VANGUARD COMMUNICATIONS, L.P.
B UNIT PURCHASE WARRANT
THE WARRANT EVIDENCED HEREBY AND THE UNITS OF
LIMITED PARTNERSHIP INTEREST ISSUABLE UPON EXERCISE THEREOF
HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE
SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. THE WARRANT MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE ASSIGNED. THE UNITS OF LIMITED PARTNERSHIP INTEREST
ISSUABLE UPON EXERCISE OF THE WARRANT (THE "SECURITIES") MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE ASSIGNED WITHOUT REGISTRATION UNLESS
(I) AN EXEMPTION FROM REGISTRATION IS AVAILABLE UNDER THE ACT
OR THE RULES OR REGULATIONS PROMULGATED THEREUNDER, AND ANY
APPLICABLE STATE LAWS, AND (II) PERMITTED IN ACCORDANCE WITH
ALL APPLICABLE RESTRICTIONS SET FORTH HEREIN AND IN THE
COMPANY'S AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP.
WARRANT TO PURCHASE B UNITS OF LIMITED PARTNERSHIP
INTEREST AS DESCRIBED HEREIN
Issue Date: December 29, 1994.
Expiration Date: December 28, 1997.
This certifies that, for value received, International Xxxxxx Pacific
Cablevision, Ltd., a corporation incorporated under the laws of the Province of
British Columbia (the "Holder"), is entitled to purchase from Vanguard
Communications, L.P., a California limited partnership (the "Company" or
"Vanguard"), for aggregate consideration of $1,250,000, subject to adjustment as
set forth herein (the "Exercise Price"), One Hundred Seventy Two (172) units of
limited partnership interest (the "Units") of the Company's B Unit. (the "B
Units") as defined in the Company's Second Amended and Restated Partnership
Agreement dated as of August 12, 1994 (as amended from time to time, the
"Partnership Agreement") on the terms set forth herein. The number of Units may
be adjusted from time to time as described in this Warrant, and the Exercise
Price shall be subject to adjustment pursuant to Section 4. Capitalized terms
used herein and not otherwise defined shall have the meanings set forth in
Exhibit A attached hereto and incorporated herein by this reference.
1. Exercise.
1.1 Time for Exercise. This Warrant may be exercised at any time, in whole
and not in part, during the period commencing on the date that is one hundred
eighty-one (181) days after the issue date of this Warrant and expiring on
December 28, 1997 (the "Exercise Period"), subject to earlier expiration as
provided herein.
1.2 Manner of Exercise. This Warrant shall be exercised by delivering it to
the Company with the exercise form duly completed and signed. Simultaneously
therewith, the Holder shall deliver to the Company cash or a certified check in
an amount equal to the Exercise Price, and, subject to Sections 1.4, 2 and 3,
the Holder shall be entitled to receive the Units from the Company in accordance
with Section 1.3.
1.3 Further Assurances; Admission as Limited Partner. Upon exercise of this
Warrant pursuant to Section 1.2, subject to Sections 1.4 and 3, Holder shall (a)
execute, acknowledge and deliver to the Partnership such other instruments as
the Company may deem necessary or advisable to consummate the sale of the Units
to Holder and, in the case of a Holder who was not a limited partner (a "Limited
Partner") of the Company prior to such exercise, to effect the admission of
Holder as a Limited Partner, including, without limitation, a Subscription
Agreement in a form acceptable to the Company and an executed Partnership
Agreement; and (b) if the Holder was not a Limited Partner prior to such
exercise, pay a fee to the Partnership in an amount sufficient to cover all
reasonable third party or out-of-pocket expenses connected with the admission of
Holder as a Limited Partner. Holder shall be deemed to be a Limited Partner with
respect to the Units as to which this Warrant is exercised as of the close of
business on the date all the actions required in this Section 1 shall have been
completed.
1.4 Security Agreement for Certain Exercises. Pursuant to the Stock
Purchase Agreement, OpTel, Inc., a Delaware corporation which is the assignee of
the Company ("OpTel"), purchased substantially all of the assets of the Holder.
This Warrant serves as partial consideration for such purchase. Pursuant to
Article 6 of the Stock Purchase Agreement, OpTel has the right to receive
indemnification from the Holder, including by means of adjusting the Exercise
Price, the Put Price and the Call Price and, if the Warrant has been exercised,
to require the Holder to execute the Security Agreement, pursuant to which the
Holder shall grant a security interest in the Units until the Outside Date (as
defined below), and to require that the proceeds of the sale of any of the
Collateral Units or distributions on Collateral Units be deposited and held in
the Collateral Account until the Outside Date.
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1.4.1 Terms of Security Agreement. In order to implement certain of the
rights of OpTel under the Stock Purchase Agreement, the Holder agrees that,
notwithstanding any other provision of this Warrant, if the Holder elects to
exercise this Warrant prior to the later to occur of (a) the one year
anniversary of the date of this Warrant, and (b) the sixtieth (60th) day
following the Indemnification Resolution Date (the latest of such dates being
referred to herein as the "Outside Date"), prior to the issuance of the Units
(i) the Holder and OpTel shall enter into the Security Agreement, and (ii) the
Holder shall execute and deliver to OpTel a financing statement (UCC-1 form) and
one duplicate original. If at the time of the exercise of this Warrant (i) there
is a Public Market for the Units, a number of the Units equal to $2,250,000 at
the then-current Market Value will serve as collateral pursuant to the Security
Agreement, or (ii) there is not a Public Market for the Units, all of the Units
and related proceeds will serve as collateral pursuant to the Security
Agreement. The Security Agreement shall remain in full force and effect until
the Outside Date.
1.4.2 Distributions on Units. All distributions paid or made with respect
to the Collateral Units during the Security Term shall be paid by the General
Partner directly to the Collateral Account. All distributions in connection with
any reorganization or recapitalization of the Company (including any merger)
paid or made with respect to the Collateral Units while the Security Agreement
is in effect shall be deposited into such account.
