LOAN AGREEMENT
This LOAN AGREEMENT, dated May 21, 1996 is made and entered into by and
between X.X. XXXXX INVESTMENT BANKING CORP. ("Lender"), a Delaware corporation
whose address is 00 Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and NEWS
COMMUNICATIONS, INC. ("News") and, a Nevada corporation whose address is 174-15
Xxxxxx Xxxxxxx Expressway, Xxxxx Xxxxxxx, Xxx Xxxx 00000, TRIBCO INCORPORATED, a
New York corporation whose address is 174-15 Xxxxxx Xxxxxxx Expressway, Xxxxx
Xxxxxxx, Xxx Xxxx 00000, and ACCESS NETWORK CORP., a New York corporation whose
address is 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (each of the foregoing
a "Borrower" and collectively, the "Borrowers").
WHEREAS, the Borrowers desire to borrow from Lender the principal sum
of One Million Dollars ($1,000,000) (the "Loan"); and
WHEREAS, Lender is willing to make the Loan upon the terms and
conditions hereinafter set forth; and
WHEREAS, the parties desire to enter into this Loan Agreement to
reflect the terms and conditions of, and to describe their respective rights and
obligations with respect to, the Loan;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein set forth, the parties hereto agree as follows:
1. The Loan. Lender agrees to make the Loan to the Borrowers in the
principal amount of $1,000,000 on the terms and conditions contained herein and
as provided in the Note (as hereinafter defined).
2. Loan Terms (a) The Loan shall be evidenced by a promissory note as such may
be amended, modified, extended, restated, or a promissory note issued as a
replacement or substitution therefor (the "Note") payable to Lender in
substantially the form attached hereto as Exhibit A.
(b) The Loan shall be payable in one installment of all outstanding
principal and unpaid, accrued interest on May 21, 1998 (the "Maturity Date").
(c) Interest shall accrue on the principal amount outstanding under the
Loan at the rate of eight and one-half percent (8-1/2%) per annum and shall be
payable quarterly commencing on July 1, 1996 and on the Maturity Date or the
date of any other payment of principal under the Note. Interest shall be
calculated on a 365-day year basis and actual days elapsed from disbursement
date until paid.
(d) The entire amount of unpaid principal and accrued interest shall,
from and after the Maturity Date and from and after an "Event of Default" (as
hereinafter defined), bear interest at the
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rate equal to the lesser of (i) twenty-four percent (24%) per annum and (ii) the
maximum interest rate permitted by law.
(e) The Borrowers may at any time prepay in whole or in part the
principal sum, plus accrued interest on the amount so prepaid to date of
payment, of the Note, without premium or penalty. Unless otherwise agreed by
Lender, any prepayments shall be applied first to accrued interest and then to
the unpaid principal amount of the Loan.
(f) The Loan, and each and every modification, extension, renewal, or
refinancing thereof, and the performance of all covenants, duties and
obligations of the Borrowers and the compliance by the Borrowers with all
conditions, representations and warranties set forth in this Loan Agreement, the
other "Loan Documents" (as hereinafter defined) and all documents executed in
connection herewith, shall be secured by a security interest in all assets of
the Borrowers pursuant to a Security Agreement annexed hereto as Exhibit B and
all of the stock of the Borrowers (other than News) pursuant to a Pledge
Agreement annexed hereto as Exhibit C.
(g) Simultaneously with the execution of this Loan Agreement, News
agrees to issue to Lender a five-year warrant to purchase 200,000 shares of
common stock of News at an initial exercise price of $2.50 per share pursuant to
the Warrant (the "Warrant") annexed hereto as Exhibit D.
(h) Lender shall not be required to make the Loan hereunder, unless and
until the following shall be satisfied:
1. The Loan Agreement, the Note, the Security Agreement and
the Pledge Agreement (collectively, the "Loan Documents") and the Warrant have
been duly executed and delivered to Lender and shall be in full force and effect
in accordance with their terms.
2. The Borrowers shall have theretofore complied with all of
the conditions, terms, covenants and agreements contained in this Loan
Agreement, the other Loan Documents and all documents executed in connection
herewith including the Warrant and all representations and warranties of the
Borrowers are true and correct as of the date of the borrowing.
