U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the fiscal year ended December 31,
1998.
Commission file number: 0-3851
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SUNGROUP, INC.
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(Name of small business issuer in its charter)
Tennessee 62-0790469
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2201 Cantu Court, Suite 102A Sarasota, Florida 34232-6254
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 941-377-6710
Securities to be registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
--------------------------
(Title of class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.
[ X ]
State issuer's revenues for its most recent fiscal year. $5,228,602.
As of March 11, 1999, the aggregate market value of the Common Shares (based on
the average bid and asked price of $.375 per share in the over-the-counter
market) held by non-affiliates was approximately $700,973.
As of March 11, 1999, there were 6,988,300 Common Shares outstanding.
Transitional Small Business Disclosure Format. (Check One): Yes No X
--- ---
Page 1
Exhibit Index on Page 19
<PAGE>
TABLE OF CONTENTS
Item Page
- ---- ----
PART I
- ------
1 Description of Business 3
2 Description of Property 6
3 Legal Proceedings 7
4 Submission of Matters to a Vote of Security Holders 7
PART II
5 Market for Common Equity and Related
Stockholder Matters 8
6 Management's Discussion and Analysis 8
7 Financial Statements 10
8 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
PART III
9 Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange Act 10
10 Executive Compensation 12
11 Security Ownership of Certain Beneficial Owners and Management 13
12 Certain Relationships and Related Transactions 14
13 Exhibits and Reports on Form 8-K 15
Signatures 18
Index to Exhibits 19
4
<PAGE>
PART I
Item 1. Description of Business
General
SunGroup, Inc. ("Corporation") was incorporated in 1967 in the State of
Tennessee. The Corporation's original name was Mooney Broadcasting Corporation.
At a special stockholders meeting in 1984, a new Board of Directors and
corporate officers were elected and the Corporation's name was changed to
SunGroup, Inc.
For the past five years, the Corporation's focus has been on
restructuring its debt obligations to generate sufficient cash flow to service
these requirements. Since mid-1991, the Corporation has attempted to deal with
its liquidity needs. There has been significant efforts to restructure or pay
down debts through negotiation and asset sales.
Change in Equity
In 1996, the Corporation's shareholder's equity deficit was
substantially reduced. This improvement resulted from the Corporation's sale of
the assets of its Pensacola radio station and its related debt forgiveness by
the Federal Deposit Insurance Corporation ("FDIC"), significant debt elimination
due to Statutes of Limitations expirations applicable to other Corporation debt
and loan restructurings.
Sale of Assets
The Corporation consummated the sale of its FM radio station, WOWW, in
Pensacola, Florida on July 2, 1996. The radio station constituted all of the
operating assets of the Corporation's subsidiary located in Florida. The assets
were sold exclusive of certain retained assets, including, without limitation,
accounts receivable. The sale price of the assets of the radio station was $2.3
million in cash, plus certain closing costs of approximately $150,000.
The Corporation previously had entered into an agreement with the FDIC,
the first lien holder of the assets, on the disposition of the sale proceeds of
the Pensacola radio station and release of its lien thereon. The FDIC received
$2.094 million from the Pensacola radio station sale proceeds and discharged the
Corporation of indebtedness totaling approximately $5 million. The Corporation
dissolved this subsidiary with all of its outstanding debt in 1997.
The Corporation's principal source of funds is cash flow provided by
the operation of its subsidiary radio stations. Its primary needs include
working capital, capital expenditures, maintenance of property, plant, and
equipment, repayment of debt and interest. During the twelve months of 1998, the
Corporation was able to meet its primary cash need of debt service
5
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and interest expense.
On February 3, 1998 the Corporation entered into an Asset Purchase
Agreement with Sunburst Media of Dallas, Texas to sell substantially all the
assets of the Corporation for $24,000,000.00. The Corporation will retain its
cash and accounts receivable. It is anticipated that the net proceeds, after
payment of the Corporation's outstanding debt obligations and tax liabilities,
will be distributed and the Corporation liquidated after all affairs are wound
up. The sale is contingent upon, among other conditions, consent by the Federal
Communications Commissions to the assignment of the various broadcast licenses
from SunGroup, Inc. to Sunburst Media.
Subsequently, the Corporation entered into a Local Management Agreement
with Sunburst Media for the operation of its stations in Abilene, Longview and
Bryan College Station, Texas effective April 1, 1998. The Corporation believes
this agreement was in the best interest of its stockholders and would expedite
the Asset Purchase Agreement previously entered into.
As a condition of the asset sale of the Corporation, the Corporation is
obligated to pay its various note holders. For the Corporation to be is a
position to sell it assets, it had to negotiate a settlement with it largest
equity holder, via the warrants, and it largest note holder, Conseco Risk
Management for $10,300,000.00. Payment is due Conseco on July 23, 1998. If the
settlement does not occur on that date, interest will accrue at the rate of 18%
per annum.
The Corporation completed the sale of its subsidiary SunGroup
Broadcasting of Louisiana, Inc. Radio Station KMJJ to Capstar Broadcasting of
Austin, Texas via Sunburst Media on October 14, 1998. Proceeds of the sale were
used to pay off the debt to First Savings Bank of Arlington, and the balance was
applied to the Conseco settlement mentioned above.
On October 27, 1998, the Corporation consummated the sale of its
subsidiaries Radio SunGroup of Texas, Inc. and Radio SunGroup of Bryan/College
Station, Inc to Sunburst Media LP. The proceeds were used to pay off the balance
of the Conseco settlement and other secured and unsecured note holders. The
remaining proceeds will be used to pay any taxes the Corporation may incur ,
legal and professional fees and for distribution to the shareholders.
As part of the February 3, 1998 Asset Purchase Agreement with Sunburst
Media, LP the Corporation entered into a subsequent Asset Purchase Agreement
with Trumper Broadcasting to purchase its subsidiary SunGroup Broadcasting of
New Mexico, Inc. Trumper has withdrawn its offer to purchase this subsidiary and
the Corporation has found a new suitor in Simmons Broadcasting. An Asset
Purchase Agreement was sign with Simmons on October 13, 1998. The Simmons Asset
Purchase Agreement has been filed with the Federal Communications Commission
during the week of November 2nd, 1998 and it is expected that
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it will be approved. In addition, the Corporation also entered into a Local
Marketing Agreement with Simmons Broadcasting on October 23, 1998 that went into
effect on November 1, 1998.
Company Strategy
As a result of the sale of the Corporation's assets in 1998 and 1999,
the Corporation is in the process of liquidating the Corporation and making
distributions to the shareholders. It is anticipated that all distributions,
settlement of leases, and all legal proceedings including Dissolutions will be
completed by December 31, 1999.
7
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ITEM 2: DESCRIPTION OF PROPERTY
<TABLE>
<CAPTION>
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Station/Location Date Acquired Frequency Licensed Power Format Tower Lease Office Lease Date
Expiration Expiration Sold
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<S> <C> <C> <C> <C> <C> <C> <C>
KKSS-FM Albuquerque/ Santa Fe, 1986 97.3 MHZ 100,000 watts Contemporary 2002 1998 2/12/99
New Mexico
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KEAN-AM Abilene, Texas 1985 1280 KHz 500 watts Country Own 2000 10/27/98
- ---------------------------------------------------------------------------------------------------------------------------------
KEAN-FM Abilene, Texas 1985 105.1 MHZ 100,000 watts Country 1999 2000 10/27/98
- ---------------------------------------------------------------------------------------------------------------------------------
KYKX-FM Longview, Texas 1985 105.7 MHZ 100,000 watts Country 2017 Own 10/27/98
- ---------------------------------------------------------------------------------------------------------------------------------
KKYS-FM Bryan/College Station, 1989 104.9 MHZ 50,000 Contemporary Own 2002 10/27/98
Texas watts
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KMJJ-FM Shreveport, Louisiana 1989 99.7 MHZ 50,000 Urban 2013 Own 10/14/98
watts
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KROW-FM Abilene, Texas 1996 92.5 MHZ 50,000 Contemporary Own Own 10/27/98
watts
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
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Item 2. Description of Property
In December, 1996, the Corporation moved its headquarters from
Indianapolis, Indiana to Sarasota, Florida. The Corporation leases approximately
2,100 square feet of office space in Sarasota under a lease expiring in
December, 2001.
Management believes that there is adequate insurance coverage on its
property and equipment.
Item 3. Legal Proceedings
The Corporation in the normal course of business is a defendant in a
small number of routine lawsuits. Management believes that the results of any
such litigation will not have an material adverse effect upon the conduct of the
Corporation's business or its financial position.
Applications for the renewals of the licenses of stations KEAN(AM),
Abilene, Texas; KEAN-FM, Abilene, Texas; KYKX (FM), Longview, Texas; and KKYS
(FM) Bryan, Texas (the "Stations") were filed with the Federal Communications
Commission ("FCC") in March 1997. Those applications included information
regarding the Stations' respective Equal Employment Opportunity ("EEO")
programs. On August 1, 1997, the FCC formally requested additional information
concerning the Stations' EEO efforts. In response, the Stations submitted
additional EEO information to the FCC.
On March 12, 1998, in response to an inquiry about the status of the
Stations' renewal applications, Paulette Laden, the Chief of the FCC's EEO
Branch, contacted the Corporation's legal counsel, at the law firm of Wiley,
Rein & Fielding by telephone. Ms. Laden advised our FCC counsel that based on
the responses provided by the Stations, she had determined that the Stations had
"serious" deficiencies with respect to their EEO recruitment efforts. Ms. Laden
advised that the EEO Branch is drafting a decision for review and disposition by
the full Commission. Ms. Laden did not provide any further details.
Depending on the seriousness of the EEO program deficiencies that may
be found at one or more of the Stations, the range of remedies which may be
imposed by the Federal Communications Commission (FCC) include: (1) assessing
forfeitures against the licensees of one or more of the Stations; (2) granting
the renewals of one or more of the Stations' licenses subject to special EEO
reporting conditions; (3) granting the renewals of one or more of the Stations'
licenses for a short-term subject to such reporting conditions; (4) assessing
forfeitures and granting short-term renewals to one or more of the Stations as
described above; or (5) denying one or more of the requested renewals of the
Stations' licenses.
The Federal Communications Commission, after a federal appeals court
ruling, reversed its position on its EEO policy. As a result of this decision,
all of the station licenses were renewed and have since been transferred to the
new owners of the stations.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the Corporation's security
holders during the
9
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fourth quarter of 1998.
10
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PART II
Item 5. Market for Common Equity and Related Stockholder Matters
There is no active public trading market for the Corporation's common
stock, but it is traded on the over the counter market and has two market
makers.
As of December 31, 1998, the Corporation had 495 shareholders of
record.
Item 6. Management's Discussion and Analysis
Results of Operations: 1998 vs. 1997
For the period ended December 31, 1998 and 1997, the Corporation
operated the same properties, except for KALK -FM in Mount Pleasant, Texas and
KROW-FM in Abilene Texas. The Corporation entered into a Local Marketing
Agreement (LMA) with KALK-FM in June 1997 and began operating KROW-FM on October
29, 1997. On April 1, 1998, the Corporation entered into an additional Local
Marketing Agreement with Sunburst Media of Dallas, Texas for its stations in
Abilene, Texas; Bryan, Texas: and Longview, Texas.
Gross revenue for 1998 decreased 42.9% or $3,932,814 from 1997.
Agency commissions as a percentage of gross sales for the year were
approximately 8.89% in 1998 versus 10.69% in 1997. The decrease is due to
decrease in national and political advertising which originate through agencies.
Technical and programming expenses decreased 47% form the same period
of 1998 to 1997.
Selling and administrative expenses, which include depreciation and
amortization, decreased $1,117,219 or 19.67.
All of the decreases in Revenue, Technical, Programming, Sales and
Administrative expenses are due to the Local Marketing Agreements and subsequent
sale of the assets to Sunburst Media and Capstar Communications. Although the
Corporation received monthly income of $91,645.00 per month, this was
substantially lower than normal operating revenues of the stations. Under the
local marketing agreements, there is also a correlating decrease in expenses,
with most of the normal operating expenses paid by the operator of the stations.
Interest expense increased 295.87% or $683,668. This is a result of
refinancing several zero interest bearing notes that became due December 31,
1997 with short term notes paying a 10% annual return and the settlement
agreement with Conseco, Inc, the Corporations largest note and equity holder, at
18% per annum until the sale of the Corporations assets was completed.
11
<PAGE>
The Corporation recorded gain on disposal of assets of $11,325,264 in
1998 as a result of the sale of several of its radio stations. There were no
dispositions in 1997.
In May 1998, the Corporation sold its studio building in Longview,
Texas for $136,600. Proceeds from the sale were used to pay the mortgage due to
Longview Bank and Trust of Longview, Texas. The Corporation recognized a gain on
the sale of $70,200. The Corporation had no extraordinary items in 1997 or 1998.
In the event that the Corporation does not complete its liquidation by
December 31, 1999, the Corporation is aware of the issues associated with the
programming code in existing computer systems as the Millennium (year 2000)
approaches. The "year 2000" problem is pervasive and complex as virtually every
computer operation will be affected in some way by the rollover of the two-digit
value to 00. The issue is whether computer systems will properly recognize data
sensitive information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or cause a
system to fail. The Corporation will take steps in 1999 to contact the various
software suppliers it uses to correct the problem.
Liquidity and Capital Resources
On December 15, 1997, the Corporation reached an agreement with First
Savings Bank, Arlington, Texas, ("FSB") to renew one of the Corporation's loans,
which was to have matured on December 15, 1997. The note has a principal balance
of $2,184,322 and has been renegotiated to mature on June 30, 1998. The note
calls for monthly interest payments of $21,843.
The Corporation entered into a loan agreement with Young Investments on
December 24, 1997 in the amount of $800,000, with a 10% interest rate to be paid
monthly. The note expires June 30, 1998. Proceeds from the loan were used to
payoff the notes of James D. Osburn and Arden Osburn which matured on January 1,
1998. The payoffs for these two notes were made on January 2, 1998. In addition,
Kenneth R. Reynolds agreed to extend his note with the Corporation, which was to
mature on January 1, 1998, until June 30, 1998 at an interest rate of ten
percent (10%), with interest payments to be made monthly.
On March 1, 1998, the Corporation entered into loan agreements with
John W. Biddinger; Margaret H. Biddinger; and Karen Biddinger in the aggregate
amount of $400,000. The notes are to mature on June 30, 1998 and carry a 10%
interest rate to be paid monthly. The proceeds were used to pay down the prior
note from Young Investments. Young Investments was issued a new note on March 1,
1998 for $400,000, maturing on June 30, 1998, bearing an interest rate of
ten-percent (10%), interest payable monthly.
The Corporation had notes with several entities (see Exhibit #(ii)
attached) which
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matured on February 15, 1998. All note-holders are aware of the Asset Purchase
Agreement (APA) with SunBurst Media for the sale of substantially all the assets
of the corporation.
As a result of the closing with Capstar Broadcasting on October 14,
1998 and SunBurst Media on October 27, 1998 all of the aforementioned notes
were paid in full.
13
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Item 7. Financial Statements
The information called for by this Item is included as Exhibit 99 to
this report.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16 (a) of the Exchange Act
Listed below are the Directors of the Corporation as of December 31,
1998, their years of service as a Director, and ages:
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Director Age Service as Director Term Expires
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John W. Biddinger 58 August, 1984 - Present 2000
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James M. Elliott 56 November, 1984 - Present 1997
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Dan E. Young 69 December, 1985 - Present 1997
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Biographical information concerning Mr. Biddinger is set forth below
under the caption "Executive Officers".
James M. Elliott has been President of Elliott and Associates, an
investment advisor and investment manager, since 1991. Prior thereto, he was
Vice President and Chief Financial Officer of the Indiana University Foundation.
Daniel E. Young has been President of Young Investments, Inc.
since 1979. He has been active in the ownership and management of automobile
franchise operations and is a multi-dealership owner.
Executive Officers
Listed below are the Executive Officers of the Corporation as of
December 31, 1998, their positions, offices and ages:
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Officer Age Position
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John W. Biddinger 58 President
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James A. Hoetger 45 Vice President, Treasurer and
Secretary
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John W. Biddinger was elected President on May 24, 1991, and had been
Chairman of the Executive Committee of the Corporation since 1984. Mr. Biddinger
is also President and a Director of Biddinger Investment Capital Corporation, a
leverage buy-out and workout specialist firm.
James A. Hoetger became Vice President/Finance and Chief Financial
Officer of the Corporation in September, 1996, replacing John Southwood, Jr.,
who resigned to pursue other interests. Previously, he was Vice President and
Corporate Controller of Tak Communications, Inc., Madison, Wisconsin, and was
responsible for all accounting and certain collection functions.
Term of Office
The executive officers and Directors of the Corporation serve annual
terms or until their successors are duly elected and qualified.
Indemnification
The Corporation's By-Laws provides for the indemnification of any and
all of its directors and/or officers. The By-Laws require the Corporation to
indemnify the covered individuals for liabilities incurred by them because of
any act or omission, or neglect or breach of duty, committed while acting in the
capacity as an officer or director of the Corporation to the fullest extent
permitted by law. Certain actions, including acts for which indemnification is
found by a court to be illegal or contrary to public policy are excluded from
such coverage.
Compliance With Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's directors, executive officers and persons who own
more than ten percent of the Corporation's common stock to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock of the Corporation. Officers, directors and
greater than ten percent shareholders are required by the Securities and
Exchange Commission regulations to furnish the Corporation with copies of all
Section 16(a) forms they file.
Specific due dates for these reports have been established, and the
Corporation is required to disclose in this report any failure to file such
forms by these dates during 1997. To the Corporation's knowledge, based solely
on review of the copies of such reports furnished to
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the Corporation and written representations that no other reports were required,
with respect to the fiscal year ended December 31, 1997, all Section 16(a)
filing requirements applicable to the Company's officers, directors and greater
than ten percent shareholders were complied with.
16
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Item 10. Executive Compensation
The following table summarizes the compensation paid by the Corporation
to its current Chief Executive Officer, as of December 31, 1998, for the past
three fiscal years. The Corporation had no other executive officers at December
31, 1998 whose total annual salary and bonus from the Corporation exceeded
$100,000 during the past fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
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Name and Principal Year Salary ($) Bonus Other Annual All Other
Position ($) Compensation ($) Compensation(s)
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John W. Biddinger, CEO 1998 132,200 0 0 0
1997 132,200 0 0 0
1996 132,200 0 0 0
--------------------------------------------------------------------------------------------------
</TABLE>
Compensation of Directors
Members of the Board of Directors who are not officers of the
Corporation receive $1,000 per meeting for their attendance at regularly
scheduled Board meeting. There were no such meetings in 1998.
Board Committees
The Corporation's Compensation Committee consists of Mr. Elliott.
The duties of this Committee are to review the compensation of the
Corporation's executive officers. The Corporation has no audit or
nominating committee.
Employment Agreements
The Corporation entered into a three year employment agreement with
John W. Biddinger effective in 1991. This agreement has been extended through
May 31, 2000. The agreement calls for a minimum annual compensation of $125,000
and annual bonuses of up to 50% of annual salary. The agreement calls for Mr.
Biddinger to receive 24 months of annual compensation should he be dismissed
without cause or if there is a change in control of the Corporation (as defined
in the agreement).
The agreement provides for a death benefit to Mr. Biddinger's estate of
two and one half times the current annual base salary and a lump sum payment
equal to two times the current annual base salary if he should become
permanently disabled (as defined in the
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agreement). The Corporation is not insured against either of these events. The
agreement also grants Mr. Biddinger the option to "put" all of his stock back to
the Corporation at a mutually agreed upon fair market value (as defined in the
agreement).
Mr. Biddinger has agreed in restructuring part of the Corporation's
debt to hold his compensation at $132,200 per year.
The Corporation entered into an Employment Agreement with James A.
Hoetger on September 9, 1997. This Agreement is in effect through December 31,
1999. The Employment Agreement calls for annual compensation of $75,000 in 1998
and $80,000 in 1999 and bonuses based on merit and performance determined by the
President of the Corporation.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following tables set forth information as of December 31, 1997, as
to the beneficial ownership, direct or indirect, of the Corporation's common
stock by all Directors, all current Directors and Officers as a group, and all
persons known by the Corporation to own beneficially more than 5% of the
Corporation's common stock.
The aggregate percentage of ownership is based on 6,543,700 shares of
common stock outstanding and all exercisable options and warrants related to
individuals listed in the tables.
OWNERSHIP BY MANAGEMENT
OF THE CORPORATION'S COMMON STOCK
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Name and Address Amount and Nature of Beneficial Percent of Class (2)
- ---------------- -------------------------------- --------------------
Ownership (1)
-------------
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
John W. Biddinger 2,420,056 37.0%
7491 Albert Tillinghast Drive
Sarasota, FL 34240
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James M. Elliott 20,000 .3%
230 Fountain Square
Bloomington, IN 47404
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Dan E. Young 626,179 9.6%
3210 E. 96th Street
- ----------------------------------------------------------------------------------------------------------
All Present Directors and Executive Officers 3,066,235 46.9%
as a Group (3 persons)
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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FIVE PERCENT SHAREHOLDERS
OF THE CORPORATION'S COMMON STOCK
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Name and Address Amount and Nature of Beneficial Percent of Class (2)
- ---------------- -------------------------------- --------------------
Ownership (1)
-------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
John W. Biddinger 2,420,056 37.0%
7491 Albert Tillinghast Drive
Sarasota, FL 34240
- -------------------------------------------------------------------------------------------------
Conseco, Inc. (3) 5,972,060 47.7%
11825 N. Pennsylvania Street
Carmel, Indiana 46032
- -------------------------------------------------------------------------------------------------
Antar & Co. 1,911,014 29.2%
601 Jefferson Street
Houston, Texas 77002
- -------------------------------------------------------------------------------------------------
Dan E. Young 626,179 9.6%
3210 East 96th Street
Indianapolis, Indiana
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) All shares are held directly unless otherwise noted.
