SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. 42)
THE NOSTALGIA NETWORK, INC.
(Name of Issuer)
Common Stock, $.04 par value
(Title of Class of Securities)
669 752107
(CUSIP Number)
Dong Moon Joo, President
Concept Communications, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
(202) 789-2124
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Arthur E. Cirulnick
Tucker, Flyer & Lewis
a professional corporation
1615 L Street, N.W., Suite 400
Washington, D.C. 20036-5612
(202) 452-8600
March 28, 1997
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box [ ].
(Continued on following pages)
(Page 1 of 41 Pages)
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CUSIP No. 669 752107 Page 2 of 41 Pages
13D
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Concept Communications, Inc.
2. Check the appropriate box if a member of a group
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. Source of Funds
AF (Crown Communications Corporation)
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
NUMBER OF SHARES 7. Sole Voting Power
BENEFICIALLY 13,645,432 shares
OWNED BY
EACH 8. Shared Voting Power
REPORTING 0 shares
PERSON
WITH 9. Sole Dispositive Power
13,645,432 shares
10. Shared Dispositive Power
0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,645,432 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
70.6%
14. Type of Reporting Person
CO
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CUSIP No. 669 752107 Page 3 of 41 Pages
13D
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Crown Communications Corporation
2. Check the appropriate box if a member of a group
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
NUMBER OF SHARES 7. Sole Voting Power
BENEFICIALLY 1,000,000 shares
OWNED BY
EACH 8. Shared Voting Power
REPORTING 13,645,432 shares
PERSON
WITH 9. Sole Dispositive Power
1,000,000 shares
10. Shared Dispositive Power
13,645,432 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,645,432 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
70.6%
14. Type of Reporting Person
CO
<PAGE>
CUSIP No. 669 752107 Page 4 of 41 Pages
13D
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Crown Capital Corporation
2. Check the appropriate box if a member of a group
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. Source of Funds
AF (Crown Communications Corporation)
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
NUMBER OF SHARES 7. Sole Voting Power
BENEFICIALLY 0 shares
OWNED BY
EACH 8. Shared Voting Power
REPORTING 14,645,432 shares
PERSON
WITH 9. Sole Dispositive Power
0 shares
10. Shared Dispositive Power
14,645,432 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,645,432 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
70.6%
14. Type of Reporting Person
CO
<PAGE>
5
This Amendment No. 42 amends and supplements the statement
on Schedule 13D (the "Schedule 13D") filed by Concept
Communications, Inc., a Delaware corporation ("Concept"), Crown
Communications Corporation, a Delaware corporation
("Communications"), and Crown Capital Corporation, a Delaware
corporation ("Capital"), relating to the Common Stock, par value
$.04 per share (the "Common Stock"), of The Nostalgia Network,
Inc., a Delaware corporation (the "Issuer"). Capitalized terms
not otherwise defined herein shall have the meanings set forth in
the Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and supplemented by adding the
following thereto:
The funds for the $6,000,000 Communications loaned to the
Issuer on March 31, 1997 (as further discussed in Item 4 below)
were obtained by Communications from Atlantic Video.
The Reporting Persons understand from Atlantic Video that
all or substantially all of the amounts loaned by Atlantic Video
to Communications have been obtained by Atlantic Video as
proceeds from a loan from One-Up, which received these funds as
proceeds of a loan from UCI.
Item 4. Proceeds of the Transaction.
Item 4 is hereby amended and supplemented by appending to
the material under the caption "Certain Loans to the Issuer" the
following:
On March 21, 1997, Communications and the Issuer formally
documented their agreement to provide to Communications a
security interest in the Issuer's assets (the "Communications
Security Agreement").
On March 28, 1997, Communications delivered to BDO Seidman,
L.L.P., the Issuer's certified public accountants, a letter
representing Communications' ability and intention to provide
financial support to the Issuer throughout the remainder of 1997
(the "March 1997 Seidman Letter"). Communications' financial
commitment to the Issuer for 1997 shall not exceed $19,500,000
(and may be less depending on the circumstances), including the
$8,000,000 already forwarded to the Issuer during the year, as
evidenced by the March 1997 Promissory Note and the March 31,
1997 Promissory Note (defined below). Pursuant to the terms of
the March 1997 Seidman Letter, such financing shall be used to
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6
satisfy (i) programming commitments entered into prior to January
1, 1997, (ii) lease commitments entered into prior to January 1,
1997 and (iii) operating expenses incurred during 1997 to the
extent such expenses are not satisfied by cash flow from
operations. Such financial support shall not be used for
programming commitments entered into after December 31, 1996
without written approval from Communications. In the March 1997
Seidman Letter, Communications also expressed its intent to
modify the maturity dates of the existing loans which were due on
February 1, 1997 and February 13, 1998 to provide for a maturity
date on all such loans of February 1, 1998.