1.4.3 Restrictions. During the Security Term, the Holder shall not pledge,
mortgage, hypothecate, encumber or create or suffer to exist a security interest
in the Collateral Units or sell, assign or otherwise transfer such Units to or
in favor of anyone other than pursuant to Section 2 of the Security Agreement,
and the Holder shall not file or permit to be filed any financing statement or
other security instrument with respect to the Collateral Units. The securities
issuable upon exercise of the Warrant, whether they are Collateral Units or
otherwise, may not be sold, transferred or pledged except in accordance with the
terms of the Partnership Agreement.
1.5 Further Assurances. Intentionally deleted.
1.6 Representations and Warranties. The Holder agrees that all of the
representations and warranties made by it in the Investor Representations Letter
are true as of the date hereof and shall be true on and as of the date of
exercise of this Warrant, with the same effect as though such representations
and warranties had been made on and as of the date of exercise.
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2. Holder's Put option. Subject to Section 3, if this Warrant is not exercised
during the Exercise Period, then the Holder may, in its sole discretion, within
the ninety (90) day period commencing on the date on which the Exercise Period
terminates (the "Put Period"), by written notice to the Company and OpTel,
require that the Warrant, together with all rights, title and interest herein,
be purchased for a price of $1,000,000, subject to adjustment pursuant to
Section 4 (the "Put Price"), paid to the Holder (the "Put Option"). After the
Holder has delivered to the Company and OpTel written notice of the Holder's
exercise of the Put Option, OpTel must pay the Put Price within ninety (90)
calendar days following the later to occur of (i) the Company's receipt of such
written notice and (ii) the Outside Date (such 90-day period being referred to
as the "Put Funding Period"). The Company shall have no liability to pay the Put
Price. OpTel's failure to pay the Put Price within the Put Funding Period shall
be deemed to be an "Event of Default" under the Closing Note and the Stock
Pledge Agreement, unless such failure is due to circumstances beyond OpTel's
control. If the Holder does not exercise the Put Option prior to the expiration
of the Put Period, the Put Option shall expire and be of no further force and
effect.
3. Company 's Call option.
3.1 At any time prior to the issuance to the Holder of the Units, or such
later date as is provided in Section 3.2 (the "Call Period"), the Company may,
in its sole discretion, repurchase this Warrant, together with all rights, title
and interest herein, for a price of $4,000,000, subject to adjustment pursuant
to Section 4 (the "Call Price"), paid to the Holder (the "Call Option"). OpTel
shall be liable to the Holder to pay that portion of the Call Price that is
equal to the Put Price, and the Company shall be liable to pay to the Holder the
balance of the Call Price. The Call Option shall be exercised by written notice
delivered to the Holder and to OpTel. Upon the Company's delivery of such notice
to the Holder and to OpTel, this Warrant, together with all rights, title and
interest of the Holder herein, shall terminate and the Holder shall be obligated
to deliver this Warrant to the Company within thirty (30) calendar days of the
date of such notice; provided, however, that if the Company and OpTel do not pay
the Call Price on or before the thirtieth (30th) calendar day following the
Company's receipt of this Warrant, or such later date as is provided in Section
3.2 (the "Call Funding Period"), then this Warrant, together with all rights,
title and interest herein, shall remain in full force and effect, and thereafter
the Company must again provide written notice of its exercise of the Call Option
and comply with the provisions of this Section 3 if the Company desires to
exercise the Call Option. If the Company exercises the Call option after the
Holder has paid the Exercise Price, the
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Company shall reimburse the Holder for such amount concurrently with the payment
of the Call Price.
3.2 If during the Call Period the Outside Date has not occurred, then
(i) if the Holder has exercised this Warrant, (a) the Holder shall pay
to the Company the Exercise Price (as adjusted pursuant to Section 4) in
accordance with Section 1.2 and (b) the Units shall be pledged to OpTel as
security pursuant to the Security Agreement in accordance with Section
1.4.1;
(ii) regardless of whether the Holder has exercised this Warrant, the
Call Period shall be extended so as to terminate on the thirtieth (30th)
calendar day following the Outside Date; and
(iii) regardless of whether the Holder has exercised this Warrant, the
Call Funding Period shall be extended so as to terminate (x) if the Holder
has not exercised this Warrant, on the thirtieth (30th) calendar day after
the Company's receipt of the Warrant following the Company's exercise of
the Call Option, if any, or (y) if the Holder has exercised this Warrant,
on the thirtieth (30th) calendar day following the exercise of the Call
Option, if any.
3.3 If the Company does not exercise the Call Option prior to the
expiration of the Call Period (as extended pursuant to Section 3.2), the Call
Option shall expire and be of no further force and effect.
4. Adjustments to Exercise Price, Call Price and Put Price. If at any time
during the Call Period, the Put Period or the Put Funding Period there exists
any Resolved Indemnification Claim, then OpTel may, without prejudice to any
other rights it may have, including without limitation the right to offset
against the Closing Note and to seek damages from the Holder, to the extent that
the amount of the Resolved Indemnification Claim(s) in not otherwise satisfied,
require the following adjustments: (i) decrease the Put Price by the amount of
the Resolved Indemnification Claim(s) and (ii) decrease the Call Price by the
amount of the Resolved Indemnification Claim(s). In addition to the foregoing,
if at any time during the Call Period there exists any Resolved Indemnification
Claim, then the Company may, without prejudice to any other rights it may have,
including without limitation the right to seek damages from the Holder, to the
extent that the amount of the Resolved Indemnification Claim(s) is not otherwise
satisfied, require an increase in the Exercise Price by the amount of the
Resolved Indemnification Claim(s). Notwithstanding any adjustments made pursuant
to this Section 4, the other procedures applicable to exercising this Warrant,
the Put
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option and the Call Option provided in Sections 1, 2 and 3 shall continue to
apply.
5. Adjustments for Loss of Ventena. Intentionally Deleted.
6. Transfer of Warrants and Securities.
6.1 No Transfer of Warrant. This Warrant may not be sold, transferred or
pledged. The Company may place a legend to that effect on this Warrant and any
replacement Warrant.