(2) Pursuant to applicable Securities and Exchange Commission rules, a
person is deemed beneficial owner of those shares not outstanding which
are subject to options, warrants, rights or conversion privileges if
that person can exercise such options, warrants, rights or privileges
within 60 days. Any such shares are deemed to be outstanding for the
purpose of computing the percentage of outstanding common stock owned
by such person individually, but are not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person.
Item 12. Certain Relationships and Related Transactions
The Corporation, through its subsidiary RadioSunGroup of Texas,
entered into a Local Marketing Agreement with Mt. Pleasant Radio, Inc. for
KALK-FM in Mt. Pleasant on January 28, 1997, effective June 1, 1997. As
part of the agreement, the Corporation also has the option to purchase all
of the assets of KALK-FM.
In order for the Corporation to complete the construction permit for
KROW-FM in Abilene, Texas, the Corporation entered into a leasing contract with
SLT of Indiana, Inc. for broadcast equipment. The lease is for five-years,
beginning December 1, 1998.
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Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
1 Asset Purchase Agreement (APA)
2 Press Release(s)
3 8K SunGroup Broadcasting of New Mexico, Inc.
4 February 16, 1999 Shareholder Letter
Exhibit No. Description of Exhibit
- ----------- ----------------------
3 (i) Articles of Incorporation(1)
(ii) By-Laws as presently in effect(1)
10 Material Contracts
(a) Reinstatement, modification, renewal and
extension agreement between SunGroup, Inc. and
Kenneth R. Reynolds in the amount of $2,500,000.(2)
(b) Reinstatement, modification, renewal and
extension agreement between SunGroup, Inc. and Arden
Wilson Osburn in the amount of $1,250,000.
(c) Reinstatement, modification, renewal and
extension agreement between SunGroup, Inc. and John
D. Osburn in the amount of $1,250,000.(2)
(d) Promissory Note for $880,000 between SunGroup,
Inc. and Bankers National Life Insurance Company with
related warrant A-1 for 592,875 shares.(2)
- --------
1 Incorporated by reference to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1984.
2 Incorporated by reference to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1992.
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<PAGE>
(e) Promissory Note for $4,000,000 between SunGroup,
Inc. and Western National Life Insurance Company with
related warrant A-2 for 2,892,000 shares.(2)
(f) Promissory Note for $93,333.06 between SunGroup,
Inc. and John W. Biddinger with a related warrant A-3
for 59,287 shares.(2)
(g) Promissory Note for $124,469.18 between SunGroup,
Inc. and Robert A. Davies and related warrant A-4 for
81,575 shares.(2)
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<PAGE>
(h) Promissory Note for $176,800 between SunGroup,
Inc. and Indiana University Foundation with related
warrant A-5 for 118,575 shares.(2)
(i) Promissory Note for $265,200 between SunGroup,
Inc. and Dan E. Young - IRA Trust with related
warrant A-6 for 177,862 shares.(2)
(j) Agreement by and among RadioSunGroup of
Bryan/College Station, Inc., SunGroup Broadcasting
of Louisiana, Inc., SunGroup, Inc. and Radio USA,
Ltd. regarding exchange of common stock for debt.(3)
(k) Second Amended and Restate Promissory Note dated
September 30, 1993 executed by RadioSunGroup of
Bryan/College Station, Inc. ("RSG") and SunGroup
Broadcasting of Louisiana, Inc. ("SGBL"), payable to
the order of the Federal Deposit Insurance
Corporation ("FDIC") in the original principal amount
of $2,205,509.02 and its related First Amendment to
Assumption Agreement and Amended and Restated Loan
Agreement dated September 30, 1993.(3)
(l) Adjustment letter related to warrant A-1 issued
to Bankers National Life Insurance Company in the
original amount of 592,875 shares amended to
1,016,010 shares.(3)
(m) Adjustment letter related to warrant A-2 issued
to Western National Life Insurance Company in the
original amount of 2,892,000 shares amended to
4,956,050 shares.(3)
(n) Adjustment letter related to warrant A-4 issued
to Robert N. Davies in the original amount of 81,575
shares amended to 139,797 shares.(3)
(o) Adjustment letter related to warrant A-5 issued
to IU Foundation in the original amount of 118,575
shares amended to 203,202 shares.(3)
(p) Adjustment letter related to warrant A-6 issued
to Dan Young IRA in the original amount of 177,862
shares amended to 304,803.(3)
(q) Employment agreement with John W. Biddinger,
President.(3)
(r) Amendment number one to the John W. Biddinger
Employment Agreement.(3)
- --------
3 Incorporated by reference to the Corporation's Annual Report on
Form 10-KSB for the year ended December 31, 1993.
22
<PAGE>
(s) Amendment number two to the John W. Biddinger
Employment Agreement.
(t) Key Employee Incentive Stock Plan of 1986.
<PAGE>
(u) Act of Loan Modification and Acknowledgment by
RadioSunGroup of Bryan/College Station, Inc.,
SunGroup Broadcasting of Louisiana, Inc. and
SunGroup, Inc. in favor of First Savings Bank of
Arlington, Texas, dated December 15, 1996.
(v) Act of Loan Modification and Acknowledgment by
RadioSunGroup of Bryan/College Station, Inc.,
SunGroup Broadcasting of Louisiana, Inc. and
SunGroup, Inc. in favor of First Savings Bank of
Arlington, Texas, dated December 15, 1997.
21 Subsidiaries of the Registrant.
27 Financial Data Schedule.
99 Financial Statements
(a) No Reports on Form 8-K were filed during the last
quarter of 1998.
(b) 8-K Report for the first quarter of 1998 was filed.
(c) 8-K Report for the first quarter of 1999 was filed.
24
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SUNGROUP, INC.
DATED: March 11, 1999 By: /s/ John W. Biddinger
- ----------------------- --------------------------------------
John W. Biddinger, President
Sarasota, Florida
In accordance of the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.
DATED: March 11, 1999 /s/ John W. Biddinger
John W. Biddinger, Director and
(Principal Executive Officer)
DATED: March 11, 1998 /s/ James M. Elliott
James M. Elliott, Director
DATED: March 11, 1999 /s/ James A. Hoetger
James A. Hoetger, Treasurer, Secretary and
Vice President
(Principal Accounting/Financial Officer)
DATED: March 11, 1999 /s/ Dan E. Young
Dan E. Young, Director
25
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
3 (i) Articles of Incorporation(1)
(ii) By-Laws as presently in effect(1)
10 Material Contracts
(a) Reinstatement, modification, renewal and
extension agreement between SunGroup, Inc.
and Kenneth R. Reynolds in the amount of
$2,500,000.(2)
(b) Reinstatement, modification, renewal and
extension agreement between SunGroup, Inc.
and Arden Wilson Osburn in the amount of
$1,250,000.(2)
(c) Reinstatement, modification, renewal and
extension agreement between SunGroup, Inc.
and John D. Osburn in the amount of
$1,250,000.(2)
(d) Promissory Note for $880,000 between
SunGroup, Inc. and Bankers National Life
Insurance Company with related warrant A-1
for 592,875 shares.(2)
(e) Promissory Note for $4,000,000 between
SunGroup, Inc. and Western National Life
Insurance Company with related warrant A-2
for 2,892,000 shares.(2)
(f) Promissory Note for $93,333.06 between
SunGroup, Inc. and John W. Biddinger with a
related warrant A-3 for 59,287 shares.(2)
(g) Promissory Note for $124,469.18 between
SunGroup, Inc. and Robert A. Davies and
related warrant A-4 for 81,575 shares.(2)
(h) Promissory Note for $176,800 between
SunGroup, Inc. and Indiana University
Foundation with related warrant A-5 for
118,575 shares.(2)
- ------
2 Incorporated by reference to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1992.
26
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
(i) Promissory Note for $265,200 between
SunGroup, Inc. and Dan E. Young - IRA Trust
with related warrant A-6 for 177,862
shares.(2)
(j) Agreement by and among RadioSunGroup of
Bryan/ College Station, Inc., SunGroup
Broadcasting of Louisiana, Inc., SunGroup,
Inc. and Radio USA, Ltd. regarding exchange
of common stock for debt.(3)
10
(k) Second Amended and Restate Promissory Note
dated September 30, 1993 executed by
RadioSunGroup of Bryan/College Station, Inc.
("RSG") and SunGroup Broadcasting of
Louisiana, Inc. ("SGBL"), payable to the
order of the Federal Deposit Insurance
Corporation ("FDIC") in the original
principal amount of $2,205,509.02 and its
related First Amendment to Assumption
Agreement and Amended and Restated Loan
Agreement dated September 30, 1993.(3)
(l) Adjustment letter related to warrant A-1
issued to Bankers National Life Insurance
Company in the original amount of 592,875
shares amended to 1,016,010 shares.(3)
(m) Adjustment letter related to warrant A-2
issued to Western National Lie Insurance
Company in the original amount of 2,892,000
shares amended to 4,956,050 shares.(3)
(n) Adjustment letter related to warrant A-4
issued to Robert N. Davies in the original
amount of 81,575 shares amended to 139,797
shares.(3)
- ------
3 Incorporated by reference to the Corporation's Annual Report on
Form 10-KSB for the year ended December 31, 1993.
27
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
(o) Adjustment letter related to warrant A-5
issued to IU Foundation in the original
amount of 118,575 shares amended to 203,202
shares.(3)
(p) Adjustment letter related to warrant A-6
issued to Dan Young IRA in the original
amount of 177,862 shares amended to
304,803.(3)
(q) Employment Agreement with John W. Biddinger,
President.(3)
(r) Amendment number one to the John W.
Biddinger Employment Agreement.(3)
(s) Key Employee Incentive Stock Plan of 1986.4
(t) Amendment number two to the John W.
Biddinger Employment Agreement.(4)
- ------
4 Incorporated by reference to the Corporation's Annual Report on
Form 10-K for the year ended December 31, 1986.
4 Incorporated by reference to the Corporation's Annual Report on Form 10-K for
the year ended December 31, 1996.
28
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
10
(u) Act of Loan Modification and Acknowledgment
by RadioSunGroup of Bryan/College Station,
Inc., SunGroup Broadcasting of Louisiana,
Inc. and SunGroup, Inc. in favor of First
Savings Bank of Arlington, Texas, dated
December 15, 1996.(5)
(v) Employment Agreement with James A. Hoetger,
Vice President.
(w) Act of Loan Modification and Acknowledgment
by RadioSunGroup of Bryan/College Station,
Inc., SunGroup Broadcasting of Louisiana,
Inc. and SunGroup, Inc. in favor of First
Savings Bank of Arlington, Texas, dated
December 15, 1997.
(x) Agreement By and Among RadioSunGroup of
Texas, Inc. and Mt. Pleasant Radio, Inc.,
dated January 27, 1997.
(y) Secured Promissory Note for $800,000 between
RadioSunGroup of Texas, Inc. and Young
Investments Company (A Nevada Partnership)
dated December 24, 1997.
(z) Cancellation of Secured Promissory Note,
dated February 28, 1998.
(aa) Secured Promissory Note for $400,000 between
RadioSunGroup of Texas and Young Investments
Company (A Nevada Partnership) dated March
1, 1998 and UCC-1 form.
(bb) Secured Promissory Note for $150,000 between
RadioSunGroup of Texas and John W. Biddinger
dated March 1, 1998 and UCC-1 form.
(cc) Secured Promissory Note for $150,000 between
RadioSunGroup of Texas and Margaret H.
Biddinger dated March 1, 1998 and UCC-1
form.
(dd) Secured Promissory Note for $100,000 between
RadioSunGroup of Texas and Karen Biddinger
dated March 1, 1998 and UCC-1 form.
(ee) Renewal and Extension Agreement effective
January 2, 1998 by and between RadioSunGroup
of Texas, Inc. ("Borrower") and Kenneth R.
Reynolds ("Lender") in the amount of
$516,600.00.
(ff) Renewal and Extension Agreement effective
January 2, 1998 by and between RadioSunGroup
of Texas, Inc. ("Borrower") and Kenneth R.
Reynolds ("Lender") in the amount of
$270,600.00.
29
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
10
(gg) Renewal and Extension Agreement effective
January 2, 1998 by and between RadioSunGroup
of Texas, Inc. ("Borrower") and Kenneth R.
Reynolds ("Lender") in the amount of
$32,800.00.
(hh) Tri-Party Payment Agreement effective
January 2, 1998 by and between Radio
SunGroup of Texas, Inc., Kenneth R.
Reynolds, John Osburn and Arden Osburn.
(ii) List of SunGroup notes, which matured on
February 15, 1998
21 Subsidiaries of the Registrant(5)
27 Financial Data Schedule(5)
99 Financial Statements
30
Exhibit 10(v)
SUNGROUP, INC.
EMPLOYMENT AGREEMENT
JAMES A. HOETGER
This Employment Agreement (the "Agreement") is made and entered into as
of the 9th day of September, 1997 by and between SunGroup, Inc., a Tennessee
Corporation (the "Company") and JAMES A. HOETGER (a/k/a Jim Hoetger), a resident
of Sarasota, Florida (the "Employee").
WITNESSETH
WHEREAS, Company desires to engage Employee to be a key person in the
operation of the Company at it's corporate office: 2201 Cantu Court, Suite 102A,
Sarasota, Florida 34232-6254.
WHEREAS, Employee has made many important contributions to the Company
and to the industry as a whole; and
WHEREAS, the parties hereto desire to set forth in this Agreement the
terms, duties and compensation of Employee for the services to be performed by
Employee pursuant to this Agreement.
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements set forth herein, the parties hereto do hereby agree as
follows:
1. Employment and Term. Company does hereby employ Employee and
Employee does hereby agree to enter into the employment of Company for the
compensation provided under the terms and conditions hereinafter set forth. The
term of this Agreement shall commence on September 18, 1997 (the "Commencement
Date") and shall continue for a term ending on the first to occur of the death
of the Employee, or December 31, 1999, unless continued by written agreement of
both parties or terminated as set forth herein. Company and Employee both concur
that this contract should be extended by January 31, 2000, if both parties want
to continue the employment relationship. Employee should take the responsibility
to initiate contract extension discussions in 1999.
Services. Employee is engaged by the Company to perform as Vice
President for the Company and the duties of Employee in such
capacity shall include, without limitation, being the Chief
Financial Officer of the Company (sometimes herein referred to as
the "Services").
Compensation. For the rendering of the Services, Company shall pay
Employee as follows: see "Exhibit A", attached hereto and made part
hereof this Employment Agreement.
Scope of Service and Supervision. The Employee shall devote a
substantial amount of time, attention and energies to the
performance of the Services. The performance of the Services shall
be under the authority of the President of the Company or such other
person(s) as the President of the Company shall designate to
exercise supervisory control over Employee's performance of
Services. It is imperative that Employee deliver a commitment of
extra hours and focused attention to the Company's needs.
Information Confidential. Employee shall not divulge, disclose or
communicate, either verbally or in writing, directly or indirectly,
to any other person or persons, firm or
<PAGE>
corporation, and shall not make use of, either directly or
indirectly, the client lists, financial and cost information,
brochures, contracts, and agreements, personnel information, special
methods, general methods or other business secrets of Company, the
same being deemed, as between the parties hereto, to be important,
material and confidential and to affect the effective and successful
conduct of the business of Company and its goodwill. Further,
Employee shall not make known or divulge any information acquired
from Company, either directly or indirectly, to any person or
persons or firms or corporations in competition with or contemplated
competition with Company.
Termination by Company for Cause or Due to Death or Disability. If
the Employee is unable to perform the Services, due to disability or
otherwise, for a period of ten (10) consecutive days, or for fifteen
(15) days in any period of twelve (12) consecutive months, or if the
Employee violates any of his obligations herein, or if the Employee
fails to perform Services in a prompt, workmanlike manner, then, in
any such event, the employment thereunder may be terminated by the
Company, at its option at any time by written notice to the
Employee. If the employment is terminated pursuant to this
paragraph, such termination shall become effective on the date
specified in the notice of termination.
If termination pursuant to this paragraph is for any cause
other than disability, thereafter the Employee shall be
entitled to no further compensation or benefits from Company,
and the Employee shall be entitled only to that amount of Base
Salary which is due and payable for the period from the last
payment of an installment to the date of termination.
If employment is terminated pursuant to this paragraph due to
disability, or it terminated upon death of the Employee,
thereafter Employee, his personal representatives, successors
and assigns shall be entitled to any vested rights the
Employee may have under any insurance or benefit plan from
Company.
The Employee may, by written notice to the Secretary of
Company, designated any persons to be the beneficiary or
beneficiaries of all, or any portion, of the payments
prescribed by this Agreement to be made by the Company after
his death, and in the absence of any such designation, any
such payments shall be made to his estate.
Assignment. Neither the rights nor obligations under this
Agreement may be assigned by any party, except that it shall be
binding upon and inure to the benefit of any successor of the
Company in the ownership or operation of the Company, whether by
merger, sale of assets, reorganization or otherwise. Any new owner
of the Company must accept and honor this Agreement and Employee
agrees that this Agreement is automatically assigned to any new
owner of the Company without any consent or approval needed from
Employee.
Notices. Any notice expressly provided for under this Agreement
shall be in writing, shall be given either manually or by mail,
telegram, radiogram or cable, and shall be deemed sufficiently
given when actually received by the party to be notified or when
mailed, if mailed by certified or registered mail, postage
prepaid, addressed to such party as his address set forth below.
Either party may, by notice to the other party given in the manner
provided for herein, change his address for receiving such
notices.
<PAGE>
a) If to Company, to:
SunGroup, Inc.
2201 Cantu Court, Suite 102 A
Sarasota, Florida 34232-6254
Attention: John W. Biddinger, President
b) If to the Employee, to:
James A. Hoetger
8351 Eagle Crossing
Sarasota, Florida 34241
Governing Law. This Agreement shall be executed, construed and
performed in accordance with the laws of the State of Florida.
Entire Agreement. This Agreement constitutes the entire agreement
between the parties in connection with the subject matter hereof
and supersedes all prior and contemporaneous agreements and
understandings in connection with such subject matter. No
covenant or condition not expressed in this Agreement shall affect
or be effective to interpret, change or restrict this Agreement.
No change, termination or attempted waiver of any of the
provisions of this Agreement shall be binding unless in writing
signed by the Employee and on behalf of the Company by an officer
other than Employee, thereunto duly authorized by the Company's
Board of Directors. No modification, waiver, termination,
rescission, discharge or cancellation of this Agreement and no
waiver of any provision or default under this Agreement shall
affect the right of any party to enforce any other provision or to
exercise any right or remedy in the event of any other default.
Severability. If any term or provision of this Agreement, shall be
invalid or unenforceable to any extent or application, then the
remainder of this Agreement shall be valid and enforceable to the
fullest extent and the broadest application permitted by law. All
of the terms and provisions of this Agreement shall survive the
termination of the period that Employee is employed by the
Employer, whether such termination is voluntary or involuntary, or
initiated by Employee or the Employer.
Waiver of Breach. The waiver by either party of any provision of
this Agreement shall not operate or be construed as a waiver of
any subsequent breach by the other party.
Headings. The sections, subjects and headings in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
Employee Advancement. Employee and Company want to look forward to
a long relationship and the building of a material appreciation
for each other's contributions and plans. Company advancement
opportunities are based on superior performance and the Employee's
record-to-date at the Company is favorable and positive. Employee
is encouraged to build upon this record. Employee will be measured
by department leadership, overall Station performance and the
individual contributions of Employee.
Counterparts. This Agreement may be executed in multiple
counterparts, none of which must be signed by all of the parties
hereto, but all of which together shall constitute one document.
IN WITNESS WHEREOF, the Employee has executed this Agreement, and the
<PAGE>
Company has caused this Agreement to be executed on behalf of the Company by its
officer thereunto duly authorized all as of the date first above written.
SUNGROUP, INC. & THE EMPLOYEE
By: /s/John W. Biddinger, President By: /s/ James A. Hoetger, Vice President
& Chief Financial Officer
<PAGE>
"EXHIBIT A"
BASE SALARY:
1998: $75,000 per year
1999: $80,000 per year
INCENTIVE COMPENSATION:
Bonuses based on merit and performance. Amounts to be determined by the
President of the Company.
BENEFITS:
Employee will be eligible to participate in Company insurance and other benefit
plans, as any other employee, as benefit plans may be offered. Employee will be
reimbursed for all reasonable and necessary business expenses incurred on behalf
of the Company.
Exhibit 10(w)
ACT OF LOAN MODIFICATION AND ) UNITED STATES OF AMERICA
ACKNOWLEDGMENT )
)
BY )
)
RADIOSUNGROUP OF )
BRYAN/COLLEGE STATION, INC., a )
Texas corporation )
)
SUNGROUP BROADCASTING OF )
LOUISIANA, INC., a )
Louisiana corporation )
)
AND )
)
SUNGROUP, INC., a Tennessee )
corporation )
)
IN FAVOR OF )
)
FIRST SAVINGS BANK, FSB, )
a federal savings bank )
BE IT KNOWN, that effective on the 15th day of December, 1997;
BEFORE US, the undersigned duly qualified notary publics in and for the
states and parishes/counties described below and in the presence of the
undersigned competent witnesses:
PERSONALLY CAME AND APPEARED:
RADIOSUNGROUP OF BRYAN/COLLEGE STATION, INC., a corporation organized
under the laws of the State of Texas, whose taxpayer identification number is
62-1406505, and whose registered office in Texas is #26 Manor East Mall, 701
Villa Maria, Bryan, Texas 77805, appearing herein by and through John W.
