SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________.
Commission File No. 0-21051
CAPITAL MEDIA GROUP LIMITED
-------------------------------------------------------------------------
(exact name of small business issuer in its charter)
Nevada 87-0453100
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 James Street, London WIM 5HY
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter periods that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]
Transitional Small Business Disclosure Format. YES [ ] NO [X]
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited financial statements for the quarter and the nine months covered by
this report are attached hereto by item 310(b) of Regulation S-B.
<PAGE>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
Unaudited condensed consolidated balance sheet 3
Unaudited condensed consolidated statement of operations 4
Unaudited consolidated statement of stockholders' equity 5
Unaudited condensed consolidated statement of cash flows 6
Notes to the unaudited consolidated financial statements 7
2
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
NOTE SEPTEMBER 30 DECEMBER 31,
1996 1995
$ $
ASSETS
<S> <C> <C> <C>
Cash 655,950 7,537,137
Accounts receivable, net of allowances for doubtful
accounts of $16,708 (December 31, 1995 - $6,104)
4 1,302,542 530,515
Inventories 74,533 80,414
Amounts due from shareholders - 3,679
Prepaid expenses 325,772 290,299
---------------- ----------------
TOTAL CURRENT ASSETS 2,358,797 8,442,044
Investments - 34,805
Intangible assets, net of accumulated amortization
of $195,394 (December 31, 1995 - $33,272)
865,802 871,747
Property, plant and equipment, net 3 3,556,091 1,278,683
---------------- ----------------
TOTAL ASSETS 6,780,690 10,627,279
================ ================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable 1,555,019 120,004
Accrued expenses 944,920 1,711,050
Amounts due to minority shareholders 454,477 700,386
---------------- ----------------
TOTAL LIABILITIES 2,954,416 2,531,440
COMMITMENTS AND CONTINGENCIES
5,6 - -
MINORITY INTEREST IN SUBSIDIARIES
629,665 673,828
---------------- ----------------
3,584,081 3,205,268
---------------- ----------------
STOCKHOLDERS' EQUITY 8
Preferred stock - 5,000,000 shares authorized:
$0.001 par value: no shares issued and outstanding - -
Common stock - 50,000,000 shares authorized:
$0.001 par value 12,663,328 (December 31, 1995 -
9,326,664) issued and outstanding 12,663 9,327
Additional paid in capital 17,117,651 10,309,314
Subscriptions receivable (5,000) (5,000)
Cumulative translation adjustment 93,436 (59,963)
Accumulated deficit (14,022,141) (2,831,667)
---------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 3,196,609 7,422,011
---------------- ----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 6,780,690 10,627,279
================ ================
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
PERIOD FROM
INCEPTION
3 MONTHS 9 MONTHS 3 MONTHS (FEBRUARY 17,
ENDED ENDED ENDED 1995) TO
NOTE SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1996 1995 1995
$ $ $ $
<S> <C> <C> <C> <C>
Revenue 491,521 1,451,326 - -
Operating costs (4,761,661) (12,859,321) (615,873) (676,558)
----------------- ------------------ ------------------ ----------------
Operating loss (4,270,140) (11,407,995) (615,873) (676,558)
Other income (5,327) 14,153 - -
Interest income net 34,705 162,501 467 467
----------------- ------------------ ------------------ ----------------
Loss before taxation (4,240,762) (11,231,341) (615,406) (676,091)
Tax provision 2 119 (461) - -
----------------- ------------------ ------------------ ----------------
Loss after taxation (4,240,643) (11,231,802) (615,406) (676,091)
Minority interest (1,006) 41,328 - -
----------------- ------------------ ------------------ ----------------
Net loss (4,241,649) (11,190,474) (615,406) (676,091)
================= ================== ================== ================
Net loss per share ($0.32) ($0.91) ($0.12) ($0.14)
Weighted average shares outstanding 12,663,328 12,257,596 5,000,000 5,000,000
================= ================== ================== ================
</TABLE>
Results for the period ended September 30, 1995 reflect certain costs of Capital
Media (UK) Limited prior to the commencement of trading operations.
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
NINE MONTHS ENDED ADDITIONAL CUMULATIVE
SEPTEMBER 30, 1996 PAID-IN SUBSCRIPTION TRANSLATION ACCUMULATED
COMMON STOCK CAPITAL RECEIVABLE ADJUSTMENT DEFICIT TOTAL
SHARES $ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995
9,326,664 9,327 10,309,314 (5,000) (59,963) (2,831,667) 7,422,011
Issuance of common stock 3,336,664 3,336 6,968,337 -- -- -- 6,971,673
Translation adjustment -- -- -- -- 153,399 -- 153,399
Commission paid on shares
issued -- -- (160,000) -- -- -- (160,000)
Net loss -- -- -- -- -- (11,190,474) (11,190,474)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Balance at September 30, 1996 12,663,328 12,663 17,117,651 (5,000) 93,436 (14,022,141) 3,196,609
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM INCEPTION ADDITIONAL CUMULATIVE
(FEBRUARY 17, 1995) TO PAID-IN SUBSCRIPTION TRANSLATION ACCUMULATED
SEPTEMBER 30, 1995 COMMON STOCK CAPITAL RECEIVABLE ADJUSTMENT DEFICIT TOTAL
SHARES $ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock at 1 1 (1) --
inception -- --
Issuance of common stock 4,999,999 4,999 3,027,368 3,032,367
Subscription receivable -- -- -- (647,498) -- (647,498)
Net loss -- -- -- -- -- (676,091) (676,091)
---------- ---------- ---------- ---------- -------- ---------- ----------
Balance at September 30, 1995 5,000,000 5,000 3,027,368 (647,499) -- (76,091) 1,708,778
========== ========== ========== ========== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
PERIOD FROM
INCEPTION
9 MONTHS ENDED (FEBRUARY 17,
SEPTEMBER 30, 1995) TO
1996 SEPTEMBER 30
$ 1995
<S> <C> <C>
Cash flows from operating activities
Net loss (11,190,474) (676,091)
Adjustment to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 753,945 804
Minority interest (44,163) -
Changes in assets and liabilities
Increase in inventories 5,881 -
Increase in accounts receivable (798,123) (36,788)
Decrease in prepaid expenses (35,529) (345,314)
Increase in accrued expenses and
accounts payable 988,409 229,160
Decrease in amounts due to minority
shareholders (240,627) -
---------------- ----------------
NET CASH USED IN OPERATIONS (10,560,681) (828,229)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (2,995,390) (25,640)
Acquisition of intangible assets (128,888) -
Proceeds on the sale of investments 34,805 -
---------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (3,089,473) (25,640)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of shares 6,971,673 2,384,869
Commission paid on issuance of shares (160,000) -
Increase in amounts due from shareholder - (1,440,001)
---------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 6,811,673 944,868
---------------- ----------------
NET (DECREASE)/INCREASE IN CASH (6,838,481) 90,999
Effect of exchange rate movements on cash ( 42,706) -
Cash at start of period 7,537,137 -
---------------- ----------------
Cash at end of period 655,950 90,999
================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW ACTIVITY:
Cash payments for interest - -
Cash paid for taxes 580 -
</TABLE>
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
6
<PAGE>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
I. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements are prepared in conformity with
generally accepted accounting principles in the United States of
America.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Capital
Media Group Limited ("the Company") and its wholly owned subsidiaries
Capital Media (UK) Limited ("CM(UK)"), Blink TV Limited and Onyx
Television GmbH ("Onyx") together with its 51% owned subsidiary Tinerama
Investment AG ("Tinerama") after the elimination of all significant
intercompany balances and transactions. See Note 10 to Notes to
Unaudited Consolidated Financial Statements.
The operating results of Tinerama and its five 51% owned subsidiaries
have been included in the consolidated financial statements from the
date of acquisition.
INTERIM ADJUSTMENTS
The condensed consolidated financial statements as of, and for the
periods ended September 30, 1996 and 1995, are unaudited. The interim
financial statements reflect all adjustments (consisting only of normal
recurring accruals) which are, in the opinion of management, necessary
for a fair statement of the results for the interim periods presented.
The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1995 Annual Report on Form 10-KSB. The results
of operations for the interim periods should not be considered
indicative of results expected for the full year.
BASIS OF PREPARATION
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
7
<PAGE>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
2. INCOME TAXES
The income tax provision consisted of the following:
9 MONTHS 3 MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1996
$ $
Current tax expense 461 (119)
Deferred tax expense - -
------------------ -----------------
461 (119)
================== =================
Net operating loss carry forwards give rise to deferred tax assets as
follows:
SEPTEMBER 30, DECEMBER 31,
1996 1995
$ $
Unutilized tax losses 3,505,000 717,000
Valuation allowances (3,505,000) (717,000)
------------------------ --------------------
Total deferred tax assets - -
======================== ====================
The valuation allowance relates to deferred tax assets established under
Statement of Financial Accounting Standard No. 109 and relate to the
unutilized tax losses. These unutilized tax losses, substantially all of
which do not expire, will be carried forward to future years for
possible utilization. Because the Company has not yet achieved
profitability, it has not recognized the benefit for these unutilized
tax losses in the financial statements.
8
<PAGE>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
3. PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT SEPTEMBER 30, DECEMBER 31,
1996 1995
CONSISTS OF: $ $
Buildings 191,550 191,550
Fixtures, fittings and equipment 4,218,294 1,322,979
------------------ ---------------
Total property, plant and equipment 4,409,844 1,514,529
Less accumulated depreciation (853,753) (235,846)
------------------ ---------------
3,556,091 1,278,683
================== ===============
4. ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE COMPRISE: SEPTEMBER 30, DECEMBER 31,
1996 1995
$ $
Trade receivables 144,082 142,337
VAT receivables 481,217 1,209,435
Other debtors receivable within 1 year 69,277 70,467
Other debtors receivable after 1 year 607,966 624,628
------------------ ---------------
Total 1,302,542 2,046,867
================== ===============
5. COMMITMENTS AND CONTINGENCIES
TRANSPONDER
A bank guarantee was originally provided to PTT Telecom on November 30,
1995 in the amount of ECU 2,000,000 in relation to an agreement to lease
transponder capacity in order to broadcast a television channel in
Germany. The bank guarantee as at September 30, 1996 stood at ECU
1,700,000 ($2,140,000 at September 30, 1996 exchange rates) The Company
is also committed to paying ECU 6,000,000 ($7,555,000 at September 30,
1996 exchange rates) over the next two years for use of the transponder
capacity under the terms of the agreement.
The Company was not in a position to support the guarantee. As a result,
the guarantee has been provided by Universal Independent Holdings
Limited. See Note 10 to Notes to Unaudited Consolidated Financial
Statements.
9
<PAGE>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
LEASE COMMITMENTS
In August 1996, the Company entered into an agreement to lease studio,
post production and editing facilities in Dortmund Germany. Under the
terms of the agreement the Company is committed to paying DM 991,000 ($
658,000 at September 30, 1996 exchange rates) for the use of these
facilities until February 1997.
In January 1996, the Company entered into an agreement to lease master
control and braodcasting facilities at Ingleheim Germany. Under the
terms of the agreement the Company is committed to paying DM 1,500,000
($996,000 at September 30, 1996 exchange rates) for the use of these
facilities until January 1999.
In January 1996, the company entered into an agreement to lease uplink
capacity until January 1999, at a cost of approximately (pounds)
360,000 per year.
The Company has also entered into leases for other office space in
Germany and the UK, expiring between 1997 and 2002 at an annualized cost
of $315,000 (at September 30, 1996 exchange rates).
6. LITIGATION
On May, 9 1996 Com TV Production und Vertrieb GmbH ("Com") and Nen TV
("Nen") in relation to their litigation with the Company served Further
and Better Particulars of the Defense and Counterclaim, which provide
details of matters alleged in the Defense and Counterclaim. The most
significant detail given is that Com and Nen have quantified their
estimated damages at DM3,325,438 ($2,208,000 at September 30, 1996
exchange rates) based on a 5% share in profits over a five year period.
For additional information regarding this suit, see the Company's Annual
Report on Form 10-KSB for 1995 and Quarterly Reports on 10-QSB for the
quarters ended March 31, 1996 and June 30, 1996.
The Company has filed a Reply and Defense to the Counterclaim and
believes that the Counterclaim is without merit and intends to
vigorously contest the same. The Company will shortly issue a summons
for directions from the court, which will set out a timetable for the
steps to be taken by each party through trial. There can be no assurance
as to the outcome of this claim.
7. TINERAMA
Tinerama has an option to acquire up to a further 10% of the total
issued shares of each of its 51% owned Romanian subsidiary companies for
a price of Lei 1,000,000 ($325 at September 30, 1996). The option is
valid for a period of six months from the date of finalization of the
1995 financial statements of the Romanian subsidiaries (June 7, 1996).
TIAG has formally confirmed its intention to exercise its option to
acquire the full 10%.
10
<PAGE>
CAPITAL MEDIA GROUP LIMITED
UNAUDITED REPORT AND FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
8. WARRANTS
The Company has the following warrants (all of which expire 36 months
from the date of their effective registration) outstanding at September
30, 1996.
Description Number
Warrants for common stock exercisable at $4.00 5,200,000
Warrants for common stock exercisable at $3.125 2,033,328
Warrants for common stock exercisable at $2.50 2,200,000
9. RE-DOMESTICATION OF COMPANY
The Company intends to re-domesticate its legal status to Bermuda or
another non-U.S. jurisdiction as soon as reasonably practicable.
10. SUBSEQUENT EVENTS
On October 31, 1996, CM (UK) entered into an agreement to borrow up to
$2.0 million from Instar Holdings, Inc. to fund working capital
requirements. The loan is due on December 31, 1996, or such earlier date
as the Company raises additional funds to repay the loan. The loan is
guaranteed by the Company and Onyx, and is secured by a charge on
substantially all of the Company's assets. Interest is payable monthly
on the loan, at the rate of 2% above Lloyd Bank's base rate.
On October 31, 1996, CM (UK) entered into a deed of counter-indemnity
("Deed") with Universal Independent Holdings Limited, a BVI corporation
("Universal"). The Deed secures the obligation of CM (UK) to repay
Universal if Universal is called upon to make payment on its transponder
guaranty. See Note 5 to Notes to Unaudited Consolidated Financial
Statements. CM (UK)'s obligations under the Deed are guaranteed by the
Company and Onyx, and are secured by a charge on substantially all of
the Company's assets.
Instar and Universal have agreed that their liens on the Company's
assets shall rank parri-passu.
On November 6, 1996, the Company' subsidiary , Blink TV, entered into a
joint venture arrangement with Mirror Group PLC ("Mirror"). Mirror has
agreed that for 50% of the share capital of Blink, Mirror will: (i)
provide working capital to Blink; and (ii) purchase equipment, which
equipment will be leased to Blink for use in its business.
In connection with the agreement, the Company has agreed that for 50%
of Blink TV, it will invest (pounds) 66,731 in Blink and will convert
its outstanding loans to Blink TV in the amount of (pounds) 183,269
into equity.
Subsequent to this agreement, the Company and Mirror will jointly
control and manage Blink TV.
11
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
THE FINANCIAL INFORMATION INCLUDED HEREIN SHOULD BE READ IN CONJUNCTION WITH
THE CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO. CERTAIN OF
THE DATA CONTAINED HEREIN INCLUDES FORWARD-LOOKING INFORMATION AND ACTUAL
RESULTS COULD DIFFER FROM THAT SET FORTH BELOW. THIS DISCUSSION SHOULD BE READ
IN CONJUNCTION WITH THE INFORMATION CONTAINED IN THE COMPANY'S ANNUAL REPORT
ON FORM 10-KSB FOR 1995 (THE "FORM 10-K") AND QUARTERLY REPORTS ON FORM 10-
QSB FOR THE QUARTERS ENDED MARCH 31, 1996 AND JUNE 30, 1996 (THE "FORM 10-
Qs").
RESULTS OF OPERATIONS
ONYX TELEVISION
Onyx began transmission on January 6, 1996. The primary income to be derived
from operating a television station is from advertising sales. The primary
expenses incurred in operating a television station are programming costs,
broadcast studio expenses, transmission expenses, employee salaries and
general and administrative expenses. During the nine months of 1996, Onyx has
operated within management's initial projections of operating costs.
Advertising sales during the first nine months of the year have been
substantially lower than was anticipated when Onyx was launched. This reflects
the fact that Onyx has taken longer than anticipated to establish itself in
the advertising market, in part, because of delays in obtaining more extensive
distribution of its channel on various German cable networks. Onyx has
recently obtained distribution in Nord Rhein Westphalia. This brings total
distribution to approximately 7 million cable and satellite households.
Management now believes that distribution will reach approximately 7.5 million
homes by the end of 1996.
Management believe that distribution, marketing and audience qualification are
the key to achieving success in the advertising sales market. The Company is
making extensive changes in its operation to seek to achieve acceptable levels
of advertising sales. The Company believes that seven million households now
exceeds the critical mass of homes which can be marketed to advertising
consumers. The Company also believes that Onyx's broadcast product has been
well received within the broadcasting industry, and amongst advertisers and
consumers and that over time it will be able to validate to advertisers the
levels of audiences watching its programming. There can be no assurance that
the Company will succeed in developing significant advertising revenues,
although the Company believes that prospects for advertising sales in the next
financial year are significantly stronger.
Notwithstanding the Company believes that Onyx's operating losses in 1996 will
be approximately $13 million. See "Liquidity and Capital Resources" below.
However, there can be no assurance
12
<PAGE>
that Onyx's operating loss will not exceed this amount, in that this estimate
assumes a certain level of advertising revenue which may not be met. Moreover,
such estimate has not been reviewed or audited by an independent third party
and might be underestimated.
Onyx Television has recently moved its principal operations from Studio
Dortmund to Television Communication Center Dortmund. This move will
substantially enhance Onyx's production capabilities. In Dortmund, Onyx
Television has entered into several commitments in connection with production,
editing and post-production requirements and studio and office facilities, and
leases for facilities and equipment. The cost of these commitments is
DM991,000 ($658,000). In addition, Onyx is committed to leasing facilities and
equipment in Ingleheim, Germany at an annualized cost of approximately DM
1,500,000 ($996,000).
Further, for the transmission of the television channel via satellite, a
transponder has been secured at a cost of $2,800,000 for the first year. In
the case of the transponder, Capital Media (UK) Limited ("CM (UK)") must
provide a guaranty of one year's lease payment for this obligation. See Notes
5 and 10 to Notes to Unaudited Consolidated Financial Statements.
In January 1996, the Company entered into an agreement to lease uplink
capacity until January 1999, at the cost of approximately (pound)360,000 per
year.
The Company has entered into discussions for a heads of agreement with VIVA
Fernsehen GMBH & Co (known as "VIVA") to create a strategic alliance between
VIVA and Onyx in Germany. The details of this arrangement have not yet been
finalized and Management believe that whilst an agreement will be sought,
there is no guarantee that an agreement will be reached.
TINERAMA
CM (UK) holds a controlling interest in Tinerama Investments AG (TIAG), a
holding company holding a 51% interest in the Tinerama Companies, a group of
five media-related companies based in Bucharest, Romania. During the nine
months ended September 30 1996, each of the Tinerama Companies continue to
operate at either a small profit or experienced a small loss.
There has been a slow-down in the Romanian market for print media which may
adversely affect the profitability of Tinerama's publishing interests during
the remainder of this financial year. In response to this economic situation,
Tinerama has introduced new titles to seek to maintain profitability levels.
13
<PAGE>
TIAG has an option to acquire up to a further 10% of the total issued shares
of each of its 51% owned Romanian subsidiary companies for a price of Lei
1,000,000 ($325 @ 30 June 1996 exchange rates) from Dr Max Banush. The option
is valid for 6 months from the date of finalization of the 1995 financial
statements (June 7, 1996). TIAG has formally confirmed its intention to
exercise its option to acquire the full 10%. Upon exercise TIAG will own 61%
of the Tinerama Companies.
BLINK TV
The Company intends to launch Blink TV during the fourth quarter of 1996.
Blink TV will provide lifestyle programming on large video screens at concert
events. On 6 November 1996, a joint venture agreement was signed with Mirror
Group PLC ("Mirror") for the Mirror to subscribe for 50% of the share capital
of Blink TV Limited ("Blink"). In return, the Mirror will provide working
capital funding to Blink TV. In addition, Mirror will purchase equipment,
which will be leased to Blink TV for use in its business. The Company now
owns 50% of Blink (for which it will contribute (pounds) 66,731 to Blink TV
and convert outstanding loans to Blink TV into equity in the amount of
(pounds) 183,269. Additionally, the Company and the Mirror have granted a
five-year option to RCL Communications ("RCL") allowing RCL to acquire up to
33% of Blink from the Company and Mirror, contingent upon Blink TV meeting
certain objectives over the term of the agreement.
Subsequent to this agreement, the Company and Mirror will jointly control
and manage Blink TV.
Blink TV is currently planning the installation of the video screens and
projection equipment at UK concert venues. At present, Blink TV has signed
contracts with four venues. Purchase orders have also been issued for
equipment and installation to a value of approximately (pound)270,000
($420,000 at 30 September 1996).
In addition to gaining access to the concert venues, Blink must secure the
agreement of concert promoters and organizers to provide programming at
individual events. At present, 30 dates have been confirmed, out of a
projected 46 events remaining to the end of 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently using its cash reserves to fund its operations. Due
to the poorer than expected advertising revenues at Onyx Television and higher
than planned capital expenditures in connection with the launch and first year
operation of Onyx Television, the funds raised by the Company in late 1995 and
early 1996 have been expended earlier than anticipated.
To fund its operations beyond the end of 1996, the Company will need to raise
significant additional capital. At present the Company is considering various
options to raise additional funding for its capital resources, however, other
than as set forth herein, no arrangements have been entered into to date.
There can be no assurance that additional working capital will be available
on terms acceptable to the Company. The failure to obtain the additional
funding required will almost certainly have a material and adverse impact on
the Company's operations and financial position.
14
<PAGE>
On October 31, 1996, CM (UK) entered into an agreement to borrow up to $2.0
million (the "Loan") from Instar Holdings, Inc. ("Instar"), a corporation
organized in the Marshall Islands. Certain members of the Company's Board of
Directors (Messrs. Townsley, Hauptman and Leitner) have an interest in the
Loan as part of the lending group. See Note 10 to Notes to Unaudited
Consolidated Financial Statements.
The Loan is due on the earlier of December 31, 1996 or the date on which the
Company raises additional capital. The Loan bears interest at the rate of 2%
above Lloyd Bank's base rate, and interest is payable monthly. The Loan is
guaranteed by the Company and Onyx and is secured by a charge on substantially
all of the Company's assets. At this date, $750,000 of the principal amount of
the Loan is outstanding and the balance remains available to the Company.
The Company believes that the commercial terms of the Loan are at least as
favorable to the Company as could have been obtained from an unaffiliated
third party.
The Company's failure to raise sufficient funds to repay this loan will likely
have a significant and adverse impact on the Company's financial position, and
could result in the Company's loss of its operating assets, including its
interest in Onyx.
15
<PAGE>
PART 2
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in several lawsuits all relating to the relationship
between CM (UK) and John Garman. The background to these lawsuits is provided
in the Form 10-K and Form 10-Q filings.
ENGLISH PROCEEDINGS BETWEEN CM (UK), COM TV PRODUCTION UND VERTRIEB GMBH
("COM TV") AND NEN TV LIMITED ("NEN TV")
CM (UK) is engaged in dispute with COM TV and NEN TV in the High Court of
Justice, Queen's Bench Division in the United Kingdom, seeking a declaration
that the heads of agreement dated March 9, 1995 ("the Heads of Agreement") and
the letter of agreement dated March 31, 1995 (collectively, "the TV
Agreements") entered into by CM (UK), COM TV and John Garman, were discharged
upon breach by COM TV.
On November 24, 1995, COM TV and NEN TV filed a Defense and Counter claim in
response to CM (UK)'s Writ and Statement of Claim. In Defense and Counter
claim, COM TV and NEN TV denied that they are in breach of the TV Agreements.
Further, COM TV and NEN TV claim damages in an equal amount to the alleged
loss of future profits which would have been payable with respect to a 5%
shareholding in Onyx Television. COM TV and NEN TV further claim that CM (UK)
has used confidential information, documentation, records, research and data
provided by COM TV and NEN TV, and that they are entitled to an account of any
profits realized by CM (UK) for use of such items.
CM (UK) has filed a Reply and Defense to Counter claim and CM (UK) believes
the counter claim to be without merit and intends to vigorously contest the
same. The Company will shortly issue a summons for directions from the court,
which will set out a timetable for the steps to be taken by each party through
trial. There can be no assurance as to the outcome of this claim.
16
<PAGE>
SETTLEMENT OF WRIT WITH POTENTIAL ACQUISITION CANDIDATE
In October 1996, a writ was issued by a potential acquisition candidate and
its shareholders alleging certain breaches of undertakings relating to a
non-binding heads of agreement signed between the Company and the potential
acquisition candidate. After a due diligence review, the Board decided it was
not in the best interests of the Company to proceed with the contemplated
acquisition, at which time the potential acquisition candidate and its
shareholders filed suit against the Company and Charles Koppel, the Company's
President and Chief Executive Officer, seeking costs and unspecified damages.
An agreement has been reached in settlement of the claim, as to which the
Company and Mr. Koppel do not admit any liability, and a Notice of
Discontinuance of the action will be released upon the Company making three
payments totaling (pound)100,000 ($165,000 at September 30, 1996) by 31
December 1996.
17
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ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None during the quarter covered by this report
ITEM 5. OTHER INFORMATION
The Company intends to complete a redomestication from Nevada to Bermuda or to
another non-US jurisdiction. The redomestication will occur as soon as
reasonably practicable.
On September 20, 1996, Stephen Kornfeld was appointed to the Company's Board
of Directors. Mr. Kornfeld also became Co-Chairman of the Board at that time.
Mr. Kornfeld, age 56, has been, since September 1993, an investor and a
consultant to several companies. From January 1989 until September 1993,, Mr.
Kornfeld was the Chief Operating Officer of JWP International, Inc. and its UK
subsidiary, Drake and Skull Engineering. JWP International was during that
period one of the worlds leading mechanical, electrical and facilities
managements contractors.
In connection with Mr. Kornfeld's providing services to the Company, Kornfeld
Associates International Inc. will receive a grant of 200,000 shares of the
Company's common stock (100,000 of which are anticipated to be issued by the
Company and the balance of which are expected to be transferred from several
of the Company's founding shareholders). Additionally, Kornfeld Associates
International Inc. will be granted options to purchase an additional 200,000
shares of Common Stock at an exercise price of $2.50 per share (100,000 of
which are anticipatd to be issued by the Company and the balance of which are
expected to be transfered from several of the Company's founding
shareholders).
In October 1996, Martin Loat resigned from the Company's Board of Directors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1. Facility letter dated October 31, 1996 made between Instar
Holdings, Inc. (1) and Capital Media (UK) Limited (2);
18
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10.2. Debenture dated October 31, 1996 made between Instar
Holdings, Inc. (1) and Capital Media (UK) Limited (2);
10.3. Security Assignment dated October 31, 1996 made between
Capital Media (UK) Limited (1) and Instar Holdings, Inc. (2);
10.4. Charge over Shares and Securities dated October 31, 1996 made
between Capital Media Group Limited (1) and Instar Holdings,
Inc. (2);
10.5. Guarantee dated October 31, 1996 made between Instar
Holdings, Inc. (1) and the Guarantors (2);
10.6. Deed of Counter-Indemnity dated October 31, 1996 made
between Capital Media (UK) Limited (1) and Universal
Independent Holdings Limited (2);
10.7. Side letter to the Deed of Counter-Indemnity dated October
31, 1996 from Universal Independent Holdings Limited (1) to
Capital Media (UK) Limited (2);
10.8. Debenture dated October 31, 1996 made between Universal
Independent Holdings Limited (1) and Capital Media (UK)
Limited (2);
10.9. Security Assignment dated October 31, 1996 made between
Capital Media (UK) Limited (1) and Universal Independent
Holdings Limited (2);
10.10. Charge over Shares and Securities dated October 31, 1996
made between Capital Media Group Limited (1) and Universal
Independent Holdings Limited (2);
10.11. Guarantee dated October 31, 1996 made between Universal
Independent Holding Limited (1) and the Guarantors (2);
10.12. Deed of priorities dated October 31, 1996 made between
Instar Holdings, Inc. (1) and Universal Independent Holdings
Limited (2) and Capital Media (UK) Limited (3); and
10.13. Deed of priorities dated October 31, 1996 made between
Instar Holdings, Inc. (1) and Universal Independent Holdings
Limited (2) and Capital Media Group Limited (3).
27. Financial data Schedule
(b) No reports on Form 8-K were filed during the third quarter of 1996.
19
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SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized, on the day of November 19th, 1996.
CAPITAL MEDIA GROUP LIMITED
By: /s/ CHARLES KOPPEL
-------------------------------------
Charles Koppel, President and
Chief Executive Officer
20
EXHIBIT 10.1
INSTAR HOLDINGS INC
R.R.E. COMMERCIAL CENTRE
MAJURO
MARSHALL ISLANDS
To: Capital Media (UK) Limited
25 James Street
London W1M 5HY 31 October 1996
Dear Sirs,
This letter sets out the terms and conditions on which we (the
"Lender") are prepared to offer to you (the "Borrower") a cash
advance facility (the "Facility") in an amount of up to US$2,000,000
dollars:
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this letter (including the Introduction) unless the context
otherwise requires, the following expressions bear the meanings
shown:
Advance an advance made or to be made under the
Facility as referred to in Clause 5
Advance Date the date of the making of the first
Advance as specified in the Notice of
Drawdown which must be a Business Day
agreed form in relation to any agreement or
document, the form agreed between the
parties to the Facility Letter and
initialled by the Borrower and the Lender
by way of identification only
the Assignment the assignment in the agreed form of the
right, title, benefit and interest of the
Borrower in favour of the Lender in or
under an agreement dated 25 September 1995
made between PTT Telecom BV (1) and the
Borrower (2) whereby PTT Telecom BV agreed
to lease to the Borrower transponder
capacity
Business Day a day (other than Saturday or Sunday)
on which banks are generally open for
business of the kind contemplated by this
Facility Letter in London and New York
Consents all approvals, authorisations, consents,
licences, permissions and registrations
which it is necessary or advisable to
obtain from any governmental local public
or other authority or without limitation
any third party for the purpose of or
relating to this Facility and/or any
Security Document
<PAGE>
the Debenture the debenture in the agreed form creating
fixed and floating charges over the
Borrower's assets and undertaking in favour
of the Lender
Dollars or $ the currency for the time being of the
United States of America
Event of Default any of those events or circumstances
specified in Clause 15
Facility Amount the maximum principal amount of the
Advances which may be advanced under the
Facility
Facility Letter the agreement constituted by this letter
and your acceptance
the Guarantee the joint and several guarantee in the
agreed form to be given by the Guarantors
in favour of the Lender as security for the
obligations of the Borrower under the
Facility Letter
Guarantors Onyx GmbH of and Capital Media Group
Limited of each a Guarantor and together
the Guarantors
Interest Period each period for the calculation of
interest determined in accordance with
Clause 8.1
Loan the principal amount for the time being
outstanding under this Facility together
with interest accrued and compounded under
the terms of this Facility Letter
Notice of Drawdown the notice substantially in the
form appearing in Schedule 1 to this
Facility Letter by which the Borrower
requests the Advance
Repayment Date the earlier of 31 December 1996 or the
date (after the date of this Facility
Letter) on which Capital Media Group
Limited makes a private placement of its
shares or issues loan notes or securities
of any kind whatsoever or raises funds in
the opinion of the Lender from any other
source whatsoever in an amount equal to or
greater than the amount outstanding under
this Facility Letter at such date
Security Documents each of:
(i) the Assignment;
(ii) the Debenture;
(iii) the Guarantee and
(iv) all other security documents
required by the Lender to be
executed by the Borrower
2
<PAGE>
and the Guarantors as at the
Advance Date
1.2 Clause headings are for ease of reference only.
1.3 References to clauses are to clauses of this Facility Letter.
1.4 The singular shall include the plural and vice versa and any of the
genders shall include the other two.
1.5 Any reference to a person shall include a company, corporation,
partnership or unincorporated association.
1.6 References to a party shall include its successors in title,
transferees and assigns.
1.7 References to any statute shall include any statutory modification,
extension or re-enactment of it or any part of it for the time being
in force and shall also include all instruments and regulations
deriving validity from that statute.
1.8 References to this or any other deed, agreement or document shall be
to this Facility Letter or, as the case may be, such other deed,
agreement or document as the same may have been or may be from time
to time amended, varied, altered, modified, supplemented or novated.