3. At the time of the borrowing hereunder, the Borrowers shall
deliver to the Lender a certificate, dated the date of the borrowing, confirming
that no Event of Default (as hereinafter defined) or any event which upon notice
or passage of time or both would constitute an Event of Default shall have
occurred and be continuing at the time of such borrowing.
4. On or prior to the date of the borrowing hereunder, the
Lender shall have received from News:
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(x) A certificate of an officer of News dated the
date of such borrowing and certifying (i) that attached thereto is a true and
complete copy of the articles and bylaws of News as in effect prior to the
adoption of the resolutions referred to in the immediately following clause and
at all times since such adoption, (ii) that attached thereto is a true and
complete copy of the resolutions adopted by the Board of Directors of News
authorizing the execution, delivery and performance of this Loan Agreement and
the other Loan Documents by all of the Borrowers and the Warrants by News, and
(y) such other documents as the Lender may reasonably
request.
(i) If any payment of principal, interest or any other amount due
hereunder is due upon a day which is not a day upon which the Lender's bank is
open for business ("Business Day") then such payment shall be due on the next
succeeding Business Day and such extension shall in such case be included in the
computation of interest accrued thereon.
3. Borrowers' Representations, Warranties and Covenants. Each Borrower
represents, warrants, and covenants to Lender that, as of the date hereof, and
as long as any amount hereunder or under the Note remains outstanding (and with
respect to the Warrant, until expiration or exercise of the Warrant):
(a) there is no provision of any contract, agreement, indenture or
other instrument to which the Borrower is or will be a party which would be
contravened or violated by any of the representations, warranties, covenants or
agreements made or actions to be taken hereunder or under the other Loan
Documents or Warrant by such Borrower.
(b) there is no action, suit, proceeding, arbitration or investigation
pending at law or in equity or before any governmental agency or instrumentality
or, to the knowledge of such Borrower, threatened against or affecting such
Borrower or which, in any case, might materially adversely affect such Borrower
or its operations, business, assets, properties or condition (financial or
otherwise) or its ability to perform or otherwise comply with its obligations to
Lender. If, in the future, such action, suit, proceeding, arbitration or
investigation is pending or threatened, such Borrower shall provide Lender with
immediate notification and the details thereof.
(c) such Borrower is a corporation duly organized and validly existing
under the laws of the state of its incorporation. Such Borrower has the power
and authority to conduct all of the activities conducted by it and to own or
lease all of the assets owned or leased by it and such Borrower is duly licensed
or qualified to do business as a foreign corporation in all jurisdictions in
which the nature of its business require it to be so licensed or qualified. Such
Borrower is in all material respects in compliance with all laws, regulations
and ordinances applicably to it.
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(d) the execution, delivery and performance by such Borrower of this
Loan Agreement, the other Loan Documents and the Warrant (i) do not require the
approval of any governmental authority, (ii) do not violate the certificate of
incorporation or bylaws of such Borrower and (iii) do not violate any provisions
of law, any writ, order or decision of any court or other governmental
authority, or any indenture, agreement or other instrument to which such
Borrower is a party or by which its properties may be bound or affected. This
Loan Agreement, the other Loan Documents, the Warrant and any other documents
executed by such Borrower in connection herewith are, or upon execution and
delivery will be, the legal, valid and binding obligations of such Borrower,
enforceable in accordance with their respective terms, and are not and will not
be, without Lender's prior written consent, subordinated in right of payment to
any other obligation of such Borrower.
(e) such Borrower has obtained all necessary corporate and other
approvals for the execution and delivery of this Loan Agreement, the other Loan
Documents and the Warrant. Such Borrower has the power and authority to execute
this Loan Agreement, the other Loan Documents and the Warrant and to consummate
the transactions contemplated hereby and thereby.
(f) except for approximately $170,000 in overdue payroll taxes, which
the Borrower will repay from the proceeds of the Loan, no delinquency presently
exists with respect to payment of any tax, assessment or other governmental
charge owing by such Borrower. There are no material unresolved questions or
claims concerning any tax liability of such Borrower.
(g) insurance of the types and in the amounts customarily carried in
lines of business similar to such Borrower is maintained and kept in force.
(h) there is no condition of existing default by such Borrower under
any agreement, lease, contract or other instrument which would have a material
adverse effect on such Borrower, its operations, business, assets, properties,
or condition (financial or otherwise) or its ability to fulfill its obligations
to Lender hereunder or under the other Loan Documents or the Warrant.