Biddinger its President and duly authorized representative pursuant to a
resolution of its Board of Directors, a certified extract of which is attached
hereto ("RSG");
SUNGROUP BROADCASTING OF LOUISIANA, INC., a corporation organized under
the laws of the State of Louisiana, whose taxpayer identification number is
72-1151881, and whose registered office in Louisiana is 725 Austin Place,
Shreveport, Louisiana 7 1 1 0 1, appearing herein by and through John W.
Biddinger its President and duly authorized representative pursuant to a
resolution of its Board of Directors, a certified extract of which is attached
hereto ("SGBL");
SUNGROUP, INC., a corporation organized under the laws of the State of
Tennessee, whose taxpayer identification number is 62-0790469, and whose
principal place of business is 2201 Cantu Court, Suite 102A, Sarasota, Florida
34232, appearing herein by and through John W. Biddinger, its President and duly
authorized representative pursuant to a resolution of its Board of Directors, a
certified extract of which is attached hereto
<PAGE>
("Guarantor");
AND
FIRST SAVINGS BANK, FSB, a federal savings bank, whose taxpayer
identification number is 75-2072785, and whose principal place of business is
301 S. Center Street, Arlington, Texas 76010, appearing herein by and through
its President, Richard J. Driscoll ("Lender").
WHO DECLARED THAT:
RECITALS
WHEREAS, RSG and SGBL, or their predecessors in title (collectively
hereinafter "Borrower") and Guarantor executed those certain promissory notes
listed on Exhibit "A" attached hereto and made a part hereof (collectively, the
"Note").
WHEREAS, in order to secure the Notes, Borrower and Guarantor granted
various liens, mortgages, security interests, assignments, collateral
assignments, pledges and otherwise in various items corporeal (tangible),
incorporeal (intangible), movable (personal), and immovable (real) property
pursuant to various instruments and otherwise, including without limitation, the
instruments listed on Exhibit "B" attached hereto and made a part hereof
(collectively, the "Security Documents"), affecting, among other property, the
real and personal property described on Exhibit "C" attached hereto and made a
part hereof (the "Property"). The Notes and Security Documents are collectively
hereinafter, the "Loan Documents").
WHEREAS, Federal Deposit Insurance Corporation (the "FDIC") succeeded
to all of the right, title and interest of NCNB Texas National Bank, as
successor to First Republicbank Dallas, N.A. in, to and under the Loan Documents
pursuant to the operation of law and certain orders and powers of agencies of
the United States Government.
WHEREAS, Lender is the current holder of the Note and is the mortgagee,
pledgee, assignee and/or security interest holder under the Security Documents.
The Security Documents were assigned to Lender by an Assignment and/or
Assignments listed on Exhibit "D" attached hereto and made a part hereof.
WHEREAS, Borrower and Guarantor have requested that Lender enter into
this Agreement, and Lender has agreed to enter into this Agreement pursuant to
the terms and conditions set forth herein.
WHEREAS, Borrower and Guarantor own and operate radio stations in the
States of Louisiana and Texas (the "Business").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, agreements
and conditions contained herein and in the Note and the Security Documents, for
other good and valuable consideration and for good cause, the receipt and
sufficiency of which are hereby acknowledged Borrower, Guarantor and Lender
hereby agree as follows:
ARTICLE I
RECITALS INCORPORATED
The Recitals set forth above are hereby incorporated herein and
expressly made a part of this Agreement.
<PAGE>
ARTICLE II
DEFINITIONS
Capitalized terms used herein shall have the meanings set forth below:
2.1 "Agreement" shall mean this Loan Modification Agreement by and
between Lender and Borrower.
2.2 "Environmental Laws" shall mean any federal, state or local law,
statute, ordinance, regulation, plan, decree, demand'Ietter, order or otherwise
pertaining to health, industrial hygiene, pollution, waste disposal, hazardous
waste or the environmental conditions on, under, from or about the Property,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C.
Sections 9601 et M., and the Resource Conservation and Recovery Act of 1976
('RCRA'), 42 U.S.C. Section 6901 _q M., as amended.
2.3 "Financing Statement" shall mean a Uniform Commercial Code
financing statement or statements, in form and substance satisfactory to Lender,
perfecting a first priority security interest in personal property collateral in
favor of Lender.
2.4 "Hazardous Substance" shall mean any substance that is now or may
become regulated or governed by any Environmental Laws, or the presence of which
requires investigation under any Environmental Laws, or any flammable,
explosive, corrosive, reactive, carcinogenic, radioactive material, hazardous
waste, toxic substance or related material and any other substance or material
defined or designated as a hazardous or toxic substance, material or waste by
any Environmental Laws and shall include, without limitation:
2.4.1 Those substances included within the definitions of
"hazardous substances", "hazardous materials", "toxic substances" or
"solid waste" in CERCLA, RCRA and the Hazardous Materials
Transportation Act, 42 U.S.C. Section 1801 et seq., and in the
regulations promulgated pursuant to said laws;
2.4.2 Those substances listed in the United States Department
of Transportation Table (49 CFR 172. 101 and amendments thereto) or by
the Environmental Protection Agency (or any successor agency) as
hazardous substances (40 CFR Part 302 and amendments thereto); and
2.4.3 Any material, waste or substance which is or contains
(A) petroleum hydrocarbons, (B) asbestos, (C) polychlorinated biphenyis
or (D) designated as a "hazardous substance" pursuant to Section 311 of
the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. ss.
1321) or listed pursuant to Section 307 of the Clear Water Act (33
U.S.C. ss. 1317).
2.5 "Person" shall mean any individual, partnership, corporation and/or
other entity.
2.6 Terms defined in the recitals hereto shall have the meaning
ascribed to such terms in the recitals.
ARTICLE III
MODIFICATION OF LOAN DOCUMENTS
Effective as of December 15, 1996, the Loan Documents are modified as
provided herein.
3.1 Principal Balance. Borrower, Guarantor and Lender hereby
acknowledge and agree that the outstanding principal balance of the Note as of
December 15, 1996 is TWO MILLION ONE HUNDRED AND EIGHTY FOUR THOUSAND, THREE
HUNDRED TWENTY-ONE AND 57/100 DOLLARS ($2,184,321.57)
<PAGE>
(the "Principal Balance"), and Borrower expressly acknowledges an indebtedness
to Lender of the Principal Balance, plus interest and other costs and fees and
provided herein and the Loan Documents.
3.2 Interest Rate. From and after December 15, 1996, until an event of
default or maturity, interest shall accrue on the Principal Balance at the rate
of TWELVE PERCENT (12.0%) per annum, calculated on the basis of 360 days being a
year, or, at the election of Lender, the actual number of days in the applicable
calendar year in which accrued.
3.3 Default Interest. From and after the occurrence and during the
pendency of a default under the Loan Documents, and from and after the maturity
of the Notes, whether by acceleration or otherwise, interest shall accrue on the
amount of the Principal Balance outstanding hereunder at the Maximum Rate (as
hereinafter defined).
3.4 Payment Schedule. The Note is hereby modified effective
as of December 15, 1996 by modifying the payment schedule as follows:
3.4.1 Borrower shall pay interest only on the 15th of every
month. Lender will send Borrower each month an invoice for the current
interest due.
3.4.2 Borrower shall pay all outstanding principal and
interest on, and the loan represented by the Notes shall mature on June
30, 1998 (the "Maturity Date").
3.4.3 Borrower shall pay $10,000 as a principal reduction to
lender on June 15, 1998.
3.5 Application of Payments. Payments received by the Lender pursuant
to the terms of the Note, as amended hereby, shall be applied in the following
manner: first, to the payment of all expenses, charges, costs and fees incurred
by or payable to Lender and for which Borrower is obligated pursuant to the
terms of the Loan Documents; second, to the payment of all interest accrued to
the date of such payments; and third, to the payment of principal.
Notwithstanding anything to the contrary contained herein, after the occurrence
and during the continuation of an event of default under any of the Loan
Documents, as amended hereby, all amounts received by Lender from any party
shall be applied in such order as Lender, in its sole discretion, may elect.
3.6 Fee. In addition to the other payments due hereunder, Borrower
covenants and agrees to pay Bank on the date hereof, a commitment fee in the
amount of $10,921.61.
<PAGE>
ARTICLE IV
DEFAULT; WAIVER OF CLAIMS
Borrower hereby acknowledges and agrees that, at the date hereof:
4.1 Borrower is in default under the Loan Documents, provided, that
such default will be waived upon execution of the Agreement;
4.2 Lender has properly perfected its lien, mortgage,
assignments, security interest and other interests in and to the Property;
4.3 Borrower hereby waives and releases any and all notices, cure
periods, defenses, setoffs and claims which Borrower may be entitled to or may
raise against Lender or any other party arising out of the Loan Documents, the
administration of the Loan Documents, or any oral or written correspondence or
transactions in connection with the Loan Documents prior to the execution of
this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO THE MODIFICATION
This Agreement is subject to Borrower's and Guarantor's satisfaction of
the following conditions precedent, or Lender's written waiver thereof:
5.1 At Lender's request, Borrower shall, at borrower's sole cost and
expense, cause the Title Company, which shall be acceptable to Lender, in its
sole discretion, to issue an endorsement to Lender's prior title insurance
policy insuring Lender's first lien on any immovable (real) property
constituting the Property, subject only to such exceptions to title as Lender
may approve ('Permitted Exceptions");
5.2 Borrower shalt, at Borrower's sole cost and expense, cause a search
and update of the relevant Uniform Commercial Code records to be conducted,
which search shall show that the Lender holds a first priority security interest
in the movable (personal) property constituting the Property, and Borrower shall
execute any and all Financing Statements required by Lender in connection with
this Agreement and the modification of the Loan Documents;
5.3 Upon Lender's request, Borrower and Guarantor shall provide Lender
with financial statements for Borrower, Guarantor and for the Business, prepared
according to past practice internally or by an independent certified public
accountant, for the last three calendar years;
5.4 Upon Lender's request, Borrower shall provide Lender with a pro
forma projection of income and expenses for the Business for the time period
between the date of this Agreement and the Maturity Date set forth herein;
5.5 Borrower shall pay Lender its, costs and expenses in connection
with this Agreement including, without limitation, reasonable attorneys' fees;
5.6 Borrower and Guarantor shall execute, acknowledge and deliver to
Lender this Agreement, any letter instructions to the Title company and any
other documents or instruments required by the Lender in connection with the
loan modification contemplated hereby;
5.7 Lender shall have received any opinion of counsel required by
Lender, in its sole discretion;
5.8 Borrower shall, in accordance with all applicable state, federal
and local regulations, properly
<PAGE>
maintain all asbestos-containing material at, in or on the Property and shall
implement an appropriate operation and maintenance program for such
asbestos-containing material in order to prevent any portion of such
asbestos-containing material from becoming friable or airborne; and
5.9 Borrower and Guarantor shall provide Lender with such other
information as Lender may reasonably request relating to the Business.
<PAGE>
ARTICLE VI
REPRESENTATION, WARRANTIES AND COVENANTS OF BORROWER AND
GUARANTOR
Borrower and Guarantor hereby represent, warrant and covenant to Lender
that:
6.1 Borrower and Guarantor: (i) are duly formed and validly existing
and in good standing under the laws of the State of Louisiana, Texas and
Tennessee, as applicable; and (ii) have all requisite power, authority, and
capacity to enter into this Agreement and to perform their obligations under
this Agreement and the Loan Documents, as modified hereby. As of the date
hereof, this Agreement and any other documents executed in connection herewith
have been duly executed, acknowledged (where necessary) and delivered to Lender
by Borrower and Guarantor. Borrower and Guarantor have delivered to Lender a
Certificate of Good Standing in the state where Borrower and Guarantor are
incorporated, and a certified copy of their bylaws, articles of incorporation
and incumbency certificate;
6.2 This Agreement and all of the obligations of Borrower and Guarantor
hereunder are the legal, valid and binding obligations of Borrower and
Guarantor, enforceable in accordance with the terms of this Agreement;
6.3 The execution and delivery of this Agreement and the performance of
its obligations hereunder by Borrower and Guarantor will not conflict with any
provision of any law or regulation to which Borrower or Guarantor is subject, or
conflict with, result in a breach of or constitute a default under any of the
terms, conditions or provisions of any agreement or instrument to which Borrower
or Guarantor is a party or by which they are bound, or any order or decree
applicable to Borrower or Guarantor, or result in the creation or imposition of
any lien on any of Borrower's or Guarantor's assets or property, which would
materially and adversely affect the ability of Borrower or Guarantor to carry
out their obligations under this Agreement and the Loan Documents, as modified
herein;
6.4 There is no action, suit or proceeding pending or threatened
against Borrower, Guarantor or the Property in any court or by or before any
other government agency or instrumentality which would materially and adversely
affect the ability of Borrower or Guarantor to carry out its obligations under
this Agreement and the Loan Documents, as modified herein. The execution and
delivery of this Agreement will not result in a conflict with or violation of
any law, rule, regulation, judgment, or court order affecting Borrower,
Guarantor or the Property;
6.5 Borrower and/or Guarantor hold fee simple title to the Property
free and clear of all encumbrances, liens, claims, leases or tenancies, except
the Permitted Exceptions and the Leases;
6.6 Ile information and documents to be furnished pursuant to Article V
hereof will be true, correct, accurate and complete in all material respects;
6.7 Borrower and/or Guarantor have not received and do not know of any
notice or demand with respect to any claim, liability or cause of action arising
out of any facts or circumstances connected with the Property, which is not
fully covered under its insurance policies;
6.8 Borrower and/or Guarantor have not received any notice: (i) of any
violation of any zoning, building, health or similar laws, ordinances, rules or
regulations affecting the Business; or (ii) from any insurance company or
governmental agency of any defects or inadequacies in the Business which would
adversely affect the insurability of the Business or materially increase the
cost of insuring the Business beyond that which is customarily charged for
similar businesses in the vicinity of the Business used for a similar purpose;
<PAGE>
6.9 All real estate taxes and all tax reports of Borrower and/or
Guarantor required by law to be filed have been duly filed and all taxes,
assessments, fees and other governmental charges relating to the Property or any
of Borrower's and/or Guarantor's properties, assets, income or franchises which
are due and payable have been paid;
6.10 (i) To the best of Borrower's and Guarantor's knowledge, the
Property does not contain any Hazardous Substance; (ii) to the best of
Borrower's and Guarantor's knowledge, Borrower and/or Guarantor have not
conducted or authorized the generation, transportation, storage, treatment, or
disposal at the Property, of any Hazardous Substance; (iii) Borrower and/or
Guarantor are not aware of any pending or threatened litigation or proceedings
before any administrative agency in which any person or entity alleges the
presence, release, threat of release, or placement on or in the Property of any
Hazardous Substances; (iv) Borrower and/or Guarantor have not received any
notice of and has no actual or constructive knowledge that any governmental
authority or any employee or agent thereof is investigating whether there is, or
has determined that there has been (1) a presence, release, threat of release,
or placement on or in the Property of any Hazardous Substance, or (2) any
generation, transportation, storage, treatment or disposal at the Property of
any Hazardous Substance; and (v) there have been no communications or agreements
between Borrower and/or Guarantor and any governmental authority or agency
(federal, state or local) or any private entity, including but not limited to,
any prior owners of the Property, relating in any way to (1) the presence,
release, threat of release, or placement on or in the Property of any Hazardous
Substance, or (2) any generation, transportation, storage, treatment, or
disposal at the Property of any Hazardous Substance;
6.11 Borrower and Guarantor: (i) have no intention of filing any
voluntary petition or initiating any voluntary proceedings under the Federal
Bankruptcy Code or similar state legislation or otherwise to obtain relief from
creditors in any reorganization, insolvency, receivership or similar
proceedings, and (ii) have no knowledge of any threatened involuntary bankruptcy
proceedings affecting Borrower and/or Guarantor;
6.12 This Agreement and the transactions contemplated thereby do not
constitute a "fraudulent conveyance", "fraudulent consequence" or "fraudulent
transfer" as defined by the laws of the United States, Louisiana, Texas or
Tennessee;
6.13 The security interests, liens and other encumbrances created by
the Loan Documents and the lien of any mortgages or deeds of trust listed as a
Security Document are valid and subsisting and shall remain an enforceable and
valid lien against the Property;
6.14 The condition (financial or otherwise) of the Business or any part
thereof, whether or not insured against, has not been materially adversely
affected in any manner since October 31, 1996, as shown on the income and
expense statement of such date for the Property, which statement was true and
correct as of the date thereof,
6.15 Except for the defaults of Borrower and/or Guarantor which will be
cured by this Agreement, no event has occurred or is continuing and no condition
exists which constitutes or which after notice or lapse of time, or both, would
constitute an event of default by Borrower, Guarantor or Lender under the Loan
Documents, as modified hereby;
6.16 The fee paid to any Guarantor for management of the Business in
any year does not exceed $75,000.00 for the Business of RSG or $75,000.00 for
the Business of SGBL;
6.17 Borrower aqd/or Guarantor currently have in force insurance
policies covering the Property which comply with the property insurance
requirements set forth in the Loan Documents;
6.18 Borrower and/or Guarantor do not have the right to disbursement of
additional loan proceeds or future advances with respect to the loan represented
by the Loan Documents;
<PAGE>
6.19 As of the date hereof, the Loan Documents, as amended hereby and
any other documents executed in connection herewith constitute all of the
documents and agreements evidencing, securing, governing or otherwise relating
to the loan represented by the Loan Documents prior to the date hereof. Without
limitation on the foregoing, there has been no modification, extension, release,
waiver, assumption, or supplement to or of the Loan Documents, with the
exception of the amendments and the provisions being effected by this Agreement;
6.20 The loan represented by the Loan Documents is not
cross-collateralized or cross-defaulted with any other loan;
6.21 Borrower shall provide to Lender on or before the 20th of each
month during the term of the loan represented by the Loan Documents a true and
correct income and expense statement for the Property for the calendar month
ended immediately prior to such date, in form and substance satisfactory to
Lender and certified to be true and correct by Borrower;
6.22 All representations and warranties contained in this Article VI or
elsewhere in this Agreement shall survive the closing of the restructuring
transactions contemplated herein;
6.23 Guarantor represents and warrants that it has pledged and granted
(and does hereby grant) a continuing security interest to Lender, its successors
and assigns, in all the outstanding shares of stock in RSG and SGBL to secure
the loan represented by the Loan Documents and all other obligations to Lender,
its successors and assigns. All outstanding shares of stock in RSG & SGBL have
been delivered to Lender, and the pledge is noted on the books and records of
RSG & SGBL;
6.24 Guarantor shall this date execute a Guaranty Agreement in favor of
Lender, guaranteeing all obligations of Borrower hereunder and under the Loan
Documents.
ARTICLE VII
RELEASE
7.1 Borrower, and Guarantor and their successors and assigns each
hereby forever release, discharge and acquit the Lender, its parents, subsidiary
and affiliate corporations of each of the foregoing, and each of the respective
officers, directors, shareholders, agents, employees, representatives,
consultants, attorneys, fiduciaries, servants, predecessors, successors, heirs,
and assigns of each of the foregoing (collectively, the "Released Parties"), of
and from any and all claims, demands, obligations, liabilities, indebtedness,
breaches of contract, breaches of duty or any relationship, acts, omissions,
misfeasance, malfeasance, cause or causes of action, debts, sums of money,
accounts, compensations, contracts, controversies, promises, damages, costs,
losses and expenses, of every type, kind, nature, description or character, and
irrespective of how, why, or by reason of what facts, arising heretofore or now
existing, of whatever kind or nature, whether known or unknown, suspected or
unsuspected, liquidated or unliquidated, each as though fully set forth herein
at length, which in any way arise out of, are connected with or relate to (i)
the loan represented by the Loan Documents; (ii) the Loan Documents; (iii) this
Agreement; (iv) the Financing Statement; or (v) any action or inaction of any
Person or entity released hereunder with respect to the loan represented by the
Loan Documents, the Loan Documents or the is Agreement.
7.2 In connection with foregoing release, Borrower and Guarantor hereby
agree, represent and warrant that they realize and acknowledge that factual
matters now unknown to it may have given or may hereafter give rise to causes
and action, claims, demands, debts, controversies, damages, costs, losses, and
expenses which are presently unknown, unanticipated and unsuspected, and it
further agrees, represents and warrants that this release has been negotiated
and agreed upon in light of that realization and that it nevertheless hereby
intends to release, discharge and acquit the parties set forth hereinabove from
any such unknown causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which are in any way related to: (i) the
loan represented by the Loan Documents; (ii) the Loan Documents; (iii) this
Agreement; (iv) the Financing Statement; and (v) any
<PAGE>
action or inaction of any Person or entity released hereunder with respect to
the loan represented by the Loan Documents, the Loan Documents or this
Agreement.
ARTICLE VIII
NO TRANSFER OF CLAIMS
Borrower and Guarantor represent and warrant that neither Borrower nor
Guarantor has heretofore assigned or transferred, or purported to assign or to
transfer, to any Person any matter released hereunder or any portion thereof or
interest therein, and Borrower and Guarantor agree to indemnify, defend and hold
the Released Parties harmless from and against any and all claims based on or
arising out of any such assignment or transfer or purported assignment or
transfer.
ARTICLE IX
CONSENT OF GUARANTOR
Guarantor hereby consents to the modifications contained in this
Agreement and acknowledges that the Guaranty dated December 14, 1989, between
Guarantor and NCNB Texas National Bank, N.A., is not affected by or modified by
this Agreement, and remains in full force and effect, enforceable in favor of
Lender, its successors and assigns, in accordance with its terms.