2 AMOUNT AND PURPOSE OF THE FACILITY
2.1 The Facility Amount shall not exceed US$2,000,000
2.2 The purpose for which the Advance shall be utilised is for the
Borrower's general working capital requirements and to on-lend monies
to the Borrower's subsidiary Onyx GmbH.
3 CONDITIONS PRECEDENT
3.1 The Facility shall only be made available to the Borrower when the
Lender has received in form and substance satisfactory to the Lender
the documents items and evidence specified in Schedule 2 and is
satisfied that Schedule 2(g) is fulfilled to this Facility Letter
prior to the date of each Advance (or the Lender having waived any
one or more of them in its absolute discretion and subject to any
condition(s) it may think fit).
3.2 The Lender's obligation to make the Advances is also conditional upon
no Event of Default occuring and the Borrower being in compliance at
the relevant time of such Advance with the terms and conditions of,
and there being no breach of or default under, this Facility Letter
or any of the Security Documents or the occurrence of any of the
events under Clause 15.
4 AVAILABILITY
4.1 Subject to the terms of this Facility Letter, the Facility shall be
available to the Borrower for drawdown in Dollars only in two
Advances.
4.2 Any amount of the Loan repaid or prepaid shall not be eligible for
reborrowing.
3
<PAGE>
5 DRAWDOWN
5.1 The Notice of Drawdown requesting an Advance must be received by the
Lender no later than 10.00 a.m. (London time) three Business Days
before the Business Day on which such Advance is required. The Notice
of Drawdown must specify:
(a) the amount required, which shall not exceed US$1,000,000;
(b) the date on which the Advance is required, which must be
a Business Day:
(i) prior to the 31 October 1996 in the case of
the first Advance and;
(ii) after the 15 November 1996 in the case of the
second Advance;
(c) the name and address of the bank and the title and number
of the account to which the Advance is to be remitted.
5.2 No notice requesting the Advance may be given before the conditions
in Clause 3 have been fulfilled to the Lender's satisfaction.
6 INTEREST
6.1 Subject to Clause 7, the rate of interest applicable to the Loan
during each Interest Period shall be 2% per annum above the base rate
quoted by Lloyds Bank PLC from time to time.
6.2 Interest will accrue daily in arrears on the basis of a year of 360
days and be compounded on the last day of each Interest Period so
that such interest shall itself form part of the Loan at such time
and bear interest pursuant to the terms of this Facility.
6.3 Any certificate or determination by the Lender as to any rate of
interest payable in respect of this Facility shall (save for manifest
error) be conclusive.
7 INTEREST ON UNPAID AMOUNTS
7.1 If the Borrower fails at any time to make any payment on the due
date, the period between the due date and the date on which such
unpaid sum is paid in full shall be divided into successive periods
of such duration as the Lender may from time to time select, and the
Borrower shall pay interest on each such unpaid sum for each such
period (as well after as before judgement), such interest accruing
daily on the basis of a year of 360 days and the number of days
elapsed for so long as it remains outstanding at the rate of 4% per
annum above the base rate quoted by Lloyds Bank PLC from time to
time.
7.2 Any determination by the Lender of the rate of interest of any of
such cost, increased cost or liability shall be conclusive and
binding on the Borrower unless manifestly incorrect.
8 INTEREST PERIODS
8.1 The first Interest Period shall commence on the Advance Date and each
subsequent Interest Period shall commence immediately on the expiry
of the preceding Interest Period. The length of each Interest Period
shall be one month. Provided that no Interest Period shall extend
beyond the Repayment Date.
4
<PAGE>
8.2 Notwithstanding the provisions of Clause 8.1,
(a) if any Interest Period ends on a day which is
not a Business Day, it shall end on the next following
Business Day, unless such next following Business Day
falls in the following calendar month in which case it
shall end on the immediately preceding Business Day; and
(b) any Interest Period which commences on the last
Business Day of a calendar month, and any Interest Period
which commences on the day on which there is no
numerically corresponding day in the calendar month during
which that Interest Period is to expire, shall end on the
last Business Day in the relevant later calendar month
during which that Interest Period is to expire.
8.3 The final Interest Period relative to the Loan shall end on the date
of its final repayment.
9 REPAYMENT
The Borrower shall repay the Loan and all unpaid interest fees and
other sums payable under this Facility Letter on the Repayment Date
unless there shall occur an Event of Default in which case, all such
amounts shall be repayable on demand.
10 PREPAYMENT
10.1 The Loan may be prepaid without premium or penalty in whole or part
(but if in part in integral multiplier of US$50,000) at any time
without notice to the Lender. Such prepayment shall be made together
with accrued interest on the amount prepaid.
10.2 The Borrower may not reborrow any amount which has been repaid, nor
make any prepayment except in accordance with this Clause.
11 FEES AND EXPENSES
11.1 The Borrower will pay to the Lender on demand all expenses (including
legal and out-of-pocket expenses and together with Value Added Tax if
any thereon) on a full indemnity basis reasonably and properly
incurred by the Lender in connection with the negotiation,
preparation and execution of this Facility Letter and the Security
Documents, the fulfilment of all conditions of this Facility, any
amendment or extension of and the granting of any waiver or consent
under the discharge of this Facility Letter and/or any Security
Document and/or in contemplation of or otherwise in connection with
the enforcement of or preservation of any rights under this Facility
Letter and/or any Security Document or otherwise in respect of any
moneys owing under or in respect of this Facility.
11.2 The Borrower will pay all stamp documentary registration and other
similar duties (including any payable by the Lender) in connection
with this Facility Letter and/or any Security Document.
11.3 The Lender may effect payment of all fees expenses and other sums due
and payable by the Borrower under this Clause 11 of and by deduction
from the Advance.
12 PAYMENTS
12.1 All payments to be made by the Borrower under this Facility Letter
shall be made in same day funds settled through the New York Clearing
House System or such other funds as may for the time being be
customary for settlement in New York City of
5
<PAGE>
international payments in Dollars to such account as the Lender may
from time to time instruct the Borrower.
12.2 The Borrower will make all payments under this Facility without
set-off or counterclaim and free and clear of any withholding or
deduction (save as required by law). If the Borrower is obliged by
law to make any such withholding or deduction, the Borrower will pay
to the Lender in the same manner and at the same time additional
amounts to ensure that the Lender receives a net amount equal to the
full amount which the Lender would have received if no such deduction
or withholding had been required. The Borrower shall deliver to the
Lender a certificate of deduction and on demand any evidence
satisfactory to the Lender that any amount withheld or deducted has
been paid to the proper authority.
13 REPRESENTATIONS AND WARRANTIES
13.1 The Borrower represents warrants and undertakes to the Lender, on the
date of its acceptance of this Facility Letter and on each date that
the Loan is available or outstanding (with reference to the facts and
circumstances then existing), as follows:
(a) the Borrower is duly incorporated and validly existing
under English law and has power to carry on its business
as now carried on, to own all of its assets and borrow
this Facility;
(b) the Guarantors are duly incorporated and validly
existing under German law and State of Nevada law of the
United States respectively and have power to carry on
their business as now carried on, to own all of their
assets and to carry out all actions contemplated by this
Facility;
(c) this Facility Letter and the Security Documents
(i) constitute the Borrower's and the Guarantor's legal
valid and binding obligations in accordance with their
respective terms (ii) have been duly authorised and
executed by the Borrower and the Guarantor and (iii) do
not and will not materially breach the Borrower's
memorandum and articles of association or the Guarantor's
corporate documentation or any agreement or obligation by
which the Borrower or Guarantor is bound or violate any
applicable law;
(d) the Borrower's obligations under this Facility
Letter are unconditional and unsubordinated obligations
and rank at least pari passu with all other of the
Borrower's unsecured and unsubordinated indebtedness;
(e) there are no pending or to the Borrower's
knowledge (after due and careful enquiry) threatened
actions, arbitrations or legal proceedings affecting the
Borrower or Guarantor or any of its assets which may have
a material adverse effect on the Borrower's or Guarantor's
business, assets or financial condition;
(f) the Borrower or Guarantor is not failing to pay or in
default under any agreement or obligation relating to
(or analogous to) financial indebtedness;
(g) no event or circumstance referred to in Clause 15 has
occurred;
(h) all written information supplied by [ _______________ ]
to the Lender in contemplation of this
Facility was true in all material respects as at its date
no change has occurred since the date of the information
already supplied which renders it materially untrue or
materially misleading and all
6
<PAGE>
projections and statements of belief and opinion given by
the Borrower to the Lender were made in good faith after
due and careful enquiry;
14 UNDERTAKINGS
So long as the Loan is available or outstanding:
(a) the Borrower will not without the Lender's prior
written consent (which may in the Lender's absolute
discretion be given or withheld or given subject to any
condition or conditions):
(i) except as contemplated by this Facility Letter
or in favour of Universal Independent Holdings
Limited pursuant to the arrangements in respect
of the lease of a transponder from PTT Telecom
BV create or extend or permit to subsist any
encumbrance (being any mortgage, charge,
pledge, lien, assignment, security interest,
title retention arrangement or other
encumbrance) over all or any part of the
Borrower's present or future undertaking assets
rights or revenues save arising by operation of
law and not as a result of any default or
omission on the part of the Borrower;
(ii) make any loan or give any credit to any person
other than normal trade credit;
(iii) except under this Facility or in favour of
Universal Independent Holdings Limited pursuant
to the arrangements in respect of the lease of
a transponder from PTT Telecom BV borrow or
raise any money or incur credit or given any
guarantee indemnities or other assurances
against financial loss;
(iv) sell transfer lend or otherwise dispose of all
or any part of the Borrower's present or future
undertaking assets rights or revenues (whether
by one or series of transactions related or
not) except in the case of assets sold at not
less than market value in the ordinary course
of business as now conducted
(b) the Borrower will obtain maintain in force and comply
with all Consents;
(c) the Borrower will provide to the Lender such financial and
other information as the Lender may from time to time
reasonably request;
(d) upon becoming aware thereof the Borrower will promptly
inform the Lender of any event or circumstance referred to
in Clause 15 and of anything of which the Borrower becomes
aware which, with the giving of notice or lapse of time or
otherwise, might result in any such event or circumstance;
(e) the Borrower shall if requested by the Lender procure that
Onyx GmbH executes a charge over all its rights interests
and assets of whatever kind whatsoever (or such other form
of security as is necessary under German Law to create
equivalent security) in a form satisfactory to the Lender
as security for such amounts (including all costs and
expenses) outstanding under this Facility Letter and the
Security Documents (at the date of creation of such
change) from the Borrower to the Lender and comply with
such corporate and other requirements necessary under
applicable local law to ensure that such charge is legal
valid and binding.
7
<PAGE>
15 EVENTS OF DEFAULT
15.1 If:
(a) default is made in the payment on the due date of any
amount payable under the Facility and such payment is not
made on the earlier of the Repayment Date or within 14
days from the occurrence of such default;
(b) the Borrower fails to perform or observe any other
obligations under this Facility Letter or any of the
Security Documents and such failure is not remedied within
14 days of occurrence;
(c) the Borrower admits in writing its inability to pay or
shall become unable to pay its debts generally as they
fall due or is deemed unable to pay its debts (within the
meaning of section 123 of the Insolvency Act 1986), or
becomes bankrupt or insolvent, or files any petition or
action for relief under any bankruptcy, reorganisation,
insolvency or moratorium law ;
(d) an application is made, a petition is presented by any
person to any court or any other steps are taken (formal
or informal) for an administration order to be made in
respect of the Borrower;
(e) any petition is presented by any person or any order is
made by any court or any meeting is convened for the
purpose of considering a resolution or any resolution is
passed for the Borrower's winding-up liquidation or
dissolution;
(f) a receiver or administrative receiver or manager is
appointed of or in relation to the Borrower or the whole
or any part of the Borrower's undertaking assets rights or
revenues or the Borrower's directors request any person to
make any such appointment;
(g) an encumbrancer takes possession of or a distress,
execution, sequestration or process is levied on or
enforced against the whole or any part of the Borrower's
assets rights or revenues;
(h) the Borrower ceases or threatens to cease to carry on the
whole or a substantial part of its business or stops or
suspends payment of its debts or proposes to enter into
any composition scheme compromise or arrangement with or
for the benefit of its creditors generally or any class of
them or all or any part of its assets are seized or
appropriated by or on behalf of any governmental or other
authority or are compulsorily acquired;
(i) any of the Borrower's financial obligations (whether
actual or contingent) become prematurely payable or any
creditor in respect thereof becomes entitled to declare
any such obligation prematurely payable or any such
obligation is not paid when due or any security therefor
becomes enforceable;
(j) any governmental or other consent or exemption required to
enable the Borrower to perform its obligations under this
Facility Letter is withdrawn or modified or it becomes for
any reason unlawful for the Borrower to perform any of
those obligations;
(k) any representation or warranty made by the Borrower to the
Lender in or pursuant to this Facility Letter shall prove
to have been incorrect in any material respect when made
(or deemed made) or, if repeated at any time in
8
<PAGE>
the future by reference to the facts subsisting at such
time, would no longer be true and correct in all material
respects;
(l) any of the Security Documents is not or ceases to be for
any reason a valid enforceable and continuing security in
any respect;
(m) the security created by or pursuant to any of the Security
Documents is, in the opinion of the Lender, likely to be
adversely affected or such security loses the priority
intended to be created by them;
(n) there occurs any event or series of events whether related
or not (including, without limitation, any material
adverse change in the business, assets or financial
condition of the Borrower) which will have the effect on
the the Borrower of not being able to comply with all or
any of its obligations under this Facility Letter or any
Security Documents to which it is a party and which are
not remedied within 14 days of occurrence;
(o) any of the events specified above or comparable events
thereto occurs in relation to either of the Guarantors.
(p) anything analogous to any of the events specified above
occurs in any relevant jurisdiction in respect of the
Borrower either of the Guarantors or any of their assets.
the Lender may then and at any time thereafter by written notice to
the Borrower terminate the Lender's obligations under this Facility
and/or demand immediate repayment of the Loan together with accrued
interest and all other amounts due hereunder and the Borrower will
comply with such demand forthwith.
15.2 The Borrower will notify the Lender immediately in writing of the
occurrence of any of the events specified in this Clause 15.
16 ASSIGNMENT AND TRANSFER
16.1 The Borrower may not assign or transfer any of its rights or
obligations under this Facility Letter or any Security Document.
16.2 The Lender may on giving written notice to the Borrower assign or
transfer all or any of its rights and obligations under this Facility
Letter and/or any of the Security Documents. The Borrower will enter
into all documents specified by the Lender to be necessary to give
effect to any such assignment or transfer.
16.3 The Lender shall at the request of the Borrower and subject to the
Lender receiving an amount equal to all amounts outstanding under
this Facility Letter and the Security Documents at the date of such
receipt assign or transfer all of its rights and obligations under
this Facility Letter and the Security Documents to such person as the
Borrower shall direct
16.4 This Facility Letter and each of the Security Documents shall be
binding upon and enure for the benefit of the Lender and the Borrower
and the Lender's respective successors and, in the Lender's case,
assigns.
17 NO WAIVERS, REMEDIES CUMULATIVE
Time is of the essence of this Facility Letter and the Security
Documents but no failure or delay on the Lender's part to exercise
any power, right or remedy under
9
<PAGE>
this Facility Letter or any of the Security Documents shall operate
as a waiver, nor shall any single or partial exercise by the Lender
of any power, right or remedy under this Facility Letter or under any
of the Security Documents preclude any other or further exercise of
those powers, rights or remedies or the exercise of any other power,
right or remedy. The remedies provided in this Facility Letter and in
the Security Documents are cumulative and are not exclusive of any
remedies provided by law.
18 SEVERABILITY
In case any one or more of the provisions in this Facility Letter
and/or any of the Security Documents should be invalid, illegal or
unenforceable in any respect under any law applicable in any relevant
jurisdiction, the validity, legality and enforceability of the
remaining provisions in this Facility Letter or in any of the
Security Documents shall not in any way be affected or impaired
thereby.
19 LAW
19.1 This Facility Letter shall be governed by and construed in accordance
with English Law.
19.2 For the benefit of the Lender, the parties agree that the Courts of
England are to have jurisdiction to settle any dispute which may
arise in connection with the legal relationships established by this
Facility Letter or otherwise arising in connection with this
Agreement.
19.3 The Borrower irrevocably waives any objection on the ground of form
forum non conveniens or any similar grounds.
19.4 The Borrower and the Lender irrevocably consent to service by process
of mail or in any other manner permitted by the relevant law.
20 NOTICES
20.1 Every notice or other communication under this Facility Letter shall
be in writing and may be delivered personally or by letter telex or
facsimile transmission despatched to the Borrower or the Lender, as
the case may be, at their respective address or telex or facsimile
number stated at the head of this Facility Letter or to their
respective registered office for the time being or to such other
address and/or telex number and/or facsimile number as may be
notified by either of them to the other for such purpose.
20.2 Every notice or other communication shall, unless otherwise provided
in this Facility Letter, be deemed to have been received (if sent by
post) 48 hours after despatch and (if delivered personally or sent by
telex or facsimile transmission) at the time of delivery or despatch
if during normal business hours in the place of intended receipt on a
Business Day in that place and otherwise at the opening of business
in that place on the next succeeding such Business Day, provided that
any notice or communication to be made or delivered by the Borrower
to the Lender shall be effective only when the Lender actually
receives it.
21 PERIOD OF OFFER
Please confirm your acceptance of the offer in this letter by signing
the acceptance on the enclosed duplicate of this letter and returning
it to us within 3 days of today's
10
<PAGE>
date, failing which this offer shall automatically lapse without any
liability or commitment on our part.
Yours faithfully
/s/ ANTHONY MICHAEL BOUSFIELD, Director
------------------------------------
For and on behalf of
Instar Holdings Inc
11
<PAGE>
Form of Acceptance
To: Instar Holdings Inc
We hereby accept your offer of a facility on the terms and subject to
the conditions in the Facility Letter of which a copy is attached.
Dated 1996
/s/ BARRY LLEWELLYN
-------------------------------------
For and on behalf of
Capital Media (UK) Limited
12
<PAGE>
SCHEDULE 1
FORM OF NOTICE OF DRAWDOWN
To: Instar Holdings Inc
Attention:
Facility Letter dated 1996 (the "Facility Letter").
Terms defined in the Facility Letter shall have the same meaning in
this Notice.
We:
(i) pursuant to Clause 5 of the Facility Letter request the
Lender to make the Advance to the Borrower of
US$1,000,000 on 1996;
(ii) request the Lender to remit the Advance to
;and
(iii) confirm that the representations, warranties and
undertakings contained in Clause 13 of the Facility Letter
are true and correct in all material respects as if made
on and as of the date hereof and that none of the events
referred to in Clause 15 of the Facility Letter nor any
event which with the giving of notice, lapse of time or as
a result of the proposed Advance would constitute such an
event has occurred or is continuing.
Dated 1996
-------------------------------------
For and on behalf of
Capital Media (UK) Limited
13
<PAGE>
SCHEDULE 2
CONDITIONS PRECEDENT
(a) the duplicate of this Facility Letter with the attached
acceptance duly signed by the Borrower;
(b) a copy, certified as a true copy by an officer of the
Borrower, of its certificate of incorporation (and any
certificate of incorporation on change of name) and
current memorandum and articles of association or its
analogous incorporating and constitutional documentation;
(c) a copy, certified as a true copy by an officer of the
Borrower, of a resolution of its board of directors to:
(i) approve and authorise the Borrower's acceptance
and execution of this Facility Letter, and the
Security Documents in the agreed form to which
it is party; and
(ii) authorise one or more persons to sign
the form of acceptance of this Facility Letter
and all other notices and communications in
respect of the Facility and to operate the
Facility on the Borrower's behalf,
(d) a copy, certified on a true copy by an officer of each
Guarantor, of its certificate of incorporation (and of
certificate of incorporation on change of name) and
current memorandum and article of association or its
analogous incorporating and constitutional documentation,
(e) a copy, certified as a true copy by an officer of each
Guarantor, of a resolution of its respective board of
directors to approve and authorise such Guarantor's
acceptance and execution of such Guarantee in the agreed
form and any other security documents to which it is a
party, or such other analogous documentation as maybe
required in such Guarantor's place of incorporation to
give effect to the Guarantee and any other Security
Documents to which it is a party.
(f) the execution of the Security Documents in the agreed form
by the Borrower and the Guarantors and the delivery to the
Lender of the documentation required to be delivered to
the Lender by or pursuant to those documents;
(g) the Lender is in its absolute discretion satisfied with
the reasonable arrangements of whatsoever kind which the
Borrower may make or is making or has made in respect of
raising funds.
14
EXHIBIT 10.2
DATED 31 October 1996
DEBENTURE
(Fixed and Floating Charge)
(1)
INSTAR HOLDINGS INC
(2)
CAPITAL MEDIA (UK) LIMITED
Ref : 466/E8948.5/CF:98048.2/hs
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions 1
2 Charge 2
3 Covenants 3
4 Book Debts 5
5 Receiver 6
6 Miscellaneous 7
7 Power of Attorney 9
8 Costs and Indemnity 9
9 Severance 10
10 Further Assurance 10
11 Notices 10
12 Benefit and Assignment of Debenture 10
13 Law 10
ATTESTATION 11
<PAGE>
DATE 31 October 1996
PARTIES
(1) INSTAR HOLDINGS INC whose registered office is at R.R.E.
Commercial Centre, Majuro, Marshall Islands (the
"Lender"); and
(2) CAPITAL MEDIA (UK) LIMITED (Company no: 3025201) whose
registered office is at 25 James Street London
W1M 5HY (the "Company")
OPERATIVE PROVISIONS
1 DEFINITIONS
1.1 In this Debenture, except so far as the context otherwise requires,
the following words and expressions shall have the meanings set out
below:
<TABLE>
<S> <C>
Acts the Law of Property Act
1925 and the Insolvency Act
1986 (or any statutory
modification or
re-enactment of those acts
for the time being in
force)
Assets the property, undertaking and assets of the Company expressed
to be charged now or hereafter under Clause 2
Facility Agreement the Facility Letter dated October 1996 between the Lender
and the Company relating to a loan facility of up to
US$2,000,000
Bank Lloyds Bank PLC
Designated Account the account with
the Bank designated by the
Lender in writing from time
to time or such other
account so designated by
the Lender
Indebtedness all monies, liabilities and obligations whether principal
interest or otherwise now or at any time after the date of this
Debenture being or becoming due, owing or incurred by the
Company to the Lender whether actual, contingent present or
future and whether alone severally or jointly with any other
person and whether as principal or surety or in some other
capacity, together with interest, legal and other costs,
charges and expenses whatsoever on a full indemnity basis so
that interest shall be calculated and compounded in accordance
with the usual practice of the Lender from time to time as well
after as before any demand made or judgment ascertained
hereunder
Intellectual Property the assets charged under Clause 2.2(g) of this Debenture
Investments the assets charged under Clause 2.2(h) of this Debenture
<PAGE>
Property all leasehold and freehold property referred to in Clauses
2.2(a) and 2.2(b)
Receiver has the meaning given to it in Clause 5.1
</TABLE>
1.2 Words and expressions defined in the Facility Agreement shall have
the same meanings in this Debenture.
1.3 The terms of the Facility Agreement are incorporated into this
DEbenture to the extent required for any purported disposition of the
Property contained in this Debenture to be a valid disposition in
accordance with section 2(1) of the Law of Property (Miscellaneous
Provisions) Act 1989)
1.4 Clause headings are for ease of reference only.
1.5 Any reference in this Debenture to any statute or any section of any
statute shall be deemed to include references to any statutory
modification or re-enactment thereof for the time being in force.
2 CHARGE
2.1 The Company covenants to the Lender that it shall on demand
to pay and discharge the Indebtedness (including on an
acceleration).
2.2 As security for the payment and discharge of the Indebtedness, the
Company, with full title guarantee , hereby charges to the Lender:
(a) by way of legal mortgage, all freehold, leasehold or other
immovable property now vested in the Company, together
with all buildings, fixtures (including trade fixtures)
and fixed plant and machinery from time to time on that
property;
(b) by way of fixed charge, all estates or interests in any
freehold and leasehold or other immovable property of the
Company (not being property charged by Clause 2.2(a)) now
or hereafter belonging to or vested in the Company,
together with all buildings, fixtures (including trade
fixtures) and fixed plant and machinery from time to time
on that property;
(c) by way of fixed charge, all plant and machinery now or in
the future belonging to the Company other than fixed plant
and machinery that is charged pursuant to Clause 2.2(a);
(d) by way of fixed charge, all the goodwill and
uncalled capital for the time being of the Company;
(e) by way of fixed charge, all book debts and other debts
whatsoever now or in the future due or owing to the
Company;
(f) by way of fixed charge all present and future bank
accounts of the Company (however designated and including
the Designated Account) maintained with any bank or other
financial institution in any jurisdiction and any and all
moneys (including interest) from time to time standing to
the credit of each of them which in each such case is not
otherwise charged pursuant to Clause 2.2(e);
2
<PAGE>
(g) by way of fixed charge, all copyrights, patents, designs,
registered designs (including applications and rights to
apply therefor), inventions, rights in trade marks and
service marks whether registered or not (including
applications and rights to apply therefor) confidential
information and know-how, utility models, moral rights and
other intellectual property rights and any interest in any
of those rights, choses in action and claims and fees,
royalties and other rights of every kind deriving
therefrom now or at any time hereafter belonging to the
Company; and
(h) by way of fixed charge, all stocks shares (save for the
shares held in Blink TV Limited) and other securities now
or in the future belonging to the Company together with
all dividends and other rights deriving therefrom and the
Company shall at the date hereof deliver to the Lender all
relevant share certificates and duly executed (but not
dated) instruments of transfer (as may be required or
required by the Lender) to transfer the shares from the
Company;
(i) by way of fixed charge all the Company's right, title and
interest in and to all its present and future rights and
claims in any contracts, (save for an agreement dated 25
September 1995 and made between PTT Telecom BV and the
Company whereby PTT Telecom BV agreed to lease to the
Company transponder capacity) agreements or instruments,
including, without limitation, all contracts of insurance
of whatever nature which are from time to time taken out
by or on behalf of the Company in which the Company may
now or in the future have an interest;
(j) by way of floating charge, all the Company's present and
future undertaking and assets, whatever and wherever,
other than any property or assets for the time being
effectively charged to the Lender or otherwise by way of
legal mortgage or fixed charge under this Debenture.
2.3 By notice in writing to the Company, the Lender may at any time after
the occurrence of any of the events set out in Clause 15 of the
Facility Letter convert the floating charge created by Clause 2.2(j)
into a specific charge over any Assets specified in such notice which
are for the time being the subject of such floating charge. The
floating charge created by this Debenture shall unless otherwise
agreed in writing by the Lender automatically and without notice be
converted into a fixed charge in the event that the Company shall
create or permit to subsist any security interest as described in
Clause 3.1(a) of this Debenture.
3 COVENANTS
3.1 The Company shall not and shall undertake and procure that Onyx GmbH
does not during the subsistence in force of this Debenture without
the prior written consent of the Lender:
(a) except for charges in favour of the Lender created under
or pursuant to the Facility Agreement or in favour of
Universal Independent Holdings Limited pursuant to
arrangements in respect of a transponder agreement with
PTT Telecom BV dated 25 September 1996 create or permit to
subsist any mortgage, charge, pledge, hypothecation, lien
or other security interest on any of its undertaking or
assets;
3
<PAGE>
(b) sell, transfer, lease, lend or otherwise dispose of its
undertaking and other assets or any part of them, except
by getting in and realising them in the ordinary and
proper course of its business;
(c) deal with its book or other debts or securities for money
except by getting in and realising them in the ordinary
and proper course of its business, but so that this
exception shall not permit the realisation of debts by
means of block discounting or factoring; or
(d) grant or accept a surrender of any lease, licence or right
of occupation of or part with or share possession or
occupation of or grant or agree to grant any option in
relation to the Property or any part of it.
3.2 The Company shall and shall undertake and procure that Onyx GmbH
shall:
(a) if so requested by the Lender promptly deposit with
the Lender all deeds and documents of title and all
insurance policies relating to the Assets;
(b) keep such of the Assets as are insurable comprehensively
insured to the Lender's satisfaction in writing (and, if
so required by the Lender, in the joint names of itself
and the Lender) against loss or damage by fire and such
other risks as the Lender may require, to their full
replacement value and, where such insurance is not in
joint names, procure that the Lender's interest is noted
on all policies required under this Clause 3.2(b);
(c) duly and promptly pay all premiums and other moneys
necessary for maintaining the insurances required under
Clause 3.2(b) and on demand produce the insurance policies
and premium receipts to the Lender;
(d) keep all buildings and all plant, machinery, fixtures,
fittings and other effects in good repair and working
order;
(e) apply any insurance proceeds in making good the loss or
damage or at the Lender's option in or towards the
discharge of the monies obligations and liabilities
secured by this Debenture;
(f) punctually pay all rents taxes duties assessments and
other outgoings and observe and perform all restrictive
and other covenants under which any property subject to
this Debenture is held;
(g) make such registrations and pay such fees,
registration taxes and similar amounts as are
necessary to keep its Intellectual Property in force;
(h) take such steps as are necessary (including, without
limitation, the institution of legal proceedings) to
prevent third parties infringing its Intellectual Property
and (without prejudice to sub-paragraph (g) above) take
such other steps as are reasonably practicable to maintain
and preserve its interests therein; and
(i) not permit the registration of any Intellectual
Property to be abandoned, cancelled or to lapse or
become liable to any claim of abandonment for non-use.
(j) during the subsistence of this Debenture, duly and
promptly pay all calls, instalments and other payments due
on any of the Investments, failing
4
<PAGE>
which the Lender may in its discretion make such payments
on behalf of the Company, and any sum so paid by the
Lender shall be repayable by the Company on demand;
(k) during the subsistence of this Debenture, remain liable to
observe and perform all of the conditions and obligations
assumed by the registered holder, bearer or owner of the
Investments and the Lender shall not be under any
obligation or liability in relation thereto by reason or
arising out of the Investments being charged to the Lender
under this Debenture;
(l) the Company shall, from time to time on demand of the
Lender at the Company's cost:
(i) in the case of registered Investments, deliver
to the Lender executed transfers or assignments
in favour of the Lender or its nominee or agent
together with share certificates or other
documents of title for registration of the
Investments in the name of the Lender or its
nominee or agent;
(ii) in the case of bearer Investments, deliver to
the Lender or its nominee or agent the
documents of title to them; and
(iii) complete all transfers, renunciations, mandates,
assignments, deeds or other documents or do such
other things as the Lender may require to
perfect the title (whether legal or otherwise)
of the Lender or that of its nominee or agent to
the Investments.
3.3 If the Company fails to perform any of its obligations under Clauses
3.2 or 4, the Lender may (subject to the provisions of the Prior
Charges) take such steps as it considers appropriate to procure the
performance of such obligations (without being deemed to be a
mortgagee in possession) (including taking out or renewing any
insurance or effecting such repairs and taking such other action as
it may deem appropriate to remedy such failure) and recover the
premiums and other expenses so incurred from the Company on demand
and until so recovered such unpaid amounts shall carry interest as
mentioned in Clause 2.1 from the date of payment to the date of
recovery.
4 BOOK DEBTS
At all times during the subsistence of this Debenture the Company
shall:
(a) get in and realise the book debts and other debts
charged by Clause 2.2(e) of this Debenture in the
ordinary and usual course of its business on behalf of
the Lender;
(b) pay the proceeds of such getting in and realisation of the
book debts and other debts into the Designated Account and
pay or otherwise deal with such monies standing in such
Designated Account in accordance only with the directions
from time to time given in writing by the Lender and the
Company shall furnish to the Lender evidence satisfactory
to the Lender that the bank has been notified of, and has
agreed to operate such account in accordance with, any
procedures stipulated by the Lender);
(c) prior to any demand being made for payment of the
Indebtedness or to the crystallisation of the floating
charges created hereby (howsoever such
5
<PAGE>
crystallisation may arise) and in the absence of any
direction being given by the Lender pursuant to Clause
4(b) of this Debenture the monies received by the Company
and paid into the Designated Account in respect of such
book debts and other debts charged by Clause 2.2(e) of
this Debenture shall, upon such payment in, stand released
from the fixed charge on such debts created pursuant to
clause 2.2(e) of this Debenture and shall stand subject to
the floating charge created by clause 2.2(j) of this
Debenture over the property and assets of the Company as
therein provided;
(d) any release occurring pursuant to paragraph (c) of Clause
4 of this Debenture shall not derogate from or otherwise
prejudice the subsistence of the fixed charge over book
and other debts of the Company created by Clause 2.2(e) of
this Debenture in respect of all book debts and other
debts due owing and unpaid at the time of and subsequent
to such release;
(e) if required by the Lender at any time, execute and deliver
to the Lender a legal assignment of such book debts and
other debts for the time being charged by Clause 2.2(e) of
this Debenture to the Lender in such form as the Lender
may require and give notice of such assignment to the
person from whom such book debts and other debts are due
in such form as the Lender may require; and
(f) authorise provision by the Bank to the Lender at any time
requested by the Lender for statements and particulars of
the Designated Account and such other financial and other
information in respect thereof as the Lender shall
require.
