SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 36
TO
SCHEDULE 13D
Under the Securities Exchange Act of 1934
THE NOSTALGIA NETWORK, INC.
(Name of Issuer)
Common Stock, $.04 par value
(Title of Class of Securities)
669 752107
(CUSIP Number)
Dong Moon Joo, President
Concept Communications, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
(202) 789-2124
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Arthur E. Cirulnick
Tucker, Flyer & Lewis
a professional corporation
1615 L Street, N.W., Suite 400
Washington, D.C. 20036-5601
(202) 452-8600
October 25, 1996
(Date of Event which Requires Filing
of this Statement)
Check the following box if a fee is being paid with this
Statement: [ ]
<PAGE>
CUSIP No. 669 752107
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Concept Communications, Inc.
2. Check the appropriate box if a member of a group
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. Source of Funds
AF (Crown Communications Corporation)
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
NUMBER OF SHARES 7. Sole Voting Power
BENEFICIALLY 13,645,432 shares
OWNED BY
EACH 8. Shared Voting Power
REPORTING 0 shares
PERSON
WITH 9. Sole Dispositive Power
13,645,432 shares
10. Shared Dispositive Power
0 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,645,432 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
70.6%
14. Type of Reporting Person
CO
CUSIP No. 669 752107
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Crown Communications Corporation
2. Check the appropriate box if a member of a group
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. Source of Funds
OO
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
NUMBER OF SHARES 7. Sole Voting Power
BENEFICIALLY 1,000,000 shares
OWNED BY
EACH 8. Shared Voting Power
REPORTING 13,645,432 shares
PERSON
WITH 9. Sole Dispositive Power
1,000,000 shares
10. Shared Dispositive Power
13,645,432 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,645,432 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
70.6%
14. Type of Reporting Person
CO
CUSIP No. 669 752107
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Crown Capital Corporation
2. Check the appropriate box if a member of a group
(a) [X]
(b) [ ]
3. SEC USE ONLY
4. Source of Funds
AF (Crown Communications Corporation)
5. Check Box if Disclosure of Legal Proceedings is Required
Pursuant to Items 2(d) or 2(e) [ ]
6. Citizenship or Place of Organization
Delaware
NUMBER OF SHARES 7. Sole Voting Power
BENEFICIALLY 0 shares
OWNED BY
EACH 8. Shared Voting Power
REPORTING 14,645,432 shares
PERSON
WITH 9. Sole Dispositive Power
0 shares
10. Shared Dispositive Power
14,645,432 shares
11. Aggregate Amount Beneficially Owned by Each Reporting
Person
14,645,432 shares
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares [ ]
13. Percent of Class Represented by Amount in Row (11)
70.6%
14. Type of Reporting Person
CO
This Amendment No. 36 amends and supplements the statement
on Schedule 13D (the "Schedule 13D") filed by Concept
Communications, Inc., a Delaware corporation ("Concept"), Crown
Communications Corporation, a Delaware corporation
("Communications"), and Crown Capital Corporation, a Delaware
corporation ("Capital"), relating to the Common Stock, par value
$.04 per share (the "Common Stock"), of The Nostalgia Network,
Inc., a Delaware corporation (the "Issuer"). Capitalized terms
not otherwise defined herein shall have the meanings set forth in
the Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration.
Item 3 is hereby amended and supplemented by adding thereto
the following:
The purchase by Communications of 1,000,000 shares of
Common Stock for $900,000 pursuant to the September 20 Exercise
Letter and the Allied Option Agreement was financed by
Communications by borrowing the amount of such funds from
Atlantic Video pursuant to the Communications/AVI Promissory Note
and the Restated Security Agreement. The Reporting Persons
understand from Atlantic Video that all or substantially all of
the amounts loaned by Atlantic Video to Communications would be
obtained by Atlantic Video as proceeds of a loan from One-Up,
which would obtain those funds as proceeds of a loan from UCI.