ARTICLE X RATIFICATION OF
PLEDGE
10.1 Borrower acknowledges, represents and warrants that pledge of that
certain Collateral Mortgage Note dated December 14,1989 by Borrower in the
original principal amount of $2,000,000.00 ("NCNB Collateral Note") on December
14,1989, pursuant to that certain Act of Pledge of Collateral Mortgage Note
dated December 14,1989, as restated and amended pursuant to that certain Amended
and Restated Act of Pledge of Collateral Mortgage Note dated in January, 1990 as
amended by that certain First Amendment to Amended and Restated Act of Pledge of
Collateral Mortgage Note dated effective as of September 30,1995 (collectively
the 'NCNB Pledge Agreement") was a pledge granted in favor of NCNB Texas
National Bank, its successor and assigns, including Lender and that such pledge
was granted to secure not only all present and future obligations of Borrower,
its successors or assigns in favor or and/or advances to Borrower, its
successors or assigns by NCNB Texas National Bank, but also all present and
future obligations of Borrower its successors or assigns in favor of, and/or
advances to Borrower, its successors or assigns, by the successors and assigns
of NCNB Texas National Bank.
10.2 Borrower acknowledges, represents and warrants that the security
interest granted in that certain Collateral Mortgage Note dated November 4,1993
by Borrower in the original principal amount of $500,000.00 (the "FDIC
Collateral Note"), pursuant to that certain Act of Pledge of Collateral Mortgage
Note (Security Agreement) dated in November, 1993, (the 'FDIC Pledge Agreement")
was a security interest granted in favor of the Federal Deposit Insurance
Corporation (die "FDIC"), its successors and assigns, including Lender, and that
such security interest was granted to secure not only all present and future
obligations of Borrower, its successors or assigns in favor of and/or advances
to Borrower, its successors or assigns, by the FDIC, but also all present and
future obligations of Borrower, its successors or assigns in favor of, and/or
advances made to Borrower, its successors or assigns, by the successors or
assigns of the FDIC.
10.3 Borrower acknowledges that: (i) Lender and it predecessors in
title have held the NCNB Collateral Note and FDIC Collateral Note (collectively,
the "Collateral Notes"); (ii) the Collateral Notes have been continuously held
and remain in possession of Lender and its predecessors; (iii) pursuant to
applicable Louisiana law, including without limitation, Louisiana Civil Code
Article 3158, the obligations of Borrower, its successor or assigns under the
pledge of the NCNB Collateral Note are entitled to retroactive ranking back to
the date of the original pledge, December 14,1989, (iv) pursuant to applicable
Louisiana law, including without limitation, Chapter
<PAGE>
9 of the Louisiana Commercial laws (La. R.S. 10:9-101 et seq.), the obligations
of Borrower, its successors or assigns, secured by the security interest granted
in the FDIC Collateral Note are entitled to retroactive ranking back to the date
of the granting of the original security interest, November 4, 1993.
10.4 Borrower hereby ratifies, confirms and acknowledges the pledge of
the NCNB Collateral Note and the security interest granted in the FDIC
Collateral Note, and, in addition to, but not in lieu of the foregoing, hereby
grants a continuing security interest in the Collateral Notes in favor of
Lender, its successors and assigns, in order to secure any and all present or
future obligations of Borrower and/or Guarantor, their successors or assigns in
favor of Lender its successors or assigns.
10.5 Borrower further acknowledges the rights of Lender and the rights
of Lender's successors and assigns to enforce the Collateral Notes and all
accessories or accessory obligations thereto.
ARTICLE XI
MISCELLANEOUS
11.1 Lender's Representations and Warranties. Lender represents and
warrants that it is the holder and owner of the Note.
11.2 Legal Opinion. Simultaneously with the execution of this
Agreement, if requested by Lender, Lender shall have received from legal counsel
retained by Borrower and acceptable to Lender an opinion of counsel ("Legal
Opinion") covering the following matters: (a) the due authorization of this
Agreement and any other documents executed in connection herewith in accordance
with their respective terms; (b) the validity and enforceability of this
Agreement; (c) compliance with applicable usury laws; (d) the due organization
and valid legal existence of Borrower and Guarantor; (e) the existence of, or
the nonexistence of, any requirement for any consent of any governmental
authority in connection with the execution, delivery or performance of this
Agreement and any other documents executed in connection herewith, (f) the
execution of this Agreement will not materially impair the security for the loan
represented by the Loan Documents (including, but not limited to, the continued
validity and enforceability of any guaranty given as security for the loan
represented by the Loan Documents) and (g) such other matters incident to the
transaction contemplated herein as Lender may reasonably request.
11.3 Usury Sayinzs Clause. Notwithstanding anything to the contrary
contained elsewhere in this Agreement, Borrower, Guarantor and Lender hereby
agree that all agreements between them under this Agreement and with respect to
the loan represented by the Loan Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
Lender for the use, forbearance, or detention of the money loaned to Borrower,
or for the performance or payment of any covenant or obligation contained herein
or therein, exceed the maximum rate of interest under applicable law ('Maximum
Rate"). If from any circumstance whatsoever, fulfillment of any provision of
this Agreement at the time performance of such provisions shall be due shall
involved transcending the limit of validity prescribed by law, then,
automatically, the obligation to be fulfilled shall be reduced to the limit of
such validity, and if from any such circumstance Lender should ever receive
anything of value deemed interest by applicable law which would exceed the
Maximum Rate, such excessive interest shall be applied to the reduction of the
principal amount owing with respect to the Loan Documents or on account of the
indebtedness secured by the Loan Documents and not to the payment of interest,
or if such excessive interest exceeds the unpaid principal balance of the loan
represented by the Loan Documents and such other indebtedness, such excess shall
be refunded to Borrower. All sums paid or agreed to be paid to Lender for the
use, forbearance or detention of the loan represented by the Loan Documents and
other indebtedness of Borrower to Lender shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the actual rate of
interest on account of all such indebtedness is uniform throughout the actual
term of the loan represented by the Loan Documents or does not exceed the
Maximum Rate throughout the entire term of the loan represented by the Loan
Documents, as appropriate. By execution of this Agreement,
<PAGE>
Borrower acknowledges that it believes the loan represented by the Loan
Documents to be non-usurious and agrees that, if at any time Borrower should
have reason to believe that the loan represented by the Loan Documents is in
fact usurious, Borrower will give Lender notice of such condition, and Borrower
agrees that Lender shall have ninety (90) days after receipt of such notice in
which to make appropriate refund or other adjustment in order to correct such
condition if in fact such condition exists. The terms and provisions of this
Section 11.3 shall control every other provision of this Agreement and all other
agreements between Borrower, Guarantor and Lender.
11.4 Further Assurances. Borrower and Guarantor further assure the
Lender that Borrower and/or Guarantor will execute such other documents as may
be required by Lender, in its sole discretion, to complete this Agreement or to
accomplish the intended purpose of this Agreement. 11.5 No Waiver. Borrower and
Guarantor acknowledge that by accepting payment of any sums set forth herein to
be paid by Borrower, Lender does not waive in any manner Lender's right to
require prompt payment when due of all other sums evidenced by the Note and
secured by the Loan Documents, as modified herein, and to declare a default for
failure of Borrower to comply fully with the terms and conditions of the Note
and the Loan Documents. A waiver of any default of Borrower under the Note or
the Loan Documents, as modified, shall not be or be deemed to be a waiver of any
other or similar default by Borrower after such waiver.
11.6 Notices. Any notice, demand, request or other communication which
any party hereto may be required or may desire to give under this Agreement
shall be in writing and shall be deemed to have been property given (a) if hand
delivered (effective upon delivery), (b) if mailed (effective three days after
mailing) by United States registered or certified mail, postage prepaid, return
receipt requested, (c) if sent by a nationally recognized overnight delivery
service (effective one day after delivery to such courier), or (d) if sent by
facsimile (effective upon confirmation of transmission); provided that the
notice is also sent and received by U.S. Mail, in each case addresses as
follows:
If to Lender: First Savings Bank, FSB
301 S. Center Street
Arlington, Texas 76010
Attention: Richard J. Driscoll
Facsimile: (817) 276-0451
If to Borrower: RadioSunGroup of Bryan/College Station, Inc.
#26 Manor East Mall
701 Villa Maria
Bryan, Texas 77805
Attention: John W. Biddinger
Facsimile: (409) 823-5597
SunGroup Broadcasting of
Louisiana, Inc.
725 Austin Place
Shreveport, Louisiana 71101
Attention: John W. Biddinger
Facsimile: (318) 227-8020
If to Guarantor: SunGroup, Inc.
2201 Cantu Court
Suite 102A
Sarasota, Florida 34232
Attention: John W. Biddinger
Facsimile: (941) 378-5449
<PAGE>
or such other address which any party entitled to receive notice hereunder
designates by notice to the others.
11.7 Successors and Assigns. This Agreement and all provisions hereof,
including but not limited to all representations and warranties made herein,
shall extend to and be binding upon and inure to the benefit of the respective
heirs, legatees, legal representatives, successors and assigns of the parties
hereto.
<PAGE>
11.8 Waiver of Jury.. LENDER, GUARANTOR AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS EACH MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER,
GUARANTOR OR BORROWER WITH RESPECT THERETO. THIS PROVISION SETS FORTH THE MUTUAL
DESIRE OF LENDER, GUARANTOR AND BORROWER TO AVOID DELAYS IN THE RESOLUTION OF
DISPUTES INVOLVING THIS AGREEMENT. BORROWER AND GUARANTOR ACKNOWLEDGE THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR LENDER TO ENTER INTO THIS AGREEMENT.
11.9 Modification of Other Loan Documents. The Loan Documents are
hereby modified in accordance with this Agreement. All references to a
particular Loan Document in the Loan Documents shall be deemed to refer to said
Loan Document as amended by this Agreement.
11.10 Attorneys' Fees. Borrower and/or Guarantor shall reimburse Lender
for all reasonable attorneys' fees and expenses, arising from and after the date
hereof, incurred by Lender in connection with the enforcement of Lender's rights
under this Agreement and each of the other Loan Documents, as modified hereby
including, without limitation, reasonable attorneys' fees and disbursements for
trial, appellate proceedings, out-of-court workouts and settlements or for
enforcement of rights under any state or federal statute, including, without
limitation, reasonable attorneys' fees incurred in bankruptcy and insolvency
proceedings such as in connection with seeking relief from stay in a bankruptcy
proceeding. Borrower s and Guarantor's reimbursement obligation shall be part of
the indebtedness secured by the Loan Documents.
11.11 Disclaimer of Novation, Extinguishment and Disch&=. Except as
expressly set forth herein, the parties hereto expressly disclaim any intent to
effect a novation or an extinguishment or discharge of any of the Borrower's
obligations under the Loan Documents. Except as expressly modified hereby, each
Loan Document remains in full force and effect and is hereby confirmed and
ratified in all respects.
11.12 Entire Agreement. This Agreement contains the entire agreement
between the parties relating to the transactions contemplated hereby, and all
prior or contemporaneous agreements, understandings, representations and
statements, oral or written, are merged herein. No modification or amendment of
this Agreement or any waiver of any provision hereof shall be effective, unless
the same is in writing signed by the party against whom enforcement of such
modification, amendment or waiver is sought.
11.13 Severability. If any of the provisions of this Agreement or the
application thereof to any persons or circumstances shall, to any extent, be
deemed invalid or unenforceable, the remainder of this Agreement and the
application of such provisions to persons or circumstances other than those as
to whom or which it is held invalid or unenforceable shall not be affected
thereby, and every provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
11.14 Voluntary Execution. Borrower and Guarantor have thoroughly read
and reviewed the terms and provisions of this Agreement and is familiar with the
same, have executed this Agreement voluntarily, in the absence of coercion or
duress, have been represented by counsel in the negotiation and delivery of this
Agreement, and understands the terms hereof and intends to be legally bound by
the same. Borrower and Lender have negotiated this Agreement at arms-length and
no provision is to be construed more strictly against one party than the other.
11.15 No Joint Venture. Nothing in this Agreement shall be construed as
creating a partnership, joint venture or any other relationship between
Borrower, Guarantor or the Lender.
<PAGE>
11.16 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana, without reference to any
principles of choice of laws or conflicts of laws.
11.17 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which together
shall constitute one original instrument.
THUS DONE AND PASSED, on the 12th day of January 1998, in the State of
Florida, County of Sarasota, City of Sarasota, in presence of the undersigned
Notary and the undersigned competent witnesses, who hereunto sign their names
with RSG and me after reading of the whole.
<PAGE>
WITNESSES:
X /s/ Lawrence A. Woods
X /s/ Robert N. Davies
RADIOSUNGROUP OF BRYAN/COLLEGE
STATION, INC.,
a Texas Corporation
By: /s/ John W. Biddinger
Name: John W. Biddinger
Title: President
(NOTARY SEAL)
/s/ Merily Bryson McFadden
THUS DONE AND PASSED, on the 12th day of January 1998, in the State of
Florida, County of Sarasota, City of Sarasota, in presence of the undersigned
Notary and the undersigned competent witnesses, who hereunto sign their names
with SGBL and me after reading of the whole.
WITNESSES:
X /s/ Lawrence A. Woods
X /s/ Robert N. Davies
SUNGROUP BROADCASTING OF LOUISIANA,
INC.,
a Louisiana Corporation
By: /s/ John W. Biddinger
Name: John W. Biddinger
Title: President
(NOTARY SEAL)
/s/ Merily Bryson McFadden
THUS DONE AND PASSED, on the 12th day of January 1998, in the State of
Florida, County of Sarasota, City of Sarasota, in presence of the undersigned
Notary and the undersigned competent witnesses, who hereunto sign their names
with Guarantor and me after reading of the whole.
WITNESSES:
X /s/ Lawrence A. Woods
X /s/ Robert N. Davies
SUNGROUP, INC.,
a Tennessee Corporation
By: /s/ John W. Biddinger
Name: John W. Biddinger
Title: President
(NOTARY SEAL)
/s/ Merily Bryson McFadden
THUS DONE AND PASSED, on the ___day of December 1996, in the State of
Texas, County of Tarrant, City of Arlington, in presence of the undersigned
Notary and the undersigned competent witnesses, who hereunto sign their names
with Lender and me after reading of the whole.
WITNESSES:
X /s/_____________________________
<PAGE>
X /s/_____________________________
FIRST SAVINGS BANK, FSB
By:
Name: Richard J. Driscoll
Title: President
____________________
NOTARY PUBLIC
Exhibit 10 (x)
W I T N E S S E T H:
WHEREAS, Mt. Pleasant is or soon will be authorized by the Federal
Communications Commission as the Licensee of radio broadcast station KALK-FM and
licensed to Winfield, Texas (hereinafter, the "Mt. Pleasant Station"); and
WHEREAS, Provider is authorized by the Federal Communications Commission as the
licensee of radio broadcast station KYKX-FM, licensed to Longview, Texas
(hereinafter, the "Provider Station"); and
WHEREAS, Mt. Pleasant desires that Provider provide Prograrnming (as hereinafter
defined) responsive to the needs, interests, issues, and desires of the Mt.
Pleasant Station' s community of license and service area, and Mt. Pleasant is
willing to devote substantially all of Mt. Pleasant Station's broadcast time to
such Programming, believing that Prograrnming provided by Provider on the Mt.
Pleasant Station will responsibly address those needs, interests, issues and
desires; and
WHEREAS, Provider desires to provide to Mt. Pleasant Prograrnming to be aired on
the Mt. Pleasant Station, subject to the terms and conditions set forth herein;
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
hereinafter set forth. and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Provider and Mt. Pleasant
hereby agree that
Definitions: The following terms shall, for the purposes of this Agreement, have
the meanings ascribed herein:
Programming. The term "Programming" shall mean the programs provided to the Mt.
Pleasant Station by Provider, as well as advertising for products and services,
other commercial advertising, and other material normally broadcast by FM
stations in the TTnitPH Rtstec
Commencement Date. The term "Commencement Date" shall be the date of approval of
the Asset Purchase AgrepSent by the FCC
Commission. The term "Commission" shall mean the Federal Communications
Commission
Term. The "Term" of this Agreement shall commence on the Commencement Date and
shall terminate on the earlier to occur of (i) the effective date of any
termination of this Agreement as provided herein; or (ii) ten (10) years from
the Commencement Date. 2. Time Brokerage. During the Term hereof, for the
consideration provided in paragraph 3 below, Mt. Pleasant hereby sells to
Provider substantially all of its broadcast time each day, provided that Mt.
Pleasant shall retain, without reduction in the consideration to be paid by
Provider to Mt. Pleasant, sufficient broadcast time to allow Mt. Pleasant to
present reasonable news, public affairs programming and public service
announcements necessary for the Mt. Pleasant Station to be responsive to the
needs, interests, issues and desires of its community of license and service
area. All contracts, advertising, agreements, purchase orders, and other similar
documents and instruments negotiated and executed by Provider in connection with
the foregoing on or after the Commencement Date shall be in the name of
Provider, provided that Provider shall not represent or warrant in any fashion
that Provider is the licensee of the Mt. Pleasant Station. During the Term, the
Programming to be provided by Provider shall be of quality sufficient to aid and
assist Mt. Pleasant in satisfying its obligation for the Mt. Pleasant Station to
be responsive to the needs, interests, issues and desires of its community of
license and service area, except to the extent that such Programming is provided
by Mt. Pleasant. The Programming provided by Provider for the Mt. Pleasant
Station shall include local news programming and public service announcements
relative to the Mt. Pleasant Station's community of license and service area.
Additionally, Provider shall provide to Mt. Pleasant on a quarterly basis, a
list of issues responsive programming aired on the Mt. Pleasant Station as part
of the Programming provided by Provider during the preceding quarter, so that
Mt. Pleasant may properly maintain its public file in accordance with all
Commission Rules and Regulations. 3. Payments. In consideration for the right
set forth in Section 2 hereof, Provider shall pay in cash to Mt. Pleasant the
sum of $7,000.00 per month, payable on the tenth day of each month. In order to
comply with FCC requirements of station ownership, Mt. Pleasant shall a have
maximum of two employees. The cost associated with those two employees will be
billed back monthly to the Provider. 3.1. Option to Purchase. In further
consideration of the rights set forth herein, Mt. Pleasant hereby grants
Provider the option to purchase all of the assets of the Mt. Pleasant Station at
any time during the term of this Agreement for the following prices:
$550,000 Year One
<PAGE>
$600,000 Year Two
$650,000 Year Three
$700,000 Year Four
$750,000 Years Five
$1,000,000 Through Year Ten
This option shall only be exercised upon the Commission's approval of the
sale of such assets and the transfer of the Mt. Pleasant Station license.
The assets of the Mt. Pleasant Station shall be sold free and clear of all
liens and encumbrances
4. Right to Reject or Preempt Programs. Notwithstanding the grant to
Provider by Mt. Pleasant of the right set forth in Section 2 hereof, Mt.
Pleasant shall retain full authority and power over the operation of the
Mt. Pleasant Station at all times during the term of this Agreement. Mt.
Pleasant shall retain control over the policies and operations of the Mt.
Pleasant Station, including specifically the Programming, and also
including, without limitation, the right to decide whether to accept or
reject any of the Programming (including but not limited to advertisements)
for broadcast by the Mt. Pleasant Station in advance of such broadcasts,
and the authority to preempt such Programming for other programming deemed
by Mt. Pleasant, in its sole discretion, to be of greater national,
regional, or local importance, or necessary to promote the needs,
interests, issues and desires of the Mt. Pleasant Station's community of
license and service area.
5. Facilities. Mt. Pleasant has acquired and installed, and will maintain
the necessary transmission equipment to deliver a maximum-strength signal
in accordance with the terms and specifications of its Commission license.
Mt. Pleasant shall be responsible, at its own cost, for insuring that the
Mt. Pleasant Station's transmitting facilities shall comply at all times
with the relevant rules, regulations and policies of the Commission and
other applicable governmental authorities. Mt. Pleasant shall (i) procure
and maintain adequate loss and liability insurance coverage for the Mt.
Pleasant Station's transmitting facilities, which costs shall be reimbursed
by Provider; (ii) pay all metered costs of electricity involved in the
operation of the Mt. Pleasant Station, and such costs and all lease and
rent costs during the term of this Agreement shall be billed to Provider;
(iii) bear all maintenance costs of the broadcast and other equipment owned
by Mt. Pleasant, and such costs during the term of this Agreement shall be
billed to Provider; (iv) pay all expenses and assessments related to the
broadcasting of the Programming, and such expenses and assessments during
the term of this Agreement shall be billed to the Provider on a monthly
basis; and (v) maintain its corporate existence in good standing, pay all
taxes and assessments owed by Mt Pleasant on account of its ownership of
its property or its operation of the Mt. Pleasant Station, including the
Mt. Pleasant Station's transmitting facilities, or on account of this
Agreement or otherwise. Provider's employees will take Mt. Pleasant
transmitter readings and "log" same accordingly on behalf of Mt. Pleasant,
and Provider's broadcast facilities may serve as the remote control point
for the transmitter of the Mt. Pleasant Station; and, Provider's employees
will also monitor the Mt. Pleasant Station's EBS system. In the event that
any Commission authorizations shall be required by either Mt. Pleasant or
Provider in order to enable Provider to originate and relay programs to the
Mt. Pleasant Station's transmitting facilities for broadcast by the Mt.
Pleasant Station, both parties shall cooperate in obtaining such
authorizations, the expenses to be borne by Mt. Pleasant. Mt. Pleasant
shall further retain the Mt. Pleasant Station's public file as now
established.