5 RECEIVER
5.1 At any time after the occurrence of any of the events set out in
clause 15 of the Facility Agreement (or if so requested by the
Company), the Lender may demand repayment of the Indebtedness and
then appoint by writing any person or persons to be an administrative
receiver or a receiver and manager or receivers and managers ("the
Receiver", which expression shall include any substituted receiver(s)
and manager(s)) of all or any part of the Assets.
5.2 The Lender may from time to time determine the remuneration of the
Receiver and may remove the Receiver and appoint another in his
place.
5.3 The Receiver shall be the Company's agent and shall have all powers
conferred or which may be conferred by the Acts. The Company alone
shall be responsible for his acts and omissions and for his
remuneration. In particular, but without limiting any general powers
or the Lender's power of sale, the Receiver shall have power:
(a) to take possession of collect and get in all or any part
of the Assets and for that purpose to take any proceedings
in the Company's name or otherwise as he shall think fit;
(b) to carry on or concur in carrying on the Company's
business and raise money from any person either secured or
unsecured on the Assets or any part of them either in
priority to this security or otherwise and generally on
such terms as the Receiver shall think fit;
(c) to sell, let and/or terminate or to accept surrenders
of leases or tenancies of any part of the Property, in
such manner and on such terms as he thinks fit;
6
<PAGE>
(d) to purchase or acquire any land and purchase, acquire
and grant any interest in or right over land;
(e) to sell, assign, let or otherwise dispose of or
concur in selling, assigning, letting or otherwise
disposing of all or any of the Assets in respect of which
he is appointed;
(f) to take, continue or defend any proceedings and make
any arrangement or compromise which the Lender or he shall
think fit;
(g) to make and effect all repairs, improvements and
insurances;
(h) to appoint managers, officers, employees,
professional advisers and agents for any of the above
purposes, at such remuneration as the Receiver may
determine;
(i) to call up any of the Company's uncalled capital;
(j) to promote the formation of a subsidiary company or
companies of the Company, so that such subsidiary may
purchase, lease, license or otherwise acquire interests in
all or any part of the Assets; and
(k) to do all other acts and things which he may consider to
be incidental or conducive to any of the above powers.
5.4 Any moneys received under this Debenture shall be applied:
(a) first, in satisfaction of all costs, charges and
expenses properly incurred and payments properly made by
the Lender or the Receiver and of the remuneration of the
Receiver;
(b) secondly, the surplus (if any) shall be paid to the
person or persons entitled to it.
6 MISCELLANEOUS
6.1 No statutory or other power of granting or agreeing to grant or of
accepting or agreeing to accept surrenders of leases or tenancies of
any part of the Property may be exercised by the Company without the
Lender's prior written consent. Section 93 of the Law of Property Act
1925 shall not apply.
6.2 The Company at its expense shall at any time at the Lender' request
promptly execute and deliver to the Lender any other or further
mortgage, charge or other instrument conferring a fixed charge on any
of its Assets (including any of the Assets charged by Clause 2.2(j))
or such other charge as the Lender may in its discretion think fit
for securing the Indebtedness.
6.3 This Debenture shall be:
(a) a continuing security, notwithstanding any
settlement of account or other matter or thing whatever;
(b) without prejudice and in addition to any other security
for the Indebtedness (whether by way of mortgage,
equitable charge or otherwise) which the Lender may hold
now or hereafter on all or any part of the Assets;
7
<PAGE>
(c) in addition to any rights, powers and remedies at law;
(d) apply to the ultimate balance of the Indebtedness
(together with all expenses whatever incurred by the
Lender in the enforcement or attempted enforcement of this
Debenture) and shall not be discharged or otherwise
affected by any intermediate payment or satisfaction of
any part of the Company's obligations;
6.4 Any release or discharge of this Debenture shall be conditional on no
payment or assurance received by the Lender in respect of the
Company's obligations under the Facility Agreement being avoided or
reduced under any law (English or foreign) relating to bankruptcy,
liquidation or analogous circumstances in force within the relevant
period after that payment or discharge during which any payment may
for any reason be reclaimed or otherwise not retained by the Lender.
After that avoidance or reduction, the Lender may exercise its rights
under the Facility Agreement and this Debenture and/or any other
rights which it would have been entitled to exercise notwithstanding
any release and discharge which shall be considered null and void. In
this Clause 6.4, the "relevant period" means the relevant statutory
period, extended by one month, within which any payment or security
made to or held by the Lender may be avoided or invalidated under any
enactment relating to insolvency or otherwise.
6.5 Section 103 of the Law of Property Act 1925 shall not apply. The
statutory power of sale shall be exercisable at any time after the
execution of this Debenture. The Lender shall not exercise its power
of sale until payment has been demanded, but this provision shall not
affect a purchaser or put him on inquiry whether such demand has been
made.
6.6 No failure or delay on the Lender's part in the exercise of any of
its rights, powers and remedies (in this Clause 6 "right(s)") under
this Debenture or at law shall operate or be construed as a waiver.
No waiver of any of the Lender's rights shall preclude any further or
other exercise of that right or of any other right.
6.7 The Lender may give time or other indulgence or make any other
arrangement, variation or release with any person in respect of the
Indebtedness or any other security or guarantee for the Indebtedness
without derogating from the Company's liabilities or the Lender's
rights under this Debenture.
6.8 The Company certifies that this Debenture is in its best commercial
interests and does not contravene its Memorandum and Articles of
Association or any agreement binding on it or on any of the Assets
and has been executed in accordance therewith and hereby applies to
the Chief Land Registrar for a restriction to be entered on the
register of its title to registered properties charged by this
Debenture that:
"Except under an Order of the Registrar no disposition or
dealing by the proprietor of the land is to be registered
or noted without the consent of the proprietor for the
time being of Charge No ."
6.9 A certificate signed on behalf of the Lender of the amount for the
time being of any Indebtedness and/or the amounts due to the Lender
shall be conclusive evidence for all purposes against the Company,
unless manifestly incorrect.
6.10 No person dealing with a Receiver or the Lender shall be concerned to
enquire whether any power which he or it is purporting to exercise
has become exercisable or whether any money is due under this
Debenture or as to the application of any
8
<PAGE>
money paid raised or borrowed or as to the propriety or regularity of
any sale by or other dealing with such Receiver or the Lender. All
the protection to purchasers contained in Sections 104 and 107 of the
Law of Property Act 1925 shall apply to any person purchasing from or
dealing with a Receiver or the Lender.
7 POWER OF ATTORNEY
7.1 By way of security, the Company hereby irrevocably appoints the
Lender any Receiver and any person nominated by the Lender jointly
and also severally to be the attorney of the Company with the power
of substitution and in its name and otherwise on its behalf and as
its act and deed to sign or execute all deeds instruments and
documents which the Lender or any Receiver may require or deem proper
for any of the purposes of or which the Company ought to do under
this Debenture. The Company agrees to ratify and confirm anything
such attorney shall lawfully and properly do.
7.2 The power of attorney granted under Clause 7.1 as regards the Lender,
and its delegates and substitutes (as the Company acknowledges) are
granted irrevocably as part of the security created by this Debenture
to secure proprietary interests of and the performance of the
obligations owed to the respective donees within the meaning and for
the purposes of the Powers of Attorney Act 1971 (as amended or
re-enacted from time to time).
7.3 The Company hereby appoints the Lender as its authorised agent to
make any filings, registrations or renewals with the appropriate
registrars or authorities as shall be necessary to give effect to
Clause 2.2(g).
8 COSTS AND INDEMNITY
8.1 All costs charges and expenses incurred by the Lender in relation to
this Debenture or the monies and liabilities hereby secured shall be
reimbursed by the Company to the Lender on demand on a full indemnity
basis and until so reimbursed shall carry interest as mentioned in
Clause 1 from the date of payment to the date of reimbursement and be
secured on the property charged by this Debenture.
8.2 The Lender and every Receiver attorney or other person appointed by
the Lender under this Debenture and their respective employees shall
be entitled to be indemnified on a full indemnity basis out of the
property charged by this Debenture in respect of all liabilities and
expenses incurred by any of them in or directly or indirectly as a
result of the exercise or purported exercise of any of the powers
authorities or discretions vested in them under this Debenture and
against all actions proceedings losses costs claims and demands in
respect of any matter or thing done or omitted in any way relating to
the property charged by this Debenture and the Lender and any such
Receiver may retain and pay all sums in respect of the same out of
the monies received under the powers conferred by this Debenture.
9 SEVERANCE
The provisions of this Debenture shall be severable and if at any
time any provision in this Debenture is or becomes invalid, illegal
or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Debenture shall not be impaired.
9
<PAGE>
10 FURTHER ASSURANCE
Without prejudice to the provision of section 76(1)(C) of the Law of
Property Act 1925, the Company shall whenever requested by the Lender
immediately execute and sign all such deeds and documents and do all
such things as the Lender may require at the Company's cost over any
property or assets specified by the Lender for the purpose of
perfecting or more effectively providing security to the Lender (or
its nominees) for the payment and discharge of the monies obligations
and liabilities secured by this Debenture or to enable the Lender (or
its nominees) to exercise any right and powers attaching to the
Assets or to give effect to any sale or disposal under Clause 5 or
otherwise to put into effect the intent of this Debenture.
11 NOTICES
The porovisions of clause 20 of the Facility Letter shall apply to
this Debenture making necessary changes.
12 BENEFIT AND ASSIGNMENT OF DEBENTURE
12.1 This Debenture shall be binding upon the Company and its successors
and shall enure to the benefit of the Lender and its successors and
assigns.
12.2 The Lender may assign or transfer all or part of its rights and
obligations under this Debenture, but the Company may not assign or
otherwise transfer any of its rights or obligations under this
Debenture.
13 LAW
This Debenture shall be governed by and construed in accordance with
English law and the Company irrevocably submits to the non-exclusive
jurisdiction of the English Courts.
IN WITNESS WHEREOF this Debenture has been executed and
unconditionally delivered as a Deed the day and year first before
written.
10
<PAGE>
<TABLE>
<CAPTION>
ATTESTATION
<S> <C>
EXECUTED as a Deed on behalf of )
INSTAR HOLDINGS INC a company )
incorporated in the Marshall islands )
by Anthony Michael Bousfield, Director ) /s/ ANTHONY MICHAEL BOUSFIELD
and Philip Oscar Gallienne, Secretary ) /s/ PHILIP OSCAR GALLIENNE
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign )
this document on behalf of the Company )
Executed and delivered as a Deed )
by CAPITAL MEDIA (UK) LIMITED )
pursuant to resolution of the Board acting by: )
/s/ BARRY LLEWELLYN, Director
/s/ CHARLES KOPPEL, Secretary
</TABLE>
11
EXHIBIT 10.3
DATED 31 October 1996
SECURITY ASSIGNMENT
CAPITAL MEDIA (UK) LIMITED (1)
INSTAR HOLDINGS INC (2)
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions 1
2 Interpretation 2
3 Covenant 2
4 Security 2
5 Expenses 3
6 Further assurance 4
7 Power of attorney 4
8 Duration of assignment 4
9 No liability as mortgagee in possession 4
10 Exclusions 4
11 Certificate 4
12 Rights cumulative, waiver 5
13 Severance 5
14 Communications 5
16 Successors 5
17 Governing law 5
SCHEDULE 1 6
Notice of Assignment 6
SCHEDULE 2 7
Consent and Acknowledgement 7
<PAGE>
DATE
31 October 1996
PARTIES
(1) CAPITAL MEDIA (UK) LIMITED (formerly Excalibur Communications Limited)
a company incorporated in England and Wales with registered number
3025201, whose registered office is at 25 James Street, London W1M 5HY
(the "Assignor"); and
(2) INSTAR HOLDINGS INC of R.R.E. Commercial Centre, Majuro, Marshall
Islands (the "Assignee").
OPERATIVE PROVISIONS
1 DEFINITIONS
In this Assignment the following expressions shall bear the following
meanings:
Assigned Assets the right, title, benefit and
interest of the Assignor in or under
an agreement dated 25 September 1995
made between PTT Telecom BV ("the
Lessor") (1) and the Assignor (2)
("the Transponder Lease") whereby
the Lessor agreed to lease to the
Assignor transponder capacity
Events of Default shall have the meaning given to
such term in the Facility Agreement
Facility Agreement the facility letter dated
October 1996 between the Assignor
and the Assignee relating to a loan
facility of up to US$2,000,000
Secured Obligations all monies, liabilities
and obligations, whether principal
interest or otherwise now or at any
time after the date of this
Assignment being or becoming due,
owing or incurred by the Assignor to
the Assignee whether actual,
contingent present or future and
whether done severally or jointly
with any other person and whether as
principal or surety or in some other
capacity, together with interest
legal and other costs, charges and
expenses whatsoever on a full
indemnity basis so that interest
shall be calculated and compounded
in accordance with the usual
practice of the Assignee from time
to time as well after as before any
demand made or judgment ascertained
hereunder
Security Interest any mortgage, charge, pledge, lien,
assignment, encumbrance, guarantee,
title transfer or retention
arrangement or agreement, or any
security interest whatsoever,
howsoever created or arising
<PAGE>
2 INTERPRETATION
2.1 Sections 61 and 63 of the Law of Property Act 1925 shall apply to the
construction of this Assignment.
2.2 Headings used in this Assignment and table of contents are for
convenience only, and are to be ignored in construing this Assignment.
2.3 References in this Assignment to it or another document shall be
construed as a reference to this Assignment, or the other document, as
from time to time novated, amended, varied or supplemented.
2.4 Words importing the singular include the plural and vice versa.
2.5 References to laws and regulations include amendments and
re-enactments.
3 COVENANT
3.1 The Assignor shall satisfy the Secured Obligations as they fall due for
satisfaction in accordance with their terms.
4 SECURITY
4.1 Assignment
As continuing security for payment and discharge of the Secured
Obligations, the Assignor with full title guarantee, assigns absolutely
by way of security to the Assignee the Assigned Assets.
4.2 Re-assignment
Upon the irrevocable payment in full when due and upon the complete
performance and observance of all the Secured Obligations, the Assignee
will (subject to the terms of this Assignment) at the request and
expense of the Assignor re-assign the Assigned Assets to the Assignor.
4.3 Enforcement and application
The security created by this Assignment shall become enforceable by the
Assignee upon the occurrence of an Event of Default. Thereafter the
Assignee may apply all or any part of the Assigned Assets towards the
discharge of the Secured Obligations in such manner as the Assignee
deem fit.
4.4 Primary security
This Assignment shall be deemed to constitute primary and not
collateral security and the security shall not be discharged or
impaired by:-
(a) the dealing with, existence or validity of any other security
taken by the Assignee in relation to the Secured Obligations
or any enforcement of or failure to take, perfect or enforce
any such security;
(b) any amendment to or variation of any document or any security
relating to Secured Obligations;
2
<PAGE>
(c) any release of, or granting of time or any other indulgence to
the Assignor or any third party; or
(d) any other act, event or omission which would or might but for
this clause operate to impair or discharge the security
constituted by, or the Assignor's liability under, this
Assignment including any act, omission or thing which would or
might afford an equitable defence to a security.
4.5 Negative covenant
Except with the prior written consent of the Assignee, the Assignor
shall not create, agree to create or permit to subsist any Security
Interest in, over or affecting the whole or any part of the Assigned
Assets (except for Security Interests in favour of the Assignee as
security for the Secured Obligations) or over its right to call for a
discharge of the security hereby constituted nor deal with such right
in any manner.
4.6 Notices
The Assignor shall forthwith on receipt of consent pursuant to clause
6.1 deliver a duly completed notice of assignment in the form set out
in Schedule 1 and procure that upon receipt of such notice an
acknowledgement and consent in the form set out in Schedule 2 is
executed and delivered to each of the Assignee.
4.7 Documents
The Assignor shall deposit with a person nominated in writing by the
Assignee all documents relating to the Assigned Assets. Such documents
shall be returned to the Assignor upon re-assignment of the Assigned
Assets in accordance with clause 4.2.
5 EXPENSES
5.1 The Assignor shall immediately on demand pay the Assignee all expenses
(including legal and other out-of-pocket expenses) incurred in
connection with:
(i) the negotiation, preparation and execution of this Assignment,
the Facility Agreement and any related documents;
(ii) any variation, waiver, consent or approval relating to this
Assignment, the Facility Agreement or any related documents.
(iii) the preservation or enforcement, or the attempted preservation
or enforcement, of any Assignees' rights under this
Assignment, the Facility Agreement or any related documents.
5.2 The Assignor shall immediately on demand:
(i) pay any stamp, documentary and other similar duty or tax to
which this Assignment or any related document may be subject
or give rise; and
(ii) indemnify the Assignee against all losses or liabilities which
the Assignee may incur as a result of any delay or omission by
the Assignor to pay any such duty or tax.
3
<PAGE>
6 FURTHER ASSURANCE
6.1 Notwithstanding any of the terms and provisions set out herein the
Assignor and the Assignee agree that this Assignment shall not create a
valid assignment of the Assigned Assets (of any kind whatsoever whether
equitable or legal) until the Assignee has obtained consent from the
Lessor to such assignment of the Assigned Assets.
6.2 The Assignor shall, at the request of the Assignee and at its own cost,
promptly execute any document and do or omit to do any other act or
thing which:
(a) the Assignee may specify in order to perfect or improve any
security created or intended to be created by this Assignment
and to enable the Assignee to deal with the Assigned Assets in
accordance with the provisions of this Assignment or in order
to perfect the Assignee' title to any part of the Assigned
Assets; or
(b) the Assignee may specify with a view to the exercise or
proposed exercise of any of their powers, rights and
discretions under this Assignment.
7 POWER OF ATTORNEY
For the purposes of securing the performance of the Assignor's
obligations under this Assignment, the Assignor irrevocably appoints
each of the Assignee or any person acting as the delegate of the
Assignee as the Assignor's attorney on behalf of and in the name of the
Assignor or otherwise to do all acts and things and sign and execute
all deeds and documents which any such Assignee may consider necessary
or expedient for the purpose of giving full effect to this Assignment.
8 DURATION OF ASSIGNMENT
8.1 The provisions of this Assignment shall remain in force until the
Secured Obligations have been unconditionally and irrevocably paid or
discharged in full.
8.2 The security created by this Assignment is continuing and is not to be
considered as satisfied or discharged by any intermediate payment or
settlement of the whole or any part of the Secured Obligations or any
other matter or thing whatsoever, including, without limitation, the
insolvency, liquidation or administration of the Assignor.
9 NO LIABILITY AS MORTGAGEE IN POSSESSION
Nothing herein provided shall be deemed to constitute any Assignee
mortgagee in possession of the property charged under this Assignment.
10 EXCLUSIONS
Sections 93 and 103 of the Law of Property Act 1925 shall not apply to
this Assignment.
11 CERTIFICATE
A statement as to any amount of the Secured Obligations or as to any
amount due to any of the Assignee under this Assignment which is
certified as being correct by a duly appointed representative or
officer of such Assignee shall, in the absence of manifest error, be
conclusive evidence that such amount is in fact due and payable.
4
<PAGE>
12 RIGHTS CUMULATIVE, WAIVER
12.1 The rights of the Assignee under this Assignment:
(a) are cumulative and are in addition to their rights under the
general law;
(b) may be exercised as often as they consider appropriate; and
(c) may be waived only in writing.
12.2 Any failure or delay in the exercise of any such rights shall not be
treated as a waiver.
13 SEVERANCE
Each of the provisions of this Assignment is severable and distinct
from the others. If one or more provision is or becomes invalid,
illegal or unenforceable, then this shall not affect the validity,
legality and enforceability of the remaining provisions.
14 COMMUNICATIONS
The provisions of clause 20 of the Facility Agreement shall apply to
this Assignment making necessary changes.
16 SUCCESSORS
1.1 This Assignment shall be binding upon and inure to the benefit of the
Assignor and the Assignee and their successors and assigns. Reference
to the Assignee in this Assignment includes any assignee or transferee
of any Assignee in relation to its rights and obligations under this
Assignment.
16.2 The Assignor may not assign or transfer all or any part of its rights
or obligations under this Assignment. The Assignee may assign all or
any of their rights hereunder to any person.
17 GOVERNING LAW
This Assignment shall be governed by and construed in accordance with
English law, and the parties irrevocably submit to the exclusive
jurisdiction of the English courts.
5
<PAGE>
SCHEDULE 1
NOTICE OF ASSIGNMENT
To: PTT Telecom BV
The Hague
The Netherlands
From: Capital Media (UK) Limited
25 James Street
London W1M 5HY
Date:
Dear Sirs
We hereby give you notice that by an assignment (a copy of which is attached)
("the Assignment") dated ____________________ 1996 and made between this
Company and the Assignee described in the Assignment we have assigned
absolutely to the Assignee all our right, title, benefit and interest in and
under the Assigned Assets (as such term is defined in the Assignment).
You shall disclose such information relating to the Assigned Assets as the
Assignee may request you to disclose to them, and act in accordance with their
instructions concerning the Assigned Assets.
This notice and the instructions herein contained are irrevocable. Please
acknowledge receipt of this notice by completing and returning the enclosed
consent to assignment.
Yours faithfully
/s/ BARRY LLEWELLYN
- -----------------------
for and on behalf of
Capital Media (UK) Limited
6
<PAGE>
SCHEDULE 2
CONSENT AND ACKNOWLEDGEMENT
To: Universal Independent Holdings Limited
From: PTT Telecom BV
The Hague
The Netherlands
Date:
Dear Sirs
We acknowledge receipt of a notice of an assignment and copy of a deed of
assignment dated _______________________ 1996 (the "Assignment") and made
between Capital Media (UK) Limited (the "Assignor") and the Assignee relating
to the Assigned Assets (as such term is defined in the Assignment).
We hereby consent to such assignment, and agree to disclose information relating
to the Assigned Assets if requested to do so by the Assignee, and agree that we
will comply with the Assignee' instructions concerning the Assigned Assets.
Yours faithfully
- ----------------------------------------
For and on behalf of
PTT Telecom BV
7
<PAGE>
<TABLE>
<CAPTION>
ATTESTATIONS
THE ASSIGNOR
<S> <C>
EXECUTED and DELIVERED as a DEED )
by CAPITAL MEDIA (UK) LIMITED acting by )
two directors/a director and the secretary: )
Director /s/ BARRY LLEWELLYN
---------------------
Secretary /s/ CHARLES KOPPEL
---------------------
THE ASSIGNEES
EXECUTED as a Deed on behalf of )
INSTAR HOLDINGS INC a company )
incorporated in the Marshall islands )
by Anthony Michael Bousfield, Director ) /s/ ANTHONY MICHAEL BOUSFIELD, Director
---------------------------------------
and Philip Oscar Gallienne, Secretary ) /s/ PHILIP OSCAR GALLIENNE, Secretary
being a person/persons who in ) -------------------------------------
accordance with the laws of that )
territory is/are empowered to sign )
this document on behalf of the Company )
</TABLE>
8
EXHIBIT 10.4
DATED 31 October 1996
CHARGE
over Shares and Securities
CAPITAL MEDIA GROUP LIMITED (1)
as Chargor
INSTAR HOLDINGS INC (2)
as Company
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions and Interpretation 1
2 Covenant to Pay 3
3 Charge 3
4 Deposit of Title Documents and Further Assurance 3
5 Representations Warranties and Covenants by the Chargor 4
6 Rights of the Company 5
7 New Accounts 6
8 Enforcement 6
9 Power of Sale 8
10 Protection of Third Parties 8
11 Power of Attorney 9
12 Discharge of Security 9
13 Avoidance of Payments 9
14 Costs 10
15 Notices 10
16 Miscellaneous 11
17 Law and Jurisdiction 11
SCHEDULE 13
ATTESTATIONS 14
<PAGE>
CHARGE
DATE
31 October 1996
PARTIES
(1) CAPITAL MEDIA GROUP LIMITED (registered in the State of Nevada, United
States of America) whose principal office is at 25 James Street, London
W1M 5HY (the "Chargor"); and
IN FAVOUR OF
(2) INSTAR HOLDINGS INC whose registered office is at R.R.E Commercial
Centre, Majuro, Marshall Islands (the "Company")
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Charge (including the Introduction), unless the context
otherwise requires, the following words and expressions shall have the
meanings set out below:
"Capital Media" Capital Media (UK) Limited
(Company No:3025201) whose
regisgtered office is at 25 James
Street, London W1M 5HY.
"Charged Property" the property and rights of
the Chargor which are the subject of
any security created or purported to
be created by this Charge.
"Default Rate" the rate specified in clause 7
of the Facility Agreement
"Derivative Assets" all stocks shares warrants
or other securities rights dividends
interest or other property whether
of a capital or income nature
accruing offered issued or deriving
at any time by way of dividend bonus
redemption exchange purchase
substitution conversion
consolidation subdivision preference
option or otherwise attributable to
any of the Shares and Securities or
any Derivative Assets previously
described.
"Encumbrance" any mortgage charge pledge lien
assignment hypothecation security
interest title retention
preferential right or trust
arrangement or other security
arrangement or agreement or any
right conferring a priority of
payment.
"Enforcement Event" any event set out in Clause 8.2 of
this Charge.
"Facility Agreement" an agreement dated
1996 between Capital Media and
the Company
<PAGE>
"LPA" the Law of Property Act 1925.
"Secured Liabilities" all monies obligations
and liabilities whatsoever whether
for principal interest or otherwise
in whatever currency which may now
or at any time in the future be due
owing or incurred by Capital Media
and or the Chargor to the Company
whether actual or contingent and
whether alone severally or jointly
as principal guarantor surety or
otherwise and in whatever name or
style and whether on any current or
other account or in any other manner
whatsoever.
"Shares and Securities" all stocks shares and other
securities:
(i) listed in the Schedule for
which the stock or share
certificates or other
documents of title have been
deposited by the Chargor
with the Company; or
(ii) for which the stock or share
certificates or other
documents of title have been
deposited by the Chargor
with the Company or its
agents or nominees or are
held to the order of the
Company.
in each case whether held in the
United Kingdom or elsewhere and
irrespective of whether in any such
case the deposit was made or the
certificates or other documents were
received by the Company or its
agents or nominees for the purposes
of creating security, safe custody,
collection or otherwise.
1.2 All terms defined in the Facility Agreement which are used in this
Charge shall bear the same meaning as in the Facility Agreement unless
the context requires otherwise provided that inb the event of any
conflict between the meaning of any term as defined in the Facility
Agreement and any term as defined in this Charge the definition in the
Charge shall prevail
1.3 References to Clauses and Schedules are to the clauses and schedules to
this Charge.
1.4 Clause headings are inserted for ease of reference only and are not to
affect the interpretation of this Charge.
1.5 Except to the extent the context otherwise requires any reference in
this document to "this Charge" and any other document referred to in it
includes any document expressed to be supplemental to or collateral
with or which is entered into pursuant to or in accordance herewith or
therewith and shall be deemed to include any instruments amending
varying supplementing novating or replacing the terms of any such
documents from time to time.
1.6 References to a person are to be construed to include corporations
firms companies partnerships individuals associations states and
administrative and governmental and other entities whether or not a
separate legal entity.
2
<PAGE>
1.7 References to any person are to be construed to include references to
that person's successors transferees and assigns whether direct or
indirect.
1.8 References to any statutory provision are to be construed as references
to that statutory provision as amended supplemented re-enacted or
replaced from time to time (whether before or after the date of this
Charge) and are to include any orders regulations instruments or other
subordinated legislation made under or deriving validity from that
statutory provision.
1.9 The words "other" and "otherwise" are not to be construed ejusdem
generis with any foregoing words where a wider construction is
possible.
1.10 The words "including" and "in particular" are to be construed as being
by way of illustration or emphasis only and are not to be construed as,
nor shall they take effect as, limiting the generality of any foregoing
words.
2 COVENANT TO PAY
2.1 The Chargor covenants with the Company that it will on demand pay and
discharge the Secured Liabilities when due to the Company.
2.2 The Chargor shall pay interest to the date of payment or discharge
(notwithstanding any demand or any judgment obtained by the Company or
the liquidation or administration of or any arrangement or composition
with creditors by the Chargor) at the rate or rates applicable under
the agreements or arrangements giving rise to the relevant obligations
or liabilities or if no such rate or rates are specified at the Default
Rate upon such days and upon such terms as the Company may from time to
time determine. Such interest shall be compounded in the event of it
not being punctually paid in accordance with the usual practice of the
Company but without prejudice to the right of the Company to require
payment of such interest.
2.3 All sums payable by the Chargor under this Charge shall be paid without
any set-off counterclaim withholding or deduction whatsoever unless
required by law in which event the Chargor will simultaneously with
making the relevant payment under this Charge pay to the Company such
additional amount as will result in the receipt by the Company of the
full amount which would otherwise have been receivable and will supply
the Company promptly with evidence satisfactory to the Company that the
Chargor has accounted to the relevant authority for the sum withheld or
deducted.
3 CHARGE
The Chargor with full title guarantee (with the intent that the
security so constituted shall extend to all beneficial interests of the
Chargor in the Charged Property and to any proceeds of sale or other
realisation of the Charged Property or any part of it) and as
continuing security for the payment and discharge of the Secured
Liabilities charges the Shares and Securities and the Derivative Assets
to the Company.
4 DEPOSIT OF TITLE DOCUMENTS AND FURTHER ASSURANCE
4.1 The Chargor shall on the execution of this Charge deposit with the
Company all stock or share certificates or other documents of title to
or representing the Charged Property together with such duly executed
transfers or assignments in favour of the Company or its nominees with
the name of the transferee date and consideration left blank as the
Company may require to enable the Company to vest the same in the
Company or its nominees or, after the occurrence of an Enforcement
Event, any
3
<PAGE>
purchaser to the intent that the Company may at any time
after the occurrence of an Enforcement Event without notice present
them for registration.
4.2 The Chargor shall subject to clause 4.3 upon the accrual offer issu
or receipt of any Derivative Assets deliver or pay to the Company or
procure the delivery or payment to the Company of all such Derivative
Assets or the stock or share certificates or other documents of title
to or representing them together with such duly executed transfers or
assignments in favour of the Company or its nominees with the name of
the transferee date and consideration left blank as the Company may
require to enable the Company to vest the same in the Company or its
nominees or, after the occurrence of an Enforcement Event, any
purchaser to the intent that the Company may at any time after the
occurrence of an Enforcement Event without notice present them for
registration.
4.3 For so long as no Enforcement Event has occurred the Company will:
(a) hold all dividends interest and other income deriving from and
received by it in respect of the Charged Property for the
account of the Chargor and will promptly such dividends
interest and other income to the Chargor on request; and
(b) exercise all voting and other rights and powers attached to
the Charged Property as the Chargor may from time to time in
writing reasonably direct provided that such direction does
not adversely affect the Charged Property and is not otherwise
inconsistent with this Charge.
4.4 Without prejudice to anything else contained in this Charge the Chargor
shall at any time at the request of the Company but at the cost of the
Chargor promptly sign seal execute deliver and do all deeds instruments
transfers renunciations proxies notices documents acts and things in
such form as the Company may from time to time require for perfecting
or protecting the security over the Charged Property or any part of it
or for facilitating its realisation.
5 REPRESENTATIONS WARRANTIES AND COVENANTS BY THE CHARGOR
5.1 The Chargor represents and warrants to the Company and undertakes that:
(a) it is and will be the sole absolute and beneficial owner and
the registered holder of all of the Charged Property free from
Encumbrances and will not create or attempt to create or
permit to arise or subsist any Encumbrance (other than this
Charge) on or over the Charged Property;
(b) it has not sold or otherwise disposed of or agreed to sell or
otherwise dispose of or granted or agreed to grant any option
in respect of all or any of its right title and interest in
and to the Charged Property or any part of it and will not do
any of the foregoing at any time during the subsistence of
this Charge;
(c) the Shares and Securities are and will at all times be fully
paid and there are and will be no monies or liabilities
outstanding in respect of any of the Charged Property;
(d) the Charged Property has been and will at all times be duly
authorised and validly issued and is and will at all times be
free from any restriction on transfer or rights of
pre-emption;
4
<PAGE>
(e) it has and will at all times have the necessary power to enter
into and perform its obligations under this Charge;
(f) this Charge constitutes its legal valid binding and
enforceable obligations and is a security over all and every
part of the Charged Property effective in accordance with its
terms;
(g) this Charge does not and will not conflict with or result in
any breach or constitute a default under any agreement
instrument or obligation to which the Chargor is a party or by
which it is bound;
(h) all necessary authorisations and consents to enable or entitle
it to enter into this Charge have been obtained and will
remain in full force and effect at all times during the
subsistence of the security constituted by this Charge; and
(i) it will procure due compliance with its obligations in this
Charge by all nominees in whose name or names any Charged
Property is registered or holding any certificates or other
documents of title relating to any Charged Property.