Item 4. Purpose of the Transaction.
Item 4 is hereby amended and supplemented by deleting the
information under the caption Proposed Conversion and by adding
in lieu thereof the following:
On August 8, 1996, Concept delivered a letter to the 144
Committee of the Issuer proposing to convert the $16.5 million
principal amount of outstanding loans of the Issuer into
convertible preferred stock of the Issuer (the "August 8th
Conversion Letter"). Pursuant to the August 8th Conversion
Letter, the proposed terms of the preferred stock include, among
other things: (1) the preferred stock would be entitled to a
dividend at the rate of 6% per annum, (2) the preferred stock
would be convertible into shares of Common Stock at a price of
$0.70 per share and would have full anti-dilution protection and
(3) the holders of the preferred stock would vote with the
holders of Common Stock on an as-converted basis together with
certain class voting rights. In the August 8th Conversion
Letter, Concept indicated its desire to have the outstanding
accrued and unpaid interest on the loans repaid by the Issuer on
terms and conditions to be negotiated at a future date.
On August 13, 1996, the 144 Committee of the Issuer
delivered a letter to Concept rejecting Concept's proposal set
forth in the August 8th Conversion Letter (the "Issuer Rejection
Letter").
On August 15, 1996, Concept delivered a letter to the 144
Committee of the Issuer proposing to convert the $16.5 million
principal amount of outstanding loans of the Issuer into
convertible preferred stock of the Issuer (the "August 15th
Conversion Letter"). Pursuant to the August 15th Conversion
Letter, the proposed terms of the convertible preferred stock
would be substantially similar to the proposed terms of the
convertible preferred stock set forth in the August 8th
Conversion Letter, except that the price at which the preferred
stock would be converted into Common Stock was increased to $0.77
per share. In the August 15th Conversion Letter, Concept
indicated that it did not believe that the Issuer's Certificate of
Incorporation authorized convertible preferred shares with the
terms proposed by Concept. Concept expressed its willingness to
consider other forms of conversion with the Issuer which would
produce a similar economic effect without the need to postpone
the conversion until a shareholders' meeting could be held. By
its terms, the August 15th Conversion Letter superseded all
previous offers to convert the outstanding loans, including the
August 8th Conversion Letter.
On October 30, 1996, the 144 Committee of the Issuer
delivered a letter to Concept requesting clarification of
Concept's proposal set forth in the August 15th Conversion Letter
(the "October 30th Response Letter").
On November 1, 1996, Concept delivered a letter to the 144
Committee of the Issuer in response to the October 30th Response
Letter (the "November 1st Conversion Letter"). Pursuant to the
terms of the November 1st Conversion Letter, Concept set a
November 20, 1996 date for the expiration and termination of the
proposal set forth in the August 15th Conversion Letter. Concept
also restated and clarified certain aspects of the proposal set
forth in the August 15th Conversion Letter. In particular,
Concept reaffirmed: (1) its position that accrued interest on
the loans is not included as part of the conversion, (2) that the
preferred stock terms would include dilution protections for the
convertible stock and financial covenants and restrictions
similar to those already in place with the outstanding loans and
(3) its belief that specific performance would be the adequate
remedy after an Issuer breach of any preferred stock terms.
In the November 1st Conversion Letter, Concept also states
that it has had informal exploratory discussions with various
telecommunications industry members, but was not aware of any
concrete opportunity which would define its future plans
regarding the Issuer.
The foregoing descriptions of the August 8th Conversion
Letter, the Issuer Rejection Letter, the August 15th Conversion
Letter, the October 30th Response Letter, and the November 1st
Conversion Letter are qualified in their entirety by the text of
the August 8th Conversion Letter, the Issuer Rejection Letter,
the August 15th Conversion Letter, the October 30th Response
Letter, and the November 1st Conversion Letter, which are
attached hereto as Exhibits 34.1, 34.2, 34.3, 36.1 and 36.2
respectively and are incorporated herein by reference.