6. Force Maieure. Any failure or impairment of facilities or any delay or
interruption in broadcasting Programming, or failure at any time to furnish
facilities, in whole or in part, for broadcasting, due to acts of God,
strikes or threats thereof or force majeure or due to causes beyond the
control of Mt. Pleasant or Provider, shall not constitute a breach of this
Agreement and neither party shall be liable to the other for such failure,
impairment, delay or interruption or for payment for services not provided
as a result
Compliance with Laws. Provider hereby represents and warrants to Mt.
Pleasant that all of the Programming presented by Provider broadcast by
the Mt. Pleasant Station pursuant to this Agreement will comply with
all legal requirements, including but not limited to the Commission's
rules, regulations and policies. At least ninety (90) days before the
start of any primary or general election campaign, Provider will advise
Mt. Pleasant of f rate which Provider will charge for time to be sold
to candidates for public office and/or their supporters to make certain
that the rate charged is in conformance with the applicable law and
policy. Provider will provide to Mt. Pleasant access to all billing
records for air time sales in the ninety (90) day
<PAGE>
period preceding any primary or general election to insure that the
rates charged for political time is in conformance with all applicable
rules and policies. Within twenty-four (24) hours of any request to
purchase time on its Programming for or on behalf of a candidate for
public office or to support or urge the defeat of an issue on the
ballot in an election, Provider will immediately report the fact to Mt.
Pleasant for approval so that appropriate records can be kept with
respect to the request for such time and the disposition made thereof.
In order to enable Mt. Pleasant to fulfill its obligations under
Section 317 of Communications Act of 1934, as amended, Provider in
compliance with Section 508 of said Act, will, in advance of any
scheduled broadcast by Mt. Pleasant Station, disclose to Mt. Pleasant
any information of which Provider has knowledge, or which has been
disclosed to it, as to any money, service or other valuable
consideration which any person has paid or accepted, or has agreed to
pay or to accept, for the inclusion of any matter as a part of the
Programming or commercial matter to be supplied to Mt. Pleasant as
necessary to insure compliance with this provision. Commercial matter
with obvious sponsorship identifications shall not require disclosure
in addition to that contained in the commercial copy 8. Compliance with
Mt. Pleasant's Program Policies. Provider hereby agrees to conform any
Programming to be presented by Provider for broadcast by the Mt.
Pleasant Station to those program policies of Mt. Pleasant's that (i)
are presented by Mt. Pleasant to Provider, in writing, at least ten
(10) days prior to the date upon which such conformance is requested,
and (ii) are otherwise not in violation ovny law, rule, regulation.
ordinance, statute, policy, injunction, decree or other mandate of any
governmental authority or court
9. Response to Inquiries. Mt. Pleasant may, but shall not be required
to, cooperate with Provider in responding to any questions, comment, or
complaint from any third party (other than a governmental authority or
agent thereof) with respect to any Programming broadcast by the Mt.
Pleasant Station that was presented for such broadcast by Provider;
provided, however, Provider shall immediately forward to Mt. Pleasant
all written questions, comments or complaints. All responses to
questions, comments or complaints with respect to Programming are
subject to the approval of Mt. Pleasant. If requested by Mt. Pleasant,
Provider shall cooperate fully with respect to all responses to such
questions, comments or complaints
10 Profits and Losses; Licenses. Provider shall retain all revenue received
by it from sale of time broadcast on the Mt. Pleasant Station, and shall be
responsible for all costs in connection with the production of such
revenue. The Provider's liability, if any, based on this Agreement shall be
limited solely to the net income received by the Provider based on this
Agreement.
Control of the Mt. Pleasant Station. Nothing herein shall be construed
to grant to Provider the power or authority to control or direct the
operations of the Mt. Pleasant Station. Whenever on the premises of the
Mt. Pleasant Station, Provider's employees and agents shall at all
times be subject to the direction and control of Mt. Pleasant, its
designated employee and agents
Right to Use Programs. The right to use any programs (or portions
thereof) presented by Provider for broadcast by the Mt. Pleasant
Station hereunder, and the right to authorize such use in any manner or
in any_edia whatsoever, shall be and shall remain vested in Provider.
Mt. Pleasant shall not authorize, cause or permit, without Provider's
prior written authorization, any program or other material supplied to
Mt. Pleasant under this Agreement to be recorded, duplicated,
rebroadcast, or otherwise transmitted or used for any purpose other
than broadcasting by the Mt. Pleasant Station at the times specified by
Provider and in the community and service area to which the Mt.
Pleasant Station are licensed, as provided herein. Mt. Pleasant shall
broadcast all Programming (including all comrnercial advertising
material) without modification, addition or deletion, provided that
such Programming is not rejected or replaced pursuant to this
Agreement, at the hours and on the days specified in Provider's program
schedule
Disclosure of Information. The parties recognize and acknowledge that
during the term of this Agreement. Mt. Pleasant may from time to time
become privy to information belonging to Provider involving rates,
program information, client list(s), and other information which is
proprietary, valuable, special and unique to the business of Provider
(whether or not specifically related to the Mt. Pleasant Station), and
that the appropriation of such information by Mt. Pleasant would work
substantial and irreparable harm to Provider and its business. Mt.
Pleasant, therefore, shall not communicate or disclose at any time
during or after the
<PAGE>
term of this Agreement any information relating to client lists or
other proprietary information, or any part thereof, to any person,
firm, corporation, association, or other entity for any reason or
purpose whatsoever. In addition, Mt. Pleasant shall exercise its best
efforts to prevent the use of copyrighted material and trade secrets by
any person or entity which prior thereto has not been authorized by
Provider to use such information. Notwithstanding the foregoing, the
restrictions of this paragraph shall not apply to court ordered
subpoenas or requests from governmental agencies or courtsAfgr
information
Indemnification. Provider further represents and warrants that the
perfomming rights to all music contained in such Programming are
licensed by BMI, ASCAP, or SESAC, are in the public domain or are
controlled by Provider. Provider agrees to indemnify and hold Mt.
Pleasant, its shareholders, officers, agents, employees, successors and
assigns free and harmless from any and all claims, damages,
liabilities, costs or expenses, including attorneys' fees, incurred by
Mt. Pleasant or such persons by reason of the breach by Provider of
this representation and warranty, or any other representation,
warranty, covenant or agreement made by Provider in this Agreement, and
for all claims, damages, liabilities, costs or expenses, including
attomeys' fees arising from the broadcast of any Prograrnming or other
matter provided to Mt. Pleasant by Provider pursuant to this Agreement.
Provider shall defend at its own expense any action or proceeding
arising out of an alleged breach of the foregoing warranty. Mt.
Pleasant shall defend at its own expense any action or proceeding
arising out of any programming or other matter broadcast by the Mt.
Pleasant Station other than Programming or other matter provided to Mt.
Pleasant by Provider pursuant to this Agreement. Mt. Pleasant agrees to
indemnify and hold Provider, his officers, agents, employees,
successors and assigns, free and harmless from any and all claims,
damages, liabilities, costs or expenses, including attorneys' fees
incurred by Provider or such person by reason of any action or
proceeding arising out of any programming or other matter broadcast by
the Mt. Pleasant Station other than programming or other matter
provided to Mt. Pleasant by Provider pursuant to this Agreement.
Notwithstanding anything contained herein to the contrary, the
Provider's liability with respect to this Agreement shall be limited
solely to the net income derived from this Agreement
Non-Default Termination. This Agreement may be terminated by the parties,
as provided by this Section and its subpartZf no default has occurred and
without fault or further obligation to the other party in the following
circumstances:P. (a) License Termination. By Provider if the main license
for the Mt. Pleasant Station is terminated. for whatever reason, by the
Commission or other federal agency, and the order of termination has become
a Final Order.P. (b) Modification of Facilities. By Provider, if any action
by the Commission results in changes to the Mt. Pleasant Station's
facilities, including but not limited to, power, frequency, or hours of
operation, such changes occurring at any time during the period of this
Agreement so that the population residing within the predicted one MV/M
primary service contour of the Mt. Pleasant Station is reduced by five (5%)
percent or more. Changes in transmitter site, however, which do not result
in substantial changes in coverage area, will not create any entitlement to
modify or terminate this Agreement by Provider (c) Implications of Law. By
either party in the event that this Agreement or the involvement of either
party is deemed, preliminarily or otherwise, to be in material violation of
the Communications Act of 1934, as amended, or any rule, policy or order of
the Commission; provided, however, that upon being advised of any such
potential violation, free and harmless from any and all claims, damages,
liabilities, costs or expenses, including attorneys'fees incurred by
Provider or such person by reason of any action or proceeding arising out
of any programming or other matter broadcast by the Mt. Pleasant Station
other than programming or other matter provided to Mt. Pleasant by Provider
pursuant to this Agreement. Notwithstanding anything contained herein to
the contrary, the Provider's liability with respect to this Agreement shall
be limited solely to the net income derived from this AgreementNon-Default
Termination. This Agreement may be terminated by the parties, as provided
by this Section and its subpartZf no default has occurred and without fault
or further obligation to the other party in the following circumstances(a)
License Termination. By Provider if the main license for the Mt. Pleasant
Station is terminated. for whatever reason, by the Commission or other
federal agency, and the order of termination has become a Final Order(b)
Modification of Facilities. By Provider, if any action by the Commission
(b) Modification of Facilities. By Provider, if any action by the
Commission Modification of Facilities. By Provider, if any action by the
Commission Station is reduced by five (5%) percent or more. Changes in
transmitter site, however, which do not result in substantial changes in
coverage
<PAGE>
area, will not create any entitlement to modify or terminate this
Agreement by Provider(c) Implications of Law. By either party in the event
that this Agreement or the involvement of either party is deemed,
preliminarily or otherwise, to be in material violation of the
Communications Act of 1934, as amended, or any rule, policy or order of the
Commission; provided, however, that upon being advised of any such
potential violation, (a) Non-Pavment. Provider's failure to timely pay the
consideration provided for in Section 3 hereof. For the purposes of this
Agreement, Provider shall be timely in its payments only so long as they
are made within thirty (30) business days from the date due; b) Default in
Covenants. The default by either party in the observance or performance of
any covenant, condition, or agreement contained herein; o(c) Breach of
Representation. Should any material representation or warranty herein made
(i) by either party, or (ii) in any certificate or document furnished by
one party to the other pursuant to the provisions heresf, prove to have
been false or misleading in any material respect as of the time made or
furnished. Notwithstanding the foregoing, upon the occurrence of any Event
of Default as described above, the party in default shall have, at its
option, thirty (30) days from the date such default shall occur. to cure
said default, whereupon this Agreement shall continue in full force and
effect, with no right of termination or other recourse or remedy being then
available to the non-defaulting party as a result of such Event of Default
having occurred 17. Liabilities Upon Termination of this Asyreement.
Following termination of this Agreement for any reason, Provider shall not
be responsible for all liabilities, debts and obligations related to the
purchase of air time on any contracts or agreements written by the Provider
or Mt. Pleasant personnel including, without limitations, accounts payable,
barter agreements, trade-out agreements, for any debts or obligations of
Mt. Pleasant, including any federal and local tax liabilities 18. Services
Unique. The parties hereto agree that the facilities and services to be
provided under this Agreement are unique and cannot be readily purchased or
acquired in the open market, and for that reason, either party would be
irreparably damaged in the event of a material breach of this Agreement
Due Authority: No Conflict. Mt. Pleasant hereby warrants and represents
to Provider, and Provider hereby represents and warrants to Mt.
Pleasant, that each is legally qualified under the laws of the
State of its respective incorporation, formation or
qualifications, and that each is duly authorized by all necessary
corporate and/or legal action, to execute, deliver and perform its
respective obligations under this Agreement, and that such
execution, delivery and performance does not and will not viogte,
conflict with, constitute a default under, or upon the giving of
notice or the lapse of time, or both, constitute grounds for
terrnination of, or acceleration of obligations under, any
charter, certificate, by-law, agreement, contract, instrument,
indenture, franchise, lease. Iicense, permit, rule, regulation,
statute, ordinance, judgment, order, or decree to which such
warrantor is subject or by which it is bound. 20. Further
Assurances. Mt. Pleasant and Provider each shall execute and
deliver additional documents and take such other actions that the
other party may reasonably request for purposes of carrying out
the transactions contemplated by this Agreement 21. No Partnership
or Joint Venture. This Agreement is not intended to be and shall
not be construed as a Partnership or Joint Venture Agreement
between the parties. Except as otherwise specifically provided in
this Agreement, no party to this Agreement shall be authorized to
act as agent of or otherwise represent any other party to this
Agreement22. Successors and Assigns This Agreement shall be
binding upon, and shall inure to the benefit of, the parties
hereto and their respective successors and assigns 23.
Modification and Waiver. No modification or waiver of any
provision of thisAgreement shall be effective unless in writing
and signed by the party against whom such modification or waiver
is asserted, and no failure to exercise any right, power or
privilege hereunder shall operate to restrict the exercise of the
same right, power or privilege upon any other occasion nor to
restrict the exercise of any other right, power, or privilege upon
the same or any other occasion. Notwithstanding the foregoing, Mt.
Pleasant and Provider shall use their best efforts to modify this
Agreement from time to time, to comply with applicable rules and
regulations of the Commission respecting agreements of this
nature24. Attornev's Fees. In any act or proceeding brought to
enforce any rights or obligations hereunder, the prevailing party
sh_f be entitled to receive reimbursement for its reasonable
attorney's fees and related costs25. Governin(cent) Law. This
Agreement shall be governed by, construed, and interpreted in
accordance with, and enforceable under the laws of the State of
Texas26. Headings. The headings of the sections appearing in this
Agreement are inserted only for convenience of reference, and
shall not operate to alter the meaning of any provision
<PAGE>
appearing herein 27. Notices. Notices that are required or
permitted to be given pursuant to this Agreement shall be in
writing and shall be delivered by hand, or shall be mailed by
certified United States mail or a national express service,
postage prepaid, to the parties at the addresses shown below or at
such other addresses as the parties may provide to each other in
accordance with the provisions of this Section:
To Provider: RADIOSUNGROUP OF TEXAS, INC.
Attention: Mr. Ed Cearley
1618 Judson Road
Longview, Texas 75601
To Mt. Pleasant MT. PLEASANT RADIO, INC.
2201 Cantu Court Suite 102A
Sarasota, Florida 34232-6254
(a) Alternate Addresses. Notice, as provided by this Section, may be given to
any other person or party, as any party hereto may in the future designate in
writing, upon due notice to the other party(ies).
(b) Date of Notice, Action. The postal receipt for deposit with the United
States Mail or courier service specified herein shall establish the date of such
notification or communication. If any notification, communication or action is
required or permitted to given or taken within a certain period of time and the
last date for doing so falls on a Saturday, Sunday, a federal legal holiday, or
legal holiday by law in the State of Texas, the last day for such notification,
communication or action shall be extended to the first date thereafter which is
not a Saturday, Sunday, or such legal holiday.
28. Entire Agreement. This Agreement sets forth the entire understanding between
Mt. Pleasant and Provider with respect to the subject matter hereof, and there
are not other agreements, representations, warranties, or understandings, oral
or written, with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representative to execute this Agreement as of the date and year first above
written.
MT. Pleasant Radio, Inc.
By: /s/ John W. Biddinger
President
RADIOSUNGROUP OF TEXAS, Inc.
By: /s/ Edgar C. Cearley, III
Vice President, General Manager
Personally appeared before me, the undersigned, a Notary Public within and for
said State and County, duly commissioned and qualified, , with whom I am
personally acquainted, or proved to me zrrXhe basis of satisfactory evidence,
and who, upon oath, acknowledged himself to be the (_ of MT. PLEASANT RADIO,
INC., a corporation, the within named bargainor, and that he as such, being
authorized to do so, executed the foregoing instrument, for the purposes therein
contained by signing the name of the corDoration bv himself as such officer.P.
Witness my hand seal at office this, 1997.
My Commission Expires: Personally appeared before me, the undersigned, a Notary
Public within and for said State and County, duly commissioned and qualified, ,
with whom I am personally acquainted, or proved to me on the basis of
satisfactory evidence, and who, upon oath, acknowledged himself to be the \)ice
<PAGE>
()_eS i derzt of RADIOSUNGROUP OF TEXAS, INC., a corporation, the within named
bargainor, and that he as such, being authorized to do so, executed the
foregoing instrument, for the purposes therein contained by signing the name of
the corporation by himself as such officer. witness my hand seal at office this
1997.P. _a__P.
Exhibit 10 (y)
CANCELED
SECURED PROMISSORY NOTE
$800,000.00 Nashville, Tennessee December 24, 1997
- -----------
CANCELED
FOR VALUE RECEIVED, RADIOSUNGROUP OF TEXAS, INC. ("Maker"), promises to
pay to the order of Young Investments Company (a Nevada Partnership), the sum of
Eight Hundred Thousand and No/100 Dollars ($800,000.00), together with all
interest thereon at the fixed rate of TEN Percent (10%) per annum. Accrued
interest shall be due and payable on January 31, 1998 and on the final day of
each successive calendar month thereafter. Provided, however, on June 30, 1998,
all principal and interest then unpaid shall be finally due and payable.
All amounts due under this Note are payable at par in lawful money of
the United States of America, at such place as the holder hereof (hereinafter
"Holder") may direct.
A default shall occur under this Note if Maker fails to make the
payment required hereunder when due (time is of the essence hereof); or if Maker
becomes insolvent, or if Maker files bankruptcy or receivership proceedings or
has such proceedings filed against it; or if any property of Maker is subjected
to attachment, execution or other process; or if a default occurs under any
collateral document securing the indebtedness evidenced by this Note.
Upon the occurrence of a default, as defined above. Holder may, at its
option, declare all principal and interest provided for under this Note, and any
other obligations of Maker to Holder, to be presently due and payable, and
Holder may enforce any remedies available to Holder under any documents securing
or evidencing, debts of Maker to Holder. Holder may waive any default before or
after it occurs and may restore this Note in full effect without impairing the
right to declare it due for a subsequent default. Following default, interest
shall accrue on the principal balance hereof at the maximum lawful rate.
Privilege is reserved to prepay this Note at any time. Provided, however, if
this Note is prepaid, regardless of the date of prepayment, such prepayment
shall be accompanied by such additional sums as may be required to ensure that
Holder receives a full six months interest on this Note. For example, if this
Note is prepaid on February 1, 1998 (and assuming the regular interest payment
was made as scheduled on January 31, 1998), the prepayment shall be accompanied
by an additional five months of interest as if the Note were paid in full on its
maturity date of June 30, 1998.
Maker and all sureties, guarantors, endorsers and other parties to this
instrument hereby consent to any and all renewals, waivers, modifications, or
extensions of time (of any duration) that may be granted by Holder with respect
to this Note and severally waive demand, presentment, protest, notice of
dishonor, and all other notices which might otherwise be required by law. Holder
may release collateral securing this Note or parties liable therefor, in its
sole discretion.
<PAGE>
Maker's performance under the terms of this Note is secured by, and
Maker hereby grants Holder a security interest in all of Maker's presently owned
and hereafter acquired personal property and fixtures including all accounts
receivable, equipment, goods, contract rights, general intangibles, furniture
and other property of Maker.
Maker and all sureties, guarantors, endorsers and other parties hereto
agree to pay reasonable attorneys' fees and all court and other costs that
Holder may incur in the course of efforts to collect the debt evidenced hereby
or to protect Holder's interest in any collateral securing the same.
If any provision of this Note should for any reason be invalid or
unenforceable, the other provisions hereof shall remain in full effect.
Words used herein indicating gender or number shall be read as context
may require.
The provisions of this Note may be amended or waived only by instrument
in writing signed by the Holder and Maker hereof and attached to this Note.
RADIOSUNGROUP OF TEXAS, INC.
By: /s/ John W. Biddinger
----------------------------
John W. Biddinger
Chairman & President
<PAGE>
For good and valuable consideration, SunGroup, Inc. hereby guarantees to Holder
the timely payment and performance of this Note. SunGroup, Inc.'s guarantee of
this Note is absolute and unconditional. SunGroup, Inc.'s guarantee of the
attached Note is irrevocable. This guarantee constitutes a guarantee of payment
and performance and not of collection.
Executed this 29th day of December, 1997.
SunGroup, Inc.
By: /s/James A. Hoetger
--------------------------
James A. Hoetger
Vice President/Chief Financial Officer
Exhibit 10(z)
NOTICE: (a copy this notice is filed on record in both the SunGroup and
RadioSunGroup of Texas corporate book)
THE ORIGINAL SECURED PROMISSORY NOTE FOR $800,000 from YOUNG INVESTMENTS
COMPANY (A NEVADA PARTNERSHIP), dated December 24, 1997 has been canceled as
of February 28, 1998.
Dated: March 2, 1998
SunGroup, Inc.
By: /s/ James A. Hoetger
--------------------------
James A. Hoetger
Vice President/Chief Financial Officer
Exhibit 10 (aa)
SECURED PROMISSORY NOTE
$400,000.00 Nashville, Tennessee March 1, 1998
----------
FOR VALUE RECEIVED, RADIOSUNGROUP OF TEXAS, INC. ("Maker"), promises to
pay to the order of Young Investments Company (a Nevada Partnership), the sum of
Four Hundred Thousand and No/100 Dollars ($400,000.00), together with all
interest thereon at the fixed rate of TEN Percent (10%) per annum. Accrued
interest shall be due and payable on March 31, 1998 and on the final day of each
successive calendar month thereafter. Provided, however, on June 30, 1998, all
principal and interest then unpaid shall be finally due and payable.