5.2 The Chargor undertakes to the Company to provide a copy of any report
accounts circular or notice received in respect of or in connection
with any of the Charged Property to the Company forthwith upon the
receipt by the Chargor.
5.3 The Chargor shall promptly pay all calls or other payments due and will
discharge all other obligations in respect of any part of the Charged
Property and if the Chargor fails to fulfil any such obligations the
Company may, but shall not be obliged to, make such payments on behalf
of the Chargor in which event any sums so paid shall be reimbursed on
demand by the Chargor to the Company together with interest at the
Default Rate from the date of payment by the Company until repayment
whether before or after judgment.
5.4 The Chargor shall indemnify the Company on a full indemnity basis
against calls or other payments relating to the Charged Property and
any defect in the Chargor's title to the Charged Property and against
all actions proceedings losses costs claims and demands suffered or
incurred in respect of anything done or omitted in any way relating to
the Charged Property or in the exercise or purported exercise of the
powers contained in this Charge by the Company.
5.5 The Chargor shall not do or cause or permit anything to be done which
may adversely affect the security created or purported to be created by
this Charge or which is a variation or abrogation of the rights
attaching to or conferred by all or any part of the Charged Property
without the prior written consent of the Company and shall take such
action as the Company may in its discretion direct in relation to any
proposed compromise arrangement reorganisation conversion repayment
offer or scheme of arrangement affecting all or any part of the Charged
Property.
6 RIGHTS OF THE COMPANY
6.1 The Company may at its discretion (in the name of the Chargor or
otherwise subject to clause 4.3 whether before or after the occurrence
of any Enforcement Event and without any consent or authority on the
part of the Chargor) exercise the following rights and powers in
respect of the Charged Property:
5
<PAGE>
(a) any voting rights and any powers or rights which may be
exercised by the person or persons in whose name or names the
Charged Property is registered; and
(b) all the powers given to trustees by Section 10(3) and (4) of
the Trustee Act 1925 (as amended by Section 9 of the Trustee
Investments Act 1961) in respect of securities or property
subject to a trust.
6.2 Following the occurrence of an Enforcement Event all dividends interest
and other income forming part of the Charged Property shall, unless
otherwise agreed between the Company and the Chargor, be paid without
any set-off or deduction whatsoever to a suspense account and retained
by the Company until applied as hereinafter provided as part of the
Charged Property and any such monies which may be received by the
Chargor shall pending such payment be held in trust for the Company.
6.3 The powers conferred on the Company by this Charge are solely to
protect its interests in the Charged Property and shall not impose any
duty on it to exercise any such powers. The Company shall not have any
duty as to any Charged Property and shall incur no liability for:
(a) ascertaining or taking action in respect of any calls
instalments conversions exchanges maturities tenders or other
matters in relation to any Charged Property or the nature or
sufficiency of any payment whether or not the Company has or
is deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Charged
Property.
6.4 The Company shall not be liable to account as mortgagee in possession
in respect of all or any of the Charged Property and shall not be
liable for any loss upon realisation or for any failure to present any
interest coupon or any bond or stock drawn for repayment or for any
failure to pay any call or instalment or to accept any offer or to
notify the Chargor of any such matter or for any failure to ensure that
the correct amounts (if any) are paid or received in respect of the
Charged Property or for any negligence or default by its nominees or
agents or for any other loss of any nature whatsoever in connection
with the Charged Property.
7 NEW ACCOUNTS
If the Company receives notice (whether actual or otherwise) of any
subsequent mortgage or charge affecting all or any part of the Charged
Property the Company may open a new account or accounts with the
Chargor and, if it does not open a new account, it shall nevertheless
be treated as if it had done so at the time when it received or was
deemed to have received notice and as from that time all payments made
by the Chargor to the Company shall be credited or be treated as having
been credited to the new account and shall not operate to reduce the
amount secured by this Charge at the time when the Company received or
was deemed to have received such notice.
8 ENFORCEMENT
8.1 If any Enforcement Event shall occur and be continuing then:
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(a) the Company shall cease to be under any further commitment to
the Chargor and may at any time thereafter declare the Secured
Liabilities (or such of them as the Company may specify)
immediately due and payable or payable forthwith on demand;
and
(b) the security constituted by this Charge shall become
immediately enforceable and the power of sale and other powers
conferred by Section 101 of the LPA as varied or extended by
this Charge shall become immediately exercisable without the
restrictions contained in the LPA as to the giving of notice
or otherwise.
8.2 The following events shall constitute Enforcement Events:
(a) if there shall occur any Event of Default howsoever decided
under the Facility Agreement
(b) if the Chargor fails to pay any sums payable by it from time
to time to the Company on the due date therefor or fails to
comply with any term condition covenant or other provision of
this Charge or of any facility from the Company or any related
security document or to perform any of its obligations or
liabilities to the Company or if any representation or
warranty from time to time made to the Company by the Chargor
is or becomes incorrect or misleading in a material respect;
(c) if any indebtedness of the Chargor becomes due or capable of
being declared due before it's specified maturity date by
reason of breach or default on the part of the Chargor under
the terms of any agreement or instrument creating or
evidencing the same or is otherwise not paid when due (or
within any applicable period of grace) or any guarantee or
indemnity given by the Chargor is not honoured when due and
called upon;
(d) if an encumbrancer takes possession of or a trustee receiver
or similar officer is appointed in respect of all or any part
of the business or assets of the Chargor or a distress
execution attachment or other legal process is levied or
enforced upon or sued out against all or any substantial part
of such assets and is not discharged within 5 days;
(e) if the Chargor is deemed unable to pay its debts within the
meaning of Section 123 of the Insolvency Act 1986 or commences
negotiations with any one or more of its creditors with a view
to the general readjustment or rescheduling of its
indebtedness or makes a general assignment for the benefit of
or a composition with its creditors;
(f) if the Chargor (being a company) takes any corporate action or
other steps are taken or legal proceedings are started for its
winding-up dissolution or reorganisation (otherwise than for
the purposes of an amalgamation or reconstruction whilst
solvent on terms previously approved in writing by the
Company) or for the appointment of a receiver administrator
administrative receiver trustee or similar officer of it or of
all or a material part of its revenues and assets or (being an
individual) dies or becomes of unsound mind or has a
Companyruptcy petition presented or order made against him;
(g) if the Chargor suspends or threatens to suspend a substantial
part of its business operations (otherwise than for the
purposes of a reconstruction or amalgamation on terms
previously approved in writing by the Company) or
7
<PAGE>
any governmental authority permits or procures or threatens to
permit or procure any reorganisation transfer or expropriation
(whether with or without compensation) of a substantial part
of the business or assets of the Chargor;
(h) if any guarantee indemnity or other security for any of the
Secured Liabilities fails or ceases in any respect to have
full force and effect or to be continuing or is terminated or
disputed or in the opinion of the Company is in jeopardy
invalid or unenforceable or if this Charge or the security
created by it is disputed or in the opinion of the Company is
in jeopardy;
(i) if at any time it is or becomes unlawful for the Chargor to
perform or comply with any or all of its obligations under
this Charge the Facility Agreement any other agreement between
the Chargor and the Company or any of such obligations of the
Chargor are not or cease to be legal valid binding and
enforceable;
(j) if control (as defined in Section 435 of the Insolvency Act
1986) or the power to take control of the Chargor is acquired
by any person or company or group of associates (as defined in
such section) not having control of the Company at the date of
this Charge (unless with the prior consent in writing of the
Company);
(k) if in the opinion of the Company a material adverse change
occurs in the financial condition results of operations or
business of the Chargor; or.
(l) if there shall occur any Event of Default howsoever described
under the Facility Agreement.
8.3 The Secured Liabilities shall be deemed for the purposes of all powers
implied by statute to have become due and payable within the meaning of
Section 101 of the LPA immediately on the execution of this Charge and
Section 103 of the LPA (restricting the power of sale) and Section 93
of the LPA (restricting the right of consolidation) shall not apply to
this Charge.
9 POWER OF SALE
At any time after the security constituted by this Charge has become
enforceable the Company may without further notice to the Chargor
exercise the power to sell or otherwise dispose of the whole or any
part of the Charged Property, in such manner and on such terms and for
such consideration (whether payable immediately or by instalments) as
the Company shall in its absolute discretion think fit and without
liability for loss whatsoever, and may (without prejudice to any right
which it may have under any other provision of this Charge) treat such
part of the Charged Property as consists of money as if it were the
proceeds of such a sale or other disposal. The Company shall after the
payment of any claims having priority to the security created by this
Charge apply the proceeds without prejudice to the right of the Company
to recover any shortfall from the Chargor in paying the costs of sale
or other disposal and in or towards the discharge of the Secured
Liabilities in such order as the Company in its absolute discretion
thinks fit and the surplus (if any) of such proceeds shall be paid to
the person or persons entitled to it.
8
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10 PROTECTION OF THIRD PARTIES
No purchaser mortgagee or other person dealing with the Company shall
be concerned to enquire whether the Secured Liabilities have become
payable or whether any power which it is purporting to exercise has
become exercisable or whether any money is due under this Charge or as
to the application of any money paid raised or borrowed or as to the
propriety or regularity of any sale by or other dealing with the
Company. All the protection to purchasers contained in Sections 104 and
107 of the LPA shall apply to any person purchasing from or dealing
with the Company as if the Secured Liabilities had become due and the
statutory powers of sale in relation to the Charged Property had arisen
on the date of this Charge.
11 POWER OF ATTORNEY
11.1 The Chargor by way of security irrevocably appoints the Company to be
the attorney of the Chargor (with full powers of substitution and
delegation) for the Chargor and in its name or otherwise and on its
behalf and as its act and deed to sign seal execute deliver perfect and
do all deeds instruments transfers renunciations proxies notices
documents acts and things which the Chargor may or ought to do under
the covenants and provisions contained in this Charge and generally in
its name and on its behalf to exercise all or any of the powers
authorities and discretions conferred by or pursuant to this Charge or
by the LPA on the Company and to execute and deliver and otherwise
perfect any deed assurance agreement instrument or act which it may
deem proper in the exercise of all or any of the powers authorities or
discretions conferred on the Company pursuant to this Charge.
11.2 The Chargor ratifies and confirms and agrees to ratify and confirm
anything such attorney shall lawfully and properly do or purport to do
by virtue of clause 11.1 and all money expended by any such attorney
shall be deemed to be expenses incurred by the Company under this
Charge.
11.3 The Chargor undertakes to procure that all registered holders from time
to time of any of the Charged Property shall forthwith grant the
Company a power of attorney on the terms set out in clause 11.1 in
respect of such Charged Property.
12 DISCHARGE OF SECURITY
12.1 The security constituted by this Charge shall be continuing and shall
not be considered as satisfied or discharged by any intermediate
payment or settlement of the whole or any part of the Secured
Liabilities or any other matter or thing whatsoever including the
insolvency liquidation or administration of the Chargor and shall be
binding until all the Secured Liabilities have been unconditionally and
irrevocably paid and discharged in full.
12.2 Upon the irrevocable payment or discharge in full of the Secured
Liabilities the Company will or will procure that its nominees will (as
the case may be) at the request and cost of the Chargor re-transfer to
the Chargor all the Company's right title and interest in or to the
Charged Property freed from this Charge.
12.3 Upon any release of the Charged Property the Company or its nominees
(as the case may be) shall not be bound to release or transfer to the
Chargor the identical stocks shares or securities which were deposited
with or transferred to it or them and the Chargor shall accept shares
and securities of the same class and denomination or such other
securities as then represent the Charged Property.
9
<PAGE>
13 AVOIDANCE OF PAYMENTS
13.1 No assurance security or payment which may be avoided or adjusted under
any enactment relating to bankruptcy or insolvency or under Sections
238-245 of the Insolvency Act 1986 or similar legislation binding on
the Chargor in a jurisdiction other than England and Wales and no
release settlement or discharge given or made by the Company on the
faith of any such assurance security or payment shall prejudice or
affect the right of the Company to recover from the Chargor (including
the right to recover any monies which it may have been compelled by due
process of law to refund under the provisions of the Insolvency Act
1986 and any costs payable by it pursuant to or otherwise incurred in
connection with such process) or to enforce the security created by or
pursuant to this Charge to the full extent of the Secured Liabilities.
13.2 The Company shall be at liberty to retain the security created by or
pursuant to this Charge for a period of twenty-five months after the
Secured Liabilities shall have been paid and discharged in full
notwithstanding any release settlement discharge or arrangement given
or made by the Company on or as a consequence of such payment or
termination of liability. If at any time within the period of
twenty-five months after such payment or discharge a petition shall be
presented to a competent court for an order for the winding-up or the
making of an administration order in respect of the Chargor or the
Chargor shall commence to be wound-up or to go into administration or
any analogous proceedings shall be commenced by or against the Chargor
the Company shall be at liberty to continue to retain such security for
and during such further period as the Company may determine. The
Chargor agrees that in such event such security shall be deemed to have
continued to have been held as security for the payment and discharge
to the Company of all Secured Liabilities.
14 COSTS
The Chargor shall on demand and on a full indemnity basis pay to the
Company the amount of all costs and expenses and other liabilities
(including legal and out-of-pocket expenses and any Value Added Tax on
such costs and expenses) which the Company incurs in connection with:
(a) the preparation negotiation execution and delivery of this
Charge;
(b) any stamping or payment of stamp duty reserve tax or
registration of this Charge or any transfer of the Charged
Property pursuant hereto;
(c) any actual or proposed amendment of or waiver or consent under
or in connection with this Charge;
(d) any discharge or release of this Charge;
(e) the preservation or exercise (or attempted preservation or
exercise) of any rights under or in connection with and the
enforcement (or attempted enforcement) of this Charge; or
(f) dealing with or obtaining advice about any other matter or
question arising out of or in connection with this Charge;
together with interest thereon at the Default Rate from the date of
demand (or if earlier the date of payment by the Company) until the
date of payment by the Chargor whether before or after judgment.
10
<PAGE>
15 NOTICES
15.1 Any demand or notice by the Company may be delivered personally to the
Chargor or sent to the Chargor by post, telemessage, cable, telex or
telecopier at the address set out at the head of this Charge or such
other address(es) notified in writing to the Company.
15.2 Any such notice, demand or other correspondence required to be sent or
given for any purpose of this Charge shall be given, made or served by
sending it by recorded delivery, facsimile or telex or by delivering it
by hand. Proof of posting or despatch of any notice or communication
shall be deemed to be proof of receipt:
(a) in the case of a letter, on the second Business Day after
posting;
(b) in the case of a facsimile or telex, immediately on the date
of sending.
15.3 Any party may change its address for the receipt of notices by sending
written notice of such change in the manner set out in this Clause 15.
16 MISCELLANEOUS
16.1 No delay or omission on the part of the Company in exercising any right
or remedy under this Charge shall impair that right or remedy or
operate as or be taken to be a waiver of it nor shall any single
partial or defective exercise of any such right or remedy preclude any
other or further exercise under this Charge or that or any other right
or remedy.
16.2 The Company's rights under this Charge are cumulative and not exclusive
of any rights provided by law and may be exercised from time to time
and as often as the Company deems expedient.
16.3 Any waiver by the Company of any terms of this Charge or any consent or
approval given by the Company under it shall only be effective if given
in writing and then only for the purpose and upon the terms and
conditions if any on which it is given.
16.4 The security constituted by this Charge shall be in addition to and
shall not be prejudiced determined or affected by nor operate so as in
any way to determine prejudice or affect any Encumbrance which the
Company may now or at any time in the future hold for or in respect of
the Secured Liabilities or any part of them and shall not be prejudiced
by time or indulgence granted to any person or any abstention by the
Company in perfecting or enforcing any remedies securities guarantees
or rights it may now or in the future have from or against the Chargor
or any other person or any waiver release variation act omission
forbearance unenforceability indulgence or invalidity of any such
remedy security guarantee or right.
16.5 If at any time any one or more of the provisions of this Charge is or
becomes illegal invalid or unenforceable in any respect under any law
of any jurisdiction neither the legality validity or enforceability of
the remaining provisions of this Charge nor the legality validity or
enforceability of such provision under the law of any other
jurisdiction shall be in any way affected or impaired as a result.
16.6 Any statement certificate or determination of the Company as to the
Secured Liabilities or without limitation any other matter provided for
in this Charge shall in the absence of manifest error be conclusive and
binding on the Chargor.
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17 LAW AND JURISDICTION
17.1 This Charge is governed by and shall be construed in accordance with
English law.
17.2 The Chargor irrevocably agrees for the exclusive benefit of the Company
that the courts of England shall have jurisdiction to hear and
determine any suit action or proceeding and to settle any dispute which
may arise out of or in connection with this Charge and for such
purposes irrevocably submits to the jurisdiction of such courts.
17.3 Nothing contained in this Clause shall limit the right of the Company
to take proceedings against the Chargor in any other court of competent
jurisdiction nor shall the taking of any such proceedings in one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction whether concurrently or not (unless precluded by
applicable law).
17.4 The Chargor irrevocably waives any objection which it may have now or
in the future to the courts of England being nominated for the purpose
of this Clause on the ground of venue or otherwise and agrees not to
claim that any such court is not a convenient or appropriate forum.
17.5 The Chargor authorises and appoints of (or such other person being a
firm of solicitors in England as it may from time to time substitute by
notice to the Company) to accept service of all legal process arising
out of or connected with this Charge and service on such person (or
substitute) shall be deemed to be service on the Chargor. Except upon
such a substitution the Chargor shall not revoke any such authority or
appointment shall at all times maintain an agent for service of process
in England and if any such agent ceases for any reason to be an agent
for this purpose shall forthwith appoint another agent and advise the
Company accordingly.
IN WITNESS whereof the Chargor has executed and delivered this Charge
as a Deed the day and year first before written.
12
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SCHEDULE
(a) 5,499,999 Ordinary Shares in Capital Media (UK) Limited of
US$0.01;
(b) 1 Ordinary Share in Capital Media (UK) Limited of(pound)1.
13
<PAGE>
<TABLE>
<CAPTION>
ATTESTATIONS
<S> <C>
EXECUTED as a Deed on behalf )
of CAPITAL MEDIA GROUP )
LIMITED a company )
incorporated in the State of )
Nevada United States of )
America by C.R. Koppel ) /s/ CHARLES KOPPEL
and Barry Llewellyn ) /s/ BARRY LLEWELLYN
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to )
sign this document on behalf )
of the Company )
EXECUTED as a Deed on behalf of )
INSTAR HOLDINGS INC a company )
incorporated in the Marshall islands )
by Anthony Michael Bousfield, Director ) /s/ ANTHONY MICHAEL BOUSFIELD
and Philip Oscar Gallienne, Secretary ) /s/ PHILIP OSCAR GALLIENNE
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign )
this document on behalf of the Company )
</TABLE>
14
EXHIBIT 10.5
DATED 31 October 1996
GUARANTEE
INSTAR HOLDINGS INC
as Beneficiary (1)
THE GUARANTORS named in the (2)
Schedule
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions and Interpretation 1
2 Guarantee 2
3 The Beneficiary and the Principal 3
4 Payments 3
5 Variations, waivers etc. 4
6 New Account with the Principal 4
7 Set-off 4
8 Security from Principal 5
9 Subrogation etc. 5
10 Conditional discharge and retention of security 5
11 Joint and several obligations 6
12 Representations and warranties 6
13 Application of Proceeds, etc. 6
14 Benefit of Guarantee 7
15 Notices 8
16 Severability 8
17 Counterparts 8
18 Law and jurisdiction 8
THE SCHEDULE 9
The Guarantors 9
<PAGE>
DATE
31 October 1996
PARTIES
(1) INSTAR HOLDINGS INC of R.R.E Commercial Centre, Majuro, Marshall
Islands (the "Beneficiary")
(2) THE PARTIES named in the Schedule (together the "Guarantors" and singly
a "Guarantor")
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Guarantee, (including the Introduction) the following words and
expressions shall have the following meanings:
agreed form in relation to any agreement or
document the form agreed between the
parties to the Guarantee and
initialled by the Guarantor and the
Beneficiary by way of identification
only.
Business Day a day (other than a Saturday or
Sunday) on which banks are generally
open for business in London and New
York.
Currency of Account the currency in which any
Indebtedness is expressed.
Facility Letter a Facility Letter dated [ ]
and amde between the Principal and
the Beneficiary
Guarantee this Guarantee and Indemnity as
amended or supplemented from time to
time.
Indebtedness all the Principal's present or
future indebtedness whatever and
wherever to the Beneficiary, under
the Facility Letter, whether actual,
contingent, present or future and
whether or not matured or accrued
due and whether incurred solely,
severally or jointly with any other
person in whatever currency,
together with interest, commission,
bank charges and any other costs,
charges and expenses (on a full
indemnity basis) charged or incurred
by the Beneficiary in preparing,
negotiating, perfecting, protecting
or enforcing or attempting to
enforce or protect this Guarantee or
any other security (and its rights
thereunder) held by the Beneficiary
from time to time.
Principal Capital Media (UK) Limited (No.
3025201) of 25 St. James Street,
London W1M 5HY and where more than
one person is comprised in the term
<PAGE>
"Principal", reference to the
Principal shall (where the context
admits) take effect as a reference
to any of such persons and, where
the Principal is a firm, shall
include the person or persons from
time to time constituting the firm,
whether or not under the same style
or firm name and notwithstanding any
interim dissolution and
reconstruction. Where by any
agreement with the Principal and the
Beneficiary any person assumes all
or any part of the liability of the
Principal to the Beneficiary in
substitution for the Principal, the
Guarantors' liability shall not be
discharged, reduced or affected, but
this Guarantee shall take effect as
if the expression the "Principal"
included such person.
1.2 Clause headings are for ease of reference only. References to clauses
are to clauses of this Guarantee unless otherwise stated.
1.3 Words and expressions defined in the Facility Letter shall have the
same meaning in this Guarantee
2 GUARANTEE
2.1 In consideration of the Beneficiary now making available or continuing
to make available banking facilities or any other financial
accommodation whatsoever to the Principal at the request of the
Guarantors, each of the Guarantors unconditionally and irrevocably
guarantees payment to the Beneficiary on demand of all Indebtedness
(subject to applicable law) and, as primary obligor and not merely as a
surety, agrees to indemnify the Beneficiary on demand from and against
any loss it may incur as a result of or in connection with its having
now or subsequently advanced any moneys to the Principal or having now
or subsequently incurred any obligation on behalf of or at the request
of the Principal.
2.2 This Guarantee shall:
(a) be additional to any other guarantee or security now or
subsequently held by the Beneficiary in respect of all
Indebtedness;
(b) be a continuing security, shall remain in force until
determined by three months' notice in writing from the
Guarantors and shall extend to secure all Indebtedness
existing at the close of business on the day on which such
notice to determine expires;
(c) apply to the ultimate balance of the Indebtedness and shall
not be discharged or otherwise affected by any intermediate
payment or satisfaction of any part of the Indebtedness or
otherwise the Guarantors' obligations under this Guarantee;
(d) not be discharged or affected by any failure of, or defect or
informality in, any security given by or on behalf of the
Principal in respect of any Indebtedness, nor by any legal
limitation, disability, incapacity or lack of any borrowing or
other powers of the Principal or fraud of the Principal or any
other person or the non-existence of any matter which each of
the Guarantors considers expressly or impliedly or may be
deemed to consider a condition precedent to the giving of
their Guarantee (and where any such
2
<PAGE>
matter is considered a condition precedent it is expressly
waived by the Guarantors), or lack of authority of any
director or other person appearing to be acting for the
Principal in any matter in respect of any Indebtedness or by
any other fact or circumstances (whether known or not to any
of the Guarantors and/or the Beneficiary) as a result of which
any Indebtedness incurred or purported to be incurred by or on
behalf of the Principal is or may be rendered invalid,
illegal, void or unenforceable by the Beneficiary against the
Principal in whole or in part and notwithstanding the
non-existence of any matter as is referred to above and so
that:
(i) all such circumstances shall be disregarded as
between the Guarantors and the Beneficiary, and any
Indebtedness which would otherwise have arisen shall
be treated as Indebtedness due and owing to the
Beneficiary from the Principal for the purposes of
this Guarantee, whether the same is recoverable by the
Beneficiary from the Principal or not; and
(ii) if and so far as such moneys shall not be so
recoverable, the Guarantors shall be liable to the
Beneficiary as principal debtor and by way of
indemnity for the same amount as that for which the
Guarantors would have been liable by way of guarantee,
if valid and enforceable Indebtedness had been created
between the Beneficiary and the Principal; and
(e) remain the property of the Beneficiary.
2.3 A certificate signed on behalf of the Beneficiary of the amount for the
time being of any Indebtedness and/or the amounts due to the
Beneficiary shall be conclusive evidence for all purposes against the
Guarantors, unless manifestly incorrect.
3 THE BENEFICIARY AND THE PRINCIPAL
Before enforcing this Guarantee, the Beneficiary shall not be obliged
to take any action or obtain any judgment, nor make or file any claim
in the bankruptcy, dissolution or winding up of the Principal or any
other person, nor make any demand of the Principal, nor enforce any
other security held by it for any Indebtedness. The Beneficiary need
not advise the Guarantors of its dealings with the Principal or of any
default by the Principal of which the Beneficiary may have knowledge.
4 PAYMENTS
4.1 All payments by the Guarantors under this Guarantee shall be made in
the Currency of Account, without set-off or counter-claim and without
deduction for any taxes, duties, charges, fees, deductions,
withholdings, or restrictions whatever. If a Guarantor is obliged by
law to make any such deduction, the amount due from that Guarantor
shall be increased to the extent necessary to ensure that, after the
making of such deduction, the Beneficiary receives a net amount equal
to the amount it would have received had no such deduction been
required to be made.
4.2 Any payment made to or for the account of the Beneficiary in a currency
other than the Currency of Account shall only discharge the Guarantors
to the extent of the amount in the Currency of Account which the
Beneficiary is able in accordance with its normal practices, to
purchase on the date of receipt of such payment with the other currency
so received. If the amount of the Currency of Account which the
Beneficiary is so able to purchase falls short of the amount originally
due to the
3
<PAGE>
Beneficiary under the relevant liability of the Principal or
under the Guarantee, the Guarantors shall indemnify the Beneficiary on
demand against any loss or damage arising as a result.
4.3 The indemnity in Clause 4.2 shall constitute an independent obligation
from the Guarantors' other obligations, shall give rise to an
independent cause of action, shall apply irrespective of any indulgence
granted by the Beneficiary from time to time and shall continue in
effect notwithstanding any judgment or order for a liquidated sum or
sums in respect of any Indebtedness or in respect of amounts due under
this Guarantee.
5 VARIATIONS, WAIVERS ETC.
The Beneficiary may, without notice to, or consent from, the Guarantors
and without reducing or extinguishing the Guarantors' liability:
(a) renew, vary, determine or increase any accommodation or credit
given to the Principal;
(b) renew, modify, release or abstain from perfecting or enforcing
any security or guarantee now or subsequently held from the
Principal or any other person, including any Guarantor, in
respect of the Indebtedness;
(c) grant time or indulgence to or compound with the Principal or
any other person or Guarantor; and
(d) do or omit to do anything which but for this provision might
operate to exonerate or discharge the Guarantors or any of
them from any of their respective obligations and this
Guarantee shall not be discharged nor affected by anything
which would not have discharged or affected the Guarantors'
respective liability if the Guarantors had been principal
debtors to the Beneficiary instead of guarantors.
6 NEW ACCOUNT WITH THE PRINCIPAL
If this Guarantee is determined or called in by demand made by the
Beneficiary, the Beneficiary may in its discretion open a new account
or accounts with the Principal or any other person for whose
liabilities this Guarantee is available as security. If the Beneficiary
does not open a new account, it shall nevertheless be deemed to have
done so at the time of determination or calling in. As from that time,
all payments made to the Beneficiary shall be credited or be deemed to
be credited to the new account opened or deemed to have been opened and
shall not operate to reduce the amount for which this Guarantee is
available as security at that time.
7 SET-OFF
7.1 The Beneficiary shall, with the Guarantors' irrevocable authority and,
in addition to and without prejudice to any rights the Beneficiary may
have whether:
(a) arising by operation of law or otherwise in consequence of the
relationship between the parties to this Guarantee or any of
the Security Documents or the Facility Letter; or
(b) by way of rights of general lien or set-off which may
otherwise exist,
4
<PAGE>
be entitled without notice at any time and from time to time, set-off
any amounts due from the Beneficiary to any Guarantor of whatever
nature and in whatever currency denominated, in or towards satisfaction
of any sums due and payable from the Guarantors' to the Beneficiary
under this Guarantee or any of the Security Documents or the Facility
Letter.
7.2 In effecting any such set-off or transfer, the Beneficiary shall be
entitled to convert one currency into another currency using the spot
rate of exchange of Lloyds Bank PLC between such currencies prevailing
on the date of such set-off or transfer. If the liability in respect of
which the Beneficiary is exercising the Beneficiary's rights of set-off
is contingent, or not yet payable, it shall automatically be
accelerated, and shall accordingly be due and payable, before and as at
the time of such set-off. Provided that the Beneficiary shall not be
obliged to exercise any right given to the Beneficiary by Clause 7.
8 SECURITY FROM PRINCIPAL
Each of the Guarantors warrants that it does not hold and undertakes
that it will not take or hold without the Beneficiary's written consent
in connection with this Guarantee any security whatever from the
Principal. Any security so taken (whether with or without the consent
of the Beneficiary) shall be held in trust for the Beneficiary and as
security for the Guarantor's liability under this Guarantee. The
Guarantors shall deposit such security and any document relating to it
with the Beneficiary as soon as practicable which deposit shall be by
way of security.
9 SUBROGATION ETC.
Until all amounts due or to become due from the Guarantors under this
Guarantee have been paid and discharged in full, the Guarantors shall
not be entitled to share in any security held or money received or
receivable by the Beneficiary on account of that balance or to stand in
the place of the Beneficiary in respect of any security or money. Until
such balance has been discharged in full the Guarantors shall not take
any step to enforce any right or claim whatever against the Principal
in respect of any monies paid by the Guarantors to the Beneficiary
under this Guarantee or have or exercise any rights as surety in
competition with or in priority to any claim of the Beneficiary. Each
Guarantor will, if required by the Beneficiary, prove in a winding up
or bankruptcy on the basis that the Guarantors hold the benefits of
such claims on trust for the Beneficiary.
10 CONDITIONAL DISCHARGE AND RETENTION OF SECURITY
10.1 Any settlement, discharge or release between the Guarantors and the
Beneficiary shall be conditional on no security given or payment made
to the Beneficiary by the Principal or any other person being avoided
or reduced by virtue of any enactments relating to bankruptcy or
liquidation or any other law for the time being in force. The
Beneficiary shall be entitled to recover the value or amount of any
such security or payment from the Guarantor subsequently as if such
settlement, discharge or release had not occurred. The Beneficiary may
exercise the rights created by Clause 7 in respect of the Guarantors'
liability under this Clause (whether actual or contingent).
10.2 The Beneficiary may retain any security held by it for the Guarantors'
liability under this Guarantee for the relevant period after repayment
of all sums due to the Beneficiary from the Principal. If within the
relevant period after such repayment a petition shall be presented for
an order for the winding-up of the Principal or the
5
<PAGE>
Principal shall commence to be wound up, the Beneficiary may continue
to retain such security or any part of it for such further period as
the Beneficiary shall determine in its discretion. In this Clause 10.2,
the "RELEVANT PERIOD" means the relevant statutory period, extended by
one month, within which any payment or security made to or held by the
Beneficiary may be avoided or invalidated under any enactment relating
to insolvency or otherwise.
11 JOINT AND SEVERAL OBLIGATIONS
11.1 Notwithstanding anything to the contrary in this Guarantee, each of the
Guarantors shall:
(a) be jointly and severally responsible for the payment of the
Indebtedness and other amounts as may from time to time be due
from the Guarantors under this Guarantee and shall otherwise
be joint and severally liable for each and every obligation
undertaken, or liability incurred, under this Guarantee; and
(b) remain so jointly and severally liable notwithstanding that
either of the Guarantors has not for any reason whatever
executed this Guarantee or is not for any reason whatever
effectually bound by the terms of this Guarantee and
notwithstanding that this Guarantee may be invalid or
unenforceable against either of the Guarantors (whether or not
the deficiency is known to the Beneficiary or either of the
Guarantors) or notwithstanding any fraud or non-existence of
any matter which either of the Guarantors may have considered
fundamental to their respective obligations under this
Guarantee or notwithstanding the discharge by the Beneficiary
of either of the Guarantors from their obligations under this
Guarantee.
