<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended April 30, 1994 Commission file number 0-14361
PARTECH HOLDINGS CORPORATION
(Exact Name of Company as Specified in Its Charter)
Delaware 31-1166419
(State or Other jurisdiction of (I.R.S. Employer I.D. Number)
incorporation or organization)
3366 Riverside Drive, Suite 200, Columbus, Ohio 43221
(Address of principal executive offices) (Zip Code)
Company's telephone number, including area code: (614) 538-0660
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Title of Each Class
-------------------
Common Stock, par value $0.05
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
----
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
---- ----
The approximate aggregate market value of voting stock held by nonaffiliates
of the Company was $3,594,434 as of June 30, 1994.
The Company had 5,579,706 shares of $0.05 par value common stock
outstanding as of June 30, 1994.
DOCUMENTS INCORPORATED BY REFERENCE:
1994 Notice of Annual Meeting, Part III
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<TABLE>
PARTECH HOLDINGS CORPORATION
1994 FORM 10-K ANNUAL REPORT
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C> <C>
PART I
- - ------
Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote of Security Holders 8
PART II
- - -------
Item 5. Market for the Company's Common Equity and
Related Stockholder Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
Item 8. Financial Statements and Supplementary Data 18
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 43
PART III
- - --------
Item 10. Directors and Executive Officers of the Company 43
Item 11. Executive Compensation 43
Item 12. Security Ownership of Certain Beneficial
Owners and Management 43
Item 13. Certain Relationships and Related Transactions 43
PART IV
- - -------
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K 44
Signatures 56
Index to Exhibits 57
</TABLE>
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PART I
Item 1. BUSINESS
Partech Holdings Corporation ("Partech") was incorporated in Delaware on
March 25, 1985, and acts primarily as a holding company, owning 100% of the
outstanding capital stock of four wholly-owned subsidiaries: Leeward Capital
Corporation ("Leeward Capital"), an Ohio corporation formed in 1980, and its
two subsidiaries; LCC Equipment Corporation ("LCC Equipment"), a Delaware
corporation formed in 1985; LCC Asset Management Corporation ("LCC Asset
Management"), a Nevada corporation, formed in 1990; and Partech Communications
Group, Inc. ("PCG"), a Nevada corporation, formed in 1992, and its fifteen
subsidiaries. Partech and its subsidiaries are referred to herein as the
"Company."
Through most of the 1980s and into 1990 the Company was actively involved
in the equipment leasing business, which provided substantially all of the
Company's revenue during that period. In the late 1980s, the equipment leasing
industry experienced a significant change due to a number of factors, including
the overall decline in the economy that caused equipment users to delay or
cancel acquisition of new equipment, technological improvements in computer and
peripheral equipment which altered leasing decisions of equipment users, and
changes in tax laws. As a result of this change many of the major leasing
companies have scaled back their operations, sold their portfolios, ceased
originating new business or have gone out of business entirely. IBM Credit
Corporation quickly filled the financing void left by the departure of these
companies by aggressive pricing and having binding release clauses built into
the original lease contracts, which further reduced the availability and
profitability of computer lease transactions.
The net effect of this industry-wide change was to significantly slow down
the Company's equipment leasing operations. Therefore, since late 1990, the
Company has actively pursued various business opportunities which were
compatible with the Company's past experiences in the equipment leasing
industry and which could take advantage of the unique talents and experience of
existing management. The Company pursued a number of prospective opportunities
over the years which it rejected because, among other reasons, of their failure
to fit in with the Company's equipment leasing business. Contemporaneously
with its search, the Company has continued to engage in equipment leasing
activities, albeit on a considerably smaller scale than in the past.
In mid-1992 the Company began to investigate the broadcast and
communications industry. This industry appeared particularly attractive to the
Company because of the Company's knowledge of electronic data processing
equipment and its access to warehoused off lease computers and related
equipment which were required in certain aspects of the broadcast industry.
The Company's investigation into this field led it to determine that there was
a significant investment opportunity in the broadcast and communications
business that had recently appeared and was likely to not last long. The
unprecedented overinflated purchase prices that had been paid for broadcast
properties in the 1980s caused many operators to find themselves in financial
distress and broadcast properties were, accordingly, being offered for sale at
deep discounts from the historic highs of only a few years earlier.
Additionally, in August 1992, the Federal Communications Commission ("FCC")
increased the number of radio stations a company may control and increased
limits to the ownership of multiple stations in single markets.
The combination of these factors resulted in the formation of PCG, which
was formed for the purpose of acquiring, owning, managing, developing and
brokering communications related technology including broadcast properties,
telecommunications equipment, communications software and other products.
From May, 1992 through July, 1993 the Company received approximately
$3,560,000 in proceeds from the exercise of its A and B Warrants. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." In addition, in March, 1993 the Company received $500,000 in
proceeds from a private borrowing which was repaid from the proceeds received
upon the aforesaid exercise of B Warrants (see "Note - 13 Notes to the
Consolidated Financial Statements"). These funds were used by the Company to
repay all of its unsecured debts, fund its working capital requirements,
finance the Company's search for broadcast properties and to acquire and
upgrade the radio broadcast properties (described below).
The Company is continuing to manage its lease portfolios and to acquire
lease properties as and when suitable transactions become available. The
Company is also pursuing the acquisition and management of FM radio station
broadcast properties and leasing opportunities within the broadcasting
industry. The Company expects that its broadcast acquisition policies will
enable it expand its equipment leasing activities into this rather related
industry in a manner that is wholly homogeneous with the Company's current
leasing operations. The Company's business is
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derived from two segments, leasing and broadcasting. Financial and other
information regarding these business segments appears on page 37 of this Annual
Report on Form 10-K. The Company operated in predominately one segment for all
years prior to 1994; therefore, no financial segment information is reported
herein prior to fiscal 1994. Each of the business segments is more fully
described below.
ACQUISITION, MANAGEMENT AND SALE OF EQUIPMENT LEASE PORTFOLIOS
The Company's leasing business consists of the acquisition, financing,
ownership, management and brokerage of leases of data processing and other
equipment. The Company's lease brokerage and management activities are
principally conducted through LCC Equipment, LCC Asset Management and LCC
Leasing International, Inc., which is a leasing broker and owner of equipment
leases, and a wholly-owned subsidiary of Leeward Capital. Following is a
general description of the Company's equipment lease acquisition and management
activities. Defined terms have been applied consistently with the terms used
in the Company's Consolidated Financial Statements.
The Company acquires new equipment leases solely from other unaffiliated
leasing companies and financial institutions. Generally, the Company will
acquire a portfolio of leases consisting of numerous pieces of equipment
already on lease to a user (a "Portfolio"). Financing for these purchases is
accomplished by acquisition of the property subject to nonrecourse debt
obtained by discounting the user lease (the "Operating Leases" and Net
Investment in Operating Leases" collectively referred to hereinafter as
"Operating Leases") with a financial institution ("Discounted Lease Rentals and
Accrued Interest Payable"), seller financing ("Notes and Accrued Interest
Payable") and cash. The Company may invest its own cash ("Net Investment In
Direct Financing Leases" and "Residuals Receivable"), but has principally
financed such purchases through sale-leaseback transactions of the equipment
with an investor owner ("Equipment Notes and Accrued Interest Receivable,"
"Leased Property Under Capital Lease" and "Capital Lease Obligations and
Accrued Interest Payable").
Upon acquisition, the Company enters into a contract with the selling
company to remarket the equipment and administer the Company's obligations
under the Operating Leases. Payment for these services is accomplished through
sharing of residual proceeds. The Company's revenues from these transactions
include rental income from the Operating Leases, interest income from Equipment
Notes and Accrued Interest Receivable from sale-leaseback transactions, lease
brokerage fees and commissions (in cash and other property), and Residuals
Receivable from the release and/or sale of equipment after the expiration of
the various leases and early termination of leases.
The equipment in the Company's Portfolios consists principally of data
processing and communications equipment and is principally equipment
manufactured by International Business Machines Corporation, Digital Equipment
Corporation and Xerox Corporation. Users of the equipment, from whom Operating
Lease payments are received, are principally major U. S. industrial, financial
and service companies. All of the debt owed to financial institutions from
discounting the Operating Leases is nonrecourse to the Company.
The Company generally formed a special purpose grantor trust (the "Trusts")
to acquire each designated Portfolio. The Trusts are formed pursuant to
Section 1746 of the Ohio Revised Code. The grantor and sole beneficiary of
each Trust is generally either LCC Equipment or LCC Asset Management. The
trustee of each Trust is the Chief Executive Officer of the Company. As of
April 30, 1994 Company's twelve (12) active Business Trusts have approximately
$89,465,000 in aggregate assets. There is no cross-collateralization of assets
between Portfolios, each Portfolio and Trust constitutes a single investment
transaction undertaken with a single unaffiliated leasing company and there is
no commingling of assets or liabilities between Trusts.
As the Company has been in the business of acquiring, managing and selling
properties on a portfolio basis, it is anticipated that there may be
acquisitions or dispositions of large amounts of such property in future years.
The acquisition and disposition of these properties will result in substantial
equal periodic fluctuations of revenues and expenses and will also result in
substantial periodic changes in the Company's assets and liabilities in
equivalent proportions (see "Note 3 - Notes to the Consolidated Financial
Statements").
The Portfolio properties are highly leveraged transactions. However, once
the Discounted Lease Rentals and Accrued Interest Payable are paid, and the
Operating Lease has ended (which are coterminus events), the equipment will be
released to the same or another user, or will be sold, generally for
substantially less than the original purchase price of the equipment. Gross
proceeds from such release or sale are generally shared among several parties,
but paid first to cover the remarketing agent's expenses, and as fees to the
remarketing agent, then paid to the Company, and to the sale-leaseback owner
(if participating in the sharing of the proceeds). Proceeds received by the
Company will be applied to recover the Company's remaining investment in the
equipment.
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The Company's leasing fee income for the current year totaled $115,000 and
was earned solely from Aim Financial Corporation. For the fiscal year ended
April 30, 1993 the Company's leasing fee income totaled $349,064 which was
earned from Aim Financial Corporation and Aftra Leasing Corporation, accounting
for 82% and 18%, respectively, of the Company's leasing fee income. The
Company believes that it's relationship with these customers remains good,
however none of these companies are presently underwriting business in volumes
sufficient to assure that the Company will have access to future suitable
Portfolio purchases. The Company will continue to pursue Portfolio
acquisitions on suitable terms as and when available, however, there is no
assurance that the current economic environment will be easing in the near term
sufficiently strong enough for the Company's customers to return to their
pre-1991 lease origination volumes.
RADIO BROADCASTING
Once the Company decided upon expanding into the broadcast and
communications industry, the Company quickly turned its attention to
negotiating purchase contracts for radio broadcast properties in small to
mid-sized markets, concentrating on vacation/resort destination locations due
to their increased immunity to recessionary problems. By December, 1992 the
Company had entered into its first contract to purchase a radio station, which
was approved for transfer by the FCC and consummated in March, 1993. Since
that time, the Company has acquired a 49% interest in a station in Marathon
Key, Florida, and has entered into purchase contracts for an additional seven
(7) stations, the applications for transfer of which are or will be filed with
the FCC for approval (see table below). All subject stations are located in
the southeastern United States.
The Company has striven, in its acquisition strategy, to identify station
candidates which are in need of significant retooling in order to became
profitable. The Company's business plan calls for upgrading the stations'
broadcast power wherever feasible, changing the stations' call letters, if
appropriate, changing (often drastically) the stations' format in order to
target a market's under-served listening audience and substantially modifying
the stations' production operations, which includes reducing production and
administrative personnel. Stations will be uplinked to national satellite
broadcast sources, and interfaced with state-of-the-art computer-driven
broadcast equipment to produce seamless broadcasts of music and programming to
new audiences. The Company's experience with high-tech data processing
equipment gives it this added ability to perform a complete face-over on
stations being acquired to take advantage of situations where these acquisition
candidates are presently falling behind their competitors.
As a result of this make-over, the Company anticipates that it will capture
a completely new and different listening audience than the acquisition
candidates had. Improving the stations' broadcast power and targeting a
"better" listening audience will each serve to increase the stations' broadcast
market thereby substantially increasing their potential revenue base. The
change in the stations' listening audiences and broadcasting markets will
naturally lead to different advertisers utilizing the stations. The stations'
sales personnel will engage in a program during the make-over which will
identify and target markets to this new group of advertisers. Moreover, the
regional aspect of the Company's broadcast chain will allow the Company to
market to national and regional advertisers in substantially larger proportions
than could the acquisitions candidates.
Additionally, the Company's acquisition strategy calls for it to contract
for more than one station in each market, in order to allow the Company to
employ efficiencies of scale in significantly curtailing overhead,
administrative and production costs, and, to a lesser extent, controlling
selling costs of the stations. Additionally, multiple station ownership in a
single market will permit the Company to simultaneously broadcast different
formats, thereby allowing the Company to appeal to a larger and more diverse
audience.
The Company's first broadcast property acquisition was WDZD-FM, licensed to
Shallotte, North Carolina. The Company immediately undertook to upgrade the
station's 3,000 watt signal and expand its broadcast range and, therefore, its
marketing reach pursuant to FCC approval which had been held but not developed
by prior ownership. Accordingly, in February, 1994, the station's signal
strength was upgraded to 25,000 watts, its call letters were changed to WLTT,
and the station now serves both Myrtle Beach, South Carolina and Wilmington,
North Carolina. The Company employs eight (8) full time employees at the
station, four (4) of whom are salespeople.
As previously mentioned, the Company acquired a 49% interest in WKKB, Inc.,
Marathon, Florida, and is in the process of constructing a 50,000 watt FM radio
station in the Florida Keys, which will be leased to WKKB, Inc. In addition,
the Company has entered into a Time Brokerage Agreement ("TBA") with WMOG-FM
and WMOG-AM, for their daily operations which are licensed to St. Simons Island
and Brunswick, Georgia, respectively. The Company has contracted to purchase
these stations and its applications for license transfers are pending before
the FCC. The TBA requires the Company to pay a monthly fee to broadcast its
programming on the stations. The Company
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employs eleven (11) full time employees at these stations, four (4) of whom are
salespeople.
The Company has also entered into contracts for the purchase of stations
WJPH-FM and WMFL-AM, Montecello, Florida, and WMLO-FM, Havanna, Florida, all of
which will serve the greater Tallahassee, Florida market. The Company has also
entered into a purchase contract for WIIS-FM, Key West, Florida. Applications
for transfer of these broadcast licenses are currently pending before the FCC.
The following table sets forth the frequency and power of each of the
Stations and the date on which each of their FCC licenses expires (see "Note 24
- - - Notes to the Consolidated Financial Statements"):
<TABLE>
<CAPTION>
Expiration Date of
Station Market Frequency Power FCC Authorization
------- ------ --------- ----- -----------------
<S> <C> <C> <C> <C>
WLTT-FM (1) Myrtle Beach, SC 103.7 25.0 kw December 1, 1995
Wilmington, NC
WKKB-FM (2) Florida Keys 105.3 3.0 kw February 1, 1996
WMOG-AM (3) Brunswick, GA 1490 0.6 kw April 1, 1996
St. Simons Island
WMOG-FM (4) Brunswick, GA 92.7 6.0 kw April 1, 1996
St. Simons Island
WJPH-FM (5) Tallahassee, FL 101.9 6.0 kw February 1, 1996
WMFL-AM (5) Tallahassee, FL 1090 1.0 kw February 1, 1996
WMLO-FM (6) Tallahassee, FL 104.9 47 kw February 1, 1996
WIIS-FM (7) Key West, FL 107.1 2.5 kw February 1, 1996
- - ------------------------
<FN>
(1) WLTT-FM - Licensed to Shallotte, North Carolina. The station's market
includes Wilmington, NC and Myrtle Beach, SC.
(2) WKKB-FM - Licensed to Marathon, Florida, which is in the middle of the
Florida Keys island chain and its broadcast market is the Florida Keys.
The Company owns 49% of WKKB, Inc. and intends to finance the development
of the station and thereafter may pursue the acquisition of the remaining
51%. This station has a construction permit to increase power to 50kw.
(3) WMOG-AM - Licensed to Brunswick, Georgia. The Company has entered into
time brokerage agreement and has an application for license transfer
pending FCC approval.
(4) WMOG-FM - Licensed to St. Simons Island, Georgia. The Company has entered
into time brokerage agreement and has an application for license transfer
pending FCC approval.
(5) WJPH-FM and WMFL-AM - Both are licensed to Monticello, Florida and their
broadcast market is Tallahassee, Florida. WJPH-FM has been granted a
construction permit to increase power to 25kw and the Company has an
application for license transfer for both stations pending FCC approval.
(6) WMLO-FM - Licensed to Havanna, Florida and has a construction permit to
increase power to 47kw. The stations broadcast market is Tallahassee,
Florida. The Company's application for license transfer is pending FCC
approval.
(7) WIIS-FM - Licensed to Key West, Florida. The Company's application for
license transfer is pending FCC approval. The stations broadcast market is
Key West, Florida.
</TABLE>
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REGULATION
The radio broadcasting industry is subject to extensive federal regulation
by the FCC. In particular, the Company's radio broadcast business is dependent
upon its continuing to hold broadcasting station operating licenses issued by
the FCC. Radio station licenses are issued for terms of up to seven years and
are renewable for successive terms of up to seven years. While in the vast
majority of cases, radio licenses are routinely renewed by the FCC, there can
be no assurance that the Company's licenses will be renewed. Failure to obtain
the renewal of any of the Company's broadcast licenses would have a material
adverse effect on the Company's business and operations. Also, the activities
of persons who would be deemed by the FCC to control the Company could
adversely affect the Company's ability to obtain license renewals and to
acquire additional radio stations. There can be no assurance that there will
not be changes in the current regulatory scheme, the imposition of additional
regulations or the creation of new regulatory agencies, which would restrict or
curtail the ability of the Company to acquire, operate and dispose of its
stations or, in general, to compete profitably with other operators of radio or
other media properties. Nor can there be any assurance that there will not be
other regulatory changes, including aspects of deregulation, that will result
in a decline in the value of broadcasting licenses owned by the Company or
adversely affect the Company's competitive position.
ADVERTISING
The Company believes radio is one of the most efficient, cost-effective
means for advertisers to reach specific demographic groups. The Company also
believes that radio in general is more resistant to economic downturns than
other advertising-supported media due to its relatively lower-priced
advertising rates and lower commercial production costs.
Advertising rates charged by radio stations are based primarily on a
station's ability to attract audiences in the demographic groups targeted by
advertisers. The number of listeners of a station is often reported by rating
service surveys such as Arbitron, although most small radio markets and many
medium-sized markets are not serviced by Arbitron. Advertising rates are also
dependent upon the number of stations in the market competing for the same
demographic group and on the supply of and demand for radio advertising time.
Rates are generally highest during the morning and afternoon drive-time hours.
Radio station revenues are derived substantially from local, regional and
national advertising. Local and regional sales generally are made by a
station's sales staff. National sales are made by "national rep" firms, which
specialize in radio advertising sales on the national level. These firms are
compensated on a commission-only basis. Most contracts with advertisers are
short-term, generally running for only a few weeks.
Tourism is one of the major industries in the Company's targeted markets
which are popular vacation destinations. In addition, the average stay for
visitors is in excess of five days which, in management's view, provides an
unusual opportunity for advertisers to reach tourists through repeated
exposures to radio advertisements. Myrtle Beach (WLTT-FM) has enjoyed
substantial population growth over the last few years. Broadcast Investment
Analysts's INVESTING IN RADIO projects that the area's population will grow at
an annual rate of 4.8% from 1989 through 1994, which is substantially faster
than the projected national growth rate of 0.9% over such period.
COMPETITION
Radio broadcasting is a highly competitive business. The Company's radio
stations directly compete for listeners and advertising revenues with other
radio stations within their markets. Radio stations compete for listeners
primarily on the basis of program content and, to a lesser extent, by hiring
on-air talent which appeals to a particular demographic group. By building a
strong audience base comprised of a specific demographic group in each of its
markets (which will include several markets in the same region), the Company
seeks to attract advertisers that target these listeners. The Company's major
competitors may be owned by larger companies with greater resources.
Other media, including broadcast television, cable television, newspapers,
magazines, direct mail, coupons and billboard advertising, also compete with
the Company's stations for advertising revenues.
The FCC has indicated that the present FCC Rules will allow a greater
degree of consolidation, additional diversity and increased competition. The
Company believes that the present FCC Rules will enhance its ability to compete
in the marketplace. No assurance can be given, however, that the present FCC
Rules will improve the Company's competitive position.
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SEASONALITY
Radio industry revenues, like retailers, are seasonal and cyclical. The
Company's strongest advertising season is in the months of September through
January due to the holiday season, back-to-school advertising and retailers'
inventory reduction measures. The second largest advertising season for the
Company is in the months of May through September, due to the tourism industry
and summer sporting events. As is the case throughout the radio broadcast
industry, the months of February through April produce the lowest advertising
revenue.
OTHER INVESTMENTS
The Company is also a general partner in nine real estate limited
partnerships and receives from 0.01% to 1.00% of such partnerships' net income
and loss, which has been minimal. In addition, the Company is a limited
partner in two (2) leased equipment limited partnerships (which have active
Portfolios) and receives 99% of each partnership's net income and loss. The
Company's share of such net income or loss from leased equipment limited
partnerships has not been significant for financial statement purposes. The
Company's share, for financial accounting purposes, of net income or loss from
these limited partnerships is not expected to be significant in future periods.
The Company had a total of thirty-three (33) employees as of July 8, 1994,
none of whom were represented by a labor union.