On March 31 the Issuer and Concept executed a new promissory
note in the principal amount of $18,112,193.70 (the "Concept Wrap
Note") substituting and replacing: (i) the promissory note dated
December 16, 1994 in the principal amount of $2,500,000; (ii) the
promissory note dated March 29, 1995 in the principal amount of
$4,000,000; (iii) the promissory note dated July 24, 1995 in the
principal amount of $1,500,000; (iv) the promissory note dated
October 2, 1995 in the principal amount of $2,000,000; (v) the
promissory note dated January 4, 1996 in the principal amount of
$1,000,000; (vi) the promissory note dated February 26, 1996 in
the principal amount of $1,000,000; and (vii) the promissory note
dated April 16, 1996 in the principal amount of $4,500,000
(collectively, the "Old Concept Notes"). The principal amount of
the Concept Wrap Note equals the total unpaid principal on the
Old Concept Notes and all accrued and unpaid interest thereon.
The Concept Wrap Note is payable on February 1, 1998, together
with interest, at an annual rate equal to the Prime Rate, as
published in the Wall Street Journal on March 31, 1997. The
Concept Wrap Note is secured under the terms of the Security
Agreement. Pursuant to the terms of the Concept Wrap Note, the
Issuer must pay to Concept accrued interest of at least $40,000
per month, payable on the last day of each month commencing on
April 30, 1997 until January 31, 1998.
On March 31 the Issuer and Communications executed a new
promissory note in the principal amount of $6,500,000 (the
"Communications Wrap Note") substituting and replacing: (i)
promissory note dated October 15, 1996 in the principal amount of
$1,000,000; (ii) the promissory note dated November 1, 1996 in
the principal amount of $1,500,000; (iii) the promissory note
dated December 20, 1996 in the principal amount of $1,000,000;
(iv) the promissory note dated January 7, 1997 in the principal
amount of $500,000; (v) the promissory note dated February 14,
1997 in the principal amount of $500,000; and (vi) the promissory
note dated March 12, 1997 in the principal amount of $2,000,000
(collectively, the "Old Communications Notes"). The
Communications Wrap Note is payable on February 1, 1998, together
with interest, at an annual rate equal to the Prime Rate, as
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7
published in the Wall Street Journal on March 31, 1997. The
Communications Wrap Note is secured under the terms of the
Communications Security Agreement. Pursuant to the terms of the
Communications Wrap Note, the Issuer must pay to Communications
accrued interest of at least $20,000 per month, payable on the
last day of each month commencing on April 30, 1997 until January
31, 1998.
On March 31, 1997, pursuant to the March 1997 Seidman
Letter, Communications loaned to the Issuer $6,000,000, and the
Issuer delivered to Communications a promissory note in like
amount (the "March 31, 1997 Promissory Note"). The March 31,
1997 Promissory Note is payable on February 1, 1998, together
with interest, at an annual rate equal to the Prime Rate, as
published in the Wall Street Journal on March 28, 1997. The
March 31, 1997 Promissory Note is secured under the terms of the
Communications Security Agreement.
The foregoing descriptions of the Communications Security
Agreement, the March 1997 Seidman Letter, the Concept Wrap Note,
the Communications Wrap Note, and the March 31, 1997 Promissory
Note are qualified in their entirety by the text of the
Communications Security Agreement, the March 1997 Seidman Letter,
the Concept Wrap Note, the Communications Wrap Note, and the
March 31, 1997 Promissory Note which are attached hereto as
Exhibit 42.1, 42.2, 42.3, 42.4 and 42.5 and are incorporated
herein by reference.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Item 6 is hereby amended and supplemented by incorporating
herein the information set forth under Item 4 in this Amendment
No. 42.