11.2 This Guarantee shall not be revoked or impaired as to any of the
Guarantors by the incapacity or insolvency of any of the Guarantors.
All references to the Guarantors shall take effect as references to any
of such persons.
11.3 The Beneficiary may release or discharge any of such parties from their
obligations under this Guarantee or accept any composition from or make
any other arrangements with either of the Guarantors without releasing
or discharging the other(s) or otherwise prejudicing or affecting the
Beneficiary's rights and remedies against the other(s).
12 REPRESENTATIONS AND WARRANTIES
Each of the Guarantors represents and warrants to the Beneficiary (such
warranties and representations to continue so long as the Guarantee
remains subsisting and to be updated by reference to the subsisting
facts and circumstances) that so far as each Guarantor is aware at the
date hereof:
(a) each are duly incorporated companies with limited liability
under their relevant jurisdictions, are validly existing and
no liquidator, receiver, administrator, administrative
receiver or similar or analogous official under any relevant
law has been appointed in respect of either of them or any
part of their respective assets and no action is currently
being taken with a view to appointing any such liquidator,
receiver, administrative receiver, administrator or similar or
analogous official under any relevant law;
6
<PAGE>
(b) the execution and delivery by each of the Guarantors of this
Guarantee, the performance and observance of each of them of
their respective obligations under this Guarantee does not and
will not violate or result in a breach of or, exceed any power
granted to either of the Guarantors or their respective
directors by:
(i) any law, rule or regulation to or by which any of the
Guarantors, their respective businesses, property or
assets is subject or bound; or
(ii) any judgment, order, injunction, determination, award
or ruling of any court or arbitrator or any judicial
administrative or governmental authority to or by
which either of the Guarantors is subject to or bound;
or
(iii) the Memorandum and Articles of Association or other
incorporating and constitutional documents of either
of the Guarantors; or
(iv) any deed, agreement, franchise, concession or other
instrument to which either of the Guarantors is a
party or which may be binding them or which may affect
its business or any of its properties or assets.
(c) it is not necessary to ensure the legality, validity,
enforceability or admissability in evidence of this Guarantee
that it or any other document be stamped, registered, filed,
notarised or recorded in the United Kingdom or the
jurisdiction of their respective incorporation or residence
(if different) and this Guarantee is in proper form for its
enforcement in the relevant jurisdiction of each of the
Guarantors;
(d) neither of the Guarantors is in default in respect of any
material financial commitment or obligation, including, but
not limited to, any guarantee, indemnity, bond or like
obligation or in breach of any agreement or arrangement or
statutory or other legal requirement to an extent or in a
manner which might have a material adverse effect on the
business assets or financial condition of the Guarantors or
either of them; and
(e) no taxes, levies, imports or duties of whatever nature are
imposed by withholding or otherwise on any payment to be made
by any of them under this Guarantee or are imposed on or by
virtue of the execution or delivery by either of them of this
Guarantee.
13 BENEFIT OF GUARANTEE
This Guarantee shall be binding on the Guarantors and their respective
successors and permitted assigns and shall enure to the benefit of and
be enforceable by the Beneficiary and its successors and assigns, but
so that each of the Guarantors may not assign or otherwise transfer any
of their respective rights or obligations under this Guarantee.
14 NOTICES
14.1 Any demand or notice by the Beneficiary may be delivered personally to
the Guarantors or sent to the Guarantors by post, telemessage, cable,
telex or telecopier at their respective addresses set out in the
Schedule or such other address(es) notified in writing to the
Beneficiary.
7
<PAGE>
14.2 Any such notice, demand or other correspondence required to be sent or
given for any purpose of this Guarantee shall be given, made or served
by sending it by recorded delivery, facsimile or telex or by delivering
it by hand. Proof of posting or despatch of any notice or communication
shall be deemed to be proof of receipt:
(a) in the case of a letter, on the second Business Day after
posting;
(b) in the case of a facsimile or telex, immediately on the date
of sending.
14.3 Any party may change its address for the receipt of notices by sending
written notice of such change in the manner set out in this clause 14.
15 SEVERABILITY
Each of the provisions of this Guarantee is severable and distinct from
the others and if at any time one or more of the provisions is or
becomes invalid, illegal or unenforceable, the validity, legality
and/or enforceability of the remaining provisions of this Guarantee
shall not in any way be affected or impaired by it.
16 COUNTERPARTS
This Guarantee and any amendment or addition to it may be executed in
any number of counterparts each of which taken together shall be deemed
to constitute one and the same agreement and each of which individually
shall be deemed to be an original, with the same effect as if the
signature on each counterpart were on the same original.
17 LAW AND JURISDICTION
17.1 This Guarantee shall be governed by and construed in accordance with
English law.
17.2 For the exclusive benefit of the Beneficiary, each of the Guarantors
irrevocably submits to the exclusive jurisdiction of the English
courts. Any writ, judgment or other legal process shall be sufficiently
served on the Guarantors and each of them if delivered to the process
agent named by it in column (3) of the Schedule.
17.3 Nothing in Clause 17.2 shall prejudice or be construed as to prejudice
the Beneficiary's right to bring any action in any other such country
having or claiming jurisdiction (whether concurrently or not).
8
<PAGE>
THE SCHEDULE
THE GUARANTORS
(1) (2) (3)
NAME ADDRESS PROCESS AGENT
(INCLUDING TELEX AND
FACSIMILE NUMBERS)
Capital Media Group Limited
Onyx Television GmbH
9
<PAGE>
<TABLE>
<CAPTION>
ATTESTATIONS
<S> <C>
EXECUTED as a Deed for and on behalf )
of CAPITAL MEDIA GROUP LIMITED )
a company incorporated in the State )
of Nevada United States of America )
by C.R. Koppel ) /s/ CHARLES KOPPEL
and Barry Llewellyn ) /s/ BARRY LLEWELLYN
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign this )
document on behalf of the Company )
EXECUTED as a Deed on behalf of )
ONYX TELEVISION GMBH a company incorporated )
in the State of Germany )
by Roland M. Mueller ) /s/ ROLAND M. MUELLER
and )
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign the )
document on behalf of the Company )
</TABLE>
10
EXHIBIT 10.6
DATED 31 October 1996
DEED OF COUNTER-INDEMNITY
CAPITAL MEDIA (UK) LIMITED (1)
UNIVERSAL INDEPENDENT
HOLDINGS LIMITED (2)
<PAGE>
DATE
31 October 1996
PARTIES
(1) CAPITAL MEDIA (UK) LIMITED, a company incorporated in England and Wales
with registered number 3025201, whose registered office is at 25 James
Street, London W1M 5HY (the "Indemnifier"); and
(2) UNIVERSAL INDEPENDENT HOLDINGS LIMITED of PO Box 438 Tropic Isle
Building Wickhams Cay Road Town Tortola British Virgin Islands (the
Beneficiary").
INTRODUCTION
At the request of the Indemnifier, the Beneficiary procured the Bank
Guarantee, but on the condition that the Indemnifier procured the
release of the Beneficiary from the Obligations by June 1996. The
Beneficiary has agreed to continue to maintain the Bank Guarantee and
be liable in respect of the Obligations, subject to the Indemnifier
providing this Counter-Indemnity and supporting security required by
the Beneficiary.
OPERATIVE PROVISIONS
1 DEFINITIONS
The following definitions apply throughout this Counter-Indemnity,
unless the context requires otherwise:
Bank Guarantee the guarantee dated 8
December 1995 from Merrill Lynch in
favour of PTT Telecom BV for an
initial amount of ECU 2,000,000
Deposit any deposit(s) of up to ECU
2,000,000 deposited by the
Beneficiary with Merrill Lynch
acting through any of its branches
worlwide as security for and as a
condition to Merrill Lynch issuing
the Bank Guarantee
Merrill Lynch Merrill Lynch International
Bank Limited
Obligations all monies and liabilities now or at
any time after the date of this
Counter-Indemnity becoming due,
owing, or incurred by the
Beneficiary to Merrill Lynch,
whether pursuant to an indemnity,
guarantee or otherwise, whether
actual or contingent, present or
future, in connection with the
Beneficiary procuring the Bank
Guarantee, including without
prejudice to the generality of the
foregoing, the loss of all or any
part of the Deposit as a result of
Merrill Lynch making a payment under
the Bank Guarantee
Stipulated Rate in relation to any sum not paid
when due, or (in the case of sums
payable on demand) when demanded,
<PAGE>
the rate per annum which is two per
cent (2%) above the base rate of
Barclays Bank PLC from time to time
calculated on a day to day basis
including the date of default but
excluding the date of payment
Taxes includes all present and future
income and other taxes, deductions
and withholdings whatsoever,
together with interest and penalties
thereon
2 INTERPRETATION
2.1 The headings in this Counter-Indemnity are for convenience and are to
be ignored in construing this Counter-Indemnity.
2.2 Words importing the singular include the plural, and vice versa.
2.3 References to laws and regulations include amendments and
re-enactments.
2.4 References in this Counter-Indemnity to it or another document shall be
construed as a reference to this Counter-Indemnity, or the other
document, as from time to time novated, amended, varied or
supplemented.
3 INDEMNITY AND FEES
3.1 In consideration of the Beneficiary procuring the Bank Guarantee and
continuing to maintain the Bank Guarantee at the request of the
Indemnifier, the Indemnifier shall indemnify the Beneficiary and keep
the Beneficiary indemnified against all demands, claims, liabilities,
losses, costs and expenses whatsoever (including the loss of any part
of any Deposit and all legal and other costs, charges and expenses the
Beneficiary may incur in connection with the Obligations, or in
enforcing, or attempting to enforce, the Beneficiary's rights under
this Counter-Indemnity) arising in relation to or out of, or as the
result of the Beneficiary having undertaken the Obligations and/or
procuring the Bank Guarantee.
3.2 The Indemnifier irrevocably authorise the Beneficiary to make any
payments or comply with any demands which appear or purport to be
claimed or made by Merrill Lynch in connection with the Bank Guarantee
and/or in respect of the Obligations, without any reference to or
further authority from the Indemnifier, without enquiry into the
justification therefor or the validity, genuineness or accuracy of any
statement or certificate received by the Beneficiary with respect to or
under the Bank Guarantee and/or the Obligations and despite any
contestation on the part of the Indemnifier, and the Indemnifier agrees
that any such claim or demand shall be binding on the Indemnifier and
shall, as between the Indemnifier and the Beneficiary be accepted by
the Indemnifier as conclusive evidence that the Beneficiary was liable
to pay or comply with the same.
3.3. The liabilities and obligations of the Indemnifier under this
Counter-Indemnity shall remain in force notwithstanding any act,
omission, event or matter whatsoever, except subject to clause 3.4, an
absolute discharge or release of the Indemnifier signed by the
Beneficiary.
3.4 Any discharge, release, composition or arrangement which the
Indemnifier may effect with the Beneficiary shall be deemed to be made
subject to the condition that it will be void if payment or security
which the Beneficiary may previously have
-2-
<PAGE>
received or may later receive under this Counter-Indemnity is set
aside under any applicable law or proves to have been for any reason
invalid.
3.5 Without prejudice to clauses 3.3 and 3.4, none of the liabilities or
obligations of the Indemnifier under this Counter-Indemnity shall be
impaired by:-
(a) the Indemnifier or the Beneficiary granting any time or any
indulgence whatsoever or making any settlement, composition or
arrangement with Merrill Lynch or any other person;
(b) the Indemnifier or the Beneficiary asserting, failing or
neglecting to assert or delaying in asserting, or waiving any
of their rights or remedies arising under the Bank Guarantee,
this Counter-Indemnity, in respect of the Obligations or
otherwise;
(c) the Beneficiary, with or without the Indemnifier's consent,
making any variation to the Bank Guarantee, the terms of the
Deposit or any Obligations.
3.6 On or before 31 December 1997, the Indemnifier shall procure that all
the Obligations shall be released and the Deposit released to the
Beneficiary. This Counter-Indemnity shall remain in force
notwithstanding compliance by the Indemnifier with the terms of this
clause 3.6.
4 PAYMENTS
4.1 All payments to be made by the Indemnifier under this Deed shall be
made to the Beneficiary:
(a) in cleared funds in the currency or currencies in which the
Obligations are from time to time denominated;
(b) without set-off or counterclaim and free and clear of any
Taxes and without any deduction or withholding whatsoever,
except any deduction or withholding which is required by law;
and
(c) to such account and otherwise in such manner as the
Beneficiary may require.
4.2 If any such payment is subject to any Taxes or other deduction or
withholding the Indemnifier shall pay to the Beneficiary such
additional amounts as the Beneficiary may certify as necessary to
enable the Beneficiary to receive a net amount, after payment of such
Taxes or other deduction or withholding, equal to the full amount which
the Beneficiary would have received had such payment not been subject
to such Taxes or other deduction or withholding.
4.3 The Indemnifier shall within (30) thirty days provide the Beneficiary
with evidence and other appropriate documentation of payment of any
Taxes.
4.4 If the Indemnifier fails to pay any amount to the Beneficiary upon
demand in accordance with clause 3.1, the Indemnifier shall pay
interest on the amount from time of the demand up to the time of actual
payment (as well after as before judgement) at the Stipulated Rate.
-3-
<PAGE>
5 RIGHTS CUMULATIVE, WAIVER
5.1 The rights of the Beneficiary under this Counter-Indemnity:
(a) are cumulative and are in addition to their rights under the
general law;
(b) may be exercised as often as they consider appropriate; and
(c) may be waived only expressly in writing.
5.2 Any failure or delay in the exercise of any such rights shall not be
treated as a waiver.
6 SEVERANCE
Each of the provisions of this Counter-Indemnity is severable and
distinct from the others. If one or more provision is or becomes
invalid, illegal or unenforceable, then this shall not affect the
validity, legality and enforceability of the remaining provisions.
7 ASSIGNMENT
7.1 This Deed shall be binding upon the Indemnifier and its successors and
assigns and enure to the benefit of the Beneficiary and its successors
and assigns, but the Indemnifier may not assign all or any of its
rights under this Counter-Indemnity.
7.2 The Beneficiary may assign all or any of its rights under this
Counter-Indemnity to any person.
7.3 The Beneficiary are hereby authorised to disclose to any proposed
assignee, transferee or sub-participant such information in their
possession concerning the Indemnifier as the Beneficiary deems fit.
8 COMMUNICATIONS
8.1 Any demand, consent, record, election, certificate or notice required
or permitted to be given under this Counter-Indemnity shall be in
writing and sent by registered or recorded delivery post or facsimile,
or delivered by hand, addressed to the relevant party at the address or
the facsimile number set out in this Counter-Indemnity or in either
case to such other person or address or facsimile number as any party
shall by not less than five (5) business days' written notice have
advised the others in writing. Any such demand, consent, record,
election, certificate or notice shall be deemed (if given as aforesaid)
to have been received by the party to whom it is addressed:
(a) two (2) business days after posting in the case of despatch by
post as aforesaid; or
(b) if sent by facsimile, on the business day on which it was
transmitted if transmission takes place during normal business
hours otherwise it is deemed to be received when normal
business hours next commence; or
(c) on delivery if delivered by hand.
8.2 In this Clause:
(a) "normal business hours" are 9.30 am to 5.30 pm on a business
day; and
-4-
<PAGE>
(b) "business days" are days (not being Saturdays or Sundays or
public holidays) on which banks are open for business in
London.
9 GOVERNING LAW
This Deed shall be governed by and construed in accordance with English
law, and the parties irrevocably submit to the exclusive jurisdiction
of the English courts.
-5-
<PAGE>
ATTESTATIONS
EXECUTED and DELIVERED as a Deed )
by CAPITAL MEDIA (UK) LIMITED )
acting by two directors/a director )
and its secretary: )
Director /s/ BARRY LLEWELLYN
-----------------------
Director/Secretary /s/ CHARLES KOPPEL
EXECUTED as a Deed on behalf of )
UNIVERSAL INDEPENDENT )
HOLDINGS LIMITED incorporated in )
the British Virgin Islands )
by ) /s/
and ) /s/
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign the )
document on behalf of the Company )
-6-
EXHIBIT 10.7
UNIVERSAL INDEPENDENT HOLDINGS LIMITED
PO BOX 438
TROPIC ISLE BUILDING
WICKHAMS CORY
ROAD TOWN
TORTOLA
BRITISH VIRGIN ISLANDS
Capital Media (UK) Limited 31 October 1996
25 Jane Street
London WIM 5HY
Dear Sirs
FINANCINGS ARRANGEMENTS BY OURSELVES ("UNIVERSAL INDEPENDENT HOLDINGS
LIMITED") IN RESPECT OF THE LEASE OF A TRANSPONDER FROM PTT TELECOM BV
TO YOURSELVES CAPITAL MEDIA (UK) LIMITED (THE "LEASE").
We refer to the financing arrangements in respect of the Lease and in
particular the Security Assignment, the Debenture and the Counter
Indemnity (the "Documents") which you granted in our favour as security
in respect of such financing.
We confirm that it is our intention if circumstances remain as they are
at the date hereof that although the Documents refer to all monies
owing from yourselves to ourselves that such all monies provision will
secure only the monies outstanding to us under the Counter Indemnity
which you entered into in favour of ourselves (including all costs and
expenses) as there are no other obligations outstanding between us as
far as we are aware at the date hereof.
This letter is governed and shall be construed in accordance with the
laws of England.
Signed for and on behalf of
/s/
--------------------------------------
UNIVERSAL INDEPENDENT HOLDINGS LIMITED
Accepted and Agreed
/s/ CHARLES KOPPEL
--------------------------------------
CAPITAL MEDIA (UK) Limited
DATED 31 October 1996
DEBENTURE
(Fixed and Floating Charge)
(1)
UNIVERSAL INDEPENDENT HOLDINGS LIMITED
(2)
CAPITAL MEDIA (UK) LIMITED
Ref : 441/E8948.5/CF:97271.4/hs
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions 1
2 Charge 2
3 Covenants 3
4 Book Debts 5
5 Receiver 6
6 Miscellaneous 7
7 Events of Default 9
8 Power of Attorney 10
9 Costs and Indemnity 10
10 Severance 11
11 Further Assurance 11
12 Notices 11
13 Benefit and Assignment of Debenture 11
14 Law 12
ATTESTATION 13
<PAGE>
DATE 31 October 1996
PARTIES
(1) UNIVERSAL INDEPENDENT HOLDINGS LIMITED whose registered office is at
PO Box 438, Tropic Isle Building, wickhams Cay, Road Town, Tortola,
British Virgin Islands (the "Lender"); and
(2) CAPITAL MEDIA (UK) LIMITED (Company no: 3025201) whose
registered office is at 25 James Street London
W1M 5HY (the "Company")
OPERATIVE PROVISIONS
1 DEFINITIONS
1.1 In this Debenture, except so far as the context otherwise requires,
the following words and expressions shall have the meanings set out
below:
<TABLE>
<S> <C>
Acts the Law of Property Act
1925 and the Insolvency Act
1986 (or any statutory
modification or
re-enactment of those acts
for the time being in
force)
Assets the property, undertaking and assets of the Company expressed
to be charged now or hereafter under Clause 2
Bank Lloyds Bank PLC
Designated Account the account with
the Bank designated by the
Lender in writing from time
to time or such other
account so designated by
the Lender
Event of Default any event set out in Clause 7 of this Debenture
Indebtedness all monies, liabilities and obligations whether principal
interest or otherwise now or at any time after the date of this
Debenture being or becoming due, owing or incurred by the
Company to the Lender whether actual, contingent present or
future and whether alone severally or jointly with any other
person and whether as principal or surety or in some other
capacity, together with interest, legal and other costs,
charges and expenses whatsoever on a full indemnity basis so
that interest shall be calculated and compounded in accordance
with the usual practice of the Lender from time to time as well
after as before any demand made or judgment ascertained
hereunder
Intellectual Property the assets charged under Clause 2.2(g) of this Debenture
Investments the assets charged under Clause 2.2(h) of this Debenture
<PAGE>
Property all leasehold and freehold property referred to in Clauses
2.2(a) and 2.2(b)
Receiver has the meaning given to it in Clause 5.1
</TABLE>
1.2 Words importing the singular include the plural and vice-versa.
1.3 Clause headings are for ease of reference only.
1.4 Any reference in this Debenture to any statute or any section of any
statute shall be deemed to include references to any statutory
modification or re-enactment thereof for the time being in force.
2 CHARGE
2.1 The Company covenants to the Lender that it shall on demand
to pay and discharge the Indebtedness (including on an
acceleration).
2.2 As security for the payment and discharge of the Indebtedness, the
Company, with full title guarantee , hereby charges to the Lender:
(a) by way of legal mortgage, all freehold, leasehold or other
immovable property now vested in the Company, together
with all buildings, fixtures (including trade fixtures)
and fixed plant and machinery from time to time on that
property;
(b) by way of fixed charge, all estates or interests in any
freehold and leasehold or other immovable property of the
Company (not being property charged by Clause 2.2(a)) now
or hereafter belonging to or vested in the Company,
together with all buildings, fixtures (including trade
fixtures) and fixed plant and machinery from time to time
on that property;
(c) by way of fixed charge, all plant and machinery now or in
the future belonging to the Company other than fixed plant
and machinery that is charged pursuant to Clause 2.2(a);
(d) by way of fixed charge, all the goodwill and
uncalled capital for the time being of the Company;
(e) by way of fixed charge, all book debts and other debts
whatsoever now or in the future due or owing to the
Company;
(f) by way of fixed charge all present and future bank
accounts of the Company (however designated and including
the Designated Account) maintained with any bank or other
financial institution in any jurisdiction and any and all
moneys (including interest) from time to time standing to
the credit of each of them which in each such case is not
otherwise charged pursuant to Clause 2.2(e);
(g) by way of fixed charge, all copyrights, patents, designs,
registered designs (including applications and rights to
apply therefor), inventions, rights in trade marks and
service marks whether registered or not (including
applications and rights to apply therefor) confidential
information and know-how, utility models, moral rights and
other intellectual property rights and any interest in any
of those rights, choses in action and claims and fees,
-2-
<PAGE>
royalties and other rights of every kind deriving
therefrom now or at any time hereafter belonging to the
Company; and
(h) by way of fixed charge, all stocks shares (save for the
shares held in Blink TV Limited) and other securities now
or in the future belonging to the Company together with
all dividends and other rights deriving therefrom and the
Company shall at the date hereof (or such other date as it
is able) deliver to the Lender all relevant share
certificates and duly executed (but not dated) instruments
of transfer (as may be required or required by the Lender)
to transfer the shares from the Company;
(i) by way of fixed charge all the Company's right, title and
interest in and to all its present and future rights and
claims in any contracts, (save for an agreement dated 25
September 1995 and made between PTT Telecom BV and the
Company whereby PTT Telecom BV agreed to lease to the
Company transponder capacity) agreements or instruments,
including, without limitation, all contracts of insurance
of whatever nature which are from time to time taken out
by or on behalf of the Company in which the Company may
now or in the future have an interest;
(j) by way of floating charge, all the Company's present and
future undertaking and assets, whatever and wherever,
other than any property or assets for the time being
effectively charged to the Lender or otherwise by way of
legal mortgage or fixed charge under this Debenture.
2.3 By notice in writing to the Company, the Lender may at any time after
the occurrence of an Event of Default convert the floating charge
created by Clause 2.2(j) into a specific charge over any Assets
specified in such notice which are for the time being the subject of
such floating charge. The floating charge created by this Debenture
shall unless otherwise agreed in writing by the Lender automatically
and without notice be converted into a fixed charge in the event that
the Company shall create or permit to subsist any security interest
as described in Clause 3.1(a) of this Debenture.
3 COVENANTS
3.1 The Company shall not and shall undertake and procure that Onyx GmbH
does not during the subsistence in force of this Debenture without
the prior written consent of the Lender:
(a) except for charges in favour of the Lender created under
or pursuant to the Financing Arrangements in respect of
the lease of transponder capacity from PTT Telecom BV or
in favour of Instar Holdings Inc pursuant to a Facility
Letter dated 1996 create or permit to subsist any
mortgage, charge, pledge, hypothecation, lien or other
security interest on any of its undertaking or assets;
(b) sell, transfer, lease, lend or otherwise dispose of its
undertaking and other assets or any part of them, except
by getting in and realising them in the ordinary and
proper course of its business;
(c) deal with its book or other debts or securities for money
except by getting in and realising them in the ordinary
and proper course of its business, but so that this
exception shall not permit the realisation of debts by
means of block discounting or factoring; or
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(d) grant or accept a surrender of any lease, licence or right
of occupation of or part with or share possession or
occupation of or grant or agree to grant any option in
relation to the Property or any part of it.
3.2 The Company shall and shall undertake and procure that Onyx GmbH
shall:
(a) if so requested by the Lender promptly deposit with
the Lender all deeds and documents of title and all
insurance policies relating to the Assets;
(b) keep such of the Assets as are insurable comprehensively
insured to the Lender's satisfaction in writing (and, if
so required by the Lender, in the joint names of itself
and the Lender) against loss or damage by fire and such
other risks as the Lender may require, to their full
replacement value and, where such insurance is not in
joint names, procure that the Lender's interest is noted
on all policies required under this Clause 3.2(b);
(c) duly and promptly pay all premiums and other moneys
necessary for maintaining the insurances required under
Clause 3.2(b) and on demand produce the insurance policies
and premium receipts to the Lender;
(d) keep all buildings and all plant, machinery,
fixtures, fittings and other effects in good repair and
working order;
(e) apply any insurance proceeds in making good the loss or
damage or at the Lender's option in or towards the
discharge of the monies obligations and liabilities
secured by this Debenture;
(f) punctually pay all rents taxes duties assessments and
other outgoings and observe and perform all restrictive
and other covenants under which any property subject to
this Debenture is held;
(g) make such registrations and pay such fees,
registration taxes and similar amounts as are necessary to
keep its Intellectual Property in force;
(h) take such steps as are necessary (including, without
limitation, the institution of legal proceedings) to
prevent third parties infringing its Intellectual Property
and (without prejudice to sub-paragraph (g) above) take
such other steps as are reasonably practicable to maintain
and preserve its interests therein; and
(i) not permit the registration of any Intellectual
Property to be abandoned, cancelled or to lapse or become
liable to any claim of abandonment for non-use.
(j) during the subsistence of this Debenture, duly and
promptly pay all calls, instalments and other payments due
on any of the Investments, failing which the Lender may in
its discretion make such payments on behalf of the
Company, and any sum so paid by the Lender shall be
repayable by the Company on demand;
(k) during the subsistence of this Debenture, remain liable to
observe and perform all of the conditions and obligations
assumed by the registered holder, bearer or owner of the
Investments and the Lender shall not be under any
obligation or liability in relation thereto by reason or
arising out of the Investments being charged to the Lender
under this Debenture;
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(l) the Company shall, from time to time on demand of the
Lender at the Company's cost:
(i) in the case of registered Investments, deliver
to the Lender executed transfers or assignments
in favour of the Lender or its nominee or agent
together with share certificates or other
documents of title for registration of the
Investments in the name of the Lender or its
nominee or agent;
(ii) in the case of bearer Investments, deliver to
the Lender or its nominee or agent the
documents of title to them; and
(iii) complete all transfers, renunciations, mandates,
assignments, deeds or other documents or do such
other things as the Lender may require to
perfect the title (whether legal or otherwise)
of the Lender or that of its nominee or agent to
the Investments.
3.3 If the Company fails to perform any of its obligations under Clauses
3.2 or 4, the Lender may (subject to the provisions of the Prior
Charges) take such steps as it considers appropriate to procure the
performance of such obligations (without being deemed to be a
mortgagee in possession) (including taking out or renewing any
insurance or effecting such repairs and taking such other action as
it may deem appropriate to remedy such failure) and recover the
premiums and other expenses so incurred from the Company on demand
and until so recovered such unpaid amounts shall carry interest as
mentioned in Clause 2.1 from the date of payment to the date of
recovery.
4 BOOK DEBTS
At all times during the subsistence of this Debenture the Company
shall:
(a) get in and realise the book debts and other debts
charged by Clause 2.2(e) of this Debenture in the ordinary
and usual course of its business on behalf of the Lender;
(b) pay the proceeds of such getting in and realisation of the
book debts and other debts into the Designated Account and
pay or otherwise deal with such monies standing in such
Designated Account in accordance only with the directions
from time to time given in writing by the Lender and the
Company shall furnish to the Lender evidence satisfactory
to the Lender that the bank has been notified of, and has
agreed to operate such account in accordance with, any
procedures stipulated by the Lender);
(c) prior to any demand being made for payment of the
Indebtedness or to the crystallisation of the floating
charges created hereby (howsoever such crystallisation may
arise) and in the absence of any direction being given by
the Lender pursuant to Clause 4(b) of this Debenture the
monies received by the Company and paid into the
Designated Account in respect of such book debts and other
debts charged by Clause 2.2(e) of this Debenture shall,
upon such payment in, stand released from the fixed charge
on such debts created pursuant to clause 2.2(e) of this
Debenture and shall stand subject to the floating charge
created by clause 2.2(j) of this Debenture over the
property and assets of the Company as therein provided;
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(d) any release occurring pursuant to paragraph (c) of Clause
4 of this Debenture shall not derogate from or otherwise
prejudice the subsistence of the fixed charge over book
and other debts of the Company created by Clause 2.2(e) of
this Debenture in respect of all book debts and other
debts due owing and unpaid at the time of and subsequent
to such release;
(e) if required by the Lender at any time, execute and deliver
to the Lender a legal assignment of such book debts and
other debts for the time being charged by Clause 2.2(e) of
this Debenture to the Lender in such form as the Lender
may require and give notice of such assignment to the
person from whom such book debts and other debts are due
in such form as the Lender may require; and
(f) authorise provision by the Bank to the Lender at any time
requested by the Lender for statements and particulars of
the Designated Account and such other financial and other
information in respect thereof as the Lender shall
require.
5 RECEIVER
5.1 At any time after the occurrence of an Event of Default (or if so
requested by the Company), the Lender may demand repayment of the
Indebtedness and then appoint by writing any person or persons to be
an administrative receiver or a receiver and manager or receivers and
managers ("the Receiver", which expression shall include any
substituted receiver(s) and manager(s)) of all or any part of the
Assets.
5.2 The Lender may from time to time determine the remuneration of the
Receiver and may remove the Receiver and appoint another in his
place.
5.3 The Receiver shall be the Company's agent and shall have all powers
conferred or which may be conferred by the Acts. The Company alone
shall be responsible for his acts and omissions and for his
remuneration. In particular, but without limiting any general powers
or the Lender's power of sale, the Receiver shall have power:
(a) to take possession of collect and get in all or any part
of the Assets and for that purpose to take any proceedings
in the Company's name or otherwise as he shall think fit;
(b) to carry on or concur in carrying on the Company's
business and raise money from any person either secured or
unsecured on the Assets or any part of them either in
priority to this security or otherwise and generally on
such terms as the Receiver shall think fit;
(c) to sell, let and/or terminate or to accept surrenders
of leases or tenancies of any part of the Property, in
such manner and on such terms as he thinks fit;
(d) to purchase or acquire any land and purchase, acquire
and grant any interest in or right over land;
(e) to sell, assign, let or otherwise dispose of or
concur in selling, assigning, letting or otherwise
disposing of all or any of the Assets in respect of which
he is appointed;
(f) to take, continue or defend any proceedings and make
any arrangement or compromise which the Lender or he shall
think fit;
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(g) to make and effect all repairs, improvements and
insurances;
(h) to appoint managers, officers, employees,
professional advisers and agents for any of the above
purposes, at such remuneration as the Receiver may
determine;
(i) to call up any of the Company's uncalled capital;
(j) to promote the formation of a subsidiary company or
companies of the Company, so that such subsidiary may
purchase, lease, license or otherwise acquire interests in
all or any part of the Assets; and
(k) to do all other acts and things which he may consider to
be incidental or conducive to any of the above powers.
5.4 Any moneys received under this Debenture shall be applied:
(a) first, in satisfaction of all costs, charges and
expenses properly incurred and payments properly made by
the Lender or the Receiver and of the remuneration of the
Receiver;
(b) secondly, the surplus (if any) shall be paid to the
person or persons entitled to it.
6 MISCELLANEOUS
6.1 No statutory or other power of granting or agreeing to grant or of
accepting or agreeing to accept surrenders of leases or tenancies of
any part of the Property may be exercised by the Company without the
Lender's prior written consent. Section 93 of the Law of Property Act
1925 shall not apply.
6.2 The Company at its expense shall at any time at the Lender' request
promptly execute and deliver to the Lender any other or further
mortgage, charge or other instrument conferring a fixed charge on any
of its Assets (including any of the Assets charged by Clause 2.2(j))
or such other charge as the Lender may in its discretion think fit
for securing the Indebtedness.