Item 2. PROPERTIES
The Company leases 4,218 square feet of suburban office space at 3366
Riverside Drive, Suite 200, Columbus, Ohio, 43221, under a three year operating
lease which commenced April 6, 1992. The lease expires April 5, 1995. Such
leased property is utilized for general corporate purposes, leasing and
broadcasting activities. The Company owns five (5) acres in Shallotte, North
Carolina which has a Company owned broadcasting tower and building located
thereon. The land, tower and building hereof are currently not being utilized
for broadcasting purposes, but the Company has entered into a lease, as lessor,
for the tower and use of the building which is effective August 1, 1994 for
five (5) years. Furthermore, the Company leases 1,440 square feet of ocean
front office space in North Carolina for $900 per month, on a month to month
basis, which is used for broadcasting purposes. The Company owns approximately
sixteen (16) acres near Shallotte, North Carolina which has a broadcasting
tower, building, and other broadcasting equipment located thereon. The
property hereof is currently being utilized for broadcasting purposes. The
five (5) acres in Shallotte, North Carolina and the property located thereon,
along with other broadcasting equipment acquired or subsequently added which
relates to the Company's Shallotte, North Carolina radio station is encumbered
by the debt that was incurred for its acquisition.
Item 3. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings incidental to its
business. In the opinion of management, none of the proceedings, if adversely
decided, would have a material effect on the business of the Company. The
Company intends to vigorously prosecute or defend, as the case may be, all such
matters.
The Company has been involved in a dispute with the Estate of Joseph
Bitonte and Star Bank Central Ohio, regarding a loan from the bank to Mr.
Bitonte and a guarantee and pledge of collateral by the Company and Mr. John E.
Rayl, C.E.O. (among others). In a settlement recently reached between the
parties and to be entered into on or before August 6, 1994, the Company has
agreed to pay $115,000 to the Bitonte Estate in full and final settlement of
all matters in dispute against the Company and Mr. Rayl.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1994.
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PART II
Item 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company has historically reinvested its earnings in the business and
therefore has paid no cash dividends on its common stock. The Board of
Directors has no present intention of paying cash dividends in the foreseeable
future. The payment of dividends in the future will be determined by the Board
of Directors considering existing conditions such as financial and business
conditions, financial requirements and beneficial opportunities for
reinvestment of earnings and other conditions.
The Company's common stock trades on The Nasdaq Small-Cap Market under the
symbol APHC and on the Boston Stock Exchange under the symbol PTH.B. The
number of stockholders of record of common stock on June 30, 1994 was
approximately 2,000. The following table depicts the high and low sales price
as reported on NASDAQ for the current fiscal year.
<TABLE>
FISCAL YEAR ENDED APRIL 30, 1994
--------------------------------
<CAPTION>
FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
HIGH ASK $ 1.81 $ 2 .06 $ 2.13 $ 1.97
LOW ASK $ 0.94 $ 1 .44 $ 1.00 $ 0.97
</TABLE>
<TABLE>
FISCAL YEAR ENDED APRIL 30, 1993
--------------------------------
<CAPTION>
FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
HIGH ASK (1) $ 1.16 $ 1 .20 $ 1.08 $ 1.28
LOW ASK (1) $ 0.52 $ 0 .40 $ 0.34 $ 1.00
<FN>
(1) After June 30, 1992 the Company is required to report high and low trade
amounts, heretofore the Company reported high and low ask amounts. The
National Association of Securities Dealers Automatic Quotation System did
not maintain records of high and low trade amounts prior to June, 1992;
therefore, the first quarter of fiscal 1993 only includes amounts hereof
for the months of June and July. The high and low ask prices for the first
quarter of fiscal 1993 were $1.44 and $1.06, respectively.
</TABLE>
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Item 6. SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data
regarding the Company for the periods indicated. The Company's consolidated
financial statements as of April 30, 1994 and for all years presented hereunder
have been audited by Hausser + Taylor, CPAs, independent certified public
accountants. The selected financial data set forth in the following table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's Consolidated
Financial Statements and Notes thereto appearing hereinafter.
<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED APRIL 30,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Operating Revenues $ 30,485,138 $ 49,660,478 $ 89,515,391 $ 109,504,773 $132,880,872
Income (Loss) Before Income
Taxes, Extraordinary
Item and Cumulative
Effect of Change in
Accounting Principle $ (2,639,593) $ (1,519,715) $ (2,319,433) $ (1,670,236) $ 536,379
Income Tax Expense
(Benefit) $ - $ 180,000 $ - $ (647,616) $ -
Income (Loss) Before
Extraordinary Item and
Cumulative Effect of
Change in Accounting
Principle $ (2,639,593) $ (1,699,715) $ (2,319,433) $ (1,022,620) $ 536,379
Extraordinary Item (1) $ - $ - $ - $ 872,984 $ -
Cumulative Effect of
Change in Accounting
Principle (2) $ - $ 180,000 $ - $ - $ -
Net Income (Loss) $ (2,639,593) $ (1,519,715) $ (2,319,433) $ (149,636) $ 536,379
Average Number of Common
and Common Equivalent
Shares - Primary (3) 5,086,690 6,950,914 1,268,857 1,413,090 1,190,645
Net Income (Loss) Per Share
Before Extraordinary Item
and Cumulative Effect
of Change in Accounting
Principle - Primary (3)$ (0.52) $ (0.20) $ (1.83) $ (0.70) $0.48
Extraordinary Item Per
Share - Primary (3) $ 0.00 $ 0.00 $ 0.00 $ 0.62 $ 0.00
Cumulative Effect of
Change in Accounting
Principle - Primary (3)$ 0.00 $ 0.03 $ 0.00 $ 0.00 $0.00
Net Income (Loss) Per
Share - Primary (3) $ (0.52) $ (0.17) $ (1.83) $ (0.08) $ 0.48
Total Assets $ 93,420,160 $ 145,167,762 $ 269,931,484 $407,662,591 $545,050,232
Total Debt $ 90,443,733 $ 142,074,515 $ 266,589,256 $402,222,327 $539,545,332
Stockholders' Equity $ 2,976,427 $ 3,093,247 $ 3,342,228 $ 5,440,264 $ 5,504,900
Common Stock
Outstanding (4) 5,579,706 3,062,425 1,395,503 1,186,348 1,186,348
Book Value Per Share (5) $ 0.53 $ 1.01 $ 2.39 $ 4.59 $ 4.64
</TABLE>
10
<PAGE> 11
Item 6. SELECTED FINANCIAL DATA (CONTINUED)
(1) An officer forgave $343,491 of the prior years' accrued compensation and
interest, which was recognized as extraordinary income in fiscal 1991. In
addition, two officers reduced their compensation for fiscal 1991 by $427,835
and $80,000, respectively. Had such salary reductions and debt extinguishment
not occurred marketing, administrative and other operating expenses would have
been $2,552,121. Loss before income taxes and extraordinary item would have
been $2,178,071 and $1.52 per share, respectively, loss before extraordinary
item would have been $1,530,455 and $1.06 per share, respectively,
extraordinary item would have been $529,493 and $0.40 per share, respectively,
and net loss would have been $1,000,962 and $0.68 per share, respectively.
Earnings per share amounts are based upon primary earnings per share.
(2) The Financial Accounting Standards Board released Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ("SFAS 109") in
February, 1992. The Company adopted SFAS 109, effective May 1, 1992, and
accounted for its adoption as a cumulative effect of change in accounting
principle. Prior periods were not restated. The cumulative effect of the
adoption was $360,600 (net of a valuation allowance of $180,600), which was
reported in the fiscal 1993's statements of consolidated operations.
(3) All earnings per share and stock related information have been restated for
the 1 to 5 reverse stock split, which was effected March 9, 1992.
(4) This includes 400,000 shares and 12,000 shares which are issuable at April
30, 1993 and 1992, respectively.
(5) This is computed based upon common stock issued and outstanding (see 4).
(6) See "Consolidated Financial Statements" and "Notes to the Consolidated
Financial Statements"
(7) There have been no cash dividends declared or paid during the last five
years (see "Market for the Company's Common Equity and Related Stockholder
Matters").
11
<PAGE> 12
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As discussed in the Company's 1993 Form 10-K many of the major leasing
companies have scaled back their operations, sold their portfolios, ceased
originating new business or have gone out of business entirely. IBM Credit
Corporation quickly filled the financing void left by the departure of these
companies by aggressive pricing and having binding release contracts built
into the original lease contracts, which further reduced the availability and
profitability of computer lease transactions. Market forces driven by economic
uncertainties and technological advances have changed the markets for computer
and other types of leasing. Economic uncertainties have caused many users to
maintain with existing equipment and seek alternatives which provide low cost
access to advanced technology. Due to technological advances equipment end
users have more options available without creating a need for new equipment.
All of these factors have contributed to the slowdown of the Company's leasing
business.
As a result of the downturn in the Company's leasing business the Company
focused on cost containment for fiscal 1993 and 1992 and operated virtually on
a cash basis while it sought out other business opportunities without the
pressure and undue influence of creditors. The Company found that economic and
other factors which were having a negative effect on the leasing industry were
having a positive affect on the broadcasting industry. The Company sought out
broadcasting leasing opportunities and uses for its warehoused computers and
related equipment, and found that there were opportunities to acquire broadcast
properties which would help diversify the Company's business, and create
leasing and other opportunities within the broadcasting industry. In order to
enter into its broadcast leasing opportunities and acquire broadcast
properties, the Company undertook a public offering which provided capital to
repay past borrowings (which included a $625,000 short-term financing), finance
operations and provide financing for radio broadcast property acquisitions.
The Company received approximately $3,560,000 in proceeds from this public
offering (see "Notes 13 and 20 - Notes to the Consolidated Financial
Statements").
In the latter part of fiscal 1993 the Company acquired its first broadcast
property and has since then entered into agreements to acquire other
broadcasting properties. The Company currently owns and operates WLTT-FM,
located in Shallotte, North Carolina (serving the Wilmington, North Carolina
and Myrtle Beach, South Carolina markets) and owns a 49% interest in WKKB-FM
which is not operating, but has a construction permit to build a 50 kw station
in the Florida Keys. On April 1, 1994 the Company entered into a Time
Brokerage Agreement (the "Agreement") for the daily operations of WMOG-AM and
WMOG-FM, located in St. Simons Island and Brunswick, Georgia, until the sale of
the stations and transfer of the license is consummated (the results of
operations are included in the accompanying income statements). The Agreement
requires the Company to pay a monthly fee to broadcast it programming on the
stations. The Company has requests pending FCC approval for the transfer of
four FM and two AM stations (which include the WMOG stations). All of the
Company's stations, current and future, are to be located in the southeastern
United States (see "Note 24 - Notes to the Consolidated Financial Statements").
The Company's financial results from its broadcasting operations are
dependent on several factors, many of which are not in the Company's control.
Such factors include, but are not limited to, the general strength of the local
and national economies, the growth of the population in the Company's markets,
the ability to attract a loyal following by providing popular programming,
competition in each market, the comparative efficiency and cost of radio
broadcasting compared to other advertising media, signal strength and
penetration, and government regulation and policies. The Company's
broadcasting revenues are primarily affected by the advertising rates the
Company's radio stations are able to charge, which are based on the Company's
competition in each market and its ability to attract audiences. The Company
strives to increase its audiences by choosing a popular format for which there
is vulnerable competition and to make the station publicly visible. The amount
of advertisements that a station can broadcast without hindering audience
levels and the resultant ratings is subject, in part, to the format of a
station. Broadcasting revenues are increased by planning the number of
commercials that can be sold within a particular format and making appropriate
price adjustments for the supply and demand of commercials, taking into
consideration local and regional market conditions.
The Company expects that its broadcasting revenues will continue to grow,
but will not become significant until all of the Company's acquisition
activities (which are expected to continue into fiscal 1995 ) have been
completed.
As to the Company's leasing activities, the Company is continuing to manage
its lease portfolios and to acquire lease properties as and when suitable
transactions become available. The Company is also actively pursuing leasing
opportunities within the broadcast industry. If the Company has idle
broadcasting equipment it aggressively markets such equipment for lease.
Rental income and interest income are a function of the amount of equipment in
the
12
<PAGE> 13
Company's Portfolios which may change substantially from year to year based
upon the volume of Portfolio acquisitions and dispositions. The Company's net
earnings from its Portfolios (see "Business") is minimal until the Operating
Lease are completed and the related Discounted Lease Rentals and Accrued
Interest Payable are paid.
The following tables indicate the comparative results of operations for
the fiscal years ended April 30, 1994, 1993 and 1992 as to each immediately
preceding year.
<TABLE>
=================================================================================================================
FISCAL YEAR ENDED APRIL 30, 1994 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1993
<CAPTION>
Fiscal Year Ended April 30, Amount of Change
--------------------------------- -----------------------------
1994 1993 Dollars Percentage
<S> <C> <C> <C> <C>
Rental income $ 21,845,430 $ 34,761,344 $ (12,915,914) (37.2%)
Commissions, fees and other income $ 449,743 $ 494,192 $ (44,449) (9.0)%
Interest income $ 8,189,965 $ 14,404,942 $ (6,214,977) (43.1%)
Marketing, administrative and other
operating expenses $ 2,025,408 $ 863,774 $ 1,161,634 134.5%
Interest expense $ 11,753,578 $ 13,364,059 $ (1,610,481) (12.1%)
Depreciation and amortization of
equipment $ 18,526,940 $ 36,013,645 $ (17,486,705) (48.6%)
Loss before income taxes and
cumulative effect of change
in accounting principle $ (2,639,593) $ (1,519,715) $ (1,119,878) (73.7%)
Net loss $ (2,639,593) $ (1,519,715) $ (1,119,878) (73.7%)
=================================================================================================================
</TABLE>
The above costs reflect the activity of the Portfolios acquired by the
Company. As the number of leases vary, so do the related expenses. As of
April 30, 1994 Equipment Notes and Accrued Interest Receivable, Leased Property
Under Capital Lease and Net Investment in Operating Leases were $56,789,950,
$29,084,845 and $1,359,646, respectively, compared to $87,904,468, $44,291,407
and $5,293,165, respectively, at April 30, 1993. Discounted Lease Rentals and
Accrued Interest Payable, and Capital Lease Obligations and Accrued Interest
Payable were $30,444,340 and $56,797,791, respectively, compared to $49,584,419
and $87,910,364, respectively, at April 30, 1993. These and the above leasing
revenue and expense decreases are due to payments made as to the Company's
existing lease receivables and related obligations, which is a normal operating
circumstance, sales of the lease portfolios and the low volume of new lease
Portfolios acquired. Such revenues and expenses, and assets and liabilities
are expected to change in future periods from new properties being acquired
(resulting in increases), and for payments which will be received and made as
to equipment and leases owned or disposed of, as the case may be (resulting in
decreases). During fiscal 1994 the Company acquired $14,759,430 of Net
Investment in Direct Financing Leases and disposed of $715,565 of leased
equipment (see "Notes 2 and 27 - Notes to the Consolidated Financial
Statements").
As the Company is, in part, in the business of acquiring, managing and
selling Portfolio properties, the Company anticipates that it will acquire and
will dispose of large amounts of such property in future years. The
acquisition and disposition of these properties will result in substantial
periodic fluctuations of revenues and expenses and will also result in
substantial periodic changes in the Company's assets and liabilities in
equivalent proportions.
The Company has recorded in the accompanying income statement as
commissions, fees and other income $205,223 of net broadcasting advertising
revenue (after agency commissions), which includes recognition of $90,137 of
barter transaction revenue and has recognized $81,814 of barter transaction
expense included in marketing, administrative and other operating expenses. As
the stations continue to mature the Company anticipates the percentage of
barter transaction revenue compared to cash business will decline.
The cash revenue for the first full year of operations for WLTT-FM was
approximately $100,900. The station incurred an operating loss for the year
which included the results of operations for ten (10) months at 3 kw. In
13
<PAGE> 14
February, 1994 the Company completed the frequency, format, call letter, and
power upgrade (to 25,000 watts) change for WLTT-FM. The loss is primarily due
to operating a weak signal, in a small depressed local market for approximately
ten (10) months. As a result of the stations upgrade the signal now reaches
298% more people located in a broadcast market which includes Wilmington, North
Carolina and Myrtle Beach, South Carolina. Operating revenues for the months
of March through May, 1994 have increased each month. The revenue increase is
also due to the Company increasing the sales staff which now penetrates new and
larger advertising markets and the initiation of an extensive promotion
campaign which is expected to last until the summer tourist season begins in
March, 1995. The Company expects WLTT-FM revenues to continue to increase and
that it will turn profitable at the end of it initial promotional campaign.
Cash revenue for WMOG-AM and WMOG-FM for April, 1994 was approximately
$14,233, and for the months of April and May, 1994 this combination has been
operating above break-even (exclusive of corporate expense allocation). On the
date the Company assumed operations these stations were in receivership. The
Company has changed the broadcast format and added employees. Operating
revenues for the months of April and May, 1994 have increased each month and
this trend is expected to continue. The Company anticipates that it will
upgrade the FM station to 6,000 watts from 3,000 watts and will add six hours
to its broadcast day.
During fiscal 1994 the loss on residual values relates principally to
equipment subject to release or sale which was comprised mostly of IBM and DEC
equipment. Realization of the recorded equipment values has become difficult
due to an over supply of used computer equipment which has reduced such
equipment's current and future market value. Additionally, the decreased
demand for new computer equipment has resulted in increased competition in the
used equipment market. The resulting affect of the oversupply, decreased
demand and increased competition has been to reduce the amount of current and
predicted monies to be realized from residual proceeds.
At the beginning of the current fiscal year the Company's investments in
residual interests of leased equipment totaled $973,040. The value of this
investment declined during the fiscal year to $291,741. This reduction is due
to $227,096 of receipts, $4,042 of additions and a charge to operations of
$458,245 for market declines in the value of used equipment. Realization of
this remaining investment is dependent upon a number of factors outside the
control of the Company, including general economic conditions at the time of
anticipated residual realization, technological changes, changes in
manufacturers' business and maintenance policies, and the remarketing skills of
the Company or its remarketing agents (see "Note 2 - Notes to the Consolidated
Financial Statements").
The loss from operations for the fiscal year ended April 30, 1994 includes
$340,676 of one time charges for interest and advisory services. Without these
charges, the loss from operations would have been ($2,298,917). Furthermore,
the loss from operations includes nonrecurring write offs of $256,268. Without
the one time charges, nonrecurring write offs and residual write downs the loss
from operations would have been ($1,584,404). The loss from operations also
includes $671,612 of broadcasting operating expenses in excess of revenues.
Marketing, administrative and other operating expenses increased from $863,774
in 1993 to $1,765,005 in 1994 due mainly to the additional broadcasting
personnel, broadcasting operating costs, and costs which were incurred, but not
deferred which relate to broadcast property acquisitions.
During the fiscal year ended April 30, 1994 the Company paid $30,000 and
issued 505,000 shares of its common stock, valued at $358,832 for advisory
services rendered during the previous and current year. The Company expensed
$219,665 during the current year, and $169,167 in fiscal 1993 for which 400,000
shares were recorded as common stock subscribed at April 30, 1993. The Company
registered the 505,000 shares on a Form S-8. The Company issued 60,000 shares
to officers and directors during the current period for $3,000 and incurred
$23,400 of compensation expense.
During the current period the Company incurred $86,700 of costs related to
the investigations, negotiations and acquisitions of broadcast properties. The
Company has deferred $46,251 of such costs and has expensed $65,000 of
previously deferred costs which relate to abandoned acquisitions.
The Company earns commissions, fees and other income from transactions
which fluctuates substantially from one comparable period to the next. During
fiscal 1994 and 1993 the Company earned $115,000 and $349,064, respectively, of
leasing commissions. The Company believes that its relationship with its lease
origination customers remains good, however, none of these companies are
presently underwriting business in volumes sufficient to assure that the
Company will have access to future suitable Portfolio purchases. The Company
will continue to pursue Portfolio acquisitions on suitable terms as and when
available, however, there is no assurance that the current economic environment
will be easing in the near term sufficiently strong enough for the Company's
customers to
14
<PAGE> 15
return to their pre-1991 lease origination volumes. During fiscal 1994 and
1993 the Company earned $96,615 and $67,617, respectively, from partnerships
which are partially owned by a nonconsolidated affiliate of which an officer of
the Company is a general partner. The Company has incurred $4,950 for leasing
a vehicle from its Chief Executive Officer and leased such vehicle to the Chief
Operating Officer of a subsidiary for $2,900. Also, during the current fiscal
year the Company recognized $256,268 of nonrecurring write-offs which relates
to the above mentioned partnerships and other nonconsolidated affiliates of the
Company of which an officer of the Company is a general partner or officer.
On May 25, 1994 the Company appointed Mr. James B. Dwyer III to the Board
of Directors. The Company entered into a financial advisory contract with
Dwyer & Associates, Inc. to assist in analyzing and negotiating broadcast
property acquisitions and other related acquisition and financing activities.
On May 9, 1994 a Special Meeting of Shareholders was called to approve a
one (1) for three (3) reverse stock split (the "Reverse Split"). The Meeting
is scheduled for July 21, 1994 and the Company expects the effective date to be
July 22, 1994. If the Reverse Split is approved, each three (3) shares owned
by holders of record of the Company's Common Stock at the close of business on
the Effective Date will be converted into one (1) share.
As a result of the Reverse Split, the number of options granted under the
Company's 1989 Stock Option and Stock Appreciation Rights Plan and 1989
Incentive Stock Option Plan, and the exercise price thereof, and certain other
stock purchase agreements to which the Company is a party will also require
corresponding adjustments in accordance with the terms thereof to reflect the
effects of the Reverse Split. Also, the shares authorized for issuance under
the Company's 1989 Stock Option and Stock Appreciation Rights Plan, 1989
Incentive Stock Option Plan, and 1993 Long-term Incentive Plan will require
corresponding adjustments in accordance with the terms thereof to reflect the
effects of the Reverse Split. There will be no change in the number of common
or preferred shares authorized for issuance.
Although it cannot be predicted what effect the Reverse Split will have on
stockholders or what the potential impact will be on the trading market, the
Board of Directors believes that by effecting the proposed Reverse Split the
result will be to increase the Corporation's common stock market value, and
thereby increase the marketability and investment potential of the
Corporation's common stock by causing the market price of the common stock to
be in a range more attractive to investors, assist in increasing the
stockholder base of the Corporation, and enhance the Corporation's ability to
obtain future financing. However, there is no assurance whatsoever that any or
all of such events will occur. Shareholders who hold a odd lot number of
shares may be required to pay additional brokerage fees depending upon the
brokers they utilize.