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8
Item 7. Items to be Filed as Exhibits
Exhibit Description
42.1 Security Agreement dated March 21, 1997 by and between
The Nostalgia Network, Inc. and Crown Communications
Corporation
42.2 Letter dated March 28, 1997 from Crown Communications
Corporation to BDO Seidman, L.L.P.
42.3 Promissory Note dated March 31, 1997 made by The
Nostalgia Network, Inc. to Concept Communications, Inc.
in the principal amount of $18,112,193.70
42.4 Promissory Note dated March 31, 1997 made by The
Nostalgia Network, Inc. to Crown Communications
Corporation in the principal amount of $6,500,000
42.5 Promissory Note dated March 31, 1997 made by The
Nostalgia Network, Inc. to Crown Communications
Corporation in the principal amount of $6,000,000
<PAGE>
9
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned hereby certifies that the
information set forth in this amendment is true, complete and
correct.
Dated: April 4, 1997
CONCEPT COMMUNICATIONS, INC.
/s/ Nicholas Chiaia
By: Nicholas Chiaia, Secretary
CROWN COMMUNICATIONS CORPORATION
/s/ Nicholas Chiaia
By: Nicholas Chiaia, Secretary
CROWN CAPITAL CORPORATION
/s/ Nicholas Chiaia
By: Nicholas Chiaia, Secretary
<PAGE>
10
EXHIBIT INDEX
Exhibit Description Page
42.1 Security Agreement dated March 21, 1997 by
and between The Nostalgia Network, Inc. and
Crown Communications Corporation
42.2 Letter dated March 28, 1997 from Crown
Communications Corporation to BDO Seidman,
L.L.P.
42.3 Promissory Note dated March 31, 1997 made by
The Nostalgia Network, Inc. to Concept
Communications, Inc. in the principal amount
of $18,112,193.70
42.4 Promissory Note dated March 31, 1997 made by
The Nostalgia Network, Inc. to Crown
Communications Corporation in the principal
amount of $6,500,000
42.5 Promissory Note dated March 31, 1997 made by
The Nostalgia Network, Inc. to Crown
Communications Corporation in the principal
amount of $6,000,000
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") is made and
entered into this as of the 21st day of March, 1997, by and
between CROWN COMMUNICATIONS CORPORATION, 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, as of the date hereof, has loaned to
Debtor, in the aggregate, Four Million Five Hundred Thousand
Dollars ($4,500,00.00) and Debtor has executed Promissory Notes
(the "Notes") on which Secured Party is payee in the aggregate
principal amount of Four Million Five Hundred Thousand Dollars
($4,500,00.00), plus interest thereon; and
WHEREAS, as an inducement to Secured Party to accept the
Notes, Debtor has granted to Secured Party a security interest in
the Collateral (as defined in Section 1.A hereof) and has agreed
to execute and deliver this Agreement to Secured Party; and
WHEREAS, the parties hereby wish formally to secure in the
manner set forth in this Agreement the payment, performance and
discharge of all obligations of Debtor under the Notes 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
(i) the Notes (and all sums which may be owed thereunder) in
accordance with the terms thereof, as the Notes may be amended
from time to time, and (ii) any other promissory notes issued by
Debtor and held by Secured Party, and any other obligations
(contractual or otherwise) of Debtor to Secured Party, Debtor
hereby grants to Secured Party a continuing security interest in
the following (hereinafter collectively called the "Collateral"):
<PAGE>
(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.
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 the 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.
<PAGE>
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.
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.
<PAGE>
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
Notes 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,
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 Notes 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 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 any 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.
<PAGE>
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 constitutes "reasonable notification" within the meaning
of Section 9-504(3) of the Uniform Commercial Code.
13. Application of Proceeds.
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:
<PAGE>
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 Notes 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 Notes 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
<PAGE>
deliver to Debtor such documents as Debtor shall reasonably
request to evidence the termination of the Security Interest or
the release of such Collateral, 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) if to Secured Party, to Crown Communications
Corporation, 650 Massachusetts Ave., N.W., Washington, D.C.,
20001, Attention: President, with a copy to Arthur Cirulnick,
Tucker, Flyer & Lewis, Suite 400, 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
, 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.
<PAGE>
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.