6.3 This Debenture shall be:
(a) a continuing security, notwithstanding any settlement
of account or other matter or thing whatever;
(b) without prejudice and in addition to any other security
for the Indebtedness (whether by way of mortgage,
equitable charge or otherwise) which the Lender may hold
now or hereafter on all or any part of the Assets;
(c) in addition to any rights, powers and remedies at law;
(d) apply to the ultimate balance of the Indebtedness
(together with all expenses whatever incurred by the
Lender in the enforcement or attempted enforcement of this
Debenture) and shall not be discharged or otherwise
affected by any intermediate payment or satisfaction of
any part of the Company's obligations;
6.4 Any release or discharge of this Debenture shall be conditional on no
payment or assurance received by the Lender in respect of the
Company's obligations under the
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Facility Agreement being avoided or reduced under any law (English or
foreign) relating to bankruptcy, liquidation or analogous
circumstances in force within the relevant period after that payment
or discharge during which any payment may for any reason be reclaimed
or otherwise not retained by the Lender. After that avoidance or
reduction, the Lender may exercise its rights under the Facility
Agreement and this Debenture and/or any other rights which it would
have been entitled to exercise notwithstanding any release and
discharge which shall be considered null and void. In this Clause
6.4, the "relevant period" means the relevant statutory period,
extended by one month, within which any payment or security made to
or held by the Lender may be avoided or invalidated under any
enactment relating to insolvency or otherwise.
6.5 Section 103 of the Law of Property Act 1925 shall not apply. The
statutory power of sale shall be exercisable at any time after the
execution of this Debenture. The Lender shall not exercise its power
of sale until payment has been demanded, but this provision shall not
affect a purchaser or put him on inquiry whether such demand has been
made.
6.6 No failure or delay on the Lender's part in the exercise of any of
its rights, powers and remedies (in this Clause 6 "right(s)") under
this Debenture or at law shall operate or be construed as a waiver.
No waiver of any of the Lender's rights shall preclude any further or
other exercise of that right or of any other right.
6.7 The Lender may give time or other indulgence or make any other
arrangement, variation or release with any person in respect of the
Indebtedness or any other security or guarantee for the Indebtedness
without derogating from the Company's liabilities or the Lender's
rights under this Debenture.
6.8 The Company certifies that this Debenture is in its best commercial
interests and does not contravene its Memorandum and Articles of
Association or any agreement binding on it or on any of the Assets
and has been executed in accordance therewith and hereby applies to
the Chief Land Registrar for a restriction to be entered on the
register of its title to registered properties charged by this
Debenture that:
"Except under an Order of the Registrar no disposition or
dealing by the proprietor of the land is to be registered
or noted without the consent of the proprietor for the
time being of Charge No ."
6.9 A certificate signed on behalf of the Lender of the amount for the
time being of any Indebtedness and/or the amounts due to the Lender
shall be conclusive evidence for all purposes against the Company,
unless manifestly incorrect.
6.10 No person dealing with a Receiver or the Lender shall be concerned to
enquire whether any power which he or it is purporting to exercise
has become exercisable or whether any money is due under this
Debenture or as to the application of any money paid raised or
borrowed or as to the propriety or regularity of any sale by or other
dealing with such Receiver or the Lender. All the protection to
purchasers contained in Sections 104 and 107 of the Law of Property
Act 1925 shall apply to any person purchasing from or dealing with a
Receiver or the Lender.
7 EVENTS OF DEFAULT
The following events shall each constitute an Event of Default:
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(a) if the Company fails to pay any sums payable by it from
time to time to the Lender on the due date therefor or
fails to comply with any term condition covenant or other
provision of this Debenture or of any facility from the
Lender or any related security document or to perform any
of its obligations or liabilities to the Lender or if any
representation or warranty from time to time made to the
Lender by the Company is or becomes incorrect or
misleading in a material respect;
(b) if any indebtedness of the Company becomes due or capable
of being declared due before it's specified maturity date
by reason of breach or default on the part of the Company
under the terms of any agreement or instrument creating or
evidencing the same or is otherwise not paid when due (or
within any applicable period of grace) or any guarantee or
indemnity given by the Company is not honoured when due
and called upon;
(c) if an encumbrancer takes possession of or a trustee
receiver or similar officer is appointed in respect of all
or any part of the business or assets of the Company or a
distress execution attachment or other legal process is
levied or enforced upon or sued out against all or any
substantial part of such assets and is not disDebentured
within 5 days;
(d) if the Company is deemed unable to pay its debts within
the meaning of Section 123 of the Insolvency Act 1986 or
commences negotiations with any one or more of its
creditors with a view to the general readjustment or
rescheduling of its indebtedness or makes a general
assignment for the benefit of or a composition with its
creditors;
(e) if the Company (being a Lender) takes any corporate action
or other steps are taken or legal proceedings are started
for its winding-up dissolution or reorganisation
(otherwise than for the purposes of an amalgamation or
reconstruction whilst solvent on terms previously approved
in writing by the Lender) or for the appointment of a
receiver administrator administrative receiver trustee or
similar officer of it or of all or a material part of its
revenues and assets or (being an individual) dies or
becomes of unsound mind or has a Lenderruptcy petition
presented or order made against him;
(f) if the Company suspends or threatens to suspend a
substantial part of its business operations (otherwise
than for the purposes of a reconstruction or amalgamation
on terms previously approved in writing by the Lender) or
any governmental authority permits or procures or
threatens to permit or procure any reorganisation transfer
or expropriation (whether with or without compensation) of
a substantial part of the business or assets of the
Company;
(g) if any guarantee indemnity or other security for any of
the Secured Liabilities fails or ceases in any respect to
have full force and effect or to be continuing or is
terminated or disputed or in the opinion of the Lender is
in jeopardy invalid or unenforceable or if this Debenture
or the security created by it is disputed or in the
opinion of the Lender is in jeopardy;
(h) if at any time it is or becomes unlawful for the Company
to perform or comply with any or all of its obligations
under this Debenture any other agreement between the
Company and the Lender or any of such obligations of the
Company are not or cease to be legal valid binding and
enforceable;
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(i) if control (as defined in Section 435 of the Insolvency
Act 1986) or the power to take control of the Company is
acquired by any person or Lender or group of associates
(as defined in such section) not having control of the
Lender at the date of this Debenture (unless with the
prior consent in writing of the Lender);
(j) if in the opinion of the Lender a material adverse
change occurs in the financial condition results of
operations or business of the Company; or.
(k) if there shall occur any Event of Default howsoever
described under the Facility Agreement.
8 POWER OF ATTORNEY
8.1 By way of security, the Company hereby irrevocably appoints the
Lender any Receiver and any person nominated by the Lender jointly
and also severally to be the attorney of the Company with the power
of substitution and in its name and otherwise on its behalf and as
its act and deed to sign or execute all deeds instruments and
documents which the Lender or any Receiver may require or deem proper
for any of the purposes of or which the Company ought to do under
this Debenture. The Company agrees to ratify and confirm anything
such attorney shall lawfully and properly do.
8.2 The power of attorney granted under Clause 7.1 as regards the Lender,
and its delegates and substitutes (as the Company acknowledges) are
granted irrevocably as part of the security created by this Debenture
to secure proprietary interests of and the performance of the
obligations owed to the respective donees within the meaning and for
the purposes of the Powers of Attorney Act 1971 (as amended or
re-enacted from time to time).
8.3 The Company hereby appoints the Lender as its authorised agent to
make any filings, registrations or renewals with the appropriate
registrars or authorities as shall be necessary to give effect to
Clause 2.2(g).
9 COSTS AND INDEMNITY
9.1 All costs charges and expenses incurred by the Lender in relation to
this Debenture or the monies and liabilities hereby secured shall be
reimbursed by the Company to the Lender on demand on a full indemnity
basis and until so reimbursed shall carry interest as mentioned in
Clause 1 from the date of payment to the date of reimbursement and be
secured on the property charged by this Debenture.
9.2 The Lender and every Receiver attorney or other person appointed by
the Lender under this Debenture and their respective employees shall
be entitled to be indemnified on a full indemnity basis out of the
property charged by this Debenture in respect of all liabilities and
expenses incurred by any of them in or directly or indirectly as a
result of the exercise or purported exercise of any of the powers
authorities or discretions vested in them under this Debenture and
against all actions proceedings losses costs claims and demands in
respect of any matter or thing done or omitted in any way relating to
the property charged by this Debenture and the Lender and any such
Receiver may retain and pay all sums in respect of the same out of
the monies received under the powers conferred by this Debenture.
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10 SEVERANCE
The provisions of this Debenture shall be severable and if at any
time any provision in this Debenture is or becomes invalid, illegal
or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Debenture shall not be impaired.
11 FURTHER ASSURANCE
Without prejudice to the provision of section 76(1)(C) of the Law of
Property Act 1925, the Company shall whenever requested by the Lender
immediately execute and sign all such deeds and documents and do all
such things as the Lender may require at the Company's cost over any
property or assets specified by the Lender for the purpose of
perfecting or more effectively providing security to the Lender (or
its nominees) for the payment and discharge of the monies obligations
and liabilities secured by this Debenture or to enable the Lender (or
its nominees) to exercise any right and powers attaching to the
Assets or to give effect to any sale or disposal under Clause 5 or
otherwise to put into effect the intent of this Debenture.
12 NOTICES
12.1 Any demand, consent, record, election, certificate or notice required
or permitted to be given under this Debenture shall be in writing and
sent by registered or recorded delivery post or facsimile, or
delivered by hand, addressed to the relevant party at the address or
the facsimile number set out in this Debenture or in either case to
such other person or address or facsimile number as any party shall
by not less than five (5) business days' written notice have advised
the others in writing. Any such demand, consent, record, election,
certificate or notice shall be deemed (if given as aforesaid) to have
been received by the party to whom it is addressed:
(a) two (2) business days after posting in the case of
despatch by post as aforesaid; or
(b) if sent by facsimile, on the business day on which it was
transmitted if transmission takes place during normal
business hours otherwise it is deemed to be received when
normal business hours next commence; or
(c) on delivery if delivered by hand.
12.2 In this Clause:
(a) "normal business hours" are 9.30 am to 5.30 pm on a
business day; and
(b) "business days" are days (not being Saturdays or Sundays
or public holidays) on which banks are open for business
in London.
13 BENEFIT AND ASSIGNMENT OF DEBENTURE
13.1 This Debenture shall be binding upon the Company and its successors
and shall enure to the benefit of the Lender and its successors and
assigns.
13.2 The Lender may assign or transfer all or part of its rights and
obligations under this Debenture, but the Company may not assign or
otherwise transfer any of its rights or obligations under this
Debenture.
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14 LAW
This Debenture shall be governed by and construed in accordance with
English law and the Company irrevocably submits to the non-exclusive
jurisdiction of the English Courts.
IN WITNESS WHEREOF this Debenture has been executed and
unconditionally delivered as a Deed the day and year first before
written.
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ATTESTATION
EXECUTED as a Deed on behalf of )
UNIVERSAL INDEPENDENT )
HOLDINGS LIMITED incorporated )
in the British Virgin Islands )
by ) /s/
and ) /s/
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign the )
document on behalf of the Company )
Executed and delivered as a Deed )
by CAPITAL MEDIA (UK) LIMITED )
pursuant to resolution of the Board acting by: )
/s/ BARRY LLEWELLYN, Director
/s/ CHARLES KOPPEL, Secretary
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EXHIBIT 10.9
DATED 31 October 1996
SECURITY ASSIGNMENT
CAPITAL MEDIA (UK) LIMITED (1)
UNIVERSAL INDEPENDENT HOLDINGS LIMITED (2)
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions 1
2 Interpretation 1
3 Covenant 2
4 Security 2
5 Expenses 3
6 Further assurance 3
7 Event of Default 4
8 Power of attorney 5
9 Duration of assignment 5
10 No liability as mortgagee in possession 5
11 Exclusions 5
12 Certificate 6
13 Rights cumulative, waiver 6
14 Severance 6
15 Communications 6
16 Successors 7
17 Governing law 7
SCHEDULE 1 8
Notice of Assignment 8
SCHEDULE 2 9
Consent and Acknowledgement 9
<PAGE>
DATE
31 October 1996
PARTIES
(1) CAPITAL MEDIA (UK) LIMITED (formerly Excalibur Communications Limited)
a company incorporated in England and Wales with registered number
3025201, whose registered office is at 25 James Street, London W1M 5HY
(the "Assignor"); and
(2) UNIVERSAL INDEPENDENT HOLDINGS LIMITED of PO Box 438, Tropic Isle
Building, wickhams Cay, Road Town, Tortola, British Virgin Islands (the
"Assignee").
OPERATIVE PROVISIONS
1 DEFINITIONS
In this Assignment the following expressions shall bear the following
meanings:
Assigned Assets the right, title, benefit and
interest of the Assignor in or under
an agreement dated 25 September 1995
made between PTT Telecom BV ("the
Lessor") (1) and the Assignor (2)
("the Transponder Lease") whereby
the Lessor agreed to lease to the
Assignor transponder capacity
Events of Default any of the events mentioned in
Clause 7
Secured Obligations all monies, liabilities and
obligations, whether principal
interest or otherwise now or at any
time after the date of this
Assignment being or becoming due,
owing or incurred by the Assignor to
the Assignee whether actual,
contingent present or future and
whether done severally or jointly
with any other person and whether as
principal or surety or in some other
capacity, together with interest
legal and other costs, charges and
expenses whatsoever on a full
indemnity basis so that interest
shall be calculated and compounded
in accordance with the usual
practice of the Assignee from time
to time as well after as before any
demand made or judgment ascertained
hereunder
Security Interest any mortgage, charge, pledge, lien,
assignment, encumbrance, guarantee,
title transfer or retention
arrangement or agreement, or any
security interest whatsoever,
howsoever created or arising
2 INTERPRETATION
2.1 Sections 61 and 63 of the Law of Property Act 1925 shall apply to the
construction of this Assignment.
2.2 Headings used in this Assignment and table of contents are for
convenience only, and are to be ignored in construing this Assignment.
<PAGE>
2.3 References in this Assignment to it or another document shall be
construed as a reference to this Assignment, or the other document, as
from time to time novated, amended, varied or supplemented.
2.4 Words importing the singular include the plural and vice versa.
2.5 References to laws and regulations include amendments and
re-enactments.
3 COVENANT
3.1 The Assignor shall satisfy the Secured Obligations as they fall due for
satisfaction in accordance with their terms.
4 SECURITY
4.1 Assignment
As continuing security for payment and discharge of the Secured
Obligations, the Assignor with full title guarantee, assigns absolutely
by way of security to the Assignee the Assigned Assets.
4.2 Re-assignment
Upon the irrevocable payment in full when due and upon the complete
performance and observance of all the Secured Obligations, the Assignee
will (subject to the terms of this Assignment) at the request and
expense of the Assignor re-assign the Assigned Assets to the Assignor.
4.3 Enforcement and application
The security created by this Assignment shall become enforceable by the
Assignee upon the occurrence of an Event of Default. Thereafter the
Assignee may apply all or any part of the Assigned Assets towards the
discharge of the Secured Obligations in such manner as the Assignee
deem fit.
4.4 Primary security
This Assignment shall be deemed to constitute primary and not
collateral security and the security shall not be discharged or
impaired by:-
(a) the dealing with, existence or validity of any other security
taken by the Assignee in relation to the Secured Obligations
or any enforcement of or failure to take, perfect or enforce
any such security;
(b) any amendment to or variation of any document or any security
relating to Secured Obligations;
(c) any release of, or granting of time or any other indulgence to
the Assignor or any third party; or
(d) any other act, event or omission which would or might but for
this clause operate to impair or discharge the security
constituted by, or the Assignor's liability under, this
Assignment including any act, omission or thing which would or
might afford an equitable defence to a security.
4.5 Negative covenant
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Except with the prior written consent of the Assignee, the Assignor
shall not create, agree to create or permit to subsist any Security
Interest in, over or affecting the whole or any part of the Assigned
Assets (except for Security Interests in favour of the Assignee as
security for the Secured Obligations) or over its right to call for a
discharge of the security hereby constituted nor deal with such right
in any manner.
4.6 Notices
The Assignor shall forthwith on receipt of consent pursuant to clause
6.1 deliver a duly completed notice of assignment in the form set out
in Schedule 1 and procure that upon receipt of such notice an
acknowledgement and consent in the form set out in Schedule 2 is
executed and delivered to each of the Assignee.
4.7 Documents
The Assignor shall deposit with a person nominated in writing by the
Assignee all documents relating to the Assigned Assets. Such documents
shall be returned to the Assignor upon re-assignment of the Assigned
Assets in accordance with clause 4.2.
5 EXPENSES
5.1 The Assignor shall immediately on demand pay the Assignee all
expenses (including legal and other out-of-pocket expenses) incurred in
connection with:
(i) the negotiation, preparation and execution of this Assignment,
the Facility Agreement and any related documents;
(ii) any variation, waiver, consent or approval relating to this
Assignment, the Facility Agreement or any related documents.
(iii) the preservation or enforcement, or the attempted preservation
or enforcement, of any Assignees' rights under this
Assignment, the Facility Agreement or any related documents.
5.2 The Assignor shall immediately on demand:
(i) pay any stamp, documentary and other similar duty or tax to
which this Assignment or any related document may be subject
or give rise; and
(ii) indemnify the Assignee against all losses or liabilities which
the Assignee may incur as a result of any delay or omission by
the Assignor to pay any such duty or tax.
6 FURTHER ASSURANCE
6.1 Notwithstanding any of the terms and provisions set out herein the
Assignor and the Assignee agree that this Assignment shall not create a
valid assignment of the Assigned Assets (of any kind whatsoever whether
equitable or legal) until the Assignee has obtained consent from the
Lessor to such assignment of the Assigned Assets.
6.2 The Assignor shall, at the request of the Assignee and at its own cost,
promptly execute any document and do or omit to do any other act or
thing which:
(a) the Assignee may specify in order to perfect or improve any
security created or intended to be created by this Assignment
and to enable the Assignee to
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deal with the Assigned Assets in accordance with the
provisions of this Assignment or in order to perfect the
Assignee' title to any part of the Assigned Assets; or
(b) the Assignee may specify with a view to the exercise or
proposed exercise of any of their powers, rights and
discretions under this Assignment.
7 EVENT OF DEFAULT
The following events shall constitute an Event of Default:
(a) if the Assignor fails to pay any sums payable by it from time
to time to the Company on the due date therefor or fails to
comply with any term condition covenant or other provision of
this Assignment or of any facility from the Company or any
related security document or to perform any of its obligations
or liabilities to the Company or if any representation or
warranty from time to time made to the Company by the Assignor
is or becomes incorrect or misleading in a material respect;
(b) if any indebtedness of the Assignor becomes due or capable of
being declared due before it's specified maturity date by
reason of breach or default on the part of the Assignor under
the terms of any agreement or instrument creating or
evidencing the same or is otherwise not paid when due (or
within any applicable period of grace) or any guarantee or
indemnity given by the Assignor is not honoured when due and
called upon;
(c) if an encumbrancer takes possession of or a trustee receiver
or similar officer is appointed in respect of all or any part
of the business or assets of the Assignor or a distress
execution attachment or other legal process is levied or
enforced upon or sued out against all or any substantial part
of such assets and is not discharged within 5 days;
(d) if the Assignor is deemed unable to pay its debts within the
meaning of Section 123 of the Insolvency Act 1986 or commences
negotiations with any one or more of its creditors with a view
to the general readjustment or rescheduling of its
indebtedness or makes a general assignment for the benefit of
or a composition with its creditors;
(e) if the Assignor (being a company) takes any corporate action
or other steps are taken or legal proceedings are started for
its winding-up dissolution or reorganisation (otherwise than
for the purposes of an amalgamation or reconstruction whilst
solvent on terms previously approved in writing by the
Company) or for the appointment of a receiver administrator
administrative receiver trustee or similar officer of it or of
all or a material part of its revenues and assets or (being an
individual) dies or becomes of unsound mind or has a
Companyruptcy petition presented or order made against him;
(f) if the Assignor suspends or threatens to suspend a substantial
part of its business operations (otherwise than for the
purposes of a reconstruction or amalgamation on terms
previously approved in writing by the Company) or any
governmental authority permits or procures or threatens to
permit or procure any reorganisation transfer or expropriation
(whether with or without compensation) of a substantial part
of the business or assets of the Assignor;
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(g) if any guarantee indemnity or other security for any of the
Secured Liabilities fails or ceases in any respect to have
full force and effect or to be continuing or is terminated or
disputed or in the opinion of the Company is in jeopardy
invalid or unenforceable or if this Charge or the security
created by it is disputed or in the opinion of the Company is
in jeopardy;
(h) if at any time it is or becomes unlawful for the Assignor to
perform or comply with any or all of its obligations under
this Charge any other agreement between the Assignor and the
Company or any of such obligations of the Assignor are not or
cease to be legal valid binding and enforceable;
(i) if control (as defined in Section 435 of the Insolvency Act
1986) or the power to take control of the Assignor is acquired
by any person or company or group of associates (as defined in
such section) not having control of the Company at the date of
this Charge (unless with the prior consent in writing of the
Company); or
(j) if in the opinion of the Company a material adverse change
occurs in the financial condition results of operations or
business of the Assignor.
8 POWER OF ATTORNEY
For the purposes of securing the performance of the Assignor's
obligations under this Assignment, the Assignor irrevocably appoints
each of the Assignee or any person acting as the delegate of the
Assignee as the Assignor's attorney on behalf of and in the name of the
Assignor or otherwise to do all acts and things and sign and execute
all deeds and documents which any such Assignee may consider necessary
or expedient for the purpose of giving full effect to this Assignment.
9 DURATION OF ASSIGNMENT
9.1 The provisions of this Assignment shall remain in force until the
Secured Obligations have been unconditionally and irrevocably paid or
discharged in full.
9.2 The security created by this Assignment is continuing and is not to be
considered as satisfied or discharged by any intermediate payment or
settlement of the whole or any part of the Secured Obligations or any
other matter or thing whatsoever, including, without limitation, the
insolvency, liquidation or administration of the Assignor.
10 NO LIABILITY AS MORTGAGEE IN POSSESSION
Nothing herein provided shall be deemed to constitute any Assignee
mortgagee in possession of the property charged under this Assignment.
11 EXCLUSIONS
Sections 93 and 103 of the Law of Property Act 1925 shall not apply to
this Assignment.
12 CERTIFICATE
A statement as to any amount of the Secured Obligations or as to any
amount due to any of the Assignee under this Assignment which is
certified as being correct by a
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duly appointed representative or Officer of such Assignee shall, in
the absence of manifest error, be conclusive evidence that such amount
is in fact due and payable.
13 RIGHTS CUMULATIVE, WAIVER
13.1 The rights of the Assignee under this Assignment:
(a) are cumulative and are in addition to their rights under the
general law;
(b) may be exercised as often as they consider appropriate; and
(c) may be waived only in writing.
13.2 Any failure or delay in the exercise of any such rights shall not be
treated as a waiver.
14 SEVERANCE
Each of the provisions of this Assignment is severable and distinct
from the others. If one or more provision is or becomes invalid,
illegal or unenforceable, then this shall not affect the validity,
legality and enforceability of the remaining provisions.
15 COMMUNICATIONS
15.1 Any demand, consent, record, election, certificate or notice
required or permitted to be given under this Assignment shall be in
writing and sent by registered or recorded delivery post or facsimile,
or delivered by hand, addressed to the relevant party at the address or
the facsimile number set out in this Assignment or in either case to
such other person or address or facsimile number as any party shall by
not less than five (5) business days' written notice have advised the
others in writing. Any such demand, consent, record, election,
certificate or notice shall be deemed (if given as aforesaid) to have
been received by the party to whom it is addressed:
(a) two (2) business days after posting in the case of despatch by
post as aforesaid; or
(b) if sent by facsimile, on the business day on which it was
transmitted if transmission takes place during normal business
hours otherwise it is deemed to be received when normal
business hours next commence; or
(c) on delivery if delivered by hand.
15.2 In this Clause:
(a) "normal business hours" are 9.30 am to 5.30 pm on a business
day; and
(b) "business days" are days (not being Saturdays or Sundays or
public holidays) on which banks are open for business in
London.
16 SUCCESSORS
16.1 This Assignment shall be binding upon and inure to the benefit of
the Assignor and the Assignee and their successors and assigns.
Reference to the Assignee in this Assignment includes any assignee or
transferee of any Assignee in relation to its rights and obligations
under this Assignment.
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16.2 The Assignor may not assign or transfer all or any part of its
rights or obligations under this Assignment. The Assignee may assign
all or any of their rights hereunder to any person.
17 GOVERNING LAW
This Assignment shall be governed by and construed in accordance with
English law, and the parties irrevocably submit to the exclusive
jurisdiction of the English courts.
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SCHEDULE 1
NOTICE OF ASSIGNMENT
To: PTT Telecom BV
The Hague
The Netherlands
From: Capital Media (UK) Limited
25 James Street
London W1M 5HY
Date:
Dear Sirs
We hereby give you notice that by an assignment (a copy of which is attached)
("the Assignment") dated ____________________ 1996 and made between this Company
and the Assignee described in the Assignment we have assigned absolutely to the
Assignee all our right, title, benefit and interest in and under the Assigned
Assets (as such term is defined in the Assignment).
You shall disclose such information relating to the Assigned Assets as the
Assignee may request you to disclose to them, and act in accordance with their
instructions concerning the Assigned Assets.
This notice and the instructions herein contained are irrevocable. Please
acknowledge receipt of this notice by completing and returning the enclosed
consent to assignment.
Yours faithfully
/s/ BARRY LLEWELLYN
- ----------------------------
for and on behalf of
Capital Media (UK) Limited
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SCHEDULE 2
CONSENT AND ACKNOWLEDGEMENT
To: Universal Independent Holdings Limited
From: PTT Telecom BV
The Hague
The Netherlands
Date:
Dear Sirs
We acknowledge receipt of a notice of an assignment and copy of a deed of
assignment dated 1996 (the "Assignment") and made between Capital Media (UK)
Limited (the "Assignor") and the Assignee relating to the Assigned Assets (as
such term is defined in the Assignment).
We hereby consent to such assignment, and agree to disclose information relating
to the Assigned Assets if requested to do so by the Assignee, and agree that we
will comply with the Assignee' instructions concerning the Assigned Assets.
Yours faithfully
- -----------------------------------
For and on behalf of
PTT Telecom BV
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ATTESTATIONS
THE ASSIGNOR
EXECUTED and DELIVERED as a DEED )
by CAPITAL MEDIA (UK) LIMITED acting by )
two directors/a director and the secretary: )
Director /s/ BARRY LLEWELLYN
Secretary /s/ CHARLES KOPPEL
THE ASSIGNEES
EXECUTED as a Deed on behalf of )
UNIVERSAL INDEPENDENT )
HOLDINGS LIMITED incorporated )
in the British Virgin Islands )
by ) /s/
and ) /s/
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign the )
document on behalf of the Company )
10
EXHIBIT 10.10
DATED 31 October 1996
CHARGE
over Shares and Securities
CAPITAL MEDIA GROUP LIMITED (1)
as Chargor
UNIVERSAL INDEPENDENT HOLDINGS LIMITED (2)
as Company
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions and Interpretation 1
2 Covenant to Pay 3
3 Charge 3
4 Deposit of Title Documents and Further Assurance 3
5 Representations Warranties and Covenants by the Chargor 4
6 Rights of the Company 5
7 New Accounts 6
8 Enforcement 6
9 Power of Sale 8
10 Protection of Third Parties 8
11 Power of Attorney 8
12 Discharge of Security 9
13 Avoidance of Payments 9
14 Costs 10
15 Notices 10
16 Miscellaneous 11
17 Law and Jurisdiction 11
SCHEDULE 13
ATTESTATIONS 14
<PAGE>
CHARGE
DATE
31 October 1996
PARTIES
(1) CAPITAL MEDIA GROUP LIMITED (registered in the State of Nevada,
United States of America) whose registered office is at 25 James
Street, London W1M 5HY (the "Chargor"); and
IN FAVOUR OF
(2) UNIVERSAL INDEPENDENT HOLDINGS LIMITED whose principal office is
at PO Box 438, Tropic Isle Buildings, Wickhams Cay, Road Town, Tortola,
British Virgin Islands the "Company")
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Charge (including the Introduction), unless the context
otherwise requires, the following words and expressions shall have the
meanings set out below:
"Capital Media" Capital Media (UK) Limited (Company
No:3025201) whose regisgtered office
is at 25 James Street, London W1M
5HY.
"Charged Property" the property and rights of the
Chargor which are the subject of any
security created or purported to be
created by this Charge.
"Default Rate" 4% above the Lloyds Bank Plc Base
Rate.
"Derivative Assets" all stocks shares warrants or
other securities rights dividends
interest or other property whether
of a capital or income nature
accruing offered issued or deriving
at any time by way of dividend bonus
redemption exchange purchase
substitution conversion
consolidation subdivision preference
option or otherwise attributable to
any of the Shares and Securities or
any Derivative Assets previously
described.
"Encumbrance" any mortgage charge pledge lien
assignment hypothecation security
interest title retention
preferential right or trust
arrangement or other security
arrangement or agreement or any
right conferring a priority of
payment.
"Enforcement Event" any event set out in Clause 8.2 of
this Charge.
"LPA" the Law of Property Act 1925.
<PAGE>
"Secured Liabilities" all monies obligations and
liabilities whatsoever whether for
principal interest or otherwise in
whatever currency which may now or
at any time in the future be due
owing or incurred by Capital Media
and or the Chargor to the Company
whether actual or contingent and
whether alone severally or jointly
as principal guarantor surety or
otherwise and in whatever name or
style and whether on any current or
other account or in any other manner
whatsoever.
"Shares and Securities" all stocks shares and other
securities:
(i) listed in the Schedule for
which the stock or share
certificates or other
documents of title have been
deposited by the Chargor
with the Company; or
(ii) for which the stock or
share certificates or other
documents of title have been
deposited by the Chargor
with the Company or its
agents or nominees or are
held to the order of the
Company.
in each case whether held in the
United Kingdom or elsewhere and
irrespective of whether in any such
case the deposit was made or the
certificates or other documents were
received by the Company or its
agents or nominees for the purposes
of creating security, safe custody,
collection or otherwise.
1.2 References to Clauses and Schedules are to the clauses and schedules to
this Charge.
1.3 Clause headings are inserted for ease of reference only and are not to
affect the interpretation of this Charge.
1.4 Except to the extent the context otherwise requires any reference in
this document to "this Charge" and any other document referred to in it
includes any document expressed to be supplemental to or collateral
with or which is entered into pursuant to or in accordance herewith or
therewith and shall be deemed to include any instruments amending
varying supplementing novating or replacing the terms of any such
documents from time to time.
1.6 References to a person are to be construed to include corporations
firms companies partnerships individuals associations states and
administrative and governmental and other entities whether or not a
separate legal entity.
1.7 References to any person are to be construed to include references to
that person's successors transferees and assigns whether direct or
indirect.
1.8 References to any statutory provision are to be construed as references
to that statutory provision as amended supplemented re-enacted or
replaced from time to time (whether before or after the date of this
Charge) and are to include any orders
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regulations instruments or other subordinated legislation made under
or deriving validity from that statutory provision.
1.9 The words "other" and "otherwise" are not to be construed ejusdem
generis with any foregoing words where a wider construction is
possible.
1.10 The words "including" and "in particular" are to be construed as being
by way of illustration or emphasis only and are not to be construed as,
nor shall they take effect as, limiting the generality of any foregoing
words.
2 COVENANT TO PAY
2.1 The Chargor covenants with the Company that it will on demand pay and
discharge the Secured Liabilities when due to the Company.
2.2 The Chargor shall pay interest to the date of payment or discharge
(notwithstanding any demand or any judgment obtained by the Company or
the liquidation or administration of or any arrangement or composition
with creditors by the Chargor) at the rate or rates applicable under
the agreements or arrangements giving rise to the relevant obligations
or liabilities or if no such rate or rates are specified at the Default
Rate upon such days and upon such terms as the Company may from time to
time determine. Such interest shall be compounded in the event of it
not being punctually paid in accordance with the usual practice of the
Company but without prejudice to the right of the Company to require
payment of such interest.
2.3 All sums payable by the Chargor under this Charge shall be paid without
any set-off counterclaim withholding or deduction whatsoever unless
required by law in which event the Chargor will simultaneously with
making the relevant payment under this Charge pay to the Company such
additional amount as will result in the receipt by the Company of the
full amount which would otherwise have been receivable and will supply
the Company promptly with evidence satisfactory to the Company that the
Chargor has accounted to the relevant authority for the sum withheld or
deducted.
3 CHARGE
The Chargor with full title guarantee (with the intent that the
security so constituted shall extend to all beneficial interests of the
Chargor in the Charged Property and to any proceeds of sale or other
realisation of the Charged Property or any part of it) and as
continuing security for the payment and discharge of the Secured
Liabilities charges the Shares and Securities and the Derivative Assets
to the Company.