<TABLE>
==================================================================================================================
FISCAL YEAR ENDED APRIL 30, 1993 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1992
<CAPTION>
Fiscal Year Ended April 30, Amount of Change
---------------------------------- -----------------------------
1993 1992 Dollars Percentage
<S> <C> <C> <C> <C>
Rental income $ 34,761,344 $ 65,755,543 $ (30,994,199) (47.1%)
Commissions, fees and other income $ 494,192 $ 159,850 $ 334,342 209.2%
Interest income $ 14,404,942 $ 23,599,998 $ (9,195,056) (39.0%)
Marketing, administrative and other
operating expenses $ 863,774 $ 1,045,665 $ (181,891) (17.4%)
Interest expense $ 13,364,059 $ 37,135,938 $ (23,771,879) (64.0%)
Depreciation and amortization of
equipment $ 36,013,645 $ 52,349,015 $ (16,335,370) (31.2%)
Loss before income taxes and
cumulative effect of change
in accounting principle $ (1,519,715) $ (2,319,433) $ 799,718 (34.5%)
Net loss $ (1,519,715) $ (2,319,433) $ 799,718 (34.5%)
==================================================================================================================
</TABLE>
15
<PAGE> 16
Operating expenses were $863,744 for fiscal 1993, down from $1,045,665 and
$2,044,286 in the preceding two years which were a result of the Company's cost
reduction measures instituted in the latter part of fiscal 1990. During fiscal
1993 the Company incurred $104,551 of incremental costs associated with the
organization of its broadcasting subsidiary, of which $24,551 were deferred,
$50,000 were allocated to the acquisition of the Company's Shallotte, North
Carolina station and $30,000 were expensed in fiscal 1993. At the end of
fiscal 1993 the Company acquired WLTT-FM, Shallotte, North Carolina.
As of April 30, 1993 Equipment Notes and Accrued Interest Receivable, and
Leased Property Under Capital Lease were $87,904,468 and $44,291,407,
respectively, compared to $159,000,800 and $102,242,667 respectively, at April
30, 1992. Also, the Company acquired Net Investment in Operating Leases which
were $5,293,165 as of the end of the current fiscal year. Discounted Lease
Rentals and Accrued Interest Payable, and Capital Lease Obligations and Accrued
Interest Payable were $49,584,419 and $87,910,364, respectively, compared to
$102,229,885 and $159,023,162, respectively, at April 30, 1992. During fiscal
1993 the Company earned $67,617 from partnerships which are partially owned by
a nonconsolidated affiliate of which an officer of the Company is a general
partner.
At the beginning of the current fiscal year the Company's investments in
residual interests of leased equipment totaled $1,606,620. The value of this
investment declined during the fiscal year to $973,040. This reduction is due
to $232,246 of receipts, $232,017 of additions and a charge to operations of
$633,351 for market declines in the value of used equipment.
<TABLE>
=================================================================================================================
FISCAL YEAR ENDED APRIL 30, 1992 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1991
<CAPTION>
Fiscal Year Ended April 30, Amount of Change
--------------------------------- -----------------------------
1992 1991 Dollars Percentage
<S> <C> <C> <C> <C>
Rental income $ 65,755,543 $ 73,407,326 $ (7,651,783) (10.4%)
Commissions, fees and other income $ 159,850 $ 1,861,399 $ (1,701,549) (91.4%)
Interest income $ 23,599,998 $ 34,236,048 $ (10,636,050) (31.1%)
Marketing, administrative and other
operating expenses $ 1,045,665 $ 2,044,286 $ (998,621) (48.8%)
Interest expense $ 37,135,938 $ 50,644,548 $ (13,508,610) (26.7%)
Depreciation and amortization of
equipment $ 52,349,015 $ 57,170,705 $ (4,821,690) (8.4%)
Loss before income taxes and
extraordinary item $ (2,319,433) $ (1,670,236) $ (649,197) (38.9%)
Net loss $ (2,319,433) $ (149,636) $ (2,169,797) (1,450.1%)
=================================================================================================================
</TABLE>
As of April 30, 1992 Equipment Notes and Accrued Interest Receivable, and
Leased Property Under Capital Lease were $159,000,800 and $102,242,667,
respectively, compared to $240,558,085 and $155,020,468, respectively, for the
previous fiscal year. Discounted Lease Rentals and Accrued Interest Payable,
and Capital Lease Obligations and Accrued Interest Payable were $102,229,885
and $159,023,162, respectively, compared to $154,982,871 and $240,595,529,
respectively, for the previous fiscal year. In addition, the Company recorded
$45,000 in management fees from a nonconsolidated affiliate in which an officer
is a general partner.
LIQUIDITY AND CAPITAL RESOURCES
During the current period the Company incurred a loss of $2,639,593 and has
incurred capital expenditures of $406,390. The Company has financed its
activities from the proceeds received through the exercise of the Company's
Warrants and from non cash charges of approximately $957,578. Capital
expenditures for the purchase of WLTT-FM were provided by the proceeds of a
short-term loan which was repaid from Warrant proceeds (see "Notes 2, 13, 18,
22 and 27 - Notes to the Consolidated Financial Statements").
16
<PAGE> 17
During the current fiscal year the Company received $406,114 in cash from
commissions, fees and other receipts, representing $208,422 from current period
activities (which includes a $115,000 broker fee for a lease transaction) and
$197,692 from receivables; and realized $227,377 from leased equipment
residuals, of which $206,145 are included in commissions, fees and other
receipts, and $21,232 are included in interest income.
Marketing, administrative and other operating payments were $1,607,204 for
fiscal 1994 compared to $1,014,732 for the previous year. The increase is due
to radio station operations and non deferred costs related to radio station
acquisitions.
Current working capital assets, which are composed of cash and short-term
(one year or less) receivables, decreased from $374,011 April 30, 1993, to
$136,544 at April 30, 1994. Short-term (one year or less) debt and accounts
payable decreased from $830,080 at April 30, 1993, to $252,443 at April 30,
1994, for a net increase in working capital of $340,170. As of April 30, 1994
there is a working capital deficit of $115,899, which includes a $115,000
settlement obligation (see "Note 23 - Notes to the Consolidated Financial
Statements"). Subsequent to April 30, 1994 the Company has a lease transaction
pending which is anticipated to yield cash commissions of $60,000. The
Company's trade payables at April 30, 1994 were $72,776 compared to $42,554 at
April 30, 1993. Accrued officer compensation and interest payable decreased
from $215,113 at April 30, 1993 to $52,649 at April 30, 1994. In addition the
Company's pending contracts for the acquisition and development of its
broadcast properties are $3,487,000 (see "Note 24 - Notes to the Consolidated
Financial Statements").
As of the date of this report the Company has issued $410,000 of secured
promissory notes, has commitments for the issuance of an additional $150,000 of
such notes and may seek to issue an additional $40,000 (see "Note 13 - Notes to
the Consolidated Financial Statements"). The monies received are to be used
for working capital purposes, and for broadcast property escrow deposits.
The Company anticipates that it will continue to collect its receivables,
liquidate debt, convert assets to cash, accumulate cash from asset sales and
brokerage fees, remarket its equipment, and pursue new business opportunities
where and whenever available. In addition the Company has entered into a
letter of intent which provides for the sale of up to $7,500,000 of additional
equity securities in a registered underwriting. The underwriting is subject to
change based upon future market conditions. The Company anticipates that it
will file a registration statement with the Securities and Exchange Commission
as to these securities as soon as practicable after the filing of its April 30,
1994 annual report. In addition, the Company is pursuing additional secondary
sources of mezzanine financing and other debt and/or equity transactions as
they may become available (see "Note 24 - Notes to the Consolidated Financial
Statements").
The Company believes that funds provided from operations, together with the
funds from the above described private and public financings will be sufficient
to sustain the Company's operations, meet its obligations and acquire and
construct its broadcast properties. Future revenue prospects will be
determined by the availability of leasing transactions, the time frame within
which the pending radio broadcast station acquisitions are completed and the
operations of the stations assumed by the Company. Such revenue prospects may
be adversely affected in the event transactions or such acquisitions are
delayed or not consummated. Timely completion of acquisitions is subject to
approval of the transfer of the broadcast licenses by the Federal
Communications Commission, satisfactory completion of certain obligations by
the various sellers and timely and successful performance by financing sources,
including the Company's underwriter. In the event one or many events transpire
to delay or terminate any or all planned acquisitions, the Company's operations
may be less than anticipated but will continue through the management of its
lease portfolio and broadcast station(s), and the acquisition of additional
broadcast and lease properties as favorable transactions become available.
17
<PAGE> 18
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors of
Partech Holdings Corporation:
We have audited the accompanying consolidated balance sheets of Partech
Holdings Corporation and subsidiaries as of April 30, 1994 and 1993, and the
related statements of consolidated operations, stockholders' equity, and cash
flows for the years ended April 30, 1994, 1993 and 1992, and the financial
statement schedules of this Form 10-K. These financial statements and
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules 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 and related
financial statement schedules are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and related financial statement
schedules. 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 Partech
Holdings Corporation and subsidiaries as of April 30, 1994 and 1993, and the
results of their consolidated operations and their consolidated cash flows for
the years ended April 30, 1994, 1993 and 1992, in conformity with generally
accepted accounting principles. In addition, the financial statement schedules
referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly the information required to be
included therein.
/s/ HAUSSER + TAYLOR
Columbus, Ohio
July 15, 1994
18
<PAGE> 19
<TABLE>
PARTECH HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
----------------------------------
1994 1993
<S> <C> <C>
ASSETS:
Cash and cash equivalents $ 36,344 $ 143,164
Accounts receivable - related parties - 108,318
Deposits, accounts and commissions receivable
(net of allowance for doubtful accounts of $2,730
and $0, respectively) 137,328 18,388
Notes receivable - related parties - 129,000
Residuals, notes and accrued interest receivable 291,741 918,843
Equipment notes and accrued interest receivable 56,789,950 87,904,468
Leased property under capital lease, at cost (net of
accumulated amortization of $123,972,731
and $141,703,003, respectively) 29,084,845 44,291,407
Net investment in operating leases (net of
accumulated depreciation of $4,159,137
and $2,271,639) 1,359,646 5,293,165
Property and equipment, at cost (net of
accumulated depreciation of $350,259
and $263,626, respectively) 613,906 374,962
Cost in excess of net assets acquired (net of
accumulated amortization of $1,085,562
and $957,067, respectively) 2,283,781 2,410,775
Investment in partnerships 45,498 45,498
Net investment in direct financing leases 2,230,641 3,330,791
Deferred organization, stock issuance and other
financing costs 86,708 27,678
Broadcasting rights 381,818 -
Other assets 77,954 171,305
------------ ------------
Total Assets $ 93,420,160 $ 145,167,762
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
19
<PAGE> 20
<TABLE>
PARTECH HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
----------------------------------
1994 1993
<S> <C> <C>
LIABILITIES:
Accounts payable and accrued expenses $ 198,899 $ 90,450
Accounts payable - related parties 31,348 49,220
Note and accrued interest payable - related party 30,033 625,000
Notes and accrued interest payable 2,431,855 3,514,047
Broadcasting rights payable 381,818 -
Discounted lease rentals and accrued interest payable 30,444,340 49,584,419
Capital lease obligations and accrued interest payable 56,797,791 87,910,364
Accrued officer compensation and interest payable 52,649 215,113
Unearned income - 10,902
Deferred income taxes 75,000 75,000
------------ ------------
Total Liabilities 90,443,733 142,074,515
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 1,000,000 shares
authorized, none issued and outstanding
Common stock, $0.05 par value, 50,000,000 shares
authorized, 5,586,906 and 2,662,425, respectively,
issued 279,345 133,121
Common stock subscribed, $0.05 par value, 400,000
shares subscribed at April 30, 1993 - 20,000
Paid in capital 7,863,988 5,545,851
Retained deficit (5,155,318) (2,515,725)
------------ ------------
2,988,015 3,183,247
Common stock issued and unpaid - (90,000)
Treasury stock, at cost (11,588) -
------------ ------------
Total Stockholders' Equity 2,976,427 3,093,247
------------ ------------
Total Liabilities and Stockholders' Equity $ 93,420,160 $ 145,167,762
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
20
<PAGE> 21
<TABLE>
<CAPTION>
PARTECH HOLDINGS CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
FISCAL YEAR ENDED APRIL 30,
----------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
REVENUES:
Rental income $ 21,845,430 $ 34,761,344 $ 65,755,543
Commissions, fees and other income 449,743 494,192 159,850
Interest income 8,189,965 14,404,942 23,599,998
----------- ----------- -----------
Total Revenues 30,485,138 49,660,478 89,515,391
----------- ----------- -----------
COSTS AND EXPENSES:
Marketing, administrative and other operating expenses 1,765,005 863,774 1,045,665
Nonrecurring write-offs - related party 256,268 - -
Advisory services 219,665 176,417 -
Interest expense - related party 121,011 125,000 -
Interest expense 11,632,567 13,239,059 37,135,938
Loss on disposal and sale of fixed assets 4,135 - 78,147
Loss on residual values 458,245 633,351 1,102,602
Depreciation and amortization property, equipment
and leased property under capital lease 18,526,940 36,013,645 52,349,015
Amortization of cost in excess of net assets acquired
and other intangible assets 140,895 128,947 123,457
----------- ----------- -----------
Total Costs and Expenses 33,124,731 51,180,193 91,834,824
----------- ----------- -----------
LOSS BEFORE INCOME TAXES AND CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (2,639,593) (1,519,715) (2,319,433)
Income tax expense - 180,000 -
----------- ----------- -----------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (2,639,593) (1,699,715) (2,319,433)
Cumulative Effect to May 1, 1992 of Change in
Accounting Principle for Income Taxes - 180,000 -
----------- ----------- -----------
NET LOSS $ (2,639,593) $ (1,519,715) $ (2,319,433)
=========== =========== ==========
PRIMARY INCOME (LOSS) PER SHARE:
Loss before cumulative effect of change in
accounting principle $ (0.52) $ (0.20) $ (1.83)
Cumulative effect of change in accounting principle 0.00 0.03 0.00
----------- ----------- ----------
PRIMARY NET LOSS PER SHARE $ (0.52) $ (0.17) $ (1.83)
=========== =========== ==========
FULLY DILUTED INCOME (LOSS) PER SHARE:
Loss before cumulative effect of change in
accounting principle $ (0.52) $ (0.20) $ (1.83)
Cumulative effect of change in accounting principle 0.00 0.03 0.00
----------- ----------- ----------
FULLY DILUTED NET LOSS PER SHARE $ (0.52) $ (0.17) $ (1.83)
=========== =========== ==========
AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES:
Primary 5,086,690 6,950,914 1,268,857
Fully diluted 5,086,690 6,951,709 1,268,857
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
21
<PAGE> 22
<TABLE>
PARTECH HOLDINGS CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED STOCKHOLDERS' EQUITY
<CAPTION>
COMMON RETAINED COMMON STOCK TREASURY TOTAL
COMMON STOCK PAID IN EARNINGS ISSUED AND STOCK, STOCKHOLDERS'
STOCK SUBSCRIBED CAPITAL (DEFICIT) UNPAID AT COST EQUITY
------- ------------ ---------- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES AS OF
APRIL 30, 1991 $59,317 $0 $4,057,524 $1,323,423 $0 $0 $5,440,264
Stock sales (excluding
warrants) 4,110 125,890 130,000
Warrant exercise stock sales
(net of offering expenses) 5,748 85,649 91,397
Net loss (2,319,433) (2,319,433)
------- ------------ ---------- ----------- -------------- ---------- --------------
BALANCES AS OF
APRIL 30, 1992 69,175 0 4,269,063 (996,010) 0 0 3,342,228
Stock sales (excluding
warrants) 11,585 76,471 88,056
Common stock subscribed 20,000 233,750 253,750
Reverse split shares dropped
(720 shares) (36) 36 0
Warrant exercise stock sales
(net of stock issuance and
warrant redemption costs) 52,397 966,531 (90,000) 928,928
Net loss (1,519,715) (1,519,715)
------- ------------ ---------- ----------- -------------- ---------- --------------
BALANCES AS OF
APRIL 30, 1993 133,121 20,000 5,545,851 (2,515,725) (90,000) 0 3,093,247
Warrant exercise stock sales
(net of stock issuance costs)117,974 2,237,288 2,355,262
Stock sales (excluding
warrants) 8,250 119,262 127,512
Common stock subscribed 20,000 (20,000) 0
Other capital items (38,413) 90,000 (11,588) 39,999
Net loss (2,639,593) (2,639,593)
------- ------------ ---------- ----------- -------------- ---------- --------------
BALANCES AS OF
APRIL 30, 1994 $279,345 $0 $7,863,988 ($5,155,318) $0 ($11,588) $2,976,427
======= ============ ========== =========== ============== ========== ==============
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
22
<PAGE> 23
<TABLE>
PARTECH HOLDINGS CORPORATION AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Commissions, fees and other receipts $ 406,114 $ 389,785 $ 302,362
Marketing, administrative and other operating
payments (1,607,204) (1,014,732) (648,122)
Interest receipts 34,440 33,145 120,012
Interest payments (195,150) (27,654) (11,932)
----------- ----------- -----------
Net Cash Used For Operating Activities (1,361,800) (619,456) (237,680)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments to officers for loans - (10,125) -
Proceeds from distributions from (investments in)
non consolidated affiliates 43,950 (1,756) 2,399
Purchases of property and equipment (336,432) (6,836) (8,233)
Proceeds from the sale of property and equipment 58,027 671 1,616
Capitalized organization costs, including cash payments
associated with the acquisition of radio stations (106,482) (66,798) -
Escrow deposits for radio station acquisitions (90,000) - -
Payments for acquisition of radio stations - (280,742) -
----------- ----------- -----------
Net Cash Used For Investing Activities (430,937) (365,586) (4,218)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred stock, debt issuance and other financing costs (21,315) (61,209) (41,254)
Proceeds from issuance of stock 2,364,981 857,958 226,175
Principal payments under bank borrowings - (88,125) (43,542)
Proceeds of other borrowings - - 100,000
Principal payments under other borrowings - (74,147) -
Principal payments under radio station acquisition
financings (14,756) (3,549) -
Proceeds from officer loans 30,000 - 17,000
Principal payments under officer loans - (42,000) -
Proceeds from related party loans (other than officer loans) - 500,000 -
Principal payments under related party loans (other than
officer loans) (625,000) - -
Principal payments under capital lease obligations and
other financings (47,993) (5,799) (2,088)
----------- ----------- -----------
Net Cash Provided By Financing Activities 1,685,917 1,083,129 256,291
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (106,820) 98,087 14,393
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 143,164 45,077 30,684
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $ 36,344 $ 143,164 $ 45,077
=========== =========== ===========
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
23
<PAGE> 24
PARTECH HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION. The consolidated financial statements include the
accounts of Partech Holdings Corporation, its wholly-owned subsidiaries, and
their related business trusts (collectively, the "Company"), most of which are
engaged in the acquisition, financing, ownership, management and brokerage of
leases of data processing and other equipment. The consolidated financial
statements also include Partech Communications Group, Inc., a wholly-owned
subsidiary and its wholly-owned subsidiaries which are engaged in acquiring,
owning, managing, developing and brokering in communications related technology
including broadcast properties, telecommunications equipment, communications
software and other products. The Company uses the equity method of accounting
for its investments in real estate limited partnerships and equipment leasing
limited partnerships (see Note 7). All material intercompany transactions have
been eliminated. Certain reclassifications of previous year amounts presented
herein have been made in order to conform with current year presentations.
LEASING ACTIVITIES. The Company generally acquires leases of newly leased
equipment solely from other unaffiliated leasing companies and financial
institutions. Generally, the Company will acquire a portfolio of leases
consisting of numerous pieces of equipment already on lease to a user (a
"Portfolio"). Financing for these purchases is accomplished by acquisition of
the property subject to nonrecourse debt obtained by discounting the user lease
(the "Operating Leases" and "Net Investment in Operating Leases" collectively
referred to hereinafter as "Operating Leases") with a financial institution
("Discounted Lease Rentals and Accrued Interest Payable"), seller financing
("Notes and Accrued Interest Payable") and cash. The Company may invest its
own cash ("Net Investment In Direct Financing Leases" and "Residuals
Receivable"), but has principally financed such purchases through
sale-leaseback transactions of the equipment with an investor owner ("Equipment
Notes and Accrued Interest Receivable," "Leased Property Under Capital Lease"
and "Capital Lease Obligations and Accrued Interest Payable").
The Company has acted as both lessor and lessee in leased equipment
transactions and accounts for its leases in accordance with Financial
Accounting Standards Board Statement No. 13, as further amended by subsequent
pronouncements, which contains guidelines for classifying lease transactions
where the Company is lessor as to (i) sales-type leases, (ii) direct financing
leases, or (iii) operating leases; and, where the Company is lessee as to (i)
capital leases or (ii) operating leases. As lessor, the Company has no
sales-type leases and has accounted for its direct financing and operating
leases as appropriate. The Company's accounting methods and their financial
reporting effects are described hereunder.
DIRECT FINANCING LEASES - The cost of equipment is recorded as Net
Investment in Direct Financing Leases. Leasing revenue, which is recognized
over the term of the lease, consists of the excess of lease payments plus the
estimated residual value over the equipment's cost. The fair market value of
the equipment at lease termination is recorded at lease inception (Residuals
Receivable) and is reevaluated each accounting period thereafter. When
Residuals Receivable are collected, as to Direct Financing Leases, such
receipts are recorded as interest receipts. Initial direct costs are
capitalized and amortized over the lease term. Income is recognized monthly to
provide a constant yield and is recorded as interest income in the accompanying
statements of operations (see Notes 2, 6 and 13).
OPERATING LEASES - Rental income consists principally of monthly rentals
from Operating Leases. Equipment subject to Operating Leases has been recorded
at cost and is either depreciated over the lease term, if acquired by purchase
(Net Investment in Operating Leases), or amortized over the lease term, if
subject to a capital lease, (with the Company as lessee) to an amount equal to
the estimated fair market value at the lease termination date. The fair market
value of the equipment at lease termination is recorded at lease inception
(Residuals Receivable) and is reevaluated each accounting period thereafter.