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
SECURED PARTY:
CROWN COMMUNICATIONS
CORPORATION, a Delaware
Corporation
By: /s/
DEBTOR:
THE NOSTALGIA NETWORK, INC.,
a Delaware Corporation,
By: /s/
March 28, 1997
Mr. Scott Richardson
BDO Seidman, L.L.P.
1129 20th Street, N.W., Suite 500
Washington, D.C. 20036
Gentlemen:
Crown Communications Corporation ("Communications") hereby
represents that it has the ability and intends to provide
financial support to The Nostalgia Network, Inc. ("Nostalgia")
throughout the remainder of 1997. This financial support is
intended to satisfy the following specific cash needs of
Nostalgia to the extent required in such circumstances:
1. Programming commitments entered into prior to January
1, 1997 which fall due during 1997 and which shall not exceed
$6,400,000.
2. Lease commitments entered into prior to January 1,
1997, which fall due during 1997 and which shall not exceed
$3,200,000.
3. Operating expenses incurred during 1997 to the extent
not satisfied by cash flow from operations.
Notwithstanding the above, the financial support to be provided
by Communications to Nostalgia during 1997 shall be no more than
$19,500,000 (and may be less depending on the circumstances)
which is to be given as follows:
a. 2,000,000 loaned to Nostalgia on March 12, 1997
b. 6,000,000 to be loaned to Nostalgia on March 28, 1997
<PAGE>
It is understood that the financial support provided by
Communications shall not be used for programming commitments
entered into after December 31, 1996, unless specifically
approved in writing by Communications. Communications' financial
support may be in the form of debt or equity financing. Should
such financing be in the form of debt, the principal amount of
such debt will not be callable prior to February 1, 1998.
Additionally, the four million dollars in current loans from
Communications, which were due on February 1, 1997 and the
February 14, 1997 $500,000 loan which is due on February 13,
1998, will be due on February 1, 1998. Communications'
commitment to provide such financial support shall cease if,
prior to December 31, 1997, as a result of issuance of Nostalgia
securities, Communications shall no longer possess a majority of
the equity or voting power of Nostalgia. In the event that
Nostalgia enters into a strategic partnership, Communications's
commitment may be reduced up to the amount of the partner's
investment, be it as debt or equity financing, into Nostalgia.
Pursuant to the March 28, 1997 letter agreement and wrap-around
promissory note, Communications shall receive minimum monthly
interest payments of $20,000 from Nostalgia. Said payments shall
be applied toward accrued interest arising from the terms of the
March 28, 1997 wrap-around Note from Nostalgia to Communications.
Very truly yours,
/s/ Werner Seubert
Werner Seubert, Vice President
PROMISSORY NOTE
$18,112,193.70 Washington, D.C.
Maturity Date: February 1, 1998 March 31, 1997
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 eighteen million one
hundred twelve thousand one hundred ninety three dollars and
seventy cents ($18,112,193.70), together with all accrued interest
on such outstanding balance, in accordance with the terms and
provisions of this Note.
1. Substitution and Replacement. This Note is given by
Maker in substitution and replacement of that certain promissory
note dated December 16, 1994 in the principal amount of
$2,500,000; that certain promissory note dated March 29, 1995 in
the principal amount of $4,000,000; that certain promissory note
dated July 24, 1995 in the principal amount of $1,500,000; that
certain promissory note dated October 2, 1995 in the principal
amount of $2,000,000; that certain promissory note dated January
4, 1996 in the principal amount of $1,000,000; that certain
promissory note dated February 26, 1996 in the principal amount of
$1,000,000; and that certain promissory note dated April 16, 1996
in the principal amount of $4,500,000 (collectively, the "Old
Notes"). Upon execution of this Note to Holder, the Old Notes
shall be deemed to be cancelled and of no further force and
effect.
2. Interest; Payments. Interest shall accrue on the
unpaid principal balance of this Note (as well as on all accrued
and unpaid interest) from and after the date of this Note at a per
annum rate equal to the Prime Rate as published in the Wall Street
Journal on March , 1997, compounded monthly, and interest of at
least Forty Thousand Dollars ($40,000) per month shall be paid
monthly on the last day of each month commencing April 30, 1997
until January 31, 1998. The principal balance, together with all
remaining unpaid interest accrued thereon shall be due and payable
on February 1, 1998 (the "Maturity Date").
