SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 4, 1996
THE NOSTALGIA NETWORK
(Exact name of registrant as specified in its charter)
Delaware 0-13102 84-0923659
(State or other (Commission File Number) (IRS Employer
jurisdiction Identification No.)
of incorporation)
650 Massachusetts Avenue, N.W. 20001
Washington, D.C. (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (202) 289-6633.
Page 1 of 3
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 4, 1996, the Company borrowed the amount of
$1,000,000 from Concept Communications, Inc. ("Concept"), its
controlling stockholder. The principal amount and accrued
interest at a rate of 5.28% per annum is due and payable on
February 1, 1996. If the principal balance and accrued interest
is not paid on or before February 1, 1996, interest will accrue
thereafter at a rate equal to the rate on six month United States
Treasury bills as of February 1, 1996 plus two percent. The
indebtedness is secured by a security interest in all of the
Company's personal property and fixtures and the proceeds
thereof. The proceeds of the borrowing will be used for general
corporate purposes.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) and (b) Not Applicable.
(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION
1 Promissory Note dated January 4, 1996
given by The Nostalgia Network, Inc. to
Concept Communications, Inc.
2 Security Agreement dated as of January
4, 1996 between Concept Communications,
Inc. and The Nostalgia Network, Inc.
Page 2 of 3
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE NOSTALGIA NETWORK, INC.
By: /s/ Martin A. Gallogly
_________________________
Name: Martin A. Gallogly
Title: Chief Financial
Officer
Dated: January 19, 1996
Page 3 of 3
PROMISSORY NOTE
$1,000,000 Washington, D.C.
Maturity Date: February 1, 1996 January 4, 1996
FOR VALUE RECEIVED, the undersigned, THE NOSTALGIA NETWORK,
INC., a Delaware Corporation ("Maker"), hereby promises to pay to
the order of CONCEPT COMMUNICATIONS, INC., a Delaware
corporation, or any subsequent holder or holders ("Holder") of
this Promissory Note (this "Note"), at 650 Massachusetts Avenue,
N.W., Washington, D.C., 20001, or at such other place as Holder
may from time to time designate in writing, the principal sum of
One Million Dollars ($1,000,000), together with all accrued
interest on such outstanding balance, in accordance with the
terms and provisions of this Note.
1. Principal and Interest. Interest shall accrue on the
outstanding principal balance of this Note from January 4, 1996,
at the rate of five and twenty-eight hundredths percent (5.28%)
per annum, and the principal balance together with all interest
accrued thereon, shall be payable on February 1, 1996 (the
"Maturity Date"). In the event that the principal balance and
all accrued interest is not paid on or before the Maturity Date,
interest shall accrue thereafter on all unpaid amounts at the
rate equal to that accruing on six month United States Treasury
bills as of such date plus two percentage points.
2. Payments. All payments by Maker hereunder shall be
applied (i) first to the interest due and unpaid under this Note,
and (ii) thereafter, to any principal owing under this Note.
3. Prepayment. Maker shall have the right to prepay, in
part or in full, without penalty, this Note (together with all
accrued interest to the date of prepayment on the amount of
principal thus prepaid) at any time or times. The purpose of
this loan is to provide a bridge until Maker is able to negotiate
an equity investment not less than the principal amount hereof.
If this investment occurs prior to the Maturity Date, Maker shall
be requested to prepay all amounts owed hereunder.
4. Security. This note is secured by a security interest
in collateral described in a certain security agreement between
Payee and Maker, the effective date of which is January 4, 1996
(the "Security Agreement"). The rights and obligations of the
parties with respect to the above-mentioned collateral are stated
in the Security Agreement.
5. Waiver Regarding Notice. Maker waives presentment,
demand and presentation for payment, protest and notice of
protest, and, except as otherwise specifically provided herein,
any other notices of whatever kind or nature, bringing of suit
and diligence in taking any action to collect any sums owing
hereunder. From time to time, without in any way affecting the
obligation of Maker to pay the outstanding principal balance of
this Note and any interest accrued thereon and fully to observe
and perform the covenants and obligations
<PAGE>
Promissory Note
page 2 of 5
of Maker under this Note, without giving notice to, or obtaining the
consent of, Maker, and without any liability whatsoever on the part of
Holder, Holder may, at its option, extend the time for payment of
interest hereon and/or principal of this Note, reduce the
payments hereunder, release anyone liable on this Note or accept
a renewal of this Note, join in any extension or subordination,
or exercise any right or election hereunder. No one or more of
such actions shall constitute a novation or operate to release
any party liable for or under this Note, either as Maker or
otherwise.
6. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
a. Maker's failure to make any required payment of
principal and/or interest under this Note, or any other amount
due and payable under this Note on or before the date on which
such payment is due under this Note;
b. Maker's failure to make any required payment when
due of any other amounts owed by Maker to Holder; and
c. Maker's insolvency, general assignment for the
benefit of creditors, or the commencement by or against Maker of
any case, proceeding, or other action seeking reorganization,
arrangement, adjustment, liquidation, dissolution, or composition
of Maker's debts under any law relating to bankruptcy,
insolvency, or reorganization, or relief of debtors, or seeking
appointment of a receiver, trustee, custodian, or other similar
official for Maker or for all or any substantial part of Maker's
assets.
7. Acceleration. Upon the occurrence of an Event of
Default, Holder shall have the right to cause the entire unpaid
principal balance, together with all accrued interest thereon,
reasonable attorneys' and paralegals' fees and all fees, charges,
costs and expenses, if any, owed by Maker to Holder, to become
immediately due and payable in full by giving written notice to
Maker.
8. Remedies. Upon the occurrence of an Event of Default,
Holder may avail itself of any legal or equitable rights which
Holder may have at law or in equity or under this Note,
including, but not limited to, the right to accelerate the
indebtedness due under this Note as described in the preceding
sentence. The remedies of Holder as provided herein shall be
distinct and cumulative, and may be pursued singly, successively
or together, at the sole discretion of Holder, and may be
exercised as often as occasion therefor shall arise. Failure to
exercise any of the foregoing options upon the occurrence of an
Event of Default shall not constitute a waiver of the right to
exercise the same or any other option at any subsequent time in
respect to the same or any other Event of Default, and no single
or partial exercise of any right or remedy shall preclude other
or further exercise of the same or any other right or remedy.
Holder shall have no duty to exercise any or all of the rights
and remedies herein
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Promissory Note
page 3 of 5
provided or contemplated. The acceptance by Holder of any payment
hereunder that is less than payment in full of all amounts due and
payable at the time of such payment shall not constitute a waiver
of the right to exercise any of the foregoing rights or remedies
at that time, or nullify any prior exercise of any such rights or
remedies without the express written consent of Holder.
9. Expenses of Collection. If this Note is referred to
any attorney for collection, whether or not suit has been filed
or any other action instituted or taken to enforce or collect
under this Note, Maker shall pay all of Holder's costs, fees
(including reasonable attorneys' and paralegals' fees) and
expenses in connection with such referral.
10. Governing Law. The provisions of this Note shall be
governed and construed according to the law of the District of
Columbia, without giving effect to its conflicts of laws
provisions.
11. No Waiver. Neither any course of dealing by Holder nor
any failure or delay on its part to exercise any right, power or
privilege hereunder shall operate as a waiver of any right or
remedy of Holder hereunder unless said waiver is in writing and
signed by Holder, and then only to the extent specifically set
forth in said writing. A waiver as to one event shall not be
construed as a continuing waiver by Holder or as a bar to or
waiver of any right or remedy by Holder as to any subsequent
event.
12. Notices.
a. All notices hereunder shall be in writing and
shall either be hand delivered, with receipt therefor, or sent by
Federal Express or similar courier, with receipt therefor, or by
certified or registered mail, postage prepaid, return receipt
requested, as follows:
The Nostalgia Network, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: President
<PAGE>
Promissory Note
page 4 of 5
If to Holder: Concept Communication, Inc.
650 Massachusetts Avenue, N.W., Second Floor
Washington, D.C. 20001
Notices shall be effective when received; provided, however, that
if any notice sent by courier or by certified or registered mail
is returned as undeliverable, such notice shall be deemed
effective when mailed or given to such courier.
b. Either of the foregoing persons may change the
address to which notices are to be delivered to it hereunder by
giving written notice to the others as provided in this Paragraph
11.
13. Severability. In the event that any one or more of the
provisions of this Note shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provision of this Note, and this Note shall be construed as
if such invalid, illegal or unenforceable provision had never
been contained herein.