(i) such Borrower has no contingent or disputed liabilities or
unrealized or anticipated losses which in the aggregate are material, or any
material commitments of an unusual or burdensome character.
(j) there is no fact which materially adversely affects the ability of
such Borrower to perform its obligations to Lender which has not been set forth
herein.
(k) none of this Loan Agreement, the other Loan Documents or the
Warrant, nor any certificate, statement or other document furnished or to be
furnished to the Lender in connection with the transactions contemplated hereby
or thereby contains or will contain any untrue statement of material fact or
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein, not misleading.
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4. Covenants. Unless Lender otherwise agrees in writing, until payment
and performance in full of the Loan and all obligations hereunder and under the
other Loan Documents, each Borrower shall:
(a) duly and punctually pay or cause to be paid the principal of and
interest on the Note on the dates, in the places and in the manner set forth
therein and herein, and perform and observe all other obligations of such
Borrower under this Loan Agreement, the other Loan Documents, the Warrant and
any other instruments, documents and agreements executed in connection herewith.
(b) maintain and preserve its existence, rights, privileges and
franchises in good standing under the laws of the state of its incorporation and
of such states in which it may decide to maintain its existence and maintain its
right to transact business in all other states where its activities and
ownership of assets are such that qualification to transact business is
necessary under the laws of such states.
(c) keep and maintain full and accurate accounts and records of its
operations in accordance with generally accepted accounting principles
applicable to businesses of the type in which it is engaged and consistent with
principles heretofore applied by it in preparation of its financial statements.
(d) with respect to News, timely file all documents and reports
required to be filed by it under the Securities Exchange Act of 1934, as
amended, and provide copies of all such filings, documents and reports to Lender
immediately after their filing with the Securities and Exchange Commission or
any other governmental or regulatory body.
(e) permit Lender to inspect the accounts and records of such Borrower
at any time during normal business hours.
(f) comply in all material respects with all laws, regulations, rules
and orders of governmental authorities applicable to it or to its operations,
business or property.
(g) duly pay and discharge, all wages, indebtedness, obligations,
assessments, governmental charges and taxes, real and personal, including
federal and state income taxes, levied upon or assessed against it or against
its properties or income prior to the date on which penalties were attached
thereto, unless and except to the extent only such shall be contested in good
faith and by appropriate proceedings diligently conducted by it.
(h) execute and deliver to Lender such other and further instruments,
security agreements documents and information and to do such other and further
acts as may be reasonably required and requested by Lender in order to fully
vest and maintain in Lender any security interest or rights herein contemplated.
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(i) promptly after learning thereof, notify Lender in writing of the
occurrence of (i) any Event of Default or any act, condition, or event that
would constitute an Event of Default upon notice, failure to cure or lapse of
time or all of the foregoing; (ii) any material adverse change in its business,
property, assets, operations or condition (financial or otherwise) or (iii) the
pendency or threat of any investigation or litigation or arbitration and of any
tax deficiency, tax determination or other proceeding before any governmental
body or official affecting it.
(j) will not voluntarily create, suffer, or permit to be created any
new or additional liens against the "Collateral" (as such term is defined in the
Security Agreement) or any liens against the "Pledged Securities" (as such term
is defined in the Pledge Agreement) except any lien created hereby. Each
Borrower shall not incur any indebtedness except in the ordinary course of
business without Lender's prior written consent which shall not be unreasonably
withheld.
(k) except with Lender's prior written consent, not (a) sell, lease,
transfer, spin off to shareholders or otherwise dispose of two or more of the
Borrowers' newspapers and/or other publications or any of the Pledged Securities
or (b) enter into any arrangement with any person with respect thereto.