6.2 Restrictions on Transfers of Securities. In addition to the
restrictions on the Escrowed Units pursuant to Section 1.4.3, the Units may not
be sold, transferred or pledged unless (a) the Company shall have been supplied
with reasonably satisfactory evidence that such transfer is not in violation of
the Act and any applicable state securities laws and (b) Holder shall have met
the transfer restrictions applicable for Units set forth in the Partnership
Agreement. The Company may place a legend to that effect on this Warrant and any
replacement Warrant.
6.3 Loss, Destruction of Warrant Certificates. Upon receipt of (i) evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of the Warrant and (ii) except in the case of mutilation, an
indemnity or security reasonably satisfactory to the Company, the Company will,
within ten (10) business days, execute and deliver a replacement Warrant of like
tenor representing the right to purchase the Units for the Exercise Price.
7. Cost of Issuances. The Company shall pay all expenses and other charges
payable in connection with the preparation, issuance and delivery of the Units.
8. Anti-Dilution Provisions. If any of the following events occurs at any time
hereafter during the Exercise Period, then the number of Units subject to this
Warrant immediately prior to such event shall be changed as described in order
to prevent dilution:
8.l Stock Splits and Reverse Splits. If at any time (i) the outstanding B
Units are subdivided into a greater number of B Units, then the number of Units
will be increased proportionately, and conversely, (ii) the outstanding B Units
are consolidated into a smaller number of B Units, then the number of Units will
be reduced proportionately.
8.2 Effect of Reorganization and Asset Sales. If any Event is effected in
such a way that holders of B Units are entitled to receive securities and/or
assets as a result of their ownership of B Units, then upon exercise of this
Warrant the Holder will have the right to receive in lieu of or in addition to
the Units, as the cane may be, the securities
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and/or assets which it would have received if such rights had been fully
exercised as of the record date for such Event. The Company will not effect any
Event unless prior to or simultaneously with its consummation the successor
business entity resulting from the consolidation or merger (if other than the
Company), or the business entity purchasing the Company's assets, assumes the
performance of the Company's obligations under this Warrant (as appropriately
adjusted to reflect such consolidation, merger or sale such that the Holder' s
rights under this Warrant remain, as nearly as practicable, unchanged) by a
binding written instrument.
8.3 Other Securities Adjustments. If as a result of this Section 8, the
Holder is entitled to receive any securities other than the Units upon exercise
of this Warrant, the number of such securities shall thereafter be adjusted from
time to time in the same manner as provided pursuant to this Section 8 for the
Units. The allocation of purchase price between various securities shall be made
in writing by the Board of Directors of the General Partner of the Company in
good faith at the time of the event by which the Holder becomes entitled to
receive new securities, and a copy shall be sent to the Holder.
8.4 Notices.
8.4.1 Notice of Adjustments. When any adjustment is required to be made
under this Section 8, the Company shall promptly (i) determine such adjustments,
(ii) prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the adjustment; and (iii) cause a copy of such
statement, together with any agreement required by Section 8.2, to be promptly
mailed to the Holder after the date on which the circumstances giving rise to
such adjustment occurred.
8.4.2 Notice of Events. If at any time (i) the Company declares any
distribution with respect to the Units payable in securities, (ii) any Event
occurs, or (iii) there is a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then the Company shall give the Holder at least ten
(10) but not more than sixty (60) calendar days written notice of the date on
which the books of the Company will close or upon which a record will be taken
with regard to such occurrence. Such notice will also specify the date as of
which the holders of Units will participate in the distribution or will be
entitled to exchange their Units for securities or other property (it being
understood that Holder will be deemed to be a holder of Units only if and to the
extent he or it was a Limited Partner prior to the exercise of an option
hereunder or has become a Limited Partner hereunder). The notice may state that
the record date is subject to the effectiveness of a registration statement
under
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the Act or to a favorable vote or determination of shareholders or Unitholders
or of any governmental agency.
8.5 Computations and Adjustments. Upon each computation of an adjustment
under this Section 8, the number of Units shall be calculated up or down to the
nearest whole share. However, the fractional amount of each shall be used in
calculating any future adjustments. No fractional Units shall be issued in
connection with the exercise of this Warrant, but the Company shall make a cash
payment for any fractional Units based on the Market Value of Units on the date
of exercise. Notwithstanding any changes in the number of Units, this Warrant,
and any Warrants issued in replacement thereof, may continue to state the
initial number of Units. Alternatively, the Company may elect to issue a new
Warrant or Warrants of like tenor for the additional Units purchasable hereunder
or, upon surrender of the existing Warrant, to issue a replacement Warrant, for
the same Exercise Price as the existing Warrant, evidencing all the Warrants to
which the Holder is entitled after such adjustments.
8.6 Exercise Before Payment Date. In the event that this Warrant is
exercised after the record date for any event requiring an adjustment, but prior
to the actual event, the Company may elect to defer issuing any applicable
payment or other securities to the Holder until the actual event occurs;
provided, however, that the Company shall deliver a Due Bill or other
appropriate instrument to the Holder, transferrable to the same extent as the
other securities issuable on exercise, evidencing the Holder's right to receive
such additional payment or other securities upon the occurrence of the event
requiring such adjustment.
9. Registration Rights. If the Holder exercises this Warrant, the Holder shall
have the right to cause the Company to register the Units on the same terms and
conditions as, and only to the extent that, at any time prior to the disposition
by the Holder of the Units, the senior management of the Company or the
individuals and entities who are Limited Partners of the Company, are accorded
such right, if any. Such right is personal to the Holder and is not
transferable.
10. Covenants. Intentionally Deleted.
11. Status of Holder.
11.1 Not a Limited Partner. Subject to Section 1.4, until all the actions
required in Section 1 of this Warrant shall have been completed, the Holder
shall not be entitled to any rights (i) as a Limited Partner with respect to the
Units including, without limitation, the right to vote or receive distributions,
or (ii) to receive any notice of any proceedings of the Company except as
otherwise provided in this Warrant. Without limiting the foregoing, the
Partnership
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Agreement may be amended, and the Company may take any action described in
Section 8, without the consent of the Holder.
11.2 Limitation of Liability. Unless the Holder exercises this Warrant in
writing, the Holder's rights and privileges hereunder shall not give rise to
any liability for the Exercise Price or as a limited partner of the Company,
whether to the Company or its creditors.
