<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
CABLE LINK, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Ohio 31-1239657
- ------------------------------- ---------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
280 Cozzins Street, Columbus, Ohio 43215
- ---------------------------------------- ---------------------------------
(Address of Principal Executive Offices) (Zip Code)
(614) 221-3131
- --------------------------------------------------------------------------------
(Issuer's Telephone Number)
Securities to be registered under Section 12(g) of the Act:
Common Stock
- --------------------------------------------------------------------------------
(Title of Class)
<PAGE> 2
PART I
ALTERNATIVE 2
ITEMS 6-12 OF MODEL B OF FORM 1-A
ITEM 6. DESCRIPTION OF BUSINESS
THE COMPANY
The core business of Cable Link, Inc. (the "Company" or "Registrant")
is the refurbishment, repair and sale of previously owned cable television
("CATV") equipment. The Company purchases the equipment from cable operators
who have surplus due to either an upgrade in their system or an overstock in
their warehouse. This equipment is sold both "as is" and refurbished to CATV
operators throughout North America, South America, Mexico and the Pacific Rim.
The Company supplies virtually any type of electronic equipment a cable
operator would use, from the headend (receiving and transmitting site) to the
converter box at the customer's home. The Company distributes new equipment and
acts as a consignment agent for new equipment, on behalf of equipment
manufacturers. The Company has been recognized by Scientific-Atlanta as an
Authorized Parts Distributor and a New Products Distributor. Historically,
revenues of the Company break down to be approximately 64% attributable to
sales of refurbished equipment, 10% from the repair of cable equipment, 16%
from the brokerage of used products which the Company does not repair or
refurbish, 1% from the sale of new and used parts and approximately 9% from the
sale of new equipment, including equipment sold on consignment basis. The
Company anticipates that its revenues, as a percentage of the total, will grow
in the areas of repair and sales of new equipment.
The Company has historically received a portion of its revenue from
sales in the international market (17% in 1994, 22% in 1995 and 9% in 1996).
Because CATV penetration is low in many foreign countries, management of the
Company believes that the international market presents an additional
opportunity for the sale of the Company's products and equipment. The Company
currently conducts business in South America, Mexico, China and the Pacific
Rim. The Company's foreign operations are subject to the usual risk inherent in
situating operations abroad, including risks with respect to economic and
political destabilization, currency fluctuations, restrictive actions by
foreign governments, nationalization, the law and policies of the United States
affecting trade, foreign investments and loans and foreign tax laws.
The Company has been issued a small business credit insurance policy
from the United States Export Import Bank ("EX-IM Bank"). The EX-IM Bank is a
United States government agency established to promote export growth. This
policy will allow the Company to extend credit terms to qualified international
customers and have guaranteed payment. The EX-IM Bank will insure the
receivable against 100% political risk and 95% commercial risk for terms up to
one year. EX-IM Bank also provides special capital goods project financing for
terms of one to ten years which will allow the Company to provide long term
financing for CATV capital equipment and participate in large projects.
The Company believes that there are significant opportunities for CATV
equipment sales both domestically and internationally. In the United States,
the CATV industry is experiencing an increase in capital spending as compared
to the previous two years which increase is likely attributable to, among other
things, less uncertainty concerning federal regulation of the CATV industry and
the continued development and emergence of new technology in the industry,
including fiber optics and digital compression. CATV operators are offering an
expanded menu of services to their subscribers and can increase rates along
with the service enhancements. The ability to increase rates to subscribers
provides the necessary incentive to CATV operators to upgrade channel capacity
and create additional tiers of programming. The Company sells and develops
equipment to allow CATV operators to increase channel capacity and better
manage subscriber services and rates. Further, CATV operators and suppliers,
including the Company, are demonstrating that system upgrades with currently
available equipment and system architectures can be used as a basis to provide
advanced subscriber services. Management of the Company believes that, for the
most part, the international CATV industry and market is a few steps behind the
United States market and that there will continue
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to be an increase of system upgrades and capital spending to develop more
advanced CATV systems abroad and the Company is well-positioned to participate
in the development of the CATV industry abroad.
The Company was incorporated under the laws of the State of Ohio on
December 28, 1987. The Company operates both its administrative and
manufacturing operations from a single, leased facility at 280 Cozzins Street,
Columbus, Ohio 43215. Its telephone number is (614) 221-3131.
STRATEGY
The basic strategy of the Company is to: (a) maintain and expand its
current customer base in the United States for the sale of refurbished CATV
equipment while focusing on expanding the repair side of the United States
market, (b) continue to develop new markets offshore in South America, Mexico,
China, Russia and the Pacific Rim, and (c) increase the Company's new product
distribution.
The Company has a wide range of capabilities including the
manufacturing and sale of a variety of products designed to receive or transmit
satellite channels and local broadcast channels. The technical expertise of the
Company's engineering staff coupled with state-of-the-art test equipment enable
the Company to offer a wide range of refurbished CATV equipment, including
receivers, processors and modulators that handle the signals for delivery to
the cable subscriber. Other remanufactured products include amplifiers, line
extenders and converters. The engineering team continually researches upgrades
of line gear and converters to higher channel capabilities for domestic markets
and to formats necessary for sale in international markets.
The Company believes that the CATV industry is going through a
metamorphosis, from an entertainment service in the home to being the focal
point of a converging telecommunications marketplace serving both homes and
businesses. Technological innovation is hurdling the political and legal
obstacles which have prevented earlier convergence. As these obstacles are
removed, the Company believes that there will be a greater demand for services
such as those which the Company provides. Management believes the Company is
well-positioned to thrive and prosper in this industry.
INDUSTRY AND MARKET BACKGROUND
CATV is a service that delivers multiple channels of television to
subscribers who pay a monthly fee for the services they receive. A CATV system
consists of four principal components. The first is the "up-link," where the
programmer's signal is first scrambled and addressed, and is then transmitted
to a C-band satellite. The second, known as a cable system "headend" facility,
receives television signals from satellites and other sources. The headend
facility organizes and retransmits those signals through the third component,
the distribution network, to the subscriber. The third principal component is
the distribution network which consists of fiber optic and coaxial cables and
associated electronic equipment which originate at the headend and extend
throughout the CATV system. The fourth component of the CATV system, the
subscriber equipment, is comprised of a "dropwire" which extends from the
distribution network to the subscriber's home and connects either directly to
the subscriber's television set or to a converter box. An addressable converter
box is a home terminate device which permits the efficient delivery of premium
CATV services, including pay-per-view programming, by enabling the CATV
operator to control CATV subscriber services from a central headend computer.
CATV operators generally offer to subscribers a basic service package
and, for additional charges, additional tiers of services, including premium
services. Basic service programming typically includes broadcast network local
affiliates, independent television stations and other locally originated
programs. Additional tiers of service may consist of different
satellite-delivered services and premium services, such as HBO and Showtime,
that typically are offered to subscribers as a package for a separate monthly
fee. Successive tiers of programming include additional services for additional
monthly fees. In addition, movies and special entertainment events, such as
boxing matches and Olympic Games can be offered to subscribers with addressable
converters on a selective, pay-per-view basis. CATV operators
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are also introducing digital cable audio services which consist of multiple
channels of commercial-free, compact disc quality music.
CAPITAL EXPENDITURES IN THE CATV INDUSTRY
Construction, maintenance, expansion and upgrade of CATV systems
require significant capital expenditures by CATV operators for system
components, including coaxial and fiber optic cable, traditional radio
frequency ("RF") amplifiers and fiber optic electronics, and addressable system
controllers and converters.
A major trend in the cable and satellite television industry has been
the continuing expansion of channel capacity in response to CATV operators'
desire to provide subscribers with more programming selections, including
pay-per-view and additional premium programming services.
The Company expects that CATV operators will continue to spend to
upgrade the technological capabilities of their systems and increase channel
capacity in order to meet subscriber demand for more programming services, such
as expanded pay-per-view, premium services and digital cable audio, which, in
turn, provides opportunities for increased revenues for the CATV operators. In
addition, new technologies can improve a CATV operator's margins and customer
services by increasing the CATV system's reliability, picture quality and the
"user friendliness" of the converter. The Company also expects CATV operators
to increase spending to meet governmental requirements for renewing franchises
and to position themselves to enter new and potential markets such as telephone
and personal communications networks.
With the passage of the Telecommunications Act of 1996, there will be
additional opportunities for the Company. The Act immediately deregulates rates
for some small operators while providing for deregulation to the large
operators over the next several years as cable competition comes into the
marketplace. This expands the opportunities for the Company as cable operators
are gearing up their rebuilds to remain competitive and creating new start-up
operations from which the Company can generate both sales and repair business.
With respect to technology, CATV operators and suppliers, including
the Company, are demonstrating that system upgrades with currently available
equipment and system architectures can be used as a basis to provide advanced
subscriber services.
Moreover, the growing use of United States broadband system designs
and equipment in international markets, where CATV penetration is low, presents
another opportunity for sales of the Company's systems and equipment.
SALES AND MARKETING
The majority of the Company's sales activity is generated through
personal relationships developed by its sales personnel and executives,
telemarketing and direct mail to cable operators both in the United States and
abroad. The Company has developed contacts with the major CATV operators in the
United States and is constantly in touch with these operators regarding plans
for upgrading or expansion and their needs to either purchase or sell
equipment. The Company employs a bilingual individual in the sales department
for the international market and several other sales persons to service the
United States. The Company purchases a large amount of its inventory from cable
operators who have upgraded, or are in the process of upgrading their system.
The sales and purchasing functions operate under the same umbrella using a
computerized buy/sell board to coordinate the activity between the two. In
addition, the Company has very close relationships with major manufacturers of
CATV equipment and purchases a large amount of such equipment from these
original equipment manufacturers. Daily meetings of the sales and purchasing
functions keep both aware of what is available to be purchased and what is
needed to fill sales orders.
The Purchasing Department buys previously used CATV equipment
throughout North America. As a result of competition in the communications
industry, cable operators are aggressively upgrading their system with newer,
technologically advanced equipment. This provides the Company's purchasing
department opportunities to buy equipment which were not normally available to
the Company in the past. This competitive CATV market enables the
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Company to acquire additional inventory for sale to cable operators who are
expanding with new subscribers or who are upgrading their system with the
newer, more expensive technology. The Company employs three purchasing agents.
ENGINEERING
The Company's engineers aggressively seek to implement existing
technological developments as they strive to meet the needs of the Company's
customers.
Recent advances in technology and new federal regulations have
prompted competitive upgrade activity among cable systems operators. The
Company's engineering department is well-equipped to handle the needs of
systems operators. The Address Reader for the Oak RTC-56 and the Addressable
Prom Programmer for the Jerrold DRZ are two replacement products redesigned and
built by the engineering department to help meet customers' upgrading needs.
The engineering department strives to ensure the Company's on-going
commitment to quality and service is upheld by continually upgrading linegear
and converters to higher channel capabilities for United States markets and to
formats necessary for international markets. The department has the ability to
perform required FCC systems tests, both in-house and on-site, and maintains a
staff that is experienced in analog video, digital, and radio frequency (RF).
COMPETITION
There are a number of businesses similar to the Company throughout the
United States engaged in buying and selling used CATV equipment. The two major
competitors are Contec Limited Partnership in the repair area and VueScan, Inc.
in the sales area.
EMPLOYEES AND TRAINING
As of June 30, 1997, the Company had 80 full time employees, 52 of
which work on the repair and refurbishment of converters and other cable TV
equipment. There are 10 employees in shipping and receiving, 10 employees in
the sales and purchasing department, and the remaining eight are in finance and
general administration. New production employees are placed on a six week
training program during which they are paired with an experienced technician.
None of the Company's employees is covered by a collective bargaining agreement
and management believes that the Company's relationship with its employees is
good. Key employees may be eligible to participate in the Company's stock
option plan.
CONTROL AND INFORMATION SYSTEMS
The Company uses a personal computer based network system to control
customer orders, sales orders, shipments, accounts receivable, inventory,
general ledger and accounts payable. All payrolls are prepared by an outside
service. The current configuration of hardware and software meets the present
needs of the Company, and is flexible enough to allow for expansion in the
future. The Company completed implementation of its computer information system
in 1996.
PRODUCTS
The majority of the Company's business is the sale of used CATV
equipment. The Company purchases the equipment from cable operators and
equipment manufacturers who have surplus inventory due to either an upgrade in
their system, an overstock in their warehouse, or due to overruns or
cancellations of orders or trade-ins or upgrades. This equipment is sold both
"as is" and refurbished to CATV operators throughout North America, South
America, Mexico and the Pacific Rim. The Company supplies virtually any type of
electronic equipment a cable operator would use, from the headend (receiving
and transmitting site) to the converter box in the customer's home. In addition
to the refurbished products, the Company also distributes some new products and
repairs converters, linegear and headend equipment.
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Following is a list of the products sold by the Company with a brief
description of the application of each product line:
Converters. Converters come in many different forms (addressable,
descrambling and non-descrambling or "plain-Jane") and bandwidths from 300 MHz
(36 channels) to 750 MHz (115 channels). The majority of cable operators in the
world use some type of converter in their system. The Company specializes in
sales and repair of the Jerrold, Scientific Atlanta, Zenith, Hamlin, Pioneer
and Oak lines of converters and also sells and repairs most other
manufacturers' products.
Linegear. Linegear encompasses all products which are actually placed
on the cable line. This includes active electronics, trunk stations and line
extenders, which amplify and distribute the cable signal, and passive equipment
such as taps, splitters and directional couplers, which simply pass the signal
through for delivery to additional lines and the customer's home. The Company
sells and repairs all manufacturers' linegear products.
Headend. The headend is perhaps the most important part of the cable
system since this is where the signal is received, processed and transmitted to
the customer's home. For that reason, this particular product requires the most
technical expertise. This product line includes satellite receivers,
modulators, processors, encoders and videociphers, all of which are used to
provide cable delivered signal. If the cable operator's headend equipment is
not calibrated and maintained properly, the customer will receive poor picture
quality. The Company specializes in refurbishing and repairing various
manufacturer's lines of headend products as well as modifying these for use in
different video formats.
CONSIGNMENT INVENTORY PROGRAM
In addition to the Company's own inventory assets, it also has
recently achieved access to CATV equipment through a consignment program which
does not require payment for the equipment until 30 days after the sale. This
is done through both stocking of consignment inventory at the Company's
warehouse as well as having access to excess inventory at a vendor's location.
Consignment programs have been established with Tele Communications, Inc.,
Scientific Atlanta, Inc., Continental Cablevision and Time-Warner, Inc.
ITEM 7. DESCRIPTION OF PROPERTY
PLANT AND FACILITY
The Company operates out of approximately 60,000 square feet of space
at 280 Cozzins Street, Columbus, Ohio. The Company leases its production and
office space from a former director of the Company under an operating lease
expiring in October 1998 with a three-year renewal option. During 1995,
modifications were made to the lease that increased the Company's occupancy
area and monthly rent. At June 30, 1997, monthly payments of $11,000 are
required, subject to increases in real estate taxes and rent increases each
November.
<TABLE>
<CAPTION>
Minimum lease payments:
<S> <C>
1997 114,504
1998 97,320
---------
$ 211,824
=========
</TABLE>
Rent expense was $135,449 and $108,566 for the years ended December
31, 1996 and 1995, respectively.
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ITEM 8. DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
All directors are elected for one year terms at the Company's annual
shareholders' meeting in April or May.
<TABLE>
<CAPTION>
NAME AND ADDRESS AGE POSITION(S)
- ---------------- --- -----------
<S> <C> <C>
Bob Binsky 57 Chairman of the Board, Chief Executive Officer and Director
Brenda L. Thompson 35 President, Chief Financial Officer and Director
Richard Rozic 56 Executive Vice President, Chief Operating Officer and Director
Eric S. Newman 31 Director
Sherry J. Rothfield 56 Director
Michael Tsao 47 Director
Richard Baker 41 Vice President of Production
</TABLE>
BOB BINSKY has served as Chairman of the Board of the Company since
July 31, 1995 and has served as a director of the Company since 1992. Mr.
Binsky first joined the Company as a consultant and Executive Vice President on
October 1, 1992. On October 18, 1994, Mr. Binsky assumed the duties of the
Company's Chief Executive Officer. Prior to joining the Company, Mr. Binsky
served as Chairman and Chief Executive Officer of Decor Corporation, a chain of
135 publicly traded art and gift stores located in most of the upscale malls in
the Eastern United States. In December 1989, Decor was sold to Claires Stores,
Inc., a New York Stock Exchange listed company. Mr. Binsky serves on the board
of PH Group Inc. of Columbus and Kahiki Foods of Columbus and on the advisory
board of Regional Reps of Cleveland.
BRENDA L. THOMPSON has served as a director and President of the
Company since October 1994. Ms. Thompson joined the Company as its Chief
Financial Officer in June, 1993. From 1990 to 1993, Ms. Thompson served as
Director of Operations for Zee Medical Services. She holds an A.A. in
Accounting and Business Management from Belmont Technical College and graduated
from Wheeling Jesuit College in 1987 with a B.A. in Accounting.
RICHARD ROZIC was elected as Executive Vice President and Chief
Operating Officer and a director of the Company on December 16, 1996. From 1965
to 1996, Mr. Rozic was General Manager of National Sales, Builder's Division,
for Frigidaire Company, a manufacturer and distributor of major appliances. Mr.
Rozic graduated from the University of Maryland in 1962.
ERIC S. NEWMAN has served as a director of the Company since April
1994. Mr. Newman is Vice President of World Wide Communications, Inc. He
graduated from the University of Michigan in 1988, and Northwestern University
School of Law in 1991. From September 1991 to March 1993, he was employed as an
associate at the law firm of Jenner & Block in Chicago. From March 1993 to
October 1993, he was employed as an associate at the law firm of Altheimer &
Gray in Chicago.
SHERRY J. ROTHFIELD has served as a director of the Company since
November 1995. Mrs. Rothfield is an instructor in the Miami, Florida Advocate
Program, a structured probation and deferred prosecution agency, and also works
as a certified mediator in private practice. She graduated from State
University of New York in 1962, earned a certificate in accounting from the
University of Miami in 1981 and became a Certified Public Accountant in the
State of Florida in 1983.
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MICHAEL TSAO has served as a director of the Company since November
1995. Mr. Tsao is President and a member of the Board of Directors of Kahiki
Foods of Columbus. Mr. Tsao graduated from Pasadena City College in 1971 with
an A.A. in Business Administration.
RICHARD BAKER has been with the Company since 1984 and has served as
Vice President of Production since 1994. He served as Production Manager for
the Company from 1987 to 1994. Mr. Baker attended The Ohio State University
from 1974 to 1976.
ITEM 9. RENUMERATION OF DIRECTORS AND OFFICERSCOMPENSATION OF MANAGEMENT
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the 1996
aggregate remuneration of the three highest paid executive officers of the
Company.
<TABLE>
<CAPTION>
1996 Aggregate
Name Principal Position Renumeration
- ----- ------------------ --------------
<S> <C> <C>
Bob Binsky Chairman of the Board $100,000 (1)
Chief Executive Officer
Brenda Thompson President $ 81,571
Anthony Matteo (2) Vice Chairman $ 74,585
Chief Operating Officer
All directors and executive officers
as a group (7 persons) $448,927
</TABLE>
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(1) Mr. Binsky received $100,000 pursuant to a consulting agreement with
the Company. See "The Binsky Consulting Agreement." On August 1, 1997,
Mr. Binsky became an employee of the Company.
(2) Mr. Matteo resigned in June of 1996.
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives $500 per Board of
Directors meeting attended as compensation for his or her services. Pursuant to
a letter agreement approved by the Board of Directors in 1994, Eric S. Newman
is compensated $1,500 per month for legal and financial services he performs on
behalf of the Company. The letter agreement is terminable upon 30 days' written
notice by either party. Each of the directors of the Company is also eligible
to receive stock options under the 1995 Stock Option Plan (the "1995 Plan").
Only non-incentive options may be granted under the 1995 Plan. The 1995 Plan
provides that options on a total of 1,000 shares shall be granted to each
director who is elected as a director at the Annual Meeting of Shareholders. On
October 17, 1995, an amendment to the 1995 Plan was approved by the Board of
Directors which provides for the grant of stock appreciation rights in
connection with the grant of options under the 1995 Plan.
STOCK OPTIONS OF DIRECTORS
Directors of the Company have been issued options for the purchase of
5,940 common shares at $1.33 per share, 77,220 common shares at $1.51 per
share, 11,880 common shares at $3.50 per share and 7,700 common shares at $2.95
per share for 1994, 1995, 1996 and 1997, respectively. Additional options may
be granted pending the achievement of certain financial standards.
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STOCK OPTION PLAN
The Company has adopted a stock option plan for, and has issued options
to, certain key employees. The following chart summarizes warrant and option
activity for 1996 and 1997.
<TABLE>
<CAPTION>
Warrants Options
------------------------------ -------------------------------------
Average Exercise Average Exercise
Price Per Share Price Per Share
---------------- -----------------
<S> <C> <C> <C> <C>
Balance 1/1/96 19,800 $ .93 669,438 $ 1.58
Issued -- -- 189,090 1.29
Canceled -- -- (126,918) 1.05
Exercised -- -- (17,028) 1.77
Balance 1/1/97 19,800 .93 714,582 1.60
Issued 165,000(1) 1.82 11,000 2.89
Canceled -- -- (87,120) 1.69
Exercised -- -- -- --
Balance 6/30/97 184,800 $ 1.73 638,462 $ 1.61
- ----------------------------------
</TABLE>
(1) In July 1997, 82,500 of these warrants were exercised at an average
price of $1.51 per share.
With regard to director stock options issued under the 1995 Plan, (a) each
option vests and becomes immediately exercisable on the date of grant; and (b)
each option lapses and ceases to be exercisable upon the earliest of: (i) the
expiration of ten years from the date of grant, (ii) nine months after the
grantee ceases to be a director because of his death or disability, (iii)
immediately upon resignation by the grantee as a director, or (iv) 30 days
after the grantee ceases to be a director for any reason other than his death,
disability or resignation.
With regard to employee and consultant stock options issued under the 1995
Plan, subject to the rule set forth in the next sentence, the Board of
Directors determines the term during which an option is exercisable at the time
that it is granted. No option is exercisable after the expiration of ten years
from the date of grant. If no express determination of the times when options
are exercisable is made by the Board of Directors: (a) each option vests and
becomes immediately exercisable on the date of grant; and (b) each option
lapses and ceases to be exercisable upon the earliest of: (i) the expiration of
ten years from the date of grant, (ii) nine months after the grantee ceases to
be a consultant or employee because of his death or disability, (iii)
immediately upon resignation by the grantee as a consultant or employee or upon
the termination of the grantee for cause, or (iv) 30 days after the grantee
ceases to be a consultant or employee for any reason other than his death,
disability, resignation or termination.
THE BINSKY CONSULTING AGREEMENT
The 1996 Consulting Agreement. Effective October 1, 1996, in a Consulting
Agreement between the Company and Bob Binsky (the "1996 Consulting Agreement"),
Bob Binsky, a director and Chairman of the Board of the Company, agreed to
provide consulting services for the Company. Mr. Binsky was required to provide
consulting services up to 200 days (approximately 1,600 hours) for the one-year
term of the agreement and to serve as a director and Chairman of the Board. The
Company was obligated to pay Mr. Binsky $100,000 in equal monthly installments
for the consulting services. Mr. Binsky was granted an option to purchase
33,000 common shares of the Company for $.72 per share. Mr. Binsky can exercise
the option at any time before October 1, 2006. The 1996 Consulting Agreement
provides that Mr. Binsky can assign his obligations under the agreement to an
affiliate; this provision was negotiated by Mr. Binsky for tax purposes. On
August 1, 1997, the 1996 Consulting Agreement was terminated and Mr. Binsky
became an employee of the Company.
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ITEM 10. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY HOLDERS
The following table sets forth, as of June 30, 1997, certain
information with respect to the beneficial ownership of shares of common stock
of the Company by (i) each person known to the Company to be the beneficial
owner of more than 10% of the outstanding shares of common stock, (ii) each of
the three highest paid officers of the Company, and (iii) the Company's
directors and executive officers as a group.
<TABLE>
<CAPTION>
Number of Common Shares
Shareholder Beneficially Owned Percent of Class
----------- ----------------------- ----------------
<S> <C> <C>
BOB BINSKY 239,109(a) 15.4%
20185 E. Country Club Drive
Apt. #206
North Miami Beach,
Florida 33180
E. JACK DAVIS 147,440 9.0%
6927 Rivers Edge St. Circle
Bradenton, FL 34202
BRENDA L. THOMPSON 11,508(b) ---
458 Alton & Darby Creek Road
Galloway, Ohio 43119
ERIC S. NEWMAN 3,834(b) ---
1765 West Altgeld, Unit D
Chicago, Illinois 60614
RICHARD ROZIC 11,550(b) ---
5137 Chaffinch Court
Dublin, Ohio 43017
SHERRY J. ROTHFIELD ---(c) ---
1021 North Venetian Drive
Miami, Florida 33139
MICHAEL TSAO 1,980(b) ---
3583 East Broad Street
Columbus, Ohio 43213
All directors and executive officers
as a group (7 persons) 415,421(a)(b)(c) 26.8%
</TABLE>
- ----------
(a) Includes 3,960 shares owned by TR Sport, Inc. Excludes 422,180 shares
subject to outstanding and exercisable options and warrants held by Bob
Binsky.
(b) Excludes 28,820 shares subject to outstanding and exercisable options
held by Mr. Newman; for Ms. Thompson, 51,590 shares; for Mr. Tsao,
3,080 shares; for Mr. Rozic, 1,100 shares; and for all directors and
executive officers as a group, 490,050 shares.
(c) Excludes 19,180 shares owned by Mrs. Rothfield's husband. Mrs.
Rothfield disclaims beneficial ownership of all of the shares owned by
her husband. Excludes 3,080 shares subject to stock options outstanding
and exercisable as of June 30, 1997.
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ITEM 11. INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
THE SEPARATION AGREEMENT
On October 18, 1994, the Company and the Company's former president and
then largest shareholder, E. Jack Davis, entered into a Separation Agreement and
General Release (the "Separation Agreement"). The Separation Agreement required
the Company to pay Mr. Davis $100,000 in exchange for a release of claims or
charges of discrimination.
THE SHARE PURCHASE AGREEMENT
On October 18, 1994, Bob Binsky entered into a Share Purchase Agreement
with E. Jack Davis which provided for the sale of substantially all of the
common shares of the Company owned by Mr. Davis. Under the Share Purchase
Agreement, Mr. Binsky agreed to pay $1.176 million for 581,636 common shares of
the Company owned by Mr. Davis. Upon execution of the Share Purchase Agreement,
Mr. Binsky acquired 49,500 common shares of the Company from Mr. Davis for
$100,000. An additional $176,000 was to be paid, without interest, on or before
March 23, 1995, and another $100,000, without interest, on or before April 12,
1995. The balance of the purchase price, $800,000, was payable in 48 monthly
payments each consisting of $16,666.66 of principal plus accrued interest, with
the first such payment due on June 1, 1995. If Mr. Binsky paid $675,000 of the
$800,000 portion of the purchase price on or before October 17, 1995, the
purchase price was to be deemed satisfied in full.
On March 23, 1995, Mr. Binsky and Mr. Davis entered into a First
Amendment Agreement to Share Purchase Agreement (the "First Amendment
Agreement"). The Share Purchase Agreement was amended to provide that if Mr.
Binsky paid an aggregate of $600,000 of the $800,000 portion of the purchase
price (excluding any interest with respect to the $800,000) and all other
portions of the purchase price (including the payment of $176,000 to be paid on
or before March 23, 1995 and $100,000 to be paid on or before April 12, 1995) on
or before June 1, 1995, then Mr. Binsky's obligation to pay $800,000 would be
deemed satisfied in full.
On June 1, 1995, Mr. Binsky and Mr. Davis executed the Second Amendment
Agreement to Share Purchase Agreement (the "Second Amendment Agreement"). The
Second Amendment Agreement amended the Share Purchase Agreement to provide that
the final payment of $800,000 to Mr. Davis was payable in 48 monthly payments
each consisting of $16,666.66 of principal plus accrued interest, with the first
such payment due on January 1, 1996 and the next 47 payments due on the first
day of each month thereafter. As consideration for the execution of the Second
Amendment Agreement, outstanding interest on the $800,000 through May 30, 1995
in the amount of $38,914.19 was paid upon execution of the Second Amendment
Agreement. The Second Amendment Agreement further provided that if Mr. Binsky
paid an aggregate of $600,000 of the $800,000 portion of the purchase price on
or before December 31, 1995, then Mr. Binsky's obligation to pay the purchase
price would be deemed satisfied in full.
On November 16, 1995, Mr. Binsky and Mr. Davis executed the Third
Amendment Agreement to Share Purchase Agreement (the "Third Amendment
Agreement"). The Third Amendment Agreement provided that if Mr. Binsky made a
lump sum payment of $300,000 of the $800,000 balance of the purchase price to
Mr. Davis subsequent to December 31, 1995 and on or before January 2, 1996, and
shall not be otherwise in default under the terms of the Share Purchase
Agreement, then (a) Mr. Binsky's obligation to pay the purchase price (except
for the portion of the purchase price due for 198,000 shares) would be deemed
satisfied in full; (b) Mr. Binsky's obligation to acquire the remaining 198,000
shares would be terminated and released; (c) Mr. Davis would retain ownership of
the remaining 198,000 shares; and (d) the escrow agent holding the shares would
terminate the obligation of all of the parties under the Share Purchase
Agreement. Under the Third Amendment Agreement, Mr. Binsky also agreed to vote
the shares that he controlled to cause the election of Mr. Davis to the Board of
Directors of the Company.
On December 29, 1995, Mr. Binsky paid $300,000 to Mr. Davis. Pursuant
to the Third Amendment Agreement, the escrow agent transferred 383,637 shares to
Mr. Binsky and 198,000 shares to Mr. Davis, and the obligations of Mr. Binsky
and Mr. Davis under the Share Purchase Agreement were terminated.
11
<PAGE> 12
THE DAVIS CONSULTING AGREEMENT
In conjunction with E. Jack Davis' resignation from the Company in
October 1994, Mr. Davis and the Company entered into a Non-Competition and
Consulting Agreement dated October 18, 1994 (the "Consulting Agreement"). The
Consulting Agreement provided that Mr. Davis would serve as a consultant to the
Company from October 18, 1994 through December 31, 1998. Mr. Davis agreed that
he would not compete with the Company from the effective date of the Consulting
Agreement through December 31, 1998. As payment for Mr. Davis' covenant not to
compete with the Company, he was to receive $25,000, with an initial installment
of $4,861.08 payable on October 18, 1995, and the remainder payable in 29 equal
monthly installments. As payment for Mr. Davis' consulting services, he was to
receive $350,000 from the Company, with an initial installment of $68,055.54
payable on October 18, 1995, and the remainder payable in 29 equal monthly
installments. In addition, Mr. Davis was to receive payment for his reasonable
out-of-pocket expenses which were authorized by the Company and incurred by him
in the performance of his duties as a consultant.
