SIGNET BANK
PROMISSORY NOTE
Principal Loan Date Maturity Loan No. Call Collateral
$3,500,000.00 09-13-1996 09-30-2001
Account Officer Initials
anerican
References in the shaded area are for Lender's use only and do
not limit the applicability of this document to any particular
loan or item.
Borrower: American Passage Media, Inc. Lender: SIGNET BANK
149 Fifth Avenue Suite 500
New York, N.Y. 10010 7799 Leesburg
Pike
Falls Church,
VA 22043
IMPORTANT NOTICE
THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH
CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR
AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT
ANY FURTHER NOTICE.
Principal Amount: $3,500,000.00 Initial Rate: 8.679% Date
of Note: September 11, 1996
PROMISE TO PAY. American Passage Media, Inc. ("Borrower")
promises to pay to SIGNET BANK ("Lender"), or order, in lawful
money of the United States of America, the principal amount of
Three Million Five Hundred Thousand and 00/100 Dollars
($3,500,000.00) or so much as may be outstanding, together with
interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each
advance until repayment of each advance.
PAYMENT. Borrower will pay this loan in one payment of all
outstanding principal plus all accrued unpaid interest on
September 30, 2001. In addition, Borrower will pay regular
monthly payments of accrued unpaid interest beginning October 11,
1996, and all subsequent interest payments are due on the same
day of each month after that. Interest on this Note is computed
on a 365/360 simple interest basis; that is, by applying the
ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by
the actual number of days the principal balance is outstanding.
Borrower will pay Lender's address shown above or at such other
place as Lender may designate in writing. Unless otherwise
agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to unpaid interest, then
to principal, and any remaining amount to any unpaid collection
costs and late charges.
VARIABLE INTEREST RATE. Subject to designation of a different
interest rate index by Borrower as provided below, the interest
rate on this Note is subject to change from time to time based on
changes in an independent index which is the per annum rate of
interest, quoted by Lender in its sole discretion, as the London
Interbank Offered Rate (adjusted to reflect the cost of insurance
premiums and reserve requirements as they exist from time to
time) as published by Telerate, as BBA LIBOR on page 3750, or
Bloomberg LIBOR index page if Telerate is not available), or such
other page as may replace that page on that service for the
purpose of displaying rates or prices comparable to that Rate
(rounded upwards, if necessary, to the next higher 1/100%) for
deposits in Dollars for a period of ninety (90) days (the
"Index"). The Index is not necessarily the lowest rate charged
by Lender on its loans. If the Index becomes unavailable during
the term of this loan, Lender may designate a substitute index
after notice to Borrower. Lender will tell Borrower the current
Index rate upon Borrower's request. Borrower understands that
Lender may make loans based on other rates as well. The interest
rate change will not occur more often than each 90 days. The
Index currently is 5.679% per annum. The Interest rate to be
applied to the unpaid principal balance of this Note will be at a
rate of 3.000 percentage points over the Index, resulting in an
initial rate of 8.679% per annum. NOTICE: Under no circumstances
will the interest rate on this Note be more than the maximum rate
allowed by applicable law.
INTEREST RATE OPTIONS. The following interest rate options are
available under this Note:
(a) Default Option. The interest rate margin and index
described in the "VARIABLE INTEREST RATE" paragraph above
(the "Default Option").
(b) Prime Rate. A margin of 0.000 percentage points over
Prime Rate. For purposes of this Note, Prime Rate shall
mean an annual percentage rate periodically announced and
recorded by Lender as an index (called prime rate), at,
above or below which interest rates are established for
certain loans.
When the interest rate is based on a fixed rate, the rate shall
be in effect for a period of the number of days or months as
indicated in the rate option description (the "Interest Period"),
in any case extended to the next succeeding business day when
necessary, beginning on a borrowing date, conversion date or
expiration date of the then current Interest Period. Adjustments
in the interest rate due to changes in the maximum nonusurious
interest rate allowed (the "Highest Lawful Rate") shall be made
on the effective day of any change in the Highest Lawful Rate.
Provided Borrower is not in default under this Note, Borrower may
designate in advance which of the above interest rate indexes
shall be applicable to any loan advance under this Note and shall
designate any optional Interest Period applicable to any fixed
rate loan or advance. In the absence of any such designation the
interest rate option shall be the Default Option. Thereafter
unpaid principal balances under this Note may be converted (at
the end of an Interest Period if the index used to determine the
interest rate therefore is a fixed rate) to another of the above
interest rate options, or continued for an additional interest
period, when applicable, as designated by Borrower in advance;
and in the absence of sufficient advance designation as to
conversion to or continuation of a fixed rate index, the index
shall be converted to the Default Option. Notwithstanding the
foregoing, a fixed rate index may not be elected for a loan or
advance under this Note, nor any conversion to or continuation of
a fixed rate index be elected, if the Interest Period thereof
would extend beyond the maturity of this Note.