12. Miscellaneous.
12.1 Complete Instrument; Modifications. This Warrant and any documents
referred to herein or executed contemporaneously herewith, including without
limitation the Stock Purchase Agreement and the Investor Representations Letter,
constitute the parties' entire agreement with respect to the subject matter
hereof and supersede all agreements, representations, warranties, statements,
promises and understandings, whether oral or written, with respect to the
subject matter hereof. This Warrant may not be amended, altered or modified
except by a writing signed by the parties.
12.2 Reliance on Representations. All agreements, representations and
warranties of each party hereto shall be deemed to be material and to have been
relied upon by the other party, notwithstanding any investigation heretofore or
hereafter made by such other party or on its behalf.
12.3 Additional Documents. Each party hereto agrees to execute any and all
further documents and writings and to perform such other actions which may be or
become reasonably necessary or expedient to effectuate and carry out this
Warrant.
12.4 Expenses. Except as set forth in Sections 7, 12.9 and 12.10, each
party hereto will pay all of its own expenses incurred in connection with this
Warrant; provided, however, that each party shall pay one half of the costs of
the Collateral Account.
12.5 Notices. All notices, requests, demands and other communications under
this Warrant shall be given in writing and shall be: (a) personally delivered;
(b) sent by telecopier or facsimile transmission; or (c) delivered by registered
or certified U.S. Mail, return receipt requested and postage prepaid, or by
private overnight mail courier service, to such address as may be designated
from time to time by the relevant party, and which shall initially be:
If to the Company:
Vanguard Communications, L.P.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
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Attention: Xxxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy by the same means to:
Irell & Xxxxxxx
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to OpTel:
OpTel, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy by the same means to:
Irell & Xxxxxxx
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Holder:
International Xxxxxx Pacific Cablevision, Ltd.
0000 Xxxxx Xxxxxx
Xxxxx 0
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy by the same means to:
Xxxxx and Xxxxxxx, a P.C.
0000 Xx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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and
HPC Xxxxxxx & Co.
00000 Xxxx Xxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If personally delivered pursuant to this Section 12.5, such communication
shall be deemed delivered upon actual receipt; if sent by telecopier or
facsimile transmission pursuant to this Section 12.5, such communication shall
be deemed delivered the next business day after transmission (and sender shall
bear the burden of proof of delivery); if sent by overnight courier pursuant to
this Section 12.5, such communication shall be deemed delivered upon receipt;
and if sent by U.S. Mail pursuant to this Section 12.5, such communication shall
be deemed delivered as of the date of delivery indicated on the receipt issued
by the relevant postal service, or, if the addressee fails or refuses to accept
delivery, as of the date of such failure or refusal. No objection may be made to
the manner of delivery of any notice actually received in writing by an
authorized agent of a party.
12.6 No Third-Party Benefits; Successors and Assigns. None of the
provisions of this Warrant shall be for the benefit of, or enforceable by, any
third-party beneficiary. Except as provided herein to the contrary, this Warrant
and the representations and warranties made by the Holder in the Investor
Representations Letter shall be binding upon and inure to the benefit of the
parties and, in the case of the Company, its successors and assigns.
12.7 Governing Law; Jurisdiction. This Warrant has been negotiated and
entered into in the State of California, concerns a California business and all
questions with respect to the Warrant and the rights and liabilities of the
parties will be governed by the laws of California applicable to agreements and
instruments made and to be performed entirely in that State, regardless of the
choice of law provisions of California or any other jurisdiction. Any and all
dispute between the parties that may arise pursuant to this Warrant and are not
required to be submitted to arbitration under Section 12.10 hereof will be heard
and determined before an appropriate federal or state court located in Los
Angeles, California. The parties hereto acknowledge that such court has the
exclusive jurisdiction to interpret and enforce the provisions of this Warrant
and the parties waive any and all objections that they may have as to
jurisdiction or venue in any of the above courts.
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12.8 Waivers Strictly Construed. With regard to any power, remedy or right
provided herein or otherwise available to any party hereunder (i) no waiver or
extension of time shall be effective unless expressly contained in a writing
signed by the waiving party; and (ii) no alteration, waiver, modification or
impairment shall be implied by reason of any previous waiver, extension of time,
delay or omission in exercise, or other indulgence.
12.9 Attorneys' Fees. Should any litigation or arbitration be commenced
("including any proceedings in a bankruptcy court) between the parties hereto or
their representatives concerning any provision of this Warrant or the rights and
duties of any person or entity hereunder, solely as between the parties hereto
or their successors the party or parties prevailing in such proceeding as
determined by a court or board of arbitrators shall be entitled, in addition to
such other relief as may be granted, to the reasonable attorneys' fees and
expenses of counsel and court costs actually incurred by reason of such
litigation or arbitration.
12.10 Arbitration of Disputes.
12.10.1 Except for actions seeking injunctive relief or specific
performance, which actions may be brought before any court having jurisdiction
pursuant to Section 12.7 hereof, any claim arising out of or relating to this
Warrant including, but not limited to, its validity, interpretation,
enforceability or breach, which is not settled by agreement between the parties,
shall be resolved by arbitration in Los Angeles, California before a board of
three arbitrators. The arbitration shall be administered by the American
Arbitration Association ("AAA") and, to the extent not inconsistent with this
Section 12.10, shall be governed by the AAA's Arbitration Rules and the
Supplementary Procedures for Large, Complex Disputes. Arbitration shall be
commenced by one party serving a notice of intent to arbitrate upon the other
party by any of the means set forth in Section 12.5 hereof. The notice of intent
to arbitrate shall name one arbitrator, and the party receiving the notice shall
name the second arbitrator within ten (10) business days. The two arbitrators so
chosen shall mutually agree upon the selection of the third impartial and
neutral arbitrator. In the event that the two chosen arbitrators cannot agree
upon a third arbitrator within ten (10) business days, then the moving party and
the party receiving the notice shall each propose a list of five (5)
individuals, including on each of the two lists at least three (3) retired
judges who have served on a federal court in California or the California
Superior Court or higher court in the State of California. Each party will
strike four (4) of the names from the other party's list and the third
arbitrator will be drawn from the two names remaining on the combined list. If
the party receiving the notice shall fail to
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designate the second arbitrator, the sole arbitrator appointed shall have the
power to appoint, in his or her sole discretion, both the second and third
arbitrators. If a party fails to appoint a successor to its appointed arbitrator
within ten (10) business days of the death, resignation or other incapacity of
such arbitrator, the remaining two arbitrators shall appoint such successor.