On June 1, 1995, the Company and Mr. Davis executed the First Amendment
Agreement to Non-Competition and Consulting Agreement (the "First Amended
Consulting Agreement"). The original Consulting Agreement was amended to provide
that the Company would pay $25,000 to Mr. Davis in consideration of Mr. Davis'
covenant not to compete with the Company, payable in 12 monthly installments of
$1,099.53 and 17 monthly installments of $694.53. In consideration of the
consulting services of Mr. Davis, the Consulting Agreement was amended to
provide that the Company would pay $350,000 to Mr. Davis, payable in 11 monthly
installments of $15,393.51, one monthly installment of $15,393.57 and 17 monthly
installments of $9,722.22. The Consulting Agreement was further amended to
provide that at any time during the pendency of a default by the Company in the
payment of three monthly payments pursuant to the Consulting Agreement, or any
default by Mr. Binsky of any payment under a Share Purchase Agreement entered
into between Mr. Binsky and Mr. Davis in October 1992 which default has
continued uncured for a period of 10 days after notice thereof to the Company by
Mr. Davis, then Mr. Davis may elect to accelerate the balance due under the
Consulting Agreement, as amended, and upon the Company's failure to pay the
amount then due, including interest thereon at 10% per annum, within 10 days of
notice of acceleration, Mr. Davis may either pursue collection of such sum or
may declare the Consulting Agreement null and void by giving written notice of
such election to the Company. The First Amended Consulting Agreement was
ratified by the Board of Directors on June 20, 1995.
On November 16, 1995, the Company and Mr. Davis executed the Second
Amendment to Non-Competition and Consulting Agreement (the "Second Amended
Consulting Agreement"). Under the Second Amended Consulting Agreement, Mr.
Davis' responsibilities were altered to provide that (a) Mr. Davis would not be
required to provide consulting services for more than 40 hours during each
calendar month, (b) Mr. Davis would not be required to be present in the Company
offices more than six times per year, (c) the Company would pay all of Mr.
Davis' reasonable travel expenses from Florida to Columbus when his presence is
required at the Company (as well as Mr. Davis' reasonable living expenses in
Columbus), (d) each day that Mr. Davis is required to spend at the offices would
be considered to be equal to 10 hours of consulting service time for the
purposes of calculating Mr. Davis' number of consulting hours to be performed
under the terms of the Second Amended Consulting Agreement, and (e) all requests
for the performance of consulting services would be delivered to Mr. Davis in
written form. In addition, the Second Amended Consulting Agreement provided that
the Company would cause Mr. Davis to be elected as a director of the Company at
the next meeting of the Board of Directors for a term which would expire at the
next annual meeting of the Company, and would cause Mr. Davis to be nominated
for re-election at such meeting. The payment obligations of the Company were
also amended to provide that in consideration of Mr. Davis' covenant not to
compete with the Company, the Company would pay $25,000 to Mr. Davis payable in
seven monthly installments of $1,099.53, 25 monthly installments of $666.67 and
a final installment of $635.54. In consideration of the consulting services of
Mr. Davis, the Company must pay $350,000 to Mr. Davis, payable in seven monthly
installments of $15,393.51, 25 monthly installments of $9,333.33 and a final
installment of $8,912.18. Furthermore, Mr. Davis received $3,500 upon the
completion of the report on competitive intelligence. The Company also agreed to
provide partial reimbursement of the premium cost for medical and
hospitalization coverage for Mr. Davis.
12
<PAGE> 13
THE PARTICIPATION AGREEMENT
Although Mr. Binsky was the sole purchaser under the Share Purchase
Agreement, on January 24, 1995, Mr. Binsky entered into a Participation
Agreement whereby specified individuals were permitted to participate in the
acquisition of Mr. Davis' shares. The individuals are Eugene C. Hanchett, Marvin
A. Katz, Eric S. Newman, Brenda L. Thompson, Benton C. Rothfield and Kenneth J.
Warren (the "Participants"). The first four individuals are or were directors of
the Company, the last is counsel to the Company, and Mr. Rothfield is the spouse
of a director and a relative of counsel to the Company. The Participation
Agreement provided that 25% of the shares being acquired from Mr. Davis would be
purchased by the Participants with each Participant purchasing a specified
proportionate number of those shares. The Purchase price to be paid by the
Participants was the proportional amount of the total purchase price paid by Mr.
Binsky under the Share Purchase Agreement. Upon payment of the purchase price to
Mr. Binsky, each Participant was entitled to the proportionate amount of gains
or losses attributable to the acquisition and ownership of the shares by such
Participant. On December 29, 1995, Mr. Binsky made the final payment resulting
in the release of 383,637 shares from Mr. Davis' escrow agent. Accordingly,
certificates were delivered to each Participant representing the number of
shares corresponding to their interest in the shares acquired by Mr. Binsky, and
the parties' obligations under the Participation Agreement were terminated.
THE OPTION AGREEMENT
The Share Purchase Agreement was entered into by Mr. Binsky at the
request of and for the benefit of the Company. In order to give Mr. Binsky
flexibility in financing the purchase of shares under the Share Purchase
Agreement, the Board of Directors authorized the Company to enter into an Option
Agreement with him which provided Mr. Binsky with an option to require the
Company to purchase any and all of the shares he purchased from Mr. Davis. The
Option Agreement was executed on January 24, 1995 and expired (unexercised) upon
termination of the Share Purchase Agreement on December 29, 1995.
LEASE FROM FORMER DIRECTOR
The Company leases production and office space from Marvin A. Katz, a
former director of the Company, under an operating lease expiring in October
1998 with a three year renewal option. Rental payments for 1997 are $114,504,
subject to increases in real estate taxes and rent increases each November.
ITEM 12. SECURITIES BEING OFFERED
The Company's Articles of Incorporation authorize 10,000,000 common
shares, without par value, and 200,000 preferred shares, without par value. At
the date of this registration statement, the Company had issued and outstanding
1,632,302 common shares. No preferred shares are outstanding.
COMMON SHARES
Holders of common shares of the Company have no redemption or
conversion rights, participate ratably in any distribution of assets to
shareholders in liquidation and have no preemptive or other subscription rights.
Holders of common shares are entitled to receive such dividends as may be
declared by the Board of Directors. Holders of common shares are entitled to one
vote for each share held on all matters on which shareholders are entitled to
vote and are entitled upon compliance with certain procedural formalities, to
vote cumulatively for the election of directors.
PREFERRED SHARES
The Company's Articles of Incorporation authorize the issuance of
"blank check" preferred shares in one or more classes or series with such
designations, rights, preferences and restrictions as may be determined from
time to time by the Board of Directors. As of the date hereof, there are no
preferred shares outstanding. The Board of Directors may, without prior
shareholder approval, issue preferred shares with dividend, liquidation,
conversion, voting or other
13
<PAGE> 14
rights which could adversely affect the relative voting power or other rights of
the holders of common shares. Preferred shares could be used, under certain
circumstances, as a method of discouraging, delaying, or preventing a change in
control of the Company. Although the Company has no present intention of issuing
any preferred shares, there can be no assurance that it will not do so in the
future. If the Company issues preferred shares, such issuance may have a
dilutive effect upon the common shareholders.
REPORTS TO SHAREHOLDERS
The Company furnishes its shareholders with quarterly financial reports
which are not audited and annual reports containing audited financial
statements.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
OTHER SHAREHOLDER MATTERS
The principal market where the Registrant's equity is traded is the
Nasdaq Bulletin Board. The range of high and low bids for the Registrant's
equity for each of the past ten quarters is as follows:
<TABLE>
<CAPTION>
Year Quarter High Low
---- ------- ---- ---
<S> <C> <C> <C>
1997 2nd 3 3/4 2 1/16
1st 5 1/2 1 5/8
1996 4th 2 1/4 0 3/4
3rd 4 1/4 1 1/4
2nd 7 1/16 3 1/4
1st 5 5/8 0 13/16
1995 4th 1 7/8 0 7/16
3rd 1 11/16 0 5/16
2nd 2 1/2 0 1/2
1st 3 1/8 1 7/8
</TABLE>
The above quotations reflect inter-dealer prices, without retail
mark-up, mark down or commission and may not represent actual transactions.
There are approximately 245 holders of the common shares of the Registrant.
DIVIDEND POLICY The Registrant has not declared or paid any cash dividends on
its common shares since its inception, and the Board of Directors presently
intends to retain all earnings for use in the business for the foreseeable
future.
ITEM 2. LEGAL PROCEEDINGS.
The Registrant is not a party to any material legal proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
On September 23, 1996, the Registrant's former principal accountants
resigned. No reports or financial statements issued by the former accountants
contained an adverse opinion or disclaimer of opinion or was modified as to
uncertainty, audit scope or accounting principles. There were no disagreements
with the former accountants. The former accountants have declined to reissue
their report. Groner, Boyle & Quillin, LLP was engaged as the Registrant's
principal accountants on October 23, 1996.
14
<PAGE> 15
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
On January 10, 1997, the Registrant sold one Unit comprised of 165,000
common shares and warrants to purchase 165,000 common shares at various exercise
prices. No underwriters were used or commissions paid. The Unit was
sold to Axxess International Group, Inc. for $200,000, all of which was received
by the Registrant. The offering and sale was made in accordance with Rule 504 of
Regulation D promulgated under the Securities Act of 1933.
On or about November 4, 1994, the Registrant sold 6,000 common shares
at a purchase price of $10.00 per share to Raymond Hoch. No underwriters were
used or commissions paid. The offering and sale was made in accordance with
Section 4 (2) of the Securities Act of 1933.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Provisions governing the liability of the controlling persons,
directors and officers of the Registrant include Ohio Revised Code Section
1701.59 and Article Five of the Registrant's Code of Regulations (see Exhibit
2.2 attached hereto) which provides for indemnification if such person acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the Registrant.
PART F/S
FINANCIAL STATEMENTS
In the opinion of management, all adjustments necessary for a fair
statement of results for the income statements for the period January 1, 1997
through June 30, 1997 have been included therein.
Note: The annual financial statements for 1995 and 1996 attached
hereto have not been adjusted to reflect the 3 for 2 stock
dividend declared on January 21, 1997 nor the 11 for 10 stock
dividend declared on August 1, 1997.
15
<PAGE> 16
CABLE LINK, INC.
FINANCIAL STATEMENTS
* * * * * *
DECEMBER 31, 1996 AND 1995
AND SIX MONTHS
ENDED JUNE 30, 1997
16
<PAGE> 17
CABLE LINK, INC.
COMPARATIVE STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
3 MONTHS ENDING JUNE 30 6 MONTHS ENDING JUNE 30
-------------------------------- ---------------------------
1997 1996 1997 1996
<S> <C> <C> <C> <C>
NET SALES $2,642,018 $2,223,413 $4,853,535 $4,942,623
Cost of Goods Sold 1,762,148 1,388,990 3,233,906 3,091,980
Operating Expenses 674,515 752,728 1,271,262 1,518,366
TOTAL EXPENSES $2,436,663 $2,141,718 $4,505,168 $4,610,346
INCOME FROM OPERATIONS $ 205,355 $ 81,695 $ 348,367 $ 332,277
Interest Expense (17,247) (23,502) (35,393) (42,062)
Other Income (Expenses) 873 550 2,059 15,341
INCOME (LOSS) BEFORE TAXES $ 188,981 $ 58,743 $ 315,033 $ 305,556
Provision For Taxes 0 (625) 0 44,900
NET INCOME (LOSS) $ 188,981 $ 59,368 $ 315,033 $ 260,656
SHARES OUTSTANDING 1,408,926 1,408,926 1,408,926 1,408,926
NET EARNINGS (LOSS) PER SHARE $ 0.13 $ 0.04 $ 0.22 $ 0.19
</TABLE>
NOTE: NET EARNINGS AND NUMBER OF SHARES ARE RESTATED TO REFLECT A 3 FOR 2
STOCK SPLIT EFFECTIVE JANUARY 21, 1997. THE SHARES ALSO REFLECT THE PURCHASE
OF 150,000 (POST SPLIT) SHARES BY AXXESS INTERNATIONAL GROUP.
17
<PAGE> 18
CABLE LINK, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
1997
JUNE 30
(UNAUDITED)
<S> <C>
ASSETS
Current Assets
Cash $ 41,316
Accounts Receivable 1,165,916
Inventories 987,918
Prepaid Expenses 154,336
-------------
TOTAL CURRENT ASSETS 2,349,486
-------------
Property & Equipment
Cost 1,396,449
Accumulated Depreciation (687,291)
-------------
Net Property & Equipment 709,158
-------------
TOTAL ASSETS $ 3,058,644
=============
LIABILITIES
Current Liabilities
Accounts Payable, Trade $1,228,658
Current Portion Notes Payable 49,325
Bank Revolving Credit Line 326,592
Accrued Expenses 186,949
-------------
TOTAL CURRENT LIABILITIES 1,791,524
LONG TERM DEBT 106,762
-------------
TOTAL LIABILITIES 1,898,286
-------------
STOCKHOLDER'S EQUITY
Current Stockholder's Equity
Common Stock 1,409,298
Deficit (248,940)
-------------
TOTAL STOCKHOLDER'S EQUITY 1,160,358
-------------
TOTAL LIABILITIES & EQUITY $3,058,644
=============
</TABLE>
18
<PAGE> 19
CABLE LINK, INC.
COMPARATIVE CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 315,033 $ 260,656
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 85,371 53,906
(Increase) decrease in operating assets:
Accounts receivable (429,353) (287,027)
Inventories 188,391 (30,800)
Prepaid expenses 75,303 50,392
Increase (decrease) in operating liabilities:
Accounts payable (84,686) (78,043)
Accrued expenses 1,846 (40,263)
---------- ----------
Net cash provided by (used in) operating activities 151,905 (71,179)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (73,009) (198,653)
---------- ----------
Net cash used in investing activities (73,009) (198,653)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock 179,500 61,600
Repayments on line of credit, net (280,498) (38,530)
Issuance of long-term debt - 106,420
Principal payments on debt (52,378) (9,441)
---------- ----------
Net cash provided by (used in)
financing activities (153,376) 120,049
---------- ----------
Net decrease in cash (74,480) (149,783)
Cash - beginning of period 115,796 149,783
---------- ----------
Cash - end of period $ 41,316 $ -
========== ==========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for interest $ 35,393 $ 42,062
</TABLE>
19
<PAGE> 20
C O N T E N T S
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT................................................................................. 21
BALANCE SHEETS............................................................................................... 22
STATEMENTS OF INCOME......................................................................................... 24
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY................................................................ 25
STATEMENTS OF CASH FLOWS..................................................................................... 26
NOTES TO FINANCIAL STATEMENTS................................................................................ 28
</TABLE>
20
<PAGE> 21
To the Board of Directors and Stockholders
Cable Link, Inc.
Columbus, Ohio
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying balance sheet of Cable Link, Inc. as
of December 31, 1996, and the related statements of income, stockholders'
equity, and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cable Link, Inc. as
of December 31, 1996 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
Groner, Boyle & Quillin, LLP
Columbus, Ohio
February 5, 1997
21
<PAGE> 22
CABLE LINK, INC.
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
<TABLE>
<CAPTION>
1995
1996 (Unaudited)
------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 115,796 $ 149,783
Accounts receivable, net 736,563 1,042,401
Income taxes receivable 102,422 68,904
Inventories 1,176,309 1,149,236
Prepaid consulting 45,755 16,955
Prepaid and other assets 41,814 44,316
------------- -------------
Total current assets 2,218,659 2,471,595
------------- -------------
PROPERTY AND EQUIPMENT, at cost
Furniture and fixtures 510,587 401,601
Equipment 622,988 432,064
Leasehold improvements 175,425 167,947
Construction in progress 14,440 -
------------- -------------
1,323,440 1,001,612
Less accumulated depreciation (604,311) (462,601)
------------- -------------
Net property and equipment 719,129 539,011
------------- -------------
COVENANT NOT TO COMPETE AND
OTHER ASSETS, net 42,040 43,025
------------- -------------
TOTAL ASSETS $ 2,979,828 $ 3,053,631
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 23
CABLE LINK, INC.
LIABILITIES AND STOCKHOLDERS' EQUITY
Years Ended December 31, 1996 and 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1995
1996 (Unaudited)
---------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term obligations $ 101,703 $ 59,799
Revolving credit line 607,090 749,982
Accounts payable 1,313,344 1,148,419
Accrued expenses
Payroll and related taxes 149,060 231,228
Pension -- 81,637
Other 36,043 94,154
Total current liabilities 2,207,240 2,365,219
----------- -----------
LONG-TERM OBLIGATIONS 106,762 102,400
----------- -----------
Total liabilities 2,314,002 2,467,619
----------- -----------
STOCKHOLDERS' EQUITY
Common stock, no par value 1,093,662 1,032,062
Additional paid-in capital 136,136 136,136
Deficit (563,972) (582,186)
----------- -----------
Total stockholders' equity 665,826 586,012
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,979,828 $ 3,053,631
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 24
CABLE LINK, INC.
STATEMENTS OF INCOME
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1995
1996 (Unaudited)
----------- -------------
<S> <C> <C>
Sales $ 8,248,814 $ 7,650,356
Cost of sales 5,612,731 5,106,947
----------- -----------
Gross profit 2,636,083 2,543,409
Selling, general and administrative expenses 2,556,050 2,818,169
----------- -----------
Income (loss) from operations 80,033 (274,760)
----------- -----------
Other income (expense)
Interest expense (84,112) (74,228)
Gain (loss) on sale of assets 3,007 (2,506)
Other 1,658 1,412
----------- -----------
Total other income (expense) (79,447) (85,322)
----------- -----------
Income (loss) before income taxes 586 (360,082)
Provision (benefit) for income taxes (17,628) (68,904)
----------- -----------
Net income (loss) $ 18,214 $ (291,178)
----------- -----------
Net income (loss) per share $ 0.02 $ (0.36)
=========== ===========
Shares used in per share computations 857,300 818,168
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 25
CABLE LINK, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
Shares of Issued Additional
And Outstanding Common Paid-In
Common Stock Stock Capital Deficit Total
---------------- ---------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE - DECEMBER 31,
1994 (Unaudited) 818,168 $1,032,062 $136,136 $(291,008) $ 877,190
Net loss - - - (291,178) (291,178)
------- ---------- -------- ---------- ---------
BALANCE - DECEMBER 31,
1995 (Unaudited) 818,168 1,032,062 136,136 (582,186) 586,012
Exercise of options and warrants 21,120 61,600 - - 61,600
Net income - - - 18,214 18,214
------- ---------- -------- ---------- ---------
BALANCE - DECEMBER 31,
1996 839,288 $1,093,662 $136,136 $(563,972) $ 665,826
------- ---------- -------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 26
CABLE LINK, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1995
1996 (Unaudited)
-------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 18,214 $(291,178)
-------- ---------
Adjustments to reconcile net income(loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 156,717 95,338
(Gain) loss on sale of assets (3,007) 12,506
(Increase) decrease in operating assets:
Accounts receivable 305,838 286,341
Income tax receivable (33,518) (68,904)
Inventories (27,073) (347,424)
Prepaid and other assets (30,097) (8,520)
Increase (decrease) in operating liabilities:
Accounts payable 164,925 159,627
Accrued expenses (221,916) 88,609
--------- ---------
Total adjustments 311,869 217,573
--------- ---------
Net cash provided by (used in) operating activities 330,083 (73,605)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (213,086) (101,544)
Proceeds from sale of assets 10,575 2,500
--------- ---------
Net cash used in investing activities (202,511) ( 99,044)
--------- ---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE> 27
CABLE LINK, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1995
1996 (Unaudited)
---------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock and exercise of
stock options and warrants 61,600 -
Issuance of debt - 548,982
Repayments on line of credit, net (142,892) -
Payments to former stockholder (8,002) (124,496)
Principal payments on debt (20,163) (116,396)
Payments on capital lease obligations (52,102) (12,707)
---------- ----------
Net cash provided by (used in) financing activities (161,559) 295,383
---------- ----------
Net increase (decrease) in cash (33,987) 122,734
Cash - beginning of year 149,783 27,049
---------- ----------
Cash - end of year $ 115,796 $ 149,783
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 88,097 $ 71,215
Income taxes 10,000 14,816
SUPPLEMENTAL DISCLOSURE OF NONCASH PROPERTY
AND EQUIPMENT ACTIVITIES:
Capital lease obligations incurred for equipment $ 41,258 $ 148,793
Purchase of property and equipment with seller-financing 85,275 -
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 28
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
NATURE AND SCOPE OF BUSINESS
The Company sells new and refurbished cable TV equipment in addition to
repairing equipment for cable companies within the United States and various
international markets. The Company operates both its administrative and
manufacturing operations from a single, leased facility in Columbus, Ohio.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USES OF ESTIMATES
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, disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from these estimates.
ACCOUNTS RECEIVABLE
The Company utilizes the allowance method of accounting for accounts receivable
and has provided for possible uncollectible amounts in the accompanying
financial statements. The allowance for doubtful accounts was $40,360 and
$81,221 for the years ended December 31, 1996 and 1995, respectively. Bad debt
expense was $11,059 and $93,362 for the years ended December 31, 1996 and 1995,
respectively.
INVENTORIES
Inventories consist of new and used cable TV equipment and parts used to
refurbish and repair cable TV equipment. Inventory is valued at the lower of
cost or market, using the average-cost method.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost, less accumulated depreciation
computed using the straight-line method over the estimated useful lives of the
related assets. Furniture, fixtures, and equipment are depreciated over lives
ranging from three to seven years, and leasehold improvements are depreciated
over the shorter of the lease term or useful life of the improvement, generally
six to seven years. Major renewals and betterments are capitalized and
depreciated; maintenance and repairs which neither improve nor extend the life
of the respective assets are charged to expense as incurred. Upon disposal of
assets, the cost and related accumulated depreciation are removed from the
accounts and any gain or loss is included in income.
The Company leases certain equipment under capital lease agreements with a cost
and accumulated amortization of $218,516 and $54,314, respectively, at December
31, 1996, and $176,808 and $15,124, respectively at December 31, 1995.
Depreciation expense, which includes the amortization of assets held under
capital leases, was $151,933 and $89,338 for 1996 and 1995, respectively.
REVENUES
Revenues are recognized when the related products are shipped or repairs are
complete.
EARNINGS PER SHARE
Earnings per share are computed on the weighted average number of common shares
outstanding including any dilutive options and warrants. Per share amounts have
been restated for the effects of the 20% stock dividend, that was effective May
16, 1996 for stockholders of record as of May 6, 1996.
28
<PAGE> 29
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ADVERTISING
The Company expenses advertising costs as incurred. Advertising expenses were
$41,980 and $60,121 for the years ended December 31, 1996 and 1995,
respectively.
STATEMENTS OF CASH FLOWS
For the purpose of reporting cash flows, cash includes cash on hand and demand
deposits held by banks.
INCOME TAXES
Deferred income taxes are recognized for the tax consequences in future years of
differences between the financial reporting and tax bases of assets and
liabilities at each year-end based on enacted tax laws and statutory tax rates.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense represents the
taxes currently payable and the net change during the period in deferred tax
assets and liabilities.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 financial statements to
conform with the 1996 presentation.
CASH
As of December 31, 1996, the Company had deposits in a bank which exceeded the
federally insured limits.
INVENTORIES
Inventories at December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
$ 359,234 $ 272,405
817,075 876,831
---------- ----------
$1,176,309 $1,149,236
========== ==========
</TABLE>
REVOLVING CREDIT LINE
The Company has a revolving credit line with a bank for the lesser of $750,000
or an amount based on eligible inventory and accounts receivable. The credit
line is secured by substantially all assets of the Company and is payable on
demand. The line, which was renewed in 1996, matures on May 30, 1997, and
interest is charged at prime plus 1%.
29
<PAGE> 30
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
REVOLVING CREDIT LINE (continued)
In connection with the participation agreement discussed in the stockholder
transactions, the Company acted as guarantor of personal loans for various Board
members and stockholders. No guarantees were outstanding at December 31, 1996.
The total amount guaranteed at December 31, 1995 was $98,000.
LONG-TERM OBLIGATIONS
Long-term obligations at December 31, 1996 and 1995 consists of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Notes payable to a bank relating to motor
vehicle purchases due in monthly installments
of $342 with interest at 8.75% thru April
1997. The notes are secured by the
motor vehicles. $ 1,274 $ 8,809
Amount payable to stockholder 9,302 17,304
Amounts due under capital leases, net of $19,453
and $27,118 representing interest at December 31,
1996 and 1995, respectively. 125,242 136,086
Non-interest bearing note payable to an entity
relating to an equipment purchase due in
monthly installments of $2,722 through June,
1999. The face amount of the note is $97,985,
and the effective interest rate is 9.25%. The
unamortized discount at December 31, 1996
is $12,710. The note is secured by the related
equipment. 72,647 -
---------- ----------
Total 208,465 162,199
Less: Current maturities 101,703 59,799
---------- ----------
Long-term obligations $ 106,762 $ 102,400
========== ==========
</TABLE>
30
<PAGE> 31
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
LONG-TERM OBLIGATIONS (continued)
Maturities of long-term obligations are as follows:
<TABLE>
<CAPTION>
Long-term Capital Lease
Obligations Obligations
----------- -------------
<S> <C> <C>
1997 $ 36,345 $ 77,480
1998 30,986 44,553
1999 15,892 10,667
2000 - 10,667
2001 - 1,328
----------- -------------
144,695
Less amount representing interest - 19,453
----------- -------------
Total $83,223 $ 125,242
=========== =============
</TABLE>
RETIREMENT PLANS
The Company had a defined benefit pension plan, that was frozen effective
December 31, 1990, and a qualified defined contribution profit sharing plan. The
plans were terminated effective August 1, 1995 and no contributions were made to
either plan during 1995. Approval of the plan terminations and disbursement of
plan assets was granted by the IRS during 1996. The remaining unfunded liability
of $68,583 was paid during 1996. At December 31, 1996, the Company has no
further liability for either plan.
INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
1996 1995
---------- --------
<S> <C> <C>
Current (benefit) expense
Federal $ (7,826) $(68,904)
State and local (9,802) -
---------- --------
Income tax (benefit) expense $ (17,628) $(68,904)
========= ========
</TABLE>
31
<PAGE> 32
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
INCOME TAXES (continued)
The components of the net deferred tax asset (liability) are as follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Assets:
Accounts receivable $ 15,337 $ 30,900
Inventories 46,660 90,700
Pension - 31,000
Net operating loss 174,133 66,900
Accrued liabilities - 19,400
Other 3,811 10,600
---------- ----------
Gross deferred tax assets 239,941 249,500
---------- ----------
Liability:
Property and equipment 35,603 33,400
Prepaid asset 17,387 6,400
----------- ----------
Gross deferred tax liabilities 52,990 39,800
----------- ----------
Net deferred tax asset 186,951 209,700
Less: Valuation allowance (186,951) (209,700)
----------- ----------
$ 0 $ 0
=========== ==========
</TABLE>
A reconciliation of the Company's effective tax values is as follows:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Income tax at statutory rates $ 200 $(122,428)
State and local taxes, net of federal benefit (6,469) -
Surtax and other rate differences 5,298 (10,082)
Meals and entertainment/officer's life
insurance 6,092 9,362
Change in valuation allowance (22,749) 54,244
------------ ---------
$ (17,628) $(68,904)
============ =========
</TABLE>
Net deferred tax assets have been fully reserved, as it is not known if the
benefit will be realized by the Company.
As of December 31, 1996, the Company has approximately $458,000 of tax net
operating loss carryforwards remaining to be utilized. The tax net loss
carryforwards begin to expire in the year 2007.
32
<PAGE> 33
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
STOCKHOLDERS' EQUITY
At December 31, 1996 and 1995, the Company had authorized common shares, no par
value, of 1,800,000 and authorized preferred shares, no par value, of 200,000.
No preferred stock is issued or outstanding at December 31, 1996 or 1995.
At December 31, 1996 and 1995, the Company has a stock option plan for key
employees. The maximum number of common shares that may be issued under the plan
is 239,400. The stock option plan provides for the granting of stock
appreciation rights. Payment upon the exercise of a stock appreciation right may
be made at the discretion of the Board of Directors in cash, shares of the
Company's stock or any combination thereof. All options granted during 1996 and
1995 include stock appreciation rights.
The Company applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its stock option plan. Accordingly, no
compensation cost has been recognized in the accompanying financial statements
for options issued under the plan. Had compensation cost for the Company's stock
option plan been determined based on the fair value at the grant dates for
awards under the plan consistent with the methodology of Financial Accounting
Standards Board Statement No. 123 "Accounting for Stock-Based Compensation," the
Company's net income (loss) and net income (loss) per share would change as
indicated below:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
Net income (loss):
As reported $ 18,214 $ (291,178)
Pro forma (21,524) (305,041)
Net income (loss) per share:
As reported $ 0.02 $ (0.36)
Pro forma (0.03) (0.37)
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used for grants in 1996 and 1995.
<TABLE>
<CAPTION>
1996 1995
----------------------------- -----------------
<S> <C> <C>
Dividend yield 0 0
Expected volatility 574% 574%
Risk-free interest rates 5.72%, 5.82%, 6.32% and 6.58% 7.55% and 6.80%
Expected lives 5, 4 and 1 years 5 and 1 years
</TABLE>
33
<PAGE> 34
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
STOCKHOLDERS' EQUITY (continued)
A summary of the status of the Company's employee stock option plan as of
December 31, 1996 and 1995 and changes for the years then ended is presented
below:
<TABLE>
<CAPTION>
1996 1995
--------------------------------- -----------------------------
Weighted- Weighted-
Average Average
Shares Exercise Price Shares Exercise Price
--------- -------------- --------- --------------
<S> <C> <C> <C> <C>
January 1 132,120 $2.26 93,120 $3.09
Granted 83,80 2.31 75,000 1.75
Exercised (10,320) 2.92 - -
Canceled (76,920 1.74 (36,000) 3.35
------- --------
December 31 128,680 2.52 132,120 2.26
======= ========
Options exercisable
at year-end
61,560 57,360
Weighted-average
fair value of options
granted during the
year $ 2.20 $ 2.48
</TABLE>
The following table summarizes information about employee stock options at
December 31, 1996:
<TABLE>
<CAPTION>
Weighted
Average
Number Remaining Weighted- Number Weighted-
Outstanding Contractual Average Exercisable Average
Range of December 31, Life Exercise December 31, Exercise
Exercise Prices 1996 (In Years) Price 1996 Price
--------------- ------------- ----------- --------- ------------- ---------
<S> <C> <C> <C> <C> <C>
$2.19 - $3.75 121,480 7.3 $ 2.23 60,360 $ 2.79
4.93 - 5.80 7,200 7.9 5.08 1,200 5.80
------- ------
Total 128,680 61,560
======= ======
</TABLE>
The Company has entered into agreements to issue warrants to purchase common
stock and stock options to a director of the Company in exchange for consulting
services. In connection with these agreements, the Company paid consulting fees
of $100,000 in 1996 and 1995, and issued options to purchase 20,000 shares at
$1.19 per share and 24,000 shares at $.68 per share in 1996 and 1995,
respectively. The warrants and options include provisions allowing the director
to require the Company to repurchase the rights to warrants and options for the
difference between the exercise price and the fair market value at the date the
director notifies the Company.
