agreement shall govern and prevail. The whole or
partial invalidity, illegality or unenforceability of any provision hereof or
the Notes at any time, whether pursuant to the terms of then applicable law or
otherwise, shall not affect: in the instance of partial invalidity, illegality
or unenforceability, the validity, legality or enforceability of such provision
at such time except to the extent of such partial invalidity, illegality or
unenforceability; or (b) the validity, legality or enforceability of such
provision at any other time or of any other provision hereof at that or any
other time.
9.11. INTERPRETATION. All words herein which are expressed in the masculine or
neuter gender shall be deemed to include the masculine, feminine and neuter
Lenders. Any word herein which is expressed in the singular or plural shall be
deemed, whenever appropriate in the context, to include the plural and the
singular.
9.12. AGREEMENT BINDING ON SUCCESSORS. This Agreement shall be binding upon and
shall inure to the benefit of the Company and the Lender, their respective
successors, permitted assigns, grantees and legal representatives. The Company
may not assign any of its rights or delegate any of its duties under this
Agreement, Note(s) or any other Loan Documents.
9.13. LIMITATION ON INTEREST. The Lender and the Company and any other parties
to the Loan Documents intend to contract in strict compliance with applicable
usury law from time to time in effect. In furtherance thereof such Persons
stipulate and agree that none of the terms and provisions contained in the Loan
Documents shall ever be construed to create a contract to pay, for the use,
forbearance or detention of money, interest in excess of the maximum amount of
interest permitted to be charged by applicable law from time to time in effect.
Neither the Company nor any present or future endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable for
unearned interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully contracted for, charged, or
received under applicable law from time to time in effect, and the provisions of
this section shall control over all other provisions of the Loan Documents which
may be in conflict or apparent conflict herewith. The Lender expressly disavows
any intention to contract for, charge, or collect excessive unearned interest or
finance charges in the event the maturity of any Obligation is accelerated. If
maturity of any Obligation is accelerated for any reason, any Obligation is
prepaid and as a result any amounts held to constitute interest are determined
to be in excess of the legal maximum, or Lender or any other holder of any or
all of the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all sums determined to constitute interest
15
in excess of such legal limit shall, without penalty, be promptly applied to
reduce the then outstanding principal of the related Obligations or, at such
Lender's or such holder's option, promptly returned to the Company or the other
payor thereof upon such determination. In determining whether or not the
interest paid or payable, under any specific circumstance, exceeds the maximum
amount permitted under applicable law, the Lender and the Company (and any other
payors thereof) shall to the greatest extent permitted under applicable law,
characterize any non-principal payment as an expense, fee or premium rather than
as interest, exclude voluntary prepayments and the effects thereof, and
amortize, prorate, allocate, and spread the total amount of interest throughout
the entire contemplated term of the instruments evidencing the Obligations in
accordance with the amounts outstanding from time to time there under and the
maximum legal rate of interest from time to time in effect under applicable law
in order to lawfully contract for, charge, or receive the maximum amount of
interest permitted under applicable law. In the event applicable law provides
for an interest ceiling under Chapter 303 of the Texas Finance Code (the "Texas
Finance Code") as amended, for that day, the ceiling shall be the "weekly
ceiling" as defined in the Texas Finance Code, provided that if any applicable
Law permits greater interest, the Law permitting the greatest interest shall
apply. As used in this section the term "applicable law" means the laws of the
State of Texas or the Laws of the United States of America, whichever laws allow
the greater interest, as such laws now exist or may be changed or amended or
come into effect in the future.
9.14. CREDIT DECISIONS; EXCULPATION. Lender acknowledges that it has,
independently made its own analysis of the Company and the transactions
contemplated hereby and its own independent decision to enter into this
Agreement and the other Loan Documents. Lender also acknowledges that it will,
independently based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents. Nothing in the Loan Documents shall
be construed to constitute the Lender a trustee. Lender acknowledges that Lender
may take such actions and exercise such powers that are granted to Lender in the
Loan Documents.