Item 4 is hereby further amended and supplemented by
incorporating herein the information set forth under Item 6 of
this Amendment No. 36.
Item 5. Interest in Securities of the Issuer.
Items 5 (a) and (b) are hereby amended by deleting the
information set forth thereunder and by adding in lieu thereof
the following:
(a)-(b) The following table sets forth information
with respect to the shares of the Common Stock beneficially owned
by the Reporting Persons:
<TABLE>
<CAPTION>
Name Aggregate Number Percentage Sole Power
of Shares of Class <F1> to Vote or
Beneficially or Direct
Owned Vote
<S> <C> <C> <C>
Concept 14,645,432<F2> 70.6% 13,645,432
Communications 14,645,432<F2> 70.6% 1,000,000
Capital 14,645,432<F2> 70.6% 0
Name Shared Power Sole Power Shared Power
to Vote or to Dispose to Dispose or
Direct Vote or Direct or Direct
Disposition Disposition
<S> <C> <C> <C>
Concept 0 13,645,432 0
Communications 13,645,432 1,000,000 13,645,432
Capital 14,645,432<F2> 0 14,645,432<F2>
<FN>
<F1> Computed on the basis of 20,739,376 shares of
the Common Stock outstanding (20,274,371 shares of the Common
Stock reported to be outstanding in the Issuer's Form 10-Q for
the quarter ended June 30, 1996 and assuming the conversion of
the Preferred Stock owned by Concept and the exercise of the
Tiger Warrant by Concept).
<F2> Includes 14,180,427 shares of the Common Stock
and 2,500 shares of the Preferred Stock (each share convertible
into 100 shares of the Common Stock) owned by Concept, and
215,005 shares of the Common Stock that may be acquired by
Concept pursuant to the Tiger Warrant.
</FN>
</TABLE>
None of Ms. Spurgin and Messrs. Joo, Hugel, Gogan,
Seubert, Cooperrider, Morton, Salonen, Ward, Guerra and McDevitt
beneficially owns shares of the Common Stock or the Preferred
Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
Item 6 is hereby amended and supplemented by adding under
the caption Purchase of Allied Shares the following:
Purchase of Allied Shares.
On October 24, 1996, Allied consented to the assignment of
the option to purchase the 1,000,000 shares of Common Stock
exercised pursuant to the September 20 Exercise Letter (the
"Assignment and Consent").
On October 25, 1996, Communications consummated the purchase
from Allied of 1,000,000 shares of Common Stock pursuant to the
Allied Option Agreement and the September 20 Exercise Letter.
The aggregate price for such shares was $900,000 or $0.90 per
share.
The foregoing description of the Assignment and Consent is
qualified in its entirety by the text of the Assignment and
Consent, which is attached hereto as Exhibit 36.3 and is
incorporated herein by reference.
Item 7. Items to be Filed as Exhibits
Exhibit Description
34.1 Letter, dated August 8, 1996, from Concept
Communications, Inc., to the 144 Committee of the
Nostalgia Network, Inc.
34.2 Letter, dated August 13, 1996, from the 144 Committee
of the Nostalgia Network, Inc. to Concept
Communications, Inc.
34.3 Letter, dated August 15, 1996, from Concept
Communications, Inc., to the 144 Committee of the
Nostalgia Network, Inc.
36.1 Letter from William H. Lash III and Robert Wussler to
Concept Communications, Inc. dated October 30, 1996.
36.2 Letter from Concept Communications, Inc. to Messrs.
Wussler and Lash of the 144 Committee of The Nostalgia
Network, Inc. dated November 1, 1996.
36.3 Assignment and Consent among Concept Communications,
Inc., Crown Communications Corporation and Allied
Cellular Systems, Inc. dated October 24, 1996.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned hereby certifies that the
information set forth in this amendment is true, complete and
correct.
Dated: November 12, 1996
CONCEPT COMMUNICATIONS, INC.