34
<PAGE> 35
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
STOCKHOLDERS' EQUITY (continued)
Following is a summary of the director's options, substantially all of which are
fully vested:
<TABLE>
<CAPTION>
1996 1995
-------------------------------- ---------------------------------
Weighted-Average Weighted-Average
Shares Exercise Price Shares Exercise Price
------- ---------------- ------- ----------------
<S> <C> <C> <C> <C>
January 1 222,000 $2.82 180,000 $3.14
Granted 21,200 1.45 42,000 1.45
-------- -------
December 31 243,200 $2.70 222,000 $2.82
======= =======
</TABLE>
The stock options expire at various dates through 2006.
At December 31, 1996 and 1995, the director held warrants to purchase 12,000
shares of stock for $1.53 per share. The warrants expire in 2004.
At December 31, 1996 and 1995, outside Board of Directors members held options
to purchase 61,200 and 51,600 shares of common stock, respectively, with
exercise prices ranging from $2.50 to $5.80. At December 31, 1996 and 1995,
58,800 and 51,600 of the options are vested. At December 31, 1996, 8,400 of
these options have no expiration date, and the remaining options expire at
various dates through 2006.
OPERATING LEASE OBLIGATIONS
The Company leases production and office space from a director of the Company
under an operating lease expiring in October, 1998 with a three-year renewal
option. During 1996 and 1995, modifications were made to the lease which
increased the Company's occupancy area and monthly rent. At December 31, 1996,
monthly payments of $9,504 were required, subject to increases in real estate
taxes and rent increases each November. Minimum lease payments:
<TABLE>
<S> <C>
1997 $114,504
1998 97,320
--------
$211,824
========
</TABLE>
Rent expense was $135,449 and $108,566 for the years ended December 31, 1996 and
1995, respectively.
RECONCILIATION WITH VENDORS
During 1996 and 1995, the Company reconciled amounts owed to various vendors.
These reconciliations resulted in a reduction of expenses of $93,518 and $81,772
in 1996 and 1995, respectively. At December 31, 1995, there was a contingency
accrual of $63,893 included in accounts payable related to unresolved amounts.
No such contingency exists at December 31, 1996.
35
<PAGE> 36
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
STOCKHOLDER TRANSACTIONS
On October 18, 1994, the Company's former president and largest stockholder
entered into an agreement, with a director, whereby the director would purchase
from the former president 193,756 common shares. The disinterested stockholders
of the Company approved the transaction on December 28, 1994. In addition, the
director entered into a participation agreement whereby directors and third
parties will acquire 25% of shares purchased pursuant to the Agreement.
Effective December 31, 1995, the share purchase transaction was completed.
Under terms of the agreement, the Company entered into a separation,
Non-competition and consulting agreement with the former president. The
Separation Agreement requires the Company to pay the former president $100,000.
Consulting services are to be provided by the former president through December
31, 1998, for total consideration of $350,000 payable in seven monthly
installments of approximately $15,394; 25 monthly installments of approximately
$9,333; and a final installment of $8,917. The former president also agreed not
to compete with the Company through December 31, 1998, for total consideration
of $25,000 payable in seven monthly installments of approximately $1,100; 25
monthly installments of approximately $667; and a final installment of $625. The
covenant not to compete and the related obligation are reflected in the
accompanying balance sheets, and the covenant is being amortized on the
straight-line method over the term of the covenant. Total accumulated
amortization in relation to the covenant not-to-compete was $11,981 and $7,197
for 1996 and 1995, respectively. The consulting services are being expensed over
the term of the Agreement as services are rendered. Under this agreement, the
Company recognized expenses of $84,000 per year in 1996 and 1995.
The following are the annual payments due under these agreements:
<TABLE>
<S> <C>
1997 $120,000
1998 19,547
</TABLE>
CONCENTRATIONS OF CREDIT RISK
The Company grants credit to cable operations in the United States, Central and
South America, Europe and the Pacific Rim. Sales are denominated principally in
U. S. dollars and, therefore, the Company does not have significant foreign
exchange rate risk. Sales to customers outside the United States were $745,897
and $1,713,518 and the corresponding accounts receivable were $93,450 and
$92,393 at December 31, 1996 and 1995, respectively. In most cases, sales of
product in international markets are cash in advance or cash on delivery.
Additionally, the Company carries insurance on all significant international
accounts receivable.
At December 31, 1996, approximately 14% of the accounts receivable was due from
a single customer. At December 31, 1995, approximately 15% of the accounts
receivable balance was due from a different customer.
36
<PAGE> 37
CABLE LINK, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995 (Unaudited)
SUBSEQUENT EVENTS
On January 8, 1997 the Company entered into an agreement with another entity
(the Buyer) to purchase 100,000 shares of common stock of the Company and
100,000 warrants to purchase an additional 100,000 shares for $200,000. The
warrants are fully vested and may be exercised in increments of 1,000 shares.
The warrants have been separated into four groups of 25,000 shares each, with
exercise prices of $2.25 for one group, $2.75 for one group, $3.25 for one group
and $3.75 for one group. The expiration dates for these four warrant groups are
six months, six months, nine months, and nine months, after January 8, 1997, the
effective date of the offering. The warrants issued are transferable by the
Buyer under any manner that is in compliance with all applicable security laws.
On January 21, 1997, the Company declared a 3 for 2 stock dividend for
stockholders of record as of January 21, 1997, payable on January 31, 1997. Net
income (loss) per share at December 31, 1996 and 1995 would be $ .01 and $
(.21), respectively, after consideration of this above-mentioned issuance of
common stock, warrants and stock split.
37
<PAGE> 38
PART III
EXHIBITS
ITEM 2. DESCRIPTION OF EXHIBITS.
The following documents are filed as exhibits to the registration statement.
(2) Charter and By-Laws. The Articles of Incorporation and Code of
Regulations of the issuer as presently in effect.
(3) Instruments Defining the Rights of Security Holders.
(a) See Exhibit 2.1 - Articles of Incorporation; Articles
IV, V and VI See Exhibit 2.2 - Code of Regulations;
Articles I, IV and VII
(b) The issuer agrees to provide to the Commission upon
request instruments defining the rights of holders of
long-term debt of the issuer and all of its
subsidiaries for which consolidated financial
statements are required to be filed.
(4) None.
(5) None.
(6) Material Contracts
See Exhibit 6.1 - 1995 Stock Option Plan dated October 17,
1995
See Exhibit 6.2 - Warrant Agreement for Axxess International
Group, Inc. dated January 8, 1997
See Exhibit 6.3 - Non-Competition and Consulting Agreement
dated October 18, 1994.
See Exhibit 6.4 - First Amendment Agreement to Non-Competition
and Consulting Agreement dated June 1, 1995.
See Exhibit 6.5 - Second Amendment Agreement to
Non-Competition and Consulting Agreement dated November 16,
1995.
See Exhibit 6.6 - Consulting Agreement dated October 1, 1996.
See Exhibit 6.7 - Eric S. Newman Independent Consulting Letter
Agreement dated August 1, 1994.
See Exhibit 6.8 - Loan and Security Agreement dated November
27, 1996.
See Exhibit 6.9 - Promissory Note dated April 30, 1997.
See Exhibit 10.1 - Consent of Groner, Boyle & Quillin, LLP
See Exhibit 16.1 - Acknowledgment by Coopers & Lybrand L.L.P.
(7) None.
(10) Consents. The consent of Groner, Boyle & Quillin, LLP.
(16) Acknowledgment by Coopers & Lybrand L.L.P. as to
information in Part II, Item 3.
38
<PAGE> 39
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Columbus,
State of Ohio, on September 19, 1997.
CABLELINK, INC.
By: /s/ Bob Binsky
------------------------------------------------
Bob Binsky, Chairman and Chief Executive Officer
39
<PAGE> 40
INDEX TO EXHIBITS.
<TABLE>
<CAPTION>
Exhibits Instrument
- -------- ----------
<S> <C>
2.1 Articles of Incorporation
2.2 Code of Regulations
3.1 Articles IV, V and VI of the Articles of Incorporation
(see Exhibit 2.1 above)
3.2 Articles I, IV and VII of the Code of Regulations
(see Exhibit 2.2 above)
6.1 1995 Stock Option Plan dated October 17, 1995
6.2 Warrant Agreement for Axxess International Group, Inc.
dated January 8, 1997
6.3 Non-Competition and Consulting Agreement dated
October 18, 1994
6.4 First Amendment Agreement to Non-Competition and
Consulting Agreement dated June 1, 1995
6.5 Second Amendment Agreement to Non-Competition and
Consulting Agreement dated November 16, 1995
6.6 Consulting Agreement dated October 1, 1996
6.7 Eric S. Newman Independent Consulting Letter Agreement
dated August 1, 1994
6.8 Loan and Security Agreement dated November 27, 1996
6.9 Promissory Note dated April 30, 1997
10.1 Consent of Groner, Boyle & Quillin, LLP
16.1 Acknowledgment by Coopers & Lybrand L.L.P.
</TABLE>
40
<PAGE> 1
EXHIBIT 2.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CABLE LINK, INC.
ARTICLE I
NAME OF CORPORATION
The name of the Corporation shall be Cable Link, Inc.
ARTICLE II
PRINCIPAL OFFICE
The place in Ohio where its principal office is to be located is the
City of Columbus, Franklin County.
ARTICLE III
PURPOSE
The purposes for which it is formed are to engage in any business or
activity for which corporations are formed under Chapter 1701 of the Revised
Code of Ohio.
ARTICLE IV
AUTHORIZED SHARES
SECTION 1. Number and Class of Shares. The number of shares which the
Corporation is authorized to have issued and outstanding is 2,000,000 shares.
The classes and the aggregate number of shares of each class are as follows:
(a) 1,800,000 Common Shares, without par value; and
(b) 200,000 Preferred Shares, without par value.
SECTION 2. Preferred Shares.
2.1. Issuance in Series. Any unissued or treasury Preferred Shares
may be issued from time to time in one or more series for such consideration as
may be fixed from time to time by the Board of Directors. The Board of
Directors is hereby expressly authorized to adopt amendments to these Amended
and Restated Articles of Incorporation in respect of any unissued or treasury
Preferred Shares to, among other things, fix or change (a) the division of
Preferred Shares into one or more series, (b) the designation and authorized
number of shares of each series, and (c) the express terms of each series of
Preferred Shares.
2.2. Authority. The Board of Directors is hereby endowed with the
maximum authority permitted by law to establish the express terms of any
unissued or treasury Preferred Shares. It is the express intention of the
shareholders that if, after the date hereof, the Ohio General Corporation Law is
amended to increase the authority of the Board of Directors in this respect, the
Board of Directors will have such increased authority without further amendment
of these Amended and Restated Articles of Incorporation.
41
<PAGE> 2
2.3. Priority of Preferred Shares in Event of Dissolution. In the event
of any dissolution, liquidation or winding up of the affairs of the Corporation,
whether voluntarily or involuntarily, the holders of each series of Preferred
Shares shall be entitled, after payment or provision for payment of the debts
and other liabilities of the Corporation, to receive, out of the net assets of
the Corporation, the amount fixed and determined by the Board of Directors in
any amendment to these Amended and Restated Articles of Incorporation providing
for the issuance of a particular series of Preferred Shares, before any
distribution shall be made to the holders of Common Shares. Except as otherwise
provided in any amendment to these Amended and Restated Articles of
Incorporation providing for the issuance of a particular series of Preferred
Shares, neither the merger or consolidation of the Corporation, nor the sale,
lease or conveyance of all or part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the affairs of the Corporation within
the meaning of this Section 2.3.
2.4. Priority of Preferred Shares to Dividends or Other Distributions.
As and when dividends or other distributions payable in cash, property or
capital stock of the Corporation may be declared by the Board of Directors,
holders of Preferred Shares shall be paid a dividend or distribution in an
amount to be determined by the Board of Directors or pursuant to the terms of
any amendment to these Amended and Restated Articles of Incorporation providing
for the issuance of a particular series of Preferred Shares, before payment of
any such dividend or distribution is made to holders of Common Shares.
ARTICLE V
NO PRE-EMPTIVE RIGHTS
No holder of shares of the Corporation shall have any pre-emptive right
to subscribe for or to purchase any shares of the Corporation of any class or
series, whether now or hereafter authorized.
ARTICLE VI
SHAREHOLDER VOTING
SECTION 1. General. Notwithstanding any provision of the Revised Code
of Ohio, now or hereafter in force, requiring for any purpose the vote or
consent of the holders of shares entitling them to exercise two-thirds, or any
other proportion, of the voting power of the Corporation or of any class or
series of shares thereof, such action, unless otherwise expressly required by
the provisions of this Article VI or the Corporation's Regulations, may be taken
by the vote or consent of the holders of shares entitling them to exercise a
majority of the voting power of the Corporation, or of such class or series of
shares thereof.
SECTION 2. Control Share Acquisitions. Section 1701.831 of the Ohio
Revised Code does not apply to control share acquisitions of the shares of this
Corporation.
ARTICLE VII
PURCHASE OF SHARES
The Corporation, by action of its Board of Directors, may purchase or
otherwise acquire shares of any class or series issued by it at such times, for
such consideration and upon such terms and conditions as the Board of Directors
may determine.
ARTICLE VIII
EFFECT OF AMENDMENT
These Amended and Restated Articles of Incorporation take the place of
and supersede the Corporation's existing Articles of Incorporation as heretofore
amended and restated.
42
<PAGE> 1
EXHIBIT 2.2
AMENDED AND RESTATED
REGULATIONS
OF
CABLE LINK, INC.
ARTICLE ONE
MEETING OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the Shareholders
for the election of Directors, for the consideration of reports to be laid
before such meeting and for the transaction of such other business as may
properly come before such meeting, shall be held on such day and at such hour as
may be fixed from time to time by the Directors.
Section 1.02. Special Meetings. Special meetings of the Shareholders
may be held on any date. Calls for Special Meetings shall specify the time,
place and object or objects thereof, and no business other than that specified
in the call therefor shall be considered at any such meetings.
Section 1.03. Calling of Meetings. Meetings of the Shareholders may be
called only by the Chairman of the Board, the President or, in case of the
President's absence, death or disability, the Vice President authorized to
exercise the authority of the President; the Secretary; the Directors by action
at a meeting, or a majority of the Directors acting without a meeting; or the
holders of twenty five percent of all shares outstanding and entitled to vote
thereat.
Section 1.04. Place of Meetings. All meetings of Shareholders shall be
held at the principal office of the Corporation, unless otherwise provided by
action of the Directors. Meetings of Shareholders may be held at any place
within or without the State of Ohio.
Section 1.05. Notice of Meetings.
(A) Written notice stating the time, place and purpose of a
meeting of the Shareholders shall be given by or at the
direction of the President or Secretary, either by personal
delivery or by mail not less than seven nor more than sixty
days before the date of the meeting, to each Shareholder of
record entitled to notice of the meeting. If mailed, such
notice shall be addressed to the Shareholder at his address as
it appears on the records of the Corporation. Notice of
adjournment of a meeting need not be given if the time and
place to which it is adjourned are fixed and announced at such
meeting. In the event of a transfer of shares after the record
date for determining the Shareholders who are entitled to
receive notice of a meeting of Shareholders, it shall not be
necessary to give notice to the transferee. Nothing herein
contained shall prevent the setting of a record date in the
manner provided by law, the Articles or the Regulations for
the determination of Shareholders who are entitled to receive
notice of or to vote at any meeting of Shareholders or for any
purpose required or permitted by law.
(B) Following receipt by the President or the Secretary of a
request in writing, specifying the purpose or purposes for
which the persons properly making such request have called a
meeting of the Shareholders, delivered either in person or by
registered mail to such officer by any persons entitled to
call a meeting of Shareholders, such officer shall cause to be
given to the Shareholders entitled thereto notice of a meeting
to be held on a date not less than seven nor more than sixty
days after the receipt of such request, as such officer may
fix. If such notice is not given within fifteen days after the
receipt of such request by the President or the Secretary,
then, and only then, the persons properly calling the meeting
may fix the time of meeting and give notice thereof in
accordance with the provisions of the Regulations.
Section 1.06. Waiver of Notice. Notice of the time, place and purpose
or purposes of any meeting of Shareholders may be waived in writing, either
before or after the holding of such meeting, by any Shareholder, which writing
shall be filed with or entered upon the records of such meeting. The attendance
of any Shareholder, in person or by proxy, at any such meeting without
protesting the lack of proper notice prior to or at the commencement of the
meeting shall be deemed to be a waiver by such Shareholder of notice of such
meeting.
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Section 1.07. Quorum. At any meeting of Shareholders, the holders of a
majority in amount of the voting shares of the Corporation then outstanding and
entitled to vote thereat, present in person or by proxy, shall constitute a
quorum for such meeting. The holders of a majority of the voting shares
represented at a meeting, whether or not a quorum is present, or the Chairman of
the Board, the President or the officer of the Corporation acting as Chairman of
the meeting, may adjourn such meeting from time to time and, if a quorum is
present at such adjourned meeting, any business may be transacted as if the
meeting had been held as originally called.
Section 1.08. Votes Required. At all elections of Directors, the
candidates receiving the greatest number of votes shall be elected. Any other
matter submitted to the Shareholders for their vote shall be decided by the vote
of a majority in voting power of the shares present in person or by proxy
entitled to vote upon such matter or such other proportion of the shares, or of
any class of shares, or of each class, as is required by law, the Articles or
the Regulations.
Section 1.09. Order of Business. The order of business at any meeting
of Shareholders shall be determined by the officer of the Corporation acting as
Chairman of such meeting unless otherwise determined by a vote of the holders of
a majority of the voting shares of the Corporation present in person or by proxy
and entitled to vote at such meeting.
Section 1.10. Voting by Shareholders. At any meeting of the
Shareholders, each Shareholder of the Corporation shall, except as otherwise
provided by law or by the express terms of such shares, be entitled to one vote
either in person or by proxy, for each share of the Corporation registered in
his name on the books of the Corporation (a) on the date fixed by the Board of
Directors as the record date for the determination of Shareholders entitled to
vote at such meeting, notwithstanding the prior or subsequent sale or other
disposition of such share or shares or transfer of the same on the books of the
Corporation on the date so fixed, or (b) if no such record date shall have been
fixed, then as of the day next preceding the date of the meeting.
Section 1.11. Record Date. The Directors may fix a record date for any
lawful purpose, including without limitation, the determination of Shareholders
entitled to (a) receive notice of or to vote at any meeting, (b) receive payment
of any dividend or distribution or (c) receive or exercise rights of purchase of
or subscription for, or exchange or conversion of, shares or other securities,
subject to any contract right with respect thereto. Said record date shall not
be a date earlier than the date on which it is fixed, and shall not be more than
sixty days preceding the date of such meeting, the date fixed for payment of any
dividend or distribution, or the date fixed for the receipt or exercise of
rights, as the case may be.
Section 1.12. Proxies. At meetings of the Shareholders, any Shareholder
of record entitled to vote thereat or to execute consents, waivers and releases
may be represented at such meeting or vote thereat, and may execute consents,
waivers and releases and exercise any of his other rights by proxy or proxies
appointed by an instrument in writing signed by such Shareholder, but such
instrument shall be filed with the Secretary of the meeting before the person
holding such proxy shall be allowed to vote thereunder.
Section 1.13. Inspectors of Election. In advance of any meeting of
Shareholders, the Directors may appoint inspectors of election to act at such
meeting or any adjournment thereof; if inspectors are not so appointed, the
officer of the Corporation acting as Chairman of any such meeting may make such
appointment. In case any person appointed as inspector fails to appear or act,
the vacancy may be filled only by appointment made by the Directors in advance
of such meeting or, if not so filled, at the meeting by the officer of the
Corporation acting as Chairman of such meeting. No other person or persons may
appoint or require the appointment of inspectors of election.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except where the law, the
Articles or the Regulations otherwise provide, all authority of the Corporation
shall be exercised by or under the direction of a Board of Directors. Directors
need not be Shareholders of the Corporation.
Section 2.02. Number of Directors. The number of Directors may be
determined from time to time by the Directors, but the number of Directors shall
not be reduced so as to abolish the office of a Director during his term. The
number of Directors may also be determined at any meeting of the Shareholders
called for the purpose of electing
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Directors, at which a quorum is present. The number of Directors shall be not
less than three nor more than fifteen unless all of the shares of the
Corporation are owned of record by one or two shareholders, in which event the
number of Directors may be less than three, but not less than the number of
Shareholders. In the event the Directors fail to fix the number of Directors,
there shall be three. By a vote of a majority of those Directors in office, the
Directors may fill any Director's office that is created by an increase in the
number of Directors.
Section 2.03. Terms of Directors. Directors shall be elected to hold
office until the next annual meeting of Shareholders and until their successors
are elected and qualified or until his death, resignation or removal.
Section 2.04. Nominations. At a meeting of Shareholders at which
Directors are to be elected, only persons nominated as candidates shall be
eligible for election as Directors. Persons may be nominated by the Board of
Directors or by any Shareholder entitled to vote for the election of Directors.
Section 2.05. Election. At each annual meeting of Shareholders for the
election of Directors, the successors to the Directors shall be elected, but if
the annual meeting is not held or if one or more of such Directors is not
elected thereat, they may be elected at a special meeting called for that
purpose.
Section 2.06. Removal. The Directors may remove any Director if, by
order of court, he has been found to be of unsound mind or if he is adjudicated
a bankrupt.
Section 2.07. Vacancies. A vacancy in the Board of Directors shall
exist in the event (1) a Director dies or resigns, (2) a Director is removed by
the Board of Directors, (3) a Director is removed by the Shareholders and the
Shareholders fail to elect a new Director to fill the unexpired term or (4) the
Shareholders fail at any time to elect the whole authorized number of Directors.
The remaining Directors, though less than a majority of the whole authorized
number of Directors, may, by a vote of the majority of their number, fill any
vacancy in the Board of Directors for the unexpired term.
Section 2.08. Meetings. The Directors shall hold such meetings as may
from time to time be called by the Chairman of the Board, the President or any
two Directors. Meetings of Directors shall be held at the principal office of
the Corporation or at such other place within or without the State of Ohio as
the Directors may from time to time determine. Meetings of the Directors may be
held through any communications equipment if all persons participating can hear
each other and participation in a meeting pursuant to this provision shall
constitute presence at such meeting.
Section 2.09. Notice of Meetings. Notice of the time and place of each
meeting of Directors for which such notice is required by law, the Articles, the
Regulations or the Bylaws shall be given to each of the Directors by any of the
following methods:
(A) In a writing mailed not less than three days before such
meeting and addressed to the residence or usual place of
business of a Director, as such address appears on the records
of the Corporation; or
(B) By telegraph, cable, radio, wireless, facsimile or a writing
sent or delivered to the residence or usual place of business
of a Director as the same appears on the records of the
Corporation, not later than two days before the date on which
such meeting is to be held; or
(C) Personally or by telephone not later than the day before the
date on which such meeting is to be held.
Notice given to a Director by any one of the methods specified in the
Regulations shall be sufficient, and the method of giving notice to all
Directors need not be uniform. Notice of any meeting of Directors may be given
only by the Chairman of the Board, the President or the Secretary or an
Assistant Secretary of the Corporation. No such notice need specify the purpose
or purposes of the meeting. Notice of adjournment of a meeting of Directors need
not be given if the time and place to which it is adjourned are fixed and
announced at such meeting.
Section 2.10. Waiver of Notice. Notice of any meeting of Directors may
be waived in writing, either before or after the holding of such meeting, by any
Director, which writing shall be filed with or entered upon the records of the
meeting. The attendance of any Director at any meeting of Directors without
protesting, prior to or at the commencement of the meeting, the lack of proper
notice, shall be deemed to be a waiver by him of notice of such meeting.
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Section 2.11. Quorum. A majority of the whole authorized number of
Directors shall be necessary to constitute a quorum for a meeting of Directors,
except that a majority of the Directors in office shall constitute a quorum for
filling a vacancy in the Board. The act of a majority of the Directors present
at a meeting at which a quorum is present is the act of the Board, except as
otherwise provided by law, the Articles or the Regulations.
Section 2.12. Executive Committee. The Directors may create an
Executive Committee or any other committee of Directors, to consist of not less
than three Directors, and may authorize the delegation to such Executive
Committee or other committees of any of the authority of the Directors, however
conferred, other than that of filling vacancies among the Directors or in the
Executive Committee or in any other committee of the Directors. The Executive
Committee or any other committee of Directors shall serve at the pleasure of the
Directors, shall act only in the intervals between meetings of the Directors and
shall be subject to the control and direction of the Directors. The Executive
Committee or other committee of Directors may act by a majority of its members
at a meeting or by a writing or writings signed by all of its members. The
Executive Committee and any other committee shall keep records of its
proceedings. Any act or authorization of an act by the Executive Committee or
any other committee within the authority delegated to it shall be as effective
for all purposes as the act or authorization of the Directors. No notice of a
meeting of the Executive Committee or of any other committee of Directors shall
be required. A meeting of the Executive Committee or of any other committee of
Directors may be called only by the President or by a member of such Executive
Committee or other committee of Directors, and may be held through any
communications equipment if all persons participating can hear each other.
Participation in a meeting by communications equipment shall constitute presence
at such a meeting. An Executive Committee or other committee, once created and
appointed, shall continue in office until expressly dissolved, terminated,
reorganized or replaced.
Section 2.13. Compensation. The Directors, by the affirmative vote of a
majority in office and irrespective of any personal interest of any of them,
shall have authority to establish reasonable compensation for any Director or
officer, for services rendered or to be rendered to the Corporation.
Section 2.14. Bylaws. The Directors may adopt, and amend from time to
time, Bylaws for their own government, which Bylaws shall not be inconsistent
with the law, the Articles or the Regulations.
ARTICLE THREE
OFFICERS
Section 3.01. Officers. The officers of the Corporation to be elected
by the Directors shall be a President, a Secretary, a Treasurer and such other
officers and assistant officers as the Directors may from time to time elect. A
Chairman of the Board, if elected, must be a Director. Officers of the
Corporation may be paid such compensation as the Board of Directors may
determine. Any two or more offices may be held by the same person, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Articles, the Regulations or
the Bylaws to be executed, acknowledged or verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the Corporation shall
hold office at the pleasure of the Directors. Any officer of the Corporation may
be removed, either with or without cause, at any time, by the affirmative vote
of a majority of all the Directors then in office; such removal, however, shall
be without prejudice to the contract rights, if any, of the person so removed.
Section 3.03. Duties. Officers shall have such authority and shall
perform such duties as are determined by the Directors.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing ownership of shares
of the Corporation shall be issued to those entitled to them. Each certificate
evidencing shares of the Corporation shall bear a distinguishing number; the
signatures of the Chairman of the Board, the President or a Vice President and
of the Secretary or an Assistant Secretary (except that when any such
certificate is countersigned by an incorporated transfer agent or registrar,
such signatures may be facsimile, engraved, stamped or printed); and such
recitals as may be required by law.
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Section 4.02. Transfers. Where a certificate evidencing a share or
shares of the Corporation is presented to the Corporation or its proper agents
with a request to register transfer, the transfer shall be registered as
requested if:
(A) An appropriate person signs on each certificate so presented
or signs on a separate document an assignment or transfer of
shares evidenced by each such certificate, or signs a power to
assign or transfer such shares, or when the signature of an
appropriate person is written without more on the back of each
such certificate; and
(B) Reasonable assurance is given that the endorsement of each
appropriate person is genuine and effective; the Corporation
or its agents may refuse to register a transfer of shares
unless the signature of each appropriate person is guaranteed
by a commercial bank or trust company; and
(C) All applicable laws relating to the collection of transfer or
other taxes have been complied with; and
(D) The Corporation or its agents are not otherwise required or
permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The Directors may appoint
one or more agents to transfer or to register shares of the Corporation, or
both.
Section 4.04. Lost, Wrongfully Taken or Destroyed Certificates. Except
as otherwise provided by law, where the owner of a certificate evidencing shares
of the Corporation claims that such certificate has been lost, destroyed or
wrongfully taken, the officers must cause the Corporation to issue a new
certificate in place of the original certificate if the owner:
(A) So requests before the Corporation has notice that such
original certificate has been acquired by a bona fide
purchaser; and
(B) Files with the Corporation or its agents any indemnity bond
requested by the Corporation, with surety or sureties
satisfactory to the Corporation, in such sum as the officers
may, in their discretion, deem reasonably sufficient as
indemnity against any loss or liability that the Corporation
may incur by reason of the issuance of each such new
certificate; and
(C) Satisfies any other reasonable requirements which may be
imposed by the officers or Directors, in their discretion.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. General Indemnification. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer, employee, partner,
joint venturer or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
Section 5.02. Suits by the Corporation. The Corporation shall indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit threatened or instituted in the
right of the Corporation and may indemnify any person who was or is a party, or
is threatened to be made a party to any threatened, pending, or completed action
or suit threatened or instituted directly by the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer, employee, partner,
joint venturer,
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or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation, except that no such
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Corporation unless and only to the extent
that the court of common pleas of the county in the State of Ohio where the
principal office of the Corporation is located or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability, but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses as
such court of common pleas or such other court shall deem proper; provided,
however, that a Director of the Corporation shall not be found to be liable for
negligence or misconduct hereunder unless he has been adjudged to be liable to
the Corporation for damages under Section 1701.59(D) of the Ohio Revised Code.