9.15. WAIVER OF JURY TRIAL, PUNITIVE DAMAGES. THE COMPANY AND LENDER HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES, TO THE MAXIMUM
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR ANY
TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER
MATURITY; WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY "SPECIAL DAMAGES", AS
DEFINED BELOW, CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR
COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED
THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS, AND ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION. AS USED IN THIS SECTION, "SPECIAL DAMAGES" INCLUDES ALL
SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR PUNITIVE DAMAGES (REGARDLESS OF HOW
NAMED), BUT DOES NOT INCLUDE ANY PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS
EXPRESSLY PROMISED TO PAY OR DELIVER TO ANY OTHER PARTY HERETO.
IN WITNESS OF THE FOREGOING, the Company and Lender have executed or caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
16
LENDERS:
X.X. Xxxxxx Holdings, Inc.
/s/Xxxxxxx X. Xxxxxx, CEO
BORROWER:
URBAN TELEVISION NETWORK CORPORATION
By: /s/ Xxxxx Xxxxxxx
Chief Financial Officer
Address:
Urban Television Network Corporation
0000 X. Xxxxxx Xxx. 000
Xxxxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
17
SCHEDULE II
SECURITY SCHEDULE
1. UCC-1 Financing Statement naming the Company as debtor and Lender as
secured party, covering all personal property of the Company, to be filed
with the Secretary of State of Texas.
PROMISSORY NOTE
$228,289.80.00 July 31, 2004
FOR VALUE RECEIVED, the undersigned, Urban Television Network Corporation,
a Nevada corporation ("Borrower"), hereby promises to pay to the order of X.X.
Xxxxxx Holdings, Inc., a Nevada corporation ("Payee"), in lawful money of the
United States of America in immediately available funds, the principal sum of
Two Hundred Twenty Eight Thousand Two Hundred Eighty Nine and 80/100 Dollars
($228,289.80), together with interest on the unpaid principal balance thereof as
hereinafter set forth, both principal and interest payable as herein provided in
lawful money of the United States of America at the offices of Borrower or at
such other place as from time to time may be designated by the holder of this
Note.
All principal and interest on the outstanding principal balance shall be
payable at the expiration of the first to occur of the following: (a) July 31,
2005; (b) the closing by Borrower of a public offering or offerings (whether
debt or equity or a combination) raising in the aggregate at least $5,000,000 of
gross proceeds (i.e. prior to the payment of underwriting expenses and
commissions) to Borrower; and (c) the closing of a private placement or
placements (whether debt or equity or a combination) whereby Borrower receives
gross proceeds of at least $5,000,000 in the aggregate (i.e. prior to the
payment of sales expenses and commissions). The principal amount of this Note
(exclusive of any past due principal or interest) from time to time outstanding
shall bear interest on each day outstanding at the rate of six percent (6.0%)
per annum, calculated at on the basis of actual days elapsed and a year of 360
days. All past due principal of and interest on this Note shall bear interest on
each day outstanding at the rate of ten percent (10.0%) per annum, calculated at
on the basis of actual days elapsed and a year of 360 days, and such interest
shall be due and payable daily as it accrues.
Borrower shall have the right to prepay, without premium or penalty, at any
time, any part or all of the indebtedness evidenced by this Note upon five (5)
days advance notice to Payee. Any prepayment shall include interest accrued to
the date of such prepayment, and all prepayments of principal shall be applied
first against accrued interest and then principal.
Payee shall be entitled to convert the outstanding balance of the Loans and
accrued interest thereon at anytime before the maturity date or Borrower's
announced prepayment date, of the Loans at the rate of five shares of the
Company's common stock for each $1.00 of Loan(s) balance and accrued interest
thereon.
1. This Note is issued and delivered under that certain Loan Agreement of
even date herewith between Borrower and Lenders (as defined therein; including
Payee) (herein, as from time to time supplemented, amended or restated, called
the "Loan Agreement"), and is a "Note" as defined therein, (b) is subject to the
terms and provisions of the Loan Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof upon
the happening of certain stated events, and (c) is secured by and entitled to
the benefits of certain Security Documents (as identified and defined in the
Loan Agreement). Payments on this Note shall be made and applied as provided
herein and in the Loan Agreement. Reference is hereby made to the Loan Agreement
for a description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms used and not
defined herein and to the Security Documents for a description of the nature and
extent of the security thereby provided and the rights of the parties thereto.