All amounts due under this Note are payable at par in lawful money of
the United States of America, at such place as the holder hereof (hereinafter
"Holder") may direct.
A default shall occur under this Note if Maker fails to make the
payment required hereunder when due (time is of the essence hereof); or if Maker
becomes insolvent, or if Maker files bankruptcy or receivership proceedings or
has such proceedings filed against it; or if any property of Maker is subjected
to attachment, execution or other process; or if a default occurs under any
collateral document securing the indebtedness evidenced by this Note.
Upon the occurrence of a default, as defined above. Holder may, at its
option, declare all principal and interest provided for under this Note, and any
other obligations of Maker to Holder, to be presently due and payable, and
Holder may enforce any remedies available to Holder under any documents securing
or evidencing, debts of Maker to Holder. Holder may waive any default before or
after it occurs and may restore this Note in full effect without impairing the
right to declare it due for a subsequent default. Following default, interest
shall accrue on the principal balance hereof at the maximum lawful rate.
Privilege is reserved to prepay this Note at any time. Provided, however, if
this Note is prepaid, regardless of the date of prepayment, such prepayment
shall be accompanied by such additional sums as may be required to ensure that
Holder receives a full four months interest on this Note. For example, if this
Note is prepaid on February 1, 1998 (and assuming the regular interest payment
was made as scheduled on March 31, 1998), the prepayment shall be accompanied by
an additional three months of interest as if the Note were paid in full on its
maturity date of June 30, 1998.
Maker and all sureties, guarantors, endorsers and other parties to this
instrument hereby consent to any and all renewals, waivers, modifications, or
extensions of time (of any duration) that may be granted by Holder with respect
to this Note and severally waive demand, presentment, protest, notice of
dishonor, and all other notices which might otherwise be required by law. Holder
may release collateral securing this Note or parties liable therefor, in its
sole discretion.
<PAGE>
Maker's performance under the terms of this Note is secured by, and
Maker hereby grants Holder a security interest in all of Maker's presently owned
and hereafter acquired personal property and fixtures including all accounts
receivable, equipment, goods, contract rights, general intangibles, furniture
and other property of Maker.
Maker and all sureties, guarantors, endorsers and other parties hereto
agree to pay reasonable attorneys' fees and all court and other costs that
Holder may incur in the course of efforts to collect the debt evidenced hereby
or to protect Holder's interest in any collateral securing the same.
If any provision of this Note should for any reason be invalid or
unenforceable, the other provisions hereof shall remain in full effect.
Words used herein indicating gender or number shall be read as context
may require.
The provisions of this Note may be amended or waived only by instrument
in writing signed by the Holder and Maker hereof and attached to this Note.
RADIOSUNGROUP OF TEXAS, INC.
By: /s/ John W. Biddinger
------------------------
Chairman & President
<PAGE>
For good and valuable consideration, SunGroup, Inc. hereby guarantees to Holder
the timely payment and performance of this Note. SunGroup, Inc.'s guarantee of
this Note is absolute and unconditional. SunGroup, Inc.'s guarantee of the
attached Note is irrevocable. This guarantee constitutes a guarantee of payment
and performance and not of collection.
Executed this 1st day of March, 1998.
SunGroup, Inc.
By /s/ James A. Hoetger
---------------------------------------
Vice President/Chief Financial Officer
<PAGE>
Exhibit 10 (bb)
SECURED PROMISSORY NOTE
$150,000.00 March 1, 1998
----------
FOR VALUE RECEIVED, RADIOSUNGROUP OF TEXAS, INC. ("Maker"), promises to
pay to the order of JOHN W. BIDDINGER, the sum of One Hundred and Fifty Thousand
and No/100 Dollars ($150,000.00), together with all interest thereon at the
fixed rate of TEN Percent (10%) per annum. Accrued interest shall be due and
payable on March 31, 1998 and on the final day of each successive calendar month
thereafter. Provided, however, on June 30, 1998, all principal and interest then
unpaid shall be finally due and payable.
All amounts due under this Note are payable at par in lawful money of
the United States of America, at such place as the holder hereof (hereinafter
"Holder") may direct.
A default shall occur under this Note if Maker fails to make the
payment required hereunder when due (time is of the essence hereof); or if Maker
becomes insolvent, or if Maker files bankruptcy or receivership proceedings or
has such proceedings filed against it; or if any property of Maker is subjected
to attachment, execution or other process; or if a default occurs under any
collateral document securing the indebtedness evidenced by this Note.
Upon the occurrence of a default, as defined above. Holder may, at its
option, declare all principal and interest provided for under this Note, and any
other obligations of Maker to Holder, to be presently due and payable, and
Holder may enforce any remedies available to Holder under any documents securing
or evidencing, debts of Maker to Holder. Holder may waive any default before or
after it occurs and may restore this Note in full effect without impairing the
right to declare it due for a subsequent default. Following default, interest
shall accrue on the principal balance hereof at the maximum lawful rate.
Privilege is reserved to prepay this Note at any time. Provided, however, if
this Note is prepaid, regardless of the date of prepayment, such prepayment
shall be accompanied by such additional sums as may be required to ensure that
Holder receives a full four months interest on this Note. For example, if this
Note is prepaid on February 1, 1998 (and assuming the regular interest payment
was made as scheduled on March 31, 1998), the prepayment shall be accompanied by
an additional three months of interest as if the Note were paid in full on its
maturity date of June 30, 1998.
Maker and all sureties, guarantors, endorsers and other parties to this
instrument hereby consent to any and all renewals, waivers, modifications, or
extensions of time (of any duration) that may be granted by Holder with respect
to this Note and severally waive demand, presentment, protest, notice of
dishonor, and all other notices which might otherwise be required by law. Holder
may release collateral securing this Note or parties liable therefor, in its
sole discretion.
<PAGE>
Maker's performance under the terms of this Note is secured by, and
Maker hereby grants Holder a security interest in all of Maker's presently owned
and hereafter acquired personal property and fixtures including all accounts
receivable, equipment, goods, contract rights, general intangibles, furniture
and other property of Maker.
Maker and all sureties, guarantors, endorsers and other parties hereto
agree to pay reasonable attorneys' fees and all court and other costs that
Holder may incur in the course of efforts to collect the debt evidenced hereby
or to protect Holder's interest in any collateral securing the same.
If any provision of this Note should for any reason be invalid or
unenforceable, the other provisions hereof shall remain in full effect.
Words used herein indicating gender or number shall be read as context
may require.
The provisions of this Note may be amended or waived only by instrument
in writing signed by the Holder and Maker hereof and attached to this Note.
RADIOSUNGROUP OF TEXAS, INC.
By:__________________________
James A. Hoetger
Vice President, Finance
<PAGE>
For good and valuable consideration, SunGroup, Inc. hereby guarantees to Holder
the timely payment and performance of this Note. SunGroup, Inc.'s guarantee of
this Note is absolute and unconditional. SunGroup, Inc.'s guarantee of the
attached Note is irrevocable. This guarantee constitutes a guarantee of payment
and performance and not of collection.
Executed this 1st day of March, 1998.
SunGroup, Inc.
By:__________________________________
James A. Hoetger
Vice President/Chief Financial Officer
Exhibit 10(cc)
SECURED PROMISSORY NOTE
$150,000.00 March 1, 1998
----------
FOR VALUE RECEIVED, RADIOSUNGROUP OF TEXAS, INC. ("Maker"), promises to
pay to the order of MARGARET H. BIDDINGER, of One Hundred and Fifty Thousand and
No/100 Dollars ($150,000.00), together with all interest thereon at the fixed
rate of TEN Percent (10%) per annum. Accrued interest shall be due and payable
on March 31, 1998 and on the final day of each successive calendar month
thereafter. Provided, however, on June 30, 1998, all principal and interest then
unpaid shall be finally due and payable.
All amounts due under this Note are payable at par in lawful money of
the United States of America, at such place as the holder hereof (hereinafter
"Holder") may direct.
A default shall occur under this Note if Maker fails to make the
payment required hereunder when due (time is of the essence hereof); or if Maker
becomes insolvent, or if Maker files bankruptcy or receivership proceedings or
has such proceedings filed against it; or if any property of Maker is subjected
to attachment, execution or other process; or if a default occurs under any
collateral document securing the indebtedness evidenced by this Note.
Upon the occurrence of a default, as defined above. Holder may, at its
option, declare all principal and interest provided for under this Note, and any
other obligations of Maker to Holder, to be presently due and payable, and
Holder may enforce any remedies available to Holder under any documents securing
or evidencing, debts of Maker to Holder. Holder may waive any default before or
after it occurs and may restore this Note in full effect without impairing the
right to declare it due for a subsequent default. Following default, interest
shall accrue on the principal balance hereof at the maximum lawful rate.
Privilege is reserved to prepay this Note at any time. Provided, however, if
this Note is prepaid, regardless of the date of prepayment, such prepayment
shall be accompanied by such additional sums as may be required to ensure that
Holder receives a full four months interest on this Note. For example, if this
Note is prepaid on February 1, 1998 (and assuming the regular interest payment
was made as scheduled on March 31, 1998), the prepayment shall be accompanied by
an additional three months of interest as if the Note were paid in full on its
maturity date of June 30, 1998.
Maker and all sureties, guarantors, endorsers and other parties to this
instrument hereby consent to any and all renewals, waivers, modifications, or
extensions of time (of any duration) that may be granted by Holder with respect
to this Note and severally waive demand, presentment, protest, notice of
dishonor, and all other notices which might otherwise be required by law. Holder
may release collateral securing this Note or parties liable therefor, in its
sole discretion.
<PAGE>
Maker's performance under the terms of this Note is secured by, and
Maker hereby grants Holder a security interest in all of Maker's presently owned
and hereafter acquired personal property and fixtures including all accounts
receivable, equipment, goods, contract rights, general intangibles, furniture
and other property of Maker.
Maker and all sureties, guarantors, endorsers and other parties hereto
agree to pay reasonable attorneys' fees and all court and other costs that
Holder may incur in the course of efforts to collect the debt evidenced hereby
or to protect Holder's interest in any collateral securing the same.
If any provision of this Note should for any reason be invalid or
unenforceable, the other provisions hereof shall remain in full effect.
Words used herein indicating gender or number shall be read as context
may require.
The provisions of this Note may be amended or waived only by instrument
in writing signed by the Holder and Maker hereof and attached to this Note.
RADIOSUNGROUP OF TEXAS, INC.
By:__________________________
John W. Biddinger
Chairman & President
<PAGE>
For good and valuable consideration, SunGroup, Inc. hereby guarantees to Holder
the timely payment and performance of this Note. SunGroup, Inc.'s guarantee of
this Note is absolute and unconditional. SunGroup, Inc.'s guarantee of the
attached Note is irrevocable. This guarantee constitutes a guarantee of payment
and performance and not of collection.
Executed this 1st day of March, 1998.
SunGroup, Inc.
By:__________________________________
James A. Hoetger
Vice President/Chief Financial Officer
Exhibit 10(dd)
SECURED PROMISSORY NOTE
$100,000.00 March 1, 1998
----------
FOR VALUE RECEIVED, RADIOSUNGROUP OF TEXAS, INC. ("Maker"), promises to
pay to the order of KAREN BIDDINGER, the sum of One Hundred Thousand and No/100
Dollars ($100,000.00), together with all interest thereon at the fixed rate of
TEN Percent (10%) per annum. Accrued interest shall be due and payable on March
31, 1998 and on the final day of each successive calendar month thereafter.
Provided, however, on June 30, 1998, all principal and interest then unpaid
shall be finally due and payable.
All amounts due under this Note are payable at par in lawful money of
the United States of America, at such place as the holder hereof (hereinafter
"Holder") may direct.
A default shall occur under this Note if Maker fails to make the
payment required hereunder when due (time is of the essence hereof); or if Maker
becomes insolvent, or if Maker files bankruptcy or receivership proceedings or
has such proceedings filed against it; or if any property of Maker is subjected
to attachment, execution or other process; or if a default occurs under any
collateral document securing the indebtedness evidenced by this Note.
Upon the occurrence of a default, as defined above. Holder may, at its
option, declare all principal and interest provided for under this Note, and any
other obligations of Maker to Holder, to be presently due and payable, and
Holder may enforce any remedies available to Holder under any documents securing
or evidencing, debts of Maker to Holder. Holder may waive any default before or
after it occurs and may restore this Note in full effect without impairing the
right to declare it due for a subsequent default. Following default, interest
shall accrue on the principal balance hereof at the maximum lawful rate.
Privilege is reserved to prepay this Note at any time. Provided, however, if
this Note is prepaid, regardless of the date of prepayment, such prepayment
shall be accompanied by such additional sums as may be required to ensure that
Holder receives a full four months interest on this Note. For example, if this
Note is prepaid on February 1, 1998 (and assuming the regular interest payment
was made as scheduled on March 31, 1998), the prepayment shall be accompanied by
an additional three months of interest as if the Note were paid in full on its
maturity date of June 30, 1998.
Maker and all sureties, guarantors, endorsers and other parties to this
instrument hereby consent to any and all renewals, waivers, modifications, or
extensions of time (of any duration) that may be granted by Holder with respect
to this Note and severally waive demand, presentment, protest, notice of
dishonor, and all other notices which might otherwise be required by law. Holder
may release collateral securing this Note or parties liable therefor, in its
sole discretion.
<PAGE>
Maker's performance under the terms of this Note is secured by, and
Maker hereby grants Holder a security interest in all of Maker's presently owned
and hereafter acquired personal property and fixtures including all accounts
receivable, equipment, goods, contract rights, general intangibles, furniture
and other property of Maker.
Maker and all sureties, guarantors, endorsers and other parties hereto
agree to pay reasonable attorneys' fees and all court and other costs that
Holder may incur in the course of efforts to collect the debt evidenced hereby
or to protect Holder's interest in any collateral securing the same.
If any provision of this Note should for any reason be invalid or
unenforceable, the other provisions hereof shall remain in full effect.
Words used herein indicating gender or number shall be read as context
may require.
The provisions of this Note may be amended or waived only by instrument
in writing signed by the Holder and Maker hereof and attached to this Note.
RADIOSUNGROUP OF TEXAS, INC.
By:__________________________
John W. Biddinger
Chairman & President
<PAGE>
For good and valuable consideration, SunGroup, Inc. hereby guarantees to Holder
the timely payment and performance of this Note. SunGroup, Inc.'s guarantee of
this Note is absolute and unconditional. SunGroup, Inc.'s guarantee of the
attached Note is irrevocable. This guarantee constitutes a guarantee of payment
and performance and not of collection.
Executed this 1st day of March, 1998.
SunGroup, Inc.
By:__________________________________
James A. Hoetger
Vice President/Chief Financial Officer
Exhibit 10(ee)
RENEWAL AND EXTENSION AGREEMENT
This Renewal and Extension Agreement ("Agreement") is dated effective
as of January 2 1998, by and between RadioSunGroup of Texas, Inc. ("Borrower")
and Kenneth R. Reynolds, ("Lender").
W I T N E S S E T H
WHEREAS, the Borrower executed and delivered that certain Promissory
Note dated October 31, 1985 (the "Note") in the original principal amount of
$3,127,914.00 bearing interest at the rate stated therein: and
WHEREAS, the Note is secured by various real and personal property; and
WHEREAS, the Borrower and Lender have agreed to extend the final
maturity of the Note to June 30, 1998;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Borrower and Lender hereby agree as
follows:
1. The Note, including all principal then unpaid shall be due and
payable on June 30, 1998.
2. The interest rate charged on the Note is hereby changed to equal the
fixed rate of interest of ten percent (10%) per annum. Accrued interest shall be
due and payable on January 31, 1998 and on the final day of each successive
calendar month thereafter. Provided, however, on June 30, 1998, all principal
and interest then unpaid shall be finally due and payable.
3. Privilege is reserved to prepay this Note at any time. Provided,
however, if this Note is prepaid, regardless of the date of prepayment, such
prepayment shall be accompanied by such additional sums as may be required to
ensure that Holder receives a full six months interest on this Note. For
example, if this Note is prepaid on February 1, 1998 (and assuming the regular
interest payment was made as scheduled on January 31, 1998), the prepayment
shall be accompanied by an additional five months of interest as if the Note
were paid in full on its maturity date of June 30, 1998.
4. All liens presently securing the Note are hereby ratified and
confirmed as continuing to secure the payment of the Note. Nothing herein shall
in any manner diminish, impair or extinguish the Note or the liens securing the
Note.
5. Borrower and Lender hereby agree that the present unpaid balance
under the Note is $516,600.00 as of the date of this Agreement.
6. The Lender represents and warrants to Borrower that he is the lawful
owner and holder of the Note and that Lender has full power and authority to
enter into this Agreement.
EXECUTED, the date written above.
RadioSunGroup of Texas, Inc.
By: /s/John W. Biddinger
President
and
<PAGE>
By: /s/ Kenneth R. Reynolds
Exhibit 10(ff)
RENEWAL AND EXTENSION AGREEMENT
This Renewal and Extension Agreement ("Agreement") is dated effective
as of January 2, 1998, by and between RadioSunGroup of Texas, Inc. ("Borrower")
and Kenneth R. Reynolds, ("Lender").
W I T NE S S E T H
WHEREAS, the Borrower executed and delivered that certain Promissory
Note dated October 31, 1985 (the "Note") in the original principal amount of
$1,609,509.00 bearing interest at the rate stated therein: and
WHEREAS, the Note is secured by various real and personal property; and
WHEREAS, the Borrower and Lender have agreed to extend the final
maturity of the Note to June 30, 1998;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Borrower and Lender hereby agree as
follows:
1. The Note, including all principal then unpaid shall be due and
payable on June 30, 1998.
2. The interest rate charged on the Note is hereby changed to equal the
fixed rate of interest of ten percent (10%) per annum. Accrued interest shall be
due and payable on January 31, 1998 and on the final day of each successive
calendar month thereafter. Provided, however, on June 30, 1998, all principal
and interest then unpaid shall be finally due and payable.
3. Privilege is reserved to prepay this Note at any time. Provided,
however, if this Note is prepaid, regardless of the date of prepayment, such
prepayment shall be accompanied by such additional sums as may be required to
ensure that Holder receives a full six months interest on this Note. For
example, if this Note is prepaid on February 1, 1998 (and assuming the regular
interest payment was made as scheduled on January 31, 1998), the prepayment
shall be accompanied by an additional five months of interest as if the Note
were paid in full on its maturity date of June 30, 1998.
4. All liens presently securing the Note are hereby ratified and
confirmed as continuing to secure the payment of the Note. Nothing herein shall
in any manner diminish, impair or extinguish the Note or the liens securing the
Note.
5. Borrower and Lender hereby agree that the present unpaid balance
under the Note is $270,600.00 as of the date of this Agreement.
6. The Lender represents and warrants to Borrower that he is the lawful
owner and holder of the Note and that Lender has full power and authority to
enter into this Agreement.
EXECUTED, the date written above.
RadioSunGroup of Texas, Inc.
By: /s/John W. Biddinger
President
<PAGE>
and
By: /s/ Kenneth R. Reynolds
Exhibit 10(gg)
RENEWAL AND EXTENSION AGREEMENT
This Renewal and Extension Agreement ("Agreement") is dated effective
as of January 2, 1998, by and between RadioSunGroup of Texas, Inc. ("Borrower")
and Kenneth R. Reynolds, ("Lender").
W I T NE S S E T H
WHEREAS, the Borrower executed and delivered that certain Promissory
Note dated October 31, 1985 (the "Note") in the original principal amount of
$212,577.00 bearing interest at the rate stated therein: and
WHEREAS, the Note is secured by various real and personal property; and
WHEREAS, the Borrower and Lender have agreed to extend the final
maturity of the Note to March 31, 1998;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the Borrower and Lender hereby agree as
follows:
1. The Note, including all principal then unpaid shall be due and
payable on June 30, 1998.
2. The interest rate charged on the Note is hereby changed to equal the
fixed rate of interest of ten percent (10%) per annum. Accrued interest shall be
due and payable on January 31, 1998 and on the final day of each successive
calendar month thereafter. Provided, however, on June 30, 1998, all principal
and interest then unpaid shall be finally due and payable.
3. Privilege is reserved to prepay this Note at any time. Provided,
however, if this Note is prepaid, regardless of the date of prepayment, such
prepayment shall be accompanied by such additional sums as may be required to
ensure that Holder receives a full six months interest on this Note. For
example, if this Note is prepaid on February 1, 1998 (and assuming the regular
interest payment was made as scheduled on January 31, 1998), the prepayment
shall be accompanied by an additional five months of interest as if the Note
were paid in full on its maturity date of June 30, 1998.
4. All liens presently securing the Note are hereby ratified and
confirmed as continuing to secure the payment of the Note. Nothing herein shall
in any manner diminish, impair or extinguish the Note of the lien securing the
Note.
5. Borrower and Lender hereby agree that the present unpaid balance
under the Note is $32,800.00 as of the date of this Agreement.
6. The Lender represents and warrants to Borrower that he is the lawful
owner and holder of the Note and that Lender has full power and authority to
enter into this Agreement.
EXECUTED, the date written above.
RadioSunGroup of Texas, Inc.
By: /s/ John W. Biddinger
President
and
<PAGE>
By: /s/ Kenneth R. Reynolds
Exhibit 10(hh)
TRI-PARTY PAYMENT AGREEMENT
This Tri-Party Payment Agreement ("Agreement") is entered into this 2nd
day of January, 1998, by and between RadioSunGroup of Texas, Inc. (hereafter
"SunGroup of Texas"), Kenneth R. Reynolds ("Reynolds") and John Osburn and Arden
Osburn (hereafter sometimes collectively referred to as the "Osburns").