PREPAYMENT. Borrower may pay without penalty all or a portion of
the amount owed earlier than it is due. Early payments will not,
unless agreed to by Lender in writing, relieve Borrower of
Borrower's obligation to continue to make payments of accrued
unpaid interest. Rather, they will reduce the principal balance
due.
DEFAULT. Borrower will be in default if any of the following
happens: (a) the failure of any "Party" (which term shall mean
and include each Borrower, endorser, surety and guarantor of this
Note) to make any payment on this Note or on any other
indebtedness due Lender when due; (b) if any asset(s) of a Party
are attached, levied upon, seized or repossessed or if any
asset(s) of a Party should come into the possession of a
receiver, trustee, custodian or assignee for the benefit of
creditors, or if a Party makes an assignment for the benefit of
creditors; (c) the failure of a Party to observe or perform any
obligation or covenant contained in any agreement, document or
instrument furnished in connection herewith or in any other
agreement between a Party and Lender; (d) any representation or
warranty at any time made by a Party to Lender in connection
herewith or in any other agreement between a Party and Lender, or
in any document or instrument delivered to Lender in connection
herewith or pursuant to such other agreement, shall have been
materially false at the time it was made; (e) the termination or
withdrawal of a Party's guaranty with respect to any indebtedness
due Lender; (f) any Party files a petition in bankruptcy,
petitions or applies to any tribunal for any receiver or any
trustee of a Party or any substantial part of its property, or
commences any proceeding relating to such party under any
insolvency, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect; (g) if, within 30 days after
the filing of a petition in bankruptcy against a Party or the
commencement of any proceeding against a Party seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or
future statute, law or regulation, such petition or proceeding
shall not have dismissed, or, if, within 30 days after the
appointment, without the consent or acquiescence of a Party, of
any trustee, receiver or liquidator of such Party or of all or
any substantial part of the properties of the such Party, such
appointment shall not have been vacated; (h) the application for
the appointment of a receiver for a party or for property of a
Party; (i) the making or sending of a notice of an intended bulk
sale by a Party; (j) commencement of any foreclosure, levy,
seizure or forfeiture proceeding, whether by judicial, self-help,
repossession, or any other method, by any creditor of a Party,
any creditor of the owner of any collateral securing this Note,
or by any governmental agency with respect to a Party or such
collateral; (k) if any event occurs which is or, with the passage
of time and/or the giving of notice, could be a default under or
breach of the terms of any instrument or document evidencing a
debt or obligation of a Party to any third party and is not cured
within five (5) days after the occurrence thereof; (l) any
judgment against a Party or any attachment against it or its
property remains unpaid, undischarged, unbonded or undismissed
for a period of 30 days, unless and to the extent that such
judgment is appealed in good faith in a court of higher
jurisdiction and such appeal remains pending; (m) if any
proceeding is filed for the dissolution or liquidation of a
Party; (n) if any Party shall be enjoined or restrained in any
manner from conducting its business in whole or in part, and such
injunction shall not be dismissed or dissolved within thirty (30)
days after the filing thereof; (o) if any tax lien or notice
thereof is filed against a Party or any of the assets of a Party
and remains undismissed, unpaid or unbonded for a period of
thirty (30) days; (p) if, without Lender's prior written consent,
any Party which is not a natural person enters into or becomes a
party to any merger, consolidation or share exchange or if any
Party sells, transfers, conveys or leases, except in the ordinary
course of business, any significant part of its assets or
properties or (if not a natural person) alters its capital
structure, business activities or scope of operations; (q) if,
without Lender's prior written consent, there is a sale, exchange
or transfer of the voting control or any significant portion of
the stock or ownership interests of any Party which is not a
natural person; (r) if any Party who is a natural person shall
die or become incompetent; or (s) the good faith determination by
Lender that a material adverse change in the financial condition
of a Party has occurred since the date hereof or that Lender's
prospect of payment hereunder has been materially impaired.
LENDER'S RIGHTS. Upon default, Lender may declare the entire
unpaid principal balance on this Note and all accrued unpaid
interest, together with all other applicable fees, costs and
charges, if any, immediately due and payable, without notice, and
then Borrower will pay that amount. Upon default, including
failure to pay upon final maturity, Lender, at its option, may
also, if permitted under applicable law, increase the variable
interest rate on this Note to 6.000 percentage points over the
Index. The interest rate will not exceed the maximum rate
permitted by applicable law. Furthermore, subject to any limits
under applicable law, upon default, Borrower also agrees to pay
Lender's attorney fees equal to 25.000% of the principal balance
due on the Note, and all of Lender's other collection expenses,
whether or not there is a lawsuit and including without
limitation legal expenses for bankruptcy proceedings. This Note
shall be governed by, construed and enforced in accordance with
the laws of the Commonwealth of Virginia. Lender and Borrower
hereby waive the right to any jury trial in any action,
proceeding, or counterclaim brought by either party against the
other.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and
rights of setoff against the moneys, securities or other property
of Borrower given to Lender by law, Lender shall have, with
respect to Borrower's obligations to Lender under this Note and
to the extent permitted by law, a contractual possessory security
interest in and a right of setoff against, and Borrower hereby
assigns, conveys, delivers, pledges, and transfers to Lender all
of Borrower's right, title, and interest in and to all deposits,
moneys, securities, and other property of Borrower now or
hereafter in the possession of or on deposit with Lender, whether
held in a general or special account or deposit, whether held
jointly with someone else, or whether held for safekeeping or
otherwise, excluding however all IRA, Keogh, and trust accounts.