Initial direct costs are capitalized and amortized over the lease term.
Depreciation and amortization expense are recorded as such in the accompanying
statements of operations (see Notes 4 and 9).
DISCOUNTED LEASE RENTALS - The Company's Operating Leases have been
assigned to financial institutions at fixed interest rates on a nonrecourse
basis. In the event of default by a lessee, the financial institution has a
first lien on the underlying leased equipment, with no further recourse against
the Company. Rental income and interest expense is recorded as lessees make
payments to financial institutions (see Note 9).
24
<PAGE> 25
WRAP LEASES - In a wrap lease transaction, the Company either acquires
equipment subject to an Operating Lease and nonrecourse financing, and then
sells the equipment to a third party and leases the equipment back from the
third party; or assumes an existing wrap lease from another leasing company,
together with the existing third party note receivable, Operating Lease and
nonrecourse debt. For financial reporting purposes, the Company will record,
at the time of the transaction, the note receivable from the third party, a
capital lease equal to the present value of the wrap lease payments, and the
Operating Lease nonrecourse debt. The Company will recognize interest income
as the third party note receivable is paid, amortization and interest expense
as to the capital lease, rental income as to the Operating Lease and any
subsequent Operating Leases, and interest expense as to the nonrecourse debt
(see Notes 3, 9 and 14).
EQUIPMENT SALES. Revenues from the sale of equipment and related costs are
reflected in the accompanying statements of consolidated operations for all
sales, and are reported as earnings when title to such equipment has
transferred to the purchaser.
COMMISSIONS, FEES AND OTHER INCOME. Income is earned from brokering and
financing transactions in which the Company has earned and received cash and
rights to future rental and sale proceeds sharing (Residuals Receivable) for
services rendered in negotiating the sale, financing, or refinancing of leased
equipment. The Company records commissions, fees and other income as income in
the period earned. Where Residuals Receivable are earned, such values are
initially recorded at the discounted present value of the Company's share of
the future appraised value of the equipment. Thereafter, the Company
reevaluates residual estimates each accounting period for any impairment of
value (see Note 2). The Company also earns management fees for accounting and
other management services provided which are not related to leases (see Note
15). These fees are recognized as earned.
The Company recognizes revenue for advertising time sold when the
advertising is transmitted. If payment for advertising time is recorded prior
to the advertising being transmitted the Company will record a liability for
the advertising time due to be transmitted. The Company recognizes revenue net
of discounts earned and commissions to be withheld by advertising agencies.
BARTER TRANSACTIONS. The Company enters into barter transactions wherein
advertising time is exchanged for goods and/or services which are used for
promotional, sales and other business activities. When the advertising time
exchanged in the barter transaction is transmitted the Company recognizes
advertising revenue, when the goods or services are received or used the
Company recognizes expense, unless the goods are to be resold, then the Company
records such goods as inventory (see Note 11). Advertising revenue for barter
transactions is recognized on the basis of the fair market value of the goods
or services received. If the goods or services are received or used prior to
the transmission of the advertising the Company records a liability (unearned
broadcasting revenue). If the advertising is broadcast prior to the receipt of
the goods or services a receivable is recorded (barter transactions
receivable).
BROADCASTING RIGHTS. Broadcasting rights for music and other programming
consist of agreements to broadcast a specified or unlimited amount of program
material over a defined time period at a specified fee. The Company reports an
asset and a liability for the rights acquired and obligations incurred under
such agreements when the broadcasting rights period begin, the total cost is
known or reasonably estimable, the material to be broadcast is accepted and is
available for broadcasting. Such asset and liability are recorded at the gross
amount of the liability. The asset is amortized over the time period of the
agreement or the expected number of broadcasts if this is a shorter period of
time.
NETWORK AFFILIATION AGREEMENTS AND TIME BROKERAGE AGREEMENTS. The Company
may enter into agreements whereby a third party's programming and advertising
material will be broadcast by the Company, who is the FCC license holder. The
third party solicits advertising and receives fees for such advertising, the
Company receives fees for broadcasting the material. The Company records these
agreements as an intangible asset and amortizes them over the life of the
agreement. The Company also enters into agreements where the Company's
programming and advertising material will be broadcast by a third party who is
the license holder. In such cases the Company will record revenue when earned
and expenses when incurred.
INTANGIBLE ASSETS. Intangible assets include cost in excess of net assets
acquired, a broadcasting license and a noncompete agreement. These intangible
assets are amortized over periods not exceeding twenty years. The Company
evaluates the existence of any impairment related to intangible assets on the
basis of whether the intangible assets are fully recoverable based upon
undiscounted cash flows; historic, current and expected future results; and
market capitalization. The periods of amortization are evaluated annually to
determine whether circumstances have changed which necessitate revision. In
the opinion of management no revision is necessary nor have any of the
25
<PAGE> 26
intangible assets diminished in value.
PROPERTY AND EQUIPMENT. Property and equipment are stated at cost.
Depreciation is computed on a straight line method at rates which are adequate
to allocate the costs of such assets over their estimated useful lives see
(Note 5). Expenditures for maintenance and repairs are charged to expense as
incurred. Expenditures for additions and improvements are added to the cost of
the property and equipment. Leasehold improvements are amortized over the life
of the lease. Upon termination of the lease any remaining value is expensed.
DEFERRED COSTS. The Company defers external costs associated with the
acquisition of a radio station or broadcasting asset. Upon finalization of the
acquisition the Company will capitalize these amounts as the cost of an asset
purchased or as cost in excess of net assets acquired. Such amounts will be
amortized on a straight line basis over the asset's life or 20 years, as the
case may be. If the acquisition is terminated the Company will immediately
expense the amounts.
The Company also defers costs that relate to stock, debt and other
financings. The Company's accounting policy is to capitalize such costs and
amortize them over the life of any debt they may relate to or to charge them to
paid in capital if they relate to equity financing. If the financing is
terminated the costs are expensed.
CASH FLOWS. For the purpose of the Statement of Cash Flows all of the
Company's cash investments are liquid instruments with maturities of three
months or less and are considered to be cash equivalents (see Note 27).
2. RESIDUAL VALUES RECEIVABLE
<TABLE>
As of April 30, 1994 the Company has recorded the present value of its
estimated equipment residual values, of which the gross values are receivable
in the fiscal years ending subsequent to April 30, 1994 as follows (see Notes 1
and 6):
<CAPTION>
Years Ending
April 30,
<S> <C>
1995 $ 116,611
1996 130,020
1997 85,857
------------
Total gross residual value receivable $ 332,488
============
</TABLE>
<TABLE>
Changes in the present value of the Company's share of estimated residual
values for the periods indicated are as follows:
<CAPTION>
Year Ended April 30,
_____________________________________________________
1994 1993 1992
<S> <C> <C> <C>
Balance at beginning year 973,040 1,606,620 3,794,794
Net additions (reductions) to residual values (1) 4,042 232,017 (728,217)
Collections (227,096) (232,246) (357,355)
Provision for losses (458,245) (633,351) (1,102,602)
------------ ------------ ------------
Balance at end of year $ 291,741 $ 973,040 $ 1,606,620
============ ============ ============
<FN>
(1) Net of amounts charged to unearned income.
</TABLE>
The Company evaluated the net realizable value of its equipment pools at
April 30, 1994. The total net estimated realizable value of this equipment is
$291,741 at April 30, 1994. The Company has charged $458,245 to operations in
the current period for a decline in value.
The Company evaluated the net realizable value of its equipment pools at
April 30, 1993. The total net estimated realizable value of this equipment was
$973,040 at April 30, 1993. The Company charged $633,351 to operations in
fiscal 1993 for a decline in value. The Company also had a receivable recorded
in Residuals, Notes and
26
<PAGE> 27
Accrued Interest Receivable of $10,582, and a corresponding amount recorded in
Unearned Income. These amounts have been eliminated against each other.
During the fiscal year ended April 30, 1993 the Company recognized Residuals
Receivable with a present value of $190,064, which was included in commissions,
fees and other income.
The Company charged to operations $832,102 during fiscal 1992 as to the
AmeriGroup properties as a result of settlement of various claims against
AmeriGroup, Inc. Also, in fiscal 1993 the Company sold approximately
$14,305,000 of leased assets relating to AmeriGroup, transferring $14,305,000
of liabilities and receiving $65,000 in cash which was included in commissions,
fees and other income, and a note for $78,000, which will be recognized into
income when collected. Also, the Company received an additional $40,975 as to
these properties in fiscal 1993 which was included in commissions, fees and
other income. The Company also had a receivable related to AmeriGroup recorded
in Residuals, Notes and Accrued Interest Receivable of $794,280, and a
corresponding amount recorded in Unearned Income, which were eliminated upon
settlement.
The Company evaluated the net realizable value of its other equipment pools
at April 30, 1992. The total net estimated realizable value of this equipment
was $1,541,620 compared to a total net book value of $1,812,120 (after
applicable collections) at April 30, 1992. Consequently the Company has
charged $270,500 to operations in fiscal 1992 for this decline in value.
3. EQUIPMENT NOTES AND ACCRUED INTEREST RECEIVABLE
Equipment Notes and Accrued Interest Receivable are due over terms not
exceeding nine years and bear interest at fixed rates ranging from 8.8% to
12.35% per annum. The notes are collateralized by a security interest in the
leased equipment and lease receivables due from users. The notes have been
acquired by the Company as part of its Portfolio acquisitions (see Notes 1 and
14) and represent long-term installment receivables from the purchasers of the
equipment, undertaken at the time the equipments' purchase from the
manufacturer was originally financed. Principal and interest payments due the
Company for the fiscal years ending subsequent to April 30, 1994, are as
follows:
<TABLE>
<CAPTION>
Years Ending Equipment Note
April 30, Payments
<S> <C>
1995 $ 24,882,895
1996 24,882,895
1997 11,698,143
1998 2,445,760
1999 2,035,662
------------
Total 65,945,355
Less portion pertaining to
future interest income (9,155,405)
------------
Net notes and accrued interest receivable $ 56,789,950
============
</TABLE>
4. NET INVESTMENT IN OPERATING LEASES
The Company is lessor of data processing equipment recorded in Net
Investment in Operating Leases which consists of mainly IBM and DEC equipment.
The Company's Operating Leases recorded herein are for initial lease terms of 4
to 52 months, are recorded at cost and are net leases wherein the lessee pays
taxes, licenses, insurance and provides for general maintenance. Such
equipment is comprised of mainframes and peripheral equipment (see Notes 1 and
9). The Company's Net Investment in Operating Leases is comprised of the
following components:
Cost of investment in operating leases $ 5,518,783
Accumulated depreciation (4,159,137)
-------------
Net investment in operating leases $ 1,359,646
=============
During the fiscal years ended April 30, 1994 and 1993 the Company incurred
$3,217,953 and $2,271,639, respectively, in depreciation expense as to its
investment in these operating leases.
27
<PAGE> 28
5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Accumulated Net Assigned
Asset Classification Cost Depreciation Book Value Life
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Furniture and office equipment $ 394,405 $ (298,991) $ 95,414 5-10 years
Broadcasting equipment 400,385 (46,749) 353,636 3-20 years
Automobile 23,079 (2,613) 20,466 3 years
Building and improvements 46,806 (1,835) 44,971 20 years
Land 68,761 N/A 68,761 N/A
Land improvements 5,687 (71) 5,616 20 years
Construction in progress 3,539 N/A 3,539 N/A
Inventory 21,503 N/A 21,503 N/A
------------ ------------ ------------
Total $ 964,165 $ (350,259) $ 613,906
============ ============ ============
</TABLE>
During the fiscal year ended April 30, 1994 the Company incurred $299,461
for the construction of its Shallotte, North Carolina radio station. Such
construction was completed in early February, 1994.
6. NET INVESTMENT IN DIRECT FINANCING LEASES
The Company is a lessor of data processing and communications equipment
leased to various users. The components of the Net Investment in Direct
Financing Leases as of April 30, 1994 and 1993 are as follows (see Notes 1, 2
and 13):
<TABLE>
<CAPTION>
Fiscal Year Ended April 30,
---------------------------------
1994 1993
<S> <C> <C>
Minimum lease payments receivable $ 2,563,386 $ 3,968,850
Estimated residual values - 54,197
Less unearned revenue on lease payments
and residual values (332,745) (692,256)
------------ ------------
Net investment in direct financing leases $ 2,230,641 $ 3,330,791
============ ============
</TABLE>
<TABLE>
The minimum lease payments receivable are receivable in the fiscal years
ending subsequent to April 30, 1994 are as follows:
<CAPTION>
Years Ending Minimum Lease
April 30, Payments to be Received
<S> <C>
1995 $ 1,281,693
1996 1,281,693
------------
Total minimum lease payments to be received $ 2,563,386
============
</TABLE>
7. INVESTMENT IN PARTNERSHIPS
The Company is a general partner in nine (9) real estate limited
partnerships and receives from 0.01% to 1.00% of the partnerships' net income
and loss, which has been minimal. In addition, the Company is a limited
partner in two (2) leased equipment limited partnerships (which have active
Portfolios) and receives 99% of the partnerships' net income and loss. The
Company's share of such net income or loss from leased equipment limited
partnerships has not been significant for financial statement purposes.
28
<PAGE> 29
8. DEFERRED ORGANIZATION, STOCK AND DEBT ISSUANCE COSTS
During the current period the Company deferred $46,251 of costs that relate
to the acquisition of broadcast properties and expensed $65,000 of previously
deferred costs which relate to abandoned acquisitions. Also, during the fiscal
year ended April 30, 1994 the Company deferred $40,457 of costs that relate to
preliminary negotiations of other financings (see Note 1).
The Company charged to paid in capital deferred offering expenses during
fiscal 1994 in the amount of $8,189 which represent costs incurred in
connection with its Warrant offering and other stock issuances.
During fiscal 1993 the Company incurred $104,551 of costs associated with
the organization of it broadcasting subsidiaries, of which $24,551 were
deferred, $50,000 were allocated to the acquisition of WDZD-FM and $30,000 were
expensed in 1993 (see Note 22).
The Company capitalized deferred offering expenses during the fiscal years
ended April 30, 1993 and 1992 in the amount of $29,264 (which includes $98 of
warrant redemption costs) and $56,767, respectively. These costs, were charged
to paid in capital. Also during the year ended April 30, 1992 the Company
capitalized $22,990 of expenses in relation to the issuance of debt. Such
costs were amortized over the life of the debt (one year).
9. DISCOUNTED LEASE RENTALS AND ACCRUED INTEREST PAYABLE
Substantially all Operating Leases (see Note 1) are receivable in
installments and have been assigned to various lending institutions at fixed
rates on a nonrecourse basis. Discounted Lease Rentals and Accrued Interest
Payable represent the present value of the Operating Lease payments discounted
at the interest rate charged by the lending institution, generally ranging from
6.5% to 13.68%. Interest expense over the lease term represents the difference
between the rentals to be paid by the user/lessee and the discounted proceeds.
Minimum Operating Lease payments under noncancellable leases, and Discounted
Lease Rentals and Accrued Interest Payable for the fiscal years ending
subsequent to April 30, 1994, are as follows:
<TABLE>
<CAPTION>
Years Ending Minimum Noncancellable Lease Discounted Lease
April 30, Payments to be Earned Rental Payments
<S> <C> <C>
1995 $ 12,971,976 $ 12,418,370
1996 10,084,186 10,024,036
1997 6,317,420 6,316,687
1998 1,685,247 1,685,247
------------ ------------
Total lease payments to be earned and discounted lease
rentals and accrued interest payable, respectively $ 31,058,829 $ 30,444,340
============ ============
</TABLE>
The Company's Operating Leases are for initial lease terms of 18 to 72
months and are net leases wherein the lessee pays taxes, licenses,
insurance and provides for general maintenance. The total rental income from
Operating Leases earned during the fiscal year ended April 30, 1994, and the
two previous fiscal years is $21,845,430 $34,761,344 and $65,755,543,
respectively.
10. OFFICE LEASE
The Company leases 4,218 square feet of suburban office space under a three
year operating lease which commenced April 6, 1992. The Company's lease
obligation plus operating charges for the year ending April 30, 1995 is
$35,378. The lease expires April 5, 1995. The Company also leases office
space in Shallotte, North Carolina for $900 per month on a month-to-month
basis.
11. BARTER TRANSACTIONS
During fiscal 1994 the Company has recognized $90,137 of barter transaction
revenue which is included in commissions, fees and other income and $81,814 of
barter transaction expense included in marketing, administrative and other
operating expenses. Prior years amounts were not significant. The amount of
goods and services which were received or used prior to the transmission of
advertising was insignificant as of the balance sheet date.
29
<PAGE> 30
12. CONCENTRATION OF CREDIT RISK
The Company sells advertising time to local and regional customers in North
Carolina, South Carolina and Georgia. The Company grants credit to these
customers and performs ongoing credit evaluations. There is no concentration
of credit risks within an industry and no material concentration of credit
risks for any single customer.
13. NOTES AND ACCRUED INTEREST PAYABLE
<TABLE>
<CAPTION>
The Company's notes and accrued interest payable at April 30, 1994 and 1993 with their respective interest rates
are as follows:
Fiscal Year Ended April 30,
---------------------------------
1994 1993
<S> <C> <C>
Unsecured demand promissory notes payable to trade creditors, with
interest at 18% $ - $ 38,168
Unsecured demand promissory note and accrued interest payable to an
officer, with interest at 10% (Note 15) 30,033 -
Note payable to related party, other than officers, with
interest and loan fee - 625,000
Installment note payable to vendors, collateralized with the
equipment purchased, with interest at 8.6% and 5.09%,
respectively 17,517 671
Installment notes and accrued interest payable related to radio
station acquisition, collateralized with property purchased,
with interest at 7%, for all years (see Note 22) 183,697 198,451
Installment notes and accrued interest payable to sellers, related
to direct financing leases, collateralized with equipment leases
and equipment notes receivable (Notes 1 and 6), with interest at
fixed rates from 10.5% to 16%, for all years 2,230,641 3,276,757
------------ ------------
Total notes and accrued interest payable $ 2,461,888 $ 4,139,047
============ ============
</TABLE>
Notes and accrued interest payable for the fiscal years ending subsequent
to April 30, 1994, are as follows:
<TABLE>
<CAPTION>
Type of Debt
Years Ending ________________________________________________________________
April 30, Corporate Lease Radio Total
<S> <C> <C> <C> <C>
Accrued Interest $ 33 $ 92,648 $ - $ 92,681
1995 33,042 1,003,752 14,449 1,051,245
1996 3,603 1,134,241 16,842 1,154,684
1997 3,926 - 18,088 22,014
1998 4,277 - 134,318 138,595
1999 2,669 - - 2,669
------------ ------------ ------------ ------------
Total notes and accrued interest
payable $ 47,550 $ 2,230,641 $ 183,697 $ 2,461,888
============ ============ ============ ============
</TABLE>
On March 8, 1993 the Company received $500,000 in net proceeds from a total
borrowing of $625,000 which was incurred to finance the purchase of WDZD-FM
(see Note 22) and to provide additional working capital, the difference of
$125,000 is recorded as interest expense - related party. The loan was to be
repaid by May 7, 1993, but was extended to June 7, 1993 for an additional
charge of $62,500. The balance of the loan, fees and applicable interest (5%
per month) was $746,011, and was paid on July 30, 1993. The loan was
collateralized by a pledge of the
30
<PAGE> 31
common stock of Partech Communications Group, Inc. The Chief Executive Officer
of the Company is a trustee, but not a beneficiary, of the lender.
As of the date of this report and subsequent to April 30, 1994 the
Company has received $410,000, has commitments pending receipt for $150,000 and
may seek an additional $40,000 pursuant to an exempt offering of the Company's
securities. The securities sold consists of a Unit (the "Unit") which includes
a 6% per annum note (the "Note") and a warrant (the "Warrant"), which entitles
its holder to purchase securities of the Company which are of the same class of
securities that are contemplated to be offered in a planned public offering
(see Note 24). The Company will be required to register the Warrant and
underlying securities in the registration statement for the public offering.
The Unit is convertible after September 30, 1994 into the Company's common
stock at a price equal to 50% of the closing bid price on conversion date. If
the Note has been paid in full the Warrant is exercisable for $1 into the
Company's common stock for an amount of shares which equates to the dollar
amount of the original Unit. Upon conversion of the Unit or exercise of the
Warrant, another warrant is to be issued, which is exercisable into the number
of shares issued upon the aforementioned exercise or conversion at the closing
bid price on the date of exercise or conversion hereof. The Unit Note is
collateralized by all of the issued and outstanding stock of the Company's
communications subsidiary and 700,305 shares of the Company's common stock
which is owned by John E. Rayl, C.E.O. and President. Mr. Rayl and the Company
have agreed that if Mr. Rayl's shares are foreclosed upon the Company will
satisfy its contribution obligation to Mr. Rayl by distributing two shares of
the same class of stock for every one share foreclosed upon.
14. CAPITAL LEASE OBLIGATIONS AND ACCRUED INTEREST PAYABLE
<TABLE>
The Company is obligated under long-term capital leases (see Notes 1 and 3)
covering the lease of equipment for the fiscal years ending subsequent to April
30, 1994, as follows:
<CAPTION>
Years Ending Capital Lease
April 30, Obligation Payments
<S> <C>
1995 $ 24,887,661
1996 24,885,779
1997 11,699,104
1998 2,445,760
1999 2,035,662
------------
Total minimum obligations 65,953,966
Less interest (9,156,175)
------------
Present value of net minimum
obligations and accrued interest $ 56,797,791
============
</TABLE>
15. RELATED PARTY TRANSACTIONS
For the fiscal year ended April 30, 1994 the Company 1) issued 60,000
shares to officers and directors for $3,000 and incurred $23,400 of
compensation expense therefor, 2) earned $96,615 from partnerships which are
partially owned by a nonconsolidated affiliate of which an officer of the
Company is a general partner, 3) incurred $4,950 for leasing a vehicle from its
Chief Executive Officer which was leased to the Chief Operating Officer of a
subsidiary for $2,900, 4) recognized $256,268 of non recurring write-offs which
relate to the above mentioned partnerships and other nonconsolidated affiliates
of the Company of which an officer of the Company is a general partner or
officer, 5) borrowed $30,000 from its Chief Executive Officer, and 6) applied a
loan of $11,370 and accrued interest against compensation owed to its Chief
Executive Officer. At the request of the underwriter's (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Note 24") the Company's Chief Executive Officer has agreed to reduce his salary
effective May 1, 1994 to $110,000 per year from $249,700, such amendment to
his salary includes an increase of 5% of income before income taxes (excluding
the C.E.O.'s compensation and costs associated with the underwriting and any
short-term loans undertaken until the underwriting is completed) over
$1,000,000 of the previous year. This amendment will be null and void if the
underwriting to which it relates is not undertaken and in such case the salary
will be retroactively adjusted to the previous amount. For additional related
party information see Notes 13 and 23.
