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LOAN AND SECURITY AGREEMENT
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ACCESS CAPITAL, INC.
with
MAGNAVISION PRIVATE CABLE, INC.
and
MAGNAVISION CORPORATION, a Delaware corporation
and
MAGNAVISION WIRELESS CABLE, INC.
and
MAGNAVISION CORPORATION, a New Jersey corporation
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Dated: _________ __, 1997
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1. (a) General Definitions..................................................................... 1
(b) Accounting Terms........................................................................ 9
(c) Other Terms............................................................................. 9
2. Revolving Advances............................................................................... 9
3. Repayment of the Revolving Advances.............................................................. 10
4. Procedure for Revolving Advances; Remittance of Credit Balances.................................. 10
5. Interest and Fees................................................................................ 11
(a) Interest................................................................................ 11
(b) Fees.................................................................................... 12
(i) Closing Fee.................................................................... 12
(ii) Facility Fee................................................................... 12
(iii) Administration Fee............................................................... 12
6. Security Interest................................................................................ 12
7. Representations Concerning the Collateral........................................................ 13
8. Covenants Concerning the Collateral.............................................................. 13
10. Inspections...................................................................................... 15
11. Financial and Other Information.................................................................. 15
12. Additional Representations, Warranties and Covenants............................................. 17
13. Power of Attorney................................................................................ 22
14. Expenses......................................................................................... 23
15. Assignment By Access Capital..................................................................... 24
16. Waivers.......................................................................................... 24
17. Term of Agreement................................................................................ 24
18. Events of Default................................................................................ 25
19. Remedies......................................................................................... 27
20. Waiver; Cumulative Remedies...................................................................... 29
21. Application of Payments.......................................................................... 29
22. Depository Accounts.............................................................................. 29
23. Lock Box Accounts................................................................................ 30
24. Revival.......................................................................................... 30
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25. Notices.......................................................................................... 30
26. GOVERNING LAW AND WAIVER OF JURY TRIAL........................................................... 31
.......................................................................................................... 31
27. ................................................................................................. 31
28. Subrogation...................................................................................... 32
29. Limitation of Liability.......................................................................... 33
30. Entire Understanding............................................................................. 33
31. Severability..................................................................................... 33
32. Captions......................................................................................... 33
33. Counterparts..................................................................................... 33
34. Construction..................................................................................... 33
35. Publicity........................................................................................ 34
1. (a) General Definitions..................................................................... 1
(b) Accounting Terms........................................................................ 8
(c) Other Terms............................................................................. 8
2. Revolving Advances............................................................................... 8
3. Repayment of the Revolving Advances.............................................................. 9
4. Procedure for Revolving Advances; Remittance of Credit Balances.................................. 9
5. Interest and Fees................................................................................ 10
(a) Interest................................................................................ 10
(b) Fees.................................................................................... 11
(i) Closing Fee.................................................................... 11
(ii) Facility Fee................................................................... 11
(iii) Administration Fee............................................................... 11
6. Security Interest................................................................................ 11
7. Representations Concerning the Collateral........................................................ 12
8. Covenants Concerning the Collateral.............................................................. 12
10. Inspections...................................................................................... 14
11. Financial and Other Information.................................................................. 14
12. Additional Representations, Warranties and Covenants............................................. 15
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13. Power of Attorney................................................................................ 20
14. Expenses......................................................................................... 21
15. Assignment By Access Capital..................................................................... 21
16. Waivers.......................................................................................... 22
17. Term of Agreement................................................................................ 22
18. Events of Default................................................................................ 22
19. Remedies......................................................................................... 25
20. Waiver; Cumulative Remedies...................................................................... 26
21. Application of Payments.......................................................................... 26
22. Depository Accounts.............................................................................. 26
23. Lock Box Accounts................................................................................ 26
24. Revival.......................................................................................... 27
25. Notices.......................................................................................... 27
26. GOVERNING LAW AND WAIVER OF JURY TRIAL........................................................... 28
27. Subrogation...................................................................................... 28
28. Limitation of Liability.......................................................................... 29
29. Entire Understanding............................................................................. 29
30. Severability..................................................................................... 29
31. Captions......................................................................................... 29
32. Counterparts..................................................................................... 29
33. Construction..................................................................................... 29
34. Publicity........................................................................................ 29
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LOAN AND SECURITY AGREEMENT
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This Loan and Security Agreement is made as of
_______ __, 1997 by and among ACCESS CAPITAL, INC. ("Access Capital"), having
executive offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and MAGNAVISION
PRIVATE CABLE, INC., a Delaware corporation having its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Private
Cable"), MAGNAVISION CORPORATION, a Delaware corporation, having its principal
place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
("Holdings"), MAGNAVISION WIRELESS CABLE, INC., a Delaware corporation, having
its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ("Wireless") MAGNAVISION CORPORATION, a New Jersey corporation,
having its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("Magnavision" and together with Private Cable, Holdings and
Wireless, each a "Borrower" and jointly and severally, the "Borrowers").
BACKGROUND
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Borrowers have requested that Access Capital make loans and
advances available to Borrowers and Access Capital has agreed to make such loans
and advances to Borrowers on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings and the terms and conditions contained herein, the
parties hereto agree as follows:
1. (a) General Definitions. When used in this
Agreement, the following terms shall have the following meanings:
"Affiliate" of any Person means (a) any Person
(other than a Subsidiary) which, directly or indirectly, is in control of, is
controlled by, or is under common control with such Person, or (b) any Person
who is a director or officer (i) of such Person, (ii) of any Subsidiary of such
Person or (iii) any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (i) to
vote ten percent (10%) or more of the securities having ordinary voting power
for the election of directors of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise.
"Amortization Months" means September, October,
November and December of each year.
"Ancillary Agreements" means all agreements,
instruments and documents including, without limitation, the Warrant, mortgages,
pledges, powers of attorney, consents, assignments, contracts, notices, security
agreements, trust agreements whether heretofore, concurrently, or hereafter
executed by or on behalf of any Borrower or any other Person in favor of
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Access Capital in connection with this Agreement or the transactions
contemplated hereunder.
"Archdiocese" means The Department of Education,
Archdiocese of New York, an unincorporated ecclesiastical-controlled educational
association, and any successor thereto.
"Borrower(s)" shall have the meaning set forth in
the Introductory Paragraph hereof.
"Borrowers on a Consolidated Basis" means the
consolidation in accordance with GAAP of the accounts and other items of
Borrowers and their Subsidiaries.
"Borrowing Agent" shall mean Private Cable.
"Borrowing Base" at a particular date means an
amount equal to the lesser of:
(A) the Maximum Revolving Availability Amount; or
(B) (i) the New Contract Construction Availability less
(ii) New Contract Construction Advances.
"Borrowing Base Certificate" shall have the meaning
set forth in paragraph 4 hereof.
"Cable Contract" shall mean a fully executed,
binding and valid contract entered into by Private Cable whereby Private Cable
has maintained its ownership in the Collateral used in connection with such
Contract and pursuant to which Private Cable installs wiring and/or equipment
and units used in connection with the provision of cable television services by
Private Cable.
"Cacomm" shall mean Cacomm, Inc., a New Jersey
corporation.
"Closing Date" means the date hereof.
"Collateral" means and includes:
(A) all Inventory;
(B) all Equipment;
(C) all General Intangibles;
(D) the License Agreement;
(E) all Receivables;
(F) all books, records, ledgercards,
files, correspondence, computer programs, tapes, disks and related data
processing software (owned by any Borrower or in which it has an interest to
the extent such property may be assigned) which at any
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time evidence or contain information relating to (A), (B), (C), (D) and (E)
above or are otherwise necessary or helpful in the collection thereof or
realization thereupon;
(G) documents of title, policies and
certificates of insurance, securities, chattel paper, other documents or
instruments evidencing or pertaining to (A), (B), (C), (D), (E) and (F) above;
(H) all guaranties, liens on real or
personal property, leases, and other agreements and property which in any way
secure or relate to (A), (B), (C), (D), (E), (F) and (G) above, or are acquired
for the purpose of securing and enforcing any item thereof;
(I) (i) all cash held as cash collateral to
the extent not otherwise constituting Collateral, all other cash or property at
any time on deposit with or held by Access Capital for the account of any
Borrower (whether for safekeeping, custody, pledge, transmission or otherwise),
(ii) all present or future deposit accounts (whether time or demand or interest
or non-interest bearing) of any Borrower with Access Capital or any other Person
including those to which any such cash may at any time and from time to time be
credited, (iii) all investments, investment property and reinvestments (however
evidenced) of amounts from time to time credited to such accounts, and (iv) all
interest, dividends, distributions and other proceeds payable on or with respect
to (x) such investments, investment property and reinvestments and (y) such
accounts; and
(J) all products and proceeds of (A), (B),
(C), (D), (E), (F), (G), (H) and (I) above (including, but not limited to, all
claims to items referred to in (A), (B), (C), (D), (E), (F), (G), (H) and (I)
above) and all claims of any Borrower against third parties (x) for (i) loss of,
damage to, or destruction of any or all of (A), (B), (C), (D), (E), (F), (G),
(H), and (I) above, and (ii) payments due or to become due under leases, rentals
and hires of any or all of (A), (B), (C), (D), (E), (F), (G) and (H) above and
(y) proceeds payable under, or unearned premiums with respect to policies of
insurance in whatever form.
"Contract Rate" means an interest rate per annum
equal to the sum of the Prime Rate plus five and one-half percent
(5.5%).
"Credit Balance" shall mean, at any time, any amount
held by Access Capital to any Borrower's credit (after application of all
amounts then due and owing to Access Capital hereunder) less the positive
amount, if any, by which the then outstanding amount of Revolving Advances
exceeds the amount derived from borrowing base availability as computed at such
time under subsection "(B)" of the defined term "Borrowing Base".
"Current Assets" at a particular date, means all
cash, cash equivalents, accounts and inventory of Borrowers on a
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Consolidated Basis and all other items which would, in conformity with GAAP, be
included under current assets on a balance sheet of the Borrowers on a
Consolidated Basis as at such date; provided, however, that such amounts shall
not include (a) any amounts for any indebtedness owing by an Affiliate of any
Borrower, unless such indebtedness arose in connection with the sale of goods or
other property in the ordinary course of business and would otherwise constitute
current assets in conformity with GAAP, (b) any shares of stock issued by an
Affiliate of any Borrower (other than Cacomm), (c) the cash surrender value of
any life insurance policy (d) any assets which would be classified as intangible
assets under GAAP, or (e) any prepaid expenses.