12.10.2 The parties hereby (a) consent to the in personam jurisdiction of
the Superior Court of the State of California or any federal court, located in
Los Angeles County, for purposes of confirming any arbitration award and
entering judgment thereon; (b) agree to use their best efforts to keep all
matters relating to any arbitration hereunder confidential to the maximum extent
permitted by law; and (c) agree that the arbitrators may not assess any remedy
other than the awarding of actual out-of-pocket damages suffered and/or an
injunctive order (including temporary, preliminary and permanent relief) when
appropriate. In any arbitration proceedings hereunder: (i) all testimony of
witnesses shall be taken under oath; (ii) discovery shall be conducted only
pursuant to an order of the arbitrators, which order may be requested by any
party and which order shall permit only the conduct of the deposition of, or the
propounding of interrogatories to, such persons who may possess information
determined by the arbitrators to be necessary to a determination of the action
and who will not be available to testify at the hearing; (iii) upon conclusion
of any arbitration, the arbitrators shall render findings of fact and
conclusions of law in a written opinion setting forth the basis and reasons for
any decision reached and deliver such documents to the Company and the Holder
along with a signed copy of the award in accordance with Section 1283.6 of the
California Code of Civil Procedure; (iv) any decision of the arbitrators must be
reached by majority of the arbitrators; and (v) the rules of evidence as then
applicable to civil actions under California law shall be applied in the
arbitration.
12.10.3 Except to the extent provided in the first sentence of Section
12.10.1, each party agrees that the arbitration provisions of this Warrant are
its exclusive remedies and expressly waives any right to seek redress in another
forum. Each party shall bear the fees of the arbitrator appointed by it, and
each party hereby agrees to pay one half the costs of the fees of the third
arbitrator, during the progress of the arbitration; provided, however, that the
prevailing party in any arbitration, which shall be determined by the
arbitrators, shall be entitled to an award of attorneys' fees and costs, and the
arbitrators' fees and costs and all other costs of the arbitration shall be paid
by the losing party.
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12.11 Rules of Construction.
12.11.1 Headings. The section and subsection headings in this Warrant are
inserted only as a matter of convenience, and in no way define, limit, or extend
or interpret the scope of this Warrant or of any particular section or
subsection.
12.11.2 Tense and Case. Throughout this Warrant, as the context may
require, references to any word used in one tense or case shall include all
other appropriate tenses or cases.
12.11.3 Severability. The validity, legality or enforceability of the
remainder of this Warrant shall not be affected even if one or more of its
provisions shall be held to be invalid, illegal or unenforceable in any respect.
12.11.4 Currency. All currency amounts referred to in this Warrant are in
United States dollars.
12.11.5 Warrant Negotiated. The parties hereto are sophisticated and have
been represented by lawyers throughout this transaction who have carefully
negotiated the provisions hereof. As a consequence, the parties do not believe
that the presumptions of California Civil Code section 1654 relating to the
interpretation of contracts against the drafter of any particular clause should
be applied in this case and therefore waive its effects.
-14-
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
effective as of December 29, 1994.
VANGUARD COMMUNICATIONS, L.P.
By: Vanguard Communications, Inc.
Its: General Partner
/s/ Xxxx X Xxxxxxxxxx
-------------------------------
By: Xxxx X Xxxxxxxxxx
Its: Executive Vice President
-15-
EXERCISE FORM
To Be Executed
Upon Exercise of Warrant
The undersigned hereby exercises the attached Warrant with regard to the
Units, and herewith tenders payment of the Exercise Price of $______________ in
full in cash or by certified check, payable to the Company.
Dated: _________________ Name of
Holder: International Xxxxxx
Pacific Cablevision, Ltd.
By: _____________________________
(Signature)
Name:_____________________________
(Please Print)
Its: _____________________________
Address:__________________________
__________________________
__________________________
__________________________
Employer Identification Number,
Social Security Number or other
taxpayer identifying number:
__________________________________
-16-
EXHIBIT A
Definitions
"Act" means the Securities Act of 1933, as amended.
"Call Funding Period" is defined in Section 3.
"Call Option" is defined in Section 3.
"Call Period" is defined in Section 3.
"Call Price" is defined in Section 3.
"Closing Note" means that certain promissory note of even date herewith
executed by the Company in favor of the Holder pursuant to section 3.2.2(b) of
the Stock Purchase Agreement as partial payment of the purchase price under the
Stock Purchase Agreement.
"Company" means Vanguard Communications, L.P., a California limited
partnership.
"Collateral Account" means the account established by the Company pursuant
to the Security Agreement into which distributions on the Collateral Units and
proceeds of the sale of Collateral Units will be deposited and held following
exercise of the Warrant under the circumstances described in Section 1.4 until
the Outside Date.
"Collateral Units" means the Units that are held pursuant to the Security
Agreement from time to time pursuant to Section 1.4.
"Event" means a (i) reorganization or reclassification of the Units, (ii)
consolidation or merger of the Company with or into another business entity,
(iii) sale of all or substantially all of the Company's operating assets to
another business entity, or (iv) sale of the Company substantially as a going
concern followed by a liquidation of the Company.
"Exercise Period" is defined in Section 1.1.
"Final Resolution" or "Finally Determined" means, with respect to any
claim, that a court of competent jurisdiction has entered a judgment with
respect to such claim, and all applicable appeal periods with respect to such
judgment have passed with no appeal having been taken or any and all appeals
from such judgment having been fully resolved.
"General Partner" means Vanguard Communications, Inc., a California
corporation and the general partner of Vanguard.
"Indemnification Resolution Date" means the date on which all Pending
Indemnification Claims made prior to the exercise
-17-
of the Warrant or during the Security Term have become Resolved Indemnification
Claims.