<PAGE>
3. Payments. All payments by Maker hereunder shall be
applied (i) first to any collection costs pursuant to Paragraph 9
hereof, (ii) second to the interest due and unpaid under this
Note, and (iii) thereafter, to any principal owing under this
Note.
4. 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.
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 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, which failure continues for a period
of ten (10) days after written notice of such failure is sent by
Holder to Maker;
(b) The occurrence of an event of default under that
certain Security Agreement by and between Maker and Holder dated
as of January 4, 1996, as amended (the "Security Agreement");
<PAGE>
(c) The occurrence of an event of default under that
certain promissory note dated as of the date hereof by Maker
payable to Crown Communications Corporation, a Delaware
corporation ("Communications");
(d) The occurrence of an event of default under that
certain Security Agreement by and between Maker and Communications
dated as of March 21, 1997;
(e) Maker's failure to perform any other obligation
(other than one that can be satisfied with the payment of money)
required under this Note, and the continuation of such failure for
a period of ten (10) days after Holder gives Maker written notice
of such failure to perform; and
(f) 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
<PAGE>
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 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 an
attorney for collection, whether or not arbitration has been
initiated 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. Security. Payment of the indebtedness evidenced by
this Note is secured by certain assets of Maker pledged to Holder
pursuant to the Security Agreement.
12. 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.
13. 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:
<PAGE>
If to Maker: The Nostalgia Network, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: President
If to Holder: Concept Communications, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: General Counsel
with a copy to: Tucker, Flyer & Lewis
1615 L Street, N.W., Suite 400
Washington, D.C. 20036
Attn: Arthur E. Cirulnick, Esquire
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) Any 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
13(b).
14. 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.
15. 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.
<PAGE>
16. 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.
17. 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.
18. Time of the Essence. It is expressly agreed that time
is of the essence in the performance of the obligations set forth
in this Note.
19. Binding Arbitration. Arbitration shall be the
exclusive procedure for resolving any dispute between the parties
and shall be conducted in accordance with the rules of the
American Arbitration Association ("AAA"), including the procedures
for selecting an arbitrator and for engaging in discovery.
However, provisional equitable relief may be brought in a court
with appropriate jurisdiction. Any dispute to be arbitrated as
provided hereunder shall be referred to a sole arbitrator selected
by the President of AAA with experience and expertise in the
subject matter of this Agreement. Should any party hereunder not
agree to accept as sole arbitrator the person selected by the
President of AAA, then the case shall be referred to a panel of
three (3) arbitrators whereby each party shall appoint one
arbitrator and the two so appointed shall mutually agree upon the
third arbitrator. The decision of the arbitrator(s) shall be
final and may be enforceable in any court of competent
jurisdiction. The arbitrator shall be authorized to determine the
party responsible for payment of attorneys' fees and costs; and
he/she shall have the authority only to enforce the legal and
contractual rights of the parties arising hereunder and shall not
add to, modify, disregard, or refuse to enforce any contractual
rights.
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Promissory Note
under seal on this 31 day of March, 1997.
MAKER:
ATTEST: THE NOSTALGIA NETWORK, INC.,
a Delaware corporation
/s/ Illegible By: /s/ SQuire Rushnell
Vice President Name: SQuire Rushnell
Title: President & CEO
[CORPORATE SEAL]
PROMISSORY NOTE
$6,500,000.00 Washington, D.C.
Maturity Date: February 1, 1998 March 31, 1997
FOR VALUE RECEIVED, the undersigned, THE NOSTALGIA NETWORK,
INC. a Delaware corporation ("Maker"), hereby promises to pay to
the order of CROWN COMMUNICATIONS CORPORATION, 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 six
million five hundred thousand dollars ($6,500,000.00), together
with all accrued interest on such outstanding balance, in
accordance with the terms and provisions of this Note.
1. Substitution and Replacement. This Note is given by
Maker in substitution and replacement of that certain promissory
note dated October 15, 1996 in the principal amount of $1,000,000;
that certain promissory note dated November 1, 1996 in the
principal amount of $1,500,000; that certain promissory note dated
December 20, 1996 in the principal amount of $1,000,000; that
certain promissory note dated January 7, 1997 in the principal
amount of $500,000; that certain promissory note dated February
14, 1997 in the principal amount of $500,000; and that certain
promissory note dated March 12, 1997 in the principal amount of
$2,000,000 (collectively, the "Old Notes"). Upon execution of
this Note to Holder, the Old Notes shall be deemed to be cancelled
and of no further force and effect.