14. Limitations of Applicable Law. In the event the
operation of any provision of this Note results in an effective
rate of interest transcending the limit of the usury or any other
law applicable to the loan evidenced hereby, all sums in excess
of those lawfully collectible as interest for the period in
question shall, without further agreement or notice by any party
to this Note, be applied to the unpaid principal balance of this
Note immediately upon receipt of such monies by Holder, with the
same force and effect as though Maker had specifically designated
such extra sums to be so applied to the unpaid principal balance
and Holder had agreed to accept such extra payment(s) as a
prepayment.
15. Captions. The captions herein are for convenience of
reference only and in no way define or limit the scope or content
of this Note or in any way affect its provisions.
16. Debtor-Creditor Relationship. Holder shall in no event
be construed for any purpose to be a partner, joint venturer or
associate of Maker, it being the sole intention of the parties to
establish a relationship of debtor and creditor.
17. Time of the Essence. It is expressly agreed that time
is of the essence in the performance of the obligations set
fourth in this Note.
<PAGE>
Promissory Note
page 5 of 5
IN WITNESS WHEREOF, Maker has executed this Promissory Note
on this fourth day of January 1996, pursuant to due authority.
MAKER:
ATTEST: THE NOSTALGIA NETWORK, INC.
a Delaware corporation
/s/ Daniel C. Holdgreiwe By: /s/ Jack Heim
____________________________ ___________________
Daniel C. Holdgreiwe Jack Heim
Secretary President
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and
entered into this fourth day of January, 1996, by and between
CONCEPT COMMUNICATIONS, INC., 650 Massachusetts Ave., N.W.,
Washington, D.C., 20001, a Delaware Corporation ("Secured
party"), and THE NOSTALGIA NETWORK, INC., 650 Massachusetts Ave.,
N.W., Washington, D.C., 20001, a Delaware Corporation ("Debtor").
WHEREAS, Secured Party, on date even herewith has loaned to
Debtor One Million And No/100 Dollars ($1,000,000.00), and Debtor
did, effectively on this date, execute a Promissory Note (the
"Note") on which Secured Party is payee in the principal amount
of One Million and No/100 Dollars ($1,000,000.00), plus interest
thereon; and
WHEREAS, as an inducement to Secured Party to accept the
Note Debtor has agreed to execute and deliver this Agreement to
Secured Party; and
WHEREAS, the parties hereby wish to secure in the manner set
forth in this Agreement the payment, performance and discharge of
all obligations of Debtor under the Note or otherwise.
NOW, THEREFORE, in consideration of the mutual promises of
the parties hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Security Interests
A. In order to secure the due and punctual payment of
the Note (and all sums which may be owed thereunder) in
accordance with the terms thereof, as the Note may be amended
from time to time, Debtor hereby grants to Secured Party a
continuing security interest in the following (hereinafter
collectively called the "Collateral"):
(i) all personal property and fixtures in which
Debtor has an interest, now or hereafter existing or acquired,
and wherever located, tangible or intangible, including but not
limited to all present and hereafter existing or acquired
accounts, contract rights, general intangibles, equipment, goods,
inventory (raw materials, components, work-in process, finished
merchandise and packing and shipping materials), personal
property made available to Debtor by Secured Party (or its agent
or bailee) pursuant to a trust receipt or other security
agreement the effect of which is to continue Secured Party's
security interest therein, money, instruments, documents, chattel
paper, securities, deposits, credits, claims and demands against
Secured Party;
(ii) all proceeds thereof; and
(iii) all increases, substitutions, replacements,
additions and accessions thereto.
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Security Agreement
Page 2 of 8
B. The security interests granted pursuant to this
Section 1 (the "Security Interests") are granted as security only
and shall not subject Secured Party to, or transfer or in any way
affect any obligation or liability of Debtor with respect to any
of the Collateral or any transaction which gave rise thereto.
2. Possession
Debtor shall have the right to sell, mortgage or otherwise
dispose of Collateral in the usual course of business without the
prior written consent of Secured Party, so long as such items are
replaced with comparable items of equal or greater value.
Secured Party shall have a security interest in all such
replacements items. Any action with respect to the Collateral
that is not in the ordinary course of business shall not be taken
unless Debtor shall have obtained the prior written consent of
Secured Party to such action.
3. Location
Except as otherwise provided in Section 2 hereof, Debtor
hereby agrees to keep the Collateral at its principal office and
not to remove the same (except in the usual course of business
for temporary periods) without the prior written consent of
Secured Party.