(Reynolds and the Osburns also are sometimes hereafter referred to collectively
as the "Holders").
W I T N E S S E T H:
WHEREAS, SunGroup of Texas executed and delivered that certain
$212,577.00 Promissory Note dated October 31, 1985 as amended by those certain
Renewal Abilene Agreements dated November 16, 1986 and those certain 1991
Reinstated Agreements dated November 1, 1991, (the "Small Abilene Note") payable
to the order of Taylor Country Broadcasting, Inc. ("TCBI"); and
WHEREAS, SunGroup of Texas executed and delivered that certain
$1,609,509.00 Promissory Note dated October 31, 1985 as amended by those certain
Renewal Abilene Agreements dated November 16, 1986 and those certain 1991
Reinstated Agreements dated November 1, 1991, (the "Large Abilene Note") payable
to the order of TCBI; and
WHEREAS, SunGroup of Texas executed and delivered that certain
$3,127,914.00 Promissory Note dated October 31, 1985 as amended by those certain
Renewal Longview Agreements dated November 16, 1986, and that certain 1991
Reinstated Agreement dated November 1, 1991, (the "Longview Note") payable to
the order of Stereo 105, Inc.; and
WHEREAS, TCBI transferred and assigned all of its interest in the Small
Abilene Note and the Large Abilene Note to Reynolds and John Osburn and Stereo
105, Inc. transferred and assigned all of its interest in the Longview Note to
Reynolds and John Osburn; and
WHEREAS, John Osburn then transferred and assigned one-half of his
interest to Arden Osburn; and
WHEREAS, the owners and holders of the Small Abilene Note, the Large
Abilene Note and the Longview Note are now as follows: Reynolds (an undivided
1/2 interest), John Osburn (an undivided 1/4 interest) and Arden Osburn (an
undivided 1/4 interest); and
WHEREAS, SunGroup, the Osburns and the Reynolds wish to enter into an
agreement regarding certain payments to be received by the Holders; and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the undersigned hereby agree as follows:
<PAGE>
1. Concurrently herewith, Holders have received $32,800.00 to be
applied to the unpaid balance of the Small Abilene Note (which is presently
$65,600.00). Upon application of this sum, the remaining unpaid balance of the
Small Abilene Note shall be $32,800.00.
2. Concurrently herewith, Holders have received the sum of $270,600.00
to be applied to the unpaid balance of the Large Abilene Note (which is
presently $541,200.00). Upon application of this sum, the remaining unpaid
balance of the Large Abilene Note shall be $270,600.00.
3. Concurrently herewith, Holders have received the sum of $516,600.00
to be applied to the unpaid balance of the Longview Note (which is presently
$1,033,200.00). Upon application of this sum, the remaining unpaid balance of
the Longview Note shall be $516,600.00.
4. Reynolds has agreed that all sums received from SunGroup of Texas as
set forth above (the "Payments"), shall be delivered to John and Arden Osburn.
5. In consideration of the delivery of the Payments to the Osburns,
John Osburn and Arden Osburn hereby sell, bargain, assign and convey unto
Reynolds all their right, title and interest in and to the Small Abilene Note,
the Large Abilene Note, and the Longview Note, and all collateral and security
therefor. The effect of the conveyance contained in this paragraph is that
Reynolds shall hereafter be the sole and lawful owner and holder of the Small
Abilene Note, Large Abilene Note, and Longview Note and the Osburns will not
retain any interest. To evidence the conveyance and assignment set forth in this
paragraph, John Osburn and Arden Osburn shall deliver the original Small Abilene
Note, Large Abilene Note, and Longview Note to Reynolds with all necessary
endorsements.
6. John Osburn and Arden Osburn shall also contemporaneously herewith
execute and deliver UCC-3 termination statements and other releases of
collateral set forth on Exhibit A attached hereto. The releases filed by John
Osburn and Arden Osburn shall in no way impair the remaining secured creditor
and other rights of Reynolds as the holder of the Small Abilene Note, Large
Abilene Note and Longview Note.
7. After the date hereof, all Payments under the Small Abilene Note,
Large Abilene Note, and Longview Note to be made by SunGroup of Texas shall be
sent to Reynolds at, and all correspondence regarding the Small Abilene Note,
Large Abilene Note, and Longview Note shall be also sent to Reynolds at, the
following address:
Kenneth R. Reynolds
Radio Station KAGG
4101 South Texas Street
Bryan, Texas 77802
8. The Osburns and all parties hereto agree that after the execution of
<PAGE>
delivery of this Agreement, and delivery of the Payments, that they will execute
and deliver such additional endorsements, releases, termination statements, and
such additional documentation as may be required to evidence, the transactions
described herein.
<PAGE>
9. The parties hereto represent and warrant that the recitals set forth
at the beginning of this Agreement are true and accurate.
RADIOSUNGROUP OF TEXAS, INC.
By: /s/ John W. Biddinger
--------------------------
Chairman & President
/s/ John Osburn
---------------------
John Osburn
/s/ Arden Osburn
---------------------
Arden Osburn
/s/ Kenneth R. Reynolds
------------------------
Kenneth R. Reynolds
Exhibit 10(ii)
- ---------------------------------------------------------------------------
NOTE-HOLDER ORIGINAL AMOUNT MATURITY DATE
OF NOTE
- ---------------------------------------------------------------------------
Walter L. Koon, Jr. $167,426.65 February 15, 1998
Indiana University Foundation
- ---------------------------------------------------------------------------
John W. Biddinger $93,333.06 February 15, 1998
- ---------------------------------------------------------------------------
Robert A. Davies $124,469.18 February 15, 1998
- ---------------------------------------------------------------------------
John Cederdahl $799,655.11 February 15, 1998
Bankers National Life
- ---------------------------------------------------------------------------
John Cederdahl $3,821,912.77 February 15, 1998
Western National Life Insurance Company
- ---------------------------------------------------------------------------
Jan Chenowith $265,200.00 February 15, 1998
Dan Young IRA Trust
- ---------------------------------------------------------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDING DECEMBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,298
<SECURITIES> 0
<RECEIVABLES> 1,129
<ALLOWANCES> (92)
<INVENTORY> 0
<CURRENT-ASSETS> 3,299
<PP&E> 564
<DEPRECIATION> 450
<TOTAL-ASSETS> 3,848
<CURRENT-LIABILITIES> 1,421
<BONDS> 448
0
0
<COMMON> 3,770
<OTHER-SE> (1,966)
<TOTAL-LIABILITY-AND-EQUITY> 3,848
<SALES> 5,229
<TOTAL-REVENUES> 16,493
<CGS> 0
<TOTAL-COSTS> 5,341
<OTHER-EXPENSES> 568
<LOSS-PROVISION> 202
<INTEREST-EXPENSE> 1,033
<INCOME-PRETAX> 9,349
<INCOME-TAX> 1,344
<INCOME-CONTINUING> 8,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,004
<EPS-PRIMARY> 1.15
<EPS-DILUTED> 0.55
</TABLE>
Exhibit 99(a)
SUNGROUP, INC.
AND SUBSIDIARIES
Consolidated Financial Statements
December 31, 1998 and 1997
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Table of Contents
Page
- ---------------------------------------------------------------------------
Independent Auditor's Report 1
Financial Statements
Consolidated statement of operations 2
Consolidated balance sheet 3
Consolidated statement of changes in stockholders'
equity (deficit) 4
Consolidated statement of cash flows 5
Notes to consolidated financial statements 6
<PAGE>
Independent Auditor's Report
The Board of Directors and Stockholders
SunGroup, Inc. and Subsidiaries
Sarasota, Florida
We have audited the accompanying consolidated balance sheet of SunGroup, Inc.
and subsidiaries as of December 31, 1998 and 1997, and the related consolidated
statements of operations, changes in stockholders' equity (deficit) and cash
flows for the years then ended. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of SunGroup, Inc. and
subsidiaries as of December 31, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
On December 12, 1997, management committed to a formal plan to dispose of the
assets of the Corporation. Consequently, the consolidated statement of
operations for the year ended December 31, 1998 presents the results of
discontinued operations and the earnings per share resulting from discontinued
operations.
Indianapolis, Indiana
March 17, 1999
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
Year Ended December 31 1998 1997
- -------------------------------------------------------------------------------
Gross Revenues $5,228,602 $9,161,416
Agency commissions (464,999) (979,632)
------------------------------
4,763,603 8,181,784
------------------------------
Expenses
Technical and programming 1,081,075 2,050,326
Selling, general and administrative 4,563,879 5,681,098
------------------------------
5,644,954 7,731,424
------------------------------
Income (Loss) From Operations (881,351) 450,360
------------------------------
Other Income (Expense)
Gain on disposal of assets 11,325,263
Interest expense (1,032,702) (349,034)
Other (61,881) (21,412)
------------------------------
10,230,680 (370,446)
------------------------------
Income Before Income Taxes 9,349,329 79,914
Income Tax Expense (Benefit) 1,344,549 (629,400)
------------------------------
Net Income $8,004,780 $ 709,314
==============================
Basic Earnings Per Share $1.16 $.11
Diluted Earnings Per Share .65 .05
See notes to consolidated financial statements.
(4)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31 1998 1997
- --------------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Current Assets
Cash and cash equivalents $2,297,751 $ 1,338,065
Accounts receivable, less allowances of $92,568
and $59,028 376,907 1,460,218
Income taxes receivable 10,000
Prepaid expenses and other current assets 69,115 183,146
Escrow receivable 525,000
Deferred income taxes 1,582,591
-------------------------------
Total current assets 3,268,773 4,574,020
-------------------------------
Property, Plant and Equipment, net 94,188 1,591,970
-------------------------------
Other Assets
Intangible assets 453,494 5,748,421
Other assets 2,100 84,595
-------------------------------
455,594 5,833,016
-------------------------------
$3,818,555 $11,999,006
===============================
Liabilities and Stockholders' Deficit
Current Liabilities
Current maturities of long-term debt $ 448,049 $ 9,981,522
Accounts payable and accrued expenses 20,442 526,978
Accrued payroll 453,947 63,296
Accrued state income tax 511,978 205,332
Accrued federal income tax 448,070 10,000
-------------------------------
Total current liabilities 1,882,486 10,787,128
-------------------------------
Long-Term Debt 624,341
-------------------------------
Deferred Income Taxes 132,202 1,108,395
-------------------------------
Stockholders' Equity (Deficit)
Common stock--no par value
Authorized--30,000,000 shares
Issued and outstanding--6,988,300 and
6,543,700 shares 3,770,639 3,770,639
Additional paid-in capital 289,140 5,969,195
Retained deficit (2,255,912) (10,260,692)
-------------------------------
1,803,867 (520,858)
-------------------------------
$3,818,555 $11,999,006
===============================
</TABLE>
See notes to consolidated financial statements.
(5)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Common Stock Additional Stockholders'
--------------- Paid-In Retained Equity
Shares Amount Capital Deficit (Deficit)
- --------------------------------------------------------------------------------------------------------------
<S> <S> <C> <C> <C> <C>
Balance, January 1, 1997 6,543,700 $3,770,639 $5,969,195 $(10,970,006) $(1,230,172)
Net income 709,314 709,314
----------------------------------------------------------------
Balance, December 31, 1997 6,543,700 3,770,639 5,969,195 (10,260,692) (520,858)
Warrants exercised for a total of $.22 444,600
Warrants redeemed and cancelled totaling
7,290,136 shares (5,680,055) (5,680,055)
Net income 8,004,780 8,004,780
================================================================
Balance, December 31, 1998 6,988,300 $3,770,639 $ 289,140 $ (2,255,912) $1,803,867
================================================================
</TABLE>
See notes to consolidated financial statements.
(6)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Year Ended December 31 1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $8,004,780 $ 709,314
Reconciliation of net income to net cash provided
(used) by operating activities
Depreciation and amortization 568,010 656,259
Gain on disposal of assets (11,325,263)
Net (income) expense from barter transactions (71,698) 40,818
Deferred income taxes 606,398 (568,389)
Changes in
Accounts receivable 1,083,311 178,671
Income tax receivable 10,000 51,000
Prepaid expenses and other current assets 114,031 9,667
Accounts payable and accrued expenses 712,651 (156,525)
Interest payable (4,292)
Other assets 82,495 (70,071)
----------------------------
Net cash provided (used) by operating activities (215,285) 846,452
----------------------------
Investing Activities
Purchase of property and equipment (65,947) (184,639)
Purchase of intangible asset (32,921)
Proceeds from sale of assets 17,090,909
----------------------------
Net cash provided (used) by investing activities 17,024,962 (217,560)
----------------------------
Financing Activities
Repayments of long-term debt (10,569,936) (642,577)
Proceeds from long-term debt 400,000 800,000
Payment for warrants redeemed and cancelled (5,680,055)
----------------------------
Net cash provided (used) by financing activities (15,849,991) 157,423
----------------------------
Increase in Cash and Cash Equivalents 959,686 786,315
Cash and Cash Equivalents, Beginning of Year 1,338,065 551,750
----------------------------
Cash and Cash Equivalents, End of Year $2,297,751 $1,338,065
============================
Supplemental Cash Flows Information
Interest paid $1,032,702 $315,119
Income taxes paid 124,828 102,807
Non-Cash Transactions
Accrued interest added to note 12,122 11,793
Funds escrowed upon sale of stations 525,000
</TABLE>
See notes to consolidated financial statements.
(7)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 -- Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
SunGroup, Inc. and subsidiaries' (the "Corporation") business is the operation
of commercial radio stations. At December 31, 1998, the Corporation owned one
radio station located in New Mexico. The station is operated under a Local
Marketing Agreement ("LMA") by a third party. The station is licensed with the
Federal Communications Commission ("FCC"), with its license required to be
renewed every seven years. The Corporation grants credit to customers,
substantially all of whom are located in the same area as the radio station.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. Estimates are used when
accounting for allowance for doubtful accounts, depreciation and amortization,
taxes and contingencies.
On December 12, 1997, management adopted a formal plan to dispose of the assets
of the Corporation. Consequently, the consolidated statement of operations for
the year ended December 31, 1998 presents the results of discontinued operations
and the earnings per share resulting from discontinued operations.
Consolidation
The consolidated financial statements include the accounts of SunGroup, Inc. and
its wholly owned subsidiaries. All significant intercompany transactions and
balances have been eliminated.
Cash and Cash Equivalents
Cash and cash equivalents consist of bank deposits in federally insured
accounts. At December 31, 1998, the Corporation's cash accounts exceeded
federally insured limits by approximately $2,208,000.
For purposes of the statement of cash flows, the Corporation considers all
highly liquid debt instruments, if any, purchased with an original maturity of
three months or less to be cash equivalents.
Intangible Assets
Intangible assets represent the excess of the cost to acquire radio station
assets over the sum of the fair values of the net tangible assets acquired. The
excess of the cost over the fair values of assets acquired is allocated to
goodwill and the broadcast license and is amortized over 25 years using the
straight-line method. During 1997, the Corporation incurred costs associated
with the operations of a station in Texas under a time brokerage agreement.
These costs were being amortized over five years, but were fully amortized
during 1998.
(8)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Property and Equipment
Property and equipment are stated at cost, and depreciation is computed on a
straight-line basis using estimated lives as follows:
- ------------------------------------------------------------
Buildings 20 years
Broadcast equipment 5-10 years
Furniture and fixtures 10 years
Transportation equipment 3 years
Leasehold improvements Life of lease
Expenditures for maintenance and repairs are charged to operations. Renewals and
improvements are capitalized. The cost and the accumulated depreciation for
property and equipment retired or sold are removed from the accounts and the
resulting gain or loss is included in other income.
Income taxes
Income taxes in the consolidated statement of operations include deferred income
tax provisions for all significant temporary differences in recognizing income
and expenses for financial reporting and income tax purposes. The Corporation
files a consolidated federal income tax return.
Revenue Recognition
Revenue is recognized as advertising time is aired by the Corporation's radio
stations. Revenue from barter transactions is recognized in accordance with
Accounting Principles Board Opinion 29 and, to the extent applicable, Emerging
Issues Task Force Issue No. 93-11. Revenue is recognized as advertising time is
aired while the expense is recognized upon the receipt of the bartered
merchandise or service. Upon entering into a barter agreement, the Corporation
records an asset and a liability at the estimated fair market value of the
product or service to be received. The asset is relieved as goods/services are
received while the liability is relieved as advertising spots are run.
Reclassifications
Certain amounts presented in prior year financial statements have been
reclassified to conform to the current year presentation.
(9)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 -- Property and Equipment
Property and equipment consist of the following:
December 31 1998 1997
- -------------------------------------------------------------------------
Land $ 235,307
Buildings 543,391
Leasehold improvements $ 2,659 91,334
Equipment and furnishings 531,971 2,893,138
Vehicles 29,038 138,944
---------------------------
563,668 3,902,114
Accumulated depreciation (469,480) (2,310,144)
---------------------------
$94,188 $1,591,970
===========================
Note 1 -- Intangible Assets
Intangible assets consist of the following:
December 31 1998 1997
- -------------------------------------------------------------------------
Goodwill $4,243,678
Broadcast license $812,375 5,236,716
Start-up costs 32,921
---------------------------
812,375 9,513,315
Accumulated amortization (358,881) (3,764,894)
---------------------------
$453,494 $5,748,421
===========================
(10)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 1 -- Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31 1998 1997
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Notes payable, three individuals, interest at 0%; total principal payments of
$50,000 due monthly with balloon of $1,640,000 due January 1998. In January
1998, the Corporation paid $820,000 in full satisfaction of two of the note
holders. The third note holder has renegotiated a new note bearing interest at 10%,
maturing June 1998 $1,640,000
Note payable, an individual, interest at 0%; monthly principal payments based on cash
flow of subsidiary; balance due August 2002 225,628
Note payable, a related party, interest at 2.7%; $500,000 face amount; accrued interest
added to note; entire balance due January 2003, unsecured $448,049 435,928
Note payable, bank, interest at prime plus 1%; monthly payments of $1,520 including
interest; balance due September 2000 47,988
Note payable, institution that is a warrant holder, interest at 0%; annual principal
payments commenced March 1, 1995 based on Corporation's cash flow as defined;
balance due February 15, 1998; if not paid in full by that date, interest
accrues after that date at 4% above the ten-year treasury bond equivalent
rate and the number of shares purchasable under its warrants will increase by
an amount equal to 8% of the then outstanding common stock of the Corporation
assuming that all warrants outstanding are exercised 3,821,913
Note payable, institution that is a warrant holder, interest at 0%; annual
principal payments commenced March 1, 1995 based on Corporation's cash flow
as defined; balance due February 15, 1998; if not paid in full by that date,
interest accrues after that date at 4% above the ten-year treasury bond
equivalent rate and the number of shares purchasable under its warrants will
increase by an amount equal to 2% of the then outstanding common stock of the
Corporation assuming that all warrants outstanding are exercised 799,655
Note payable, a foundation that is also a stock and warrant holder, interest at
0%; annual principal payments commenced March 1, 1995 based on the
Corporation's cash flow as defined; balance due February 15, 1998; if not
paid in full by that date, interest accrues after that date at 4% above the
ten-year treasury bond equivalent rate and the number of shares purchasable
under its warrant will increase by an amount equal to .35% of the then
outstanding common stock of the Corporation assuming that all warrants
outstanding are exercised 167,427
Notes payable, three individuals, all of whom are stock and warrant holders (one
is an officer and director and one is a director), interest at 0%; balance is
due February 15, 1998; if not paid in full by that date, interest accrues
after that date at 4% above the ten-year treasury bond equivalent rate and
the number of shares purchasable under the warrants increase by an amount
equal to .966% of the then outstanding common stock of the Corporation
assuming that all warrants outstanding are exercised; subordinated to the notes
payable to institution and to the foundation 483,002 Note payable, institution,
interest at 10%; monthly payments of interest only; balance due June 1998. 800,000
Note payable, financial institution, interest at 12%; monthly payments of interest only;
balance due June 1998 2,184,322
--------------- ----------------
448,049 10,605,863
Current maturities (448,049) (9,981,522)
--------------- ----------------
$ 0 $ 624,341
=============== ================
</TABLE>
(11)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Stockholders' Equity
During 1998, warrants for 7,290,136 shares of stock were redeemed and cancelled
for $5,680,055.
Income Taxes
The reconciliation of income tax to the tax at the federal statutory income tax
rate is as follows:
December 31 1998 1997
- -------------------------------------------------------------------------------
Income before income taxes $9,349,329 $79,914
===========================
Tax expense at statutory rate of 34% $3,178,772 $ 21,171
Tax effect of
State income tax (net of federal effect) 300,340 (85,156)
Nondeductible expenses 59,866 83,964
Goodwill recorded as a reduction of realized gain (2,052,086) (576,487)
Other (237,076) 40,839
Increase (decrease) in valuation allowance 94,733 (113,731)
---------------------------
$1,344,549 $(629,400)
===========================
Income tax expense (benefit) consists of the following:
Year Ended December 31 1998 1997
- -------------------------------------------------------------------------------
Current payable
Federal $ 397,070 $ (72,503)
State 407,286 11,492
---------------------------
804,356 (61,011)
---------------------------
Deferred
Federal 492,418 (427,873)
State 47,775 (140,516)
---------------------------
540,193 (568,389)
===========================
$1,344,549 $(629,400)
===========================
(12)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The components of the net deferred tax (liability) asset are as follows:
<TABLE>
<CAPTION>
December 31 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Difference in depreciation methods of property and equipment $ (8,993) $(24,688)
Difference in amortization method of broadcast licenses (154,188) (985,626)
Allowance for doubtful accounts 31,473 20,070
Imputed interest on zero percent notes 53,396
State deferred taxes 101,901 23,411
Other 495
Net operating loss carryforwards 1,394,800
------------------------------
(29,807) 481,858
Valuation allowance (102,395) (7,662)
------------------------------
$(132,202) $474,196
==============================
Assets $133,374 $1,492,172
Liabilities (163,181) (1,010,314)
Valuation allowance (102,395) (7,662)
------------------------------
$(132,202) $ 474,196
==============================
</TABLE>
The valuation allowance at December 31, 1998 is $102,395 and was increased by
$94,733 during the current year due to increased state net operating losses the
Corporation will be unable to utilize.