/s/ Werner Seubert
By: Werner Seubert, Vice President
CROWN COMMUNICATIONS CORPORATION
/s/ Werner Seubert
By: Werner Seubert, Vice President
CROWN CAPITAL CORPORATION
/s/ Werner Seubert
By: Werner Seubert, Vice President
<PAGE>
EXHIBIT INDEX
Exhibit Description Page
34.1 Letter, dated August 8, 1996, from Concept
Communications, Inc., to the 144 Committee of the
Nostalgia Network, Inc.
34.2 Letter, dated August 13, 1996, from the 144
Committee of the Nostalgia Network, Inc. to
Concept Communications, Inc.
34.3 Letter, dated August 15, 1996, from Concept
Communications, Inc., to the 144 Committee of the
Nostalgia Network, Inc.
36.1 Letter from William H. Lash III and Robert
Wussler to Concept Communications, Inc. dated
October 30, 1996.
36.2 Letter from Concept Communications, Inc. to
Messrs. Wussler and Lash of the 144 Committee of
The Nostalgia Network, Inc. dated November 1,
1996.
36.3 Assignment and Consent among Concept
Communications, Inc., Crown Communications
Corporation and Allied Cellular Systems, Inc.
dated October 24, 1996.
VIA FACSIMILE & HAND DELIVERY
August 8, 1996
144 Committee
Nostalgia Television
650 Massachusetts Avenue, NW
Washington, D.C. 20001
Gentlemen:
The Nostalgia Network, Inc. ("Nostalgia") is currently
indebted to Concept Communications, Inc. ("Concept") in the
principal amount of $16.5 million (the "Principal"), plus accrued
interest as of August 10, 1996 in the amount of $960,566.89.
Concept desires to convert the Principal into equity of
Nostalgia. Concept will discuss with Nostalgia separately the
terms of the repayment of the outstanding accrued and unpaid
interest.
Concept desires to convert the Principal into a class
of preferred stock of Nostalgia with the following rights and
preferences:
1. Liquidation Preferences. $16.5 million, plus all
accrued and unpaid dividends.
2. Dividends. A paid-in-kind dividend at the rate of
6% per annum.
3. Conversion Rights. Convertible into shares of
Nostalgia common stock at a price of $0.70 per
share. Concept would receive full anti-dilution
protection.
4. Voting. The preferred shares will vote, together
with the common stock, on an as-converted basis.
There may be separated class voting on certain
issues to be discussed further.
5. Covenants. Concept desires to discuss continuing
the covenants which Nostalgia agreed to in its
March 29, 1995 letter agreement with Concept in
connection with earlier bridge loans.
Notwithstanding the above, Concept might be willing to
consider entering into negotiations for a participating preferred
stock at a different conversion price.
As best as Concept can determine, Nostalgia is not in a
position to sell shares of preferred stocks with the rights
described above without first receiving shareholder approval.
However, Concept would explore converting into a specially
created class of preferred stock ("Special Stock") approved by
Nostalgia's Board (without the need for shareholder approval),
which Special Stock would be convertible into a class of
preferred stock with the appropriate rights and preferences to be
approved at the next annual shareholders' meeting. The Special
Stock issued for this interim period would grant Concept
contractual rights substantially similar to the rights described
above. If you believe this proposal does not work, Concept would
be willing to consider other economically equivalent alternatives
so that conversion can occur promptly and not be held up pending
a shareholders' meeting. Of course, before the conversion
process is completed, Concept must secure its Board's approval.
We look forward to your response.
Sincerely,
Concepts Communications
By:/s/ Werner Seubert
Werner Seubert, VP
August 13, 1996
Werner Seubert
Nicholas Chiaia
Concept Communications
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
VIA FAX 202-408-8891
Gentlemen:
The members of the 144 Committee of Nostalgia Network,
Inc. are in receipt of your offer to convert the principal of the
Nostalgia Network debt held by Concept Communications into equity
instruments of Nostalgia Network.