5. Events of Default. If any of the events specified in this Section 5
shall occur (herein individually referred to as an "Event of Default"):
(i) Default in payment of principal or interest under the Note when due;
(ii) A default by any Borrower in any obligation, or breach by any
Borrower of any representation, warranty, covenant or agreement, set forth
herein or in any other Loan Document or the Warrant, or other documents signed
by any Borrower in connection with the Loan which is not cured or cannot be
cured by such Borrower, within ten (10) days after the Lender has given such
Borrower written notice of such default;
(iii) The institution by any Borrower of proceedings to be adjudicated
as 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 release under the federal Bankruptcy Code,
or any other applicable federal or state law, or the consent by it to the filing
of any such petition or the appointment of a receiver, liquidator, assignee,
trustee or other similar official for all or any substantial part of its
property or the taking of any action by any Borrower in furtherance of any such
action;
(iv) If, within sixty (60) days after the commencement of an action
against any Borrower seeking any bankruptcy, insolvency, reorganization,
liquidation or similar relief under any present or future statute, law or
regulation, such action shall not have been resolved in favor of such Borrower,
or all orders or proceedings thereunder affecting the property of such Borrower,
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stayed, or if the stay of any such order or proceeding shall thereafter be set
aside, or if, within sixty (60) days after the appointment without the consent
or acquiescence of such Borrower of any trustee or receiver for all or any
substantial party of its property such appointment shall not have been vacated;
(v) Any default of any Borrower under any indebtedness or other
obligations which aggregate at least $100,000 if such default is not cured by
such Borrower before the earlier of (1) ten (10) days after the Lender has given
such Borrower written notice of such default or (2) the obligee of such
indebtedness or other obligation has made demand or notified the Borrower of any
acceleration and in either case, any cure period has lapsed; or
(vi) The rendering of one or more judgments or orders against any
Borrower for the payment of money exceeding any applicable insurance coverage by
more than $100,000 in the aggregate, and either (1) enforcement proceedings
shall have been commenced by any creditor upon any such judgment or order, or
(2) there shall be any period of 30 consecutive days during which a stay of
enforcement of any such judgement or order, by reasons of a pending appeal or
otherwise, shall not be in effect; or
(vii) Any event if default under any other Loan Document; or
(viii) The dissolution or liquidation of any Borrower or if any
Borrower or its directors or shareholders shall take action approving or
authorizing the dissolution or liquidation of such Borrower
then, with the exception of an Event of Default specified in clauses
(iii) or (iv) above, the Lender may, by notice to the Borrowers, declare any
outstanding indebtedness to Lender under the Note and this Loan Agreement, all
interest thereon and all other amounts payable hereunder or thereunder to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the Borrowers,
whereupon the principal amount of the Note, all such interest and all such
amounts shall become and be immediately due and payable, and exercise any and
all of its other rights under applicable law.
Upon the occurrence of an Event of Default specified in clauses (iii)
or (iv) above, any outstanding indebtedness to Lender under the Note and this
Loan Agreement, all interest thereon and all other amounts payable hereunder or
thereunder shall thereupon and concurrently therewith become due and payable,
all without any action by the Lender, and without presentment, demand, protest
or other notice of any kind, all of which are hereby expressly waived by the
Borrowers, anything in this Loan Agreement or the Note to the contrary
notwithstanding.
In addition to its rights hereunder Lender may also exercise any or all
of its rights contained in any other Loan Document.
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6. Miscellaneous.
(a) Any notice required, desired or permitted to be given to the
Borrowers or the Lender hereunder shall be in writing and shall be delivered
personally, sent certified or registered United States mail, return receipt
requested, or sent by overnight courier service addressed to:
Borrowers: Xxxxxxx Xxxxxxxxx
President
News Communications, Inc.
174-15 Xxxxxx Xxxxxxx Expressway
Xxxxx Xxxxxxx, Xxx Xxxx 00000
Lender: J. Xxxxxx Xxxxx
Chairman
X.X. Xxxxx Investment Banking Corp.
00 Xxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Such notices shall be deemed given (i) if delivered personally, upon delivery,
(ii) if mailed as aforesaid, two (2) business days after deposit in the United
States mail and (iii) if sent by overnight courier service, (1) business day
after deposit with the courier service. Any party may change its address by
notice to the other parties.
(b) In the event any term or provision of this Loan Agreement, any
other Loan Document, the Warrant or any other instrument, document or agreement
executed pursuant hereto shall be finally determined to be superseded, invalid,
illegal or otherwise unenforceable pursuant to applicable law by any authority
having jurisdiction, such determination shall not affect the validity, legality
or enforceability of the remaining terms and provisions of this Loan Agreement,
any Loan Document, the Warrant or any such other instrument, document or
agreement, which shall be enforced as if the unenforceable term or provision
were deleted.