"Current Liabilities" at a particular date, means
all amounts which would, in conformity with GAAP, be included under current
liabilities on a balance sheet of Borrowers on a Consolidated Basis as at such
date, but in any event including, without limitation, the amounts of (a) all
indebtedness payable on demand, or, at the option of the Person to whom such
indebtedness is owed, not more than twelve (12) months after such date, (b) any
payments in respect of any indebtedness (whether installment, serial maturity,
sinking fund payment or otherwise) required to be made not more than twelve (12)
months after such date, (c) all reserves in respect of liabilities or
indebtedness payable on demand or, at the option of the Person to whom such
indebtedness is owed, not more than twelve (12) months after such date, the
validity of which is contested at such date and (d) all accruals for federal or
other taxes measured by income payable within a twelve (12) month period but
shall not include indebtedness payable by Holdings to IBJCC and KOCO with
respect to a promissory note in the sum of $105,468 as of June 30, 1997 plus all
accrued interest thereon.
"Customer" means and includes the account debtor
with respect to any of the Receivables and/or prospective purchaser of goods,
services or both with respect to any contract or contract right, and/or any
party who enters into or proposes to enter into any contract or other
arrangement with any Borrower, pursuant to which such Borrower is to deliver any
personal property or perform any services.
"Default Rate" means a rate equal to two and one-
half (2.5%) per annum in excess of the Contract Rate.
"Equipment" means and includes all of each
Borrower's now owned or hereafter acquired equipment, machinery and goods
(excluding Inventory), whether or not constituting fixtures, including, without
limitation: plant and office equipment, tools, dies, parts, data processing
equipment, furniture and trade fixtures, trucks, trailers, loaders and other
vehicles and all replacements and substitutions therefore and all accessions
thereto.
"Equity Documents" means, collectively, the Exchange
Agreement dated as of May 8, 1997 among IBJSCC, KOCO and Holdings,
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the Registration Rights Agreement dated as of May 8, 1997 among IBJSCC, KOCO and
Holdings, the Stockholders' Agreement dated as of May 8, 1997 among IBJSCC, KOCO
and Holdings, the Management Services Agreement dated as of May 8, 1997 between
Holdings and KOCO, the Warrants issued by Holdings to IBJSCC and KOCO to
purchase an aggregate of 1,826,932 Shares of common stock of Holdings and any
documents, agreements or instruments executed in connection therewith.
"ERISA" shall have the meaning set forth in
paragraph 13(f).
"Event of Default" means the occurrence of any of
the events set forth in paragraph 19.
"FCC" shall mean the Federal Communications
Commission or any successor governmental entity that has jurisdiction over the
matters which are within the jurisdiction of the FCC.
"FCC Rules" shall mean the rules and regulations of
the FCC published in Title 47 of the Code of Federal Regulations, as well as
those rules and regulations not yet incorporated into Title 47 but published in
the Federal Register or in a FCC report and order, including rules and
regulations adopted but not yet effective.
"GAAP" means generally accepted accounting
principles, practices and procedures in effect from time to time.
"General Intangibles" means and includes all of each
Borrower's now owned or hereafter acquired general intangibles including,
without limitation, trademarks, tradenames, tradestyles, trade secrets,
equipment formulation, manufacturing procedures, quality control procedures,
product specifications, patents, patent applications, copyrights, registrations,
contract rights, choses in action, causes of action, corporate or other business
records, inventions, designs, goodwill, claims under guarantees, licenses (to
the extent such property may be assigned), franchises (to the extent such
property may be assigned), tax refunds, tax refund claims, computer programs,
computer data bases, computer program flow diagrams, source codes, object codes
and all other intangible property of every kind and nature.
"Holdings" means Magnavision Corporation, a Delaware
corporation.
"IBJSCC" means IBJS Capital Corporation, a Delaware
corporation.
"Incipient Event of Default" means any act or event
which, with the giving of notice or passage of time or both, would constitute an
Event of Default.
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"Indebtedness" of a Person at a particular date
shall mean all obligations of such Person which in accordance with GAAP would be
classified upon a balance sheet as liabilities.
"Inventory" means and includes all of each
Borrower's now owned or hereafter acquired goods, merchandise and other personal
property, wherever located, to be furnished under any contract of service or
held for sale or lease, all raw materials, work in process, finished goods and
materials and supplies of any kind, nature or description which are or might be
used or consumed in such Borrower's business or used in selling or furnishing
such goods, merchandise and other personal property, and all documents of title
or other documents representing them.
"KOCO" means KOCO Capital Company, L.P., a Delaware
limited partnership.
"License Agreement" means the License Agreement
dated August 20, 1990 between Magnavision and Archdiocese as amended by First
Agreement of Amendment to License Agreement dated January 6, 1994.
"Loans" means the Revolving Advances and all other
extensions of credit hereunder.
"Magnavision" means Magnavision Corporation, a New
Jersey corporation.
"Maximum Revolving Availability Amount" means
$1,250,000.
"New Contract Construction Advances" shall mean any
Revolving Advances made by Access Capital with respect to any New Units.
"New Contract Construction Availability" shall mean,
at any time, an amount equal to the number of New Units to be installed pursuant
to all New Eligible Contracts multiplied by the lesser of (i) $250.00 or (ii)
the actual estimated installation cost of each New Unit as presented via the
Borrowing Agent's cash flow and profitability analysis with respect to such New
Eligible Contract.
"New Eligible Contract" shall mean a Cable Contract
with (a) a projected internal rate of return (as calculated in accordance with
GAAP) of not less than twenty-five percent (25%) or (b) a net present value in
excess of zero (as calculated in accordance with GAAP) with a discount rate of
twenty-five percent (25%), a copy of which has been furnished to Access Capital
and pursuant to which construction has commenced after June 1, 1997 on the New
Units to be installed in connection with such Cable Contract. In addition, no
Cable Contract shall be deemed to be a New Eligible Contract until Access
Capital has filed all fully executed UCC-1 Financing Statements and/or UCC-1
Fixture Filings in all jurisdictions necessary to perfect its security interest
in the
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Collateral utilized in connection with such Cable Contract which UCC statements
shall be filed by Access Capital within seven (7) business days of receipt by
Access Capital of such executed UCC statements from the applicable Borrower.
"New Unit" shall mean a cable outlet which (a)
enables an end user to receive cable television and/or telecommunication
services from Private Cable, (b) shall be installed by Private Cable pursuant to
a New Eligible Cable Contract and (c) with respect to which Access Capital has
not yet made a Revolving Advance.
"Obligations" means and includes all Loans, all
advances, debts, liabilities, obligations, covenants and duties owing by any
Borrower to Access Capital (or any corporation that directly or indirectly
controls or is controlled by or is under common control with Access Capital) of
every kind and description (whether or not evidenced by any note or other
instrument and whether or not for the payment of money or the performance or
non-performance of any act), direct or indirect, absolute or contingent, due or
to become due, contractual or tortious, liquidated or unliquidated, whether
existing by operation of law or otherwise now existing or hereafter arising
including, without limitation, any debt, liability or obligation owing from any
Borrower to others which Access Capital may have obtained by assignment or
otherwise and further including, without limitation, all interest, charges or
any other payments any Borrower is required to make by law or otherwise arising
under or as a result of this Agreement and the Ancillary Agreements, together
with all reasonable expenses and reasonable attorneys' fees chargeable to any
Borrower's account or incurred by Access Capital in connection with any
Borrower's account whether provided for herein or in any Ancillary Agreement.
"Overadvance" shall have the meaning set forth in
paragraph 2(b) hereof.
"Permitted Liens" means (i) liens of warehousemen,
mechanics and materialmen incurred in the ordinary course of business securing
sums not overdue; (ii) liens incurred in the ordinary course of business in
connection with workmen's compensation, unemployment insurance or other forms of
governmental insurance or benefits, relating to employees, securing sums (a) not
overdue or (b) being diligently contested in good faith provided that adequate
reserves with respect thereto are maintained on the books of the applicable
Borrower in conformity with GAAP, (iii) liens in favor of Access Capital, (iv)
liens for taxes (a) not yet due or (b) being diligently contested in good faith,
provided that adequate reserves with respect thereto are maintained on the books
of the applicable Borrower in conformity with GAAP provided, that, the lien
shall have no effect on the priority of liens in favor of Access Capital or the
value of the assets in which Access Capital has a lien and (v) liens specified
on Exhibit 1(B) hereto.
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"Person" means an individual, partnership,
corporation, trust or unincorporated organization, or a government
or agency or political subdivision thereof.
"Prime Rate" means the prime commercial lending rate
of Citibank, N.A. as publicly announced to be in effect from time
to time, such rate to be adjusted automatically, without notice, on
the effective date of any change in such rate.
"Private Cable" means Magnavision Private Cable,
Inc., a Delaware corporation.
"Receivables" means and includes all of each
Borrower's now owned or hereafter acquired accounts and contract rights,
instruments (negotiable or otherwise), insurance proceeds, documents, chattel
paper, letters of credit and each Borrower's rights to receive payment
thereunder, any and all rights to the payment or receipt of money or other forms
of consideration of any kind at any time now or hereafter owing or to be owing
to any Borrower, all proceeds thereof and all files in which any Borrower has
any interest whatsoever containing information identifying or pertaining to any
of such Borrower's Receivables, together with all of each Borrower's rights to
any merchandise which is represented thereby, and all of each Borrower's right,
title, security and guaranties with respect to each Receivable, including,
without limitation, all rights of stoppage in transit, replevin and reclamation
and all rights as an unpaid vendor.
"Reduction Amount" at any Testing Date shall be the
amount set forth below as corresponds to the amount of outstanding Obligations
set forth below as of such Testing Date:
Outstanding Obligations Reduction Amount
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Less than $500,000 $25,000
$500,000 to $749,999 $50,000
$750,000 to $999,999 $75,000
$1,000,000 to $1,250,000 $100,000
"Revolving Advances" shall have the meaning set
forth in paragraph 2(a) hereof.
"Revolving Request Date" has the meaning set forth
in paragraph 4 hereof.