31
<PAGE> 32
For the fiscal year ended April 30, 1993 the accompanying financial
statements include $67,617 of income recognized from partnerships in which the
Company and its Chief Executive Officer are general partners. In addition, the
Company entered into several transactions with its Chief Executive Officer
including the exchange of a note payable in the amount of $81,056 for 217,704
shares of restricted common stock, issuance of 100,000 shares upon the exercise
of 100,000 Class A Warrants, repayment of loans in the amount of $43,225, an
advance of $10,125, and leased a van at the rate of $450 per month.
During the fiscal year ended April 30, 1992 the Company recognized $45,000
in management fees from a nonconsolidated affiliate in which an officer of the
Company is a general partner; and at the end of fiscal 1992 the Company's
president had personally guaranteed repayment of $88,125 of the Company's
obligations.
16. EMPLOYEE STOCK OPTION AND STOCK APPRECIATION RIGHTS PLANS
The following table sets forth: (1) the number of shares of the Company's
common stock issuable at April 30, 1994 pursuant to outstanding Options; (2)
the exercise price per share; (3) the aggregate exercise price; (4) the
expiration dates; and (5) the market values of such shares at April 30, 1994,
based on $1.00 per share, which is the average of the high and low ask and bid
prices on the National Association of Securities Dealers Automated Quotation
system at April 30, 1994 (see Note 19).
<TABLE>
<CAPTION>
Number of
Shares Market
Covered By Exercise Aggregate Value at
Outstanding Price Per Exercise Expiration April 30,
Plan Options Share Price Dates 1994
- - ----------------------- --------- ------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
Incentive Stock Option Plan 71,428 $ 0.69 $ 49,285 11/18/02 $ 71,428
Incentive Stock Option Plan 250,000 (1) $ 1.09 $ 272,500 7/15/03 $ 250,000
Incentive Stock Option Plan 1,500 $ 0.9375 $ 1,406 4/29/04 $ 1,500
Stock Option and Stock
Appreciation Rights Plan 100,000 $ 0.69 $ 69,000 11/18/02 $ 100,000
Stock Option and Stock
Appreciation Rights Plan 340,000 (1) $ 1.09 $ 370,600 7/15/03 $ 340,000
<FN>
(1) On February 23, 1994 160,000 Stock Option and Stock Appreciation Rights
Plan options terminated and three months thereafter 90,000 Incentive Stock
Option Plan options terminated.
(2) All Options are currently exercisable, except as noted above, and no
Options were exercised during the current period.
</TABLE>
17. OTHER STOCK OPTIONS
On January 3, 1994 the Company entered into an agreement whereby it may
issue up to 48,000 options (8,000 per month), commencing January 1, 1994 and
ending June 30, 1994. The options would be exercisable at 100.25% of the
closing bid price on the date of issuance. The Company has agreed, if
requested between July 1, 1994 and December 31, 1994, to register the options
on Form S-8. As of April 30, 1994 the Company had issued 8,000 options which
are each exercisable at $1.6917.
18. WARRANTS
The Company issued an aggregate of 2,360,086 shares pursuant to the
exercise of its Class B Warrants at the Temporary Exercise Price of $1.00
during the Temporary Exercise Period. The Temporary Exercise Period expired
July 23, 1993 and the offering terminated September 12, 1993.
32
<PAGE> 33
19. PROPOSED REVERSE STOCK SPLIT
On May 9, 1994 a Special Meeting of Shareholders was called to approve a
one (1) for three (3) reverse common stock split (the "Reverse Split"). The
Meeting is scheduled for July 21, 1994 and the Company expects the effective
date to be July 22, 1994. If the Reverse Split is approved, each three (3)
shares owned by holders of record of the Company's Common Stock at the close of
business on the effective date will be converted into one (1) share. As a
result of the Reverse Split there will be corresponding adjustments for all
previous stock purchase rights granted and the number of shares authorized
thereunder in accordance will all plan terms therefor.
20. COMMON STOCK AND CAPITAL TRANSACTIONS
<TABLE>
The Company's Common stock trades on The Nasdaq Small-Cap Market under the
symbol APHC and on the Boston Stock Exchange under the symbol PTH.B. The
Company's common stock issued and outstanding is as follows (see Note 19):
<CAPTION>
Total Number Common Paid in
of Shares Stock Capital
<S> <C> <C> <C>
Issued and outstanding shares as of April 30, 1992 1,383,503 $ 69,175 $4,269,063
Stock sales (excluding warrants) 231,704 11,585 76,471
Common stock subscribed 400,000 20,000 233,750
Warrant exercise stock sales (net of offering
expenses) 1,047,938 52,397 966,531
Reverse stock split fractional shares dropped (720) (36) 36
---------- ---------- ----------
Issued and outstanding shares as of April 30, 1993 3,062,425 153,121 5,545,851
Warrant exercise stock sales (net of offering
expenses) 2,359,481 117,974 2,237,288
Stock sales (excluding warrants and net of offering
expenses) 565,000 28,250 119,262
Common stock subscribed (400,000) (20,000) -
Other charges - - (38,413)
---------- ---------- ----------
Issued shares as of April 30, 1994 5,586,906 $ 279,345 $ 7,863,988
========== ========== ==========
</TABLE>
During the fiscal year ended April 30, 1994 the Company paid $30,000 and
issued 505,000 shares of its common stock, valued at $358,832 for advisory
services rendered during the previous and current year. The Company expensed
$219,665 during the current year, and $169,167 in fiscal 1993 for which 400,000
shares were recorded as common stock subscribed at April 30, 1993.
As of April 30, 1994 the Company has 44,413,094 shares of its $0.05 per
share par value common stock authorized for issuance and unissued, and 7,200
shares in its treasury stock account. As of April 30, 1994 there were 762,928
shares reserved and issuable under various stock option plans (see Note 16).
During fiscal 1993 the Company issued 90,000 shares of its common stock
pursuant to the exercise of warrants for which funds were not received and
recorded a liability for $40,000 for promotional services rendered by the
person to whom the shares were issued. The Company recorded the receivable as
common stock issued and unpaid. In fiscal 1994 the Company received from this
person 7,200 shares of its common stock and relief from its $40,000 liability.
The Company has recorded treasury stock, at its cost, in the amount of $11,588
and has charged $38,413 to paid in capital.
33
<PAGE> 34
21. INCOME TAXES
The Financial Accounting Standards Board released Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ("SFAS 109") in
February, 1992, which changed the accounting principles used in reporting
income tax expense pursuant to Accounting Principals Board Opinion No. 11 ("APB
11"). All amounts computed for fiscal 1993 and thereafter are pursuant to SFAS
109 and all amounts computed for fiscal 1992 are pursuant to APB 11.
For financial accounting purposes income taxes were reported pursuant to
APB 11 using the deferred method. SFAS No. 109 requires the reporting of
income taxes using an asset and liability approach and measuring the change in
the tax asset or liability. A deferred tax asset or liability generally arise
from changes in differences between financial reporting and tax bases of all
assets and liabilities (with exception related to goodwill). A deferred tax
asset will result in an income tax benefit (before valuation allowance),
conversely a deferred tax liability will result in income tax expense.
Previously recorded deferred tax assets and liabilities are adjusted upon any
changes in enacted tax rates. Differences between financial reporting and tax
bases usually result from differences in timing of income and expense
recognition. A valuation allowance is applied to a tax asset for any amount
that does not meet certain realizability criteria. A change in the amount of
valuation allowance that is applicable to the beginning of the year balance is
recognized in income from continuing operations, increases in the valuation
allowance are recognized as income tax expense and decreases are recognized as
income tax benefit.
The Company has adopted SFAS 109, effective May 1, 1992, and accounted for
its adoption as a cumulative effect of change in accounting principle. Prior
periods were not restated. The cumulative effect of the adoption was $360,600
(net of a valuation allowance of $180,600), which was reported in the fiscal
1993's statements of consolidated operations. The valuation allowance at the
beginning fiscal 1994 was $788,200 and increased $843,800.
Deferred income taxes result from temporary differences in the financial
bases and tax bases of assets and liabilities. The type of differences that
give rise to significant portions of deferred income tax liabilities or
(assets) are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended April 30,
-----------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Deferred Liabilities:
Cash versus accrual reporting $ 99,200 $ 312,400 $ 638,300
Capital lease versus operating lease reporting 594,400 923,500 336,700
Excess amortization of leasehold costs 4,513,500 5,356,700 -
Temporary differences not currently utilizable 93,400 75,000 1,410,900
---------- ---------- ----------
Total deferred tax liabilities 5,300,500 6,667,600 2,385,900
---------- ---------- ----------
Deferred Assets:
Cash versus accrual reporting $ (17,900) $ (73,100) $ -
Excess amortization of leasehold costs - - (2,310,900)
Temporary differences with no tax benefit - - -
Net operating loss carryforwards (6,839,600) (7,307,700) -
---------- ---------- ----------
Gross deferred tax assets (6,857,500) (7,380,800) (2,310,900)
Deferred tax asset valuation allowance 1,632,000 788,200 -
---------- ---------- ----------
Total deferred tax assets (5,225,500) (6,592,600) (2,310,900)
---------- ---------- ----------
Net deferred tax liabilities (asset) $ 75,000 $ 75,000 $ 75,000
---------- ---------- ----------
</TABLE>
As of April 30, 1994 the Company and its subsidiaries have regular tax net
operating loss carryforwards, expiring in the years 2004 through 2009 available
to offset future taxable income of $19,771,300.
34
<PAGE> 35
<TABLE>
The Company's income tax expense attributable to continuing operations is
comprised of the following significant components for the fiscal year ended
April 30, 1994:
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Deferred tax expense $(1,311,900) $ 587,500
Utilization of (Benefit) derived from use of operating
loss carryforwards 468,100 (1,015,100)
Change in the amount of valuation allowance that is
applicable to the beginning of the year balance 843,800 607,600
---------- ----------
Provision for income taxes $ 0 $ 180,000
========== ==========
</TABLE>
<TABLE>
The Company's provision for income taxes differs from the amount of income
tax determined by applying the applicable U.S. Federal statutory income tax
rate to pretax accounting income from continuing operations as a result of the
following differences:
<CAPTION>
Fiscal Year Ended April 30,
-----------------------------------------
1994 1993 1992
<S> <C> <C> <C>
U.S. Federal statutory income tax rate $ (897,500) $ (516,700) $ (788,600)
Key man life insurance premiums 1,300 $ - $ 300
Amortization of cost in excess of
net assets acquired 47,900 43,800 42,000
Utilization of net operating losses - - -
Losses not currently utilizable 2,500 - 746,000
Other 2,000 45,300 300
Valuation allowance 843,800 607,600 -
---------- ---------- ----------
Income tax expense (benefit) at effective rate $ 0 $ 180,000 $ 0
========== ========== ==========
</TABLE>
<TABLE>
For the years ended April 30, 1994, 1993 and 1992 the provision for income
taxes charged to continuing operations was as follows:
<CAPTION>
Fiscal Year Ended April 30,
-----------------------------------------
1994 1993 1992
<S> <C> <C> <C> <C> <C>
Federal current $ - $ - $ -
Federal deferred - 180,000 -
---------- ---------- ----------
Provision for income taxes $ - $ 180,000 $ -
========== ========== ==========
</TABLE>
22. ACQUISITION
On March 10, 1993 the Company acquired the assets of WDZD-FM, Shallotte,
North Carolina. The total purchase price was $462,000, which was paid with
$260,000 in cash and two promissory notes to the seller in the amounts of
$95,000 and $107,000, which are payable over 60 months (see Note 13). The
station's upgrade to 25 kw was completed and call letters were changed to
WLTT-FM in February, 1994.
The acquisition was accounted for under the purchase method of accounting
and the results of operations for WDZD are included in the Company's results of
operations for the period beginning March 10, 1993 and thereafter. Goodwill
associated with the acquisition will be amortized over twenty years.
Additionally, the Company has allocated $50,000 of its deferred organization
costs to this goodwill.
35
<PAGE> 36
<TABLE>
If the acquisition had occurred at the beginning of fiscal 1993 or at the
beginning of fiscal 1992 period the unaudited proforma results of operations
would of been as follows:
<CAPTION>
Fiscal Year Ended April 30,
------------------------------------
1993 1992
<S> <C> <C>
Total revenue $ 49,823,554 $ 89,678,467
Loss before cumulative effect of change
in accounting principle $ (1,844,810) $ (2,464,528)
Net loss $ (1,664,810) $ (2,464,528)
Primary Earnings Per Share:
Loss before cumulative effect of change in
accounting principle $ (0.22) $ (1.94)
Cumulative effect of change in accounting principle $ 0.03 $ 0.00
Primary net loss per share $ (0.19) $ (1.94)
Fully Diluted Earnings Per Share:
Loss before cumulative effect of change in
accounting principle $ (0.22) $ (1.94)
Cumulative effect of change in accounting principle $ 0.03 $ 0.00
Fully net loss per share $ (0.19) $ (1.94)
</TABLE>
The above proforma financial information is presented for informational
purposes only and is not necessarily indicative of the operating results which
would have occurred had the acquisition of WDZD been consummated at the above
dates, nor are they necessarily indicative of future operating results.
23. LITIGATION
The Company has been involved in a dispute with the Estate of Joseph
Bitonte and Star Bank Central Ohio, regarding a loan from the bank to Mr.
Bitonte and a guarantee and pledge of collateral by the Company and Mr. Rayl
(among others) since 1987. In a settlement recently reached between the
parties and to be entered into on or before August 6, 1994, the Company has
agreed to pay $115,000 to the Bitonte Estate in full and final settlement of
all matters in dispute against the Company and Mr. Rayl, and, in turn, the
litigation will be terminated and all parties' claims against one another will
be released in such a manner so as to reserve the Star Bank's claims against
other guarantors who are not affiliated with the Company.
24. COMMITMENTS AND CONTINGENCIES
The Company has entered into contracts for the purchase and construction of
five (5) FM and two (2) AM radio stations. Escrow deposits in the aggregate
amount of $90,000 have been tendered and requests for permission to transfer
the various licenses have been filed with the Federal Communications
Commission. As of the date of this report the FCC has not acted favorably or
unfavorably as to any of the requests for transfer and the Company has no
reason to believe that the requests will not be granted. The aggregate
purchase price and construction costs are estimated to be approximately
$3,487,000 of which approximately $1,510,000 is to be paid in cash at closing,
$1,350,000 is to be paid monthly with interest at rates ranging from 7% to 10%
per annum based on a 10 year term with all unpaid principal due in 60 months
from the date of closing, approximately $145,000 through the assumption of
existing bank debt, $397,000 of new equipment purchases and the assumption of
approximately $85,000 of existing leases on broadcast equipment.
Financing for these transactions is being provided principally from
external sources, including the Companies placement of approximately $600,000
of promissory notes (see Note 13) and an anticipated sale of equity securities.
The Company has entered into a letter of intent which provides for the sale of
up to $7,500,000 of equity securities in a registered underwriting. Such
underwriting is subject to change based upon future market conditions. The
Company anticipates that it will file a registration statement with the
Securities and Exchange Commission as to these securities as soon as
practicable after the filing of its April 30, 1994 annual report. In addition,
the Company is
36
<PAGE> 37
pursuing secondary sources of mezzanine financing and other debt and/or equity
transactions as they may become available. Also see Note 15.
25. INDUSTRY SEGMENT DATA REPORTING INFORMATION
The Company's leasing business consists of the acquisition, financing,
ownership, management and brokerage of leases of data processing and other
equipment. The Company's broadcasting business consists of the acquisition,
ownership, management, development and brokerage of communications related
technology including broadcast properties, telecommunications equipment,
communications software and other products. The Company operated in
predominately one segment for all years prior to 1994; therefore, no financial
segment information is reported herein prior to fiscal 1994. Financial
information for the Company's industry segments is summarized below for the
fiscal year ended April 30, 1994.
<TABLE>
<CAPTION>
1994 Leasing Broadcasting Other (1) Consolidated
------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Total revenue from
unaffiliated customers $ 30,152,140 $ 211,702 $ 121,296 $ 30,485,138
Operating loss (873,552) (671,612) (953,198) (2,498,362)
Identifiable assets 89,887,858 1,199,924 2,332,378 93,420,160
Depreciation and
amortization 18,459,756 68,296 139,783 18,667,835
Capital expenditures 1,389 392,505 12,496 406,390
<FN>
(1) Other includes costs associated with unsuccessful and pending broadcast
property acquisitions.
</TABLE>
The following table reconciles consolidated operating loss reported hereof
to operating loss reported in the statement of consolidated operations for the
fiscal year ended April 30, 1994:
Consolidated operating loss $ (2,498,362)
Interest expense not included in
non leasing operating loss (141,231)
--------------
Operating loss reported in the
statement of consolidated
operations (2,639,593)
==============
26. NET INCOME (LOSS) PER SHARE
For the fiscal year ended April 30, 1994 primary earnings per share amounts
are computed based on the weighted average number of common shares outstanding
of 5,086,690 shares. No common stock equivalents are included herein due to
their antidilutive nature. During the current year the Company issued
2,917,281 shares pursuant to stock sales, net of 7,200 shares acquired for
treasury stock (see Note 18 and 20) which are included in the weighted average
number of common shares outstanding. The aforementioned shares issued include
2,359,481 shares issued pursuant to warrant exercises. If these shares had
been issued at the beginning of the current fiscal year primary and fully
diluted earnings per share would have been ($0.47).
For the fiscal year ended April 30, 1993 primary earnings per share amounts
are computed based on the weighted average number of common shares outstanding
of 2,541,977 shares. The primary average number of common and common
equivalent shares were 6,950,914 shares for the fiscal year ended April 30,
1993. Fully diluted average number of common and common equivalent shares for
the fiscal year ended April 30, 1993 were 6,951,709. Interest expense for
fully diluted earnings per share has been adjusted under the modified treasury
stock method. At the end of fiscal 1993 the Company had issuable 400,000
shares which were not issued, these were included in the average number of
common and common equivalent shares.
The Company issued, during the fiscal year ended April 30, 1993, 1,279,642
shares pursuant to stock sales (see Note 20) which are included in the weighted
average number of common shares outstanding. The aforementioned shares issued
include 1,047,938 shares issued pursuant to warrant exercises, also 2,334,423
shares were issued
37
<PAGE> 38
subsequent to April 30, 1993 pursuant to warrant exercises. If these shares
had been issued at the beginning of fiscal 1993 primary and fully diluted
earnings per share would have been as follows: Loss per share before
cumulative effect of change in principle ($0.23), cumulative effect of a change
in principle $0.03, and net loss per share ($0.20). On October 27, 1992 the
Company issued 14,000 shares of stock (which are included in the above
mentioned number) for the payment of accrued interest on debt. There would
have been no change in earnings per share if these shares were issued at the
beginning of the period. On November 6, 1992, the Company issued 217,704
shares of stock (which are included in the aforesaid number) for the payment of
debt (see Note 15). If these shares had been issued at the beginning of the
current fiscal year primary and fully diluted loss per share would have been as
follows: Loss per share before cumulative effect of a change in principle
($0.20), cumulative effect of a change in principle $0.03, and net loss per
share ($0.17).
For the fiscal year ended April 30, 1992, primary and fully diluted
earnings per share amounts, were computed based on 1,268,857 shares, the
weighted average number of common shares outstanding. The Company issued,
during fiscal 1992, 197,155 shares pursuant to stock sales which were included
in the weighted average number of common shares outstanding . Shares under the
Company's stock option plans are antidilutive for fiscal 1992, therefore, these
are not included herein. All of the above amounts and all amounts hereof were
restated (unless specified otherwise) for the 1 to 5 reverse stock split,
effected March 9, 1992. During the fiscal year ended April 30, 1992 the
Company issued 114,955 shares pursuant to warrant exercises and 1,047,333
shares subsequent to April 30, 1992 pursuant to warrant exercises. If these
shares had been issued immediately upon the issuance of the warrants primary
and fully diluted loss per share would have been ($1.01). On February 25, 1992
the Company issued 50,000 shares (before restatement) of stock pursuant for the
exercise of 50,000 A Warrants. The proceeds therefrom were used to retire debt
issued June 14, 1991. If the stock was issued and debt retired upon the
issuance of the warrants, primary and fully diluted loss per share would have
been ($1.82). At the end of fiscal 1992 the Company has issuable 12,000 shares
pursuant to the above debt, which were included in the weighted average number
of common shares outstanding for the current fiscal year.