All remedies afforded by law shall be cumulative, and all shall be
available to Payee at all times until this Note has been paid and performed in
full. No delay or omission of Payee to exercise any right or power under this
Note shall impair such right or power or be construed to be a waiver of any
Default or Event of Default or acquiescence therein, and any single or partial
exercise of any such right or power shall not preclude any other or further
exercise thereof or the exercise of any other right or power, and no waiver
whatsoever shall be valid unless it is in a writing signed by Payee and then
only to the extent specifically set forth in such writing.
The terms and provisions of this Note shall inure to the benefit of any
assignee, transferee, or holder of this Note, and in the event of such transfer
or assignment, each of the rights, powers, privileges and benefits conferred
upon Payee by this Note shall automatically be vested in such transferee,
assignee, or holder.
The terms and provisions of this Note shall be binding upon Borrower and
its successors, assigns, and transferees, but any such assignment or transfer
shall not relieve Borrower of its obligations under this Note.
The invalidity or unenforceability of any of the provisions of this Note
shall not affect the validity or enforceability of the remainder hereof.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be contracted for, charged, or received on this Note, and this Note is expressly
made subject to the provisions of the Loan Agreement that more fully set out the
limitations on how interest accrues hereon. In the event applicable law provides
for an interest ceiling under Chapter 303 of the Texas Finance Code (the "Texas
Finance Code") as amended, for that day, the ceiling shall be the "weekly
ceiling" as defined in the Texas Finance Code and shall be used in this Note for
calculating the Maximum Rate and for all other purposes. The term "applicable
law" as used in this Note shall mean the laws of the State of Texas or the laws
of the United States, whichever laws allow the greater interest, and as such
laws now exist or may be changed or amended or come into effect in the future.
This Note and the rights and duties of the parties hereto shall be governed
by the laws of the State of Texas (without regard to principles of conflicts of
law), except to the extent the same are governed by applicable federal law.
THIS CONVERTIBLE PROMISSORY NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. PAYEE MUST
RELY ON HIS OR HER OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.
BORROWER:
URBAN TELEVISION NETWORK CORPORATION
By: /s/ Xxxxx Xxxxxxx
Its: Chief Financial Officer
PROMISSORY NOTE
$171,710.00 August 31, 2004
FOR VALUE RECEIVED, the undersigned, Urban Television Network Corporation,
a Nevada corporation ("Borrower"), hereby promises to pay to the order of X.X.
Xxxxxx Holdings, Inc., a Nevada corporation ("Payee"), in lawful money of the
United States of America in immediately available funds, the principal sum of
One Hundred Seventy One Thousand Seven Hundred Ten and NO/100 Dollars
($171,7710.00), together with interest on the unpaid principal balance thereof
as hereinafter set forth, both principal and interest payable as herein provided
in lawful money of the United States of America at the offices of Borrower or at
such other place as from time to time may be designated by the holder of this
Note.
All principal and interest on the outstanding principal balance shall be
payable at the expiration of the first to occur of the following: (a) July 31,
2005; (b) the closing by Borrower of a public offering or offerings (whether
debt or equity or a combination) raising in the aggregate at least $5,000,000 of
gross proceeds (i.e. prior to the payment of underwriting expenses and
commissions) to Borrower; and (c) the closing of a private placement or
placements (whether debt or equity or a combination) whereby Borrower receives
gross proceeds of at least $5,000,000 in the aggregate (i.e. prior to the
payment of sales expenses and commissions). The principal amount of this Note
(exclusive of any past due principal or interest) from time to time outstanding
shall bear interest on each day outstanding at the rate of six percent (6.0%)
per annum, calculated at on the basis of actual days elapsed and a year of 360
days. All past due principal of and interest on this Note shall bear interest on
each day outstanding at the rate of ten percent (10.0%) per annum, calculated at
on the basis of actual days elapsed and a year of 360 days, and such interest
shall be due and payable daily as it accrues.
Borrower shall have the right to prepay, without premium or penalty, at any
time, any part or all of the indebtedness evidenced by this Note upon five (5)
days advance notice to Payee. Any prepayment shall include interest accrued to
the date of such prepayment, and all prepayments of principal shall be applied
first against accrued interest and then principal.
Payee shall be entitled to convert the outstanding balance of the Loans and
accrued interest thereon at anytime before the maturity date or Borrower's
announced prepayment date, of the Loans at the rate of five shares of the
Company's common stock for each $1.00 of Loan(s) balance and accrued interest
thereon.