"Seasonal Month" means June, July and August of each
year.
"Subsidiary" of any Person means a corporation or
other entity whose shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the
directors of such
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corporation, or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.
"Tangible Net Worth" at a particular date means (a)
the aggregate amount of all assets of Borrowers on a Consolidated Basis as may
be properly classified as such in accordance with GAAP consistently applied
excluding such other assets as are properly classified as intangible assets
under GAAP, less (b) the aggregate amount of all liabilities of Borrowers on a
Consolidated Basis.
"Term" means the Closing Date through ______ __,
2000, subject to acceleration upon the occurrence of an Event of Default
hereunder or other termination hereunder.
"Testing Date" shall mean November 30, February 28
and May 31 of each year.
"Testing Period" shall mean the period commencing on
the first day following a Testing Date and ending on the immediately succeeding
Test Date provided, that, the first Testing Period shall commence on the Closing
Date and end on November 30, 1997.
"UCC" shall mean the Uniform Commercial Code as
adopted in the State of New York as in effect from time to time.
"Warrant" shall mean the Warrant Agreement dated as
of the Closing Date issued by Holdings to Access Capital with respect to 138,536
shares fully paid and non-assessable shares of the common stock of Holdings on a
fully diluted basis, in substantially the form of Exhibit A attached hereto and
made a part hereof.
"Wireless" means Magnavision Wireless Cable, Inc., a
Delaware corporation.
"Working Capital" at a particular date means the
excess, if any, of Current Assets less Current Liabilities at such
date.
(b) Accounting Terms. Any accounting terms used in
this Agreement which are not specifically defined shall have the meanings
customarily given them in accordance with GAAP.
(c) Other Terms. All other terms used in this
Agreement and defined in the UCC, shall have the meaning given therein unless
otherwise defined herein.
2. Revolving Advances.
(a) Subject to the terms and conditions set forth
herein and in the Ancillary Agreements and so long as no Event of Default shall
have occurred and be continuing, upon Borrowing Agent's request for an advance
(a "Revolving Advance") in accordance with the terms and provisions set forth in
paragraph 4
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hereof, Access Capital will make a Revolving Advance to Borrowers jointly and
severally in the amount so requested; provided, however, that, the maximum
Revolving Advance which may be requested by Borrowing Agent on any Revolving
Request Date and the maximum Revolving Advance which will be advanced by Access
Capital hereunder on any Revolving Request Date shall not at any time exceed the
Borrowing Base.
(b) In the event that for any reason any Revolving
Advance advanced by Access Capital to Borrowers on any Revolving Request Date
exceeds the Borrowing Base on such date and Access Capital shall not have
consented in writing to such overadvance (each, an "Overadvance"), such
Overadvance shall in no way reduce or limit the rights of Access Capital with
respect to the entire amount advanced hereunder, including, without limitation,
the amount of any Overadvance.
(c) Each Borrower acknowledges that the exercise of
Access Capital's discretionary rights hereunder may result during the term of
this Agreement in one or more increases or decreases in the Borrowing Base
advance amounts and such Borrower hereby consents to any such increases or
decreases which may limit or restrict advances requested by such Borrower;
provided, however, that Access Capital shall (i) provide Borrowing Agent prior
written notice of each such decrease and (ii) not decrease the Borrowing Base by
more than twenty-five percent (25%) in any forty-five (45) day period.
(d) Any sums reasonably expended by Access Capital as
a result of any Borrower's failure to perform or comply with its obligations
under this Agreement, including but not limited to the payment of taxes,
insurance premiums or leasehold obligations, shall be deemed a Revolving Advance
hereunder and added to the Obligations. Access Capital shall furnish Borrowing
Agent with notice immediately upon making any expenditure pursuant to this
clause (d).
(e) Access Capital will account to Borrowing Agent
monthly with a statement of all Revolving Advances and other charges and
payments made pursuant to this Agreement with respect to the prior month, and
such account rendered by Access Capital shall be deemed final, binding and
conclusive unless Access Capital is notified by Borrowing Agent in writing to
the contrary within thirty (30) days of the date each account was rendered
specifying the item or items to which objection is made.
3. Repayment of the Revolving Advances. Borrowers
shall be required to (a) make a mandatory prepayment hereunder at any time that
(i) an Overadvance shall be in existence, in the amount of such Overadvance,
except to the extent Access Capital consents in writing to the existence of such
Overadvance and (b) repay on the expiration of the Term (i) the then aggregate
outstanding principal balance of Revolving Advances made by Access Capital to
Borrowers hereunder together with accrued and unpaid
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interest, fees and charges and (ii) all other amounts owed Access Capital under
this Agreement and the Ancillary Agreements.
4. Procedure for Revolving Advances; Remittance of
Credit Balances. Borrowing Agent on behalf of any Borrower, may, on Wednesday
(or the following business day if the applicable Wednesday is not a business
day) of every other week during the Term commencing on the Wednesday (or the
following business day if such Wednesday is not a business day) following the
Closing Date (a "Revolving Request Date"), by written notice request a borrowing
of Revolving Advances; provided, however, that, without the prior written
consent of Access Capital, Revolving Advances hereunder shall not be made more
frequently than once every other week. Borrowing Agent shall deliver to Access
Capital no later than 12:00 Noon (New York time) on Wednesday (or the following
business day if such Wednesday is not a business day) of every other week, as
and for the immediately preceding weeks, a borrowing base certificate in the
form of borrowing base certificate attached hereto as Exhibit 4 (the "Borrowing
Base Certificate"). Access Capital is hereby authorized to make Revolving
Advances based upon written notice received from any officer of Borrowing Agent
whose signature is set forth on Exhibit 4A or, at Access Capital's election, if
such Revolving Advances are necessary to satisfy any Obligations then due and
owing hereunder. All Revolving Advances shall be disbursed from whichever
office or other place Access Capital may designate from time to time. The
proceeds of each Revolving Advance made by Access Capital shall be made
available on the day so requested by way of credit to such Borrower's operating
account maintained with such bank as such Borrower shall have designated to
Access Capital. Any and all Obligations due and owing hereunder may be charged
to such Borrower's account and shall constitute Revolving Advances. All
Revolving Advances made hereunder shall be conclusively presumed to have been
made to, and at the request of and for the benefit of, the applicable Borrower
when credited to such Borrower's operating account in accordance with the
provisions of this paragraph 4 or as otherwise disbursed in accordance with such
Borrower's written instructions to Access Capital. In the event, on any
Wednesday (or the following business day if such Wednesday is not a business
day) of every other week during the Term, Access Capital is holding a Credit
Balance, then Access Capital shall disburse such Credit Balance to Borrowing
Agent, for the ratable benefit of Borrowers; provided, however, at such time as
an Incipient Event of Default or an Event of Default is in existence, Access
Capital may establish reserves against all or a portion of the Credit Balance as
determined by Access Capital in its reasonable discretion exercised in good
faith.
-xiv-
5. Interest and Fees.
(a) Interest.
(i) Except as modified by paragraph
5(a)(iii) below, Borrowers shall pay interest on the unpaid principal balance of
the Loans for each day they are outstanding at the Contract Rate.
(ii) Interest shall (a) be computed on the
basis of actual days elapsed over a 360-day year, (b) be calculated by Access
Capital on a daily basis, (c) be charged by Access Capital to Borrowers' account
as a Revolving Advance in arrears on the last day of each month (other than a
Seasonal Month) and (d) continue to accrue during each Seasonal Month. Any such
accrued interest shall be charged by Access Capital to Borrowers' account as a
Revolving Advance in four consecutive equal amounts on the regularly scheduled
interest payment date in each Amortization Month during the year of such
accrual.
(iii) Upon the occurrence and during the
continuance of an Event of Default, interest shall accrue and be payable at the
Default Rate.
(iv) Notwithstanding the foregoing, in no
event shall interest exceed the maximum rate permitted under any applicable law
or regulation, and if any provision of this Agreement or an Ancillary Agreement
is in contravention of any such law or regulation, such provision shall be
deemed amended to provide for interest at said maximum rate and any excess
amount shall either be applied, at Access Capital's option, to the outstanding
Loans in such order as Access Capital shall determine or refunded by Access
Capital to Borrowers.
(v) Each Borrower, as applicable, shall pay
principal, interest and all other amounts payable by such Borrower hereunder, or
under any Ancillary Agreement, without any deduction whatsoever, including, but
not limited to, any deduction for any set-off or counterclaim.
(b) Fees.
(i) Closing Fee. On the Closing Date,
Borrowers shall pay to Access Capital a closing fee in an amount equal to
$18,750, which fee shall be deemed fully earned as of the Closing Date.
(ii) Facility Fee. Borrowers shall pay to
Access Capital an annual facility fee in an amount equal to $18,750, payable on
each yearly anniversary of the Closing Date. The facility fee shall be deemed
fully earned on the date when same is due and payable hereunder and shall not be
subject to rebate or proration upon termination of this Agreement for any
reason.
-xv-
(iii) Administration Fee. Borrowers shall pay
Access Capital an administration fee in an amount equal to $1,750 per month,
payable on the last day of each month.
6. Security Interest.
(a) To secure the prompt payment to Access Capital of
the Obligations, each Borrower hereby assigns, pledges and grants to Access
Capital a continuing security interest in and to the Collateral, whether now
owned or existing or hereafter acquired or arising and wheresoever located,
whether or not the same is subject to Article 9 of the UCC. All of each
Borrower's ledger sheets, files, records, books of account, business papers and
documents relating to the Collateral shall, until delivered to or removed by
Access Capital, be kept by such Borrower in trust for Access Capital until all
Obligations have been paid in full. Each confirmatory assignment schedule or
other form of assignment hereafter executed by any Borrower shall be deemed to
include the foregoing grant, whether or not the same appears therein.
(b) If, upon the request of Access Capital, any
Borrower fails to execute one or more financing statements disclosing Access
Capital's security interest in the Collateral, Access Capital may immediately
file any such financing statement without a Borrower's signature appearing
thereon or Access Capital may sign on such Borrower's behalf as provided in
paragraph 13 hereof. The parties agree that a carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement. If
any Receivable becomes evidenced by a promissory note or any other instrument
for the payment of money the applicable Borrower will immediately deliver such
instrument to Access Capital appropriately endorsed.