38
<PAGE> 39
<TABLE>
27. SUPPLEMENTAL CASH FLOW INFORMATION
Reconciliation of net loss to net cash used for operating activities is as follows:
<CAPTION>
Fiscal Year Ended April 30,
---------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Net loss $ (2,639,593) $(1,519,715) $(2,319,433)
----------- ----------- -----------
Adjustments to reconcile net loss to net cash
used for operating activities:
Expenses and revenues not affecting operating cash flows:
Cumulative effect to May 1, 1992 of change in
accounting principle for income taxes - (180,000) -
Loss on residual valuation 458,245 633,351 1,102,602
Depreciation, and amortization of equipment and
intangible assets 18,667,835 36,142,592 52,472,472
Deferred costs expensed and amortized 68,127 2,874 20,116
Loss from other valuation - - 24,147
Loss (net of $8,211 gain, for fiscal 1992) on
sale of office furniture and equipment 4,135 - 69,936
Advisory services paid in stock 189,665 169,166 -
Nonrecurring write-offs - related party 256,268 - -
Employee stock bonus 23,400 - -
Rental income (21,845,430) (34,761,344) (65,755,543)
Leasing interest income (8,175,098) (14,387,839) (23,597,940)
Leasing interest expense 11,595,851 13,209,859 37,087,101
Changes in assets and liabilities:
Changes in accrued interest income 19,573 16,042 117,954
Changes in accrued interest expense (37,423) 126,546 36,905
Changes in notes, accounts and commissions
receivable 38,702 (105,138) 209,177
Changes in other assets 28,883 10,293 48,739
Changes in note and accounts payable, and
accrued expenses (9,486) (156,354) 245,877
Income taxes - 180,000 -
Other (5,454) 211 210
----------- ----------- -----------
Total Adjustments 1,277,793 900,259 2,081,753
----------- ----------- -----------
NET CASH USED FOR OPERATING ACTIVITIES $(1,361,800) $ (619,456) $ (237,680)
=========== =========== ===========
</TABLE>
39
<PAGE> 40
NON CASH INVESTING AND FINANCING ACTIVITIES. The Company acquires leases
of equipment and lease receivables partially by assuming existing financing.
Also, the Company may sell or dispose of such assets with a commensurate
transfer of any related financing to the transferee. The net increases in
assets and liabilities associated with the acquisition and disposition of such
equipment and equipment leases and the related liabilities for the fiscal years
ended April 30, 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Fiscal Year Ended April 30,
---------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
ASSETS:
Equipment notes and accrued interest receivable $ - $ (15,049,872) $ (9,840,731)
Leased property under capital lease (net of
accumulated amortization) - (24,281,049) (511,559)
Net investment in operating leases (715,565) 7,564,804 -
Net investment in direct financing leases 14,759,430 - -
------------ ------------ ------------
Total Assets $ 14,043,865 $ (31,766,117) $ (10,352,290)
------------ ------------ ------------
LIABILITIES:
Notes and accrued interest payable $ 14,759,430 $ - $ -
Discounted lease rentals and accrued interest payable (715,565) (16,716,245) (511,559)
Capital lease obligations and accrued interest payable - (15,049,872) (9,840,731)
------------ ------------ ------------
Total Liabilities $ 14,043,865 $ (31,766,117) $ (10,352,290)
============ ============ ============
</TABLE>
During the fiscal year ended April 30, 1994 the Company (1) incurred
$59,079 of debt and expended $19,449 in cash for the purchase of fixed assets,
(2) entered into a capital lease obligation for $7,670 for new equipment, (3)
issued 60,000 shares for $3,000 in cash and incurred $23,400 of compensation
expense, (4) recorded broadcasting rights of $417,039 and related broadcasting
rights payable of an equivalent amount (5) reduced common stock issued and
unpaid by $90,000, relieved a liability in the amount of $40,000, charged paid
in capital for $38,413 and recorded $11,588 of treasury stock, without
receiving or expending cash (see Note 20), (6) received $1,450 of fixed assets
in barter transactions and (7) reduced accrued officer compensation and
interest payable by offsetting a short-term loan and accrued interest
receivable in the amount of $11,370 (see Note 15). During the current fiscal
year the Company purchased assets and liabilities, which included Net
Investment in Direct Financing Leases of $14,759,430 and Notes and Accrued
Interest Payable of $14,759,430. Also, during the fiscal year ended April 30,
1994 the Company disposed of Net Investment in Operating Leases of $715,565
(net of $1,330,455 of accumulated depreciation) and Discounted Lease Rentals
and Accrued Interest Payable of a commensurate amount. Also during fiscal 1994
leasehold tenancy positions terminated which reduced the gross value of Leased
Property Under Capital Lease by $32,936,834 and accumulated amortization by an
equivalent amount.
During the fiscal year ended April 30, 1993 the Company sold assets and
liabilities, which at the date of sale included Leased Property Under Capital
Lease of $23,530,404, and Discounted Lease Rentals and Accrued Interest Payable
of $23,530,404 for a $10,000 reduction of debt. Also, during this same period
there were additional dispositions of assets and liabilities which included
Leased Property Under Capital Lease of $750,645, Installment Notes and Accrued
Interest Receivable of $15,049,872, Discounted Lease Rentals and Accrued
Interest Payable of $750,645, and Capital Lease Obligations and Accrued
Interest Payable of $15,049,872. Acquisitions during fiscal 1993 were
comprised of Net Investment in Operating Leases of $7,564,804, and Discounted
Lease Rentals and Accrued Interest Payable of $7,564,804. During fiscal 1993
leasehold tenancy positions terminated which reduced the gross value of Leased
Property Under Capital Lease by $52,863,547 and accumulated amortization by a
tantamount.
Also, during fiscal 1993 100,000 warrants were exercised for a $100,000
reduction in accrued compensation (see Note 15). Similarly, during third
quarter of fiscal 1993 the Company issued 217,704 shares of $0.05 per share par
value common stock to pay $81,056 of debt (see Note 15). Furthermore, during
fiscal 1993, 90,000 warrants were exercised and 90,000 shares were issued for
which the Company has recorded a receivable of $90,000 (see Note 20).
Additionally, the Company incurred $2,634 of debt pursuant to the purchase of
office equipment during the fiscal year ended April 30, 1993. During the
fiscal 1993 the Company reduced Residuals, Notes and Accrued Interest
Receivable by $10,582 by eliminating Unearned Income. Also, during the same
period the Company received 2,000 shares of
40
<PAGE> 41
another Company's stock in payment of a $7,822 note receivable. Additionally,
during fiscal 1993 the Company incurred $625,000 of debt, incurring $125,000
related to a transaction fee, receiving a net of $500,000 (see Note 13).
During the fiscal year ended April 30, 1992, the Company acquired assets
and liabilities associated with equipment and equipment leases represented by
Leased Property Under Capital Lease of $7,059,442, and Discounted Lease Rentals
and Accrued Interest Payable of $7,059,442. Also during the fiscal year April
30, 1992, the Company disposed of assets and liabilities which were comprised
of Equipment Notes and Accrued Interest Receivable of $9,840,731, Leased
Property Under Capital Lease of $7,571,001, Discounted Lease Rentals and
Accrued Interest Payable of $7,571,001 and Capital Lease Obligations and
Accrued Interest Payable of $9,840,731. Leasehold tenancy positions terminated
which reduced the gross value of Leased Property Under Capital Lease by
$42,847,270 and accumulated amortization by a tantamount.
During fiscal 1992 the Company issued stock and debt for $101,000, for
which an additional $9,000 of paid in capital has been assigned to the value of
the stock, which was capitalized as debt issuance costs. Also, a capital lease
obligation of $11,825 was incurred when the Company entered into a lease for
new equipment. Additionally, the Company reduced notes and accrued interest
payable by $41,836 without expending any cash or property. During fiscal 1992,
the Company has written off the value of a securities broker license in the
amount of $22,400. Further, the fiscal year ended April 30, 1992, the Company
paid compensation with furniture and office equipment in the amount of $13,767
and accounts payable for $8,625. The Company issued stock for the payment of
debt in the net amount of $25,853. The Company reduced Residuals, Notes and
Accrued Interest Receivable by $794,280 by eliminating Unearned Income.
Refer to other notes to the financial statements for further discussion of
noncash investing and financing activities.
41
<PAGE> 42
28. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
Summarized selected quarterly financial data for the fiscal years ended April 30, 1994 and 1993 is set forth below:
<CAPTION>
FISCAL YEAR ENDED APRIL 30, 1994
----------------------------------------------------------------------
FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues $ 5,708,797 $ 7,409,177 $ 8,023,733 $ 9,343,431
Expenses 6,916,303 7,686,428 8,576,171 9,945,829
------------ ------------ ------------ -------------
NET LOSS $ (1,207,506) $ (277,251) $ (552,438) $ (602,398)
============ ============ ============ =============
PRIMARY NET LOSS PER SHARE $ (0.22) $ (0.05) $ (0.10) $ (0.17)
============ ============ ============ =============
FULLY DILUTED NET LOSS PER SHARE $ (0.22) $ (0.05) $ (0.10) $ (0.17)
============ ============ ============ =============
================================================================================================================================
</TABLE>
<TABLE>
FISCAL YEAR ENDED APRIL 30, 1993
----------------------------------------------------------------------
FOURTH THIRD SECOND FIRST
QUARTER QUARTER QUARTER QUARTER
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenues $ 10,935,605 $ 12,019,971 $ 11,992,846 $ 14,712,056
Expenses 11,975,682 12,162,788 12,174,355 14,867,368
------------ ------------ ------------ -------------
LOSS BEFORE INCOME TAXES (1,040,077) (142,817) (181,509) (155,312)
Income tax expense (benefit) 450,000 0 (251,200) (18,800)
------------ ------------ ------------ -------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE (1,490,077) (142,817) 69,691 (136,512)
Cumulative Effect to May 1,1992 of Change in
Accounting Principle for Income Taxes
0 0 0 180,000
------------ ------------ ------------ -------------
NET INCOME (LOSS) $ (1,490,077) $ (142,817) $ 69,691 $ 43,488
============ ============ ============ =============
PRIMARY NET INCOME (LOSS) PER SHARE:
Income (loss) before cumulative effect of
change in accounting principle $ (0.50) $ (0.05) $ 0.01 $ 0.01
Cumulative effect of change in accounting
principle 0.00 0.00 0.00 0.02
------------ ------------ ------------ -------------
Primary Net Income (Loss) Per Share $ (0.50) $ (0.05) $ 0.01 $ 0.03
============ ============ ============ =============
FULLY DILUTED NET INCOME (LOSS) PER SHARE:
Income (loss) before cumulative effect of
change in accounting principle $ (0.50) $ (0.05) $ 0.01 $ 0.01
Cumulative effect of change in accounting
principle 0.00 0.00 0.00 0.02
------------ ------------ ------------ -------------
FULLY DILUTED NET INCOME (LOSS) PER SHARE $ (0.50) $ (0.05) $ 0.01 $ 0.03
============ ============ ============ =============
</TABLE>
42
<PAGE> 43
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The information required by this Item is incorporated by reference to the
Company's definitive Information Statement pursuant to Regulation 14C or Proxy
Statement pursuant to Regulation 14A, to be filed within 120 days after the
Company's fiscal year end.
Item 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference to the
Company's definitive Information Statement pursuant to Regulation 14C or Proxy
Statement pursuant to Regulation 14A, to be filed within 120 days after the
Company's fiscal year end.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference to the
Cocmpany's definitive Information Statement pursuant to Regulation 14C or Proxy
Statement pursuant to Regulation 14A, to be filed within 120 days after the
Company's fiscal year end.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference to the
Company's definitive Information Statement pursuant to Regulation 14C or Proxy
Statement pursuant to Regulation 14A, to be filed within 120 days after the
Company's fiscal year end.
43
<PAGE> 44
<TABLE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS ON FORM 8-K
<CAPTION>
Form 10-K
Page Reference
--------------
(a)(1) Index to Consolidated Financial Statements:
<S> <C>
Report of Independent Certified Public Accountants 18
Consolidated Balance Sheets as of April 30, 1994 and 1993 19
Statements of Consolidated Operations for the years ended
April 30, 1994, 1993 and 1992 21
Statements of Consolidated Stockholders' Equity for the years ended
April 30, 1994, 1993 and 1992 22
Statements of Consolidated Cash Flows for the years ended
April 30, 1994, 1993 and 1992 23
Notes to Consolidated Financial Statements 24-42
(a)(2) Index to Financial Statement Schedules:
II Amounts due from related parties and underwriters, promoters and
employees other than related parties 45
V Property, plant and equipment 46
VI Accumulated depreciation, depletion and amortization of property,
plant and equipment 47
VIII Valuation and qualifying accounts 48
IX Short-term borrowings 49
</TABLE>
All other schedules have been omitted because the required information is
included in the consolidated financial statements or notes thereto, or is not
required to be filed.
The Company hereby undertakes to furnish to the Commission any instrument
with respect to long-term debt of the Company which does not exceed ten percent
of the total assets of the Company and its subsidiaries and business trusts.
(a)(3) Exhibits: See index filed as part of Form 10-K on page 57.
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the fiscal quarter
ended April 30, 1994:
(1) Form 8-K dated March 10, 1994 to announce Mark S. Manafo ceased being a
Director, Chief Operating Officer and Employee of the Company's Subsidiary,
Partech Communications Group, Inc. and all of its subsidiaries.
44
<PAGE> 45
<TABLE>
PARTECH HOLDINGS CORPORATION
SCHEDULE II AMOUNTS RECEIVABLE FROM RELATED PARTIES
UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
FOR THE FISCAL YEARS ENDED APRIL 30, 1994, 1993 AND 1992
<CAPTION>
Column A Column B Column C Column D Column E
---------------- ------------ ------------ ---------------------------- --------------------------
Deductions Balance at End of Period
---------------------------- --------------------------
Balance at
Fiscal Beginning Amounts Amounts
Year Ended Name of Debtor of Period Additions Collected Written Off Current Non Current
------------ ---------------- ------------ ------------ -------------- ------------ --------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
1994 John E. Rayl $232,158 $35,765 (A) ($11,655) (B) ($256,268) $0 (C) $0 (C)
1993 John E. Rayl $211,966 $24,271 (A) ($4,079) (B) $0 $101,478 $130,680
1992 John E. Rayl $171,473 $58,033 (A) ($17,540) (B) $0 $77,407 $134,559
<FN>
(A) Represents advances to nonconsolidated affiliates, and partnerships which are partially owned by a
nonconsolidated affiliate. Mr. Rayl is a partner in the above mentioned nonconsolidated affiliates.
Fiscal 1992 additions include a $10,125 short-term loan to Mr. Rayl, at 10% interest per annum.
(B) Fiscal 1994 collections include the above mentioned loan to Mr. Rayl and accrued interest in the amount of
$11,370, which were applied against accrued compensation due to Mr. Rayl. Collections for fiscal 1993
and 1992 were entirely cash.
(C) There are no amounts hereof due to the Company at the end of fiscal 1994.
</TABLE>
45
<PAGE> 46
<TABLE>
SCHEDULE V PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED APRIL 30, 1994, 1993 AND 1992
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
Balance at Other Balance at
Beginning Additions Changes End of
Description of Period at Cost Retirements Add (Deduct) Period
----------- ------------- -------------- ------------- ------------- ---------------
<S> <C> <C> <C>
FOR THE YEAR ENDED
APRIL 30, 1994:
Furniture and office
equipment $ 383,073 $ 24,669 $ (13,337) $ - $ 394,405
Broadcasting equipment 211,515 198,170 (9,300) - 400,385
Automobile 4,000 77,255 (58,176) - 23,079
Leased property under
capital lease (B) 185,994,410 - (32,936,834) - 153,057,576
Net investment in
operating leases (A) 7,564,804 - (2,046,021) - 5,518,783
Building and
improvements 25,000 21,806 - - 46,806
Land 15,000 53,761 - - 68,761
Land improvements - 5,687 - - 5,687
Construction in progress - 3,539 - - 3,539
Inventory - 21,503 - - 21,503
------------- ------------- ------------- ------------- -------------
$ 194,197,802 $ 406,390 $ (35,063,668) $ - $ 159,540,524
============= ============= ============= ============== =============
FOR THE YEAR ENDED
APRIL 30, 1993:
Furniture and office
equipment $ 369,960 $ 13,113 $ 0 $ - $ 383,073
Broadcasting equipment 0 211,515 0 - 211,515
Automobile 0 4,000 0 - 4,000
Leased property under
capital lease (A)(B) 300,095,873 0 (114,101,463) - 185,994,410
Net investment in
operating leases (A) 0 7,564,804 0 - 7,564,804
Building and
improvements 0 25,000 0 - 25,000
Land 0 15,000 0 - 15,000
------------- ------------- ------------- ------------- -------------
$ 300,465,833 $ 7,833,432 $ (114,101,463) $ - $ 194,197,802
============= ============== =============== ============== =============
FOR THE YEAR ENDED
APRIL 30, 1992:
Furniture and office
equipment $ 564,413 $ 19,003 $ (213,456) $ - $ 369,960
Leased property under
capital lease (A)(B) 348,408,807 7,059,442 (55,372,376) - 300,095,873
------------- ------------- ------------- ------------- -------------
$ 348,973,220 $ 7,078,445 $ (55,585,832) $ - $ 300,465,833
============= ============== =============== ============== =============
<FN>
(A) Cost of additions for all years represent the assumption of discounted lease rental debt.
(B) Retirements of $32,936,834, $52,863,547 and $42,847,270 and are due to leasehold tenancies expiring in
the fiscal years ended April 30, 1994, 1993 and 1992, respectively.
46
</TABLE>
<PAGE> 47
<TABLE>
SCHEDULE VI ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
FOR THE YEARS ENDED APRIL 30, 1994, 1993 AND 1992
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
-------- -------- -------- -------- -------- --------
Additions
Balance at Charged to Other Balance at
Beginning Costs and Changes End of
Description of Period Expenses Retirements Add (Deduct) Period
----------- ------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED
APRIL 30, 1994:
Furniture and office
equipment $ 254,779 $ 54,188 $ (9,976) $ - $ 298,991
Broadcasting equipment 8,284 40,126 (1,661) - 46,749
Automobile 250 6,518 (4,155) - 2,613
Leased property under
capital lease (A) 141,703,003 15,206,562 (32,936,834) - 123,972,731
Net investment in
operating leases 2,271,639 3,217,953 (1,330,455) - 4,159,137
Building and
improvements 313 1,522 - - 1,835
Land improvements - 71 - - 71
------------- ------------- ------------- ------------- -------------
$ 144,238,268 $ 18,526,940 $ (34,283,081) $ - $ 128,482,127
------------- ------------- ------------- ------------- -------------
FOR THE YEAR ENDED
APRIL 30, 1993:
Furniture and office
equipment $ 191,831 $ 62,948 $ 0 $ - $ 254,779
Broadcasting equipment 0 8,284 0 - 8,284
Automobile 0 250 0 - 250
Leased property under
capital lease (A) 197,853,206 33,670,211 (89,820,414) - 141,703,003
Net investment in
operating leases 0 2,271,639 0 - 2,271,639
Building and
improvements 0 313 0 - 313
------------- ------------- ------------- ------------- -------------
$ 198,045,037 $ 36,013,645 $ (89,820,414) $ - $ 144,238,268
============= ============= ============= ============== =============
FOR THE YEAR ENDED
APRIL 30, 1992:
Leased property under
capital lease (A) $ 193,388,339 $ 52,266,242 $ (47,801,375) $ - $ 197,853,206
Furniture and office
equipment 228,213 82,773 (119,155) - 191,831
------------ ------------ ------------- ------------- ------------
$ 193,616,552 $ 52,349,015 $ (47,920,530) $ - $ 198,045,037
============= ============= ============= ============== =============
<FN>
(A) Retirements of $32,936,834 , $52,863,547 and $42,847,270 and are due to leasehold tenancies expiring in
the fiscal years ended April 30, 1994, 1993 and 1992, respectively.
</TABLE>
47
<PAGE> 48
<TABLE>
SCHEDULE VIII VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED APRIL 30, 1994, 1993 AND 1992
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
Additions
---------------------------
Balance at Charged Charged Balance at
Allowance for Beginning to Costs to Other End of
Uncollectable Accounts of Period and Expenses Accounts Deductions (A) Period
- - ------------------------- ------------- ------------ -------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED:
April 30, 1994
Accounts receivable -
related party $ - $ 129,234 $ - $ (129,234) $ -
Accounts receivable - 10,415 - (7,685) 2,730
Notes receivable -
related party - 128,714 - (128,714) -
Equipments residuals - 425,000 - (425,000) -
Net investment in
direct financing
leases - 33,245 - (33,245) -
Valuation allowance for
deferred tax assets 788,200 843,800 - - 1,632,000
----------- ----------- ----------- ------------ -----------
Total $ 788,200 $ 1,570,408 $ - $ (723,878) $ 1,634,730
=========== =========== =========== ============ ===========
April 30, 1993
Accounts receivable $ - $ 9,498 $ - $ (9,498) $ -
Equipments residuals - 578,553 10,583 (B) (589,136) -
Net investment in
direct financing
leases - 54,798 - (54,798) -
Valuation allowance for
deferred tax assets (C) 180,600 607,600 - - 788,200
----------- ----------- ----------- ------------ -----------
Total $ 180,600 $ 1,250,449 $ 10,583 $ (653,432) $ 788,200
=========== =========== =========== ============ ===========
For the year ended:
April 30, 1992
Accounts receivable $ - $ 17,443 $ - $ (17,443) $ -
Equipments residuals - 474,699 - (474,699) -
Net investment in
direct financing
leases - 610,460 - (610,460) -
----------- ----------- ------------ -------------- ------------
Total $ - $ 1,570,408 $ - $ (1,102,602) $ 1,634,730
============= =========== ============ ============== ============
<FN>
(A) All amounts were written off.
(B) Charged to unearned income.
(C) The Company implemented SFAS 109, Accounting for Income Taxes, as a Cumulative Effect of Change
in Accounting Principle effective May 1, 1992 and recorded a valuation allowance of $180,600 thereof (see
"Note 21 - Notes to the Consolidated Financial Statements").
</TABLE>
48
<PAGE> 49
<TABLE>
SCHEDULE IX SHORT-TERM BORROWINGS
FOR THE YEARS ENDED APRIL 30, 1994, 1993 AND 1992
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- - -------- -------- -------- -------- -------- --------
Maximum Average Weighted
Category of Weighted Amount Amount Average
Aggregate Balance at Average Outstanding Outstanding Interest Rate
Short-Term End of Interest During the During the During the
Borrowing Period Rate Period Period (A) Period (B)
- - ---------- ------------ ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
For the year ended
April 30, 1994:
Short-term
borrowings
from banks
and officers (C) $ 30,000 81.72% $ 625,000 $ 106,667 127.15%
=========== ========== =========== =========== ==========
For the year ended
April 30, 1993:
Short-term
borrowings
from banks
and officers (C) $ 625,000 22.20% $ 625,000 $ 137,177 84.24%
=========== ========== =========== =========== ==========
For the year ended
April 30, 1992:
Short-term
borrowings
from banks
and officers $ 204,272 11.93% $ 283,732 $ 238,180 12.35%
=========== ========== =========== =========== ==========
<FN>
(A) The average amount outstanding during the period was computed by dividing the total of month-end
outstanding principal balances by twelve.