In paragraph 3 of your letter Concept Communications
offers to convert the principal of the Nostalgia Network debt it
holders into Nostalgia common stock at a price of $0.70 per
share.
After substantial evaluation and deliberation the 144
Committee of Nostalgia Network must reject your offer to convert
at $0.70 per share as inadequate.
We look forward to working with you to arrive a
mutually acceptable debt-equity conversion.
William H. Lash, III Robert J. Wussler
VIA FACSIMILE & HAND DELIVERY
August 15, 1996
144 Committee
Nostalgia Television
650 Massachusetts Avenue, NW
Washington, D.C. 20001
Gentlemen:
The Nostalgia Network, Inc. ("Nostalgia") is currently
indebted to Concept Communications, Inc. ("Concept") in the
principal amount of $16.5 million (the "Principal"), plus accrued
interest as of August 10, 1996 in the amount of $960,566.89.
Concept desires to convert the Principal into equity of
Nostalgia. Concept will discuss with Nostalgia separately the
terms of the repayment of the outstanding accrued and unpaid
interest.
Concept desires to convert the Principal into a class
of preferred stock of Nostalgia with the following rights and
preferences:
1. Liquidation Preferences. $16.5 million, plus all
accrued and unpaid dividends.
2. Dividends. A paid-in-kind dividend at the rate of
6% per annum.
3. Conversion Rights. Convertible into shares of
Nostalgia common stock at a price of $0.77 per
share. Concept would receive full anti-dilution
protection.
4. Voting. The preferred shares will vote, together
with the common stock, on an as-converted basis.
There may be separated class voting on certain
issues to be discussed further.
5. Covenants. Concept desires to discuss continuing
the covenants which Nostalgia agreed to in its
March 29, 1995 letter agreement with Concept in
connection with earlier bridge loans.
Notwithstanding the above, Concept might be willing to
consider entering into negotiations for a participating preferred
stock at a different conversion price.
As best as Concept can determine, Nostalgia is not in a
position to sell shares of preferred stocks with the rights
described above without first receiving shareholder approval.
However, Concept would explore converting into a specially
created class of preferred stock ("Special Stock") approved by
Nostalgia's Board (without the need for shareholder approval),
which Special Stock would be convertible into a class of
preferred stock with the appropriate rights and preferences to be
approved at the next annual shareholders' meeting. The Special
Stock issued for this interim period would grant Concept
contractual rights substantially similar to the rights described
above. If you believe this proposal does not work, Concept would
be willing to consider other economically equivalent alternatives
so that conversion can occur promptly and not be held up pending
a shareholders' meeting. Of course, before the conversion
process is completed, Concept must secure its Board's approval.
This offer supersedes all of Concept's preceding debt to equity
conversion offers, including Concept's August 8, 1996 offer.
We look forward to your response.
Sincerely,
Concepts Communications
By: /s/ Werner Seubert
Werner Seubert, VP
WILLIAM H. LASH III
ROBERT J. WUSSLER
October 30, 1996
Werner Seubert
Vice President
Concept Communications, Inc.
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Re: Nostalgia Network, Inc.
Dear Mr. Seubert:
This letter is in response to your letters dated August 15
and October 31, 1996 regarding your proposed recapitalization of
the indebtedness of Nostalgia held by Concept.
Your proposal to date lacks the necessary detail to enable
us to adequately evaluate it. We need clarification regarding
the terms of the preferred stock that you propose. For example:
(i) how will accrued interest be treated in any recapitalization;
(ii) under what circumstances will the preferred shares be
entitled to anti-dilution protection; (iii) what covenants are
specifically envisioned by you; and (iv) what remedies would be
available upon default under the preferred? Also, we need an
understanding of the various possibilities, or plans, that you
envision for Nostalgia. Your letter of October 22 is not
helpful.