7. Representations Concerning the Collateral. Each
Borrower represents and warrants (each of which such representations and
warranties shall be deemed repeated upon the making of each request for a
Revolving Advance and made as of the time of each and every Revolving Advance
hereunder):
(a) each Borrower owns its respective Collateral free
and clear of all claims, liens, security interests and encumbrances (including
without limitation any claims of infringement) except (A) those in Access
Capital's favor and (B) Permitted Liens;
(b) none of the Collateral is subject to any
agreement prohibiting the granting of a security interest or requiring notice
of or consent to the granting of a security interest (other than as set forth
on Exhibit 7(b) attached hereto); and
(c) all Receivables (i) represent complete bona fide
transactions which require no further act under any circumstances on the
applicable Borrower's part to make such Receivables payable by the Customers
(other than the providing of cable and/or other telecommunication services
contracted for by
-xvi-
such Borrower pursuant to a bona fide contract executed by such Customer and the
applicable Borrower in the ordinary course of business), (ii) to the best of
each Borrower's knowledge, are not subject to any present, future or contingent
offsets or counter-claims, and (iii) do not represent ▇▇▇▇ and hold sales,
consignment sales, guaranteed sales, sale or return or other similar under-
standings or obligations of any Affiliate (other than Cacomm and ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇.) or Subsidiary of any Borrower.
8. Covenants Concerning the Collateral. During the
Term, each Borrower covenants that it shall:
(a) not dispose of any of the Collateral whether by
sale, lease or otherwise except for (i) the sale of Inventory, to the extent
applicable, in the ordinary course of business, (ii) the disposition or transfer
in the ordinary course of business of obsolete and worn-out Equipment provided,
that, Private Cable shall be permitted to sell any Equipment or wiring to a
Customer pursuant to the "buy back" provision of the Cable Contract with such
Customer so long as (x) the applicable Borrower receives the purchase price
specified in the applicable Cable Contract with respect to the Collateral sold
and (y) all of the proceeds of each such sale up to an amount equal to the
aggregate Revolving Advances made by Access Capital in connection with such
Cable Contract are remitted to Access Capital for application to the outstanding
principal amount of the Revolving Advances.
(b) not encumber, mortgage, pledge, assign or grant
any security interest in any Collateral or any other assets of any Borrower to
anyone other than Access Capital and except for Permitted Liens, provided,
however, that to the extent any Person shall make an equity
contribution/investment in Wireless in an amount greater than $1,000,000 and as
a condition of such contribution/investment, such Person requires that Wireless
grant such Person a security interest in any of its assets, Access Capital will
not unreasonably withhold or delay its consent to such a transaction so long as
(i) Access Capital shall have received copies of all documentation relating to
the equity contribution/investment and the security interest being granted with
respect thereto, which documentation shall be in form and substance satisfactory
to Access Capital and (ii) such Person shall have entered into a subordination
and/or intercreditor agreement with Access Capital, which agreement(s) shall be
in form and substance satisfactory to Access Capital in all respects;
(c) place notations upon each Borrower's books of
account to disclose Access Capital's security interest in the Collateral;
(d) keep and maintain the Equipment in good operating
condition, except for ordinary wear and tear, and shall make all necessary
repairs and replacements thereof so that the value and operating efficiency
shall to the extent possible be maintained and preserved. To the extent
possible, no Borrower
-xvii-
shall permit any such items to become a fixture to real estate or accessions to
other personal property;
(e) not extend the payment terms of any Receivable
without prompt notice thereof to Access Capital;
(f) perform all other steps reasonably requested by
Access Capital to create and maintain in Access Capital's favor a valid
perfected first security interest in all Collateral of each Borrower subject
only to Permitted Liens.
(g) defend the Collateral against the claims and
demands of all parties.
9. Collection and Maintenance of Collateral and
Records.
(a) Access Capital may at any time verify
Receivables utilizing an audit control company or any other agent of Access
Capital. Borrowers shall instruct all Customers or account debtors to remit
payment of all invoices directly to Magnavision Corporation, c/o Access Capital,
Inc. at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and Access Capital shall
collect Receivables directly from such Customers or account debtors. In the
event that any Borrower receives any payments on account of any Receivables,
such Borrower shall hold same for Access Capital's benefit in trust as Access
Capital's trustee and immediately deliver them to Access Capital in their
original form with all necessary endorsements or, as directed by Access Capital,
deposit such payments as directed by Access Capital pursuant to paragraphs 22 or
23 hereof. All payments on Receivables received by Access Capital from Customers
or account debtors of any Borrower shall be deposited by Access Capital into
Access Capital's account. One Business Day following receipt by Access Capital
of such payments in immediately available funds, Access Capital will (a) credit
(conditional upon final collection) all such payments to the Obligations (other
than the outstanding principal balance of the Revolving Advances excluding any
Revolving Advances made to pay interest, fees or expenses hereunder) and (b)
remit to Borrowing Agent the remaining balance, if any, of such payments. At any
time following the occurrence and continuation of an Event of Default, Access
Capital may notify and instruct all Customers or account debtors of (i) Access
Capital's security interest in Receivables and (ii) to make each payment of all
invoices payable to the order of Access Capital and Access Capital will credit
all payments received by Access Capital from Customers or account debtors to any
Obligations (in such order as Access Capital shall determine) on the third
business day following receipt by Access Capital of such payments in immediately
available funds. Promptly after the creation of any Receivables, the Borrowers
shall provide Access Capital with schedules describing all Receivables created
or acquired by them but any Borrower's failure to execute and deliver such
schedules shall not affect or limit Access Capital's security interest or other
rights in and to the Receivables. Each Borrower
-xviii-
shall furnish, at Access Capital's request, copies of contracts, invoices or the
equivalent, and any original shipping and delivery receipts for all merchandise
sold or services rendered and such other documents and information as Access
Capital may reasonably require. Each Borrower shall provide Access Capital, as
reasonably requested by Access Capital, such other schedules, documents and/or
information regarding the Collateral as Access Capital may require.
(b) (i) If on any Testing Date the aggregate number of subscribers
under the Cable Contracts has decreased by ten percent (10%) or more (the
"Decrease") during the applicable Testing Period, then, in addition to the
amounts credited against the Obligations by Access Capital in subsection (a)
above, Borrowers' shall reduce the Obligations on a quarterly basis in an amount
equal to the Reduction Amount applicable on such Testing Date (any such amount,
a "Mandatory Repayment Amount"). The Mandatory Repayment Amount shall be paid by
Borrowers to Access Capital on the first day of the first month following the
applicable Testing Date and thereafter on each three month anniversary of such
date.
(ii) If, on any Testing Date subsequent to a
Testing Date on which a Decrease was determined, an additional Decrease is
determined and the applicable Reduction Amount on such Testing Date would be
greater than the Mandatory Repayment Amount, then the Mandatory Repayment Amount
shall be increased to an amount equal to the then applicable Reduction Amount.
(iii) If (i) on any of the three (3) Testing
Dates immediately following a Testing Date on which a Decrease has been
determined ("Initial Decrease Date"), Borrowers shall increase the aggregate
number of subscribers to an amount equal to 110% of the number of subscribers in
existence as of the Testing Date immediately preceding the Initial Decrease Date
("the Preceding Testing Date") and (ii) the Preceding Testing Date was not a
Testing Date on which a Decrease was determined, then Borrower shall no longer
be obligated to make the Mandatory Repayment Amount reductions that commenced on
the Initial Decrease Date.
10. Inspections. At all times during normal
business hours, Access Capital shall have the right to (a) visit and inspect
each Borrower's properties (which shall not include the premises of any
Customer) and the Collateral located at any Borrower's properties, (b) upon (i)
ten (10) days prior notice to Borrowing Agent or (ii) without prior notice if an
Event of Default has occurred and is continuing, inspect any Customer's premises
to the extent Collateral is located at such premises, (c) inspect, audit and
make extracts from each Borrower's relevant books and records, including, but
not limited to, management letters prepared by independent accountants, and (d)
discuss with each Borrower's principal officers, partners, members, and
independent accountants, such Borrower's business, assets, liabilities,
financial condition, results of operations and business prospects. Each Borrower
will deliver to Access Capital any instrument necessary for Access
-xix-
Capital to obtain records from any service bureau maintaining records for such
Borrower.
11. Financial and Other Information.
(a) Borrowers shall provide Access Capital
(i) as soon as available, but in any event within ninety (90) days after
Borrowers' fiscal years, a balance sheet of Borrowers on a Consolidated Basis
and on a consolidating basis as at the end of such fiscal year and the related
statements of income, retained earnings and changes in cash flow for such fiscal
year, setting forth in comparative form the figures as at the end of and for the
previous fiscal year, which shall have been reported on by independent certified
public accountants who shall be a national "Big Six" accounting firm and shall
be accompanied by an unqualified audit report issued by such independent
certified public accountants provided, that, the audit report issued in
connection with Borrowers' Fiscal Year 1997 may be qualified; (ii) as soon as
available, drafts of the balance sheet of Borrowers on a Consolidated Basis and
on a consolidating basis as at the end of each of Borrowers' fiscal years and
the related statements of income, retained earnings and changes in cash flow for
such fiscal year, which have been internally prepared by Borrowers; (iii) as
soon as available, but in any event within (x) thirty (30) days after the close
of each month and (y) forty-five (45) days after the close of each quarter, the
balance sheet as at the end of such month and quarter and the related statements
of income, retained earnings and changes in cash flow for such month and
quarter, which have been internally prepared by Borrowers. All financial
statements required under (i), (ii) and (iii) above shall be prepared in
accordance with GAAP, subject to year-end adjustments in the case of monthly and
quarterly statements. Together with the financial statements furnished pursuant
to (i) above, Borrowers shall deliver a certificate of Borrowers' certified
public accountants addressed to Access Capital stating that (i) they have caused
this Agreement and the Ancillary Agreements to be reviewed and (ii) in making
the examination necessary for the issuance of such financial statements, nothing
has come to their attention to lead them to believe that any Event of Default or
Incipient Event of Default exists and, in particular, they have no knowledge of
any Event of Default or Incipient Event of Default or, if such is not the case,
specifying such Event of Default or Incipient Event of Default and its nature,
when it occurred and whether it is continuing. At the times the financial
statements are furnished pursuant to (i) and (ii) above, a certificate of each
Borrower's President or Chief Financial Officer shall be delivered to Access
Capital stating that, based on an examination sufficient to enable him to make
an informed statement, no Event of Default or Incipient Event of Default exists,
or, if such is not the case, specifying such Event of Default or Incipient Event
of Default and its nature, when it occurred, whether it is continuing and the
steps being taken by the Borrowers with respect to such event. If any internally
prepared financial information, including that required under this paragraph is
reasonably unsatisfactory in any manner to
-xx-
Access Capital, Access Capital may request that Borrowers' independent certified
public accountants review same.