2. Interest; Payments. Interest shall accrue on the
unpaid principal balance of this Note (as well as on all accrued
and unpaid interest) from and after the date of this Note at a per
annum rate equal to the Prime Rate as published in the Wall Street
Journal on March , 1997, compounded monthly, and interest of at
least Twenty Thousand Dollars ($20,000) per month shall be paid
monthly on the last day of each month commencing April 30, 1997
until January 31, 1998. The principal balance, together with all
remaining unpaid interest accrued thereon shall be due and payable
on February 1, 1998 (the "Maturity Date").
3. Payments. All payments by Maker hereunder shall be
applied (i) first to any collection costs pursuant to Paragraph 9
hereof, (ii) second to the interest due and unpaid under this
<PAGE>
Note, and (iii) thereafter, to any principal owing under this
Note.
4. 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.
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 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, which failure continues for a period
of ten (10) days after written notice of such failure is sent by
Holder to Maker;
(b) The occurrence of an event of default under that
certain Security Agreement by and between Maker and Holder dated
as of March 21, 1997, as amended (the "Security Agreement");
(c) The occurrence of an event of default under that
certain promissory note dated as of the date hereof by Maker
payable to Concept Communications, Inc., a Delaware corporation
("Concept");
<PAGE>
(d) The occurrence of an event of default under that
certain Security Agreement by and between Maker and Concept dated
as of January 4, 1996;
(e) Maker's failure to perform any other obligation
(other than one that can be satisfied with the payment of money)
required under this Note, and the continuation of such failure for
a period of ten (10) days after Holder gives Maker written notice
of such failure to perform; and
(f) 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 provided or
contemplated. The acceptance by Holder of any payment hereunder
<PAGE>
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 an
attorney for collection, whether or not arbitration has been
initiated 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. Security. Payment of the indebtedness evidenced by
this Note is secured by certain assets of Maker pledged to Holder
pursuant to the Security Agreement.
12. 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.
13. 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:
If to Maker: The Nostalgia Network, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: President
<PAGE>
If to Holder: Crown Communications Corporation
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: General Counsel
with a copy to: Tucker, Flyer & Lewis
1615 L Street, N.W., Suite 400
Washington, D.C. 20036
Attn: Arthur E. Cirulnick, Esquire
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) Any 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
13(b).
14. 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.
15. 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.
16. 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.
<PAGE>
17. 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.
18. Time of the Essence. It is expressly agreed that time
is of the essence in the performance of the obligations set forth
in this Note.
19. Binding Arbitration. Arbitration shall be the
exclusive procedure for resolving any dispute between the parties
and shall be conducted in accordance with the rules of the
American Arbitration Association ("AAA"), including the procedures
for selecting an arbitrator and for engaging in discovery.
However, provisional equitable relief may be brought in a court
with appropriate jurisdiction. Any dispute to be arbitrated as
provided hereunder shall be referred to a sole arbitrator selected
by the President of AAA with experience and expertise in the
subject matter of this Agreement. Should any party hereunder not
agree to accept as sole arbitrator the person selected by the
President of AAA, then the case shall be referred to a panel of
three (3) arbitrators whereby each party shall appoint one
arbitrator and the two so appointed shall mutually agree upon the
third arbitrator. The decision of the arbitrator(s) shall be
final and may be enforceable in any court of competent
jurisdiction. The arbitrator shall be authorized to determine the
party responsible for payment of attorneys' fees and costs; and
he/she shall have the authority only to enforce the legal and
contractual rights of the parties arising hereunder and shall not
add to, modify, disregard, or refuse to enforce any contractual
rights.
<PAGE>
IN WITNESS WHEREOF, Maker has executed this Promissory Note
under seal on this 31 day of March, 1997.
MAKER:
ATTEST: THE NOSTALGIA NETWORK, INC.,
a Delaware corporation
/s/ Illegible By:/s/ SQuire Rushnell
Vice President Name: SQuire Rushnell
Title:President & CEO
[CORPORATE SEAL]
PROMISSORY NOTE
$6,000,000.00 Washington, D.C.