Section 5.03. Indemnification for Expenses. To the extent that a
Director, trustee, officer, employee, partner, joint venturer or agent has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Sections 5.01 and 5.02, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Section 5.04. Determination Required. Any indemnification under
Sections 5.01 and 5.02 (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
the indemnification of the Director, trustee, officer, employee, partner, joint
venturer or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 5.01 and 5.02. Such
determination shall be made (A) by the Board of Directors by a majority vote of
a quorum consisting of Directors who were not and are not parties to, or
threatened with, such action, suit or proceeding or (B) if such a quorum is not
obtainable or if a majority of a quorum of disinterested Directors so directs,
in a written opinion by independent legal counsel other than an attorney, or a
firm having associated with it an attorney, who has been retained by or who has
performed services for the Corporation or any person to be indemnified within
the past five years, (C) by the Shareholders, or (D) by the court of common
pleas of the county in the State of Ohio where the principal office of the
Corporation is located or the court in which such action, suit or proceeding was
brought. Any determination made by the disinterested Directors or by independent
legal counsel under this Section 5.04 shall be promptly communicated to the
person who threatened or brought the action or suit by or in the right of the
Corporation, and such person shall have the right, within ten days after receipt
of such notification, to petition the court of common pleas of the county in the
State of Ohio where the principal office of the Corporation is located or the
court in which action or suit was brought to review the reasonableness of such
determination.
Section 5.05. Advances for Expenses. Expenses (including attorneys'
fees) incurred in defending any civil or criminal action, suit or proceeding
referred to in Sections 5.01 and 5.02 may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of the Director in which he agrees to do both of the following:
(A) Repay such amount if it is proved by clear and convincing
evidence in a court of competent jurisdiction that his action
or failure to act involved an act or omission undertaken with
deliberate intent to cause injury to the Corporation or
undertaken with reckless disregard for the best interests of
the Corporation; and
(B) reasonably cooperate with the Corporation concerning the
action, suit, or proceeding.
Section 5.06. Article Five Not Exclusive. The indemnification provided
by this Article Five shall not be deemed exclusive of any other rights to which
those seeking indemnification may be entitled under the Articles, common law or
the General Corporation Law of the State of Ohio or the Regulations or any
agreement, vote of Shareholders or disinterested Directors, or otherwise, both
as to action in his official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
Director, trustee, officer, employee, partner, joint venturer or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
Section 5.07. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a Director, officer, employee,
partner, joint venturer or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer, employee, partner,
joint venturer or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him and
incurred
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by him in any such capacity, or arising out of his status as such, whether or
not the Corporation would have the power to indemnify him against such liability
under the provisions of this Article Five.
Section 5.08. Definition of "the Corporation." As used in this Article
Five, references to "the Corporation" include all constituent corporations in a
consolidation or merger and the new or surviving corporation, so that any person
who is or was a Director, trustee, officer, employee, partner, joint venturer or
agent of such a constituent corporation, or is or was serving at the request of
such constituent corporation as a director, trustee, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the provisions of this Article Five with
respect to the new or surviving corporation as he would if he had served the new
or surviving corporation in the same capacity.
ARTICLE SIX
SEAL
Section 6.01. Seal Not Required. The Corporation shall not be required
to have a seal; provided, however, the officers may provide a suitable seal. A
duplicate seal or seals may be kept and used by any officer of the Corporation
or by any transfer agent of the Corporation's shares.
ARTICLE SEVEN
ACTION WITHOUT A MEETING
Section 7.01. Action by Shareholders or Directors Without a Meeting.
Anything contained in the Regulations to the contrary notwithstanding, any
action which may be authorized or taken at a meeting of the Shareholders or of
the Directors or of a committee of the Directors, as the case may be, may be
authorized or taken without a meeting with the affirmative vote or approval of,
and in a writing or writings signed by, all the Shareholders who would be
entitled to notice of a meeting of the Shareholders held for such purpose, or
all the Directors, or all the members of such committee of the Directors,
respectively, which writings shall be filed with or entered upon the records of
the Corporation.
ARTICLE EIGHT
AMENDMENTS TO REGULATIONS
Section 8.01. Amendments at a Meeting. The Regulations may be amended,
or new Regulations may be adopted, at a meeting of Shareholders held for such
purpose, by the affirmative vote of holders of shares entitling them to exercise
a majority of the voting power of the Corporation on such proposal, or the
affirmative vote of the holders of a majority of the voting power of each class
or classes of shares of the Corporation entitled to vote on such proposal as a
class.
Section 8.2. Amendments Without a Meeting. The Regulations may be
amended or new Regulations may be adopted without a meeting by the written
consent of holders of shares entitling them to exercise three-fourths of the
voting power of the Corporation on such proposal or by the written consent of
the holders of three-fourths of the voting power of each class or classes of the
Corporation entitled to vote on such proposal as a class.
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EXHIBIT 6.1
AMENDED AND RESTATED
CABLE LINK, INC.
1995 STOCK OPTION PLAN
--------------------
OCTOBER 17, 1995
--------------------
P R E A M B L E:
1. Cable Link, Inc., an Ohio corporation ("Cable Link" or the "Company"), by
means of this 1995 Stock Option Plan (the "Plan") desires to afford certain of
its directors, consultants and employees an opportunity to acquire a proprietary
interest in the Company and thus to create in such persons an increased interest
in and a greater concern for the welfare of the Company.
2. The Company has determined that the foregoing objectives will be promoted
by granting Awards (as hereinafter defined) under this Plan to certain
directors, consultants and employees of the Company pursuant to this Plan.
3. The Plan is intended to comply with Regulation 701 promulgated by the SEC
(as hereinafter defined) under the Securities Act of 1933.
TERMS:
ARTICLE 1. DEFINITIONS.
Section 1.1. General. Certain words and phrases used in this Plan shall have
the meanings given to them below in this section:
"Awards" means a grant of Options or Stock Appreciation Rights under the
Plan.
"Board of Directors" means the board of directors of Cable Link.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as now in effect or hereafter amended.
"Common Stock" means the common stock, without par value, of the Company.
"Consultant" means any person, including an advisor, who renders bona fide
services to the Company which are not in connection with the offer and sale of
securities in a capital raising transaction.
"Date of Grant" means the date an Award is first granted.
"Director" means a member of the Board of Directors.
"Effective Date" means the date this Plan was first adopted by the Board of
Directors.
"Employee" means any common law employee of Cable Link and any person who is
an officer of Cable Link.
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"Exchange Act" means the Securities Exchange Act of 1934.
"Exercise Price" means, with respect to an Option, the amount of
consideration that must be delivered to the Company in order to purchase a
single Share thereunder and, with respect to a Stock Appreciation Right that is
not granted in tandem with an Option, the per Share amount that is the basis for
the calculation of the payment thereunder.
"Fair Market Value of a Share" means the amount determined to be the fair
market value of a single Share by the Board of Directors based upon the trading
price of the Shares, their offering price in public and private offerings by the
Company and such other factors as it deems relevant. In the absence of such a
determination, the Fair Market Value of a Share shall be deemed to be (a) if the
Shares are listed or admitted to trading on a national securities exchange or
the NASDAQ - National Market System, the per Share closing price regular way on
the principal national securities exchange or the NASDAQ - National Market
System on which the Shares are listed or admitted to trading on the day prior to
the date of determination or, if no closing price can be determined for the date
of determination, the most recent date for which such price can reasonably be
ascertained, or (b) if the Shares are not listed or admitted to trading on a
national securities exchange or the NASDAQ - National Market System, the mean
between the representative bid and asked per Share prices in the
over-the-counter market at the closing of the day prior to the date of
determination or the most recent such bid and asked prices then available, as
reported by NASDAQ or if the Shares are not then quoted by NASDAQ as furnished
by any market maker selected from time to time by Cable Link for that purpose.
"Grantee" means any person to whom an Award has been granted and any heir or
legal representative to whom an Award has been transferred by will or the laws
of descent and distribution.
"Incentive Stock Option" or "ISO" means an Option intended to comply with the
terms and conditions set forth in Section 422 of the Code.
"Meeting Date" means the date of each annual meeting of the shareholders of
Cable Link on or after the Effective Date at which Directors are elected.
"Non-qualified Option" means a Stock Option other than an Incentive Stock
Option.
"Option" or "Stock Option" means a right granted under Article 5 or 6 of the
Plan to a Participant to purchase a stated number of Shares.
"Option Agreement" means an agreement evidencing an Option substantially in
the form of Exhibit A or Exhibit B hereto.
"Participant" means a person who is eligible to receive and has received an
Award under the Plan.
"Plan" means this Plan as it may be amended or restated from time to time.
"Rule 16b-3" means Rule 16b-3 (17 C.F.R. ss.240.16b-3) promulgated under
Section 16(b) of the Exchange Act as now in effect or hereafter amended.
"Rule 144" means Rule 144 promulgated by the SEC under the Securities Act of
1933 as now in effect or hereafter amended.
"Rule 701" means Rule 701 promulgated by the SEC under Section 3(b) of the
Securities Act of 1933 as now in effect or hereafter amended.
"SAR Agreement" means a Stock Appreciation Right Agreement in the form of
Exhibit C attached hereto.
"SEC" means the Securities and Exchange Commission.
"Shares" means shares of Common Stock.
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"Stock Appreciation Right" or "SAR" means a stock appreciation right granted
to a Participant under Article 7 of the Plan.
Section 1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles.
Section 1.3. Effect of Definitions. The definitions set forth in Section 1.1
above shall apply equally to the singular, plural, adjectival, adverbial and
other forms of any of the words and phrases defined regardless of whether they
are capitalized.
ARTICLE 2. ADMINISTRATION.
Section 2.1. Board of Directors. The Plan shall be administered by the Board
of Directors.
Section 2.2. Authority. Subject to the express provisions of the Plan and in
addition to the powers granted by other sections of the Plan, the Board of
Directors has the authority, in its discretion, to: (a) determine the
Participants, grant Awards and determine their timing, pricing and amount; (b)
define, prescribe, amend and rescind rules, regulations, procedures, terms and
conditions relating to the Plan; (c) make all other determinations necessary or
advisable for administering the Plan, including, but not limited to,
interpreting the Plan, correcting defects, reconciling inconsistencies and
resolving ambiguities; and (d) review and resolve all claims of Consultants,
Directors, Employees, Grantees and Participants. The actions and determinations
of the Board of Directors on matters related to the Plan shall be conclusive and
binding upon the Company and all Consultants, Directors, Employees, Grantees and
Participants.
ARTICLE 3. SHARES.
Section 3.1. Number. The aggregate number of Shares in respect of which
Awards may be granted under the Plan shall not exceed 199,500, which number of
Shares is hereby reserved for issuance under the Plan out of the authorized but
unissued Shares. The foregoing notwithstanding, the aggregate Exercise Price or
number of Shares offered and sold under the Plan shall not exceed the greater of
(i) $500,000 or (ii) the amount or number determined under paragraphs (a) or (b)
of this Section 3.1; provided, however, that the aggregate unpaid Exercise Price
of Shares, plus the aggregate Exercise Price of Shares sold in the preceding 12
months under the Plan, shall in no event exceed $5,000,000.
(a) The aggregate unpaid Exercise Price of Shares, plus the aggregate price
of Shares sold in the preceding 12 months under the Plan, shall not exceed 15
percent of the total assets of the Company, measured at the end of its last
fiscal year; or
(b) The number of Shares that has not been paid for under the Awards, plus
the number of Shares sold in the preceding 12 months under the Plan, shall
not exceed 15 percent of the outstanding Shares. The outstanding Shares shall
include Shares issuable pursuant to the exercise of outstanding options,
warrants, rights or conversion of convertible securities, other than Shares
not yet paid for under the Awards.
Section 3.2. Cancellations. If any Awards granted under the Plan are canceled
or terminate or expire for any reason without having been exercised or matured
in full, or if Stock Appreciation Rights are exercised for cash, the Shares
related to the unexercised portion of an Award or to the portion of a Stock
Appreciation Right exercised for cash, shall be available again for the purposes
of the Plan. If any Shares acquired under the Plan are forfeited for any reason,
the Shares shall be available again for the purposes of the Plan.
Notwithstanding the foregoing, if any unexpired Option granted hereunder is
canceled in connection with the exercise of a Stock Appreciation Right that is
granted in tandem with such Option and is payable in Shares, any Shares covered
by the canceled Option shall not again become available for the granting of
Awards.
Section 3.3. Anti-Dilution.
(a) If the Shares are split or if a dividend of Shares is paid on the Shares,
the number of Shares on which each then outstanding Award is based and the
number of Shares as to which Awards may be granted under this Plan shall be
automatically increased by the ratio between the number of Shares that is
outstanding immediately after such event and the number of Shares that was
outstanding immediately before such event and the Exercise
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Price shall be automatically decreased by the same ratio and if the Shares
are combined into a lesser number of Shares, the number of Shares for which
each then outstanding Award is based and the number of Shares as to which
Awards may be granted under the Plan shall be automatically decreased by such
ratio and the Exercise Price shall be automatically increased by such ratio.
(b) In the event of any other change in the Shares, through recapitalization,
merger, consolidation or exchanges of shares or otherwise, there shall
automatically be substituted for each Share subject to an unexercised Award
and each Share available for additional grants of Awards, the number and kind
of shares or other securities into which each outstanding Share was changed;
and the Exercise Price shall be increased or decreased proportionally so that
the aggregate Exercise Price for the securities subject to each Award shall
remain the same as immediately before such event; and the Board of Directors
may make such further equitable adjustments in the Plan and the then
outstanding Awards as it deems necessary and appropriate including, but not
limited to, changing the number of Shares reserved under the Plan or covered
by outstanding Awards, and the Exercise Price for the securities subject to
outstanding Awards.
Section 3.4. Source. Except as otherwise determined by the Board of
Directors, the Shares issued under the Plan shall be authorized but unissued
Shares. However, Shares which are to be sold under the Plan may be obtained by
the Company from its treasury, by purchases on the open market or from private
sources, or by issuing authorized but unissued Shares. The proceeds of the sale
of any Shares shall be general corporate funds of the Company. No fractional
Shares shall be issued or sold under the Plan nor will any cash payment be made
in lieu of fractional Shares.
Section 3.5. Rights of a Shareholder. No Grantee or other person claiming
under or through any Grantee shall have any right, title or interest in or to
any Shares reserved under the Plan or subject to any Award except as to such
Shares, if any, for which certificates representing such Shares have been issued
to such Grantee.
Section 3.6. Securities Laws. The Shares sold under the Plan are restricted
securities as defined in Rule 144 to the extent required by Rule 701. No Award
shall be exercised nor shall any Shares or other securities be issued or
transferred pursuant to an Award unless and until all applicable requirements
imposed by federal and state securities laws and by any stock exchanges upon
which the Shares may be listed, have been fully complied with. As a condition
precedent to the exercise of an Award or the issuance of Shares pursuant to the
grant or exercise of an Award, the Company may require the Grantee to take any
reasonable action to meet such requirements including providing undertakings as
to the investment intent of the Grantee, accepting transfer restrictions on the
Shares issuable thereunder and providing opinions of counsel, in form and
substance acceptable to the Company, as to the availability of exemptions from
such requirements.
ARTICLE 4. ELIGIBILITY.
Section 4.1. Article 5. Only Directors shall be eligible to receive Options
under Article 5 below.
Section 4.2. Article 6. Only Consultants and Employees shall be eligible to
receive Options under the provisions of Article 6 below.
Section 4.3. Article 7. Only Employees shall be eligible to receive Stock
Appreciation Rights under Article 7 below.
ARTICLE 5. DIRECTOR STOCK OPTIONS.
Section 5.1. Grant.
(a) On each Meeting Date, an Option on 1,000 Shares or such lesser number as
remain available for granting under Article 3 above shall be automatically
granted to each Director who is elected as a Director at such meeting of
shareholders.
(b) On the Effective Date, an Option on 10,000 Shares shall be automatically
granted to each Director.
(c) On the Effective Date, an Option on 4,000 Shares shall be automatically
granted to each of the following Directors: Bob Binsky, Eugene C. Hanchett
and Marvin A. Katz.
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(d) On the Effective Date, an Option on 2,000 Shares shall be automatically
granted to each of Eric S. Newman and Brenda L. Thompson.
Section 5.2. Exercise Price. The Exercise Price of an Option shall be equal
to the Fair Market Value of a Share on the Date of Grant.
Section 5.3. Term. (a) Each Option shall vest and become immediately
exercisable on the Date of Grant; and (b) each Option shall lapse and cease to
be exercisable upon the earliest of: (i) the expiration of ten years from the
Date of Grant, (ii) nine months after the Grantee ceases to be a Director
because of his death or disability, (iii) immediately upon resignation by the
Grantee as a Director, or (iv) 30 days after the Grantee ceases to be a Director
for any reason other than his death, disability or resignation.
Section 5.4. Incentive Stock Options. An Option under this Article 5 shall
not be treated as an Incentive Stock Option.
Section 5.5. Exercise. An Option shall be exercised by the delivery of the
Option Agreement therefor with the notice of exercise attached thereto properly
completed and duly executed by the Grantee named therein to the Secretary of the
Company, together with the aggregate Exercise Price for the number of Shares as
to which the Option is being exercised, after the Option has become exercisable
and before it has ceased to be exercisable. An Option may be exercised as to
less than all of the Shares purchasable thereunder but not for a fractional
Share. No Option may be exercised as to less than 100 Shares unless it is
exercised as to all of the Shares then available thereunder. If an Option is
exercised as to less than all of the Shares purchasable thereunder, a new duly
executed Option Agreement reflecting the decreased number of Shares exercisable
under such Option, but otherwise of the same tenor, shall be returned to the
Grantee. The Exercise Price shall be paid in cash by (a) delivery of a certified
or cashier's check payable to the order of the Company in such amount, (b) wire
transfer of immediately available funds to a bank account designated by the
Company, or (c) reduction of a debt of the Company to the Grantee. Promptly
after an Option is properly exercised, the Company shall issue to the Grantee a
certificate representing the Shares purchased thereunder.
Section 5.6. Option Agreement. Promptly after the Date of Grant, Cable Link
shall duly execute and deliver to the Grantee an Option Agreement setting forth
the terms of the Option. Option Agreements are neither negotiable instruments
nor securities (as such term is defined in Article 8 of the Uniform Commercial
Code). Lost and destroyed Option Agreements may be replaced without bond.
Section 5.7. Article 2. The provisions of Article 2 above shall not apply to
Options granted under this Article 5.
ARTICLE 6. EMPLOYEE AND CONSULTANT STOCK OPTIONS.
Section 6.1. Determinations. The Board of Directors shall determine which
Consultants and Employees shall receive Options, the number of Shares for which
the Options may be exercised, the times when they shall receive them and the
terms and conditions of individual Option grants (which need not be identical).
Section 6.2. Exercise Price. The Board of Directors shall determine the
Exercise Price of each Option at the time that it is granted, but in no event
shall the Exercise Price of an Option be less than the Fair Market Value of a
Share on the Date of Grant. If no express determination of the Exercise Price of
an Option is made by the Board of Directors, the Exercise Price thereof is equal
to the Fair Market Value of a Share on the Date on Grant.
Section 6.3. Term. Subject to the rule set forth in the next sentence, the
Board of Directors shall determine the term during which an Option is
exercisable at the time that it is granted. No Option shall be exercisable after
the expiration of ten years from the Date of Grant. If no express determination
of the times when Options are exercisable is made by the Board of Directors: (a)
each Option shall vest and become immediately exercisable on the Date of Grant;
and (b) each Option shall lapse and cease to be exercisable upon the earliest
of: (i) the expiration of ten years from the Date of Grant, (ii) nine months
after the Grantee ceases to be a Consultant or Employee because of his death or
disability, (iii) immediately upon resignation by the Grantee as a Consultant or
Employee or upon the termination of the Grantee for cause, or (iv) 30 days after
the Grantee ceases to be a Consultant or Employee for any reason other than his
death, disability, resignation or termination.
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Section 6.4. Incentive Stock Options. An Option under this Article 5 shall
not be treated as an Incentive Stock Option.
Section 6.5. Exercise. An Option shall be exercised by the delivery of the
Option Agreement therefor with the notice of exercise attached thereto properly
completed and duly executed by the Grantee named therein to the Secretary of the
Company, together with the aggregate Exercise Price for the number of Shares as
to which the Option is being exercised, and the SAR Agreement for any Stock
Appreciation Right that is in tandem with the Option being exercised, after the
Option has become exercisable and before it has ceased to be exercisable. An
Option may be exercised as to less than all of the Shares purchasable
thereunder, but not for a fractional share. No Option may be exercised as to
less than 100 Shares unless it is exercised as to all of the Shares then
available thereunder. If an Option is exercised as to less than all of the
Shares purchasable thereunder, a new duly executed Option Agreement reflecting
the decreased number of Shares exercisable under such Option, and a new duly
executed SAR Agreement reflecting the decreased number of Stock Appreciation
Rights that are in tandem with the Option, but otherwise of the same tenor,
shall be returned to the Grantee. The Board of Directors may, in its sole
discretion, and upon such terms and conditions as it shall determine at or after
the Date of Grant, permit the Exercise Price to be paid in cash, by the tender
to the Company of Shares owned by the Grantee or by a combination thereof. If
the Board of Directors does not make such determination, the Exercise Price
shall be paid in cash. If any portion of the Exercise Price of an Option is
payable in cash, it may be paid by (a) delivery of a certified or cashier's
check payable to the order of the Company in such amount, (b) wire transfer of
immediately available funds to a bank account designated by the Company, or (c)
reduction of a debt of the Company to the Grantee. If any portion of the
Exercise Price of an Option is payable in Shares it may be paid by delivery of
certificates representing a number of Shares having a total Fair Market Value on
the date of delivery equal to or greater than the required amount, duly endorsed
for transfer with all signatures guaranteed by a medallion signature guarantee.
If more Shares than are necessary to pay such Exercise Price based on their Fair
Market Value on the date of first delivery to the Company are delivered to the
Company, it shall return to the Grantee a certificate for the balance of the
whole number of Shares and a check payable to the order of the Grantee for any
fraction of a Share. Shares may not be delivered to the Company as payment for
the exercise of an Option, if such Shares have been owned by the Grantee
(together with his decedent or testator) for less than six months. Promptly
after an Option is properly exercised, the Company shall issue to the Grantee a
certificate representing the Shares purchased thereunder.
Section 6.6. Option Agreement. Promptly after the Date of Grant, Cable Link
shall duly execute and deliver to the Grantee an Option Agreement setting forth
the terms of the Option. Option Agreements are neither negotiable instruments
nor securities (as such term is defined in Article 8 of the Uniform Commercial
Code). Lost and destroyed Option Agreements may be replaced without bond.
ARTICLE 7. STOCK APPRECIATION RIGHTS.
Section 7.1. Determinations. The Board of Directors shall determine which
Participants shall receive Stock Appreciation Rights, the times when they shall
receive them, the number of Shares to which each Stock Appreciation Right
relates, whether or not a Stock Appreciation Right is to be in tandem with an
Option, and the terms and conditions of individual Stock Appreciation Right
grants (which need not be identical).
Section 7.2. Tandem Grants.
(a) A Stock Appreciation Right may be granted in tandem with an Option,
either at the time of grant or at any time thereafter during the term of the
Option, or may be granted unrelated to an Option. A Stock Appreciation Right
granted to an individual Grantee at the same time as the grant of an Option
shall be deemed to be in tandem with such Option unless the Board of
Directors expressly provides otherwise.
(b) The exercise of a Stock Appreciation Right tandem to an Option shall
cancel the related Option with respect to the number of Shares as to which
such Stock Appreciation Right is exercised. The exercise of an Option granted
in tandem with a Stock Appreciation Right shall cancel the related Stock
Appreciation Right with respect to the number of Shares as to which such
Option is exercised.
(c) Except as otherwise provided by the Board of Directors at the time it is
granted, a Stock Appreciation Right tandem to an Option will be exercisable
at such times as, and only to the extent that, the related Option is
exercisable.
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(d) Upon the exercise of a Stock Appreciation Right tandem to an Option,
the Holder will be entitled to receive payment of an amount determined by
multiplying:
(i) The excess of the Fair Market Value of a Share on the date of
exercise of such Stock Appreciation Right over the Exercise Price
of the related Option, by
(ii) The number of Shares as to which such Stock Appreciation Right
has been exercised.
Section 7.3. Stock Appreciation Rights Not in Tandem with Option.
(a) The Board of Directors shall determine the Exercise Price of each Stock
Appreciation Right that is not in tandem with an Option at the time of the
granting of the Stock Appreciation Right, but in no event shall the Exercise
Price be less than the Fair Market Value of a Share on the Date of Grant of
such Stock Appreciation Right. If no express determination of the Exercise
Price of a Stock Appreciation Right that is not in tandem with an Option is
made by the Board of Directors, the Exercise Price thereof is equal to the
Fair Market Value of a Share on the Date of Grant.
(b) Subject to the rule set forth in the next sentence, the Board of
Directors shall determine the times when a Stock Appreciation Right that is
not in tandem with an Option vests and the term during which a Stock
Appreciation Right that is not in tandem with an Option is exercisable. No
such Stock Appreciation Right shall be exercisable after the expiration of
ten years from the Date of Grant. If no express determination of the times
when a Stock Appreciation Right that is not in tandem with an Option is
exercisable is made by the Board of Directors: (i)each such Stock
Appreciation Right shall vest and become immediately exercisable on the Date
of Grant; and (ii)each such Stock Appreciation Right shall lapse and cease to
be exercisable upon the earliest of: (A)the expiration of ten years from the
Date of Grant, (B) nine months after the Grantee ceases to be an Employee
because of his death or disability, (C)immediately upon resignation by the
Grantee as an Employee or upon the termination of employment of the Grantee
for cause, or (D)30 days after the Grantee ceases to be an Employee for any
reason other than his death, disability, resignation or termination.
(c) A Stock Appreciation Right not in tandem with an Option will entitle the
Grantee, upon exercise of the Stock Appreciation Right, to receive payment of
an amount determined by multiplying:
(i) The excess of the Fair Market Value of a Share on the date of
exercise of such Stock Appreciation Right over the Exercise Price
thereof, by
(ii) The number of Shares as to which such Stock Appreciation Right
has been exercised.
Section 7.4. Exercise. Stock Appreciation Rights shall be exercised by the
delivery of the SAR Agreement therefor, with the notice of exercise attached
thereto properly completed and duly executed by the Grantee, to the Secretary of
the Company together with the Option Agreement for any Option that is in tandem
with such Stock Appreciation Right after it has become exercisable and before it
has ceased to be exercisable. A Stock Appreciation Right may be exercised as to
less than all of the Shares to which it relates but not as to a fractional
Share. No Stock Appreciation Right may be exercised as to less than 100 Shares
unless it is exercised as to all of the Shares then available thereunder. If a
Stock Appreciation Right is exercised as to less than all of the Shares to which
it relates, a new duly executed SAR Agreement and Option Agreement, if
applicable, reflecting the decreased number of Shares exercisable under such SAR
Agreement and any Option granted in tandem therewith, but otherwise of the same
tenor, shall be returned to the Holder.
Section 7.5. Limitations. The Board of Directors may place limitations on the
amount payable upon exercise of a Stock Appreciation Right. Any such limitation
must be determined as of the Date of Grant. The Board of Directors may impose
such additional conditions or limitations on the exercise of a Stock
Appreciation Right as it may deem necessary or desirable.
Section 7.6. Payment. Payment to the Grantee of the amount realized upon
exercise of a Stock Appreciation Right may be made, in the sole discretion of
the Board of Directors unless otherwise provided in the grant thereof, in cash,
whole Shares valued at the Fair Market Value of a Share on the date of exercise
of the Stock Appreciation Right, or a combination thereof. Such payment shall be
made promptly after the exercise of the Stock Appreciation Right. If a Stock
Appreciation Right is payable in Shares and the amount payable results in a
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fractional Share, no fractional Share may be issued nor may any cash payment be
made in lieu of such fractional Share.
Section 7.7. Officers and Directors. Stock Appreciation Rights may be
exercised by a Grantee who is an Officer or Director at the time of exercise
only during the period beginning on the third business day following the date of
release for publication of the Company's regular quarterly or annual summary
statement of sales and earnings (assuming such financial data appears on a wire
service, in a financial news service, or in a newspaper of general circulation,
or is otherwise made publicly available) and ending on the twelfth business day
following such date.
Section 7.8. SAR Agreement. Promptly after the Date of Grant, the Company
shall duly execute and deliver to the Grantee an SAR Agreement setting forth the
terms of the SAR. No term that does not vary from those set forth in the Plan
need be set forth in an SAR Agreement. SAR Agreements are not negotiable
instruments or securities (as such term is defined in Article 8 of the Uniform
Commercial Code). Lost and destroyed SAR Agreements may be replaced without
bond.
ARTICLE 8. PROVISIONS APPLICABLE TO ALL TYPES OF AWARDS.
Section 8.1. Disclosure. The Company shall provide each Participant with a
copy of the Plan and the Option Agreement.
Section 8.2. Surrender and Exchange. The Board of Directors may permit the
voluntary surrender of all or a portion of any Award to be conditioned upon the
granting to the Participant of a new Award for the same or a different number of
Shares as the Award surrendered, or may require such voluntary surrender as a
condition precedent to a grant of a new Award to such Participant. Subject to
the provisions of the Plan, such new Award shall be exercisable at the price,
during the period and on such other terms and conditions as are specified by the
Board of Directors at the time the new Award is granted. Upon surrender, the
Award surrendered shall be canceled and the Shares previously subject to it
shall be available for the grant of other Awards.
Section 8.3. Corporate Mergers and Acquisitions. The Board of Directors may
grant Awards having terms and conditions which vary from those specified in the
Plan if such Awards are granted in substitution for, or in connection with the
assumption of, existing options granted by another business entity and assumed
or otherwise agreed to be provided for by Cable Link pursuant to or by reason of
a transaction involving a merger or consolidation of or acquisition of
substantially all of the assets or stock of another business entity with or by
Cable Link.
Section 8.4. Actions by Board of Directors After Grant. The Board of
Directors shall, subject to the written consent of the Grantee where the action
impairs or adversely alters the rights of the Grantee, have the right at any
time and from time to time after the Date of Grant of any Award to modify the
terms of any Award.
Section 8.5. Withholding. The Company shall have the right to withhold from
any payments due under any Award or due to any Grantee from the Company as
compensation or otherwise the amounts of any federal, state or local withholding
taxes not paid by the Grantee at the time of the exercise or vesting of any
Award. If cash payments sufficient to allow for withholding of taxes are not
made at the time of exercise or vesting of an Award, the Grantee exercising such
Award shall pay to Cable Link an amount equal to the withholding required to be
made less the withholding otherwise made in cash. The Company may make such
other provisions as it deems appropriate to withhold any taxes the Company
determines are required to be withheld in connection with the exercise of any
Award, including, but not limited to, the withholding of Shares from an Award
upon such terms and conditions as the Board of Directors may provide. The
Company may require the Participant to satisfy any relevant withholding
requirements before issuing Shares or delivering any Award to the Participant.