(b) Each Borrower shall furnish Access Capital with written
notice that such Borrower has failed to comply with the reporting or other
requirements of the FCC promptly after such Borrower becomes aware of any such
failure if such failure could reasonably be expected to have a material adverse
effect on such Borrower.
(c) Each Borrower shall promptly furnish Access Capital with
copies of any statements, reports and other communications which such Borrower
shall have provided to or received from the FCC or the Archdiocese in connection
with (i) actual or claimed liability of such Borrower to the FCC or the
Archdiocese, (ii) a default by a Borrower of (x) FCC Rules, (y) the requirements
of any license issued to a Borrower or (z) the License Agreement, (iii) the
termination or revocation of (x) any license issued to a Borrower or (y) the
License Agreement or (iv) the amendment or modification of any license issued to
a Borrower.
(d) Holdings shall promptly furnish Access Capital with copies
of all regular, periodic and special reports which it files with the Securities
and Exchange Commission or any governmental authority which may be substituted
therefor, or any national securities exchange.
12. Additional Representations, Warranties and
Covenants. Each Borrower represents, warrants (each of which such
representations and warranties shall be deemed repeated upon the making of a
request for a Revolving Advance and made as of the time of each Revolving
Advance made hereunder), and covenants that:
(a) such Borrower is a corporation duly organized and
validly existing under the laws of the States listed on Exhibit 12(a), and such
Borrower is duly qualified and in good standing in every other state or
jurisdiction in which the nature of such Borrower's business requires such
qualification;
(b) the execution, delivery and performance of this
Agreement and the Ancillary Agreements (i) have been duly authorized, (ii) are
not in contravention of such Borrower's certificate of incorporation, by-laws,
or of any indenture, agreement or undertaking to which such Borrower is a party
or by which such Borrower is bound and (iii) are within such Borrower's
corporate powers;
(c) this Agreement and the Ancillary Agreements
executed and delivered by each Borrower are such Borrower's legal, valid and
binding obligations, enforceable in accordance with their terms;
(d) it keeps and will continue to keep all of its
books and records concerning the Collateral at the executive offices located at
the address set forth in the introductory
-xxi-
paragraph of this Agreement and will not move such books and records without
giving Access Capital at least thirty (30) days prior written notice;
(e) the operation of each Borrower's business is
and will continue to be in compliance in all material respects with all
applicable federal, state and local laws, including but not limited to all
applicable environmental laws and regulations;
(f) based upon the Employee Retirement Income
Security Act of 1974 ("ERISA"), and the regulations and published
interpretations thereunder: (i) no Borrower has engaged in any Prohibited
Transactions as defined in paragraph 406 of ERISA and paragraph 4975 of the
Internal Revenue Code, as amended; (ii) each Borrower has met all applicable
minimum funding requirements under paragraph 302 of ERISA in respect of its
plans; (iii) no Borrower has knowledge of any event or occurrence which would
cause the Pension Benefit Guaranty Corporation to institute proceedings under
Title IV of ERISA to terminate any employee benefit plan(s); (iv) no Borrower
has fiduciary responsibility for investments with respect to any plan existing
for the benefit of persons other than Borrower's employees; and (v) no Borrower
has withdrawn, completely or partially, from any multi-employer pension plan so
as to incur liability under the Multiemployer Pension Plan Amendments Act of
1980;
(g) it is solvent, able to pay its debts as they
mature, has capital sufficient to carry on its business and all businesses in
which it is about to engage and the fair saleable value of its assets
(calculated on a going concern basis) is in excess of the amount of its
liabilities;
(h) there is no pending or threatened litigation,
actions or proceeding which involve the possibility of materially and adversely
affecting any Borrower's business, assets, operations, prospects or condition
(financial or otherwise), or the Collateral or the ability of any Borrower to
perform this Agreement;
(i) all balance sheets and income statements for
the fiscal year ended December 31, 1996, the fiscal quarter ended March 31, 1997
and for the period ended May 31, 1997 which have been presently delivered to
Access Capital fairly, accurately and properly state such Borrower's financial
condition on a basis consistent with that of previous financial statements and
there has been no material adverse change in any Borrower's financial condition
as reflected in such statements since the date thereof and such statements do
not fail to disclose any fact or facts which might materially and adversely
affect such Borrower's financial condition;
(j) (x) it possesses all of the licenses, patents,
copyrights, trademarks and tradenames necessary to conduct its business, (y)
there has been no assertion or claim of violation or infringement with respect
thereof and (z) all such licenses,
-xxii-
patents, copyrights, trademarks and tradenames are listed on Exhibit 12(j);
(k) it will pay or discharge when due all taxes,
assessments and governmental charges or levies imposed upon it when due unless
it is contesting or disputing any such tax, assessment or governmental charge or
levy in good faith, by expeditious protest, administrative or judicial appeal or
similar proceeding and provided that any related lien is stayed and sufficient
reserves are established to the reasonable satisfaction of Access Capital to
protect Access Capital's security interest in the Collateral;
(l) it will promptly inform Access Capital in writing
of: (i) the commencement of all proceedings and investigations by or before
and/or the receipt of any notices from, any governmental or nongovernmental body
and all actions and proceedings in any court or before any arbitrator against or
in any way concerning any of Borrower's properties, assets or business, which
might singly or in the aggregate, have a materially adverse effect on any
Borrower; (ii) any amendment of any Borrower's certificate of incorporation or
by-laws; (iii) any change in any Borrower's business, assets, liabilities,
condition (financial or otherwise), results of operations or business prospects
which has had or could reasonably have a materially adverse effect on any
Borrower; (iv) the occurrence of any Event of Default or Incipient Event of
Default; (v) any default or any event which with the passage of time or giving
of notice or both would constitute a default under any agreement for the payment
of money to which any Borrower is a party or by which any Borrower or any of any
Borrower's properties may be bound which would have a material adverse effect on
any Borrower's business, assets, operations, prospects or condition (financial
or otherwise) or the Collateral; (vi) any change in the location of any
Borrower's executive offices; (vii) any change in the location of any Borrower's
Inventory or Equipment from the locations listed on Exhibit 12(l) attached
hereto, (viii) any change in any Borrower's name; (ix) any material delay in any
Borrower's performance of any of its obligations to any account debtor and of
any assertion of any material claims, offsets or counterclaims by any account
debtor and of any allowances, credits and/or other monies granted by it to any
account debtor; (x) furnish to and inform Access Capital of all material adverse
information relating to the financial condition of any account debtor; and (xi)
to the extent applicable, any material return of goods;
(m) it will not (i) create, incur, assume or suffer
to exist any indebtedness (exclusive of trade debt incurred in the ordinary
course of business) whether secured or unsecured other than any Borrower's
indebtedness to Access Capital and as set forth on Exhibit 12(m) attached hereto
and made a part hereof; (ii) declare, pay or make any dividend or distribution
on any shares of the common stock, preferred stock of such Borrower or apply any
of its funds, property or assets to the purchase, redemption or other retirement
of any common or preferred stock, except as may be
-xxiii-
required under the Warrant, (iii) directly or indirectly, prepay any
indebtedness (other than to Access Capital), or repurchase, redeem, retire or
otherwise acquire any indebtedness of any Borrower; (iv) make advances, loans,
extensions of credit or prepayments of commissions to any Person other than
advances made to installers and sales persons in an aggregate amount not to
exceed $5,000 at any time in connection with work performed by them for any
Borrower; (v) become either directly or contingently liable upon the obligations
of any Person by assumption, endorsement or guaranty thereof or otherwise; (vi)
enter into any merger, consolidation or other reorganization with or into any
other Person or acquire all or a portion of the assets or stock of any Person or
permit any other Person to consolidate with or merge with it; (vii) form any
Subsidiary or enter into any partnership, joint venture or similar arrangement;
(viii) materially change the nature of the business in which it is engaged on
the Closing Date; (ix) change its fiscal year or make any changes in accounting
treatment and reporting practices without prior written notice to Access Capital
except as required by GAAP or in the tax reporting treatment or except as
required by law; (x) enter into any transaction with any Affiliate, except in
ordinary course on arms-length terms; (xi) ▇▇▇▇ Receivables under any name
except the present name of such Borrower; or (xii) transfer or assign any
property of any kind to any Subsidiary (other than to a Subsidiary that is also
a Borrower) or to Wireless, including, without limitation, cash, cash
equivalents, tangible or intangible personal property or real property provided,
that, any Borrower may transfer cash to (A) Wireless in an aggregate amount not
to exceed (x) its obligations under the License Agreement (provided such funds
are used by Wireless to pay such obligations) and any reasonable professional
fees incurred in connection therewith plus (y) an aggregate amount equal to
fifty thousand dollars ($50,000) in any fiscal year and (B) any Subsidiary of
Borrower for the sole purpose of paying its taxes;
(n) Holdings on a Consolidated Basis shall not at any
time permit Tangible Net Worth to be less than $250,000;
(o) all financial projections of the Borrowers'
performance prepared by the Borrowers and delivered to Access Capital will
represent, at the time of delivery to Access Capital, the Borrowers' reasonable
estimate of their future financial performance and will be based upon
assumptions which are reasonable in light of the Borrowers' past performance and
then current business conditions;
(p) Intentionally Omitted.