4 DEPOSIT OF TITLE DOCUMENTS AND FURTHER ASSURANCE
4.1 The Chargor shall on the execution of this Charge deposit with the
Company all stock or share certificates or other documents of title to
or representing the Charged Property together with such duly executed
transfers or assignments in favour of the Company or its nominees with
the name of the transferee date and consideration left blank as the
Company may require to enable the Company to vest the same in the
Company or its nominees or, after the occurrence of an Enforcement
Event, any purchaser to the intent that the Company may at any time
after the occurrence of an Enforcement Event without notice present
them for registration.
4.2 The Chargor shall subject to clause 4.3 upon the accrual offer issue or
receipt of any Derivative Assets deliver or pay to the Company or
procure the delivery or payment to the Company of all such Derivative
Assets or the stock or share certificates or
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other documents of title to or representing them together with such
duly executed transfers or assignments in favour of the Company or its
nominees with the name of the transferee date and consideration left
blank as the Company may require to enable the Company to vest the same
in the Company or its nominees or, after the occurrence of an
Enforcement Event, any purchaser to the intent that the Company may at
any time after the occurrence of an Enforcement Event without notice
present them for registration.
4.3 For so long as no Enforcement Event has occurred the Company will:
(a) hold all dividends interest and other income deriving from and
received by it in respect of the Charged Property for the
account of the Chargor and will promptly such dividends
interest and other income to the Chargor on request; and
(b) exercise all voting and other rights and powers attached to
the Charged Property as the Chargor may from time to time in
writing reasonably direct provided that such direction does
not adversely affect the Charged Property and is not otherwise
inconsistent with this Charge.
4.4 Without prejudice to anything else contained in this Charge the Chargor
shall at any time at the request of the Company but at the cost of the
Chargor promptly sign seal execute deliver and do all deeds instruments
transfers renunciations proxies notices documents acts and things in
such form as the Company may from time to time require for perfecting
or protecting the security over the Charged Property or any part of it
or for facilitating its realisation.
5 REPRESENTATIONS WARRANTIES AND COVENANTS BY THE CHARGOR
5.1 The Chargor represents and warrants to the Company and undertakes that:
(a) it is and will be the sole absolute and beneficial owner and
the registered holder of all of the Charged Property free from
Encumbrances and will not create or attempt to create or
permit to arise or subsist any Encumbrance (other than this
Charge) on or over the Charged Property;
(b) it has not sold or otherwise disposed of or agreed to sell or
otherwise dispose of or granted or agreed to grant any option
in respect of all or any of its right title and interest in
and to the Charged Property or any part of it and will not do
any of the foregoing at any time during the subsistence of
this Charge;
(c) the Shares and Securities are and will at all times be fully
paid and there are and will be no monies or liabilities
outstanding in respect of any of the Charged Property;
(d) the Charged Property has been and will at all times be duly
authorised and validly issued and is and will at all times be
free from any restriction on transfer or rights of
pre-emption;
(e) it has and will at all times have the necessary power to enter
into and perform its obligations under this Charge;
(f) this Charge constitutes its legal valid binding and
enforceable obligations and is a security over all and every
part of the Charged Property effective in accordance with its
terms;
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(g) this Charge does not and will not conflict with or result in
any breach or constitute a default under any agreement
instrument or obligation to which the Chargor is a party or by
which it is bound;
(h) all necessary authorisations and consents to enable or entitle
it to enter into this Charge have been obtained and will
remain in full force and effect at all times during the
subsistence of the security constituted by this Charge; and
(i) it will procure due compliance with its obligations in this
Charge by all nominees in whose name or names any Charged
Property is registered or holding any certificates or other
documents of title relating to any Charged Property.
5.2 The Chargor undertakes to the Company to provide a copy of any report
accounts circular or notice received in respect of or in connection
with any of the Charged Property to the Company forthwith upon the
receipt by the Chargor.
5.3 The Chargor shall promptly pay all calls or other payments due and will
discharge all other obligations in respect of any part of the Charged
Property and if the Chargor fails to fulfil any such obligations the
Company may, but shall not be obliged to, make such payments on behalf
of the Chargor in which event any sums so paid shall be reimbursed on
demand by the Chargor to the Company together with interest at the
Default Rate from the date of payment by the Company until repayment
whether before or after judgment.
5.4 The Chargor shall indemnify the Company on a full indemnity basis
against calls or other payments relating to the Charged Property and
any defect in the Chargor's title to the Charged Property and against
all actions proceedings losses costs claims and demands suffered or
incurred in respect of anything done or omitted in any way relating to
the Charged Property or in the exercise or purported exercise of the
powers contained in this Charge by the Company.
5.5 The Chargor shall not do or cause or permit anything to be done which
may adversely affect the security created or purported to be created by
this Charge or which is a variation or abrogation of the rights
attaching to or conferred by all or any part of the Charged Property
without the prior written consent of the Company and shall take such
action as the Company may in its discretion direct in relation to any
proposed compromise arrangement reorganisation conversion repayment
offer or scheme of arrangement affecting all or any part of the Charged
Property.
6 RIGHTS OF THE COMPANY
6.1 The Company may at its discretion (in the name of the Chargor or
otherwise subject to clause 4.3 whether before or after the occurrence
of any Enforcement Event and without any consent or authority on the
part of the Chargor) exercise the following rights and powers in
respect of the Charged Property:
(a) any voting rights and any powers or rights which may be
exercised by the person or persons in whose name or names the
Charged Property is registered; and
(b) all the powers given to trustees by Section 10(3) and (4) of
the Trustee Act 1925 (as amended by Section 9 of the Trustee
Investments Act 1961) in respect of securities or property
subject to a trust.
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6.2 Following the occurrence of an Enforcement Event all dividends
interest and other income forming part of the Charged Property shall,
unless otherwise agreed between the Company and the Chargor, be paid
without any set-off or deduction whatsoever to a suspense account and
retained by the Company until applied as hereinafter provided as part
of the Charged Property and any such monies which may be received by
the Chargor shall pending such payment be held in trust for the
Company.
6.3 The powers conferred on the Company by this Charge are solely to
protect its interests in the Charged Property and shall not impose any
duty on it to exercise any such powers. The Company shall not have any
duty as to any Charged Property and shall incur no liability for:
(a) ascertaining or taking action in respect of any calls
instalments conversions exchanges maturities tenders or other
matters in relation to any Charged Property or the nature or
sufficiency of any payment whether or not the Company has or
is deemed to have knowledge of such matters; or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Charged
Property.
6.4 The Company shall not be liable to account as mortgagee in possession
in respect of all or any of the Charged Property and shall not be
liable for any loss upon realisation or for any failure to present any
interest coupon or any bond or stock drawn for repayment or for any
failure to pay any call or instalment or to accept any offer or to
notify the Chargor of any such matter or for any failure to ensure that
the correct amounts (if any) are paid or received in respect of the
Charged Property or for any negligence or default by its nominees or
agents or for any other loss of any nature whatsoever in connection
with the Charged Property.
7 NEW ACCOUNTS
If the Company receives notice (whether actual or otherwise) of any
subsequent mortgage or charge affecting all or any part of the Charged
Property the Company may open a new account or accounts with the
Chargor and, if it does not open a new account, it shall nevertheless
be treated as if it had done so at the time when it received or was
deemed to have received notice and as from that time all payments made
by the Chargor to the Company shall be credited or be treated as having
been credited to the new account and shall not operate to reduce the
amount secured by this Charge at the time when the Company received or
was deemed to have received such notice.
8 ENFORCEMENT
8.1 If any Enforcement Event shall occur and be continuing then:
(a) the Company shall cease to be under any further commitment to
the Chargor and may at any time thereafter declare the Secured
Liabilities (or such of them as the Company may specify)
immediately due and payable or payable forthwith on demand;
and
(b) the security constituted by this Charge shall become
immediately enforceable and the power of sale and other powers
conferred by Section 101 of the LPA as varied or extended by
this Charge shall become immediately
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<PAGE>
exercisable without the restrictions contained in the LPA as
to the giving of notice or otherwise.
8.2 The following events shall constitute Enforcement Events:
(a) if the Chargor fails to pay any sums payable by it from time
to time to the Company on the due date therefor or fails to
comply with any term condition covenant or other provision of
this Charge or of any facility from the Company or any related
security document or to perform any of its obligations or
liabilities to the Company or if any representation or
warranty from time to time made to the Company by the Chargor
is or becomes incorrect or misleading in a material respect;
(b) if any indebtedness of the Chargor becomes due or capable of
being declared due before it's specified maturity date by
reason of breach or default on the part of the Chargor under
the terms of any agreement or instrument creating or
evidencing the same or is otherwise not paid when due (or
within any applicable period of grace) or any guarantee or
indemnity given by the Chargor is not honoured when due and
called upon;
(c) if an encumbrancer takes possession of or a trustee receiver
or similar officer is appointed in respect of all or any part
of the business or assets of the Chargor or a distress
execution attachment or other legal process is levied or
enforced upon or sued out against all or any substantial part
of such assets and is not discharged within 5 days;
(d) if the Chargor is deemed unable to pay its debts within the
meaning of Section 123 of the Insolvency Act 1986 or commences
negotiations with any one or more of its creditors with a view
to the general readjustment or rescheduling of its
indebtedness or makes a general assignment for the benefit of
or a composition with its creditors;
(e) if the Chargor (being a company) takes any corporate action or
other steps are taken or legal proceedings are started for its
winding-up dissolution or reorganisation (otherwise than for
the purposes of an amalgamation or reconstruction whilst
solvent on terms previously approved in writing by the
Company) or for the appointment of a receiver administrator
administrative receiver trustee or similar officer of it or of
all or a material part of its revenues and assets or (being an
individual) dies or becomes of unsound mind or has a
Companyruptcy petition presented or order made against him;
(f) if the Chargor suspends or threatens to suspend a substantial
part of its business operations (otherwise than for the
purposes of a reconstruction or amalgamation on terms
previously approved in writing by the Company) or any
governmental authority permits or procures or threatens to
permit or procure any reorganisation transfer or expropriation
(whether with or without compensation) of a substantial part
of the business or assets of the Chargor;
(g) if any guarantee indemnity or other security for any of the
Secured Liabilities fails or ceases in any respect to have
full force and effect or to be continuing or is terminated or
disputed or in the opinion of the Company is in jeopardy
invalid or unenforceable or if this Charge or the security
created by it is disputed or in the opinion of the Company is
in jeopardy;
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(h) if at any time it is or becomes unlawful for the Chargor to
perform or comply with any or all of its obligations under
this Charge any other agreement between the Chargor and the
Company or any of such obligations of the Chargor are not or
cease to be legal valid binding and enforceable;
(i) if control (as defined in Section 435 of the Insolvency Act
1986) or the power to take control of the Chargor is acquired
by any person or company or group of associates (as defined in
such section) not having control of the Company at the date of
this Charge (unless with the prior consent in writing of the
Company); or
(j) if in the opinion of the Company a material adverse change
occurs in the financial condition results of operations or
business of the Chargor.
8.3 The Secured Liabilities shall be deemed for the purposes of all powers
implied by statute to have become due and payable within the meaning of
Section 101 of the LPA immediately on the execution of this Charge and
Section 103 of the LPA (restricting the power of sale) and Section 93
of the LPA (restricting the right of consolidation) shall not apply to
this Charge.
9 POWER OF SALE
At any time after the security constituted by this Charge has become
enforceable the Company may without further notice to the Chargor
exercise the power to sell or otherwise dispose of the whole or any
part of the Charged Property, in such manner and on such terms and for
such consideration (whether payable immediately or by instalments) as
the Company shall in its absolute discretion think fit and without
liability for loss whatsoever, and may (without prejudice to any right
which it may have under any other provision of this Charge) treat such
part of the Charged Property as consists of money as if it were the
proceeds of such a sale or other disposal. The Company shall after the
payment of any claims having priority to the security created by this
Charge apply the proceeds without prejudice to the right of the Company
to recover any shortfall from the Chargor in paying the costs of sale
or other disposal and in or towards the discharge of the Secured
Liabilities in such order as the Company in its absolute discretion
thinks fit and the surplus (if any) of such proceeds shall be paid to
the person or persons entitled to it.
10 PROTECTION OF THIRD PARTIES
No purchaser mortgagee or other person dealing with the Company shall
be concerned to enquire whether the Secured Liabilities have become
payable or whether any power which it is purporting to exercise has
become exercisable or whether any money is due under this Charge or as
to the application of any money paid raised or borrowed or as to the
propriety or regularity of any sale by or other dealing with the
Company. All the protection to purchasers contained in Sections 104 and
107 of the LPA shall apply to any person purchasing from or dealing
with the Company as if the Secured Liabilities had become due and the
statutory powers of sale in relation to the Charged Property had arisen
on the date of this Charge.
11 POWER OF ATTORNEY
11.1 The Chargor by way of security irrevocably appoints the Company to be
the attorney of the Chargor (with full powers of substitution and
delegation) for the Chargor and in its name or otherwise and on its
behalf and as its act and deed to sign seal execute deliver perfect and
do all deeds instruments transfers renunciations proxies notices
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documents acts and things which the Chargor may or ought to do under
the covenants and provisions contained in this Charge and generally in
its name and on its behalf to exercise all or any of the powers
authorities and discretions conferred by or pursuant to this Charge or
by the LPA on the Company and to execute and deliver and otherwise
perfect any deed assurance agreement instrument or act which it may
deem proper in the exercise of all or any of the powers authorities or
discretions conferred on the Company pursuant to this Charge.
11.2 The Chargor ratifies and confirms and agrees to ratify and confirm
anything such attorney shall lawfully and properly do or purport to do
by virtue of clause 11.1 and all money expended by any such attorney
shall be deemed to be expenses incurred by the Company under this
Charge.
11.3 The Chargor undertakes to procure that all registered holders from time
to time of any of the Charged Property shall forthwith grant the
Company a power of attorney on the terms set out in clause 11.1 in
respect of such Charged Property.
12 DISCHARGE OF SECURITY
12.1 The security constituted by this Charge shall be continuing and shall
not be considered as satisfied or discharged by any intermediate
payment or settlement of the whole or any part of the Secured
Liabilities or any other matter or thing whatsoever including the
insolvency liquidation or administration of the Chargor and shall be
binding until all the Secured Liabilities have been unconditionally and
irrevocably paid and discharged in full.
12.2 Upon the irrevocable payment or discharge in full of the Secured
Liabilities the Company will or will procure that its nominees will (as
the case may be) at the request and cost of the Chargor re-transfer to
the Chargor all the Company's right title and interest in or to the
Charged Property freed from this Charge.
12.3 Upon any release of the Charged Property the Company or its nominees
(as the case may be) shall not be bound to release or transfer to the
Chargor the identical stocks shares or securities which were deposited
with or transferred to it or them and the Chargor shall accept shares
and securities of the same class and denomination or such other
securities as then represent the Charged Property.
13 AVOIDANCE OF PAYMENTS
13.1 No assurance security or payment which may be avoided or adjusted under
any enactment relating to bankruptcy or insolvency or under Sections
238-245 of the Insolvency Act 1986 or similar legislation binding on
the Chargor in a jurisdiction other than England and Wales and no
release settlement or discharge given or made by the Company on the
faith of any such assurance security or payment shall prejudice or
affect the right of the Company to recover from the Chargor (including
the right to recover any monies which it may have been compelled by due
process of law to refund under the provisions of the Insolvency Act
1986 and any costs payable by it pursuant to or otherwise incurred in
connection with such process) or to enforce the security created by or
pursuant to this Charge to the full extent of the Secured Liabilities.
13.2 The Company shall be at liberty to retain the security created by or
pursuant to this Charge for a period of twenty-five months after the
Secured Liabilities shall have been paid and discharged in full
notwithstanding any release settlement discharge or arrangement given
or made by the Company on or as a consequence of such payment
9
<PAGE>
or termination of liability. If at any time within the period of
twenty-five months after such payment or discharge a petition shall be
presented to a competent court for an order for the winding-up or the
making of an administration order in respect of the Chargor or the
Chargor shall commence to be wound-up or to go into administration or
any analogous proceedings shall be commenced by or against the Chargor
the Company shall be at liberty to continue to retain such security for
and during such further period as the Company may determine. The
Chargor agrees that in such event such security shall be deemed to have
continued to have been held as security for the payment and discharge
to the Company of all Secured Liabilities.
14 COSTS
The Chargor shall on demand and on a full indemnity basis pay to the
Company the amount of all costs and expenses and other liabilities
(including legal and out-of-pocket expenses and any Value Added Tax on
such costs and expenses) which the Company incurs in connection with:
(a) the preparation negotiation execution and delivery of this
Charge;
(b) any stamping or payment of stamp duty reserve tax or
registration of this Charge or any transfer of the Charged
Property pursuant hereto;
(c) any actual or proposed amendment of or waiver or consent under
or in connection with this Charge;
(d) any discharge or release of this Charge;
(e) the preservation or exercise (or attempted preservation or
exercise) of any rights under or in connection with and the
enforcement (or attempted enforcement) of this Charge; or
(f) dealing with or obtaining advice about any other matter or
question arising out of or in connection with this Charge;
together with interest thereon at the Default Rate from the date of
demand (or if earlier the date of payment by the Company) until the
date of payment by the Chargor whether before or after judgment.
15 NOTICES
15.1 Any demand or notice by the Company may be delivered personally to the
Chargor or sent to the Chargor by post, telemessage, cable, telex or
telecopier at the address set out at the head of this Charge or such
other address(es) notified in writing to the Company.
15.2 Any such notice, demand or other correspondence required to be sent or
given for any purpose of this Charge shall be given, made or served by
sending it by recorded delivery, facsimile or telex or by delivering it
by hand. Proof of posting or despatch of any notice or communication
shall be deemed to be proof of receipt:
(a) in the case of a letter, on the second Business Day after
posting;
(b) in the case of a facsimile or telex, immediately on the date
of sending.
15.3 Any party may change its address for the receipt of notices by sending
written notice of such change in the manner set out in this Clause 15.
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<PAGE>
16 MISCELLANEOUS
16.1 No delay or omission on the part of the Company in exercising any right
or remedy under this Charge shall impair that right or remedy or
operate as or be taken to be a waiver of it nor shall any single
partial or defective exercise of any such right or remedy preclude any
other or further exercise under this Charge or that or any other right
or remedy.
16.2 The Company's rights under this Charge are cumulative and not exclusive
of any rights provided by law and may be exercised from time to time
and as often as the Company deems expedient.
16.3 Any waiver by the Company of any terms of this Charge or any consent or
approval given by the Company under it shall only be effective if given
in writing and then only for the purpose and upon the terms and
conditions if any on which it is given.
16.4 The security constituted by this Charge shall be in addition to and
shall not be prejudiced determined or affected by nor operate so as in
any way to determine prejudice or affect any Encumbrance which the
Company may now or at any time in the future hold for or in respect of
the Secured Liabilities or any part of them and shall not be prejudiced
by time or indulgence granted to any person or any abstention by the
Company in perfecting or enforcing any remedies securities guarantees
or rights it may now or in the future have from or against the Chargor
or any other person or any waiver release variation act omission
forbearance unenforceability indulgence or invalidity of any such
remedy security guarantee or right.
16.5 If at any time any one or more of the provisions of this Charge is or
becomes illegal invalid or unenforceable in any respect under any law
of any jurisdiction neither the legality validity or enforceability of
the remaining provisions of this Charge nor the legality validity or
enforceability of such provision under the law of any other
jurisdiction shall be in any way affected or impaired as a result.
16.6 Any statement certificate or determination of the Company as to the
Secured Liabilities or without limitation any other matter provided for
in this Charge shall in the absence of manifest error be conclusive and
binding on the Chargor.
17 LAW AND JURISDICTION
17.1 This Charge is governed by and shall be construed in accordance with
English law.
17.2 The Chargor irrevocably agrees for the exclusive benefit of the Company
that the courts of England shall have jurisdiction to hear and
determine any suit action or proceeding and to settle any dispute which
may arise out of or in connection with this Charge and for such
purposes irrevocably submits to the jurisdiction of such courts.
17.3 Nothing contained in this Clause shall limit the right of the Company
to take proceedings against the Chargor in any other court of competent
jurisdiction nor shall the taking of any such proceedings in one or
more jurisdictions preclude the taking of proceedings in any other
jurisdiction whether concurrently or not (unless precluded by
applicable law).
17.4 The Chargor irrevocably waives any objection which it may have now or
in the future to the courts of England being nominated for the purpose
of this Clause on the ground of venue or otherwise and agrees not to
claim that any such court is not a convenient or appropriate forum.
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17.5 The Chargor authorises and appoints___________________
of_________________________ (or such other person being a firm of
solicitors in England as it may from time to time substitute by notice
to the Company) to accept service of all legal process arising out of
or connected with this Charge and service on such person (or
substitute) shall be deemed to be service on the Chargor. Except upon
such a substitution the Chargor shall not revoke any such authority or
appointment shall at all times maintain an agent for service of process
in England and if any such agent ceases for any reason to be an agent
for this purpose shall forthwith appoint another agent and advise the
Company accordingly.
IN WITNESS whereof the Chargor has executed and delivered this Charge
as a Deed the day and year first before written.
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SCHEDULE
(a) 5,499,999 Ordinary Shares in Capital Media (UK) Limited of
US$0.01;
(b) 1 Ordinary Share in Capital Media (UK) Limited of(pound)1.
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ATTESTATIONS
EXECUTED as a Deed on behalf )
of CAPITAL MEDIA GROUP )
LIMITED a company )
incorporated in the State of )
Nevada United States of )
America by C.R. Koppel ) /s/ CHARLES KOPPEL
and Barry Llewellyn ) /s/ BARRY LLEWELLYN
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to )
sign this document on behalf )
of the Company )
EXECUTED as a Deed on behalf )
of UNIVERSAL INDEPENDENT )
HOLDINGS LIMITED )
incorporated in the British )
Virgin Islands )
by ) /s/
and ) /s/
being a person/persons who in )
accordance with the laws of )
that territory is/are empowered )
to sign the document on behalf )
o the Company )
14
EXHIBIT 10.11
DATED 31 October 1996
GUARANTEE
UNIVERSAL INDEPENDENT
HOLDINGS LIMITED
as Beneficiary (1)
THE GUARANTORS named in the Schedule (2)
<PAGE>
TABLE OF CONTENTS
PARTIES 1
OPERATIVE PROVISIONS 1
1 Definitions and Interpretation 1
2 Guarantee 2
3 The Beneficiary and the Principal 3
4 Payments 3
5 Variations, waivers etc. 4
6 New Account with the Principal 4
7 Set-off 4
8 Security from Principal 5
9 Subrogation etc. 5
10 Conditional discharge and retention of security 5
11 Joint and several obligations 6
12 Representations and warranties 6
13 Application of Proceeds, etc. 6
14 Benefit of Guarantee 7
15 Notices 8
16 Severability 8
17 Counterparts 8
18 Law and jurisdiction 8
THE SCHEDULE 9
The Guarantors 9
<PAGE>
DATE
31 October 1996
PARTIES
(1) UNIVERSAL INDEPENDENT HOLDINGS LIMITED of PO Box 438, Tropic Isle
Building, Wickhams Cay, Rod Town, Tortola, British Virgin Islands (the
"Beneficiary")
(2) THE PARTIES named in the Schedule (together the "Guarantors" and singly
a "Guarantor")
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Guarantee, (including the Introduction) the following
words and expressions shall have the following meanings:
agreed form in relation to any agreement
or document the form agreed between
the parties to the Guarantee and
initialled by the Guarantor and the
Beneficiary by way of identification
only.
Business Day a day (other than a Saturday or
Sunday) on which banks are generally
open for business in London and New
York.
Counter Indemnity a counter indemnity dated [ ]
and made between the Principal and
the Beneficiary
Currency of Account the currency in which any
Indebtedness is expressed.
Guarantee this Guarantee and Indemnity as
amended or supplemented from time to
time.
Indebtedness all the Principal's present or
future indebtedness whatever and
wherever to the Beneficiary under
the Counter Indemnity, whether
actual, contingent, present or
future and whether or not matured or
accrued due and whether incurred
solely, severally or jointly with
any other person in whatever
currency, together with interest,
commission, bank charges and any
other costs, charges and expenses
(on a full indemnity basis) charged
or incurred by the Beneficiary in
preparing, negotiating, perfecting,
protecting or enforcing or
attempting to enforce or protect
this Guarantee or any other security
(and its rights thereunder) held by
the Beneficiary from time to time.
Principal Capital Media (UK) Limited (No.
3025201) of 25 St. James Street,
London W1M 5HY and where more
<PAGE>
than one person is comprised in the
term "Principal", reference to the
Principal shall (where the context
admits) take effect as a reference
to any of such persons and, where
the Principal is a firm, shall
include the person or persons from
time to time constituting the firm,
whether or not under the same style
or firm name and notwithstanding any
interim dissolution and
reconstruction. Where by any
agreement with the Principal and the
Beneficiary any person assumes all
or any part of the liability of the
Principal to the Beneficiary in
substitution for the Principal, the
Guarantors' liability shall not be
discharged, reduced or affected, but
this Guarantee shall take effect as
if the expression the "Principal"
included such person.
1.2 Clause headings are for ease of reference only. References to clauses
are to clauses of this Guarantee unless otherwise stated.
1.3 Words and expressions defined in the Facility Letter shall have the
same meaning in this Guarantee
2 GUARANTEE
2.1 In consideration of the Beneficiary now making available or continuing
to make available financial accommodation to the Principal pursuant to
arrangements in respect of a lease of a transponder by the Principal
from PTT Telecom B.V. at the request of the Guarantors, each of the
Guarantors unconditionally and irrevocably guarantees payment to the
Beneficiary on demand of all Indebtedness (subject to applicable law)
and, as primary obligor and not merely as a surety, agrees to indemnify
the Beneficiary on demand from and against any loss it may incur as a
result of or in connection with its having now or subsequently advanced
any moneys to the Principal or having now or subsequently incurred any
obligation on behalf of or at the request of the Principal.
2.2 This Guarantee shall:
(a) be additional to any other guarantee or security now or
subsequently held by the Beneficiary in respect of all
Indebtedness;
(b) be a continuing security, shall remain in force until
determined by three months' notice in writing from the
Guarantors and shall extend to secure all Indebtedness
existing at the close of business on the day on which such
notice to determine expires;
(c) apply to the ultimate balance of the Indebtedness and shall
not be discharged or otherwise affected by any intermediate
payment or satisfaction of any part of the Indebtedness or
otherwise the Guarantors' obligations under this Guarantee;
(d) not be discharged or affected by any failure of, or defect or
informality in, any security given by or on behalf of the
Principal in respect of any Indebtedness, nor by any legal
limitation, disability, incapacity or lack of any borrowing or
other powers of the Principal or fraud of the Principal or any
other person or the non-existence of any matter which each of
the
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Guarantors considers expressly or impliedly or may be
deemed to consider a condition precedent to the giving of
their Guarantee (and where any such matter is considered a
condition precedent it is expressly waived by the Guarantors),
or lack of authority of any director or other person appearing
to be acting for the Principal in any matter in respect of any
Indebtedness or by any other fact or circumstances (whether
known or not to any of the Guarantors and/or the Beneficiary)
as a result of which any Indebtedness incurred or purported to
be incurred by or on behalf of the Principal is or may be
rendered invalid, illegal, void or unenforceable by the
Beneficiary against the Principal in whole or in part and
notwithstanding the non-existence of any matter as is referred
to above and so that:
(i) all such circumstances shall be disregarded as
between the Guarantors and the Beneficiary, and any
Indebtedness which would otherwise have arisen shall
be treated as Indebtedness due and owing to the
Beneficiary from the Principal for the purposes of
this Guarantee, whether the same is recoverable by the
Beneficiary from the Principal or not; and
(ii) if and so far as such moneys shall not be so
recoverable, the Guarantors shall be liable to the
Beneficiary as principal debtor and by way of
indemnity for the same amount as that for which the
Guarantors would have been liable by way of guarantee,
if valid and enforceable Indebtedness had been created
between the Beneficiary and the Principal; and
(e) remain the property of the Beneficiary.
2.3 A certificate signed on behalf of the Beneficiary of the amount
for the time being of any Indebtedness and/or the amounts due to the
Beneficiary shall be conclusive evidence for all purposes against the
Guarantors, unless manifestly incorrect.
3 THE BENEFICIARY AND THE PRINCIPAL
Before enforcing this Guarantee, the Beneficiary shall not be obliged
to take any action or obtain any judgment, nor make or file any claim
in the bankruptcy, dissolution or winding up of the Principal or any
other person, nor make any demand of the Principal, nor enforce any
other security held by it for any Indebtedness. The Beneficiary need
not advise the Guarantors of its dealings with the Principal or of any
default by the Principal of which the Beneficiary may have knowledge.
4 PAYMENTS
4.1 All payments by the Guarantors under this Guarantee shall be
made in the Currency of Account, without set-off or counter-claim and
without deduction for any taxes, duties, charges, fees, deductions,
withholdings, or restrictions whatever. If a Guarantor is obliged by
law to make any such deduction, the amount due from that Guarantor
shall be increased to the extent necessary to ensure that, after the
making of such deduction, the Beneficiary receives a net amount equal
to the amount it would have received had no such deduction been
required to be made.
4.2 Any payment made to or for the account of the Beneficiary in a
currency other than the Currency of Account shall only discharge the
Guarantors to the extent of the amount in the Currency of Account which
the Beneficiary is able in accordance with its normal practices, to
purchase on the date of receipt of such payment with the
3
<PAGE>
other currency so received. If the amount of the Currency of Account
which the Beneficiary is so able to purchase falls short of the amount
originally due to the Beneficiary under the relevant liability of the
Principal or under the Guarantee, the Guarantors shall indemnify the
Beneficiary on demand against any loss or damage arising as a result.
4.3 The indemnity in Clause 4.2 shall constitute an independent
obligation from the Guarantors' other obligations, shall give rise to
an independent cause of action, shall apply irrespective of any
indulgence granted by the Beneficiary from time to time and shall
continue in effect notwithstanding any judgment or order for a
liquidated sum or sums in respect of any Indebtedness or in respect of
amounts due under this Guarantee.
5 VARIATIONS, WAIVERS ETC.
The Beneficiary may, without notice to, or consent from, the Guarantors
and without reducing or extinguishing the Guarantors' liability:
(a) renew, vary, determine or increase any accommodation or credit
given to the Principal;
(b) renew, modify, release or abstain from perfecting or enforcing
any security or guarantee now or subsequently held from the
Principal or any other person, including any Guarantor, in
respect of the Indebtedness;
(c) grant time or indulgence to or compound with the Principal or
any other person or Guarantor; and
(d) do or omit to do anything which but for this provision might
operate to exonerate or discharge the Guarantors or any of
them from any of their respective obligations and this
Guarantee shall not be discharged nor affected by anything
which would not have discharged or affected the Guarantors'
respective liability if the Guarantors had been principal
debtors to the Beneficiary instead of guarantors.
6 NEW ACCOUNT WITH THE PRINCIPAL
If this Guarantee is determined or called in by demand made by the
Beneficiary, the Beneficiary may in its discretion open a new account
or accounts with the Principal or any other person for whose
liabilities this Guarantee is available as security. If the Beneficiary
does not open a new account, it shall nevertheless be deemed to have
done so at the time of determination or calling in. As from that time,
all payments made to the Beneficiary shall be credited or be deemed to
be credited to the new account opened or deemed to have been opened and
shall not operate to reduce the amount for which this Guarantee is
available as security at that time.
7 SET-OFF
7.1 The Beneficiary shall, with the Guarantors' irrevocable authority and,
in addition to and without prejudice to any rights the Beneficiary may
have whether:
(a) arising by operation of law or otherwise in consequence of the
relationship between the parties to this Guarantee or any of
the Security Documents or the Facility Letter; or
4
<PAGE>
(b) by way of rights of general lien or set-off which may
otherwise exist,
be entitled without notice at any time and from time to time, set-off
any amounts due from the Beneficiary to any Guarantor of whatever
nature and in whatever currency denominated, in or towards satisfaction
of any sums due and payable from the Guarantors' to the Beneficiary
under this Guarantee or any of the Security Documents or the Facility
Letter.
7.2 In effecting any such set-off or transfer, the Beneficiary shall be
entitled to convert one currency into another currency using the spot
rate of exchange of Lloyds Bank PLC between such currencies prevailing
on the date of such set-off or transfer. If the liability in respect of
which the Beneficiary is exercising the Beneficiary's rights of set-off
is contingent, or not yet payable, it shall automatically be
accelerated, and shall accordingly be due and payable, before and as at
the time of such set-off. Provided that the Beneficiary shall not be
obliged to exercise any right given to the Beneficiary by Clause 7.