Section 8.6. Disability. If a Grantee who is a Director is absent from
meetings of the Board of Directors because of a physical or mental disability,
for purposes of the Plan, such Grantee will not be considered to have ended his
service with the Board of Directors while he has that disability, unless he
resigns or is not re-elected by the shareholders. If a Grantee who is a
Consultant or Employee is absent from work with the Company because of a
physical or mental disability, for purposes of the Plan, such person will not be
considered to have ended his service with the Company while he has that
disability, unless he resigns or the Board of Directors decides otherwise.
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Section 8.7. Merger of Cable Link. If Cable Link merges or consolidates with
or sells substantially all of its assets to a person that was not one of its
affiliates before such transaction, or any such unaffiliated person or
corporation has publicly announced a tender offer to purchase more than 20% of
the outstanding voting securities of Cable Link, the Board of Directors, in its
discretion, may provide that, for a period of 30 days not extending beyond the
ten year period referred to in Sections 5.3, 6.3 and 7.3 above from the date of
execution of the acquisition agreement in final definitive form or the
announcement of such offer, notwithstanding the provisions of any Award, that
upon the termination of such 30 day period any Award shall expire and be null
and void.
Section 8.8. Waiver. Notwithstanding anything else in the Plan, the Board of
Directors may at any time or from time to time hereafter, waive any provisions
of the Plan relating to the manner of payment or procedures for the exercise of
any Award. Any such waiver may be made effective (a) with respect to one or more
or all Grantees, (b) with respect to some or all of the Shares subject to an
Award of any Grantee or (c) for a period of time ending at or before the
expiration date of any Award.
ARTICLE 9. GENERAL PROVISIONS.
Section 9.1. No Right to Employment. Nothing in the Plan or any Award or any
instrument executed pursuant to the Plan will confer upon any Participant any
right to continue to provide services to the Company or to continue to be an
Employee, Consultant or Director of the Company or affect the right of the
Company to terminate its relationship with any Participant or to terminate the
employment or directorship of any Participant.
Section 9.2. Limited Liability. The liability of the Company under this Plan
or in connection with the exercise of any Award is limited to the obligations
expressly set forth in the Plan and in the grant of any Award, and no term or
provision of this Plan nor of any Award shall be construed to impose any duty,
obligation or liability on the Company not expressly set forth in the Plan or
any grant of any Award.
Section 9.3. Assumption of Awards. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the Company with
one or more other entities as a result of which the Company is not the surviving
entity, or upon a sale of substantially all the assets of the Company to another
entity, any Awards outstanding theretofore granted or sold hereunder must be
assumed by the surviving or purchasing entity, with appropriate adjustments as
to the number and kind of shares and price.
Section 9.4. No Transfer. No Award or other benefit under the Plan may be
sold, pledged or otherwise transferred other than by will or the laws of descent
and distribution; and no Award may be exercised during the life of the
Participant to whom it was granted except by such Participant.
Section 9.5. Expenses. All costs and expenses incurred in connection with the
administration of the Plan including any excise tax imposed upon the transfer of
Shares pursuant to the exercise of an Award shall be borne by the Company.
Section 9.6. Notices. Notices and other communications required or permitted
to be made under the Plan shall be in writing and shall be deemed to have been
duly given if personally delivered or if sent by first class mail addressed (a)
if to a Grantee, at his or her residence address set forth in the records of the
Company or (b) if to the Company, to its President at its principal executive
office.
Section 9.7. Third Parties. Nothing herein expressed or implied is intended
or shall be construed to give any person other than the Grantees any rights or
remedies under this Plan.
Section 9.8. Saturdays, Sundays and Holidays. Where this Plan authorizes or
requires a payment or performance on a Saturday, Sunday or public holiday, such
payment or performance shall be deemed to be timely if made on the next
succeeding business day; provided, however, that this Section 9.8 shall not be
construed to extend the ten year period referred to in Sections 5.3, 6.3 and 7.3
above.
Section 9.9. Rules of Construction. The captions and section numbers
appearing in this Plan are inserted only as a matter of convenience. They do not
define, limit or describe the scope or intent of the provisions of this Plan. In
this Plan words in the singular number include the plural, and in the plural
include the singular; and words of the masculine gender include the feminine and
the neuter, and when the sense so indicates words of the neuter gender may refer
to any gender.
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<PAGE> 10
Section 9.10. Governing Law. The validity, terms, performance and enforcement
of this Plan shall be governed by laws of the State of Ohio that are applicable
to agreements negotiated, executed, delivered and performed solely in the State
of Ohio.
Section 9.11. Effective Date of the Plan. The Plan shall become effective
upon its approval by the Board of Directors of Cable Link.
Section 9.12. Amendment and Termination. No Award shall be granted under the
Plan more than ten years after the Effective Date. The Board of Directors may at
any time terminate the Plan, or make such amendment of the Plan as it may deem
advisable, provided, however, that no amendment or termination of the Plan shall
be effective to alter or impair the rights of a Grantee under any Award made
before the adoption of such amendment or termination by the Board of Directors,
without the written consent of such Grantee.
59
<PAGE> 11
EXHIBIT A
CABLE LINK, INC.
280 COZZINS STREET
COLUMBUS, OHIO 43215-2379
<<Date of Grant>>
<<Name of Grantee>>
<<Street>>
<<City, State, Zip>>
Congratulations. You have been granted a Stock Option under the Amended and
Restated Cable Link, Inc. 1995 Stock Option Plan (the "Plan") on the following
terms:
1. NUMBER OF SHARES. The number of Shares of Common Stock of Cable Link, Inc.
that you may purchase under this Option is:<<Number>>
2. EXERCISE PRICE. The exercise price to purchase Shares under this Option
is: $<<Price>> per Share.
3. VESTING. The Shares subject to this Option will vest and become
exercisable upon execution of this Agreement.
4. LAPSE. This Option will lapse and cease to be exercisable upon the
earliest of:
(i) the expiration of 10 years from the date of this Agreement shown
above,
(ii) nine months after you cease to be a Director because of your death
or disability,
(iii) immediately upon your resignation as a Director, or
(iv) 30 days after you cease to be a Director for any reason other than
your death, disability or resignation.
5. TAXATION. This Option is a Non-qualified Option. You will have taxable
income upon the exercise of this Option.
6. EXERCISE. This Option may be exercised by the delivery of this Agreement
with the notice of exercise attached hereto properly completed and signed
by you to the Secretary of the Company, together with the aggregate
Exercise Price for the number of Shares as to which the Option is being
exercised, after the Option has become exercisable and before it has
ceased to be exercisable. The Exercise Price must be paid in cash by (a)
delivery of a certified or cashier's check payable to the order of Cable
Link in such amount, (b) wire transfer of immediately available funds to a
bank account designated by Cable Link, or (c) reduction of a debt of Cable
Link to you. This Option may be exercised as to less than all of the
Shares purchasable hereunder, but not for a fractional share, nor may it
be exercised as to less than 100 Shares unless it is exercised as to all
of the Shares then available hereunder. If this Option is exercised as to
less than all of the Shares purchasable hereunder, a new duly executed
Option Agreement reflecting the decreased number of Shares exercisable
under such Option, but otherwise of the same tenor, will be returned to
you.
7. NO TRANSFER. This Option may not be sold, pledged nor otherwise
transferred other than by will or the laws of descent and distribution;
and it may only be exercised during your lifetime by you. This Agreement
is neither a negotiable instrument nor a security (as such term is defined
in Article 8 of the Uniform Commercial Code).
8. SECURITIES LAWS.
(a) Receipt of Plan and Agreement. You hereby acknowledge that you have
been provided with a copy of this Agreement and the Plan, have had
an opportunity to read such documents and to discuss their
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<PAGE> 12
contents with your personal legal counsel before signing this
Agreement and have been allowed to retain such copies for your
personal records.
(b) Transfer Restriction. You understand that the Shares have not been
registered under the Securities Act of 1933 on the ground that the
issuance of securities provided for in this Agreement is exempt from
registration under the Securities Act of 1933 pursuant to Rule 701
and that in order to obtain such exemption, the transfer of such
securities is restricted by the legend required by this Agreement.
You will not offer for sale, sell or otherwise transfer any of the
Shares unless such securities have been registered under the
Securities Act of 1933 and under applicable state securities laws or
such securities or their offer, sale or transfer are exempt from
such registration and the Company has received an opinion of
counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such securities, or their offer, sale or
transfer, are so exempt. Any certificates representing the Shares
shall continue to bear the legend set forth below until such time as
you are, in the opinion of counsel to the Company, lawfully able to
offer, sell and transfer such Shares without registration under the
Securities Act of 1933 or any applicable state securities law and
without compliance with Rule 144.
(c) Any certificate representing any Shares issued hereunder shall bear
the following legend:
THESE SECURITIES HAVE NEITHER BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 NOR UNDER ANY APPLICABLE STATE SECURITIES LAW. THESE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS THEY
ARE REGISTERED UNDER THE SECURITIES ACT OF 1933 AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THEY OR SUCH OFFER, SALE OR TRANSFER ARE EXEMPT
FROM SUCH REGISTRATION AND THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IN FORM AND SUBSTANCE, TO
THAT EFFECT.
9. NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment agreement
and nothing contained herein gives you any right to continue to be a
Director of the Company.
10. PLAN CONTROLS. This Agreement is an Option Agreement (as such term is
defined in the Plan) under the Plan. The terms of this Agreement are subject
to, and controlled by, the terms of the Plan, as it is now in effect or may
be amended from time to time hereafter, which are incorporated herein as if
they were set forth in full. Any words or phrases defined in the Plan have
the same meanings in this Agreement.
11. PREVIOUS OPTION GRANTS. The Options granted pursuant to the Plan and this
Agreement supersede and replace any Options that were granted to you before
January 24, 1995 for serving as a director.
12. MISCELLANEOUS. This Agreement sets forth the entire agreement of the parties
with respect to the subject matter hereof and it supersedes and discharges
all prior agreements (written or oral) and negotiations and all
contemporaneous oral agreements concerning such subject matter. This
Agreement may not be amended or terminated except by a writing signed by the
party against whom any such amendment or termination is sought. If any one
or more provisions of this Agreement shall be found to be illegal or
unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby. This Agreement shall be governed by the laws of the State of Ohio.
Please acknowledge your acceptance of this Agreement by signing the enclosed
copy in the space provided below and returning it promptly to Cable Link.
CABLE LINK, INC.
By:
-------------------------------------
<<Name of Officer>> <<Title>>
Accepted and Agreed to as of
the date first set forth above:
- ----------------------------------
<<Name of Grantee>>
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<PAGE> 13
OPTION EXERCISE FORM
The undersigned hereby exercises the right to purchase
________________ shares of Common Stock of Cable Link, Inc. pursuant to the
Option Agreement dated <<Date of Grant>> under the Amended and Restated Cable
Link, Inc. 1995 Stock Option Plan.
Date:
---------------------------------- -------------------------------
<<Name of Grantee>>
- ---------------------------------------
Sign and complete this Option Exercise Form and deliver it to:
Cable Link, Inc.
Attn.: President
280 Cozzins Street
Columbus, Ohio 43215-2379
together with the option price in cash by (a) delivery of a certified or
cashier's check payable to the order of Cable Link in such amount, (b) wire
transfer of immediately available funds to a bank account designated by Cable
Link, or (c) reduction of a debt of Cable Link to you.
62
<PAGE> 14
EXHIBIT B
CABLE LINK, INC.
280 COZZINS STREET
COLUMBUS, OHIO 43215-2379
<<Date of Grant>>
<<Name of Grantee>>
<<Street>>
<<City, State, Zip>>
Congratulations. You have been granted a Stock Option under the Amended and
Restated Cable Link, Inc. 1995 Stock Option Plan (the "Plan") on the following
terms:
1. NUMBER OF SHARES. The number of Shares of Common Stock of Cable Link,
Inc. that you may purchase under this Option is:<<Number>>
2. EXERCISE PRICE. The exercise price to purchase Shares under this Option
is: $<<Price>> per Share.
3. VESTING. The Shares subject to this Option will vest and become
exercisable upon execution of this Agreement.
4. LAPSE. This Option will lapse and cease to be exercisable upon the
earliest of:
(i) the expiration of 10 years from the date of this Agreement shown
above,
(ii) nine months after you cease to be a[n] [Employee/Consultant]
because of your death or disability,
(iii) immediately upon your termination for cause or resignation as a[n]
[Employee/Consultant],
(iv) 30 days after you cease to be a[n] [Employee/Consultant] for any
reason other than your death, disability, resignation or
termination, or
(v) in certain cases upon the exercise of a Stock Appreciation Right
granted in tandem with this Option as set forth in the Plan.
5. TAXATION. This Option is a Non-qualified Option. You will have taxable
income upon the exercise of this Option.
6. EXERCISE. This Option may be exercised by the delivery of this Agreement
with the notice of exercise attached hereto properly completed and
signed by you to the Secretary of the Company, together with the
aggregate Exercise Price for the number of Shares as to which the Option
is being exercised, after the Option has become exercisable and before
it has ceased to be exercisable. The Exercise Price must be paid in cash
by (a) delivery of a certified or cashier's check payable to the order
of Cable Link in such amount, (b) wire transfer of immediately available
funds to a bank account designated by Cable Link, or (c) reduction of a
debt of Cable Link to you. This Option may be exercised as to less than
all of the Shares purchasable hereunder, but not for a fractional share,
nor may it be exercised as to less than 100 Shares unless it is
exercised as to all of the Shares then available hereunder. If this
Option is exercised as to less than all of the Shares purchasable
hereunder, a new duly executed Option Agreement reflecting the decreased
number of Shares exercisable under such Option, but otherwise of the
same tenor, will be returned to you.
7. NO TRANSFER. This Option may not be sold, pledged nor otherwise
transferred other than by will or the laws of descent and distribution;
and it may only be exercised during your lifetime by you. This Agreement
is neither a negotiable instrument nor a security (as such term is
defined in Article 8 of the Uniform Commercial Code).
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<PAGE> 15
8. SECURITIES LAWS.
(a) Receipt of Plan and Agreement. You hereby acknowledge that you have
been provided with a copy of this Agreement and the Plan, have had
an opportunity to read such documents and to discuss their contents
with your personal legal counsel before signing this Agreement and
have been allowed to retain such copies for your personal records.
(b) Transfer Restriction. You understand that the Shares have not been
registered under the Securities Act of 1933 on the ground that the
issuance of securities provided for in this Agreement is exempt from
registration under the Securities Act of 1933 pursuant to Rule 701
and that in order to obtain such exemption, the transfer of such
securities is restricted by the legend required by this Agreement.
You will not offer for sale, sell or otherwise transfer any of the
Shares unless such securities have been registered under the
Securities Act of 1933 and under applicable state securities laws or
such securities or their offer, sale or transfer are exempt from
such registration and the Company has received an opinion of
counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such securities, or their offer, sale or
transfer, are so exempt. Any certificates representing the Shares
shall continue to bear the legend set forth below until such time as
you are, in the opinion of counsel to the Company, lawfully able to
offer, sell and transfer such Shares without registration under the
Securities Act of 1933 or any applicable state securities law and
without compliance with Rule 144.
(c) Any certificate representing any Shares issued hereunder shall bear
the following legend:
THESE SECURITIES HAVE NEITHER BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 NOR UNDER ANY APPLICABLE STATE SECURITIES LAW. THESE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS THEY
ARE REGISTERED UNDER THE SECURITIES ACT OF 1933 AND UNDER APPLICABLE
STATE SECURITIES LAWS OR THEY OR SUCH OFFER, SALE OR TRANSFER ARE EXEMPT
FROM SUCH REGISTRATION AND THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY IN FORM AND SUBSTANCE, TO
THAT EFFECT.
9. NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment
agreement and nothing contained herein gives you any right to continue
to be a[n] [Employee/Consultant] of the Company.
10. PLAN CONTROLS. This Agreement is an Option Agreement (as such term is
defined in the Plan) under the Plan. The terms of this Agreement are
subject to, and controlled by, the terms of the Plan, as it is now in
effect or may be amended from time to time hereafter, which are
incorporated herein as if they were set forth in full. Any words or
phrases defined in the Plan have the same meanings in this Agreement.
11. MISCELLANEOUS. This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof and it supersedes and
discharges all prior agreements (written or oral) and negotiations and
all contemporaneous oral agreements concerning such subject matter. This
Agreement may not be amended or terminated except by a writing signed by
the party against whom any such amendment or termination is sought. If
any one or more provisions of this Agreement shall be found to be
illegal or unenforceable in any respect, the validity and enforceability
of the remaining provisions hereof shall not in any way be affected or
impaired thereby. This Agreement shall be governed by the laws of the
State of Ohio.
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<PAGE> 16
Please acknowledge your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it promptly to Cable
Link.
CABLE LINK, INC.
By:
--------------------------------------
<Name of Officer>> <<Title>>
Accepted and Agreed to as of
the date first set forth above:
- -----------------------------------
<<Name of Grantee>>
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<PAGE> 17
OPTION EXERCISE FORM
The undersigned hereby exercises the right to purchase ________________
shares of Common Stock of Cable Link, Inc. pursuant to the Option Agreement
dated <<Date of Grant>> under the Amended and Restated Cable Link, Inc. 1995
Stock Option Plan.
Date:
------------------------------- --------------------------
<<Name of Grantee>>
- ------------------------------------
Sign and complete this Option Exercise Form and deliver it to:
Cable Link, Inc.
Attn: President
280 Cozzins Street
Columbus, Ohio 43215-2379
together with the option price in cash by (a) delivery of a certified or
cashier's check payable to the order of Cable Link in such amount, (b) wire
transfer of immediately available funds to a bank account designated by Cable
Link, or (c) reduction of a debt of Cable Link to you.
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<PAGE> 18
EXHIBIT C
CABLE LINK, INC.
280 COZZINS STREET
COLUMBUS, OHIO 43215-2379
<<Date of Grant>>
<<Name of Grantee>>
<<Street>>
<<City, State, Zip>>
Congratulations. You have been granted a Stock Appreciation Right ("SAR")
under the Amended and Restated Cable Link, Inc. 1995 Stock Option Plan (the
"Plan") on the following terms:
1. NUMBER OF SHARES. You have been granted an SAR based on <<Number>>
Shares of Common Stock of the Company. This grant [* is *][* is not *]
made in tandem with the grant to you of an Option under the Plan.
2. EXERCISE PRICE. The exercise price under your SAR is: $<<Price>> per
Share.
3. VESTING. [* Your right to exercise your SAR shall vest in the same
manner and at the same times as your Option.*] [* [25%] of the Shares
originally subject to this SAR will vest and become exercisable on the
first [four] anniversaries of the date of this Agreement if you have
been an Employee continuously from the date of this Agreement through
the date when such portion of the Option vests *].
4. LAPSE. [* This SAR shall lapse and cease to be exercisable in the same
manner and at the same time as your Option and also, in certain cases,
upon the exercise of the Option granted in tandem with this Stock
Appreciation Right as set forth in the Plan. *][* This SAR will lapse
and cease to be exercisable upon the earliest of:
(i) the expiration of 10 years from the date of this Agreement,
(ii) nine months after you cease to be an Employee because of your
death or disability,
(iii) three months after the termination without cause of your
employment with the Company, or
(iv) immediately upon termination of your employment with the Company
for cause or by your resignation. *]
5. TAXATION. You will have taxable income upon the exercise of this SAR. At
that time, you must pay to the Company an amount equal to the required
federal, state, and local tax withholding less any withholding otherwise
made from your salary or bonus. You must satisfy any relevant
withholding requirements before the Company makes any payment due to you
under this SAR.
6. EXERCISE. This SAR may be exercised by the delivery of this Agreement
with the notice of exercise attached hereto properly completed and
signed by you to the Secretary of the Company after the SAR has become
exercisable and before it has ceased to be exercisable. [* You must also
deliver the Option Agreement for an Option that is in tandem with this
SAR. *] This SAR may be exercised as to less than all of the Shares
available hereunder, but not for a fractional share, nor may it be
exercised as to less than 100 Shares unless it is exercised as to all of
the Shares then available hereunder.
7. NO TRANSFER. This SAR may not be sold, pledged nor otherwise transferred
other than by will or the laws of descent and distribution; and it may
be exercised during your lifetime only by you. This Agreement is neither
a negotiable instrument nor a security (as such term is defined in
Article 8 of the Uniform Commercial Code).
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<PAGE> 19
8. NOT AN EMPLOYMENT AGREEMENT. This Agreement is not an employment
agreement and nothing contained herein gives you any right to continue
to be employed by or provide services to the Company or affects the
right of the Company to terminate your employment or other relationship
with you.
9. PLAN CONTROLS. This Agreement is an SAR Agreement (as such term is
defined in the Plan) under Article 7 of the Plan. The terms of this
Agreement are subject to, and controlled by, the terms of the Plan, as
it is now in effect or may be amended from time to time hereafter, which
are incorporated herein as if they were set forth in full. Any words or
phrases defined in the Plan have the same meanings in this Agreement.
10. MISCELLANEOUS. This Agreement sets forth the entire agreement of the
parties with respect to the subject matter hereof and it supersedes and
discharges all prior agreements (written or oral) and negotiations and
all contemporaneous oral agreements concerning such subject matter. This
Agreement may not be amended or terminated except by a writing signed by
the party against whom any such amendment or termination is sought. If
any one or more provisions of this Agreement shall be found to be
illegal or unenforceable in any respect, the validity and enforceability
of the remaining provisions hereof shall not in any way be affected or
impaired thereby. This Agreement shall be governed by the laws of the
State of Ohio.
Please acknowledge your acceptance of this Agreement by signing the
enclosed copy in the space provided below and returning it promptly to the
Company.
CABLE LINK, INC.
By:
---------------------------------------
<<Name of Officer>> <<Title>>
Accepted and Agreed to as of
the date first set forth above:
- ---------------------------------
<<Name of Grantee>>
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<PAGE> 20
SAR EXERCISE FORM
The undersigned hereby exercises the right to receive certain payments with
respect to _________ Shares of Common Stock of the Company pursuant to the SAR
Agreement dated <<Date of Grant>> under the Amended and Restated Cable Link,
Inc. 1995 Stock Option Plan. The undersigned hereby represents and warrants to
the Company that he or she is not exercising such rights while in the possession
of material inside information relating to the Company.
Date:
------------------------------- -------------------------
<<Name of Grantee>>
- ------------------------------------
Sign and complete this Option Exercise Form and deliver it to:
CABLE LINK, INC.
Attn: President
280 Cozzins Street
Columbus, Ohio 43215-2379
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<PAGE> 1
EXHIBIT 6.2
WARRANT AGREEMENT FOR AXXESS INTERNATIONAL GROUP, INC.
Cable Link, Inc. (the "Company"), hereby grants to Axxess International Group,
Inc. (the "Warrantee") a warrant to purchase a total of 100,000 shares of the
Common Stock (the "Shares") of the Company, at the price determined herein.
RECITALS
A. Warrantee is purchasing one unit of Cable Link comprising of 100,000
Common Shares and 100,000 Warrants.
B. Warrantee is paying $200,000 for said Common Shares.
C. The Company considers it desirable and in the best interests that the
Warrantee be given an inducement to acquire a further proprietary
interest in the Company pursuant to the Warrants granted as provided
for below.
In consideration of the mutual promised made herein, it is agreed by and between
the parties as follows:
1. Nature of the Warrant. These warrants will be exempt from registration
pursuant to a Regulation D 504 filing with the SEC as part of a unit
and the common shares will be issuable and freely tradable upon
exercise, with the warrant price at or in excess of the current market
value of the shares.
2. Warrant Price and Term. The warrant price is as follows:
- Warrants for 25,000 shares with an exercise price of $2.25 per
share, with an expiration of six months after the effective date of
the offering.
- Warrants for 25,000 shares with an exercise price of $2.75 per
share, with an expiration of six months after the effective date of
the offering.
- Warrants for 25,000 shares with an exercise price of $3.25 per
share, with an expiration of nine months after the effective date of
the offering.
- Warrants for 25,000 shares with and exercise price of $3.75 per
share, with an expiration of nine months after the effective date of
the offering.
3. Exercise of Warrants
(a) Exercise. The warrants shall be exercisable in increments of 1,000
shares.
(b) Method of Exercise. The Warrants shall be exercisable by written
notice which shall state the election to exercise the Warrants, the
number of Shares in respect to which the Warrants are being
exercised, and the name in which the shares are to be registered.
Such written notice shall be signed by the Warrantee and shall be
delivered to the CEO, or legal council of the Company. Warrantee
shall make payment to the Company at such time as the Company is
prepared to exchange the certificates representing the shares.
(c) Cashless Exercise. The Warrants may be exercised through a
"cashless" exercise, when coordinated with a brokerage firm. In the
event the Warrantee selects a cashless method of exercising the
warrants, he shall notify the Company at the time of exercise that
he intends a cashless exercise, and identify in writing the
brokerage firm, and the Company will coordinate forthwith such
brokerage firm.
(d) Restrictions on Exercise. These warrants are fully vested, and there
are no restrictions on their exercise.
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<PAGE> 2
4. Reclassification, Consolidation or Merger. The number and Warrant price
of the shares of Stock covered by the Warrants as well as the number of
shares of Stock covered by any outstanding Warrants shall be
proportionately adjusted as appropriate, to reflect any dividend, split,
combination, recapitalization, exchange of shares, reorganization or
similar transaction or change in, or affecting the stock, the Common
Stock or the capital structure of the Company.
5. Rights Prior to Exercise of Warrant. Warrantee shall have no rights as a
stockholder with respect to the warranted Shares until payment of the
option price and delivery to him such Shares as provided herein.
6. Restrictions on Disposition. All Shares acquired by Warrantee pursuant
to this Warrant Agreement shall be subject to the restrictions on sale,
encumbrance and other disposition contained in the Company's Bylaws or
as required by the applicable state laws, or the Securities Exchange
Commission. However, such shares shall be exempt from registration, and
shall be freely tradable when exercised.
7. Binding Effect. This Agreement shall insure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
8. Withholding. Because the exercise price for the warrants is equal to or
greater than the market value of the shares, there is no withholding by
the Company as a result of the grant or exercise of the warrants or the
sale of the Shares issued upon exercise of the warrants.
9. Transferability of Warrants. The warrants (and the rights to the shares
thereunder) may be sold, pledged, assigned, hypothecated, gifted,
transferred or disposed of in any manner, in increments of 1,000 shares;
provided, however, that (i) such transfer of assignment is in compliance
with all applicable securities laws, and (ii) Cable Link shall have
received (at its sole option) an opinion of counsel, in form and
substance acceptable to Cable Link, that such transfer or assignment is
so in compliance with all applicable securities laws.
10. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the Sate of California.
Effective Date: January 8, 1997
Cable Link, Inc.
By:
-------------------------------
Bob Binsky
Axxess International Group, Inc.
-----------------------------------
Bill Glaser
71
<PAGE> 1
EXHIBIT 6.3
NON-COMPETITION AND CONSULTING AGREEMENT
This NON-COMPETITION AND CONSULTING AGREEMENT (the "Agreement") is made and
entered into as of October 18, 1994, between CABLE LINK, INCORPORATED, an Ohio
corporation (the "Company"), and E. JACK DAVIS ("Davis").
R E C I T A L S:
WHEREAS, Davis has heretofore been President of the Company and the Company
has heretofore employed Davis as a full-time employee of the Company; and
WHEREAS, Davis has resigned from his office with the Company and whereas
Davis' employment as a full-time employee of the Company has been terminated;
and
WHEREAS, the Company desires to retain Davis as a consultant to the Company
and obtain a commitment from Davis to refrain from competing with the Company on
the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements hereinafter set
forth, the parties hereto, intending to be legally bound, agree as follows:
Section 1. Control Share Acquisition Act.
1.1. Condition. This Agreement and all the obligations and
duties of the parties hereunder are conditional upon the
Company obtaining the approval of the shareholders of the
Company in compliance with the provisions of the Ohio Control
Share Acquisition Act (the "Acquisition Act") as it applies to
the transactions (the "Transactions") contemplated by, and
arising out of, this Agreement, a Share Purchase Agreement
(the "Purchase Agreement") between Bob Binsky ("Binsky") and
Davis and a Separation Agreement and General Release between
the Company and Davis, both dated of even date herewith, and
the documents and instruments executed in connection with the
foregoing. This Agreement shall be null and void and of no
effect if the Company does not obtain shareholder approval of
the Transactions as contemplated by Section 3.3 of the
Purchase Agreement.
1.2. Effort. The Company shall use its best efforts to comply
with the provisions of the Acquisition Act in connection
with the Transactions.
Section 2. Employment as Consultant.
2.1. The Company hereby retains Davis as a consultant to the
Company from the date hereof through and including December
31, 1998, subject to the terms hereinafter set forth.
2.2. At any time through the last day of the term of this
Agreement, Davis shall consult with and advise the Company
with respect to the business engaged in by the Company at the
date hereof when, and as requested by, the Company from time
to time. Davis shall determine the time, manner and place at
which the requested services shall be rendered to the Company
in his reasonable discretion and Davis shall not be deemed to
be an employee of the Company for any purpose. The Company
shall not unreasonably request Davis to perform services
hereunder that will conflict with Davis' business or personal
schedule.
Section 3. Confidentiality and Assignment of Intellectual Property.
3.1. From the date hereof and thereafter, Davis agrees to hold
in strictest confidence, and not use, or disclose to anyone,
other than when such disclosure is authorized in writing by
the Board of Directors of the Company, any trade secrets,
confidential knowledge, data or other proprietary information
of the Company which he now knows or hereafter learns of,
which by way of
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<PAGE> 2
illustration and not limitation, includes scientific, technical
and business information relating to products, processes,
know-how, designs, formulas, methods, developmental or
experimental work, firmware, software (whether executable or
source code), improvements, discoveries, plans for research, new
products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs,
suppliers and customers, and information regarding the skills
and compensation of employees of the Company. Davis shall return
all writings, electronic recordings, or other copies or
facsimiles possessed by Davis which include any such
confidential knowledge, data or other proprietary information of
the Company or other information as described above to an
executive officer of the Company within 10 days of the date
hereof and after such date, immediately upon the discovery of
such material in his possession. In addition, Davis hereby
agrees that, within 10 days of the date hereof and after such
date, immediately upon the discovery of such material in his
possession , he will return to the Company all of its property
then in his possession and control, including but not limited to
all records, documents, financial information, equipment,
vehicles, disks, keys, and any other personal property of the
Company, and deliver all of the property and assets of any
employee benefit plan for the benefit of the employees of the
Company and all records in connection therewith which are in his
possession or under his control, or with respect to which he is
a fiduciary to the trustees of such plans as they have been
appointed by the Board of Directors. Company agrees that if it
learns that Davis has any Company property it will promptly
notify him thereof, and Davis shall return the property to the
Company within 10 days from receipt of the notice.