(q) Holdings on a Consolidated Basis shall not at any
time permit its Working Capital to be less than $-0-;
(r) Holdings on a Consolidated Basis shall cause to
be maintained at all times a ratio of Current Assets to Current Liabilities of
not less than 1.00 to 1.00;
-xxiv-
(s) Holdings on a Consolidated Basis shall cause to
be maintained at all times a ratio of Indebtedness to Tangible Net Worth of no
more than 5.00 to 1.00;
(t) none of the proceeds of the Loans hereunder will
be used directly or indirectly to "purchase" or "carry" "margin stock" or to
repay indebtedness incurred to "purchase" or "carry" "margin stock" within the
respective meanings of each of the quoted terms under Regulation G of the Board
of Governors of the Federal Reserve System as now and from time to time
hereafter in effect;
(u) it will bear the full risk of loss from any loss
of any nature whatsoever with respect to the Collateral. At its own cost and
expense in amounts and with carriers acceptable to Access Capital, it shall (i)
keep all its insurable properties and properties in which it has an interest
insured against the hazards of fire, flood, sprinkler leakage, those hazards
covered by extended coverage insurance and such other hazards, and for such
amounts, as is customary in the case of companies engaged in businesses similar
to such Borrower's including, without limitation, business interruption
insurance; (ii) maintain public and product liability insurance against claims
for personal injury, death or property damage suffered by others; (iii) maintain
all such worker's compensation or similar insurance as may be required under the
laws of any state or jurisdiction in which such Borrower is engaged in business;
(iv) furnish Access Capital with (x) copies of all policies and evidence of the
maintenance of such policies at least thirty (30) days before any expiration
date, (y) endorsements to such policies naming Access Capital as "co-insured" or
"additional insured" and appropriate loss payable endorsements in form and
substance satisfactory to Access Capital, naming Access Capital as loss payee,
and (z) evidence that as to Access Capital the insurance coverage shall not be
impaired or invalidated by any act or neglect of any Borrower and the insurer
will provide Access Capital with at least thirty (30) days notice prior to
cancellation. Each Borrower shall instruct the insurance carriers that in the
event of any loss thereunder, the carriers shall make payment for such loss to
Access Capital, as its interest may appear, and not to such Borrower and Access
Capital jointly. If any insurance losses are paid by check, draft or other
instrument payable to any Borrower and Access Capital jointly, Access Capital
may endorse such Borrower's name thereon and do such other things as Access
Capital may deem advisable to reduce the same to cash. Access Capital is hereby
authorized to adjust and compromise claims. All loss recoveries received by
Access Capital upon any such insurance may be applied to the Obligations, in
such order as Access Capital in its sole discretion shall determine. Any surplus
shall be paid by Access Capital to the applicable Borrower or applied as may be
otherwise required by law. Any deficiency thereon shall be paid by the Borrowers
to Access Capital, on demand;
(v) none of its accounts payable shall be more than
ninety (90) days past due unless a bona fide dispute exists
-xxv-
which such Borrower is contesting in good faith and such Borrower establishes
reserves in an amount satisfactory to Access Capital;
(w) it, to the best of its knowledge, has duly
complied with the provisions of the FCC and the FCC Rules and any failure to
comply with the FCC and the FCC Rules would not have a material adverse effect
on such Borrower , including, without limitation, the reporting requirements
thereunder and there have been no outstanding citations, notices or orders of
non-compliance issued to such Borrower relating to its business or assets under
any such laws, rules or regulations;
(x) it has been issued all material required federal,
state, territorial and local licenses, certificates or permits relating to all
applicable laws;
(y) it is certified, tariffed or otherwise qualified
to provide its services in all states and territories where such certification
or qualification is necessary for such Borrower to operate its business and such
Borrower has filed and maintained all necessary tariffs with the appropriate
federal, state, local or territorial authorities;
(z) it is and will remain eligible under Rule
74.931(h) of the FCC to lease transmission time or capacity pursuant to all of
its existing and future Instructional Television Fixed Service excess capacity
leases;
(aa) it shall not, directly or indirectly, engage in
the development of production of cable-related or other similar programming;
(bb) it shall not enter into any material amendment,
waiver or modification of the Equity Documents;
(cc) Magnavision is in compliance with the terms and
conditions of the License Agreement, no default has been declared nor has any
material default occurred and been continuing thereunder beyond any applicable
grace period;
(dd) it shall not assign any Cable Contract to any
Person;
(ee) it shall not waive its right to any of its
property in any Cable Contract (other than a sale of Equipment to a Customer
pursuant to a "buy back" provision under a Cable Contract in accordance with the
provisions of Section 8(a) hereof); and
(ff) at all times at least seventy-five percent (75%)
of all New Eligible Contracts shall be fully assignable.
13. Power of Attorney. Each Borrower hereby appoints Access
Capital or any other Person whom Access Capital may designate as such Borrower's
attorney, with power to: (i) endorse such Borrower's name on any checks, notes,
acceptances, money
-xxvi-
orders, drafts or other forms of payment or security that may come into Access
Capital's possession; (ii) sign such Borrower's name on any invoice or ▇▇▇▇ of
lading relating to any Receivables, drafts against customers, schedules and
assignments of Receivables, notices of assignment, financing statements and
other public records, verifications of account and notices to or from customers;
(iii) verify the validity, amount or any other matter relating to any Receivable
by mail, telephone, telegraph or otherwise with account debtors; (iv) to the
extent applicable, execute customs declarations and such other documents as may
be required to clear Inventory through Customs; (v) do all things necessary to
carry out this Agreement, any Ancillary Agreement and all related documents; and
(vi) on or after the occurrence and continuation of an Event of Default, notify
the post office authorities to change the address for delivery of such
Borrower's mail to an address designated by Access Capital, and to receive, open
and dispose of all mail addressed to such Borrower. Each Borrower hereby
ratifies and approves all acts of the attorney performed in accordance with this
Agreement. Neither Access Capital nor the attorney will be liable for any acts
or omissions or for any error of judgment or mistake of fact or law. This power,
being coupled with an interest, is irrevocable so long as any Receivable which
is assigned to Access Capital or in which Access Capital has a security interest
remains unpaid and until the Obligations have been fully satisfied.
14. Expenses. Each Borrower shall jointly and severally pay
all of Access Capital's reasonable out-of-pocket costs and expenses, including,
without limitation, reasonable fees and disbursements of counsel and appraisers,
in connection with the preparation, execution and delivery of this Agreement and
the Ancillary Agreements, and in connection with the prosecution or defense of
any action, contest, dispute, suit or proceeding concerning any matter in any
way arising out of, related to or connected with this Agreement or any Ancillary
Agreement. Each Borrower shall also jointly and severally pay all of Access
Capital's fees, charges, out-of-pocket costs and expenses, including without
limitation reasonable fees and disbursements of counsel and appraisers, in
connection with (a) the preparation, execution and delivery of any waiver, any
amendment thereto or consent proposed or executed in connection with the
transactions contemplated by this Agreement or the Ancillary Agreements, (b)
Access Capital's obtaining performance of the Obligations under this Agreement
and any Ancillary Agreements, including, but not limited to, the enforcement or
defense of Access Capital's security interests, assignments of rights and liens
hereunder as valid perfected security interests, (c) any attempt to inspect,
verify, protect, collect, sell, liquidate or otherwise dispose of any
Collateral, (d) any appraisals or re-appraisals of any property (real or
personal) pledged to Access Capital by any Borrower as Collateral for, or any
other Person as security for, Borrowers' Obligations hereunder and (e) any
consultations in connection with any of the foregoing. Each Borrower shall also
jointly and severally pay Access Capital's customary bank charges for all bank
services performed or caused to be performed by Access Capital for any Borrower
at any Borrower's request or in connection with the
-xxvii-
transactions contemplated hereunder. All such costs and expenses together with
all filing, recording and search fees, taxes and interest payable by Borrowers
to Access Capital shall be payable on demand and shall be secured by the
Collateral. If any tax by any governmental authority is or may be imposed on or
as a result of any transaction between any Borrower and Access Capital which
Access Capital is or may be required to withhold or pay, each Borrower agrees to
jointly and severally indemnify and hold Access Capital harmless in respect of
such taxes, and each Borrower will jointly and severally repay to Access Capital
the amount of any such taxes which shall be deemed Obligations hereunder; and
until Borrowers shall furnish Access Capital with indemnity therefor (or supply
Access Capital with evidence satisfactory to it that due provision for the
payment thereof has been made), Access Capital may hold without interest any
balance standing to Borrowers' credit and Access Capital shall retain its
security interests in any and all Collateral.
15. Assignment By Access Capital. Upon sixty (60) days prior
written notice to Borrowing Agent, Access Capital may assign any or all of the
Obligations or any or all of the security therefor to any Person other than a
direct competitor of any Borrower and any permitted transferee shall succeed to
all of Access Capital's rights and obligations with respect thereto. Upon such
permitted transfer, Access Capital shall be released from all responsibility for
the Collateral to the extent same is assigned to any permitted transferee.
Access Capital may from time to time sell or otherwise grant participations in
any of the Obligations and the holder of any such participation shall, subject
to the terms of any agreement between Access Capital and such holder, be
entitled to the same benefits as Access Capital with respect to any security for
the Obligations in which such holder is a participant. Each Borrower agrees that
each such holder may exercise any and all rights of banker's lien, set-off and
counterclaim with respect to its participation in the Obligations as fully as
though such Borrower were directly indebted to such holder in the amount of such
participation.
16. Waivers. Each Borrower waives presentment and protest of
any instrument and notice thereof, notice of default and all other notices to
which such Borrower might otherwise be entitled.
17. Term of Agreement. This Agreement shall continue in full
force and effect until the expiration of the Term. Notwithstanding the
foregoing, if Borrowing Agent provides Access Capital with thirty (30) days
prior written notice of its intention to terminate this Agreement, Access
Capital shall release its security interests upon payment to it in cash in full
of all Obligations hereunder if each Borrower shall have (i) provided Access
Capital with an executed release of any and all claims which such Borrower may
have or thereafter shall have under this Agreement and (ii) paid to Access
Capital an early payment fee as follows:
-xxviii-
(a) during the period commencing on the Closing Date and
ending on the first anniversary of the Closing Date, the fee shall be equal to
$37,500;
(b) during the period commencing on the day immediately
succeeding the first anniversary of the Closing Date and ending on the second
anniversary of the Closing Date, the fee shall be equal to $25,000; and
(c) during the period commencing on the day immediately
succeeding the second anniversary of the Closing Date and ending on the last day
of the Term, the fee shall be equal to $18,750;
such fee being intended to compensate Access Capital for its costs and expenses
incurred in initially approving this Agreement or extending same provided, that,
if Access Capital (a) has provided written notice to Borrowing Agent that Access
Capital intends to assign all or substantially all of the Obligations to another
Person pursuant to Section 15 hereof and the Borrowers prepay the Obligations
after receiving any such notice but prior to such assignment of such Obligations
by Access Capital any early payment fee due to Access Capital pursuant to this
Section shall be reduced by fifty percent (50%) or (b) has decreased the
Borrowing Base, so that the amount of Revolving Advances available to be
borrowed is more than 25% less than would have been available prior to such
decrease and Borrower refinances solely due to such decrease, by exercising its
discretionary rights pursuant to Section 2(c) hereof any early payment fee due
to Access Capital pursuant to this Section shall be reduced by fifty percent
(50%). Such early payment fee shall also be due and payable by Borrower to
Access Capital upon termination of this Agreement by Access Capital after the
occurrence of an Event of Default.