4. Filing
Debtor will, at its expense, execute, deliver, file and
record (in such manner and form as Secured Party may require), or
permit Secured Party to file and record any financing statements,
continuation statements, specific assignment or other instruments
that may be necessary or desirable in order to create, preserve,
perfect or validate any security interest or to enable Secured
Party to exercise and enforce its rights hereunder.
5. Repairs
Debtor hereby agrees to keep the Collateral, at Debtor's own
expense and cost, in such repair and condition as exists on the
date hereof and available for inspection by Secured Party at all
reasonable times.
6. Liens
Debtor hereby agrees to keep the Collateral free and clear
of all liens, charges, encumbrances, taxes and assessments,
except as may have been or may be created by Secured Party.
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Security Agreement
Page 3 of 8
7. Title
Debtor hereby agrees to defend the title to the Collateral
against all persons and against all claims and demands
whatsoever; provided, however, that Debtor shall not be required
to defend the title to the Collateral against any claim or demand
arising out of any act or failure to act by Secured Party.
8. Payment
Debtor hereby agrees to pay and perform all of the
obligations secured by this Agreement according to the terms
hereof.
9. Applicable Law
The Uniform Commercial Code as in effect in the District of
Columbia shall govern the rights, duties and remedies of the
parties hereto and any provisions herein declared invalid under
any law shall not invalidate any other provision of this
Agreement.
10. Events of Default
Debtor shall be in default under this Agreement upon the
occurrence of:
(i) the failure by Debtor to timely pay the
principal or any installment of principal or interest on the Note
or any other sum due thereunder or otherwise;
(ii) the failure by Debtor to comply with or
perform any provision of this Agreement;
(iii) the breach by Debtor of any covenant and
agreement or condition contained in any other security or other
agreement of any kind securing the payment of the indebtedness
(or any part thereof) under the Note or otherwise;
(iv) the execution by Debtor of an assignment for
the benefit of creditors;
(v) the subjection of the Collateral to levy of
execution or other judicial process;
(vi) the appointment of a receiver of Debtor or of
the Collateral, or of any substantial part thereof;
(vii) the commencement of any bankruptcy or
insolvency proceeding
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Security Agreement
Page 4 of 8
against Debtor; or
(viii) the commencement of any bankruptcy or
insolvency proceeding by Debtor.
11. Remedies Upon Event of Default
Upon any default by Debtor, at the option of Secured Party,
the obligations secured by this Agreement shall immediately
become due an payable in full and Secured Party shall have all
the rights, remedies and privileges with respect to repossession,
retention and sale of the Collateral and disposition of the
proceeds as are accorded by the applicable sections of the
Uniform Commercial Code as in effect in the District of Columbia.
12. General Authority
Debtor hereby irrevocably appoints Secured Party as Debtor's
true and lawful attorney, with full power of substitution, in the
name of Debtor, Secured Party or otherwise, for the sole use and
benefit of Secured Party, but at Debtor's expense, to the extent
permitted by law, to exercise, at any time and from time to time
while any default has occurred and is continuing, all or any of
the following powers with respect to all or any of the
Collateral:
(i) To receive, take endorse, assign and deliver
any and all checks, notes, drafts, documents and other negotiable
and non-negotiable instruments and chattel paper taken or
received by Secured Party in connection therewith;
(ii) To settle, compromise, compound, prosecute or
defend any action or proceeding with respect thereto;
(iii) To sell, transfer, assign or otherwise
deal in or with same or the proceeds or avails thereof as fully
and effectually as if Secured Party were the absolute owner
thereof;
(iv) To extend the time of payment of any or all
thereof and to make any allowance and other adjustments with
reference thereto; and
(v) To discharge any taxes, liens, security
interests or other encumbrances at any time placed thereon;
provided that Secured Party shall give Debtor not less than five
(5) days' prior written notice of the time and place of any sale
or other intended disposition of any of the Collateral, except
any Collateral which is perishable or threatens to decline
speedily in value or is of a type customarily sold on a
recognized market. Secured Party and Debtor agree that such
notice
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Security Agreement
Page 5 of 8
constitutes "reasonable notification" within the meaning
of Section 9-504(3) of the Uniform commercial Code.