Maturity Date: February 1, 1998 March 31, 1997
FOR VALUE RECEIVED, the undersigned, THE NOSTALGIA NETWORK,
INC. a Delaware corporation ("Maker"), hereby promises to pay to
the order of CROWN COMMUNICATIONS CORPORATION, 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
six million dollars ($6,000,000.00), together with all accrued
interest on such outstanding balance, in accordance with the
terms and provisions of this Note.
1. Interest; Payments. Interest shall accrue on the
unpaid principal balance of this Note from and after the date of
this Note at a per annum rate equal to the Prime Rate as
published in the Wall Street Journal on March 28, 1997,
compounded monthly. The principal balance, together with all
remaining unpaid interest accrued thereon shall be due and
payable on February 1, 1998 (the "Maturity Date").
2. Payments. All payments by Maker hereunder shall be
applied (i) first to any collection costs pursuant to Paragraph 9
hereof, (ii) second to the interest due and unpaid under this
Note, and (iii) 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 prin-
cipal thus prepaid) at any time or times.
4. 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 of Maker under this
<PAGE>
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.
5. 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, which failure continues for a
period of ten (10) days after written notice of such failure is
sent by Holder to Maker;
(b) The occurrence of an event of default under that
certain Security Agreement by and between Maker and Holder dated
as of March 21, 1997, as amended (the "Security Agreement");
(c) The occurrence of an event of default under that
certain promissory note dated as of the date hereof by Maker
payable to Concept Communications, Inc., a Delaware corporation
("Concept");
(d) The occurrence of an event of default under that
certain Security Agreement by and between Maker and Concept dated
as of January 4, 1996;
(e) Maker's failure to perform any other obligation
(other than one that can be satisfied with the payment of money)
required under this Note, and the continuation of such failure
for a period of ten (10) days after Holder gives Maker written
notice of such failure to perform; and
(f) 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,
<PAGE>
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.
6. 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.
7. 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 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.
8. Expenses of Collection. If this Note is referred to an
attorney for collection, whether or not arbitration has been
initiated 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.
<PAGE>
9. 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.
10. Security. Payment of the indebtedness evidenced by
this Note is secured by certain assets of Maker pledged to Holder
pursuant to the Security Agreement.
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:
If to Maker: The Nostalgia Network, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: President
If to Holder: Crown Communications Corporation
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attn: General Counsel
with a copy to: Tucker, Flyer & Lewis
1615 L Street, N.W., Suite 400
Washington, D.C. 20036
Attn: Arthur E. Cirulnick, Esquire
Notices shall be effective when received; provided, however, that
if any notice sent by courier or by certified or registered mail
<PAGE>
is returned as undeliverable, such notice shall be deemed
effective when mailed or given to such courier.
(b) Any 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
13(b).
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 forth
in this Note.
18. Binding Arbitration. Arbitration shall be the
exclusive procedure for resolving any dispute between the parties
<PAGE>
and shall be conducted in accordance with the rules of the
American Arbitration Association ("AAA"), including the
procedures for selecting an arbitrator and for engaging in
discovery. However, provisional equitable relief may be brought
in a court of competent jurisdiction. Any dispute to be
arbitrated as provided hereunder shall be referred to a sole
arbitrator selected by the President of AAA with experience and
expertise in the subject matter of this Agreement. Should any
party hereunder not agree to accept as sole arbitrator the person
selected by the President of AAA, then the case shall be referred
to a panel of three (3) arbitrators whereby each party shall
appoint one arbitrator and the two so appointed shall mutually
agree upon the third arbitrator. The decision of the
arbitrator(s) shall be final and may be enforceable in any court
of competent jurisdiction. The arbitrator shall be authorized to
determine the party responsible for payment of attorneys' fees
and costs; and he/she shall have the authority only to enforce
the legal and contractual rights of the parties arising hereunder
and shall not add to, modify, disregard, or refuse to enforce any
contractual rights.
IN WITNESS WHEREOF, Maker has executed this Promissory Note
under seal on this 31 day of March, 1997.
MAKER:
ATTEST: THE NOSTALGIA NETWORK, INC.,
a Delaware corporation
/s/ Illegible By: /s/ SQuire Rushnell
Vice President Name: SQuire Rushnell
Title: President & CEO
[CORPORATE SEAL]