18. Events of Default. The occurrence of any of the
following shall constitute an Event of Default:
(a) failure to make payment of any of the Obligations
within ten (10) days after the same is required hereunder;
(b) failure to pay any taxes within 30 days of the due date
therefor unless such taxes are being contested in good faith by appropriate
proceedings, any related lien is stayed and adequate reserves have been provided
on the applicable Borrower's books with respect thereto;
(c) (i) failure to perform under and/or committing any breach
under Sections 8(c), 8(d), 8(g), 12(l)(i) and/or 11(a) (solely with respect to
financial statements being delivered in reasonable detail) which shall not be
cured within 30 days of the occurrence of such failure or breach or (ii) failure
to perform under and/or committing any other breach of this Agreement or (iii)
failure to perform under and/or committing any breach of any Ancillary Agreement
or any other agreement between any Borrower and Access Capital which is not
cured within any applicable cure period therefor;
-xxix-
(d) occurrence of a default under any agreement to which any
Borrower is a party with third parties which has a material adverse affect upon
any Borrower's business, assets, operations, prospects or condition (financial
or otherwise) including all leases for any premises where Inventory or Equipment
is located;
(e) any representation, warranty or statement when made by any
Borrower hereunder, in any Ancillary Agreement, any certificate, statement or
document delivered pursuant to the terms hereof, or in connection with the
transactions contemplated by this Agreement should at any time be false or
misleading in any material respect;
(f) Intentionally Omitted.
(g) Intentionally Omitted.
(h) an attachment or levy is made upon any Borrower's assets
having an aggregate value in excess of $50,000, or a judgment is rendered
against a Borrower or any Borrower's property involving a liability of more than
$50,000, which shall not have been vacated, discharged, stayed or bonded pending
appeal within thirty (30) days from the entry thereof;
(i) any material adverse change in any Borrower's condition or
affairs (financial or otherwise) which in Access Capital's reasonable opinion
impairs the Collateral or the ability of such Borrower to perform its
Obligations;
(j) any lien created hereunder or under any Ancillary
Agreement for any reason ceases to be or is not a valid and perfected lien
having a first priority security interest (other than as a direct result of the
failure of Access Capital or its representatives to present proper UCC financing
statements for recording or UCC continuation statements in any jurisdiction
where any Borrower has disclosed to Access Capital in writing that it has a
location or any of its Collateral is located);
(k) if any Borrower shall (i) apply for, consent to or suffer
to exist the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its property, (ii) make a general assignment for the benefit of creditors, (iii)
commence a voluntary case under the federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy laws, or
(vii) take any action for the purpose of effecting any of the foregoing;
(l) any Borrower shall admit in writing its inability, or be
generally unable to pay its debts as they become due or cease operations of its
private cable business;
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(m) any Affiliate (other than Cacomm and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇.) or any Subsidiary shall (i) apply for or consent to the appointment of, or
the taking possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property, (ii) admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business, (iii) make a general assignment for the
benefit of creditors, (iv) commence a voluntary case under the federal
bankruptcy laws (as now or hereafter in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, within thirty (30) days, any petition filed against it in any
involuntary case under such bankruptcy laws or (viii) take any action for the
purpose of effecting any of the foregoing;
(n) any Borrower directly or indirectly sells, assigns,
transfers, conveys, or suffers or permits to occur any sale, assignment,
transfer or conveyance of any assets of any Borrower or any interest therein,
except as permitted herein other than ordinary course of business;
(o) any Borrower fails to operate in the ordinary course of
business (for purposes of this clause the "ordinary course of business" with
respect to Wireless shall mean any utilization of cable channel service pursuant
to the License Agreement;
(p) Intentionally Omitted.
(q) a default by any Borrower in the payment, when due, of any
principal of or interest on any indebtedness for money borrowed in excess of
$10,000 in the aggregate which is not cured within any applicable grace period;
(r) if (i) the Series A Preferred Stock of Holdings held by
IBJSCC and KOCO at any time shall cease to be at least 22% of the outstanding
capital stock of Holdings on a fully diluted basis or (ii) the number of issued
and outstanding shares of common stock of Holdings shall increase by 50% or more
from the number of issued and outstanding shares of common stock as of the
Closing Date; or
(s) occurrence of a material default under the License
Agreement or termination thereof.
19. Remedies.
(a) Upon the occurrence of an Event of Default
pursuant to paragraph 18(k) herein, all Obligations shall be immediately due and
payable and this Agreement shall be deemed terminated; upon the occurrence and
continuation of any other of the Events of Default, Access Capital shall have
the right to demand repayment in full of all Obligations, whether or not
otherwise due. Until all Obligations have been fully satisfied, Access Capital
shall retain its security interest in all Collateral. Access Capital shall have,
in addition to all other
-xxxi-
rights provided herein, the rights and remedies of a secured party under the
UCC, and under other applicable law, all other legal and equitable rights to
which Access Capital may be entitled, including without limitation, the right to
take immediate possession of the Collateral, to require Borrowers to assemble
the Collateral, at Borrowers' expense, and to make it available to Access
Capital at a place designated by Access Capital which is reasonably convenient
to both parties and to enter any of the premises of any Borrower or wherever the
Collateral shall be located, with or without force or process of law, and to
keep and store the same on said premises until sold (and if said premises be the
property of a Borrower, such Borrower agrees not to charge Access Capital for
storage thereof), and the right to apply for the appointment of a receiver for
any Borrower's property. Further, Access Capital may, at any time or times after
default by any Borrower, sell and deliver all Collateral held by or for Access
Capital at public or private sale for cash, upon credit or otherwise, at such
prices and upon such terms as Access Capital, in Access Capital's sole
discretion, deems advisable or Access Capital may otherwise recover upon the
Collateral in any commercially reasonable manner as Access Capital, in its sole
discretion, deems advisable. The requirement of reasonable notice shall be met
if such notice is mailed postage prepaid to Borrower, on behalf of each
Borrower, at Borrower's address as shown in Access Capital's records, at least
ten (10) days before the time of the event of which notice is being given.
Access Capital may be the purchaser at any sale, if it is public. In connection
with the exercise of the foregoing remedies, Access Capital is granted
permission to use all of any Borrower's trademarks, tradenames, tradestyles,
patents, patent applications, licenses, franchises and other proprietary rights.
The proceeds of sale shall be applied first to all costs and expenses of sale,
including attorneys' fees, and second to the payment (in whatever order Access
Capital elects) of all Obligations. Access Capital will return any excess to the
applicable Borrower and each Borrower shall remain jointly and severally liable
to Access Capital for any deficiency. In addition to all other sums due to
Access Capital, Borrowers shall pay Access Capital, for costs and expenses
incurred by Access Capital for internal collection efforts to obtain or enforce
payment of Receivables, an amount equal to four percent (4%) of the net face
amount of any Receivables collected until such time as the Obligations have been
paid in full and this Agreement is irrevocably terminated.
(b) Notwithstanding anything to the contrary
contained in this Agreement and subsection (a) of this Section 9, Access Capital
will not take any action pursuant to this Agreement which would constitute or
result in any assignment of a FCC license or any change of control of any
Borrower if such assignment of FCC license or change of control would require
under then existing law (including the FCC Rules), the prior consent of the FCC,
without first obtaining such consent of the FCC. After the occurrence and during
the continuance of any Event of Default, each Borrower shall take any action
which Access Capital may reasonably request in order to obtain and enjoy the
full rights and benefits granted to Access Capital by this Agreement, including
at such Borrower's own
-xxxii-
cost and expense, the use of its best efforts to assist in obtaining consent of
the FCC for any action or transaction contemplated by this Agreement which is
then required by law, and specifically, with limitation, upon request, to
prepare, sign and file with the FCC the assignor's or transferor's portion of
any application or applications for consent to the assignment of license or
transfer of control necessary or appropriate under the FCC's Rules.
20. Waiver; Cumulative Remedies. Failure by Access Capital to
exercise any right, remedy or option under this Agreement or any supplement
hereto or any other agreement between any Borrower and Access Capital or delay
by Access Capital in exercising the same, will not operate as a waiver; no
waiver by Access Capital will be effective unless it is in writing and then only
to the extent specifically stated. Access Capital's rights and remedies under
this Agreement will be cumulative and not exclusive of any other right or remedy
which Access Capital may have.
21. Application of Payments. Each Borrower irrevocably waives
the right to direct the application of any and all payments at any time or times
hereafter received by Access Capital from or on any Borrower's behalf and each
Borrower hereby irrevocably agrees that Access Capital shall have the continuing
exclusive right to apply and reapply any and all payments received at any time
or times hereafter against (a) at any time, the Obligations hereunder (other
than against the outstanding principal amount of the Revolving Advances
excluding any Revolving Advances made to pay interest, fees or expenses
hereunder) or (b) following the occurrence and during the continuation of an
Incipient Event of Default or an Event of Default against any of the Obligations
hereunder in such manner as Access Capital may deem advisable notwithstanding
any entry by Access Capital upon any of Access Capital's books and records.
22. Depository Accounts. Any payment received by any Borrower
on account of any Collateral shall be held by such Borrower in trust for Access
Capital and such Borrower shall promptly deliver same in kind to Access Capital
or following the occurrence and during the continuation of an Event of Default,
deposit all such payments into a cash collateral account at such bank as Access
Capital may designate for application to payment of the Obligations. Each
Borrower shall also execute such further documents as Access Capital may deem
necessary to establish such an account and all funds deposited in such account
shall immediately be deemed Access Capital's property provided, that, upon and
after the payment in full of the Obligations and the irrevocable termination of
this Agreement all funds deposited in such account shall immediately be deemed
the applicable Borrowers' property and shall be remitted by Access Capital to
Borrowing Agent for the benefit of Borrowers provided, further, that, each
Borrower hereby authorizes Access Capital to set off against any such funds any
expense or fee incurred by Access Capital in connection with making any such
remittance.