13. Application of Preceeds
The proceeds of any sale of, or other realization upon, all
or any part of the Collateral shall be applied in the following
order or priorities:
First, to pay the expenses of retaking, holding,
preparing for sale or lease, selling, leasing and the like and
reasonable attorneys' fees and legal expenses incurred by Secured
Party;
Second, to the payment of the Note and any other
obligations secured hereby;
Third, to pay the indebtedness secured by any
subordinate security interest in the item of Collateral sold if
written notification of demand therefor is received before
distribution of the proceeds is completed; and
Finally, to pay to Debtor, or its assigns, or as a
court of competent jurisdiction may direct, any surplus then
remaining from such proceeds.
14. Expenses; Secured Party's Lien
Debtor will forthwith upon demand pay to Secured Party:
(i) the amount of any taxes which Secured Party
may have been required to pay by reason of the exercise of its
rights pursuant to Section 12 hereof (including any applicable
transfer taxes) or to free any of the Collateral from any lien
thereon, and
(ii) the amount of any and all reasonable out-of-
pocket expenses, including the fees and disbursements of its
counsel and of any agents not regularly in its employ, which
Secured Party may incur in connection with (a) the collection,
sale or other disposition of any of the Collateral, (b) the
exercise by Secured Party of any of the powers conferred upon it
hereunder or (c) any default on Debtor's part hereunder.
15. Termination of Security Interests; Release of
Collateral
Upon the repayment in full of the Note and all other
obligations secured hereby, the Security Interest shall terminate
and all rights to the Collateral shall revert to Debtor. Upon
any such termination of the Security Interest or release of
Collateral, Secured Party will, at Debtor's expense, execute and
deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interest or
the release of such Collateral,
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Security Agreement
Page 6 of 8
as the case may be.
16. Notices
All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been
duly given, if delivered or sent by registered or certified mail,
return receipt requested, first-class postage prepaid as follows:
(i) it to Secured Party, to Concept
Communications, Inc., 650 Massachusetts Ave., N.W., Washington,
D.C. 20001, Attention: President, with a copy to Arthur
Cirulnik, Tucker, Flyer & Lewis, 1615 L Street, N.W., Washington,
D.C. 20036.
(ii) if to Debtor, to The Nostalgia Network, Inc.,
650 Massachusetts Ave., N.W., Washington, D.C., 20001, Attention:
President, with a copy to Bruce Casino, Esq., Fried, Frank,
Harris, Shriver & Jacobson, 1001 Pennsylvania Ave., N.W., Suite
800, Washington, D.C. 20004, or to such other address as any
such party may designate in accordance with this Section 16.
17. Waivers; Non-Exclusive Remedies
No failure on the part of Secured Party to exercise, and no
delay in exercising, and no course of dealing with respect to,
any rights, power or remedy under this Agreement shall operate as
a waiver thereof; nor shall any single or partial exercise by
Secured Party of any right, power or remedy under this Agreement
preclude any other right, power or remedy. The remedies in this
Agreement are cumulative and are not exclusive of any other
remedies provided by law.
18. Changes in Writing
Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by a
statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is
sought.
19. District of Columbia Law; Meaning of Terms
This Agreement shall be governed and construed according to
the laws of the District of Columbia and shall be binding upon
Debtor, and shall inure to the benefit of Secured Party and its
successors and assigns.
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Security Agreement
Page 7 of 8
20. Severability
If any provision hereof is invalid or unenforceable in any
jurisdiction, the other provisions hereof shall remain in full
force and effect in such jurisdiction and shall be liberally
construed in favor of Secured Party in order to carry out the
intentions of the parties hereto as nearly as may be possible;
and the invalidity or unenforceability of any provision hereof in
any jurisdiction shall not affect the validity or enforceability
of such provision in any other jurisdiction.
21. Headings
The headings in this Agreement are for the purpose of
convenience and reference only and shall not limit or otherwise
affect the meaning hereof.
22. Binding Effect
The terms, warranties, agreements and covenants herein
contained shall bind and inure to the benefit of the respective
parties hereto, and their successors and assigns.
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Security Agreement
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
SECURED PARTY:
Concept Communications, Inc.,
a Delaware Corporation
By: /s/ Dong Moon Joo
_________________________
Dong Moon Joo, President
DEBTOR:
The Nostalgia Network, Inc.,
a Delaware Corporation
By: /s/ Jack Heim
_________________________
Jack Heim, President