(B) The weighted average interest rate during the period was computed by dividing the actual interest expense by
the average short-term debt outstanding.
(C) During the fiscal year ended April 30, 1993 the Company borrowed $625,000 and incurred a transaction fee
of $125,000 which was charged to interest expense. During fiscal 1994 the loan was extended and the
Company incurred an extension fee of $62,500 which was charged to interest expense, and incurred interest
thereafter at the rate of 5% per month.
49
</TABLE>
<PAGE> 50
<TABLE>
EXHIBIT 11(A). PRIMARY EARNINGS PER SHARE
The computation of primary earnings per share is as follows:
<CAPTION>
Fiscal Year Ended April 30,
-----------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Weighted average number of common shares outstanding 5,086,690 2,541,977 1,268,857
Shares assumed to be issued upon exercising
of stock purchase rights in excess of 20%
repurchase limitation
- 4,408,937 -
----------- ---------- ----------
Average number of common and common
equivalent shares 5,086,690 6,950,914 1,268,857
=========== ========== ==========
Loss before cumulative effect of change
in accounting principle $ (2,639,593) $ (1,699,715) $ (2,319,433)
Increase in interest income (net of tax) from assumed
investment in certificates of deposit and decrease
in interest expense (net of tax) from assumed
payment of short-term debt with assumed
stock purchase rights' proceeds in excess
of 20% repurchase limitation - 338,074 -
----------- ----------- -----------
Adjusted loss before cumulative effect of change in
accounting principle (2,639,593) (1,361,641) (2,319,433)
Cumulative effect of change in accounting principle - 180,000 -
----------- ----------- -----------
Adjusted net loss $ (2,639,593) $ (1,181,641) $ (2,319,433)
=========== =========== ===========
Loss before cumulative effect of change in accounting
principle per common share $ (0.52) $ (0.20) $ (1.83)
Cumulative effect of change in accounting
principle per common share 0.00 0.03 0.00
------------ ----------- ----------
Net loss per common share $ (0.52) $ (0.17) $ (1.83)
============ =========== ==========
</TABLE>
50
<PAGE> 51
<TABLE>
EXHIBIT 11(B). FULLY DILUTED EARNINGS PER SHARE
The computation of fully diluted earnings per share is as follows:
<CAPTION>
Fiscal Year Ended April 30,
-----------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Weighted average number of common shares outstanding 5,086,690 2,541,977 1,268,857
Shares assumed to be issued upon exercising
of stock purchase rights in excess of 20%
repurchase limitation - 4,409,732 -
----------- ---------- ----------
Average number of common and common equivalent
shares 5,086,690 6,951,709 1,268,857
=========== ========== ==========
Loss before cumulative effect of change
in accounting principle $ (2,639,593) $ (1,699,715) $ (2,319,433)
Increase in interest income (net of tax) from assumed
investment in certificates of deposit and decrease
in interest expense (net of tax) from assumed
payment of short-term debt with assumed
stock purchase rights' proceeds in excess
of 20% repurchase limitation - 338,078 -
----------- ---------- ----------
Adjusted loss before cumulative effect of change in
accounting principle (2,639,593) (1,361,637) (2,319,433)
Cumulative effect of change in accounting principle - 180,000 -
----------- ----------- -----------
Adjusted net loss $ (2,639,593) $ (1,181,637) $ (2,319,433)
----------- ----------- -----------
Loss before cumulative effect of change in accounting
principle per common share $ (0.52) $ (0.20) $ (1.83)
Cumulative effect of change in accounting
principle per common share 0.00 0.03 0.00
----------- ----------- ----------
Net loss per common share $ (0.52) $ (0.17) $ (1.83)
=========== =========== ==========
</TABLE>
51
<PAGE> 52
Notes regarding the calculation of primary and fully diluted earnings per
share:
For the fiscal year ended April 30, 1994 no common stock equivalents are
included herein due to their antidilutive nature. During the current year the
Company issued 2,917,281 shares pursuant to stock sales, net of 7,200 shares
acquired for treasury stock which are included in the weighted average number
of common shares outstanding. The aforementioned shares issued include
2,359,481 shares issued pursuant to warrant exercises. If these shares had
been issued at the beginning of the current fiscal year primary and fully
diluted earnings per share would have been ($0.47).
The fiscal year ended April 30, 1993, includes the exercise of stock
purchase rights which is assumed at the beginning of the period or at the date
of grant, if granted during the period. Pursuant to the modified treasury
stock method shares assumed to be issued upon exercising of stock purchase
rights represents the number shares issued upon assumed exercise less shares
repurchased at the average market price, not to exceed 20% of outstanding
shares.
For the fiscal year ended April 30, 1993 fully diluted earnings per share
amounts are based on the increased number of shares that would be issued
assuming exercise of stock purchase rights. Fully diluted earnings per share
is computed under the aforementioned method as primary earnings per share,
except the repurchase of shares uses the higher of the average market price
during the period or the ending market price, unless shares were actually
issued pursuant to exercises, then the average market price on the day of
exercise is used.
At the end of fiscal 1993 the Company had issuable 400,000 shares which
were not issued, these were included in the average number of common and common
equivalent shares. The Company issued, during fiscal 1993, 1,279,642 shares
pursuant to stock sales which are included in the weighted average number of
common shares outstanding. The aforementioned shares issued include 1,047,938
shares issued pursuant to warrant exercises also 2,334,423 shares were issued
subsequent to April 30, 1993 pursuant to warrant exercises. If these shares
had been issued at the beginning of the fiscal year primary and fully diluted
earnings per share would have been as follows: Loss per share before
cumulative effect of change in principle ($0.23), cumulative effect of a change
in principle $0.03, and net loss per share ($0.20). On October 27, 1992 the
Company issued 14,000 shares of stock (which are included in the above
mentioned number) for the payment of accrued interest on debt. There would of
been no change in earnings per share if these shares were issued at the
beginning of the period. On November 6, 1992, the Company issued 217,704
shares of stock (which are included in the aforesaid number) for the payment of
debt. If these shares had been issued at the beginning of the fiscal year
primary and fully diluted loss per share would have been as follows: Loss per
share before cumulative effect of a change in principle ($0.20), cumulative
effect of a change in principle $0.03, and net loss per share ($0.17).
The Company issued, during fiscal 1992, 197,155 shares pursuant to stock
sales which are included in the weighted average number of common shares
outstanding. All of the above amounts and all amounts hereof have been
restated for the 1 to 5 reverse stock split, effected March 9, 1992.
During fiscal 1992 the Company issued 114,955 shares pursuant to warrant
exercises and 1,047,333 shares subsequent to April 30, 1992 pursuant to warrant
exercises. If these shares would have been issued immediately upon the
issuance of the warrants primary and fully diluted loss per share would have
been $1.01 On February 25, 1992 the Company issued 50,000 shares (before
restatement) of stock pursuant for the exercise of 50,000 A Warrants. The
proceeds therefrom were used to retire debt issued June 14, 1991. If the stock
was issued and debt retired upon the issuance of the Warrants primary and fully
diluted loss per share would be $1.82. At the end of fiscal 1992 the Company
had to issue 12,000 shares pursuant to the above debt, these are included in
the weighted average number of common shares outstanding for the current fiscal
year. Shares under the Company's stock option plans are antidilutive for
fiscal 1992, therefore, these are not included herein.
52
<PAGE> 53
Additional primary and fully diluted earnings per share computations
pursuant to Regulation S-K, CFR Section 229.601(b)(11): The following
computations are submitted for informational purposes only pursuant to
Regulation S-K, although they are contrary to APB 15 (computations for the
fiscal year ended April 30, 1993 does not change from the original computations
presented above).
EXHIBIT 11(C). PRIMARY EARNINGS PER SHARE (ADDITIONAL)
<TABLE>
The computation of primary earnings per share is as follows:
<CAPTION>
Fiscal Year Ended April 30,
---------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Weighted average number of common shares outstanding 5,086,690 2,541,977 1,268,857
Shares assumed to be issued upon exercising
of stock purchase rights 910,433 4,408,937 5,253,433
----------- ---------- ----------
Average number of common and common
equivalent shares 5,997,123 6,950,914 6,522,290
=========== ========== ==========
Loss before cumulative effect of change
in accounting principle $ (2,639,593) $ (1,699,715) $ (2,319,433)
Increase in interest income (net of tax) from assumed
investment in certificates of deposit and decrease
in interest expense (net of tax) from assumed
payment of short-term debt with assumed
stock purchase rights' proceeds in excess
of 20% repurchase limitation 26,158 338,074 610,967
----------- ----------- -----------
Adjusted loss before cumulative effect of change in
accounting principle (2,613,435) (1,361,641) (1,708,466)
Cumulative effect of change in accounting principle - 180,000 -
----------- ----------- -----------
Adjusted net loss $ (2,613,435) $ (1,181,641) $ (1,708,466)
============ ========== ==========
Loss before cumulative effect of change in accounting
principle per common share $ (0.44) $ (0.20) $ (0.26)
Cumulative effect of change in accounting
principle per common share 0.00 0.03 0.00
------------ ---------- ----------
Net loss per common share $ (0.44) $ (0.17) $ (0.26)
============ ========== ==========
</TABLE>
53
<PAGE> 54
<TABLE>
EXHIBIT 11(D). FULLY DILUTED EARNINGS PER SHARE (ADDITIONAL)
The computation of fully diluted earnings per share is as follows:
<CAPTION>
Fiscal Year Ended April 30,
------------------------------------------------
1994 1993 1992
<S> <C> <C> <C>
Weighted average number of common shares outstanding 5,086,690 2,541,977 1,268,857
Shares assumed to be issued upon exercising
of stock purchase rights 992,169 4,409,732 5,250,154
----------- ---------- ----------
Average number of common and common equivalent
shares 6,078,859 6,951,709 6,519,011
----------- ---------- ----------
Loss before cumulative effect of change
in accounting principle $ (2,639,593) $ (1,699,715) $ (2,319,433)
Increase in interest income (net of tax) from assumed
investment in certificates of deposit and decrease
in interest expense (net of tax) from assumed
payment of short-term debt with assumed
stock purchase rights' proceeds in excess
of 20% repurchase limitation 24,712 338,078 608,408
----------- ---------- ----------
Adjusted loss before cumulative effect of change in
accounting principle (2,614,881) (1,361,637) (1,711,025)
Cumulative effect of change in accounting principle - 180,000 -
----------- ----------- -----------
Adjusted net loss $ (2,614,881) $ (1,181,637) $ (1,711,025)
=========== =========== ===========
Loss before cumulative effect of change in accounting
principle per common share $ (0.43) $ (0.20) $ (0.26)
Cumulative effect of change in accounting
principle per common share 0.00 0.03 0.00
---------- ---------- ----------
Net loss per common share $ (0.43) $ (0.17) $ (0.26)
========== ========== ==========
</TABLE>
54
<PAGE> 55
Notes regarding the additional calculation of primary and fully diluted
earnings per share pursuant to Regulation S-K, CFR Section 229.601(b)(11):
Primary earnings per share for the fiscal year ended April 30, 1994
includes the exercise of stock purchase rights which is assumed at the
beginning of the period or at the date of grant, if granted during the period.
Pursuant to the treasury stock method or modified treasury stock method, as
appropriate, shares assumed to be issued upon exercising of stock purchase
rights represents the number shares issued upon assumed exercise less shares
repurchased at the average market price. For the fiscal year ended April 30,
1994 fully diluted earnings per share amounts are based on the increased number
of shares that would be issued assuming exercise of stock purchase rights.
Fully diluted earnings per share is computed under the aforementioned method
as primary earnings per share, except the repurchase of shares uses the higher
of the average market price during the period or the ending market price,
unless shares were actually issued pursuant to exercises, then the average
market price on the day of exercise is used. During the current year the
Company issued 2,917,281 shares pursuant to stock sales, net of 7,200 shares
acquired for treasury stock which are included in the weighted average number
of common shares outstanding. The aforementioned shares issued include
2,359,481 shares issued pursuant to warrant exercises. If these shares had
been issued at the beginning of the current fiscal year primary and fully
diluted earnings per share would have been ($0.44).
The fiscal year ended April 30, 1993, includes the exercise of stock
purchase rights which is assumed at the beginning of the period or at the date
of grant, if granted during the period. Pursuant to the modified treasury
stock method shares assumed to be issued upon exercising of stock purchase
rights represents the number shares issued upon assumed exercise less shares
repurchased at the average market price, not to exceed 20% of outstanding
shares. For the fiscal year ended April 30, 1993 fully diluted earnings per
share amounts are based on the increased number of shares that would be issued
assuming exercise of stock purchase rights. Fully diluted earnings per share
is computed under the aforementioned method as primary earnings per share,
except the repurchase of shares uses the higher of the average market price
during the period or the ending market price, unless shares were actually
issued pursuant to exercises, then the average market price on the day of
exercise is used.
At the end of fiscal 1993 the Company had issuable 400,000 shares which
were not issued, these were included in the average number of common and common
equivalent shares. The Company issued, during fiscal 1993, 1,279,642 shares
pursuant to stock sales which are included in the weighted average number of
common shares outstanding. The aforementioned shares issued include 1,047,938
shares issued pursuant to warrant exercises also 2,334,423 shares were issued
subsequent to April 30, 1993 pursuant to warrant exercises. If these shares
had been issued at the beginning of the fiscal year primary and fully diluted
earnings per share would have been as follows: Loss per share before
cumulative effect of change in principle ($0.23), cumulative effect of a change
in principle $0.03, and net loss per share ($0.20). On October 27, 1992 the
Company issued 14,000 shares of stock (which are included in the above
mentioned number) for the payment of accrued interest on debt. There would of
been no change in earnings per share if these shares were issued at the
beginning of the period. On November 6, 1992, the Company issued 217,704
shares of stock (which are included in the aforesaid number) for the payment of
debt. If these shares had been issued at the beginning of the fiscal year
primary and fully diluted loss per share would have been as follows: Loss per
share before cumulative effect of a change in principle ($0.20), cumulative
effect of a change in principle $0.03, and net loss per share ($0.17).
Primary earnings per share for the fiscal year ended April 30, 1992
includes the exercise of stock purchase rights which is assumed at the
beginning of the period or at the date of grant, if granted during the period.
Pursuant to the modified treasury stock method shares assumed to be issued upon
exercising of stock purchase rights represents the number shares issued upon
assumed exercise less shares repurchased at the average market price. For the
fiscal year ended April 30, 1992 fully diluted earnings per share amounts are
based on the increased number of shares that would be issued assuming exercise
of stock purchase rights. Fully diluted earnings per share is computed under
the aforementioned method as primary earnings per share, except the repurchase
of shares uses the higher of the average market price during the period or the
ending market price, unless shares were actually issued pursuant to exercises,
then the average market price on the day of exercise is used. The Company
issued, during fiscal 1992, 197,155 shares pursuant to stock sales which are
included in the weighted average number of common shares outstanding. All of
the amounts hereof have been restated for the 1 to 5 reverse stock split,
effected March 9, 1992. During fiscal 1992 the Company issued 114,955 shares
pursuant to warrant exercises and 1,047,333 shares subsequent to April 30, 1992
pursuant to warrant exercises. If these shares would have been issued
immediately upon the issuance of the warrants primary and fully diluted loss
per share would have been $0.97. On February 25, 1992 the Company issued
50,000 shares (before restatement) of stock pursuant for the exercise of 50,000
A Warrants. The proceeds therefrom were used to retire debt issued June 14,
1991. If the stock was issued and debt retired upon the issuance of the
Warrants primary and fully diluted loss per share would not change. The
Company had to issue 7,000 shares pursuant to the above debt, these are
included in the weighted average number of common shares outstanding for the
current fiscal year.
55
<PAGE> 56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
PARTECH HOLDINGS CORPORATION
/s/ JOHN E. RAYL
DATE: July 15, 1994 By: _______________________________
John E. Rayl
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the Company
and in the capacities and on the dates indicated.
/s/ JOHN E. RAYL
___________________________ Chairman, Chief Executive Officer, July 15, 1994
John E. Rayl President, Treasurer and Director
(principal financial officer)
/s/ THOMAS E. REYNOLDS
___________________________ Vice President, Secretary, Assistant July 15, 1994
Thomas E. Reynold Treasurer and Director
/s/ JERALD K. RAYL
___________________________ Director July 15, 1994
Jerald K. Rayl
/s/ JAMES B. DWYER III
___________________________ Director July 15, 1994
James B. Dwyer III
56
<PAGE> 57
INDEX TO EXHIBITS
Exhibit 2.1 Authorization of Plan of Distribution filed as Exhibit 1 to
Form 10, Commission File No. 014361 filed on March 28, 1986 is
incorporated herein by reference.
Exhibit 3.1 Certificate of Incorporation and Bylaws filed as Exhibit 2 to
Form 10, Commission File No. 014361 filed on March 28, 1986 is
incorporated herein by reference.
Exhibit 3.2 Certificate of Amendment of Partech Holdings Corporation dated
March 10, 1992, incorporated herein by reference to Exhibit A,
to Form 8-K, dated March 13, 1992, Commission File No. 014361.
Exhibit 3.3 Proposed Amendment to Partech Holdings Corporation Articles of
Incorporation, Proxy Item Number 2, incorporated herein by
reference to Exhibit 3.3, to Schedule 14A filed November 9,
1993, Commission file No. 014361.
Exhibit 3.4 Restated Certificate of Incorporation of Partech Holdings
Corporation dated January 25, 1994, incorporated herein by
reference to Exhibit 3.3, to Form 10-Q for the fiscal quarter
ended January 31, 1994, filed March 17, 1994, Commission file
No. 014361, Commission file No. 014361.
Exhibit 3.5 Proposed Amendment to Partech Holdings Corporation Certificate
of Incorporation, incorporated herein by reference to Exhibit
3.5, to Schedule 14A filed May 20, 1994, Commission file No.
014361.
Exhibit 4.1 Instruments Defining the Rights of Security Holders filed as
Exhibit 3 to Form 10, Commission File No. 014361 filed on
March 28, 1986 is incorporated herein by reference.
Exhibit 4.2 Form of Common Share Certificate of Partech Holdings
Corporation, incorporated herein by reference to Exhibit B, to
Form 8-K, dated March 13, 1992, Commission File No. 014361.
Exhibit 4.3 Form of Notice of Redemption for Redeemable Class A Warrants
of Partech Holdings Corporation incorporated herein by
reference to Exhibit A, to Form 8-K, dated April 14, 1992,
Commission File No. 014361.
Exhibit 4.4 Prospectus Supplement of Partech Holdings Corporation dated
March 13, 1992, incorporated herein by reference to Exhibit A,
to Form 8-K, dated March 13, 1992, Commission File No. 014361.
Exhibit 4.5 Prospectus Supplement of Partech Holdings Corporation dated
February 1, 1993, incorporated herein by reference to Exhibit
4.5, to Form 8-K, filed February 2, 1993, Commission File No.
014361.
Exhibit 4.6 Prospectus Supplement of Partech Holdings Corporation dated
April 27, 1993, incorporated herein by reference to Exhibit
4.6, to Form 8-K, filed April 28, 1993, Commission File No.
014361.
Exhibit 4.7 Prospectus Supplement, incorporated herein by reference to
Exhibit 4.7, to Form 8-K, filed June 4, 1993, Commission file
No. 014361.
Exhibit 4.8 Prospectus Supplement, filed herewith as Exhibit 4.7,
incorporated herein by reference to Exhibit 4.8, to Form 8-K,
filed July 2, 1993, Commission file No. 014361.
Exhibit 4.9 Form of Subscription Agreement between Partech Holdings
Corporation and the Investor, filed herewith as Exhibit 4.9.
Exhibit 4.10 Form of 6% Secured Note of Partech Holdings Corporation issued
to the Investor, filed herewith as Exhibit 4.10.
Exhibit 4.11 Form of Supplemental Warrant and Additional Warrant between
Partech Holdings Corporation and the Investor, filed herewith
as Exhibit 4.11.
Exhibit 4.12 Form of Unit Warrant between Partech Holdings Corporation and
the Investor, filed herewith as Exhibit 4.12.
57
<PAGE> 58
Exhibit 5.4 Opinion of Counsel Regarding the $600,000 exempt Convertible
Securities offering, filed herewith as Exhibit 5.4.
Exhibit 10.1 Employment Agreement with John E. Rayl filed as Exhibit 5 to
Form 10, Commission File No. 014361 filed on March 28, 1986 is
incorporated herein by reference.
Exhibit 10.4 Form of Agreement of Trust of the Company's Ohio business
trusts. Incorporated herein by reference to Exhibit 10.4 to
Annual Report on Form 10-K for the year ended April 30, 1987,
Commission File No. 014361.
Exhibit 10.5 Form of Purchase Assignment and Assumption Agreement of the
Company's Ohio business trusts. Incorporated herein by
reference to Exhibit 10.5 to Annual Report on Form 10-K for
the year ended April 30, 1987, Commission File No. 014361.
Exhibit 10.6 Form of Description of the Property and the Property's Rights,
Obligations, and Equipment of the Company's Ohio business
trusts. Incorporated herein by reference to Exhibit 10.6 to
Annual Report on Form 10-K for the year ended April 30, 1987,
Commission File No. 014361.
Exhibit 10.7 Form of Remarketing and Servicing Agreement of the Company's
Ohio business trusts. Incorporated herein by reference to
Exhibit 10.7 to Annual Report on Form 10-K for the year ended
April 30, 1987, Commission File No. 014361.
Exhibit 10.26 Partech Holdings Corporation 1989 Incentive Stock Options Plan
and 1989 Stock Option and Stock Appreciation Rights Plan
incorporated herein by reference to an Exhibit filed therewith
Information Statement filed on Form 14C for the year ended
April 30, 1989, Commission File No. 014361.
Exhibit 10.35 Lease dated as of March 23, 1992 between LCC Asset Management
Corporation and Ohio State Life Insurance Company, filed
herewith as Exhibit 10.35. Incorporated herein by reference
to Exhibit 10.35 to Annual Report on Form 10-K for the Fiscal
Year Ended April 30, 1992, Commission File No. 014361.