We and our advisors are prepared to meet to discuss any
proposal presented by with representing Concept that addresses
our concerns, as well as Concept's plans that may affect
Nostalgia. We look forward to hearing from you.
Very truly yours,
/s/ William H. Lash
William H. Lash III
/s/ Robert Wussler
Robert Wussler
Copies for: John K. Winkler, III and John D. Carton
Patricof & Co. Capital Corp.
Theodore Sonde and Ronald R. Jewell
Dechert Price & Rhoads
Via Facsimile and U.S. Mail
November 1, 1996
Messrs Wussler and Lash
144 Committee
The Nostalgia Network, Inc.
650 Massachusetts Avenue, NW
Washington, DC 20001
Gentleman:
Thank you for your October 30, 1996 formal response to Concept's
August 15, 1996 offer letter. We appreciate your giving it your
sincere attention and remain committed to the highest
professional and ethical standards. With this intention, we
have, to date, extended you the time necessary to do your
analysis. We regret, however, that it has taken so long for you
to raise the questions presented here and hope that there will be
no losses sustained by any interested parties. As you must know,
Concept cannot control the type of business opportunities that
may arise with the passage of time. Thus, our $0.77 conversion
offer cannot remain open indefinitely and will expire on November
30, 1996. There is no guarantee that we will make another offer.
As for your questions, we offer the following response seriatim
with hope that this will expedite the negotiating process and
with the understanding that this letter will be used solely by
your Committee and its agents for purposes of completing the debt
to equity conversion process. This letter may not, under any
circumstances, be disseminated, distributed, or copied and does
not constitute Concept's formal plans.
1. Accrued Interest
In response to your query about the treatment of accrued
interest, we fail to see the materiality of this question. Our
conversion offer extends to the principal amount of 16.5 million.
At present, Concept has not offered to change the existing
treatment of any outstanding interest nor does it have any firm
plans to do so. Thus, presently outstanding promissory notes and
related agreements specify the terms and conditions of repayment
on accrued interest. Presumably, your committee has copies of
such notes and agreements in your possession.
2. Anti-Dilution Protection
Regarding the circumstances entitling anti-dilution protection
for the preferred shares requested, we seek full anti-dilution
protection if Nostalgia sells its stock for less than $0.77 at
any time prior to Concept converting the preferred stock it
receives into common shares.
3. Covenants Envisioned
We envision implementing expenditure constraints similar to those
agreed in paragraphs "2" and "3" of our March 29, 1995 letter
agreement with Nostalgia. Likewise, we would like a right of
first refusal as outlined in paragraph "4" of the March 29, 1995
letter agreement. (A copy of the letter is attached for your
convenience.)
4. Remedies for Default Under the Preferred
Regarding the remedies we would seek if Nostalgia were to breach
its obligations under the preferred stocks requested, we have
always anticipated that Nostalgia would perform and have no
reason to believe that it would not. Since you insist on our
addressing this possibility, we would most likely seek specific
performance.
5. Possibilities or Plans for Nostalgia
As indicated in our October 12, 1996 letter to you, other than
any existing obligations to Nostalgia for 1996, Concept has no
formal plans for the future. Generally speaking, we hope to see
Nostalgia as a prosperous television network offering quality
programs to the 49+ audience. With this aim, Concept has had
informal exploratory discussions with various telecommunication
industry members but we are not aware of any concrete opportunity
which would define our future plans regarding Nostalgia. We wish
we could tell you more but this is our present status regarding
Nostalgia.
Once again, we appreciate the 144 Committee's efforts and will
continue to diligently cooperate with you in bringing this matter
promptly to a close.
Very truly yours,
CONCEPT COMMUNICATIONS
by: /s/ Nicholas Chiaia
Nicholas Chiaia, General Counsel
<PAGE>
VIA FACSIMILE & HAND DELIVERY
August 15, 1996
144 Committee
Nostalgia Television
650 Massachusetts Avenue, NW
Washington, D.C. 20001
Gentlemen:
The Nostalgia Network, Inc. ("Nostalgia") is currently
indebted to Concept Communications, Inc. ("Concept") in the
principal amount of $16.5 million (the "Principal"), plus accrued
interest as of August 10, 1996 in the amount of $960,566.89.