"Investor Representations Letter" means that certain Investor
Representations Letter of even date herewith executed by Xxxxxx.
"Market Value" for any security on any given date means (i) the average
closing price for the prior ten (10) trading days for such security on the
principal stock exchange on which such security is traded or (ii) if not so
traded, the closing (or, if no closing price is available, the average of the
bid and asked prices) for such period on the NASDAQ if such security is listed
on the NASDAQ or (iii) if not listed on any exchange or quoted on the NASDAQ,
such value as may be determined in good faith by the Board of Directors of the
Company's general partner, which determination shall be conclusively binding on
the parties.
"OpTel" means OpTel, Inc., a Delaware corporation which is the assignee of
all of the rights and obligations, with certain exceptions, of the Company.
"Outside Date" is defined in Section 1.4.1.
"Pending Indemnification Claim" means a claim by the Company against the
Holder for indemnification under Article 6 of the Stock Purchase Agreement.
"Public Market" for any security means the security is listed on any
national securities exchange or quoted on the NASDAQ.
"Put Funding Period" is defined in Section 2.
"Put option" is defined in Section 2.
"Put Period" is defined in Section 2.
"Put Price" is defined in Section 2.
"Resolved Indemnification Claim" means that a Pending Indemnification Claim
(a) has been Finally Determined, or (b) has been agreed to by the Company and
the Holder in writing.
"Security Agreement" means the Security Agreement in the form of Exhibit B
attached hereto and incorporated herein by reference.
"Security Term" means the period during which any of the Collateral Units
are held pursuant to the Security Agreement or any amount is held in the
Collateral Account.
-18-
"Stock Pledge Agreement" means that certain Stock Pledge Agreement of even
date herewith executed by and between the Holder and OpTel.
"Stock Purchase Agreement" means that certain Stock Purchase Agreement
dated as of July 6, 1994 by and between the Holder and Vanguard and certain
other parties signatory thereto, together with that certain side letter dated as
of July 6, 1994 executed concurrently therewith, as amended by Amendment No. 1
to Stock Purchase Agreement dated as of September 30, 1994 and Amendment No. 2
to Stock Purchase Agreement dated as of December 16, 1994.
"Vanguard" means Vanguard Communications, L.P., a California limited
partnership.
-19-
Exhibit B
SECURITY AGREEMENT
This Security Agreement (the "Agreement") is entered into as of this
______________________ day of __________________, 199 _ between INTERNATIONAL
XXXXXX PACIFIC CABLEVISION, LTD., a corporation incorporated under the laws of
the Province of British Columbia (the "Debtor"), and OPTEL, INC., a Delaware
corporation (the "Secured Party").
1. For valuable consideration and to secure the payment and performance by
Debtor of all Liabilities (as hereinafter defined) Debtor hereby conveys,
assigns, transfers and grants to Secured Party a security interest in (a) all of
Debtor's limited partnership interest in Vanguard Communications, L.P., a
California limited partnership ("Vanguard"), (b) all of Debtor's rights as a
limited partner of Vanguard, (c) all of Debtor's interest in that certain Second
Amended and Restated Partnership Agreement dated as of August 12, 1994 (as
amended from time to time, the "Partnership Agreement"), (d) all of Debtor's
rights, whether now owned or hereafter acquired, to receive its share of
profits, income, capital, distributions and surplus from Vanguard in the form of
cash, properties or other assets and whether upon dissolution, liquidation or
otherwise, and (e) the proceeds of all of the foregoing, all of which shall be
collectively referred to herein as "collateral".
For purposes hereof, the term "Liabilities" shall include any and all
indebtedness, obligations, and liabilities of any kind of Debtor to Secured
Party, now existing or hereafter arising, under or pursuant to that certain
Stock Purchase Agreement, dated as of July 6, 1994, as amended by that certain
Amendment No. 1 to Stock Purchase Agreement dated as of September 29, 1994, and
by that certain Amendment No. 2 to Stock Purchase Agreement dated as of December
16, 1994, and any and all amendments, modifications, restatements, substitutions
and replacements thereof and thereto, whether prior to or after the date of this
Agreement (as so amended, the "Stock Purchase Agreement").
2. Debtor warrants that it is and will continue to be the absolute and
exclusive owner of the collateral; that it has granted no other security
interest in the collateral; that no financing statement or other document
evidencing a security interest or lien covering the collateral, or any part
thereof, or any proceeds thereof, is on file in any public office, except in
favor of Secured Party. Debtor hereby agrees to execute on demand and Debtor
hereby irrevocably appoints Secured Party its attorney-in-fact to execute,
deliver and, if appropriate, file such security agreements, financing statements
or other instruments as Secured Party may request
or require in order to impose, perfect or continue the perfection of, the
security interest created hereby. Debtor will promptly comply with all
obligations placed upon it pursuant to the terms of the Partnership Agreement.
Debtor shall not, without Secured Party's written consent, sell, contract to
sell, encumber or dispose of the collateral, or any interest therein, or alter,
modify or amend the collateral until the obligations secured hereby have been
paid in full; provided, however, that Secured Party agrees to release its
security interest in the collateral upon a sale of the collateral by Debtor if
(i) such sale is pursuant to and complies strictly with the provisions of the
Partnership Agreement, and (ii) the proceeds of such sale are deposited in an
account in which Secured Party shall have a first priority security interest,
and (iii) prior to any transfer of the collateral pursuant to such a sale,
Debtor shall have executed and delivered to Secured Party such documents and
instruments as Secured Party may request to create and perfect Secured Party's
security interest in the account referred to in clause (ii) above.
3.(a) Secured Party shall have the right at any time, and from time to
time, regardless of whether an Event of Default (as defined herein) has occurred
and is continuing hereunder or under the Stock Purchase Agreement, to notify
Vanguard and the partners therein that the collateral has been assigned to
Secured Party, and that all distributions and payments, in any way related to
Vanguard, Debtor's partnership interest in Vanguard, or any or all of the other
collateral are to be made directly to Secured Party or to the Collateral Account
(as defined herein), and Debtor shall, at Secured Party's request, join in such
notification.