Every such security interest and right of setoff may be exercised
without demand upon or notice to Borrower. No security interest
or right of setoff shall be deemed to have been waived by any act
or conduct on the part of Lender or by any neglect to exercise
such right of setoff or to enforce such security interest or by
any delay in so doing. Every right of setoff and security
interest shall continue in full force and effect until such right
of setoff or security interest is specifically waived or released
by an instrument in writing executed by Lender.
LINE OF CREDIT. This Note evidences a revolving line of credit.
Advances hereunder shall be conclusively presumed to have been
made to and for the benefit of and at the request of Borrower
when: (1) deposited or credited to an account of Borrower with
Lender, notwithstanding that such advance was requested, orally
or in writing, by someone other than the person(s) signing below
or that someone other than the person(s) signing below is
authorized to draw on such account and may or does withdraw the
whole or part of any such advance; or (2) made in accordance with
oral or written instructions of Borrower or anyone signing below
for or on behalf of Borrower. Lender is hereby authorized to
maintain records of the date and amount of each advance, the date
and amount of any payment of principal or interest and the
principal balance then remaining unpaid hereon. Borrower hereby
agrees that the amount so evidenced in such records shall, for
all purposes, constitute prima facie evidence thereof and shall
be binding upon Borrower, absent manifest error.
LATE CHARGE. Borrower agrees to pay to Lender on demand a late
charge not to exceed 5% of the amount of any payment of principal
or interest, or both, that is more than ten (10) days past due.
REDUCING REVOLVER. Borrower will reduce balance under the
revolver according to the following schedule:
DATE COMMITMENT AMOUNT ANNUAL REDUCTION BY %
December 31, 1996 $3,500,000.00 0.00%
June 30, 1997 $3,325,000.00 0.00%
December 31, 1997 $3,150,000.00 10.00%
June 30, 1998 $2,800,000.00 10.00%
December 31, 1998 $2,450,000.00 20.00%
June 30, 1999 $2,100,000.00 20.00%
December 31, 1999 $1,750,000.00 20.00%
June 30, 2000 $1,312,000.00 20.00%
December 31, 2000 $ 875,000.00 25.00%
June 30, 2001 $ 437,000.00 25.00%
September 30, 2001 $ -0-
APPLICABLE MARGIN. The applicable margin will be based on the
Borrower's ratio of funded debt to operating cash flow and will
be determined according to the following table:
Operating Cash Flow Base Margin LIBOR
Margin
Leverage less than 1 1.00% 300 basis points
Leverage more than = 1.0 and less than 2.5 1.50% 350 basis points
Leverage more than = 2.5 and less than 3.5 2.00% 400 basis points
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of
its rights or remedies under this Note without losing them.
Borrower and any other person who signs, guarantees or endorses
this Note, to the extent allowed by law, waive presentment,
demand for payment, protest and notice of dishonor. Upon any
change in the terms of this Note, and unless otherwise expressly
stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be
released from liability. All such parties agree that Lender may
renew or extend (repeatedly and for any length of time) this
loan, or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender's security interest in the
collateral; and take any other action deemed necessary by Lender
without the consent of or notice to anyone. All such parties
also agree that Lender may modify this loan without the consent
of or notice to anyone other than the party with whom the
modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE NOTE.
BORROWER:
AMERICAN PASSAGE MEDIA, INC.
By: /s/ Don Leeds (SEAL)
Don Leeds
Executive Vice President
By: /s/ Harlan D. Peltz (SEAL)
Harlan D. Peltz
Chief Executive Officer
Notwithstanding the terms of the foregoing Business Loan
Agreement or any of the Related Documents:
1. Lender may not accelerate the loan or otherwise
exercise any remedies against Borrower unless an Event
of Default has occurred and is continuing.
2. With respect to any default by Borrower in the
performance of any covenant under the Business Loan
Agreement or Related Documents (including, without
limitation, a payment covenant), such default will not
constitute an Event of Default and Lender may not
accelerate the Loan or otherwise exercise remedies
against Borrower if Borrower fully cures such default
by performing such act or making such payment within 15
calendar days of the date on which such action or
payment was due to be performed or paid.
3. Once a default occurs under the Business Loan Agreement
or Related Documents, then such default will continue
to exist until it is either cured by Borrower or is
otherwise waived by Lender and once an Event of Default
occurs under the Business Loan Agreement or Related
Documents, then such Event of Default will continue to
exist until expressly waived by Lender which may not be
unreasonably withheld by Lender.