Concept desires to convert the Principal into equity of
Nostalgia. Concept will discuss with Nostalgia separately the
terms of the repayment of the outstanding accrued and unpaid
interest.
Concept desires to convert the Principal into a class
of preferred stock of Nostalgia with the following rights and
preferences:
1. Liquidation Preferences. $16.5 million, plus all accrued
and unpaid dividends.
2. Dividends. A paid-in-kind dividend at the rate of 6% per
annum.
3. Conversion Rights. Convertible into shares of Nostalgia
common stock at a price of $0.77 per share. Concept would
receive full anti-dilution protection.
4. Voting. The preferred shares will vote, together with the
common stock, on an as-converted basis. There may be separated
class voting on certain issues to be discussed further.
5. Covenants. Concept desires to discuss continuing the
covenants which Nostalgia agreed to in its March 29, 1995 letter
agreement with Concept in connection with earlier bridge loans.
Notwithstanding the above, Concept might be willing to
consider entering into negotiations for a participating preferred
stock at a different conversion price.
As best as Concept can determine, Nostalgia is not in a
position to sell shares of preferred stocks with the rights
described above without first receiving shareholder approval.
However, Concept would explore converting into a specially
created class of preferred stock ("Special Stock") approved by
Nostalgia's Board (without the need for shareholder approval),
which Special Stock would be convertible into a class of
preferred stock with the appropriate rights and preferences to be
approved at the next annual shareholders' meeting. The Special
Stock issued for this interim period would grant Concept
contractual rights substantially similar to the rights described
above. If you believe this proposal does not work, Concept would
be willing to consider other economically equivalent alternatives
so that conversion can occur promptly and not be held up pending
a shareholders' meeting. Of course, before the conversion
process is completed, Concept must secure its Board's approval.
This offer supersedes all of Concept's preceding debt to equity
conversion offers, including Concept's August 8, 1996 offer.
We look forward to your response.
Sincerely,
Concepts Communications
By: /s/ Werner Seubert
Werner Seubert, VP
<PAGE>
March 29, 1995
The Nostalgia Network, Inc.
c/o 144 Committee
650 Massachusetts Avenue, N.W.
Washington, D.C. 20001
Attention: Professor William Lash
Gentlemen:
As an inducement to Concept Communications, Inc. ("Concept")
to make a bridge loan to The Nostalgia Network, Inc.
("Nostalgia") and to agree to certain forbearances and other
matters requested by Nostalgia's auditors, Concept desires that
Nostalgia agree to certain terms as a condition to Concept's loan
and other agreements. These conditions are as follows:
1. It is the anticipation of Concept and Nostalgia that the
money currently being loaned by Concept to Nostalgia will be
converted into equity of Nostalgia once Concept and Nostalgia are
able to reach mutual agreement as to the price at which shares
are to be sold to Concept. Nostalgia agrees that as part of such
investment by Concept, Nostalgia will sell at least 2,000 shares
of its Preferred Stock to Concept and that, in the interim,
Nostalgia will not issue any of its shares of Preferred Stock to
any party other than Concept. Notwithstanding the foregoing, in
the event that any currently existing or new loans from Concept
to Nostalgia are outstanding as of January 31, 1996, all such
outstanding loans shall have their interest rates adjusted,
effective as of February 1, 1996, to the six month Treasury bill
rate used to compute the initial interest rate(s) of such loan(s)
(which in the case of the loan made by Concept on December 16,
1994, was the six month Treasury bill rate as of close of
business December 9, 1994, for maturities over $1 million on June
8, 1995) plus two percentage points.