(b) If Debtor receives any distributions from Vanguard at any time on any
of the collateral after Secured Party has notified Debtor that such
distributions are to be made directly to Secured Party or after the occurrence
of any Event of Default, such distributions will be received by Debtor in trust
for Secured Party, and immediately deposited and delivered in kind to Secured
Party or into the Collateral Account, as the case may be.
(c) Prior to the occurrence of an Event of Default, all distributions and
payments made by Vanguard or the partners thereof following the notice from
Secured Party referred to in Section 3(a) hereof shall be deposited into the
Collateral Account. The notice given by Secured Party pursuant to Section 3(a)
shall direct Vanguard and the partners thereof to deposit all such distributions
and payments directly into the Collateral Account. If prior to the occurrence of
an Event of Default, Secured Party or Debtor shall receive any of the
distributions or payments from Vanguard or the partners that are to be
deposited in the Collateral Account pursuant to this Section 3(c), Secured
2
Party and Debtor shall promptly deposit such sums in the Collateral Account. For
purposes hereof, the term "Collateral Account" means a deposit account solely in
the name of Secured Party, established in a bank located in the State of
California having unrestricted capital of at least $500,000,000 selected by
Secured Party. Debtor shall grant to Secured Party a first priority security
interest in such deposit account and Debtor shall have no right to withdraw any
of the amount deposited therein without the prior written consent of Secured
Party. If Debtor fails to take such actions and execute and deliver such
documents as Secured Party may request to establish the Collateral Account
pursuant hereto and to create and perfect Secured Party's first priority
security interest therein (including without limitation the execution of a UCC-1
form), and until Debtor shall take such actions and execute and deliver such
documents, all distributions and payments from Vanguard and the partners thereof
that would otherwise have been deposited into the Collateral Account shall be
delivered to Secured Party, and Secured Party may so notify Vanguard and the
partners thereof pursuant to Section 3(a).
(d) Following the occurrence of an Event of Default, all distributions and
payments relating to the collateral shall be paid directly to Secured Party and
shall be (i) applied to the obligations, including the Liabilities, secured
hereby, if and to the extent such obligations and Liabilities are in an amount
of money that is determinable at or at any time after the occurrence of the
Event of Default, and (ii) to the extent such distributions and payments exceed
the amount of obligations and Liabilities that Can be determined in monetary
terms, such excess shall be deposited in the Collateral Account until such a
determination can be made or until the Liabilities are fully discharged,
whichever occurs first.
(e) In order to facilitate the terms and provisions of this Security
Agreement with respect to the collateral and any distributions and payments made
in connection therewith, Secured Party shall have the right to receive, receipt
for, endorse, assign, deposit and deliver, in Secured Party's name or in the
name of Debtor, any and all checks, notes, drafts and other instruments for the
payment of money constituting proceeds of or otherwise relating to the
collateral. Debtor hereby authorizes Secured Party to affix, by facsimile
signature or otherwise, the general or special endorsement of Debtor, in such
manner as Secured Party shall deem advisable, to any such instrument in the
event the same has been delivered to Secured Party without appropriate
endorsement, and Secured Party and any collecting bank are hereby authorized to
consider such endorsement to be a sufficient, valid and effective endorsement by
Debtor to the same extent as though it were manually executed by the duly
authorized officer of Debtor, regardless of by whom or under what
3
circumstances or by what authority such facsimile signature or other endorsement
is actually affixed, without duty of inquiry or responsibility as to such
matters, and Debtor hereby waives demand, presentment, protest and notice of
protest or dishonor and all other notices of every kind and nature with respect
to any such instrument.
4.(a) Upon the occurrence of an Event of Default hereunder, Secured Party
shall have, in addition to all other rights and remedies which Secured Party may
have at law or in equity, or under any other agreement executed by Debtor in
favor of Secured Party and under applicable law all rights and remedies of a
secured party under the California Commercial Code. In addition, Secured Party
shall have the following rights and remedies, all of which may be exercised with
or without further notice to Debtor: to exercise all partnership rights with
respect to the collateral as if it were the absolute owner thereof (and Debtor
hereby irrevocably constitutes and appoints Secured Party, with full power of
substitution, the proxy and attorney-in-fact of Debtor to do so); to directly
receive any and all payments and distributions on or in any way related to the
collateral or Vanguard; to settle, compromise, or release, on terms acceptable
to Secured Party, in whole or in part, any amounts owing on the collateral; to
enforce payment and to prosecute any action or proceeding with respect to any
and all of the collateral; to foreclose the liens and security interests created
under this Agreement or under any other agreement relating to the collateral by
any available procedure, with or without judicial process; to sell, assign, or
otherwise dispose of the collateral or any part thereof, either at public or
private sale or any broker's board, in lots or in bulk, for cash, on credit or
otherwise, with or without representations or warranties, and upon such terms as
shall be acceptable to Secured Party; all at Secured Party's sole option and as
Secured Party in its sole discretion may deem advisable. Debtor shall be given
reasonable notice of the time and place of any public sale of the collateral, or
of the time on or after which any private sale or other intended disposition is
to be made. Secured Party may be the purchaser at any public sale or private
sale. Five (5) days notice of such public or private sale or other disposition
shall be considered to be reasonable notice. Secured Party shall have no duty to
exercise any of the rights, privileges, options or powers or to sell or
otherwise realize on any of the collateral, as hereinabove authorized, and
Secured Party shall not be responsible for any failure to do so or delay in
doing so.
(b) Debtor recognizes that Secured Party may be unable to effect (or to do
so only after delay which would adversely affect the value that might be
realized from the collateral) a public sale of all or part of the collateral by
reason of certain prohibitions contained in the Securities Act of 1933,
4
as amended, and may be compelled to resort to one or more private sales to a
registered group of purchasers who will be obliged to agree, among other things,
to acquire the collateral for their own account, for investment and not with a
view to the distribution or resale thereof. Debtor agrees that any such private
sale may be at prices and on terms less favorable than if sold at public sales
and that such private sales shall be deemed to have been made in a commercially
reasonable manner.