Incentive Compensation Plans
The Corporation accounts for its incentive stock option plans in accordance with
Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued
to Employees. Although the Corporation has elected to follow APB Opinion No. 25,
SFAS No. 123 requires pro forma disclosures of net income and earnings per share
as if the Corporation had accounted for its employee stock options under that
statement. The Corporation has not made the pro forma disclosures required by
SFAS No. 123 since there have been no options granted since 1994.
(13)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In 1986, the Corporation initiated the Key Employee Incentive Bonus Stock Option
Plan for the purpose of granting options to key employees. Options granted each
year are exercisable after two years and expire after ten years, termination of
employment, or upon dissolution or liquidation of the Corporation, or merger if
the Corporation is not the surviving entity and there is not an express
assumption by the surviving entity. Each option enables the holder to purchase
one share of common stock. All options exercisable under the above Plan had
expired as of December 31, 1998. A summary of changes in the stock options
follows:
Number of Shares
------------------
December 31 1998 1997
- ------------------------------------------------------------------------
Qualified
Outstanding at beginning of year 3,200 3,200
Expired 3,200
------------------
Outstanding at end of year 0 3,200
==================
Option price range at December 31 $3.00
to
$4.00
In addition, in 1987 a non-qualified Plan was established to grant options to
certain other key personnel. Each option enables the holder to purchase one
share of common stock. All shares are exercisable over a ten-year period. There
were 10,000 options exercisable at a price of $3 per share under this plan at
December 31, 1998. During 1998, 4,000 options exercisable at a price of $4 per
share expired due to termination of the holder's employment. No option have been
exercised under this plan as of December 31, 1998. The outstanding options
expire in 1999.
Earnings Per Share
Earnings per share (EPS) were computed as follows:
<TABLE>
<CAPTION>
Year Ended December 31,1998
-----------------------------------------------------
Weighted Average
Shares Per-Share
Income Amount
-----------------------------------------------------
<S> <C> <C> <C>
Net Income $8,004,780
Less: Preferred stock dividends
-------------------
Basic Earnings Per Share
Income available to common stockholders 8,004,780 6,900,598 $1.16
================
Effect of Dilutive Securities
Warrants 5,439,572
--------------------------------------
Diluted Earnings Per Share
Income available to common stockholders and
assumed conversions $8,004,789 12,340,170 $.65
=====================================================
</TABLE>
(14)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Options to purchase 10,000 shares of common stock at $3 per share were
outstanding at December 31, 1998, but were not included in the computation of
diluted EPS because the options' exercise price was greater than the average
market price of the common shares.
<TABLE>
<CAPTION>
Year Ended December 31,1997
-----------------------------------------------------
Weighted Average
Shares Per-Share
Income Amount
-----------------------------------------------------
<S> <C> <C>
Net Income $709,314
Less: Preferred stock dividends
-------------------
Basic Earnings Per Share
Income available to common stockholders 709,314 6,543,700 $.11
================
Effect of Dilutive Securities
Warrants 6,619,862
--------------------------------------
Diluted Earnings Per Share
Income available to common stockholders and assumed conversions
$709,314 13,163,562 $.05
=====================================================
</TABLE>
Options to purchase 17,200 shares of common stock at $3 to $4 per share were
outstanding at December 31, 1998, but were not included in the computation of
diluted EPS because the options' exercise price was greater than the average
market price of the common shares.
Stock Warrant
Duing 1998, the Corporation issued 2,636,152 additional warrants. At year end,
the Corporation has a warrant outstanding exercisable for 1,521,278 shares of
stock at a total price of $.11. The warrant includes an anti-dilutive provision,
is exercisable currently and expires February 15, 2003.
Commitments and Contingencies
The Corporation has an employment agreement with its president through May 31,
2000, which includes a provision for an annual base salary of $125,000 and
annual bonuses of up to 50% of his annual salary. As part of restructuring the
Corporation's debt, the president has agreed to a maximum compensation of
$132,200 per year. Upon termination of the president "without cause" or if the
president terminates his employment for "good reason," his salary will be
continued for 24 months. The agreement provides for a death benefit to the
president's estate of two and one half times the current annual base salary and
a lump sum payment equal to two times the current annual base salary if he
should become permanently disabled. The Corporation is not insured against
either of these events. The president is also granted the option to put his
stock back to the Corporation at a mutually agreed-upon fair market value.
(15)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The Corporation rents its office under an operating lease. The lease agreement
requires the Corporation to pay utilities, insurance and maintenance.
Substantially all of the Corporation's operating leases were assumed during 1998
by the buyer upon sale of the stations or by the operator upon execution of the
LMA. Total rental expense for all operating leases, including short-term leases
of less than one year, amounted to $278,877 in 1998 and $177,612 in 1997.
Minimum commitment under its non-cancelable lease is as follows:
Years Ending December 31
- -------------------------------------------------------------
1999 $26,766
2000 27,565
2001 27,169
-------------
$81,500
=============
The Corporation, in the normal course of business, is a defendant in certain
lawsuits. Management believes that the results of such litigation will not have
a materially adverse effect upon the Corporation's conduct of its business or
its financial position.
Dispositions
On October 14, 1998, the Corporation sold substantially all the assets of its
Shreveport, Louisiana station. The sales price was $5,575,000, all of which was
paid at closing with the exception of $225,000, which is being held pursuant to
an Indemnification Escrow Agreement.
On October 28, 1998, the Corporation sold substantially all the assets of its
five Texas stations for $12,434,000. The entire purchase price was paid at
closing with the exception of $300,000, which is being held pursuant to an
Indemnification Escrow Agreement.
Subsequent Event
The Corporation has entered into an asset purchase agreement to sell
substantially all the assets of its remaining radio station in Santa Fe, New
Mexico for $5,500,000. The sale of this station closed on February 12, 1999,
resulting in a gain of approximately $5,000,000. The Corporation will retain its
cash and accounts receivable and the buyer will assume certain leases and
contracts.
It is anticipated that during 1999, the net proceeds and all cash and cash
equivalents, after payment of the Corporation's outstanding obligations, will be
distributed and the Corporation liquidated. Management believes the Corporation
will have net income in 1999, and therefore assets do not need to be written
down.
On February 16, 1999, the Corporation made an initial distribution to the
stockholders of fifty cents ($.50) per share. In addition, the Corporation has
declared a second distribution in the amount of ten cents ($.10) per share to be
issued April 9, 1999.
(16)
<PAGE>
SUNGROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Year 2000
Like all entities, the Corporation is exposed to risks associated with the Year
2000 Issue, which affects computer software and hardware; transactions with
customers, vendors, and other entities; and equipment dependent upon microchips.
It is not possible for any entity to guarantee the results of its own
remediation efforts or to accurately predict the impact of the Year 2000 Issue
on third parties with which the Corporation does business. If remediation
efforts of the Corporation or third parties with which the Corporation does
business are not successful, the Year 2000 Issue could have negative effects on
the Corporation's financial condition and results of operations in the near
term.
(17)
Exhibit 99(b)
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 20, 1998
SunGroup, Inc.
(Exact name of registrant as specified in its charter)
Tennessee 0-3851 62-0790469
State of other jurisdiction Commission IRS Employer
of incorporation File No. Identification No.
2201 Cantu Court, Suite 102A, Sarasota, FL 34232-6254
(Address of principal executive offices)
Registrant's telephone number, including area code: 941-377-6710
<PAGE>
ITEM 7
Financial Statements and Exhibits
Exhibits
Financial Statements
Asset Purchase Agreement, by and between SunGroup, Inc. and SunBurst Media
of Dallas Texas, dated February 3, 1998
Copy of Press Release (attachments).
Copy of Shareholder Initial Distribution Letter. (attached)
8-K for SunGroup Broadcasting of New Mexico, Inc. (attached)
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SunGroup, Inc.
Dated: February 20, 1998 By:_______________________________
James A. Hoetger
Vice President, Finance
<PAGE>
Exhibit for SEC 8-K Item 7 (c)
SUNGROUP, INC.
2201 CANTU COURT, SUITE 102A
SARASOTA, FLORIDA 34232-6254
941 - 377-6710 - TELEPHONE - 941 - 378-5449 - FAX
NOVEMBER 19, 1997
CONTACT:
JOHN W. BIDDINGER, CHAIRMAN AND PRESIDENT
PRESS RELEASE
-------------
ON NOVEMBER 13, 1997, SUNGROUP, INC. ("SUNGROUP") ENTERED INTO A LETTER OF
INTENT ("LETTER OF INTENT") WITH SUNBURST MEDIA MANAGEMENT, INC. ("SUNBURST").
THE LETTER OF INTENT PROVIDES FOR SUNBURST'S ACQUISITION OF SUBSTANTIALLY ALL OF
THE ASSETS OF SUNGROUP FOR A PRICE OF TWENTY FOUR MILLION DOLLARS ($24,000,000),
AND THAT THE COMPANY WILL CONTINUE TO KEEP IT'S ACCOUNTS RECEIVABLES AND CASH.
SENIOR MANAGEMENT OF SUNGROUP HAS BEEN ADVISED OF THE LETTER OF INTENT AND IS
PARTICIPATING IN PREPARING THE REQUIRED DUE DILIGENCE. SUNBURST WILL BEGIN
VISITING SUNGROUP'S RADIO STATIONS ON NOVEMBER 21, 1997.
THE TRANSACTIONS CONTEMPLATED BY THE LETTER OF INTENT ARE SUBJECT TO APPROVAL BY
THE SHAREHOLDERS OF BOTH SUNGROUP AND SUNBURST. THE TRANSACTIONS ARE ALSO
SUBJECT TO FCC AND OTHER APPLICABLE REGULATORY APPROVALS.
SUNGROUP CURRENTLY OWNS 7 RADIO STATIONS:
KEAN-AM & FM & KROW FM (ABILENE, TEXAS),
KYKX-FM (LONGVIEW, TEXAS),
KMJJ-FM (SHREVEPORT, LOUISIANA),
KKSS-FM (ALBUQUERQUE, NEW MEXICO), AND
KKYS-FM (BRYAN, TEXAS).
ALL OF SUNGROUP'S RADIO STATIONS ARE SUBJECT TO THE LETTER OF INTENT.
SUNBURST CURRENTLY OWNS 12 RADIO STATIONS LOCATED IN:
SPRINGFIELD, MISSOURI
LAKE CHARLES, LOUISIANA
MCALLEN BROWNSVILLE, TEXAS
IN ADDITION, SUNBURST PRESENTLY HAS OTHER PROPERTIES UNDER CONTRACT.
<PAGE>
Exhibit for SEC 8-K Item 7 (c)
SUNGROUP, INC.
2201 CANTU COURT, SUITE 102A
SARASOTA, FLORIDA 34232-6254
941 - 377-6710 - TELEPHONE - 941 - 378-5449 - FAX
FEBRUARY 5, 1998
CONTACT:
JOHN W. BIDDINGER, CHAIRMAN AND PRESIDENT
PRESS RELEASE
-------------
JOHN W. BIDDINGER, CHAIRMAN AND PRESIDENT OF SUNGROUP, INC. (THE "COMPANY")
ANNOUNCED TODAY THAT THE BOARD OF DIRECTORS HAS APPROVED AND THE COMPANY HAS
OFFICIALLY SIGNED THE PREVIOUSLY ANNOUNCED AGREEMENT FOR THE SALE OF
SUBSTANTIALLY ALL OF ITS ASSETS, INCLUDING ITS RADIO STATIONS KEAN-AM/FM,
KROW-FM, ABILENE, TEXAS; KYKX-FM, LONGVIEW, TEXAS; KKYS-FM, BRYAN, TEXAS;
KKSS-FM, ALBUQUERQUE, NEW MEXICO; AND, KMJJ-FM, SHREVEPORT, LOUISIANA TO
SUNBURST MEDIA OF DALLAS, TEXAS FOR THE SUM OF TWENTY-FOUR MILLION DOLLARS
($24,000,000). THE COMPANY WILL RETAIN ITS ACCOUNTS RECEIVABLE AND CASH IN THE
TRANSACTION. SUNBURST MEDIA OWNS TWELVE STATIONS IN THREE OTHER MARKETS IN
ADDITION TO THOSE BEING ACQUIRED FROM THE COMPANY.
CONSUMMATION OF THE TRANSACTION IS SUBJECT TO THE APPROVAL OF THE SHAREHOLDERS
OF SUNGROUP, WHO WILL BE ALLOWED TO VOTE ON THE TRANSACTION IN THE NEXT FEW
WEEKS. FINALIZATION OF THE AGREEMENT IS ALSO SUBJECT TO THE APPROVAL OF THE
FEDERAL COMMUNICATIONS COMMISSION, WHICH IS EXPECTED TO OCCUR SOMETIME IN
APRIL OR MAY, 1998.
THE COMPANY FURTHER ANNOUNCED THAT SUNBURST MEDIA HAS ENTERED INTO ADDITIONAL
AGREEMENTS WHICH PROVIDE FOR THE SIMULTANEOUS TRANSFER OF KMJJ-FM, SHREVEPORT,
LOUISIANA TO AN AFFILIATE OF CAPSTAR BROADCASTING, AUSTIN, TEXAS AND FOR THE
TRANSFER OF KKSS-FM, ALBUQUERQUE/SANTA FE, NEW MEXICO TO AN AFFILIATE OF
TRUMPER COMMUNICATIONS, II L.P., CHICAGO, ILLINOIS.
<PAGE>
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 12, 1999
SUNGROUP, INC.
(Exact name of registrant as specified in its charter)
Tennessee 0-3851 72-1151881
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
2201 Cantu Court, Suite 102a, Sarasota, Florida 34232-6254
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 377-6710
<PAGE>
Item 2. Acquisition or Disposition of Assets
On February 12, 1999, SunGroup Broadcasting of New Mexico, Inc.
("SunGroup Broadcasting of New Mexico"), a wholly-owned subsidiary of SunGroup,
Inc. ("SunGroup"), consummated its sale of substantially all of the assets of
radio station KKSS-FM ("Radio Station"), in Albuquerque, New Mexico, to Simmons
Media Group, Inc. ("Simmons"). The initiation of this transaction pursuant to
execution of the Asset Purchase Agreement by and between SunGroup and Sunburst
Media, LP was disclosed in SunGroup's Current Report on Form 10-Q, filed with
the Securities and Exchange Commission on November 13, 1998. The net proceeds to
SunGroup, Inc. from the disposition of the Radio Station were $5,500,000.00
There exists no material relationship between Simmons and SunGroup,
or any of its officers, directors or affiliates.
Item 7. Financial Statements and Exhibits
b) Pro Forma Financial Information.
The Pro Forma financial information reflects the current interim
period and the corresponding interim period of the preceding
fiscal year as though the transaction occurred at the beginning
of the periods.
<TABLE>
<CAPTION>
12 Months 12 Months
Ended 12-31-98 Ended 12-31-97
-------------- --------------
<S> <C> <C>
Revenue $4,645,827 $8,031,573
Income from Continuing Operations (385,052) 1,157,729
Net Income 8,004,770 (759,109)
Income Per Share 1.15 (.11)
</TABLE>
<PAGE>
Exhibits.
2) Asset Purchase Agreement by and between SunGroup, Inc. and
Sunburst Media, LP dated February 13, 1998, is hereby
incorporated by reference to SunGroup's Current Report or Form
10-Q filed November 13, 1998.
3) Articles of Incorporation and By-Laws
(i) The Articles of Incorporation of SunGroup are
incorporated herein by reference to SunGroup's Annual
Report on Form 10-KSB filed December 31, 1993.
(ii) The By-Laws of SunGroup are incorporated herein by
reference to SunGroup's Annual Report on Form 10-K
filed December 31, 1984
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SUNGROUP, INC.
Date: February 24, 1999 By: /s/ James A. Hoetger.
----------------- -----------------------------
James A. Hoetger.
Vice President, Finance
<PAGE>
SUNGROUP, INC.
2201 CANTU COURT, SUITE 102A
SARASOTA, FLORIDA 34232-6254
941 - 377-6710 - TELEPHONE - 941 - 378-5449 - FAX
FEBRUARY 16, 1999
DEAR SHAREHOLDER:
WE HAVE CLOSED THE SALE OF THE LAST RADIO STATION WITHIN THE SUNGROUP
PORTFOLIO. THIS TRANSACTION TOOK PLACE ON FEBRUARY 12, 1999.
WE ARE NOW IN THE PROCESS OF COLLECTING THE ACCOUNTS RECEIVABLES, NEGOTIATING
THE CONCLUSION OF TWO PROPERTY LEASES, AND SELLING OFF THE CORPORATION ASSETS.
ENCLOSED IS THE INITIAL DISTRIBUTION IN THE AMOUNT OF FIFTY CENTS ($.50) PER
SHARE. WE EXPECT TO MAKE A FINAL DISTRIBUTION AFTER THE ACCOUNTS RECEIVABLE HAVE
BEEN COLLECTED, UPON RESOLUTION OF OUR LEASES AND AFTER THE HOLD BACK PERIOD
EXPIRES WITH REGARDS TO OUR THREE TRANSACTIONS, AND OUR TAX OBLIGATIONS.
ALSO ENCLOSED IS AN INTERNAL REVENUE SERVICE FORM W-9, WHICH YOU NEED TO FILL
OUT AND RETURN TO US. PLEASE RETURN THE COMPLETED FORM IN THE ENVELOPE PROVIDED
HEREIN.
AT THIS TIME, WE PLAN TO HAVE THE CORPORATION COMPLETELY LIQUIDATED BY THE END
OF 1999. WE HAVE BEEN INFORMED BY LEGAL COUNSEL THAT SUNGROUP, INC. IS NO LONGER
A REPORTING COMPANY TO THE SECURITIES AND EXCHANGE COMMISSION (SEC).
A SIGNIFICANT AMOUNT OF TIME HAS BEEN SPENT WITH REGARDS TO THE ABOVE
TRANSACTIONS IN OBTAINING APPROVAL FROM THE FOLLOWING AGENCIES:
FAA = FEDERAL AVIATION ASSOCIATION,
FCC = FEDERAL COMMUNICATIONS COMMISSION,
SEC = SECURITIES AND EXCHANGE COMMISSION, AND
EPA = ENVIRONMENTAL PROTECTION AGENCY.
ALL ISSUES HAVE BEEN RESOLVED, AND WE ARE NOW PROCEEDING WITH THE DISSOLUTION OF
THE CORPORATION.
WE APPRECIATE YOUR PATIENCE WHILE WE HAVE GONE THROUGH THESE DIFFICULT
TRANSACTIONS.
SINCERELY YOURS,
JOHN W. BIDDINGER
ENCS.
<PAGE>
SUNGROUP, INC.
2201 CANTU COURT, SUITE 102A
SARASOTA, FLORIDA 34232-6254
941 - 377-6710 - TELEPHONE - 941 - 378-5449 - FAX
FEBRUARY 16, 1999
DEAR SHAREHOLDER:
WE HAVE CLOSED THE SALE OF THE LAST RADIO STATION WITHIN THE SUNGROUP PORTFOLIO.
THIS TRANSACTION TOOK PLACE ON FEBRUARY 12, 1999.
WE ARE NOW IN THE PROCESS OF COLLECTING THE ACCOUNTS RECEIVABLES, NEGOTIATING
THE CONCLUSION OF TWO PROPERTY LEASES, AND SELLING OFF THE CORPORATION ASSETS.
ENCLOSED IS THE INITIAL DISTRIBUTION IN THE AMOUNT OF FIFTY CENTS ($.50) PER
SHARE. WE EXPECT TO MAKE A FINAL DISTRIBUTION AFTER THE ACCOUNTS RECEIVABLE HAVE
BEEN COLLECTED, UPON RESOLUTION OF OUR LEASES AND AFTER THE HOLD BACK PERIOD
EXPIRES WITH REGARDS TO OUR THREE TRANSACTIONS, AND OUR TAX OBLIGATIONS.
AT THIS TIME, WE PLAN TO HAVE THE CORPORATION COMPLETELY LIQUIDATED BY THE END
OF 1999. WE HAVE BEEN INFORMED BY LEGAL COUNSEL THAT SUNGROUP, INC. IS NO LONGER
A REPORTING COMPANY TO THE SECURITIES AND EXCHANGE COMMISSION (SEC).
A SIGNIFICANT AMOUNT OF TIME HAS BEEN SPENT WITH REGARDS TO THE ABOVE
TRANSACTIONS IN OBTAINING APPROVAL FROM THE FOLLOWING AGENCIES:
FAA = FEDERAL AVIATION ASSOCIATION,
FCC = FEDERAL COMMUNICATIONS COMMISSION,
SEC = SECURITIES AND EXCHANGE COMMISSION, AND
EPA = ENVIRONMENTAL PROTECTION AGENCY.
ALL ISSUES HAVE BEEN RESOLVED, AND WE ARE NOW PROCEEDING WITH THE DISSOLUTION OF
THE CORPORATION.
WE APPRECIATE YOUR PATIENCE WHILE WE HAVE GONE THROUGH THESE DIFFICULT
TRANSACTIONS.
SINCERELY YOURS,
JOHN W. BIDDINGER
ENC.