(c) No course of dealing on the part of Lender, its officers,
directors, employees, consultants or agents, nor any failure or delay by Lender
with respect to exercising any rights, remedy, power or privilege of Lender
under this Loan Agreement, any other Loan Document the Warrant, or any other
instrument, document or instrument executed and delivered in connection herewith
at law or in equity shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise or the exercise
of any other right, remedy, power or privilege. No waiver or consent shall be
effective unless the same shall be in writing and signed by Lender and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on the Borrowers in any
case shall entitle the Borrowers to any other or further notice or demand in
similar or other circumstances.
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(d) The enforcement of any rights of Lender to any security for the
Loan including under the Loan Documents shall not affect the rights of Lender to
enforce payment of the Loan and to recover judgement for any portion thereof
remaining unpaid. The rights and remedies herein expressed are cumulative and
not exclusive of any right or remedy that Lender shall otherwise have.
(e) This Loan Agreement, the other Loan Documents, the Warrant and all
instruments, documents or agreements executed pursuant hereto shall be governed
by and construed in accordance with the laws of the State of New York without
giving effect to the principles of conflicts of laws thereof.
(f) The Borrowers may not assign any of their respective rights or
obligations hereunder or under any of the other Loan Documents or the Warrant,
without the prior written consent of Lender. Any such assignment without such
consent shall be void and shall constitute an Event of Default hereunder and
under the other Loan Documents. Lender may assign its rights and obligations
hereunder or under the other Loan Documents or the Warrant without the prior
consent of the Borrowers.
(g) This Loan Agreement shall be binding upon, and inure to the benefit
of, and be enforceable by, the Borrowers and the Lender, and their respective
successors and permitted assigns.
(h) This Loan Agreement contains the entire agreement between the
Borrowers and the Lender with respect to the subject matter hereof, and
supersedes and cancels any prior agreements or understanding, oral or written
among the parties hereto with respect thereto. This Loan Agreement may not be
amended or modified except in a writing signed by the Lender and the Borrowers.
(i) All representations and warranties contained in this Loan Agreement
or made in writing by or on behalf of Borrowers in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Loan Agreement and of the other Loan Documents, regardless of any
investigation at any time made by Lender or on its behalf. This Loan Agreement
shall continue in full force and effect so long as any amounts borrowed, or
expenses, fees, including legal fees, or interest remain unpaid.
(j) This Loan Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one agreement. This Loan Agreement will be deemed to be a binding agreement
among the parties hereto upon the receipt by each party of fully executed copies
of this Agreement by mail, facsimile or otherwise.
(k) The Lender is not a partner or a joint venturer with the Borrowers
with respect to the transactions contemplated hereby or by the other Loan
Documents or the Warrant and the Lender shall not be deemed liable as such with
respect to any liability of the Borrowers.
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(l) The Borrowers hereby consent to service of any notice, process,
motion or other document in connection with any lawsuit or other proceeding
arising out of or relating to this Loan Agreement, the other Loan Documents or
the Warrant, by registered mail, return receipt requested, to the address set
forth in Section 6(a) hereof or such other address as the Borrowers shall
provide the Lender in writing and the Borrowers hereby waive any right to trial
by jury in any such lawsuit or proceeding.
(m) Each Borrower hereby agrees not to raise or interpose any defense,
set-off or counterclaim of any kind or nature whatsoever which it may have
against the Lender in any action brought upon this Loan Agreement, the other
Loan Documents or the Warrant and each Borrower acknowledges that it has no
defense of any kind or nature to the enforcement of this Loan Agreement, the
other Loan Documents and the Warrant or to the binding nature of the obligations
represented hereby or thereby.
(n) The Borrower agrees to pay all of Lender's legal fees and expenses
incurred in connection with the documentation, negotiation and execution of this
Loan Agreement, the other Loan Documents and the Warrant, and all expenses
incurred, including legal fees and expenses, in collecting any of Borrower's
obligations hereunder or thereunder.
X.X. XXXXX INVESTMENT NEWS COMMUNICATIONS, INC.
BANKING CORP.
By: /s/ J. Xxxxxx Xxxxx By: /s/ Xxxxxxx Xxxxxxxxx
------------------------- ----------------------------
J. Xxxxxx Xxxxx Xxxxxxx Xxxxxxxxx
Chairman President
TRIBCO INCORPORATED
By: /s/ Xxxxxxx Xxxxxxxxx
----------------------------
Xxxxxxx Xxxxxxxxx
President
ACCESS NETWORK CORP.
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------
Xxxxxxx Xxxxxxxxx
President
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