5. The net cash proceeds resulting from disposition of the collateral shall
be applied first, to the expenses (including all attorneys' fees) of
disposition, and then applied to the obligations, including the Liabilities,
secured hereby, if and to the extent such obligations and Liabilities are in an
amount of money that is determinable at or at any time after the occurrence of
the Event of Default, and (ii) to the extent such net cash proceeds exceed the
amount of obligations and Liabilities that can be determined in monetary terms,
such excess shall be deposited in the Collateral Account until such a
determination can be made or until the Liabilities are fully discharged,
whichever occurs first. Any such application from time to time shall be in
Secured Party's absolute discretion and Secured Party may apply such proceeds in
its absolute discretion. In addition to any other rights and remedies that
Secured Party may have on an event of default, it may take or bring, in Secured
Party's name or in the name of Debtor, all steps, actions, suits or proceedings
deemed by Secured Party to be necessary or desirable to realize upon the
collateral. Until all indebtedness secured hereby shall have been discharged in
full, the power of sale and all other rights, powers and remedies granted to
Secured Party hereunder shall continue to exist and may be exercised by Secured
Party at any time and from time to time irrespective of the fact that the
indebtedness secured hereby or any part thereof may have become barred by a
statute of limitations, or that the personal liability of Debtor may have
ceased.
6. As used herein, the term "Event of Default" shall mean and refer to the
occurrence of any one of the following events: (a) failure of Debtor to pay when
due any of the Liabilities; or (b) insolvency of Debtor ("insolvency of Debtor")
means that there shall have occurred with respect to that Debtor one or more of
the following events: appointment of a receiver of any part of the property of,
assignment for the benefit of creditors, or the filing of a petition in
bankruptcy or the Commencement of any proceedings under any bankruptcy or
insolvency laws, or any laws relating to the relief of debtors, readjustment of
indebtedness, reorganization, composition or extension by or against, Debtor),
or (c) the breach by Debtor of any covenants or agreements contained herein, or
(d) any representation or
5
warranty of the Debtor in the Stock Purchase Agreement proves to be false in any
material respect as of and when made.
7. This Agreement may not be altered or amended except with the written
consent of each of the parties hereto. This Agreement shall be binding upon and
enure to the benefit of the respective successors and assigns of the parties
hereto.
8. All notices, requests, demands and other communications under this
Agreement shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier or facsimile transmission; or (c) delivered by registered or
certified U.S. Mail, return receipt requested and postage prepaid, or by private
overnight mail courier service, to such address as may be designated from time
to time by the relevant party, and which shall initially be:
To Secured Party:
OpTel, Inc.
000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx, Chairman
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy by the same means to:
Irell & Xxxxxxx
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Debtor:
International Xxxxxx Pacific Cablevision, Ltd.
0000 Xxxxx Xxxxxx
Xxxxx 0
Xxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
6
With a copy by the same means to:
Xxxxx and Xxxxxxx, a P.C.
0000 Xx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
HPC Xxxxxxx & Co.
00000 Xxxx Xxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If personally delivered pursuant to this section 8, such communication
shall be deemed delivered upon actual receipt; if sent by telecopier or
facsimile transmission pursuant to this section 8, such communication shall be
deemed delivered the next business day after transmission (and sender shall bear
the burden of proof of delivery); if sent by overnight courier pursuant to this
section 8, such communication shall be deemed delivered upon receipt; and if
sent by U.S. Mail pursuant to this section 8, such communication shall be deemed
delivered as of the date of delivery indicated on the receipt issued by the
relevant postal service, or, if the addressee fails or refuses to accept
delivery, as of the date of such failure or refusal. No objection may be made to
the manner of delivery of any notice actually received in writing by an
authorized agent of a party.
9. This Agreement shall be governed by and construed in accordance with the
laws of the State of California. Xxxxxx agrees to pay all attorneys' fees
incurred by Secured Party in connection with the enforcement or protection of
any of Secured Party's rights and remedies hereunder, whether or not any
proceeding be commenced to enforce or protect such rights and remedies.
10. All advances, charges, costs and expenses including reasonable
attorneys' fees, incurred or paid by Secured Party in exercising any right,
power or remedy conferred by this Agreement, or in the enforcement thereof,
shall become a part of the indebtedness secured hereby and shall be paid to
Secured Party by Debtor immediately upon demand, with interest thereon at a rate
of interest equal to ten percent (10%) per annum.
7
12. Debtor waives any right to require Secured Party to (a) proceed against
any person, (b) proceed against or exhaust any collateral, or (c) pursue any
other remedy in Secured Party's power; and waives any defense arising by reason
of any disability or other defense of any other person, or by reason of the
cessation from any cause whatsoever of the liability of any other person. Debtor
authorizes Secured Party, without notice or demand and without affecting its
liability hereunder or on the obligations secured hereby, from time to time to
(a) take and hold security, other than the collateral herein described, for the
payment of the Liabilities or any part thereof, and exchange, enforce, waive and
release the collateral herein described or any part thereof or any such other
security; (b) apply such collateral or other security and direct the order or
manner of sale thereof as Secured Party in its discretion may determine; and (c)
release or substitute any of the endorsers or guarantors of the obligations
secured hereby or any part thereof, or any other parties thereto.
13. The rights, powers and remedies given to Secured Party by this
Agreement shall be in addition to all rights, powers and remedies given to
Secured Party by virtue of any statute, rule of law, or any other agreement
between the undersigned and Secured Party. Secured Party may exercise its right
of set-off with respect to the obligations secured hereby in the same manner as
if the obligations secured hereby were unsecured. Any forbearance or failure or
delay by Secured Party in exercising any right, power or remedy hereunder shall
not preclude the further exercise thereof; and every right, power and remedy of
Secured Party shall continue in full force and effect until such right, power or
remedy is specifically waived by an instrument in writing executed by Secured
Party.
8
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
"Debtor"
INTERNATIONAL XXXXXX PACIFIC
CABLEVISION, LTD., a corporation
incorporated under the laws of
the Province of British Columbia
By: ______________________________
Its:______________________________
"Secured Party"
OPTEL, INC.,
a Delaware corporation
By: ______________________________
Its:______________________________
9