-xxxiii-
23. Lock Box Accounts. Following the occurrence and during the
continuation of an Event of Default, each Borrower shall, at Access Capital's
request, instruct all of its customers and account debtors to make such payments
on account of Receivables to an account under Access Capital's dominion and
control at such bank as Access Capital may designate. Each Borrower shall also
execute such further documents as Access Capital may deem necessary to establish
such an account and all funds deposited in such account shall immediately be
deemed Access Capital's property provided, that, upon and after the payment in
full of the Obligations and the irrevocable termination of this Agreement all
funds deposited in such account shall immediately be deemed the applicable
Borrowers' property and shall be remitted by Access Capital to Borrowing Agent
for the benefit of Borrowers provided, further, that, each Borrower hereby
authorizes Access Capital to set off against any such funds any expense or fee
incurred by Access Capital in connection with making any such remittance.
24. Revival. Each Borrower further agrees that to the extent
any Borrower makes a payment or payments to Access Capital, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy act, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the obligation or part thereof intended to be satisfied shall be revived and
continued in full force and effect as if said payment had not been made.
25. Notices. Any notice or request hereunder may be given to
Borrowing Agent on behalf of Borrowers or Access Capital at the respective
addresses set forth below or as may hereafter be specified in a notice
designated as a change of address under this paragraph. Any notice or request
hereunder shall be given by registered or certified mail, return receipt
requested, hand delivery, overnight mail or telecopy (confirmed by mail).
Notices and requests shall be, in the case of those by (a) hand delivery, deemed
to have been given when delivered to any officer of the party to whom it is
addressed, (b) overnight mail, when deposited with an overnight mail carrier of
national recognition (such as Federal Express), (c) registered or certified
mail, on the second business day after the mailing thereof, and (d) telecopy,
when confirmed.
Notices shall be provided as follows:
If to Access Capital: Access Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Client Services
Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇ & Hessen LLP
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▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Borrower: Magnavision Private Cable, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Zimet, Haines, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
26. GOVERNING LAW AND WAIVER OF JURY TRIAL. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK. ACCESS CAPITAL SHALL HAVE THE RIGHTS AND REMEDIES OF A
SECURED PARTY UNDER APPLICABLE LAW INCLUDING, BUT NOT LIMITED TO, THE UNIFORM
COMMERCIAL CODE OF NEW YORK. EACH BORROWER AGREES THAT ALL ACTIONS AND
PROCEEDINGS RELATING DIRECTLY OR INDIRECTLY TO THIS AGREEMENT OR ANY ANCILLARY
AGREEMENT OR ANY OTHER OBLIGATIONS SHALL BE LITIGATED IN THE FEDERAL DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR, AT ACCESS CAPITAL'S OPTION, IN
ANY OTHER COURTS LOCATED IN NEW YORK STATE OR ELSEWHERE AS ACCESS CAPITAL MAY
SELECT AND THAT SUCH COURTS ARE CONVENIENT FORUMS AND EACH BORROWER SUBMITS TO
THE PERSONAL JURISDICTION OF SUCH COURTS. EACH BORROWER WAIVES PERSONAL SERVICE
OF PROCESS AND CONSENTS THAT SERVICE OF PROCESS UPON SUCH BORROWER MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWING
AGENT AT ITS ADDRESS APPEARING ON ACCESS CAPITAL'S RECORDS, AND SERVICE SO MADE
SHALL BE DEEMED COMPLETED TWO (2) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
THE PARTIES HERETO WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING BETWEEN ANY BORROWER AND ACCESS CAPITAL AND EACH BORROWER WAIVES THE
RIGHT TO ASSERT IN ANY ACTION OR PROCEEDING INSTITUTED BY ACCESS CAPITAL WITH
REGARD TO THIS AGREEMENT OR ANY OF THE OBLIGATIONS ANY OFFSETS OR COUNTERCLAIMS
WHICH IT MAY HAVE.
27. Borrowing Agency Provisions.
(a) Each Borrower hereby irrevocably designates Borrowing
Agent to be its attorney and agent and in such capacity to borrow, sign and
endorse notes, and execute and deliver all instruments, documents, writings and
further assurances now or hereafter required hereunder, on behalf of such
Borrower or Borrowers, and hereby authorizes Access Capital to pay over or
-xxxv-
credit all loan proceeds hereunder in accordance with the request
of Borrowing Agent.
(b) The handling of this credit facility as a co-borrowing
facility with a borrowing agent in the manner set forth in this Agreement is
solely as an accommodation to Borrowers and at their request. Access Capital
shall not incur liability to Borrowers solely as a result thereof. To induce
Access Capital to do so and in consideration thereof, each Borrower hereby
indemnifies Access Capital and holds Access Capital harmless from and against
any and all liabilities, expenses, losses, damages and claims of damage or
injury asserted against Access Capital by any Person arising from or incurred by
reason of the handling of the financing arrangements of Borrowers as provided
herein, reliance by Access Capital on any request or instruction from Borrowing
Agent or any other action taken by Access Capital with respect to this Section
27 except due to willful misconduct or gross (not mere) negligence by the
indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
to Access Capital to any Borrower, failure of Access Capital to give any
Borrower notice of borrowing or any other notice, any failure of Access Capital
to pursue or preserve its rights against any Borrower, the release by Access
Capital of any Collateral now or thereafter acquired from any Borrower, and such
agreement by each Borrower to pay upon any notice issued pursuant thereto is
unconditional and unaffected by prior recourse by Access Capital to the other
Borrowers or any Collateral for such Borrower's Obligations or the lack thereof.
28. Subrogation. Notwithstanding any payment or payments made
by any Borrower hereunder, or any setoff or application of funds of any Borrower
by Access Capital, no Borrower shall be entitled to be subrogated to any of the
rights of Access Capital against any other Borrower or against any Collateral or
guarantee or right of offset held by Access Capital for the payment of the
Obligations, nor shall any Borrower seek or be entitled to seek any contribution
or reimbursement from any other Borrower in respect of payments made by such
Borrower hereunder, until all amounts owing to Access Capital by all Borrowers
on account of the Obligations are paid in full and this Loan Agreement had been
terminated. If, notwithstanding the foregoing, any amount shall be paid to any
Borrower on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full and the Loan Agreement shall not
have been terminated, such amount shall be held by such Borrower in trust for
Access Capital, segregated from other funds of such Borrower, and shall,
forthwith upon and (in any event within two (2) business days of) receipt by
such Borrower, be turned over to Access Capital in the exact form received by
such Borrower (duly endorsed by the undersigned to Access Capital, if required),
to
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be applied against the Obligations, whether matured or unmatured, in such order
as Access Capital may determine.
29. Limitation of Liability. Each Borrower acknowledges and
understands that in order to assure repayment of the Obligations hereunder,
Access Capital may be required to exercise any and all of Access Capital's
rights and remedies hereunder and agrees that neither Access Capital nor any of
Access Capital's agents shall be liable for acts taken or omissions made in
connection herewith or therewith except for actual bad faith, gross (not mere)
negligence or willful misconduct.
30. Entire Understanding. This Agreement and the Ancillary
Agreements contain the entire understanding between Borrowers and Access Capital
and any promises, representations, warranties or guarantees not herein contained
shall have no force and effect unless in writing, signed by each Borrower's and
Access Capital's respective officers. Neither this Agreement, the Ancillary
Agreements, nor any portion or provisions thereof may be changed, modified,
amended, waived, supplemented, discharged, cancelled or terminated orally or by
any course of dealing, or in any manner other than by an agreement in writing,
signed by the party to be charged.
31. Severability. Wherever possible each provision of this
Agreement or the Ancillary Agreements shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this
Agreement or the Ancillary Agreements shall be prohibited by or invalid under
applicable law such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions thereof.
32. Captions. All captions are and shall be without
substantive meaning or content of any kind whatsoever.
33. Counterparts. This Agreement may be executed in
one or more counterparts, all of which taken together shall
constitute one and the same instrument.
34. Construction. The parties acknowledge that each party and
its counsel have reviewed this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments, schedules or exhibits thereto.
35. Publicity. Upon the prior written consent of each
Borrower, such Borrower hereby authorizes Access Capital to make appropriate
announcements of the financial arrangement entered into by and between such
Borrower and Access Capital, including, without limitation, announcements which
are commonly known as tombstones, in such publications and to such selected
parties as
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Access Capital shall in its sole and absolute discretion deem appropriate.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
WITNESS: MAGNAVISION PRIVATE CABLE,
INC.
By:_________________________ By:________________________
Title:_________________
----
WITNESS: MAGNAVISION CORPORATION, a
Delaware corporation
By:_________________________ By:________________________
Title:_________________
----
WITNESS: MAGNAVISION WIRELESS CABLE,
INC.
By:_____________________ By:_______________________
Title:____________________
WITNESS: MAGNAVISION CORPORATION, a New
Jersey corporation
By:_____________________ By:_______________________
Title:____________________
ACCESS CAPITAL, INC.
By:______________________
Title:___________________
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Exhibit A - Warrant
(See Attached)
Exhibit 1(B) - Permitted Liens
------------------------------
NONE
Exhibit 4 - Form of Borrowing Base Certificate
Exhibit 4A - Officers Authorized to make Revolving Advances
-------------------------- ----------------------------
Name Signature
-------------------------- ----------------------------
Name Signature
-------------------------- ----------------------------
Name Signature
-------------------------- ----------------------------
Name Signature
Exhibit 7(b)
------------
Prohibitions on Granting a Security Interest
Exhibit 12(a) - States of Incorporation
---------------------------------------
Private Cable-Delaware
Holdings-Delaware
Wireless-Delaware
Magnavision-New Jersey
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Exhibit 12(j) - Licenses, Patents, Trademarks and Copyrights
------------------------------------------------------------
The License Agreement
Exhibit 12(l) - Inventory Locations
-----------------------------------
Exhibit 12(m) - Permitted Indebtedness
--------------------------------------
None
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