2. This Note is issued and delivered under that certain Loan Agreement of
even date herewith between Borrower and Lenders (as defined therein; including
Payee) (herein, as from time to time supplemented, amended or restated, called
the "Loan Agreement"), and is a "Note" as defined therein, (b) is subject to the
terms and provisions of the Loan Agreement, which contains provisions for
payments and prepayments hereunder and acceleration of the maturity hereof upon
the happening of certain stated events, and (c) is secured by and entitled to
the benefits of certain Security Documents (as identified and defined in the
Loan Agreement). Payments on this Note shall be made and applied as provided
herein and in the Loan Agreement. Reference is hereby made to the Loan Agreement
for a description of certain rights, limitations of rights, obligations and
duties of the parties hereto and for the meanings assigned to terms used and not
defined herein and to the Security Documents for a description of the nature and
extent of the security thereby provided and the rights of the parties thereto.
All remedies afforded by law shall be cumulative, and all shall be
available to Payee at all times until this Note has been paid and performed in
full. No delay or omission of Payee to exercise any right or power under this
Note shall impair such right or power or be construed to be a waiver of any
Default or Event of Default or acquiescence therein, and any single or partial
exercise of any such right or power shall not preclude any other or further
exercise thereof or the exercise of any other right or power, and no waiver
whatsoever shall be valid unless it is in a writing signed by Payee and then
only to the extent specifically set forth in such writing.
The terms and provisions of this Note shall inure to the benefit of any
assignee, transferee, or holder of this Note, and in the event of such transfer
or assignment, each of the rights, powers, privileges and benefits conferred
upon Payee by this Note shall automatically be vested in such transferee,
assignee, or holder.
The terms and provisions of this Note shall be binding upon Borrower and
its successors, assigns, and transferees, but any such assignment or transfer
shall not relieve Borrower of its obligations under this Note.
The invalidity or unenforceability of any of the provisions of this Note
shall not affect the validity or enforceability of the remainder hereof.
If this Note is placed in the hands of an attorney for collection after
default, or if all or any part of the indebtedness represented hereby is proved,
established or collected in any court or in any bankruptcy, receivership, debtor
relief, probate or other court proceedings, Borrower and all endorsers, sureties
and guarantors of this Note jointly and severally agree to pay reasonable
attorneys' fees and collection costs to the holder hereof in addition to the
principal and interest payable hereunder.
Borrower and all endorsers, sureties and guarantors of this Note hereby
severally waive demand, presentment, notice of demand and of dishonor and
nonpayment of this Note, protest, notice of protest, notice of intention to
accelerate the maturity of this Note, declaration or notice of acceleration of
the maturity of this Note, diligence in collecting, the bringing of any suit
against any party and any notice of or defense on account of any extensions,
renewals, partial payments or changes in any manner of or in this Note or in any
of its terms, provisions and covenants, or any releases or substitutions of any
security, or any delay, indulgence or other act of any trustee or any holder
hereof, whether before or after maturity.
Notwithstanding the foregoing paragraph and all other provisions of this
Note, in no event shall the interest payable hereon, whether before or after
maturity, exceed the maximum amount of interest which, under applicable law, may
be contracted for, charged, or received on this Note, and this Note is expressly
made subject to the provisions of the Loan Agreement that more fully set out the
limitations on how interest accrues hereon. In the event applicable law provides
for an interest ceiling under Chapter 303 of the Texas Finance Code (the "Texas
Finance Code") as amended, for that day, the ceiling shall be the "weekly
ceiling" as defined in the Texas Finance Code and shall be used in this Note for
calculating the Maximum Rate and for all other purposes. The term "applicable
law" as used in this Note shall mean the laws of the State of Texas or the laws
of the United States, whichever laws allow the greater interest, and as such
laws now exist or may be changed or amended or come into effect in the future.
This Note and the rights and duties of the parties hereto shall be governed
by the laws of the State of Texas (without regard to principles of conflicts of
law), except to the extent the same are governed by applicable federal law.
THIS CONVERTIBLE PROMISSORY NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS
(i) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. PAYEE MUST
RELY ON HIS OR HER OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.
BORROWER:
URBAN TELEVISION NETWORK CORPORATION
By: /s/ Xxxxx Xxxxxxx
Its: Chief Financial Officer