2. Nostalgia agrees that for the remainder of calendar year
1995, it will not expend any amounts in excess of the amounts
budgeted for calendar year 1995 as reflected in the long range
business plan (the "Plan") previously submitted to Concept in or
about November 1994. In addition, Nostalgia agrees to provide to
Concept, as soon as possible after the end of each month (for all
months through December 1995, or, if later, the date on which the
loan is converted into equity of Nostalgia) balance sheets,
income statements, and such other financial information and
results of operation as Concept shall reasonably request with
respect to such month.
3. Nostalgia agrees that, during the term of the loan, it will
not enter into any agreement committing Nostalgia to spend in
excess of $1 million unless such expenditure is provided for in
the Plan or unless otherwise agreed to by Concept.
4. Nostalgia agrees that in the event that, prior to December
31, 1995, or, if later, the date on which the loan is converted
into equity of Nostalgia, it desires to sell in the aggregate
more than 500,000 of its shares of Common Stock or more than 500
shares of its Preferred Stock to any third party or third parties
acting in concert in any transaction or series of transactions,
Concept shall have a right of first refusal to purchase such
shares on the terms offered to such third party. In addition, in
the event of any future sales of shares by Nostalgia to a third
party at a price less than the price to be agreed to by Concept
and Nostalgia with respect to the conversion of all currently
outstanding bridge loans, as well as the currently contemplated
bridge loan, Nostalgia would issue such number of additional
shares to Concept as to cause Concept's subscription price to be
adjusted to such lesser purchase price.
Concept and Nostalgia agree that the terms of this letter
agreement are a material inducement to Concept to advance the
additional bridge loan and to agree to the forbearances and other
matters requested by Nostalgia's auditors and are intended to be
a binding agreement between Concept and Nostalgia. As soon as
possible after the date hereof, representatives of Concept will
prepare and submit to Nostalgia for review more detailed
agreements reflecting the agreements contained in this letter.
Notwithstanding the fact that more detailed agreements are
contemplated, the parties agree that the terms hereof are legally
binding upon each of them and may be specifically enforced by a
court of competent jurisdiction. In the event that any provision
hereof is deemed by such a court to be unenforceable, the
remaining provisions hereof shall be enforced to the maximum
extent possible to preserve the intent of the parties hereof.
Please indicate your acceptance to the terms hereof by
executing this agreement where indicated below.
Yours truly,
CONCEPT COMMUNICATIONS, INC.
By: /s/ Dong Moon Joo
Dong Moon Joo, President
ACCEPTED AND AGREED TO:
THE NOSTALGIA NETWORK
By: /s/ William H. Lash III
144 Committee
ASSIGNMENT
WHEREAS, Concept Communications, Inc. ("Concept") is a party
to an Option Agreement dated March 21, 1996, between it and
Allied Cellular Systems, Inc. ("Allied") with respect to an
Option to purchase 1,000,000 shares of the Common Stock of
Nostalgia Television Network, Inc. ("the Nostalgia Shares");
WHEREAS, Concept desires to assign its option to purchase
the Nostalgia Shares to Crown Communications Corporation
("Crown");
THEREFORE, Concept hereby assigns to Crown (for good and
valuable consideration) all of its rights under the Option
Agreement and Crown hereby assumes all of Concept's obligations
under the Option Agreement.
Dated: September 30, 1996
CONCEPT COMMUNICATIONS, INC.
By: /s/ Dong Moon Joo
Name: Dong Moon Joo
Title: President
Dated: September 30, 1996
CROWN COMMUNICATIONS
CORPORATION
By: /s/ Dong Moon Joo
Name: Dong Moon Joo
Title: President
CONSENT
Allied Cellular Systems, Inc., hereby consents to the above
assignment of the Option Agreement dated March 21, 1996 from
Concept Communications, Inc., to Crown Communications
Corporation.
Dated: October 24, 1996
ALLIED CELLULAR SYSTEMS, INC.
/s/ David L. Petersen
Name: David L. Petersen
Title: Executive Vice-President and
Chief Financial Officer