3.2. Except as otherwise provided in Section 4.2, Davis hereby
assigns to the Company and agrees to execute, verify and deliver
such documents necessary to effect such assignment without
further payment or consideration, all of his right, title and
interest in and to any ideas, inventions, original works of
authorship, developments, improvements or trade secrets which he
may have solely or jointly conceived or reduced to practice, or
caused to be conceived or reduced to practice during the period
of his employment with the Company and while providing services
to the Company at any time during the term of this Agreement,
excluding only ideas, inventions, original works of authorship,
developments, improvements and trade secrets which:
(a) were not developed or produced using equipment, supplies,
facilities or trade secrets that belong to the Company, and
(b) do not relate to (i) the business of the Company as it is
currently conducted or as it was conducted during the term of
Davis' employment by the Company or (ii) actual or currently
contemplated research or development conducted by the Company,
and
(c) were not developed or produced while providing services to
the Company during the term of this Agreement or during ordinary
business hours during the period of his employment with the
Company.
3.3. Davis acknowledges and agrees that all original works of
authorship which were made by him (solely or jointly with
others) within the scope of his employment during his term of
employment with the Company or while providing services to the
Company at any time during the term of this Agreement which are
protectable by copyright are "works made for hire," as that term
is defined in the United States Copyright Act (17 U.S.C.,
Section 101).
3.4. Davis agrees to assist the Company in every proper way to
obtain and from time to time enforce United States and foreign
proprietary rights, including patents and copyrights, relating
to any and all inventions, original works of authorship,
developments, improvements or trade secrets of the Company in
any and all countries. To that end, Davis agrees to execute,
verify and deliver such documents and perform such other acts
(including appearing as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting,
evidencing, sustaining and enforcing such proprietary rights and
the assignment thereof.
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Section 4. Non-Competition.
4.1. Scope of Covenant. From the date hereof and through and
including December 31, 1998 (the "Restriction Period"), Davis
agrees and covenants that he will not: (a) engage or participate
in any portion of the United States of America (the "Restricted
Area"), in any activity or business which is the same or similar
to the business engaged in by the Company at the date hereof;
(b) serve as, act as, or be an employee, agent, consultant,
representative, officer, director or investor (other than as an
investor owning not more than 1% of the voting securities of any
corporation having more than 500 stockholders) with or of, or
receive any payment in the way of remuneration from, or loan,
pledge or give money directly or indirectly to, any Person or
Affiliate (as defined in Section 4.4) of a Person, which engages
or becomes engaged, within the Restricted Area, in any activity
or business which is the same or similar to the business engaged
in by the Company at the date hereof;
(c) without the written consent of the Company, directly or
indirectly, for himself, or on behalf of or in conjunction with
any Person, hire or endeavor to recruit or hire, as an employee,
consultant, agent or representative, any individual, except
Malissa Sullivan or Chris Chambers, who was an employee of the
Company within one year of the date that Davis first hires or
endeavors to recruit or hire such individual;
(d) discourage or otherwise attempt to prevent any Person from
doing business with the Company; nor
(e) disparage, by any means and to any supplier or customer of
the Company.
4.2. Permissible Business Activity. Company agrees that Davis is
the owner of the trade name "Life Quest" and that Davis may
choose to engage in a business involving the dissemination of
health care and medical information and the sale of health care
and medical products and services under that trade name or other
related trade names yet to be obtained. Company agrees that
Davis may retain all rights to promote and carry on this
business free of any claims of interference from the Company.
4.3. Partial Unenforceability. If it is determined that any term
of this Section 4 is unenforceable because of the duration or
geographic scope of such term, the duration or geographic scope
of such term shall be reduced to the maximum time and geographic
scope permitted by applicable law and as so reduced, such term
shall then be enforced.
4.4. Definition of "Affiliate" and "Person". An "Affiliate" of a
specified Person is a Person that directly, or indirectly
through one or more intermediaries, controls, is controlled by,
or is under common control with, the Person specified. A Person
shall be deemed to be an Affiliate of any other Person if (a) he
is an officer, director, partner, agent or attorney of such
other Person; (b) he is the beneficial owner of 10% or more of
any class of the equity securities of another Person; (c) he has
a substantial beneficial interest in or serves as trustee or in
a similar fiduciary capacity for such other Person; (d) it is an
employee benefit plan for the benefit of the employees of such
other Person or his Affiliates; or (e) such other Person (i) is
the parent, spouse, or minor child of the specified Person, or
(ii) shares the same house as the specified Person. "Person"
means any individual, corporation, partnership, limited
liability company, joint venture, trust, estate, unincorporated
association, government or government body.
Section 5. Consideration.
5.1. Payments for Non-Competition. In consideration of Davis'
covenant not to compete with Company and Davis' other covenants
and obligations hereunder, the Company shall pay $25,000 to
Davis, payable in an initial installment of $4,861.08 and
thereafter payable in 29 monthly installments of $694.44.
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5.2. Payments for Consulting. In consideration of the consulting
services of Davis hereunder and Davis' other covenants and
obligations hereunder, the Company shall pay $350,000 to Davis,
payable in an initial installment of $68,055.54 and thereafter
in 29 equal installments of $9,722.22.
5.3. Time for Payment. The first installment payment pursuant to
each of Section 5.1 and 5.2 shall be paid on October 18, 1995
and the remaining installments shall be paid on the first day of
each calendar month for the 29 months following such date.
Payments shall be made by mailing to Davis at the address set
forth in Section 8.4 below a cashier's check payable to the
order of Davis in the amount required by the previous sentence.
5.4. Reimbursement. The Company shall reimburse Davis for his
reasonable out-of-pocket expenses which are first authorized by
the Company and are incurred by him in the performance of his
duties hereunder including expenses for travel and similar
items, promptly after the presentation by Davis of an itemized
account of expenses and reasonable documentation thereof.
Section 6. Remedies.
6.1. Termination and Return of All Payments. If Davis engages in
actions which constitute a material breach of his obligations
under Section 4 "Non-Competition" of this Agreement, which
actions are commenced before the first anniversary of this
Agreement, upon entry of a judgment, from which the appeal
period has expired without appeal or from which no appeal is
available, that such a breach has occurred; then Davis shall
return to the Company all payments made by the Company to Davis
under Section 5 of this Agreement before the entry of such
judgment, all payments made by the Company pursuant to the next
sentence of this Section 6.1 shall be returned to the Company,
and the Company shall not be obligated to make any further
payments to Davis under Section 5 of this Agreement. If any
action or proceeding has been commenced to determine whether
Davis has materially breached before the first anniversary of
this Agreement his obligations under Section 4 "Non-Competition"
of this Agreement, the Company may pay any amounts due to Davis
under Section 5 of this Agreement into the court before which
such action or proceeding is pending and the Company shall not
be deemed to be in default of its obligations to Davis under
Section 5 of this Agreement for the purposes of this or any
other agreement to which Davis is a party. Upon the completion
of such action or proceeding, such court may direct the manner
of the disbursement of any such payments.
6.2. Injunction. Notwithstanding Section 6.1, Davis and Company
specifically acknowledge and agree that the remedy at law for
any breach of his or its obligations set forth in this Agreement
shall be inadequate and that Davis and the Company, in addition
to any other relief available to him or it, shall be entitled to
temporary and permanent injunctive relief without the necessity
of proving actual damage.
Section 7. Legal Matters.
7.1. Choice of Law. The validity, terms, performance and
enforcement of this Agreement shall be governed by those laws of
the State of Ohio which are applicable to agreements which are
negotiated, executed, delivered and performed solely in the
State of Ohio.
7.2. Jurisdiction, Venue, Service of Process. The State and
Federal District Courts located in Franklin County, Ohio shall
have exclusive jurisdiction and venue of any action or
proceeding arising out of or related to the negotiation,
execution, delivery, performance or breach of this Agreement or
any relationship or transaction between the parties hereto,
regardless of the framing of any cause of action as lying in
contract or tort or arising out of statute. The parties hereto
hereby irrevocably consent to the personal jurisdiction of such
courts, to such venue and to the service of process in the
manner provided for the giving of notices in this Agreement. The
parties hereto hereby waive all objections to such jurisdiction
and venue including those which might be based upon
inconvenience or the nature of the forum.
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7.3. Payment of Attorneys' Fees. If either party hereto
institutes any action or proceeding against the other relating
to a purported default under the provisions of this Agreement,
the non-prevailing party in such action or proceeding after such
judgment agrees to reimburse the prevailing party for the
reasonable expenses in excess of $25,000 for bringing such
action, including reasonable attorneys' fees and disbursements,
incurred by the prevailing party.
Section 8. Miscellaneous.
8.1. Integration. This Agreement sets forth the entire
understanding between the parties hereto with respect to the
subject matter hereof. There are no covenants, agreements,
understandings, representations or warranties (oral or written)
between the parties hereto relating to the subject matter of
this Agreement other than those set forth herein. There are no
oral conditions precedent to the effectiveness of this
Agreement.
8.2. Waivers and Amendments. No waiver of any right or remedy
under this Agreement and no amendment, change or modification of
the terms hereof or rescission or termination hereof shall be
binding on any party hereto unless it is in writing and is
signed by the party to be charged.
8.3. Severability. If any term or provision set forth in this
Agreement shall be invalid or unenforceable, the remainder of
this Agreement, or the application of such terms or provisions
to persons or circumstances, other than those to which it is
held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision
were omitted.
8.4. Notices. Any notice or other communication required or
permitted to be given under this Agreement shall be in writing
and deemed to be properly given when delivered in person or by
overnight courier:
If to the Company:
Cable Link, Incorporated
280 Cozzins Street, Suite 2-A
Columbus, Ohio 43215
Attention: Brenda L. Thompson, President
with a copy to:
Schwartz, Kelm, Warren & Ramirez
41 South High Street
Columbus, Ohio 43215-6188
Attention: Kenneth J. Warren, Esq.
If to Davis:
E. Jack Davis
2047 Willowick Drive
Columbus, Ohio 43229
with a copy to:
Hamilton, Kramer, Myers & Cheek
471 East Broad Street, 19th Floor
Columbus, Ohio 43215-3872
Attention: Timothy J. Ucker, Esq.
Either party may change his or its address for notices in the manner set forth
above.
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<PAGE> 6
8.5. Joint Preparation. This Agreement is to be deemed to have
been prepared jointly by the parties hereto, and any uncertainty
or ambiguity existing herein shall not be interpreted against
either party, but shall be interpreted according to the rules of
interpretation for arms-length agreements.
8.6. Rules of Construction. In this Agreement, unless the
context otherwise requires, words in the singular number include
the plural, and in the plural include the singular; and the
words of the masculine gender include the feminine and the
neuter, and when the sense so indicates, words of the neuter
gender may refer to any gender. The names of the parties hereto,
the date and the recitals first above written are part of this
Agreement. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do
no define, limit, construe or describe the scope or intent of
the provisions of this Agreement.
8.7. Counterparts. This Agreement may be executed in
counterparts, each of which when executed by the parties hereto
shall constitute an original and both of which together shall be
deemed one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
CABLE LINK, INCORPORATED
By:
---------------------------------
Brenda L. Thompson, President
-------------------------------------
E. Jack Davis
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EXHIBIT 6.4
FIRST AMENDMENT AGREEMENT TO
NON-COMPETITION AND CONSULTING AGREEMENT
THIS FIRST AMENDMENT AGREEMENT TO NON-COMPETITION AND CONSULTING
AGREEMENT (the "Amendment") is made and entered into as of the 1st day of June,
1995, by and between CABLE LINK, INC. an Ohio corporation and formerly known as
Cable Link, Incorporated (the "Company") and E. JACK DAVIS ("Davis").
Capitalized terms not defined herein have the meanings given them in the
Agreement (as such term is defined below).
W I T N E S S E T H:
WHEREAS, the Company and Davis are parties to a Non-Competition and
Consulting Agreement, dated as of the 18th day of October, 1994 (the
"Agreement") and desire to amend the terms of the Agreement by this Amendment;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound, agree
as follows:
SECTION 1. Amendment of Section 5.1 Section 5.1 of the Agreement is hereby
amended and restated in its entirety to read as follows:
5.1. Payments for Non-Competition. In consideration of Davis'
covenant not to compete with Company and Davis' other covenants
and obligations hereunder, the Company shall pay $25,000 to
Davis, payable in 12 monthly installments of $1,099.53 and 17
monthly installments of $694.53
SECTION 2. Amendment of Section 5.2. Section 5.2 of the Agreement is hereby
amended and restated in its entirety to read as follows:
5.2. Payments for Consulting. In consideration of the consulting
services of Davis hereunder and Davis' other covenants and
obligation hereunder, the Company shall pay $350,000 to Davis,
payable in 11 monthly installments of $15,393.51, one monthly
installment of $15,393.57 and 17 monthly installments of
$9,722.22.
SECTION 3. Amendment of Section 5.3. The first sentence of Section 5.3 is
hereby amended and restated in its entirety to read as follows:
The first monthly installment payment pursuant to each of
Section 5.1 and 5.2 shall be paid on June 1, 1995, receipt of
which by Davis is hereby acknowledged, the remaining monthly
installments shall be paid on the first day of each calendar
month for the 28 months following such date.
SECTION 4. New Section 6.3. A new Section 6.3 is hereby added to the
Agreement to read as follows:
6.3. Default. At any time during the pendency of a default by
the Company in the payment of three monthly payments payable
pursuant to Section 5.3 hereof, or of any default by Binsky of
any payment under Section 3.2 of the Purchase Agreement which
such default has continued uncured for a period of 10 days after
notice thereof to the Company by Davis, then Davis may elect to
accelerate the balance due hereunder to immediate maturity and
upon the Company's failure to pay the amount then due, including
interest thereon at ten percent (10%) per annum from and after
the date of default, within ten (10) days of notice of
acceleration, Davis may either pursue collection of such sum or
may declare this Agreement null and void by giving written
notice of such election to the Company, and upon receipt of such
notice by the Company, this Agreement shall be null and void.
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<PAGE> 2
SECTION 5. Counterparts. This Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of
which together shall constitute one and the same Amendment.
SECTION 6. Board Action. As soon as is reasonably possible, but in any
event prior to June 21, 1995, the Company shall present this
Amendment to its board of directors for its approval.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first mentioned above.
CABLE LINK, INC.
By:
------------------------------
Bob Binsky
----------------------------------
E. Jack Davis
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EXHIBIT 6.5
SECOND AMENDMENT AGREEMENT TO
NON-COMPETITION AND CONSULTING AGREEMENT
THIS SECOND AMENDMENT AGREEMENT TO NON-COMPETITION AND CONSULTING
AGREEMENT (the "Amendment") is made and entered into as of the 16th day of
November, 1995, by and between CABLE LINK, INC. an Ohio corporation and formerly
known as Cable Link, Incorporated (the "Company") and E. JACK DAVIS ("Davis").
Capitalized terms not defined herein have the meanings given them in the
Agreement (as such term is defined below).
W I T N E S S E T H:
WHEREAS, the Company and Davis are parties to a Non-Competition and
Consulting Agreement, dated as of the 18th day of October, 1994, as amended by a
First Amendment dated June 1, 1995 (the "Agreement") and desire to further amend
the terms of the Agreement by this Amendment;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto, intending to be legally bound, agree
as follows:
SECTION 1. Amendment of Section 2.2. Section 2.2 of the Agreement is
hereby amended and restated in its entirety to read as follows:
2.2. At anytime through the last day of the term of this
Agreement, Davis shall consult with and advise the Company with respect
to the business engaged in by the Company. In the performance of Davis'
consulting services, Davis and Company agree that: (a) Davis shall not
be required to provide consulting services for more than forty (40)
hours during each calendar month; (b) Davis shall not be required to be
present in the Company offices more than six (6) times per year,
preferably on a bi-monthly basis; (c) at such time as Davis' presence
shall be required at the Company offices, Company shall pay all of
Davis' reasonably travel expenses from Bradenton, Florida to Columbus,
Ohio as well as Davis' reasonable living expenses in Columbus, Ohio;
(d) each day that Davis is required to spend at the Company offices
shall be considered to be equal to ten (10) hours of consulting service
time for the purpose of calculating Davis' number of consulting hours
to be performed under the terms of this Agreement; (e) in the
performance of his consulting services, Davis shall receive
instructions from and shall report to Anthony Matteo, the Vice Chairman
and Chief Operating Officer of the Company; and, (f) all requests for
the performance of consulting services shall be delivered to Davis in
written form with sufficient description of the services desired so as
to permit Davis to fully understand the task presented to him;
provided, however, that Davis hereby acknowledges that the first
project to be performed by him shall be a comprehensive report of
competitive intelligence, the first draft of which shall be due no
later than January 15, 1996 and the final version of which shall be due
no later than February 15, 1996.
SECTION 2. New Section 2.3. A new Section 2.3. is hereby added to the
Agreement to read as follows:
2.3. No later than November 30, 1995, the Company shall, at a
regular or special meeting of the Board of Directors of the Company,
cause Davis to be elected as a director of the Company for a term which
shall expire at the next annual meeting of the Company, and shall cause
Davis to be nominated for re-election at such meeting subject to Davis
providing the Company with all information to be included in the
Company's proxy statement which is customary or legally required.
SECTION 3. Amendment of Section 5.1. Section 5.1. of the Agreement is
hereby amended and restated in its entirety to read as follows:
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<PAGE> 2
5.1. Payments for Non-Competition. In consideration of Davis'
covenant not to compete with Company and Davis' other covenants and
obligations hereunder, the Company shall pay $25,000 to Davis, payable
in seven monthly installments of $1,099.53; 25 monthly installments of
$666.67; and, a final installment of $635.54.
SECTION 4. Amendment of Section 5.2. Section 5.2. of the Agreement is
hereby amended and restated in its entirety to read as follows:
5.2. Payments for Consulting. In consideration of the
consulting services of Davis hereunder and Davis' other covenants and
obligation hereunder, the Company shall pay $350,000 top Davis, payable
in seven monthly installments of $15,393.51; 25 monthly installments of
$9,333.33; and, a final installment of $8,912.18.
SECTION 5. Amendment of Section 5.3. The first sentence of 5.3. is
hereby amended and restated to read as follows:
The first six monthly installment payments pursuant to each of Section
5.1. and 5.2. have been paid commencing as of June 1, 1995, the receipt
of which by Davis is hereby acknowledged; and the remaining monthly
installments shall be paid on the first day of each calendar month for
27 months starting December 1, 1995.
SECTION 6. New Section 5.5. A new Section 5.5. is hereby added to the
Agreement to read as follows:
5.5. Special Fee. As a one time fee, Davis shall receive
$1,750 on the later of January 15, 1996 or the date that the first
version of the report on competitive intelligence is presented to
Anthony Matteo, and a further $1,750 on the later of February 15, 1996
or the dated that the final report on competitive intelligence is
presented to Anthony Matteo.
SECTION 7. New Section 5.6. A new Section 5.6. is hereby added to the
Agreement to read as follows:
5.6. Medical Coverage. During the term of this Agreement, as
additional consideration for the consulting services to be provided
by Davis hereunder, Company shall, in accordance with its
normal employment policies, provide medical and hospitalization
coverage for Davis, either, at Davis' option, under: (a) subject to
the provisions of the last sentence of this Section 5.6, such of the
Company's medical and hospitalization plans as may be in existence
during the term of this Agreement as shall provide Davis with the same
medical and hospitalization benefits as would be available to Davis if
he were considered to be an employee of the Company, the cost of which
shall be equally divided between Davis and the Company; or, (b) an
independently issued health care coverage policy or plan thereby
requiring Davis to seek coverage under the Company's existing medical
and hospitalization plans, Davis and the Company agree to further
amend this Non-Competition and Consulting Agreement in a mutually
agreeable and reasonable fashion to the extent that such amendments
may be necessary in order to permit Davis to qualify for medical and
hospitalization coverage as an employee of the Company.
SECTION 8. Amendment of Section 8.4. The provisions of Section 8.4.
relating to the place of delivery for notices or other communications to Davis
is hereby amended and restated in its entirety to read as follows:
If to Davis:
E. Jack Davis
6927 Riversedge Street Circle
Bradenton, FL 34202
With a copy to:
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<PAGE> 3
Harllee, Porges, Hamlin & Hamrick, P.A.
1205 Manatee Avenue West
Bradenton, FL 34205
Attention: Gregory J. Porges, Esquire
SECTION 9. Counterparts. This Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of which,
together, shall constitute one and the same Amendment.
SECTION 10. Board Action. As soon as is reasonably possible, but in no
event later than November 30, 1995, the Company shall present this Amendment to
its Board of directors for its approval.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first mentioned above.
CABLE LINK, INC.
By:
-------------------------- ---------------------------
Bob Binsky E. Jack Davis
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EXHIBIT 6.6
CONSULTING AGREEMENT
This CONSULTING AGREEMENT (the "Agreement") is executed on December
____, 1996, to be effective October 1, 1996 (the "Effective Date"), between
CABLE LINK, INC., an Ohio corporation (the "Company"), and BOB BINSKY, an
individual residing at Unit 206, The Landmark, 20185 East Country Club Drive,
North Miami Beach, Florida ("Consultant").
WITNESSETH:
WHEREAS, the Company has retained Consultant to provide consulting
services to the Company pursuant to a Consulting Agreement providing for a term
which expires by its terms on September 30, 1996 (the "Current Agreement"); and
WHEREAS, the Company wishes to continue to retain Consultant for an
additional period, and Consultant desires to accept such retention, and,
pursuant to action of the Board of Directors of the Company at a meeting held on
October 25, 1996, to grant to Consultant certain rights to acquire stock of the
Company, all upon the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby agree as
follows:
Section 1. General Services. Subject to the supervision of the board of
directors of the Company (the "Company Board") or the President, and subject to
any limitation which the Company Board may from time to time place on the
authority herein granted to Consultant, Consultant shall perform consulting
services consisting of the following: management systems controls; accounting
procedures; credit policies; commercial and institutional financing
relationships of the Company including short-term loans; assistance to the
Company in developing cash flow projections, operating forecasts and capital
improvement schedules and projections; acquisitions, mergers and leases or sales
of assets; and advice and assistance with respect to such other economic and
financial matters as the Company may from time to time request (the "General
Services"). Consultant agrees to serve on the Company Board and hold the offices
of Chairman and Chief Executive Officer. Consultant will not be required to
perform services hereunder on more than 200 days (approximately 1600 hours)
during the term of this Agreement. The parties hereto acknowledge that (a) it is
not expected that Consultant will devote substantially all of his time and
attention to the affairs of the Company, and (b) Consultant shall be free to be
a director of, and perform services for, other non-competing companies. The
Company acknowledges that Consultant will be spending much of his time in
Florida, and that services performed hereunder shall include review of material
received by Consultant in Florida and telephone conversations between Consultant
in Florida and management of the Company.
Section 2. Fee. As compensation for all General Services to be
performed hereunder, the Company shall pay Consultant a fee of $100,000 in equal
monthly installments on the last business day of each month, with the first
payment to be paid on October 31, 1996. Fringe benefits are specifically
excluded. In addition, the Company shall reimburse Consultant monthly for all
expenses incurred by Consultant on behalf of the Company in the performance of
the General Services hereunder, including but not limited to telephone and
telecopy expenses, on presentation of appropriate documentation thereof. In
addition, the Company agrees to reimburse Consultant for up to $500 of the legal
cost incurred in the preparation of this Agreement, payable immediately upon
execution hereof. Consultant agrees to submit a report once a month detailing
the hours he spent performing the General Services. In addition, if Consultant
makes a trip to Florida during the term of this Agreement (the "Florida Trips"),
the Company agrees to pay the lesser of (a) fifty percent of the expenses of the
Florida Trips or (b) $4,000 annually. Expenses in the previous sentence includes
(without limitation) travel costs, meals and all out-of-pocket expenses related
to Florida Trips. The Company shall have no obligation to pay for any expenses
not specifically set forth in this Agreement while Consultant is in Columbus.
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Section 3.1. Stock Option. As an additional incentive to encourage
Consultant to enter into this Agreement, concurrently with the execution of this
Agreement, the Company hereby grants Consultant or its registered assigns, and
Company shall approve any assignment, its consent not to be unreasonably
withheld, an option (the "Stock Option") to purchase 20,000 shares of the
Company's common stock ("Shares") at a price of $1.19 per Share (such price per
Share, as adjusted pursuant to Sections 3.2.2 through 3.2.10 of this Agreement,
is referred to herein as the "Option Exercise Price").
3.2.1. Term of Stock Option. The Stock Option shall be
exercisable at any time and from time to time commencing on October 1, 1996,
through the period ending at 5:00 p.m. Eastern Standard Time on October 1, 2006,
and shall be void thereafter.
3.2.2. Appreciation Rights. Consultant shall have the
option, at any time that he may exercise its right to purchase Shares under the
Stock Option, to require the Company to purchase its right to so exercise with
respect to one or more of such Shares at a dollar amount per share equal to the
difference between the Stock Option Price and the Fair Market Value of a Share
as of the day immediately preceding the day on which Consultant gives to the
Company notice of its exercise of this right. "Fair Market Value" shall mean the
closing price for such a Share as reported on the primary national securities
exchange on which the Shares are listed, or if not so listed, in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation System, Inc. ("NASDAQ"), or a comparable
inter-dealer quotation system, or if the Shares are not listed or quoted on
NASDAQ or a comparable inter-dealer quotation system, the average of the closing
bid and asking prices as furnished by any member of the National Association of
Securities Dealers, Inc.
3.2.3. Exercise. Consultant may exercise the Stock
Option by delivery of a notice to the Company indicating the number of Shares to
be acquired (or to be sold under Section 3.2.2) accompanying such notice with a
check of Consultant payable to the order of the Company in the amount of the
Option Exercise Price (except if Section 3.2.2 is being availed of). Promptly
upon receipt of such notice and check, where applicable, the Company shall cause
to be issued and delivered to Consultant one or more certificates representing
the Shares so acquired (or a check of the Company in the amount required to be
delivered to Consultant pursuant to the provisions of Section 3.2.2.)
3.2.4. Company to Reserve Shares. The Company shall
reserve out of its authorized but unissued Shares or Shares held in treasury
enough Shares to permit Consultant to acquire all Shares which he may acquire
hereunder. The Company may, if required by the securities laws, in the opinion
of its counsel, place a legend upon the certificates of Shares issued to
Consultant hereunder restricting their transfer unless in compliance with the
Securities Act of 1933 and state securities laws.
3.2.5. Adjustment for Change in Capital Shares. If the
Company (a) pays a dividend or makes a distribution on its Shares in its Shares,
(b) subdivides its outstanding Shares into a greater number of shares, (c)
combines its outstanding Shares into a smaller number of shares, (d) makes a
distribution on its Shares in its capital shares other than Shares or (e) issues
by reclassification of its Shares any of its capital shares, then the Option
Exercise Price in effect immediately before such action shall be adjusted so
that Consultant may receive the number of capital shares of the Company which he
would have owned immediately following such action if he had acquired the Shares
immediately before such action. The adjustment shall become effective
immediately after the record date in the case of a dividend or distribution or
immediately after the effective date in the case of a subdivision, combination
or reclassification. If after an adjustment Consultant may receive shares of two
or more classes of the capital shares of the Company, the Company shall
determine the allocation of the adjusted Option Exercise Price between the
classes of capital shares. After such allocation, the Option Exercise Price of
each class of capital shares shall thereafter be subject to adjustment on terms
comparable to those applicable to Shares in this Section.
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3.2.6. Adjustment for Rights Issue. If the Company
distributes any rights or warrants to all holders of Shares entitling them after
the record date mentioned below to purchase Shares at a price per share less
than the current market price per share on that record date, the Stock Option
Exercise Price shall be adjusted in accordance with the following formula: A = C
x ((O + ((N x P) / M)) / (O + N)) where A = the adjusted Option Exercise Price;
C = the current Option Exercise Price; O = the number of Shares outstanding on
the record date; N = the number of additional Shares offered; P = the offering
price per share of the additional Shares; M = the current market price per Share
on the record date. The adjustment shall become effective immediately after the
record date for the determination of shareholders entitled to receive the rights
or warrants.
3.2.7. Adjustment for Other Distributions. If the Company
distributes to all holders of Shares any of its assets or debt securities or any
rights or warrants to purchase securities of the Company, the Option Exercise
Price shall be adjusted in accordance with the following formula: A = C x ((M -
F) / M) where A = the adjusted Option Exercise Price; C = the current Option
Exercise Price; M = the current market price per Share on the record date
mentioned below; F = the fair market value on the record date of the assets,
securities, rights or warrants applicable to one Share. The Board of Directors
of the Company shall determine the current market price of the Shares and the
fair market value of the assets, securities, rights or warrants distributed. The
adjustment shall become effective immediately after the record date for the
determination of shareholders entitled to receive the distribution. This Section
3.2.7 does not apply to (a)cash dividends or cash distributions paid out of
current or retained earnings shown on the books of the Company, (b)rights or
warrants referred to in Section 3.2.6 above, or (c)distributions or
reclassifications referred to in Section 3.2.5 above.
3.2.8. Current Market Price. In Sections 3.2.6 and 3.2.7,
the current market price per Share on any date is the average of the quoted
prices of the Shares for 30 consecutive trading days commencing 45 trading days
before the date in question. In the absence of one or more such quotations, the
Company shall determine the current market price on the basis of such
quotations, bid and asked prices or other information as it considers
appropriate and reasonable in the light of the circumstances. If the Shares are
not publicly traded at the date in question, the Company may determine the
current market price per Share by obtaining the opinion of a reputable appraiser
or investment banker as to the fair market value of a single Share on the date
in question.
3.2.9. Notice of Adjustment. Whenever the Option Exercise
Price is adjusted, the Company shall promptly mail to Consultant a notice of
adjustment briefly stating the facts requiring the adjustment and the manner of
computing it.
3.2.10. Mergers, Etc. If the Company merges or
consolidates with another corporation or sells or transfers all or substantially
all of its assets to another person and the holders of the Shares are entitled
to receive securities or property in respect of or in exchange for Shares, then
as a condition of such merger, consolidation, sale or transfer, the Company and
any such successor, purchaser or transferee shall amend this Agreement to
provide that Consultant may thereafter acquire on the terms and subject to the
conditions set forth in this Section 3 the kind and amount of securities or
property receivable upon such merger, consolidation, sale or transfer by a
holder of the number of Shares which Consultant could have acquired immediately
before such merger, consolidation, sale or transfer, subject to adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Section 3.