8 SECURITY FROM PRINCIPAL
Each of the Guarantors warrants that it does not hold and undertakes
that it will not take or hold without the Beneficiary's written consent
in connection with this Guarantee any security whatever from the
Principal. Any security so taken (whether with or without the consent
of the Beneficiary) shall be held in trust for the Beneficiary and as
security for the Guarantor's liability under this Guarantee. The
Guarantors shall deposit such security and any document relating to it
with the Beneficiary as soon as practicable which deposit shall be by
way of security.
9 SUBROGATION ETC.
Until all amounts due or to become due from the Guarantors under this
Guarantee have been paid and discharged in full, the Guarantors shall
not be entitled to share in any security held or money received or
receivable by the Beneficiary on account of that balance or to stand in
the place of the Beneficiary in respect of any security or money. Until
such balance has been discharged in full the Guarantors shall not take
any step to enforce any right or claim whatever against the Principal
in respect of any monies paid by the Guarantors to the Beneficiary
under this Guarantee or have or exercise any rights as surety in
competition with or in priority to any claim of the Beneficiary. Each
Guarantor will, if required by the Beneficiary, prove in a winding up
or bankruptcy on the basis that the Guarantors hold the benefits of
such claims on trust for the Beneficiary.
10 CONDITIONAL DISCHARGE AND RETENTION OF SECURITY
10.1 Any settlement, discharge or release between the Guarantors and the
Beneficiary shall be conditional on no security given or payment made
to the Beneficiary by the Principal or any other person being avoided
or reduced by virtue of any enactments relating to bankruptcy or
liquidation or any other law for the time being in force. The
Beneficiary shall be entitled to recover the value or amount of any
such security or payment from the Guarantor subsequently as if such
settlement, discharge or release had not occurred. The Beneficiary may
exercise the rights created by Clause 7 in respect of the Guarantors'
liability under this Clause (whether actual or contingent).
10.2 The Beneficiary may retain any security held by it for the Guarantors'
liability under this Guarantee for the relevant period after repayment
of all sums due to the
5
<PAGE>
Beneficiary from the Principal. If within the relevant period after
such repayment a petition shall be presented for an order for the
winding-up of the Principal or the Principal shall commence to be wound
up, the Beneficiary may continue to retain such security or any part of
it for such further period as the Beneficiary shall determine in its
discretion. In this Clause 10.2, the "RELEVANT PERIOD" means the
relevant statutory period, extended by one month, within which any
payment or security made to or held by the Beneficiary may be avoided
or invalidated under any enactment relating to insolvency or otherwise.
11 JOINT AND SEVERAL OBLIGATIONS
11.1 Notwithstanding anything to the contrary in this Guarantee, each of the
Guarantors shall:
(a) be jointly and severally responsible for the payment of the
Indebtedness and other amounts as may from time to time be due
from the Guarantors under this Guarantee and shall otherwise
be joint and severally liable for each and every obligation
undertaken, or liability incurred, under this Guarantee; and
(b) remain so jointly and severally liable notwithstanding that
either of the Guarantors has not for any reason whatever
executed this Guarantee or is not for any reason whatever
effectually bound by the terms of this Guarantee and
notwithstanding that this Guarantee may be invalid or
unenforceable against either of the Guarantors (whether or not
the deficiency is known to the Beneficiary or either of the
Guarantors) or notwithstanding any fraud or non-existence of
any matter which either of the Guarantors may have considered
fundamental to their respective obligations under this
Guarantee or notwithstanding the discharge by the Beneficiary
of either of the Guarantors from their obligations under this
Guarantee.
11.2 This Guarantee shall not be revoked or impaired as to any of the
Guarantors by the incapacity or insolvency of any of the Guarantors.
All references to the Guarantors shall take effect as references to any
of such persons.
11.3 The Beneficiary may release or discharge any of such parties from their
obligations under this Guarantee or accept any composition from or make
any other arrangements with either of the Guarantors without releasing
or discharging the other(s) or otherwise prejudicing or affecting the
Beneficiary's rights and remedies against the other(s).
12 REPRESENTATIONS AND WARRANTIES
Each of the Guarantors represents and warrants to the Beneficiary (such
warranties and representations to continue so long as the Guarantee
remains subsisting and to be updated by reference to the subsisting
facts and circumstances) that so far as each Guarantor is aware of at
the date hereof:
(a) each are duly incorporated companies with limited liability
under their relevant jurisdictions, are validly existing and
no liquidator, receiver, administrator, administrative
receiver or similar or analogous official under any relevant
law has been appointed in respect of either of them or any
part of their respective assets and no action is currently
being taken with a view to appointing any such liquidator,
receiver, administrative receiver, administrator or similar or
analogous official under any relevant law;
6
<PAGE>
(b) the execution and delivery by each of the Guarantors of this
Guarantee, the performance and observance of each of them of
their respective obligations under this Guarantee does not and
will not violate or result in a breach of or, exceed any power
granted to either of the Guarantors or their respective
directors by:
(i) any law, rule or regulation to or by which any of the
Guarantors, their respective businesses, property or
assets is subject or bound; or
(ii) any judgment, order, injunction, determination, award
or ruling of any court or arbitrator or any judicial
administrative or governmental authority to or by
which either of the Guarantors is subject to or bound;
or
(iii) the Memorandum and Articles of Association or other
incorporating and constitutional documents of either
of the Guarantors; or
(iv) any deed, agreement, franchise, concession or other
instrument to which either of the Guarantors is a
party or which may be binding them or which may affect
its business or any of its properties or assets.
(c) it is not necessary to ensure the legality, validity,
enforceability or admissability in evidence of this Guarantee
that it or any other document be stamped, registered, filed,
notarised or recorded in the United Kingdom or the
jurisdiction of their respective incorporation or residence
(if different) and this Guarantee is in proper form for its
enforcement in the relevant jurisdiction of each of the
Guarantors;
(d) neither of the Guarantors is in default in respect of any
material financial commitment or obligation, including, but
not limited to, any guarantee, indemnity, bond or like
obligation or in breach of any agreement or arrangement or
statutory or other legal requirement to an extent or in a
manner which might have a material adverse effect on the
business assets or financial condition of the Guarantors or
either of them; and
(e) no taxes, levies, imports or duties of whatever nature are
imposed by withholding or otherwise on any payment to be made
by any of them under this Guarantee or are imposed on or by
virtue of the execution or delivery by either of them of this
Guarantee.
13 BENEFIT OF GUARANTEE
This Guarantee shall be binding on the Guarantors and their respective
successors and permitted assigns and shall enure to the benefit of and
be enforceable by the Beneficiary and its successors and assigns, but
so that each of the Guarantors may not assign or otherwise transfer any
of their respective rights or obligations under this Guarantee.
14 NOTICES
14.1 Any demand or notice by the Beneficiary may be delivered personally to
the Guarantors or sent to the Guarantors by post, telemessage, cable,
telex or telecopier at their respective addresses set out in the
Schedule or such other address(es) notified in writing to the
Beneficiary.
7
<PAGE>
14.2 Any such notice, demand or other correspondence required to be sent or
given for any purpose of this Guarantee shall be given, made or served
by sending it by recorded delivery, facsimile or telex or by delivering
it by hand. Proof of posting or despatch of any notice or communication
shall be deemed to be proof of receipt:
(a) in the case of a letter, on the second Business Day after
posting;
(b) in the case of a facsimile or telex, immediately on the date
of sending.
14.3 Any party may change its address for the receipt of notices by sending
written notice of such change in the manner set out in this clause 15.
165 SEVERABILITY
Each of the provisions of this Guarantee is severable and distinct from
the others and if at any time one or more of the provisions is or
becomes invalid, illegal or unenforceable, the validity, legality
and/or enforceability of the remaining provisions of this Guarantee
shall not in any way be affected or impaired by it.
16 COUNTERPARTS
This Guarantee and any amendment or addition to it may be executed in
any number of counterparts each of which taken together shall be deemed
to constitute one and the same agreement and each of which individually
shall be deemed to be an original, with the same effect as if the
signature on each counterpart were on the same original.
17 LAW AND JURISDICTION
17.1 This Guarantee shall be governed by and construed in accordance with
English law.
17.2 For the exclusive benefit of the Beneficiary, each of the Guarantors
irrevocably submits to the exclusive jurisdiction of the English
courts. Any writ, judgment or other legal process shall be sufficiently
served on the Guarantors and each of them if delivered to the process
agent named by it in column (3) of the Schedule.
17.3 Nothing in Clause 18.2 shall prejudice or be construed as to prejudice
the Beneficiary's right to bring any action in any other such country
having or claiming jurisdiction (whether concurrently or not).
8
<PAGE>
THE SCHEDULE
THE GUARANTORS
(1) (2) (3)
NAME ADDRESS PROCESS AGENT
(INCLUDING TELEX AND
FACSIMILE NUMBERS)
Capital Media Group Limited
Onyx Television GmbH
9
<PAGE>
ATTESTATIONS
Executed and unconditionally delivered as a deed.
EXECUTED as a Deed on behalf )
of CAPITAL MEDIA GROUP )
LIMITED a company )
incorporated in the State of )
Nevada United States of )
America by C.R. Koppel ) /s/ CHARLES KOPPEL
and Barry Llewellyn ) /s/ BARRY LLEWELLYN
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to )
sign this document on behalf )
of the Company )
EXECUTED as a Deed on behalf )
of ONYX TELEVISION GMBH a company )
incorporated in the State of )
Germany by Roland M. Mueller ) /s/ ROLAND M. MUELLER
and )
being a person/persons who in )
accordance with the laws of )
that territory is/are empowered )
to sign the document on behalf )
of the Company )
10
EXHIBIT 10.12
DATED 31 October 1996
DEED OF PRIORITIES
INSTAR HOLDINGS INC (1)
- and -
UNIVERSAL INDEPENDENT
HOLDINGS LIMITED (2)
- and -
CAPITAL MEDIA UK LIMITED (3)
<PAGE>
TABLE OF CONTENTS
PARTIES 1
INTRODUCTION 1
1 Definitions and Interpretation 1
2 Confirmations 2
3 Priorities 2
4 Appointment of Receiver 3
5 Transferability 4
6 The Borrower 4
7 Law 4
SCHEDULE 1 6
SCHEDULE 2 7
SCHEDULE 3 8
ATTESTATIONS 9
<PAGE>
DATE
31 October 1996
PARTIES
(1) INSTAR HOLDINGS INC whose registered office is at R.R.E. Commercial
Centre, Majuro Marshall Islands ("Instar");
(2) UNIVERSAL INDEPENDENT HOLDINGS, whose registered office is at PO box
438, Tropic Isle Building, Wickhams Cay, Road Town, Tortola, British
Virgin Islands ("Universal"); and
(3) CAPITAL MEDIA (UK) LIMITED registered in England under number 3025201,
whose registered office is at 25 James Street London W1M 5HY (the
"Borrower").
INTRODUCTION
The Parties have agreed to regulate their respective priorities in
respect of the security referred to in the Schedules in the manner set
out in this Deed.
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Deed (including the Introduction), unless the context otherwise
requires, the following words and expressions shall have the following
meanings:
Capital Media Group Capital Media Group Limited a
company registered in the State of
Nevada United Sates of America and
having its principal office at 25
James Street London W1M 5HY
Instar Charges the mortgages or charges referred
to in Schedule 2 below and any other
security interest which at the date
of this Deed or at any later date
secures the Instar Debt
Instar Debt all monies, liabilities and
obligations, whether principal
interest or otherwise now or at any
time after the date hereof being or
becoming due, owing or incurred by
the Borrower or Capital Media Group
to Instar whether actual, contingent
present or future and whether done
severally or jointly with any other
person and whether as principal or
surety or in some other capacity,
together with interest legal and
other costs, charges and expenses
interest shall be calculated and
compounded in accordance with the
usual practice of Instar from time
to time as well after as before any
demand made or judgment ascertained
hereunder
Universal Charges the mortgages or charges referred
to in Schedule 1 below and any other
security interest which at the
<PAGE>
date of this Deed or at any later
date secures any Universal Debt
Universal Debt all monies, liabilities and
obligations, whether principal
interest or otherwise nor or at any
time after the date hereof being or
becoming due, owing or incurred by
the Borrower or Capital Media Group
to Universal whether actual,
contingent present or future and
whether done severally or jointly
with any other person and whether as
principal or surety or in some other
capacity, together with interest
legal and other costs, charges and
expenses whatsoever or in a full
indemnity basis so that interest
shall be calculated and compounded
in accordance with the usual
practice of Universal from time to
time as well after as before any
demand made or judgment ascertained
hereunder
Priority Assets the property and assets described
in Schedule 3
Subordination Period the period beginning on the date
hereof and ending on the date
following which the Universal Debt
has been unconditionally and
irrevocably paid and discharged in
full and no liabilities remain
outstanding under the terms of the
Universal Debt.
2 CONFIRMATIONS
2.1 For the avoidance of doubt:
(a) Instar consents to the creation and registration of the
Universal Charges; and
(b) Universal consents to the creation and registration of the
Instar Charges.
2.2 Each of Universal and Instar confirm that they have taken no action to
crystallise any floating charge given by the Borrower to either of them
nor are they aware that any such floating charge has crystallised.
2.3 The Borrower hereby confirms and warrants to each of Universal and
Instar that:
(a) it has not ceased to carry on business;
(b) no floating charge given by it has at the date hereof
crystallised and that such party is aware of no event having
occurred or about to occur which could result directly in the
crystallisation of any such floating charge.
3 PRIORITIES
3.1 During the Subordination Period in relation to the Priority Assets, the
Universal Debt and Universal Charges shall rank in priority to the
Instar Debt and Instar Charges.
2
<PAGE>
3.2 Save in relation to the Priority Assets, the Instar Debt and the Instar
Charges shall rank in priority to the Universal Debt and Universal
Charges.
3.3 Clauses 3.1, 3.2 and 3.4 apply:
(a) as between Universal and Instar; and
(b) as between the Borrower and each of Universal and Instar.
3.4 Nothing in this Deed shall affect the status of the Universal Charges
and the Instar Charges as continuing securities nor shall the ranking
of the Universal Charges and the Instar Charges contained in this
Clause 3 be affected by any of, or any combination of, the following:
(a) the nature of the various securities comprised in the
Universal Charges and the Instar Charges and the date of their
execution and registration;
(b) any provision contained in any of the Universal Charges and
the Instar Charges;
(c) the respective date or dates on which any person received
notice of the existence or creation of the Universal Charges
and the Instar Charges;
(d) the respective date or dates upon which moneys may be or have
been advanced or become owing or payable or secured under the
Universal Charges and the Instar Charges;
(e) any fluctuation from time to time in the amount of the moneys
secured by the Universal Charges and the Instar Charges (which
shall be continuing securities in favour of each chargee
respectively) and in particular, but without limitation, any
reduction to nil of the moneys so secured or any advance or
loans by Universal and Instar (as appropriate) to the Borrower
acting by a receiver or administrative receiver or any advance
or loan made by Universal or Instar to any receiver or
administrative receiver of the Borrower in a personal capacity
both before and after liquidation of the Borrower;;
(f) the existence at any time of a credit balance on any current
or other account of the Borrower; or
(g) the appointment of any liquidator or receiver, administrator
or other similar officer in respect of the Borrower or over
all or any part of the Borrower's assets.
4 APPOINTMENT OF RECEIVER
4.1 Universal and Instar agree that if either wishes to appoint an
administrative receiver or receiver of the Borrower or to exercise its
power of sale or otherwise enforce any of its security, it shall
forthwith inform the other of its intention and endeavour to agree with
the other on the method by which its security will be enforced.
Universal and Instar shall consult together with a view to agreeing
upon the method of enforcement and where appropriate upon a suitable
person to be appointed administrative receiver or receiver and shall
endeavour to co-operate with each other in realising the assets charged
to them and ensuring that the net proceeds
3
<PAGE>
after deduction of the expenses of realisation are paid in accordance
with the provisions of this Deed provided that nothing herein contained
shall prevent either of them from appointing an administrative receiver
or a receiver of the Borrower forthwith without such consultation or
agreement where the appointor believes that the immediate appointment
of the same is necessary to protect its interests. However, the
appointor shall as soon as practicable thereafter inform Universal or
Instar, as the case may be, of such appointment and consult with it
with a view to the retention in office of such an administrative
receiver or receiver or (if not agreed) to the appointment of others to
act jointly with him.
4.2 If Instar appoints a receiver or an administrative receiver pursuant to
the Instar Charges, such receiver or administrative receiver shall give
priority to any receiver or administrative receiver subsequently
appointed by Universal such priority to be in relation to the Priority
Assets only, and if Universal appoint such a receiver or administrative
receiver pursuant to the Universal Charges, it shall procure that such
receiver or administrative receiver gives priority to any receiver
subsequently appointed by Instar such priority to be in relation to all
assets of the Borrower other than the Priority Assets.
4.3 Instar will, at the request of Universal or any receiver or
administrative receiver appointed by Universal and at the cost of the
Borrower (or if the Borrower does not have sufficient funds to make the
appropriate payments, at the cost of Instar), join in such documents or
otherwise take such action as shall be reasonably required to
facilitate the disposal of the Priority Assets or any of them whether
or not there will be any balance of proceeds available for Instar
arising from a disposal of the Priority Assets or any of them.
5 TRANSFERABILITY
5.1 All references in this Deed to Universal, Instar and the Borrower shall
in each case be deemed to include their successors in title and
assigns, provided always that any successor and assign shall enter into
a deed in form and substance satisfactory to Universal and Instar
confirming that such successor and assign shall be bound by the
provisions of this Deed.
5.2 Universal and Instar acknowledge the right of each other to copies of
the Universal Security and the Instar Security, respectively.
6 THE BORROWER
The Borrower acknowledges the terms of this Deed and that nothing
contained contracted in this Deed shall in any way affect or prejudice
its liability to or the rights and remedies of Universal and Instar
under their respective security all of which shall remain in full force
and effect subject only to the priorities established by this Deed.
7 LAW
7.1 This Deed is governed by English law.
7.2 Universal and Instar irrevocably agree for the exclusive benefit of
Universal and Instar respectively that the courts of England shall have
jurisdiction to hear and determine any suit action or proceeding, and
to settle any disputes, which may arise
4
<PAGE>
out of in connection with this Agreement and for such purposes hereby
irrevocably submits to the jurisdiction of such courts.
7.3 Nothing contained in this Clause shall limit the right of Instar or
Universal to take proceedings against the Borrower in any other court
of competent jurisdiction, nor shall the taking of any such proceedings
in one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not (unless precluded by
applicable law).
7.4 Universal hereby authorises and appoints _______________________ of
___________________ and Instar hereby authorises and appoints
___________________ of _______________ (or such other person being a
firm of solicitors or authorised institution in England as it may
substitute by notice to Instar and Universal as the case may be to
accept service of all legal process arising out of or connected with
this Deed. Service on such person(s) (or substitute) shall be deemed to
be service on Instar whether or not process is forwarded to or received
by it.
IN WITNESS whereof the parties hereto have executed and delivered this
Deed on the date first above written.
5
<PAGE>
SCHEDULE 1
1 The Facility dated __ 1996 and made between Instar (1) and the Borrower
(2).
2 A Debenture dated __ 1996 and made between Instar (1) and the Borrower
(2).
3 A Security Assignment dated __ 1996 and made between Instar (1) and the
Borrower.
6
<PAGE>
SCHEDULE 2
1 A Counter Indemnity dated __1996 and made between Universal and the
Borrower
2 A Debenture dated __ and made between Universal (1) and the Borrower
(2)(the "Universal Debenture")
3 Each and every other security document created by the Borrower in
favour of Universal relating to the Priority Assets.
7
<PAGE>
SCHEDULE 3
All the rights title and interest of the Borrower of whatever kind
whatsoever in respect of an agreement dated 25 September 1995 made
between PTT Telecom BV and the Borrower whereby the PTT Telecom BV
agreed to lease to the Borrower transporter capacity (the "PTT
Lease")and in addition thereto all such items charged by the floating
charge contained in Clause 2.2.(j) of the Universal Debenture which
relate to or form any part of the PTT Lease.
8
<PAGE>
<TABLE>
<CAPTION>
ATTESTATIONS
<S> <C>
EXECUTED as a Deed on behalf of )
INSTAR HOLDINGS INC a company )
incorporated in the Marshall islands )
by Anthony Michael Bousfield, Director ) /s/ ANTHONY MICHAEL BOUSFIELD
and Philip Oscal Gallienne, Secretary ) /s/ PHILIP OSCAR GALLIENNE
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign )
this document on behalf of the Company )
EXECUTED as a Deed on behalf of )
UNIVERSAL INDEPENDENT )
HOLDINGS LIMITED incorporated )
in the British Virgin Islands )
by ) /s/
and ) /s/
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign the )
document on behalf of the Company )
EXECUTED and delivered as a deed )
by CAPITAL MEDIA (UK) LIMITED )
acting by: )
/s/ BARRY LLEWELLYN Director
/S/ CHARLES KOPPEL Secretary
</TABLE>
9
EXHIBIT 10.13
DATED 31 October 1996
DEED OF PRIORITIES
INSTAR HOLDINGS INC (1)
- and -
UNIVERSAL INDEPENDENT
HOLDINGS LIMITED (2)
- and -
CAPITAL MEDIA GROUP LIMITED (3)
<PAGE>
TABLE OF CONTENTS
PARTIES 1
INTRODUCTION 1
1 Definitions and Interpretation 1
2 Confirmations 2
3 Priorities 2
4 Appointment of Receiver 3
5 Transferability 4
6 The Chargor 4
7 Law 4
SCHEDULE 1 6
SCHEDULE 2 7
ATTESTATIONS 8
<PAGE>
DATE
31 October 1996
PARTIES
(1) INSTAR HOLDINGS INC whose registered office is at R.R.E. Commercial
Centre, Majuro Marshall Islands ("Instar");
(2) UNIVERSAL INDEPENDENT HOLDINGS, whose registered office is at PO Box
438, Tropic Isle Building, Wickhams Cay, Road town, Tortola, British
Virgin Islands ("Universal"); and
(3) CAPITAL MEDIA GROUP LIMITED registered in England under number 3025201,
whose principal office is at 25 James Street London W1M 5HY (the
"Chargor").
INTRODUCTION
The Parties have agreed to regulate their respective priorities in
respect of the security referred to in the Schedules in the manner set
out in this Deed.
OPERATIVE PROVISIONS
1 DEFINITIONS AND INTERPRETATION
1.1 In this Deed (including the Introduction), unless the context otherwise
requires, the following words and expressions shall have the following
meanings:
Capital Media Capital Media UK Limited registered
in England under number 3025201
whose registered office is at 25
James Street, London W1M 5HY
Instar Charge the charge referred to in Schedule 1
below and any other security
interest which at the date of this
Deed or at any later date secures
the Instar Debt
Instar Debt all monies, liabilities and
obligations, whether principal
interest or otherwise now or at any
time after the date hereof being or
becoming due, owing or incurred by
the Chargor or Capital Media to
Instar whether actual, contingent
present or future and whether done
severally or jointly with any other
person and whether as principal or
surety or in some other capacity,
together with interest legal and
other costs, charges and expenses
interest shall be calculated and
compounded in accordance with the
usual practice of Instar from time
to time as well after as before any
demand made or judgment ascertained
hereunder
Universal Charge the charge referred to in Schedule 2
below and any other security
interest which at the date of this
Deed or at any later date secures
any Universal Debt
<PAGE>
Universal Debt all monies, liabilities and
obligations, whether principal
interest or otherwise nor or at any
time after the date hereof being or
becoming due, owing or incurred by
the Chargor or Capital Media to
Universal whether actual, contingent
present or future and whether done
severally or jointly with any other
person and whether as principal or
surety or in some other capacity,
together with interest legal and
other costs, charges and expenses
whatsoever or in a full indemnity
basis so that interest shall be
calculated and compounded in
accordance with the usual practice
of Universal from time to time as
well after as before any demand made
or judgment ascertained hereunder
Priority Assets the property and assets described
in Schedule 3
2 CONFIRMATIONS
2.1 For the avoidance of doubt:
(a) Instar consents to the creation and registration of the
Universal Charge; and
(b) Universal consents to the creation and registration of the
Instar Charge.
2.2 Each of Universal and Instar confirm that they have taken no action to
crystallise any floating charge given by the Chargor to either of them
nor are they aware that any such floating charge has crystallised.
2.3 The Chargor hereby confirms and warrants to each of Universal and
Instar that:
(a) it has not ceased to carry on business;
(b) no floating charge given by it has at the date hereof
crystallised and that such party is aware of no event having
occurred or about to occur which could result directly in the
crystallisation of any such floating charge.
3 PRIORITIES
3.1 Subject always to the terms and provisions of a deed of priorities
dated ___________________________ 1996 and made between Instar,
Universal and Capital Media the Instar Debt and the Instar Charge shall
rank in priority to the Universal Debt and Universal Charge.
3.2 Clauses 3.1 and 3.2;
(a) as between Universal and Instar; and
(b) as between the Chargor and each of Universal and Instar.
3.4 Nothing in this Deed shall affect the status of the Universal Charge
and the Instar Charge as continuing securities nor shall the ranking of
the Universal Charge and the Instar Charge contained in this Clause 3
be affected by any of, or any combination of, the following:
2
<PAGE>
(a) the nature of the various securities comprised in the
Universal Charge and the Instar Charge and the date of their
execution and registration;
(b) any provision contained in any of the Universal Charge and the
Instar Charge;
(c) the respective date or dates on which any person received
notice of the existence or creation of the Universal Charge
and the Instar Charge;
(d) the respective date or dates upon which moneys may be or have
been advanced or become owing or payable or secured under the
Universal Charge and the Instar Charge;
(e) any fluctuation from time to time in the amount of the moneys
secured by the Universal Charge and the Instar Charge (which
shall be continuing securities in favour of each chargee
respectively) and in particular, but without limitation, any
reduction to nil of the moneys so secured or any advance or
loans by Universal and Instar (as appropriate) to the Chargor
acting by a receiver or administrative receiver or any advance
or loan made by Universal or Instar to any receiver or
administrative receiver of the Chargor in a personal capacity
both before and after liquidation of the Chargor;;
(f) the existence at any time of a credit balance on any current
or other account of the Chargor; or
(g) the appointment of any liquidator or receiver, administrator
or other similar officer in respect of the Chargor or over all
or any part of the Chargor's assets.
4 APPOINTMENT OF RECEIVER
4.1 Universal and Instar agree that if either wishes to appoint an
administrative receiver or receiver of the Chargor or to exercise its
power of sale or otherwise enforce any of its security, it shall
forthwith inform the other of its intention and endeavour to agree with
the other on the method by which its security will be enforced.
Universal and Instar shall consult together with a view to agreeing
upon the method of enforcement and where appropriate upon a suitable
person to be appointed administrative receiver or receiver and shall
endeavour to co-operate with each other in realising the assets charged
to them and ensuring that the net proceeds after deduction of the
expenses of realisation are paid in accordance with the provisions of
this Deed provided that nothing herein contained shall prevent either
of them from appointing an administrative receiver or a receiver of the
Chargor forthwith without such consultation or agreement where the
appointor believes that the immediate appointment of the same is
necessary to protect its interests. However, the appointor shall as
soon as practicable thereafter inform Universal or Instar, as the case
may be, of such appointment and consult with it with a view to the
retention in office of such an administrative receiver or receiver or
(if not agreed) to the appointment of others to act jointly with him.
4.2 If Instar appoints a receiver or an administrative receiver pursuant to
the Instar Charge, such receiver or administrative receiver shall give
priority to any receiver or administrative receiver subsequently
appointed by Universal such priority to be in relation to the Priority
Assets only, and if Universal appoint such a receiver or administrative
receiver pursuant to the Universal Charge, it shall procure that such
3
<PAGE>
receiver or administrative receiver gives priority to any receiver
subsequently appointed by Instar such priority to be in relation to all
assets of the Chargor other than the Priority Assets.
4.3 Instar will, at the request of Universal or any receiver or
administrative receiver appointed by Universal and at the cost of the
Chargor (or if the Chargor does not have sufficient funds to make the
appropriate payments, at the cost of Instar), join in such documents or
otherwise take such action as shall be reasonably required to
facilitate the disposal of the Priority Assets or any of them whether
or not there will be any balance of proceeds available for Instar
arising from a disposal of the Priority Assets or any of them.
5 TRANSFERABILITY
5.1 All references in this Deed to Universal, Instar and the Chargor shall
in each case be deemed to include their successors in title and
assigns, provided always that any successor and assign shall enter into
a deed in form and substance satisfactory to Universal and Instar
confirming that such successor and assign shall be bound by the
provisions of this Deed.
5.2 Universal and Instar acknowledge the right of each other to copies of
the Universal Security and the Instar Security, respectively.
6 THE CHARGOR
The Chargor acknowledges the terms of this Deed and that nothing
contained contracted in this Deed shall in any way affect or prejudice
its liability to or the rights and remedies of Universal and Instar
under their respective security all of which shall remain in full force
and effect subject only to the priorities established by this Deed.
7 LAW
7.1 This Deed is governed by English law.
7.2 Universal and Instar irrevocably agree for the exclusive benefit of
Universal and Instar respectively that the courts of England shall have
jurisdiction to hear and determine any suit action or proceeding, and
to settle any disputes, which may arise out of in connection with this
Agreement and for such purposes hereby irrevocably submits to the
jurisdiction of such courts.
7.3 Nothing contained in this Clause shall limit the right of Instar or
Universal to take proceedings against the Chargor in any other court of
competent jurisdiction, nor shall the taking of any such proceedings in
one or more jurisdictions preclude the taking of proceedings in any
other jurisdiction, whether concurrently or not (unless precluded by
applicable law).
7.4 Universal hereby authorises and appoints _______________________ of
___________________ and Instar hereby authorises and appoints
___________________ of _______________ (or such other person being a
firm of solicitors or authorised institution in England as it may
substitute by notice to Instar and Universal as the case may be to
accept service of all legal process arising out of or connected with
this Deed. Service on such person(s) (or substitute) shall be deemed to
be service on Instar whether or not process is forwarded to or received
by it.
4
<PAGE>
IN WITNESS whereof the parties hereto have executed and delivered this
Deed on the date first above written.
5
<PAGE>
SCHEDULE 1
A Shares Charge dated __1996 and made between Instar (1) and the
Chargor (2).
6
<PAGE>
SCHEDULE 2
A Shares Charge dated __1996 and made between Universal (1) and the
Chargor (2).
7
<PAGE>
<TABLE>
<CAPTION>
ATTESTATIONS
<S> <C>
EXECUTED as a Deed on behalf of )
INSTAR HOLDINGS INC a company )
incorporated in the Marshall islands )
by Anthony Michael Bousfield, Director ) /s/ ANTHONY MICHAEL BOUSFIELD
and Philip Oscar Gallienne, Secretary ) /s/ PHILIP OSCAR GALLIENNE
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign )
this document on behalf of the Company )
EXECUTED as a Deed on behalf of )
UNIVERSAL INDEPENDENT )
HOLDINGS LIMITED incorporated )
in the British Virgin Islands )
by ) /s/
and ) /s/
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign the )
document on behalf of the Company )
EXECUTED as a Deed for and on behalf )
of CAPITAL MEDIA GROUP LIMITED )
a company incorporated in the State )
of Nevada United States of America )
by Charles Koppel ) /s/ CHARLES KOPPEL
and Barry Llewellyn ) /s/ BARRY LLEWELLYN
being a person/persons who in )
accordance with the laws of that )
territory is/are empowered to sign this )
document on behalf of the Company )
</TABLE>
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains significant financial information
extracted from the Company's Form 10-QSB for the quarter ended
September 30, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 655,950
<SECURITIES> 0
<RECEIVABLES> 1,302,542<F1>
<ALLOWANCES> 0
<INVENTORY> 74,533
<CURRENT-ASSETS> 2,358,797
<PP&E> 3,556,091<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 6,780,690
<CURRENT-LIABILITIES> 2,954,416
<BONDS> 629,665<F3>
0
0
<COMMON> 3,196,609
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,780,690
<SALES> 1,451,326
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> (12,859,321)
<OTHER-EXPENSES> 176,654
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (11,231,341)
<INCOME-TAX> (461)
<INCOME-CONTINUING> (11,231,802)
<DISCONTINUED> 0
<EXTRAORDINARY> 41,328<F4>
<CHANGES> 0
<NET-INCOME> (11,190,474)
<EPS-PRIMARY> (.91)
<EPS-DILUTED> (.91)
<FN>
<F1> - Net of allowance of doubtful accounts of $16,708
<F2> - Net of Depreciation of $853,753
<F3> - Minortiy Interest in subsidiaries
<F4> - Minority Interest
</FN>
</TABLE>