Section 4. Non-Exclusivity. The services of Consultant to the
Company are not exclusive and Consultant is free to render services to others
and to engage in other activities, provided that such other services and
activities do not, during the term of this Agreement, interfere in a material
manner, with Consultant's ability to meet all of his obligations with respect to
rendering services hereunder. In the absence of gross negligence, Consultant
shall not be subject to liability to the Company or to any shareholder of the
Company for any act or omission in the course of, or in connection with, the
rendering of services hereunder.
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Section 5. Consulting Term. The period during which Consultant shall
be available for General Services under this Agreement shall commence on
October 1, 1996 and end on September 30, 1997. Upon termination, and upon
receipt of all monies due to Consultant from the Company for General Services,
Consultant shall forthwith deliver to the Company all property and documents of
the Company then in the custody or control of Consultant.
Section 6. Indemnity. The Company agrees to indemnify and hold
harmless Consultant from and against any and all claims, liabilities, damages,
losses, costs and expenses, including, without limitation, reasonable counsel
fees and expenses, resulting from the performance or observance by Consultant
of any of the covenants or other obligations which it is to perform or observe
in this Agreement.
Section 7. Confidentiality. Consultant agrees that all information
which Consultant obtains with respect to the Company which the Company keeps
confidential (the "Confidential Information") will not be used by Consultant in
any way detrimental to the Company, will be kept confidential by Consultant and
his representatives (which term includes its agents, representatives, attorneys,
accountants, employees and financial advisers), shall not, except as Consultant
may be legally obligated, without the prior written consent of the Company, be
disclosed by Consultant or his representatives, in any manner whatsoever, in
whole or in part, and shall not be used by Consultant or his representatives
other than for the services Consultant is to perform for the Company. Consultant
further agrees to transmit the Confidential Information only to those of his
representatives who need to know such information for the purpose of performing
services for the Company and who shall (a) be advised by Consultant of this
Agreement and (b) agree with Consultant to be bound by the provisions hereof.
For a period of two years after the last date on which General Services are
performed by Consultant under this Agreement, or any renewal hereof, Consultant
shall not accept employment with an employer which is, or which engages in
activities that are, in competition with the business of the Company.
Section 8. Notices. Any notice or other document given pursuant or
with respect to this Agreement shall be in writing (including telex, telecopy
or similar electronic mail) and shall be deemed given when the same is
delivered personally, deposited in the United States mail, postage prepaid,
registered or certified mail, addressed to the party at the following
respective addresses, or sent to the telephone number or telecopy number and
address set forth below or such other address, telephone number or telecopy
number and address as the party may from time to time designate by written
notice to the other party hereto:
The Company: Consultant:
280 Cozzins Street The Landmark, Unit 206
Columbus, Ohio 43215 20185 East Country Club Drive
Tel. No. (614) 221-3131 North Miami Beach, Florida 33180
Fax No. (614) 222-0581 Tel. No. (305) 936-8688
Attn: Brenda L. Thompson, President Fax No. (305) 936-8688
Section 9. General Provisions.
9.1. Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Ohio applicable to contracts to be
performed entirely within the State of Ohio.
9.2. Amendments. This Agreement may be amended only in writing
by the consent of each of the parties hereto, evidenced by all necessary and
proper authority.
9.3. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and no
party hereto shall be bound by any communications between them on the subject
matter hereof unless such communications are in writing and bear a date
contemporaneous with or subsequent to the date hereof. However,
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nothing in this Agreement shall in any way modify, amend or affect the
provisions of the Current Agreement and all provisions of the Current Agreement
(including without limitation the grant of the Warrant and Stock Option to
Consultant as provided therein) shall continue in effect in accordance with
their terms.
9.4. Successors. This Agreement and all rights of Consultant
hereunder shall inure to the benefit of, and be enforceable by, Consultant's
personal or legal representatives, executors or administrators.
9.5. Assignment. This Agreement (and the rights and obligations
hereunder) may be assigned by Consultant to any affiliate of Consultant provided
that (a) Consultant shall receive the prior written consent of the Company,
approving the assignment and (b) such transferee shall execute an amendment in a
form acceptable to the Company agreeing to be bound by the terms of the
Agreement as if an original signatory hereto.
This Agreement is effective as of the Effective Date.
Consultant: the Company:
CABLE LINK, INC.
By:
- --------------------------- ------------------------------
Bob Binsky Name: Brenda L. Thompson
Title: President
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EXHIBIT 6.7
ERIC S. NEWMAN
474 N. LAKE SHORE DRIVE
SUITE 2109
CHICAGO, IL 60611
-----------
(312) 464-3699
August 1, 1994
Board of Directors
Cable Link, Incorporated
280 Cozzins Street
Columbus, OH 43215
Re: Independent Consulting Arrangement
Fellow Directors:
By this letter, I seek approval from the Board of Directors (the "Board") for
Cable Link, Incorporated (the "Company") to compensate me on a monthly basis as
an independent consultant to assist management of the Company and the Board with
various strategic maters, including, but not limited to, seeking and assisting
in the analysis of potential acquisition candidates, locating and negotiating
with strategic partners and alliances and helping the Company secure additional
capital and/or bank lines. I will also seek to utilize my connections and
relationships in the cable industry, both domestically and internationally, to
assist the Company further develop its core business.
In addition, I have been, and seek to continue to locate and secure product and
equipment, including cable equipment, in order to utilize the Company's contacts
and distribution channels to broker various types of equipment in order to
generate additional revenue for the Company. The cable equipment referred to
herein will be handled by the Company in the ordinary course of business.
Further, I have been requested by the Company to assist the Company in the
drafting of agreements to be used to secure and compensate non-exclusive dealers
and supply sources for the Company.
I agree to devote sufficient time during each month to the performance of my
services under this Agreement and understand that the compensation described
below contemplates devoting an average of seven days per month to the
performance of my duties hereunder.
It is understood that for the performance of the duties and services performed
under this Agreement, the Company shall pay to me ONE THOUSAND-FIVE HUNDRED
DOLLARS ($1,500) per month (the "Compensation"), payable to me by check on the
first day of the month for services performed under this Agreement for the
preceding month. Said payment shall commence on September 1, 1994 for services
performed under this Agreement for August 1994. It is further understood that
the Compensation shall be reviewed periodically by Company management and shall
be increased based upon good faith negotiations between myself and Company
management. It is further understood that the Company shall reimburse me for
reasonable out-of-pocket expenses incurred by me, including travel related
expenses, in connection with the performance of my duties under this Agreement.
This Agreement shall commence on August 1, 1994 and shall be terminable by
either party upon sixty (60) days written notice.
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Please confirm that the foregoing is in accordance with your understanding by
signing below.
Very truly yours,
Eric S. Newman
Agreed to and Acknowledged by:
- ------------------------------ --------------------------
E. Jack Davis, Robert Binsky
Chairman
- ------------------------------ --------------------------
Eugene Hanchet Marvin Katz
I agree to provide a summary to the Board of Directors of work performed each
month. ESN
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EXHIBIT 6.8
ASSET BASED
LOAN AND SECURITY AGREEMENT
AGREEMENT, DATED November 27, 1996, between Cable Link, Inc., an Ohio
corporation (Borrower), whose mailing address is 280 Cozzins Street, Columbus,
OH 43215, and The Provident Bank (Bank), an Ohio banking corporation, whose
mailing address is 10 West Broad Street, Columbus, OH 43215.
1. Definitions. As used herein, the following terms, when initial
capital letters are used, shall have the respective meanings set forth below. In
addition, all terms defined in the Uniform Commercial Code as adopted in Ohio
shall have the meanings given therein unless otherwise defined herein.
1.1 Accounts shall mean all of Borrower's accounts (as that term is
defined in the Uniform Commercial Code), accounts receivable, chattel paper,
contract rights, documents and instruments, all other obligations or
indebtedness owed to Borrower from whatever source arising; all guaranties of
any of the foregoing and all security therefor; all of the right, title and
interest of Borrower in and with respect to the goods, services or other
property which gave rise to or which secure any of the foregoing and all
insurance policies and proceeds relating thereto; all of the foregoing whether
now owned by Borrower or hereafter acquired or in existence.
1.2 Affiliate shall mean any person, company or business entity
controlling, controlled by or under common control with, Borrower, whether such
common control is direct or indirect, and all of the partners, officers,
directors and shareholders of Borrower and such entities.
1.3 Cash Collateral Account shall mean that deposit account maintained
by Borrower at Bank into which all collections on the collateral shall be
deposited and over which Bank shall have the sole power of withdrawal.
1.4 Collateral shall mean (a) all of the Borrower's Accounts,
Equipment, General Intangibles, Inventory and all other items of personal
property now owned or hereafter acquired by the Borrower or in which the
Borrower has granted or may in the future grant a security interest to the Bank
hereunder or in any supplement hereto or otherwise; (b) all of the Borrower's
right, title and interest in and to all goods or other property represented by
or securing any of the Accounts, including all goods that may be reclaimed
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or repossessed from or returned by Debtors; (c) all of the Borrower's rights as
an unpaid seller, including stoppage in transit, detinue and reclamation; (d)
all additional amounts due to the Borrower from any Debtor, irrespective of
whether such additional amounts have been specifically assigned to the Bank; (e)
all guaranties, or other agreements or property securing or relating to any of
the items referred to in (a) above, or acquired for the purpose of securing and
enforcing any of such items; (f) all instruments, documents, securities, cash,
property, deposit accounts (including but not limited to deposits made to
Borrower's Cash Collateral Account), and the proceeds of any of the foregoing,
owned by the Borrower or in which it has an interest, which are now or may
hereafter be in the possession or control of the Bank or in transit by mail or
carrier to or from the Bank, or in possession of any third party acting on
behalf of Bank, without regard to whether Bank received same in pledge, for
safekeeping, as agent for collection or transmission or otherwise or whether
Bank had conditionally released the same; (g) all ledger sheets, files, records,
documents, blueprints, drawings and instruments (including, without limitation,
computer programs, tapes and related electronic data processing software)
evidencing an interest in or relating to the foregoing; and (h) all proceeds and
products of the collateral described above, including, without limitation, all
claims against third parties for damage to or loss or destruction of any of the
foregoing, including insurance proceeds, and accounts, contract rights, chattel
paper and general intangibles arising out of any sale, lease or other
disposition of any of the foregoing.
1.5 Debtor shall mean the account debtor with respect to any of the
Borrower's Accounts and/or the prospective purchaser with respect to any
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with the Borrower pursuant to which the Borrower
is to deliver any personal property or perform any service.
1.6 Eligible Inventory shall mean such of Borrower's Inventory as is
acceptable to Bank in its sole discretion and in which Bank shall have a
perfected first priority security interest.
1.7 Eligible Accounts shall mean such Accounts which are and at all
times shall continue to be acceptable to the Bank in all respects and in which
Bank shall have a perfected first priority security interest. Criteria for
eligibility shall be fixed and revised from time to time solely by the Bank in
its exclusive judgment. In general, an Account shall in no event be deemed to be
eligible unless (a) delivery of the merchandise or the rendition of services has
been completed; (b) no return, rejection or repossession has occurred; (c) such
merchandise or services have been finally accepted by the customer
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without dispute, offset, defense or counterclaims (d) such Account continues to
be in full conformity with the representations and warranties made by the
Borrower to the Bank with respect thereto; (e) no more than 90 days have
elapsed from the invoice date; and (f) the Bank is and continues to be
satisfied with the credit standing of the Debtor in relation to the amount of
credit extended. In general, Accounts due from any single Debtor shall in no
event be deemed to be eligible to the extent that such Accounts, in the
aggregate, exceed an amount equal to fifteen percent (15%) of the aggregate of
all Accounts at any time, and Accounts due from any affiliated group of Debtors
shall in no event be deemed to be eligible.
1.8 Equipment shall mean all of Borrower's equipment (as that term is
defined in the Uniform Commercial Code), including, without limitation, all
furniture, fixtures, machinery and other equipment of any kind and all
substitutions and replacements thereof and accessories and parts therefor, all
whether now owned or hereafter acquired by Borrower.
1.9 Event of Default shall mean any event described in Section 10.1.
1.10 General Intangibles shall mean all of Borrower's general
intangibles (as that term is defined in the Uniform Commercial Code), including,
without limitation, all goodwill, patents, formulas, blueprints, proprietary
manufacturing processes, trademarks, trade names, licenses, franchises,
beneficial interests in trusts, joint venture interests, partnership interests,
rights to tax refunds, rights to insurance proceeds, causes of action, pension
plan overfundings, literary rights and other contractual rights of Borrower, all
whether now owned or hereafter acquired by Borrower.
1.11 Inventory shall mean all of Borrower's inventory (as that term is
defined in the Uniform Commercial Code), including, without limitation, all
goods, merchandise and other personal property which are held for sale or lease,
or are furnished or to be furnished under any contract of service by Borrower,
or are raw materials, work-in-progress, supplies or materials used or consumed
in Borrower's business, and all products thereof, and all substitutions,
replacements, additions and accessories thereto, all whether now owned or
hereafter acquired by Borrower; and all of Borrower's right, title and interest
in and to any leases or rental agreements for such inventory.
1.12 Loans shall have the meaning set forth in Section 2.1.
1.13 Maximum Loan Amount shall have the meaning set forth in Section
2.1.
1.14 Notes shall mean one or more promissory notes evidencing the Loans
pursuant to Section 2.2.
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1.15 Obligations shall mean, without limitation, all Loans (as
defined in Section 2) and all other debts, obligations, or liabilities of every
kind and description of Borrower to Bank, now due or to become due, direct or
indirect, absolute or contingent, presently existing or hereafter arising,
joint or several, secured or unsecured, whether for payment or performance,
regardless of how the same arise or by what instrument, agreement or book
account that may be evidenced, or whether evidenced by any instrument,
agreement or book account, including, without limitation, all loans (including
any loan by renewal or extension), all overdrafts, all guaranties, all bankers
acceptances, all agreements, all letters of credit issued by Bank for Borrower
and the applications relating thereto, all indebtedness of Borrower to Bank,
all undertakings to take or refrain from taking any action and all
indebtedness, liabilities and obligations owing from Borrower to others which
Bank may obtain by purchase, negotiation, discount, assignment or otherwise.
Obligations shall also include all interest and other charges chargeable to the
Borrower or due from the Borrower to the Bank from time to time and all costs
and expenses referred to in Section 11.
1.6 Permitted Liens shall mean the liens and interests in favor
of Bank granted in connection herewith and, to the extent reflected on
Borrower's books and records and not impairing the operations of Borrower or
any performance hereunder or contemplated hereby:
(i) liens arising by operation of law for taxes not yet due and
payable;
(ii) statutory liens of mechanics, materialmen, shippers and
warehousemen for services or materials for which payment is not yet due;
(iii) liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(iv) liens, if any, specifically permitted by Bank from time to
time in writing; and
(v) the following if the validity or amount thereof is being
contested in good faith and by appropriate and lawful proceedings promptly
initiated and diligently conducted of which Borrower has given prior notice to
Bank and for which appropriate reserves (in Bank's reasonable judgment) have
been established and so long as levy and execution have been and continue to be
stayed: claims and liens for taxes due and payable and claims of mechanics,
materialmen, shippers, warehousemen, carriers and landlords.
2. Loans and Interest
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2.1 Loans. The Bank proposes to make loans to the Borrower in an
aggregate amount not to exceed the lesser of (i) $750,000 or (ii) the sum of (a)
the lessor $200,000 or 25% of the cost or market value, whichever is lower from
the date of this Agreement to 12-31-96; the lesser of $100,000 or 25% of cost or
market value whichever is lower from 01-01-97 to 03-31-97; and zero dollars from
04-01-97 and thereafter of Eligible Inventory, (b) 75% of the outstanding amount
of Eligible Accounts and (c) 100% of the balance of the Cash Collateral Account
(the lessor of (i) or (ii) being referred to hereinafter as the "Maximum Loan
Amount"). Should the outstanding amount of loans at any time exceed the Maximum
Loan Amount, Borrower shall on demand immediately repay such excess amount. All
such loans will be made from time to time in the absolute discretion of the
Bank, and neither this Agreement nor any loans or other action by the Bank shall
obligate the Bank to make further loans to the Borrower. Such loans may be made
in excess of the Maximum Loan Amount in the sole discretion of the Bank. All
loans shall be herein collectively called the "Loans".
2.2 Evidence of Loans. The Loans shall be evidenced by one or more
promissory notes the "Notes") in form satisfactory to Bank and shall bear
interest on the daily outstanding balance thereof at the rate set forth in such
Notes. In case of any change in law or governmental rules, regulations,
guidelines or orders (or any interpretations thereof) or the introduction of new
laws, regulations or guidelines, which require Bank to reserve for unfunded
credit commitments, Bank may charge Borrower an additional fee which will
compensate Bank for such requirements.
2.3 Loan Payments. All payments of interest, principal and all other
amounts owing hereunder or under the Notes shall be made by the Borrower to the
Bank in immediately available funds at its principal office in Cincinnati, Ohio
or at such other place as the Bank may designate in writing, at such times as
shall be set forth herein or in the Notes or if not so set forth, such amounts
shall be payable on demand. Borrower hereby authorizes Bank, at Bank's option,
to charge any account or charge or increase any Loan balance of Borrower at Bank
for the payment or repayment of any interest or principal of the Loans or any
fees, charges or other amounts due to Bank hereunder.
3. Grant of Security Interest. To secure the payment and performance
of all of the Obligations, as herein defined, the Borrower hereby grants to the
Bank a continuing security interest in and assigns to the Bank all of the
Collateral.
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4. Representations and Warranties. The Borrower hereby represents and
warrants to the Bank that:
4.1 (a) Organization and Authority. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation and has the corporate power and authority to conduct its
business as now conducted and as proposed to be conducted while this Agreement
is in effect; (b) the execution and delivery of this Agreement and the Notes and
the performance of the transactions contemplated hereby and thereby are within
the corporate authority of the Borrower and have been duly authorized by all
proper and necessary corporate action; (c) the execution and delivery of this
Agreement and the Notes and the performance of the transactions contemplated
hereby and thereby will not violate or contravene any provisions of law or the
articles of incorporation or bylaws of the Borrower, or result in a breach or
default in respect of the terms of any other agreement to which the Borrower is
a party or by which it is bound, which breach or default would result in the
creation, imposition or enforcement of any lien against any of the Collateral,
or would have a material adverse effect on the conduct of the Borrower's
business as it is now being conducted and proposed to be conducted while this
Agreement is in effect, or would otherwise impair the value of the security
interest granted to the Bank hereunder; and (d) the Borrower is duly qualified
as a foreign corporation and is in good standing and duly authorized to do
business in every jurisdiction where the nature of its properties or the conduct
of its business requires such qualification and authorization.
4.2 Binding Effect of Documents. This Agreement and the Notes are legal
and binding obligations of the Borrower enforceable in accordance with their
terms.
4.3 Government Consent. The execution and delivery of this Agreement
and the Notes and the performance of the transactions contemplated hereby and
thereby do not require any approval or consent of any governmental agency or
authority, or of any other party.
4.4 Financial Statements. The Borrower has delivered to the Bank copies
of its consolidated and consolidating financial statements as of and for the
year or other period ending December 31, 1995, prepared by Coopers & Lybrand,
CPAs. All of these financial statements are true and correct, are in accordance
with the respective books of account and records of the Borrower and its
subsidiaries (if any) and have been prepared in accordance with generally
accepted accounting principles applied on a basis
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consistent with prior periods, and accurately present the financial condition of
the Borrower and it subsidiaries (if any) and their assets and liabilities and
the results of its operations as at such date.
4.5 No Change in Financial Condition. Since the ending date of the
financial statement described in Section 4.4, there has been no change in the
assets, liabilities, financial condition or operation of the Borrower, other
than changes in the ordinary course of business, the effect of which have not,
individually or in the aggregate, been materially adverse.
4.6 No Other Liabilities. Except to the extent reflected in the
financial statements described in Section 4.4, the Borrower, as of the date of
this Agreement, does not know or have reasonable grounds to know of any basis
for the assertion against it of any liabilities or obligations of any nature,
direct or indirect, accrued, absolute or contingent, including, without
limitation, liabilities for taxes then due or to become due whether incurred in
respect of or measured by the income of the Borrower for any period prior to the
date of this Agreement or arising out of transactions entered into, or any state
of facts existing prior thereto.
4.7 Taxes. The Borrower has filed all federal, state, local and other
tax returns and reports required to be filed by it and such returns and reports
are true and correct. The Borrower has paid all taxes, assessments and other
governmental charges lawfully levied or imposed on or against it or its
properties, other than those presently payable without penalty or interest.
4.8 No Litigation. There is no litigation or proceeding or
governmental investigation pending or, to the knowledge of the Borrower,
threatened against or relating to the Borrower, its properties or business
which is not reflected in the financial statements described in Section 4.4.
4.9 Compliance with Laws. The Borrower is not, to its knowledge, in
violation of or default under any statute, regulation, license, permit, order,
writ, injunction or decree of any government, governmental department,
commission, board, bureau, agency, instrumentality or court, which violation or
default would have a material adverse effect on the business, properties or
condition, financial or otherwise, of the Borrower.
4.10 No Default. The Borrower is not, to its knowledge, in default
under a material order, writ, judgment, injunction, decree, indenture,
agreement, lease or other instrument or contract, which default would have a
material adverse effect on the business, properties or condition, financial or
otherwise, of the Borrower, or in the performance of any covenants or conditions
respecting any of its indebtedness,
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and no holder of any indebtedness of the Borrower has given notice of any
asserted default thereunder, and no liquidation or dissolution of the Borrower
and no receivership, insolvency, bankruptcy, reorganization or other similar
proceedings relative to the Borrower or its properties is pending or, to the
knowledge of the Borrower, is threatened against Borrower.
4.11 Location of Collateral. The Borrower maintains places of business
and owns collateral only at 280 Cozzins Street, Columbus, OH 43215 and maintains
its books of account and records, including all records concerning Collateral,
only at 280 Cozzins Street, Columbus, OH 43215. The Borrower maintains its chief
executive office at 280 Cozzins Street, Columbus, OH 43215.
4.12 Title to Collateral. With respect to the Collateral, at the time
the Collateral becomes subject to the Bank's security interest, the Borrower is
and at all times will be the sole owner of and have good and marketable title
to the Collateral, free from all liens, encumbrances and security interests in
favor of any person other than the Bank except Permitted Liens, and has full
right and power to grant the Bank a security interest therein. All information
furnished to Bank concerning the Collateral is and will be complete, accurate
and correct in all material respects when furnished.
4.13 Rights of Borrower to Accounts. As to each and every Account (a)
it is a bona fide existing obligation, valid and enforceable against the Debtor
for a sum certain for sales of goods shipped or delivered, or goods leased, or
services rendered in the ordinary course of business; (b) all supporting
documents, instruments, chattel paper and other evidence of indebtedness, if
any, delivered to the Bank are complete and correct and valid and enforceable in
accordance with their terms, and all signatures and endorsements that appear
thereon are genuine, and all signatories and endorsers have full capacity to
contract; (c) the Debtor is liable for and will make payment of the amount
expressed in such Account according to its terms; (d) it will be subject to no
discount, allowance or special terms of payment without the prior approval of
the Bank; (e) it is subject to no dispute, defense or offset, real or claimed;
(f) it is not subject to any prohibition or limitation upon assignment; (g) the
Borrower has full right and power to grant the Bank a security interest therein
and the security interest granted in such Account to the Bank in Section 3
hereof, when perfected, will be a valid first security interest which will inure
to the benefit of the Bank without further action. The warranties set out herein
shall be deemed to have been made with respect to each and every Account now
owned or hereafter acquired by the Borrower.
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4.14 Rights of Borrower in Inventory. The Inventory (a) is and will be
of good and merchantable quality, free from defects and (b) none of the
inventory is or will be stored with a bailee without the prior written consent
of Bank.
4.15 Employee Benefit Plans. Other than as set forth on Schedule 4.15
hereto, Borrower has no Plans which are subject to regulation under the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Borrower has not
received any notice to the effect that it is not in full compliance with any of
the requirements of ERISA, and no fact or situation, including but not limited
to any "Reportable Event," or "Prohibited Transaction," as such terms are
defined in ERISA, exists which is or could in any way be construed as a
violation of ERISA in connection with any Plan. Borrower has complied with all
applicable provisions of ERISA, including minimum funding requirements, has made
all filings required to be made by Borrower or any of its Plans (now or at any
time in the past maintained) under ERISA, has not applied for any extensions of
time in which to make contributions to any Plan maintained (nor or at any time
in the past) by it or to which it is, or has been, required to contribute, has
timely made all contributions and paid all premiums required to be paid to the
Pension Benefit Guaranty Corporation, and no matters are presently pending
before the United States Labor Department or the Internal Revenue Service
concerning any Plan maintained (now or at any time in the past) by Borrower to
which it is or was required to contribute. Each employee pension benefit plan
(as defined in Section 3(2) of ERISA) maintained by Borrower is qualified and
tax exempt under the Internal Revenue Code. Borrower has never had any
obligation or liability with respect to a multi-employer plan as defined in
Section 3(37) of ERISA.
4.16 Accuracy of Representations. No representation or warranty by or
with respect to the Borrower contained herein or in any certificate or other
document furnished by the Borrower pursuant hereto contains any untrue statement
of a material fact or omits to state a material fact necessary to make such
representation or warranty not misleading in light of the circumstances under
which it was made.
4.17 Representations as Inducement to Bank. The foregoing
representations and warranties are made by the Borrower with the knowledge and
intention that the Bank will rely thereon, and shall survive the execution and
delivery of this Agreement and the making of all Loans hereunder. The receipt of
Borrower of each Loan advance shall constitute a representation and warranty by
Borrower that the representations and warranties of Borrower contained in this
Section 4 are true and correct as of the date
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of such Loan advance, except to the extent such representations and warranties
expressly relate to an earlier date.
5. Affirmative Covenants. The Borrower covenants and agrees that until
all of the Obligations have been paid in full, unless the Bank shall otherwise
consent in writing, it shall and shall cause each of its subsidiaries to:
5.1 Books and Records. Maintain complete and accurate books of account
and records pertaining to the Collateral and the operations of the Borrower, and
all such books of account and records shall be kept and maintained at the
location specified in Section 4.11. The Borrower shall not move such books of
account and records or change its chief executive office without giving the Bank
at least 30 days prior written notice. Prior to moving any of such books of
account and records or changing the location of its chief executive office, the
Borrower shall execute and deliver to the Bank financing statements satisfactory
to the Bank. All such books of account and records and all financial statements
and reports furnished to the Bank shall be maintained and prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
prior periods.
5.2 Access to Information. Grant the Bank, or its representatives, full
and complete access to the Collateral and to all books of account, records,
correspondence and other papers relating to the Collateral during normal
business hours and the right to inspect, examine, verify and make abstracts from
the copies of such books of account, records, correspondence and other papers,
and to investigate such other records, activities and business of the Borrower
as they may deem necessary or appropriate at the time.
5.3 Evidence of Accounts. Upon the creation of Accounts, or from time
to time as the Bank may require, deliver to the Bank schedules of all
outstanding Accounts. Such schedules shall be in form satisfactory to the Bank
and shall show the age of such Accounts in intervals of not more than 30 days,
and contain such other information and be accompanied by such supporting
documents as the Bank may from time to time prescribe. The Borrower shall also
deliver to the Bank copies of Debtor's invoices, evidences of shipment or
delivery and such other schedules and information as the Bank may reasonably
request. The items to be provided under this Section are to be prepared and
delivered to the Bank from time to time solely for its convenience in
maintaining records of the Collateral and the Borrower's failure
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to give any of such items to the Bank shall not affect, terminate, modify or
otherwise limit the Bank's security interest granted herein.
5.4 Financial Information. Deliver to the Bank not more than 90 days
after the close of each fiscal year of the Borrower, or within such further time
as the Bank may permit, consolidated and consolidating audited financial
statements for Borrower and its subsidiaries, including a balance sheet and
related profit and loss statement, prepared in accordance with generally
accepted accounting principles by independent certified public accountants
acceptable to the Bank, who shall give their unqualified opinion with respect
thereto.
5.5 Other Information. Furnish to the Bank such other financial and
business information and reports in form and substance satisfactory to the Bank
as and when the Bank may from time to time request.
5.6 Maintenance of Existence and Licenses. While this Agreement remains
in effect and until the Obligations have been paid in full, (a) maintain its
corporate existence in good standing; (b) make no change in the nature or
character of its business or engage in any business in which it was not engaged
on the date of this Agreement; (c) maintain and keep in full force and effect
all licenses and permits necessary to the proper conduct of its business and (d)
at the request of the Bank, qualify as a foreign corporation and obtain all
requisite licenses and permits in each state (other than the state of its
incorporation) where the Borrower does business.
5.7 Maintenance and Insurance of Properties. Maintain and keep all of
its properties, real and personal, in good working order, condition and repair
and insure and keep insured all such properties at all times against loss of
damage by fire, theft, and such other risks and hazards as are customarily
insured against by corporations in similar circumstances, or as the Bank may
specify from time to time, with insurers and in amounts acceptable to the Bank.
If the Borrower fails to do so, the Bank may obtain such insurance and charge
the cost thereof to the Borrower's account and add it to the Obligations. The
Borrower agrees that, if any loss should occur, the proceeds of all such
insurance policies may be applied to the payment of all or any part of the
Obligations, as the Bank may direct. Bank shall be named loss payee on such
insurance policies to the extent that such policies insure the Collateral. All
policies shall provide for at least 10 days prior written notice of cancellation
to the Bank. Borrower shall deliver at least annually to Bank, or sooner if
requested by Bank, certificates of insurance evidencing Borrower's
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compliance herewith. Bank or Bank's designated agent is hereby irrevocably
constituted and appointed Borrower's attorney-in-fact to (either in the name of
Borrower or in the name of Bank) make adjustments of all insurance losses, sign
all applications, releases and other papers necessary for the collection of any
such loss, make settlements and endorse and collect all instruments payable to
Borrower or issued in connection therewith.
5.8 Liability Insurance. At all times, maintain in full force and
effect such liability insurance with respect to its activities and business
interruption and other insurance as may be reasonably required by Bank, such
insurance to be provided by insurer(s) acceptable to Bank, and if requested by
Bank, such insurance shall name Bank as an additional insured. Borrower shall
deliver at least annually to Bank, or sooner if requested by Bank, certificates
of insurance evidencing Borrower's compliance herewith.
5.9 Notice of Certain Events. Give prompt notice in writing to the
Bank of any Event of Default hereunder, or of any condition which with the
passage of time or the giving of notice or both would give rise to an Event of
Default, and of any development, financial or otherwise, which would materially
adversely affect its business, properties or affairs or the ability of the
Borrower to perform its obligations under this Agreement or the Notes.
5.10 Payment of Taxes. Pay all taxes, assessments or governmental
charges lawfully levied or imposed on or against it and its properties prior to
the date when such taxes, assessments or charges shall become delinquent, unless
the Borrower shall contest the validity thereof in good faith and shall post any
bond or other security required by applicable law or by the Bank against the
payment thereof.
5.11 Dealings in Inventory. With respect to the Inventory (a) sell or
dispose of the Inventory only to buyers in the ordinary course of business, (b)
immediately notify the Bank of any change in location of any of the Inventory
and, prior to any such change, execute and deliver to the Bank such financing
statements satisfactory to the Bank as the Bank may request and (c) report, in
form satisfactory to the Bank and with such frequency as determined by the Bank,
such information as the Bank may request regarding the Inventory.
5.12 Claims Against Borrower. Immediately upon learning thereof, report
to the Bank any reclamation, return or repossession of goods, any claim or
dispute asserted by any Debtor or other obligor, and any other matters affecting
the value and enforceability or collectibility of any of the Collateral. In
addition, the Borrower shall, at its sole cost and expense (including attorneys'
fees), settle any and all such
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claims and disputes and indemnify and protect the Bank against any liability,
loss or expense arising therefrom or out of any such reclamation, return or
repossession of goods, provided, however, if the Bank shall so elect, it shall
have the right at all times to settle, compromise adjust or litigate all claims
or disputes directly with the Debtor or other obligor upon such terms and
conditions as it deems advisable and charge all costs and expenses thereof
(including attorneys' fees) to the Borrower's account and add them to the
Obligations.
5.13 Defense of Collateral. Defend the Collateral against all claims
and demands of all persons at any time claiming the same or any interest therein
and pay all costs and expenses (including attorneys' fees) incurred in
connection with such defense.
5.14 Financing Statements. At the request of the Bank, execute and
deliver such financing statements, documents and instruments, and perform all
other acts as the Bank deems necessary or desirable, to carry out and perform
the intent and purpose of this Agreement, and pay, upon demand, all expenses
(including attorneys' fees) incurred by the Bank in connection therewith. A
photocopy of this Agreement shall be sufficient as a financing statement and may
be filed in any appropriate office in lieu thereof.
5.15 Maintenance of Bank Accounts. At Bank's option, maintain all of
its depository accounts with Bank, including without limitation, all demand
deposit, lock box, time deposit, concentration and zero balance accounts.
6. Negative Covenants. The Borrower covenants and agrees that until
the Obligations have been paid in full, unless the Bank shall consent in
advance in writing, it shall not and shall not permit any subsidiary to:
6.1 Sale of Assets or Merger. Discontinue its business or liquidate,
sell, transfer, assign or otherwise dispose of a material part of its assets or
of the Collateral, by sale, merger, consolidation or otherwise, provided,
however, that it may sell in the ordinary course of business and for a full
consideration in money or money's worth, any product, merchandise or service
produced, marketed or furnished by it.
6.2 Liens and Encumbrances. Sell, assign, pledge, grant or suffer to
exist a security interest, lien, mortgage or other encumbrance on any of the
Collateral to any person other than the Bank, or permit
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any lien, encumbrance or security interest to attach to any of the Collateral,
except in favor of the Bank and except Permitted Liens.
6.3 Contingent Liabilities. Endorse, guarantee or become surety for
the obligations of any person, firm or corporation, except that the Borrower
may endorse checks and negotiable instruments for collection or deposit in the
ordinary course of business.
6.4 Loans. Make any loans to or repay any existing loans made to it by
its Affiliates.
6.5 Distributions. Declare or pay any dividends or make any other
payments on its capital stock, redeem, repurchase or retire any of its capital
stock, or make any other distribution to its stockholders.
6.6 Dealings with Accounts. Compromise or discount any Account except
for ordinary trade discounts or allowances for prompt payment.
6.7 Investments. Change its name or consolidate or merge with any
other corporation or acquire or purchase any equity interest in any other
entity, including shares of stock of other corporations, or acquire or purchase
any assets or assume any obligations of any other entity the value of which
exceeds 25% of the Borrower's Eligible Accounts (whether in one transaction or
in a series of transactions), except that Borrower is permitted to own notes
and other receivables acquired in the ordinary course of business.
6.8 Change in Management or Business. Change its management or make
any material change in any of its business objectives, purposes and operations
which might in any way adversely affect the repayment of the Loans.
6.9 Change in Ownership. Permit to occur a change in record or
beneficial ownership of voting stock of Borrower which Bank, in its sole
discretion, deems material with respect to the control over Borrower.
6.10 Transaction with Affiliates. Enter into, or be a party to, any
transaction with any of Borrower's Affiliates, except in the ordinary course of
business, pursuant to the reasonable requirements of Borrower's business, and
upon fair and reasonable terms which are fully disclosed to Bank and are no less
favorable to Borrower than Borrower could obtain in a comparable arm's length
transaction with a person not an Affiliate of Borrower.
6.11 Indebtedness. Directly or indirectly create, incur, assume,
guarantee or be or remain liable with respect to any indebtedness, except for
(a) the Obligations, (b) any existing indebtedness disclosed in
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the financial statements referenced in Section 4.4 hereof, (c) any purchase
money indebtedness not to exceed $50,000 per year and (d) any other indebtedness
to which Bank has consented in writing, except for testing equipment purchased
from Hewlett-Packard.
7. Collection of Collateral and Notice of Assignment
7.1 Collections on Collateral. So long as the Bank does not request
that the Debtors on the Collateral be notified of the consignment thereof to
Bank or that all collections be directed to a lock box at Bank, Borrower may
make collections on the Collateral. All collections on the Collateral shall be
the property of the Bank, shall be held in trust for the Bank by the Borrower
and shall not be commingled with the Borrower's other funds or be deposited in
any bank account of the Borrower (except for the Cash Collateral Account), or
used in any manner except to pay the Obligations. Borrower shall immediately
deposit all collections on the Collateral in the Cash Collateral Account of
Borrower maintained at Bank for that purpose, over which the Bank alone shall
have the sole power of withdrawal. On a daily basis, Bank will apply all or part
of the collected balance of the Cash Collateral Account against the Obligations,
the amount, order and method of such application to be in the sole discretion of
Bank. In no event shall Bank be obligated to apply any funds deposited in the
Cash Collateral Account before the second business day after the day of deposit.
Any part of the collected balance in the Cash Collateral Account which the Bank
elects not to apply to Borrower's obligations may be paid over and deposited by
Bank to the Borrower's commercial account. The crediting of items deposited in
the Cash Collateral Account to the reduction of the Obligations shall be
conditioned upon final payment of the item and if any item is not so paid, the
amount of any credit given for it may be charged to the Obligations or to any
other deposit account of the Borrower whether or not the item is returned.
7.2 Notice of Assignment. The Bank shall have the right at any time to
notify Debtors of its security interest in the Accounts and to require payments
to be made directly to the Bank. Upon request of the Bank at any time, Borrower
will so notify the account debtors and will indicate on all billings to the
account debtors that the Accounts are payable to the Bank. To facilitate direct
collection, the Borrower hereby appoints the Bank and any officer or employee of
the Bank, as the Bank may from time to time designate, as attorney-in-fact for
the Borrower to (a) receive, open and dispose of all mail addressed to the
Borrower and take therefrom any payments on or proceeds of Accounts; (b) take
over the Borrower's post office boxes or make other arrangements, in which the
Borrower shall cooperate, to receive the
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Borrower's mail, including notifying the post office authorities to change the
address for delivery of mail addressed to the Borrower to such address as the
Bank shall designate; (c) endorse the name of the Borrower in favor of the Bank
upon any and all checks, drafts, money orders, notes, acceptances or other
evidences of payment or Collateral that may come into the Bank's possession; (d)
sign and endorse the name of the Borrower on any invoice or bill of lading
relating to any of the Accounts, on verifications of Accounts sent to any
Debtor, to drafts against Debtors, to assignments of Accounts and to notices to
Debtors; and (e) do all acts and things necessary to carry out this Agreement,
including signing the name of the Borrower on any instruments required by law in
connection with the transactions contemplated hereby and on financing statements
as permitted by the Uniform Commercial Code. The Borrower hereby ratifies and
approves all acts of such attorneys-in-fact, and neither the Bank nor any other
such attorney-in-fact shall be liable for any acts of commission or omission, or
for any error of judgment or mistake of fact or law. This power, being coupled
with an interest, is irrevocable so long as any of the Obligations remain
unsatisfied.
7.3 Enforcement of Accounts. The Bank shall not, under any
circumstances, be liable for any error or omission or delay of any kind
occurring in the settlement, collection or payment of any Accounts or any
instruments received in payment thereof or for any damage resulting therefrom.
The Bank may, without notice to or consent from the Borrower, sue upon or
otherwise collect, extend the time of payment of, or compromise or settle for
cash, credit or otherwise, upon any terms, any of the Accounts or any
securities, instruments or insurance applicable thereto and/or release the
obligator thereon. The Bank is authorized to accept the return of the goods
represented by any of the Accounts, without notice to or consent by the
Borrower, or without discharging or any way affecting the Obligations hereunder.
7.4 Returned or Rejected Goods. Upon receipt of any returned or
rejected goods the Borrower shall immediately issue and deliver a credit memo to
the Bank with respect thereto. Or, at the Bank's election, the Borrower shall
set aside such goods, mark them in the Bank's name and hold them in trust for
the Bank at the Borrower's expense, and, upon request, shall pay the Bank the
sales price thereof. If the Bank shall request the Borrower to pay the sales
price of such goods and the Borrower fails to forthwith pay the sales price to
the Bank, the Bank may take possession of such goods and sell or cause the goods
to be sold, at public or private sale, at such prices, to such purchasers and
upon such terms as
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the Bank deems advisable. The Borrower shall remain liable to the Bank for any
deficiency and shall pay the costs and expenses of such sale, including
reasonable attorneys' fees.
7.5 Limitation of Bank's Liability. The Bank shall not be liable for
or prejudiced by any loss, depreciation or other damage to Accounts or other
Collateral unless caused by the Bank's willful and malicious act, and the Bank
shall have no duty to take any action to preserve or collect any Account or
other Collateral.
7.6 Verification of Accounts. The Bank may confirm and verify all
Accounts in any reasonable manner at any time. Bank shall have no obligation to
disclose or discuss with Borrower the names or identities of any customers from
whom the Bank obtains or requests information as to Accounts. Borrower agrees to
cooperate with Bank in the confirmation and verification of any Accounts, or
reconciling any discrepancy between those amounts verified by the Bank and
information provided to the Bank by the Borrower.
8. Service Charges. In addition to the principal and interest on the
Loans and the reimbursement of expenses to Bank pursuant to this Agreement, the
Borrower shall pay to the Bank a monthly service charge for the services
provided by Bank in connection with this Agreement in the amount of $250.00,
which service charge may be increased or decreased in the sole discretion of
Bank upon 30 days prior written notice to Borrower.
9. One General Obligation: Cross Collateral. All loans and advances
by Bank to Borrower under this Agreement and under all other agreements
constitute one loan, and all indebtedness and obligations of Borrower to Bank
under this and under all other agreements, present and future, constitute one
general obligation secured by the Collateral and security held and to be held
by Bank hereunder and by virtue of all other assignments and security
agreements between Borrower and Bank now and hereafter existing. It is
expressly understood and agreed that all of the rights of Bank contained in
this Agreement shall likewise apply insofar as applicable to any modification
of or supplement to this Agreement and to any other agreements, present and
future, between Bank and Borrower.
10. Events of Default and Remedies.
10.1 Event of Default. If the Loans are due on a specific date (e.g.
not due on demand), the following shall constitute Events of Default under this
Agreement, it being agreed that time is of the essence hereof: (a) failure of
the Borrower to pay when due any of the Obligations; (b) failure of the
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Borrower to observe or perform any covenant contained in this Agreement or in
any other agreement between the Borrower and the Bank; (c) any representation or
warranty at any time made by the Borrower to the Bank orally or in this
Agreement or in any other agreement between the Borrower and the Bank, or in any
document or instrument delivered to the Bank pursuant to this Agreement or any
such other agreement is, or becomes, untrue or misleading in any material
respect; (d) acceleration of the maturity of any of the Obligations; (e)
Borrower shall be in default or breach under any material obligation for the
payment of borrowed money or for the payment of rent under any lease agreement
covering real or personal property; (f) failure of the Borrower or any
guarantor, after request by the Bank, to furnish financial information or to
permit the inspection of its books of account and records; (g) suspension by the
Borrower or any guarantor of the operation of its present business, or the
insolvency of the Borrower or any guarantor, or the inability of the Borrower or
any guarantor to meet its debts as they mature, or its admission in writing to
such effect, or its calling any meeting of all or any of its creditors or
committing any act of bankruptcy, or the filing by or against the Borrower or
any guarantor of any petition under any provision of the Bankruptcy Act, as
amended, or the entry of any judgment or filing of any lien against the Borrower
or any guarantor; (h) there shall occur any material adverse change in the
Borrower's condition or affairs (financial or otherwise) or in that of any
endorser, guarantor of surety for any of the Obligations; (i) loss, theft,
damage, destruction or encumbrance of any of the Collateral or any levy, seizure
or attachment thereof; (j) any guarantor of the Obligations denies his
obligation to guarantee any Obligations then existing or attempts to limit or
terminate his obligation to guarantee any future Obligations, including future
Loan advances; and (k) the death of any Borrower, co-maker, guarantor or surety
of the Loans.
10.2 Rights of Bank upon Default. Upon the occurrence of an Event of
Default described in Section 10.1, or at any time in the sole discretion of the
Bank if the Loan is due on demand, the Bank at its option may: (a) declare the
Obligations of the Borrower immediately due and payable, without presentment,
notice, protest or demand of any kind for the payment of all or any part of the
Obligations (all of which are expressly waived by Borrower) and exercise all of
its rights and remedies against Borrower and any Collateral provided herein, in
any other agreement between Borrower and Bank, at law or in equity and (b)
exercise all rights granted to a secured party under the Ohio Uniform Commercial
Code or otherwise. Upon the occurrence of an Event of Default, or in the event
of non-payment of the
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Loan when due in the case of a demand Loan, Bank may take possession of the
Collateral, or any part thereof, and Borrower hereby grants Bank authority to
enter upon any premises on which the Collateral may be situated, and remove the
Collateral from such premises or use such premises, together with the materials,
supplies, books and records of Borrower, to maintain possession and/or the
condition of the Collateral and to prepare the Collateral for sale. Borrower
shall, upon demand by Bank, assemble the Collateral and make it available at a
place designated by Bank which is reasonably convenient to both parties. Unless
the Collateral is perishable or threatens to decline speedily in value or is of
a type customarily sold on a recognized market, Bank will give Borrower
reasonable notice of the time and place of any public sale thereof or of the
time after which any private sales or other intended disposition thereof is to
be made. The requirement of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the address of the Borrower shown at the beginning
of this Agreement at least 5 days prior to the time of such sale or disposition.
10.3 Application of Proceeds. The Bank shall have the right to apply
the proceeds of any disposition of the Collateral to the payment of the
Obligations in such order of application as the Bank may, in its sole
discretion, elect. The Bank shall have no obligation to marshall any assets in
favor of the Borrower or any other party.
10.4 Remedies Cumulative. The rights, options and remedies of the Bank
shall be cumulative and no failure or delay by the Bank in exercising any right,
option or remedy shall be deemed a waiver thereof or of any other right, option
or remedy, or waiver of any Event of Default hereunder, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or future
exercise thereof or the exercise of any other right, power or remedy hereunder.
Bank shall not be deemed to have waived any of the Bank's rights hereunder or
under any other agreement, instrument or paper signed by Borrower unless such
waiver be in writing and signed by the Bank.
11. Miscellaneous
11.1 Governing Law; Jurisdiction and Venue. The provisions of this
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Ohio. The Bank and Borrower hereby designate all courts of record
sitting in Cincinnati, Ohio, both state and federal, as forums where any action,
suit or proceeding in respect of or arising out of this Agreement or the
transactions
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contemplated by this Agreement may be prosecuted as to all parties, their
successors and assigns, and by the foregoing designation the Bank and Borrower
consent to the jurisdiction and venue of such courts.
11.2 MUTUAL WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED
INDUCEMENT FOR THE BANK TO EXTEND CREDIT TO BORROWER AND FOR BORROWER TO BORROW
FROM BANK, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL, BORROWER AND
BANK HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR
PROCEEDING RELATING TO THIS AGREEMENT OR ARISING IN ANY WAY FROM THE
OBLIGATIONS.
11.3 Other Waivers. The Borrower waives notice of nonpayment, demand,
notice of demand, presentment, protest and notice of protest with respect to the
Obligations, or notice of acceptance hereof, notice of Loans made, credit
extended, Collateral received or delivered, or any other action taken in
reliance hereon, and all other demands and notices of any description, except
such as are expressly provided for herein.
11.4 Collection Costs. All costs and expenses incurred by the Bank to
obtain, enforce or preserve the security interests granted by this Agreement and
to collect the Obligations, including, without limitation, stationery and
postage, telephone and telegraph, secretarial and clerical expenses, the fees or
salaries of any collection agents utilized, all costs to maintain and preserve
the Collateral and all attorneys' fees and legal expenses incurred in obtaining
or enforcing payment of any of the Obligations or foreclosing the Bank's
security interest in any of the Collateral, whether through judicial proceedings
or otherwise, or in enforcing or protecting its rights and interests under this
Agreement or under any other instrument or document delivered pursuant hereto,
or in protecting the rights of any holder or holders with respect thereto, or in
defending or prosecuting any actions or proceedings arising out of or relating
to the Bank's transactions with the Borrower, shall be paid by the Borrower to
the Bank, upon demand, or, at the Bank's election, charged to the Borrower's
account and added to the Obligations, and the Bank may take judgment against the
Borrower for all such costs, expense and fees in addition to all other amounts
due from the Borrower hereunder.
11.5 Expenses. The Borrower shall reimburse the Bank for all
out-of-pocket costs and expenses incurred by the Bank in connection with the
preparation of this Agreement and the making of the Loans
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hereunder, including reasonable fees and expenses of the Bank's counsel, and
for all UCC search, filing, recording and other costs connected with the
perfection of the Bank's security interest in the Collateral.
11.6 Notices. All notices, requests, directions, demands, waivers, and
other communications provided for herein shall be in writing and shall be deemed
to have been given or made when delivered personally, by telecopy, or sent by
registered or certified mail, postage prepaid and return receipt requested,
addressed to the Borrower or the Bank, as the case may be, at their respective
addresses set forth at the beginning of this Agreement. Notices of changes of
address shall be given in the same manner.
11.7 Severability. Any provision of this Agreement which is prohibited
and enforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
11.8 Entire Agreement, Modification, Benefit. This Agreement shall
constitute the entire agreement of the parties and no provision of this
Agreement, including the provisions of this Section, may be modified, deleted or
amended in any manner except by agreement in writing executed by the parties.
All terms of this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
assigns, provided, however, that the Borrower shall not assign or transfer its
rights hereunder.
11.9 Construction. All references in this Agreement to the single
number and neuter gender shall be deemed to mean and include the plural number
and all genders, and vice versa, unless the context shall otherwise require.
11.10 Headings. The underlined headings contained herein are for
convenience only and shall not affect the interpretation of this Agreement.
11.11 Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed an original.
11.12 Nonliability of Bank. The relationship between the Borrower and
the Bank shall be solely that of borrower and lender. The Bank shall not have
any fiduciary responsibilities to the Borrower. The Bank undertakes no
responsibility to the Borrower to review or inform the Borrower of any matter in
connection with any phase of the Borrower's business or operations.
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11.13 Limitation of Liability. No claim may be made by the Borrower
against the Bank, or the Affiliates, directors, officers, employees, attorneys
or agents of Bank for any special, consequential or punitive damages in respect
of any claim for breach of contract or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement, or any act,
omission or event occurring in connection therewith; and the Borrower hereby
waives, releases and agrees not to sue upon any such claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor.
11.14 Warrant of Attorney. The Borrower(s) authorize any attorney at
law, including an attorney engaged by the Bank, to appear in any court of record
in the State of Ohio or any other State or Territory of the United States, after
the occurrence of an Event of Default hereunder and waive the issuance and
service of process and confess judgment against the Borrower(s) or any one of
them in favor of the Bank, for the amount of the Obligations then appearing due,
together with costs of suit and, thereupon, to release all errors and waive all
rights of appeal and stay of execution, but no such judgment or judgments
against any one of the Borrower(s) shall be a bar to a subsequent judgment or
judgments against any one or more than one of such persons against whom judgment
has not been obtained hereon. The Borrower(s) hereby expressly waive any
conflict of interest that the Bank's attorney may have in confessing such
judgment against Borrower(s) and expressly consent to the confessing attorney
receiving a legal fee from the holder for confessing such judgment against
Borrower(s). This warrant of attorney to confess judgment is a joint and several
warrant of attorney. The foregoing warrant of attorney shall survive any
judgment; and if any judgment be vacated for any reason, the Bank nevertheless
may thereafter use the foregoing warrant of attorney to obtain an additional
judgment or judgments against the Borrower(s) or any one or more of them.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers.
WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND
COURT TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST
YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO
COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR
WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH
THE AGREEMENT OR ANY OTHER CAUSE.
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CABLE LINK, INC. THE PROVIDENT BANK
By:/s/ Brenda L. Thompson By: /s/
-------------------------------------- -----------------------
Title: President Title: Vice President
ATTEST: /s/
--------------------------------
Secretary or Assistant Secretary
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EXHIBIT 6.9
COMMERCIAL LOAN
The Provident Bank PROMISSORY NOTE NOTE NO. 4
-----
$ 750,000.00 Columbus, Ohio April 30, 1997
- ------------ -------- --------
The undersigned, for value received, promises to pay to the order of The
Provident Bank, at any of its offices, the sum of Seven Hundred Fifty Thousand
Dollars and no cents****************************** Dollars ($750,000.00 ), (the
"Maximum Credit") or so much thereof as is loaned by the holder pursuant to the
provisions hereof, together with interest until demand or maturity at the rate
of the prime rate plus 1% per year computed on the basis of a year of 360 days
for the actual number of days elapsed, and after default hereunder, demand or
maturity, whether at stated maturity or by acceleration, at a rate four (4)
percentage points greater than the stated rate (the "Default Rate"). Interest
shall be due and payable monthly beginning May 30, 1997 , and at maturity.
Principal shall be due and payable on demand or no later than April 30, 1998.
The undersigned hereby state(s) that the purpose of the loan evidenced by this
Note is business expenses.
[X] REVOLVING CREDIT: If this box is checked, this Note is a revolving
credit subject to the terms of this paragraph. Subject to the conditions hereof
and of any other agreements between the parties relating hereto, and until
demand, if the principal is payable on demand, or maturity (weather at scheduled
or accelerated maturity), if the principal is payable other than on demand, the
undersigned may borrow and re-borrow from the holder and the holder may, in its
sole discretion, lend and re-lend to the undersigned such amounts not the exceed
the Maximum Credit as the undersigned may at any time and from time to time
request upon satisfactory notice to the holder.
Notwithstanding anything to the contrary contained herein or in any
other agreement between the undersigned and the holder, if this Note provides
that the principal hereof is payable on demand, then this Note is a demand Note
due and owing immediately, without prior demand of the holder and immediate
action to enforce its payment may be taken at any time, without notice and
without reason. If any payment of principal or interest is not paid when due, or
if the holder deems itself insecure for any reason, including but not limited
to, the solvency, bankruptcy, business failure, death, default in the payment of
other obligations or receivership of or concerning any maker, guarantor or
indorser hereof, this Note shall, if payable other than on demand, at the option
of its holder, become immediately due and payable, without demand or notice. The
undersigned shall promptly provide such financial information as the holder
shall reasonably request from time to time.
As collateral security for the payment of the amounts from time to time
owing hereunder, Borrower and all indorsers hereby grants to the holder a
security interest in (i) all property in which the holder now or hereafter holds
a security interest pursuant to any and all assignments, pledges and security
agreements between the undersigned and the holder and (ii) all accounts,
securities and properties now and hereafter in the possession of the holder and
in which the undersigned or any indorsers have any interest. Upon this Note
becoming due under any of its terms and provisions, and not being fully paid and
satisfied, the total sum then due hereunder may, at any time and from time to
time, be charged against any account or accounts maintained with the holder
hereof by any of the undersigned or any indorser, without notice to or further
consent from any of them, and the undersigned and all indorsers agree to be and
remain jointly and severally liable for all remaining indebtedness represented
by this Note in excess of the amount or amounts so applied. The undersigned and
the holder intend that this indebtedness shall be secured by any and all
mortgages heretofore or hereafter granted by the undersigned in favor of the
holder.
There will be a minimum finance charge of $50.00 for each billing
period. Prime rate is that annual percentage rate of interest which is
established by The Provident Bank from time to time as its prime rate, whether
or not such rate is publicly announced, and which provides a base to which loan
rates may be referenced. Prime rate is not necessarily the lowest lending rate
of The Provident Bank. A rate based on the prime rate will change each time and
as of the date that the prime rate changes. If any payment of principal or
interest is not paid when due or if the undersigned shall otherwise default in
the
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performance of its obligations hereunder or under any other note or agreement
with the holder, the holder at its option, may charge and collect, or add to the
unpaid balance hereof, a late charge up to the greater of $250 or 1% of the
unpaid balance of this Note at the time of such delinquency for each such
delinquency to cover the extra expense incident to handling delinquent accounts,
and/or increase the interest rate on the unpaid balance to the Default Rate. The
holder may charge interest at the rate provided herein on all interest and other
amounts owing hereunder which are not paid when due.
The undersigned, all indorsers hereof, any other party hereto, and any
guarantor hereof (collectively "Obligors") each (i) waive(s) presentment,
demand, notice of demand, protest, notice of protest and notice of dishonor and
any other notice required to be given by law in connection with the delivery,
acceptance, performance, default or enforcement of this Note, of any indorsement
or guaranty of the Note or of any document or instrument evidencing any security
for payment of this Note; and (ii) consent(s) to any and all delays, extensions,
renewals or other modifications of this Note or waivers of any term hereof or
release or discharge by the holder of any of Obligors or release, substitution
or exchange of any security for the payment hereof or the failure to act on the
part of the holder or any indulgence shown by the holder, from time to time and
in one or more instances, (without notice to or further assent from any of
Obligors) and agree(s) that no such action, failure to act or failure to
exercise any right or remedy, on the part of the holder shall in any way affect
or impair the obligations of any Obligors or be construed as a waiver by the
holder of, or otherwise affect, any of the holder's rights under this Note,
under any indorsement or guaranty of this Note or under any document or
instrument evidencing any security for payment of this Note. The undersigned and
all indorsers further agree to reimburse the holder for all advances, charges,
costs and expenses, including reasonably attorneys' fees, incurred or paid in
exercising any right, power or remedy conferred by this Note, or in the
enforcement thereof. If the undersigned are more than one (1), the liability of
the undersigned hereon is joint and several, and the term "undersigned", as used
herein, means any one or more of them.
The undersigned and all indorsers authorize any attorney at law,
including any attorney engaged by the holder, to appear in any court of record
in the State of Ohio or any other State or Territory of the United States, after
the indebtedness evidenced hereby, or any part thereof, becomes due and waive
the issuance and service of process and confess judgment against any one or more
than one of the undersigned and all indorsers in favor of the holder, for the
amount then appearing due, together with costs of suit and, thereupon, to
release all errors and waive all rights of appeal and stay of execution, but no
such judgment or judgments has not been obtained hereon. This warrant of
attorney to confess judgment is a joint and several warrant of attorney. The
foregoing warrant of attorney shall survive any judgment, and if any judgment be
vacated for any reason, the holder hereof nevertheless may hereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned and all indorsers or any one or more of them. The
undersigned and all indorsers hereby expressly waive any conflict of interest
that the holder's attorney may have in confessing such judgment against such
parties and expressly consent to the confessing attorney receiving a legal fee
from the holder for confessing such judgment against such parties.
If the undersigned or any indorser or guarantor hereof would have the
right to rescind the loan evidenced by this Note pursuant to a right so to do
under the Truth-in-Lending Act because one or more mortgages now exist in favor
of the holder hereof covering the principal home or homes of the undersigned or
any indorser or guarantor hereof, the holder's acceptance of this Note shall
constitute a waiver of its right under any such mortgage to treat such principal
home or homes as security for the repayment or guaranty of this Note except for
the principal home or homes described in the Mortgage dated _________________.
THE PROVISIONS OF THIS NOTE SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF OHIO AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE HOLDER TO
EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT COUNSEL,
THE UNDERSIGNED AND ALL INDORSERS HEREBY EXPRESSLY WAIVE THE RIGHT TO TRIAL BY
JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS NOTE OR ARISING IN ANY WAY
FROM ANY INDEBTEDNESS OR OTHER TRANSACTIONS INVOLVING THE HOLDER AND THE
UNDERSIGNED. THE UNDERSIGNED HEREBY DESIGNATE(S) ALL COURTS OF RECORD SITTING IN
CINCINNATI, OHIO AND HAVING JURISDICTION OVER THE SUBJECT MATTER, STATE AND
FEDERAL, AS FORUMS
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WHERE ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING FROM OR OUT OF
THIS NOT, ITS MAKING, VALIDITY OR PERFORMANCE, MAY BE PROSECUTED AS TO ALL
PARTIES. THEIR SUCCESSORS AND ASSIGNS, AND BY THE FOREGOING DESIGNATION THE
UNDERSIGNED CONSENT(S) TO THE JURISDICTION AND VENUE OF SUCH COURTS.
WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL.
IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR
PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FORM YOU
REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED
GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY
OTHER CAUSE.
Cable Link, Incorporated
- ----------------------------- --------------------------------
By:
- ----------------------------- --------------------------------
Brenda L. Thompson, President
Address 280 Cozzins St.
--------------------
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EXHIBIT 10.1
We hereby consent to the use in the Offering Circular constituting part of this
Regulation A Offering Statement of our report dated February 5, 1997 relating to
the financial statements of Cable Link, Inc., which appears in such Offering
Circular.
Groner, Boyle & Quillin, LLP
September 16, 1997
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EXHIBIT 16.1
September 12, 1997
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We have read the statements made by Cable Link, Inc. (copy attached), which we
understand will be filed with the Commission, pursuant to Regulation S-B, Item
304, as part of the Company's Form 10-SB. We agree with the statements
concerning our Firm in Item 3 of such Form 10-SB.
Very truly yours,
Coopers & Lybrand L.L.P.
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