Exhibit 10.37 Letter to continental Stock Transfer and Trust Company, dated
February 1, 1993, authorizing issuance of Redeemable B
Warrants at Temporary Exercise Price during Temporary Exercise
Period, incorporated herein by reference to Exhibit 10.40, to
Form 8-K, dated February 1, 1993, Commission File No. 014361.
Exhibit 10.38 Letter to continental Stock Transfer and Trust Company, dated
April 27, 1993, authorizing issuance of Redeemable B Warrants
at Temporary Exercise Price during Temporary Exercise Period,
incorporated herein by reference to Exhibit 10.41, to Form
8-K, filed April 28, 1993, Commission File No. 014361.
Exhibit 10.41 Loan Agreement between Partech Communications Group, Inc. and
Funder's Trust 1992-A, dated March 9, 1993, incorporated
herein by reference to Exhibit 10.41, to Form 8-K, file March
17, 1993, Commission File No. 014361.
Exhibit 10.42 Purchase Agreement between Jenning's Communications
Corporation and PCG of the Golden Strand, Inc., for the
purchase of WDZD-FM, dated September 17, 1992, incorporated
herein by reference to Exhibit 10.42, to Form 8-K, file March
17, 1993, Commission File No. 014361.
Exhibit 10.43 Bill of Sale between Jenning's Communications Corporation and
PCG of the Golden Strand, Inc., for the purchase of WDZD-FM,
dated March 10, 1993, incorporated herein by reference to
Exhibit 10.43, to Form 8-K, file March 17, 1993, Commission
File No. 014361.
Exhibit 10.44 Letter to Continental Stock Transfer and Trust Company, dated
June 3, 1993, authorizing issuance of Redeemable B Warrants at
Temporary Exercise Price during Temporary Exercise Period
incorporated herein by reference to Exhibit 10.44, to Form
8-K, filed June 4, 1993, Commission file No. 014361.
58
<PAGE> 59
Exhibit 10.45 Purchase Agreement between Webster Broadcasting, Inc. and PCG
of Tallahassee, Inc., for the purchase of WMFL-AM and WJPH-FM,
dated May 12, 1993, incorporated herein by reference to
Exhibit 10.45, to Form 8-K, filed June 4, 1993, Commission
file No. 014361.
Exhibit 10.46 Guarantee by Partech Holdings Corporation of Purchase
Agreement between Webster Broadcasting, Inc. and PCG of
Tallahassee, Inc., for the purchase of WMFL-Am and WJPH-FM,
dated May 12, 1993, incorporated herein by reference to
Exhibit 10.46, to Form 8-K, filed June 4, 1993, Commission
file No. 014361.
Exhibit 10.47 Local Programming and Marketing Agreement between Webster
Broadcasting, Inc. and PCG of Tallahassee, Inc., to broadcast
from WMFL-AM and WJPH-FM, dated May 12, 1993, incorporated
herein by reference to Exhibit 10.47, to Form 8-K, filed June
4, 1993, Commission file No. 014361.
Exhibit 10.48 1989 Stock Option and Stock Appreciation Rights Plan Agreement
between Partech Holdings Corporation and John E. Rayl, dated
July 15, 1993, incorporated herein by reference to Exhibit
10.48, to Form S-8, filed August 9, 1993, Commission file No.
014361.
Exhibit 10.50 1989 Stock Option and Stock Appreciation Rights Plan Agreement
between Partech Holdings Corporation and Mark S. Manafo, dated
July 15, 1993, incorporated herein by reference to Exhibit
10.50, to Form S-8, filed August 9, 1993, Commission file No.
014361.
Exhibit 10.51 1989 Incentive Stock Option Plan Agreement between Partech
Holdings Corporation and Mark S. Manafo, dated July 15, 1993,
incorporated herein by reference to Exhibit 10.51, to Form
S-8, filed August 9, 1993, Commission file No. 014361.
Exhibit 10.52 1989 Incentive Stock Option Plan Agreement between Partech
Holdings Corporation and Thomas E. Reynolds, dated July 15,
1993, incorporated herein by reference to Exhibit 10.52, to
Form S-8, filed August 9, 1993, Commission file No. 014361.
Exhibit 10.53 1989 Incentive Stock Option Plan Agreement between Partech
Holdings Corporation and Jerald K. Rayl, dated July 15, 1993,
incorporated herein by reference to Exhibit 10.53, to Form
S-8, filed August 9, 1993, Commission file No. 014361.
Exhibit 10.54 1989 Incentive Stock Option Plan Agreement between Partech
Holdings Corporation and Paul R. Weinberger, dated July 15,
1993, incorporated herein by reference to Exhibit 10.54, to
Form S-8, filed August 9, 1993, Commission file No. 014361.
Exhibit 10.55 Consulting Agreement between Partech Holdings Corporation and
Birchwood Capital Advisors Group, Inc. dated February 1, 1994,
incorporated herein by reference to Exhibit 10.51, to Form
S-8, filed March 21, 1994, Commission file No. 014361.
Exhibit 10.56 Agreement to Grant Options between Partech Holdings
Corporation and M.S. Farrell & Company, Inc. dated April 6,
1994, incorporated herein by reference to Exhibit 10.52, to
Form S-8, filed April 8, 1994, Commission file No. 014361.
Exhibit 10.57 Consulting Agreement between Partech Holdings Corporation and
M.S. Farrell & Company, Inc. dated November 13, 1992,
incorporated herein by reference to Exhibit 10.53, to Form
S-8, filed April 8, 1994, Commission file No. 014361.
Exhibit 10.58 Letter to Continental Stock Transfer and Trust Company, dated
June 3, 1993, authorizing issuance of Redeemable B Warrants at
Temporary Exercise Price during Temporary Exercise Period,
incorporated herein by reference to Exhibit 10.49, to Form
8-K, filed July 2, 1993, Commission file No. 014361.
Exhibit 10.59 1993 Long-Term Incentive Plan, Proxy Item Number 3,
incorporated herein by reference to Exhibit 10.50, to Schedule
14A, Preliminary Proxy Statement, filed November 9, 1993,
Commission file No. 014361.
59
<PAGE> 60
Exhibit 10.60 Amendment to Employment Agreement between Partech Holdings
Corporations and John E. Rayl, dated July 15, 1993,
incorporated herein by reference to Exhibit 10.60, to Schedule
14A filed May 20, 1994, Commission file No. 014361.
Exhibit 10.61 Amendment to Employment Agreement between John E. Rayl and
Partech Holdings Corporation, Partech Communications Group,
Inc. and Leeward Capital Corporation, dated May 1, 1994,
filed herewith as Exhibit 10.61.
Exhibit 10.62 Agreement between Dwyer & Associates, Inc. and Partech
Holdings Corporation, dated May 10, 1994, with Exhibit A,
Option Agreement and sub Exhibit A, Certificate for Common
Stock Purchase Options and sub Exhibit B, Form of Election top
Purchase, filed herewith as Exhibit 10.62.
Exhibit 10.63 1989 Incentive Stock Option Plan Agreement between Partech
Holdings Corporation and James B. Dwyer, III, dated May 18,
1994, filed herewith as Exhibit 10.63.
Exhibit 10.64 Form of Time Brokerage Agreement between Lee Mitchell and
Tropic of St. Simons Inc., filed herewith as Exhibit 10.64.
Exhibit 10.65 Form of Stock Purchase Agreement between PCG of the Florida
Keys, Inc. and Richard Silva, filed herewith as Exhibit 10.65.
Exhibit 10.66 Form of Security Pledge and Hypothecation Agreement between
PCG of the Florida Keys, Inc. and Richard Silva, filed
herewith as Exhibit 10.66.
Exhibit 10.67 Form of Put Option Agreement between PCG of the Florida Keys,
Inc. and Richard Silva, filed herewith as Exhibit 10.67.
Exhibit 10.68 Form of Purchase Option Agreement between Richard Silva and
PCG of the Florida Keys, Inc. filed herewith as Exhibit 10.68.
Exhibit 10.69 Form of Security Agreement between PCG of the Golden Strand,
Inc. and Media Group, Inc., filed herewith as Exhibit 10.69.
Exhibit 10.70 Form of Escrow Agreement among Ed Winton, Partech
Communications Group, Inc. and Mark T. Jorgenson d/b/a/
Jorgenson Broadcast Brokerage, filed herewith as Exhibit
10.70.
Exhibit 10.71 Form of Promissory Note by PCG of the Golden Strand, Inc.
payable to Media Group, Inc., filed herewith as Exhibit 10.71.
Exhibit 10.72 Form of Purchase Agreement between Ed Winton and Tropic of
Tallahassee, Inc., filed herewith as Exhibit 10.72.
Exhibit 10.73 Form of Security Agreement between Tropic of Tallahassee, Inc.
and Ed Winton, filed herewith as Exhibit 10.73.
Exhibit 10.74 Form of Promissory Note by Tropic of Tallahassee, Inc. payable
to Ed Winton, filed herewith as Exhibit 10.74.
Exhibit 10.75 Form of Escrow Agreement among WBA Broadcasting, Inc., Partech
Communications Group, Inc. and Mark T. Jorgenson d/b/a/
Jorgenson Broadcast Brokerage, filed herewith as Exhibit
10.75.
Exhibit 10.76 Form of Purchase Agreement among Lee M. Mitchell, AT&T
Commercial Finance Corporation, and Tropic of St. Simons,
Inc., filed herewith as Exhibit 10.76.
Exhibit 10.77 Purchase Agreement between White Broadcasting Corporation and
Tropic of Key West, Inc., dated June 17, 1994, filed herewith
as Exhibit 10.77.
Exhibit 10.78 Form of Escrow Agreement among White Broadcasting, Inc.,
Partech Communications Group, Inc. and Mark T. Jorgenson
d/b/a/ Jorgenson Broadcast Brokerage, filed herewith as
Exhibit 10.78.
60
<PAGE> 61
Exhibit 10.79 Form of Non-Compete Agreement between White Broadcasting, Inc.
and Tropic of Key West, Inc., filed herewith as Exhibit 10.79
Exhibit 10.80 Agreement between John E. Rayl, Partech Holdings Corporation
and Partech Communications Group, Inc., as to the replacement
of pledged shares that may be foreclosed upon in accordance
with Unit Note pursuant to the $600,000 Convertible Securities
Offering, dated May 31, 1994, filed herewith as Exhibit 10.80.
Exhibit 10.81 Partech Communications Group, Inc. Pledge Agreement between
Partech Communications Group, Inc. and the Investor and Kelly
Drye & Warren, the Investor's Representative, dated June 15,
1994, filed herewith as Exhibit 10.81.
Exhibit 10.82 Pledge Agreement between John E. Rayl and the Investor and
Kelly Drye & Warren, the Investor's Representative, dated June
15, 1994, filed herewith as Exhibit 10.82.
Exhibit 11 Statement re: computation of earnings per share.
Exhibit 20 Form of Proxy for 1993 Annual Meeting of Shareholders,
incorporated herein by reference to Exhibit 20, to Schedule
14A, Preliminary Proxy Statement, filed November 9, 1993,
Commission file No. 014361.
Exhibit 20.1 Letter between Partech Holdings Corporation and M.S. Farrell &
Company, Inc. dated April 6, 1994, incorporated herein by
reference to Exhibit 20, to Form S-8, filed April 8, 1994,
Commission file No. 014361.
Exhibit 20.2 Form of Proxy for Special Meeting to be held July 21, 1994,
incorporated herein by reference to Exhibit 20.2, to Schedule
14A filed May 20, 1994, Commission file No. 014361.
Exhibit 22 Subsidiaries of the Company.
Exhibit 23.2 Consent of Hausser + Taylor incorporated herein by reference
to Exhibit 23.6, to Form S-8, filed April 8, 1994, Commission
file No. 014361.
Exhibit 23.3 Consent of Hausser + Taylor incorporated herein by reference
to Exhibit 24.4, to Form S-8, filed August 9, 1993, Commission
file No. 014361.
Exhibit 23.5 Consent of Hausser + Taylor incorporated herein by reference
to Exhibit 23.5, to Form S-8, filed March 21, 1994, Commission
file No. 014361.
Exhibit 99 Board of Directors resolutions for reverse stock split, dated
April 21, 1994, incorporated herein by reference to Exhibit
99, to Schedule 14A filed May 20, 1994, Commission file No.
014361.
61
<PAGE> 62
EXHIBIT 22. SUBSIDIARIES OF THE COMPANY
Leeward Capital Corporation (a wholly-owned subsidiary of the Company)
LCC Equipment Corporation (a wholly-owned subsidiary of the Company)
LCC Leasing International, Inc. (a wholly-owned subsidiary of Leeward Capital
Corporation)
LCC Investments, Inc. (a wholly-owned subsidiary of Leeward Capital
Corporation)
LCC Asset Management Corporation (a wholly-owned subsidiary of the Company)
Partech Communications Group, Inc. (a wholly-owned subsidiary of the Company)
PCG of Florida, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
PCG of the Florida Keys, Inc. (a wholly-owned subsidiary of Partech
Communications Group, Inc.)
PCG of the Golden Strand, Inc. (a wholly-owned subsidiary of Partech
Communications Group, Inc.)
GS Services, Inc. (a wholly-owned subsidiary of Partech Communications Group,
Inc.)
PCG of Tallahassee, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
PCG of Florida, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
Tropic Broadcasting, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
Tropic Broadcasting of Brunswick, Inc. (a wholly-owned subsidiary of Partech
Communications Group, Inc.)
Tropic of Key West, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
Tropic Broadcasting of North Florida, Inc. (a wholly-owned subsidiary of
Partech Communications Group, Inc.)
Tropic of St. Simons, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
Tropic of South Carolina, Inc. (a wholly-owned subsidiary of Partech
Communications Group, Inc.)
Tropic Broadcasting of Waycross, Inc. (a wholly-owned subsidiary of Partech
Communications Group, Inc.)
Tropic of Tallahassee, Inc. (a wholly-owned subsidiary of Partech
Communications Group, Inc.)
Par Comm Consultants, Inc. (a wholly-owned subsidiary of Partech Communications
Group, Inc.)
Thorndine, Ltd. (an inactive United Kingdom company and wholly-owned subsidiary
of LCC Leasing International, Inc.)
62
<PAGE> 1
Exhibit 4.9
THE SECURITIES DESCRIBED IN THIS AGREEMENT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS
AVAILABLE.
SUBSCRIPTION AGREEMENT
----------------------
This Subscription Agreement is made by and between Partech Holdings
Corporation, a Delaware corporation ("Partech" or the "Company") and the
undersigned (the "Investor").
The parties hereto agree as follows:
Article 1
---------
The Securities
--------------
Section 1.01. THE SECURITIES. The securities offered hereby shall
consist of the Company's Convertible Units (the "Units"), each Unit consisting
of one 6% Secured Note (a "Unit Note"), and one warrant (a "Unit Warrant").
Each of the Unit Notes shall be pari passu with each of the other Unit Notes
with respect to all rights and preferences of such Unit Notes. The Unit Note
shall be in substantially the form attached hereto as Exhibit A-1, the terms of
which are hereby incorporated herein as if such Unit Note were fully set forth
herein. The Unit Warrant shall be in substantially the form attached hereto as
Exhibit A-2, the terms of which are hereby incorporated herein as if such Unit
Warrant were fully set forth herein.
<PAGE> 2
Set forth below is a brief summary of the terms and conditions
of the Units. Such summary is qualified in its entirety by the terms and
conditions set forth herein and in Exhibit A-1 and Exhibit A-2 hereto.
Unit Notes: (A) Interest: 6% per annum, payable on the 1st day
- - ---------- -------- of each month; provided that in the
event that the Unit Notes are not
repaid in full at maturity or the
Warrant Securities have not been
registered and become tradeable by
September 30, 1994 (as described
below under UNIT WARRANTS), the
interest rate shall automatically
increase to 15% per annum.
(B) Maturity: The earlier of (i) September 30,
-------- 1994 or (ii) the closing of the
underwritten public offering (as
described below under UNIT WARRANTS)
or of any other private or public
financing obtained by Partech; may
be extended, at option of holder,
for up to 6 consecutive one month
periods. No prepayment without the
prior written consent of holder.
Unit Warrants: It is contemplated that Partech shall have an underwritten
- - ------------- public offering of its securities (the "Underwritten
Securities"). Each Unit Warrant shall entitle holder to
purchase securities (the "Warrant Securities") of the same
class as the Underwritten Securities (as described in the next
paragraph). Partech shall be obligated to register the
Warrant Securities in the same registration statement as the
underwritten public offering, so that holders of such Warrant
Securities shall be entitled to sell same simultaneously with
the Underwritten Securities sold for the account of Partech
pursuant to such underwritten public offering, subject only to
a 180 day hold-back at the discretion of Berkeley Securities
Corporation (the "Underwriter's Holdback"). Partech shall be
obligated to bear all costs and expenses (except any discount
or commission) of such underwritten public offering and
registration.
Each Unit Warrant shall be exercisable at an exercise price
of $1.00 per Unit Warrant and shall entitle the holder to
receive a number of Warrant Securities equal to (i) the
original principal amount of the corresponding Unit Note held
by such holder divided by (ii) 100% (the "Exercise Factor") of
the initial public offering price of the Underwritten
Securities (e.g., if the initial public offering price of the
Underwritten Securities is $10, the holders would receive upon
exercise of all of the Unit Warrants an aggregate of 60,000
($600,000 / 100% of $10) securities of the same class as the
Underwritten Securities). Further, in the event that the
underwritten public offering is not effective or the
Underwritten Securities have not commenced trading by
September 30, 1994, the Exercise Factor shall be decreased by
4% during each of the next succeeding months or part thereof
(i.e., from October 1, 1994 to October 31, 1994, the Exercise
- 2 -
<PAGE> 3
Factor would be 96%; from November 1, 1994 to
November 30, 1994, the Exercise Factor would be 92%; etc.)
Conversion: If the underwritten public offering is not effective
- - ---------- and the Underwritten Securities have not commenced
trading by September 30, 1994 (or if the underwritten
public offering is terminated prior thereto), the
holder of Units may, at its option, at any time
thereafter:
(A) demand registration, in whole or in part, of the
securities into which the Units or the Unit Warrants
are convertible or exercisable (as described in the
next three sentences), at the expense of Partech.
The holder shall be entitled to convert the Units, in
whole or in part at any time, into shares of Partech
Common Stock at a conversion price equal to 50%
(subject to reduction as described below) (the
"Conversion Factor") of the closing bid price of
Partech Common Stock on the day of each such
conversion (the "Conversion Shares") (e.g., if the
closing bid price of Partech Common Stock on the day
of conversion is $5, the holders would receive upon
conversion of all of the Units an aggregate of
240,000 ($600,000 / 50% of $5) shares of Partech
Common Stock). Alternatively, if the Unit Notes have
then been repaid in full, each Unit Warrant shall be
exercisable at an exercise price of $1.00 per Unit
Warrant and shall entitle the holder to receive a
number of shares of Partech Common Stock equal to (i)
the original principal amount of the corresponding
Unit Note held by such holder divided by (ii) 100%
(subject to reduction as described below) (the
"Alternative Exercise Factor") of the closing bid
price of Partech Common Stock on the day of the first
of such exercises (e.g., if such closing bid price of
the Partech Common Stock was $5, the holders would
receive upon exercise of all of the Unit Warrants an
aggregate of 120,000 ($600,000 / 100% of $5) shares
of Partech Common Stock). Upon any such conversion
or exercise under the two immediately preceding
sentences, the holder shall be entitled to receive at
no further cost a warrant to purchase one share of
Partech Common Stock exercisable at 100% (subject to
reduction as described below) (the "Supplemental
Exercise Factor") of the closing bid price of Partech
Common Stock on the day of the first of such
conversions or exercises for each share of Partech
Common Stock issued upon conversion or exercise (the
"Supplemental Warrants"). If such registration
statement is not rendered effective within 45 days
after demand: (1) as to the Units, the Conversion
Factor shall be decreased by 2% during each 30 day
period (or part thereof) thereafter (e.g., from 50%
to 48%, from 48% to 46%, etc.); and (2) as to the
Unit Warrants and the Supplemental Warrants, the
Alternative Exercise Factor and the Supplemental
Exercise Factor, respectively, shall each be
decreased by 4% during each 30 day period (or part
thereof) thereafter (e.g., from 100% to 96%, from 96%
to 92%, etc.). The Supplemental Warrants issuable
under this paragraph (A) and the Additional Warrants
defined under COLLATERAL below shall contain full
- 3 -
<PAGE> 4
anti-dilution and registration right provisions
(including one demand registration);
(B) in the event any such registration as provided for in
paragraph (A) above is not declared effective within
45 days, the holders of the Unit Notes may declare a
default under the terms of the Unit Notes and
request, at the holders' option, acceleration of
repayment of principal, in whole or in part, and/or
execution against the collateral, in whole or in
part. A holder may elect a combination of remedies.
Collateral: The following collateral shall be pledged:
- - ----------
(A) An aggregate of 700,305 shares of Partech Common
Stock, free and clear of all encumbrances, owned by
John E. Rayl, who will have owned 382,601 of such
shares for not less than three years for purposes of
Rule 144 and, at July 1, 1994, 217,704 of such shares
for not less than three years for purposes of Rule
144. 100,000 of such shares have been registered
pursuant to the Securities Act of 1933, as amended
(the "Act") and are freely tradeable. If a holder
exercises its rights with respect to the pledged
shares in whole or in part, the pledged shares shall
be valued at 50% of the closing bid price on the date
of the applicable foreclosure, and Partech shall
deliver one warrant to purchase one share of Partech
Common Stock exercisable at a price equal to the
closing bid price on the date of the first
foreclosure (the "Additional Warrants") to such
holder for each pledged share foreclosed upon by such
holder; and
(B) All of the capital stock of Partech Communications
Group, Inc. Partech Communications Group, Inc. shall
be the owner of all of the capital stock of each
subsidiary of Partech that holds a Federal
Communications Commission license.
Section 1.02. COLLATERAL. The obligations of the Company
with respect to the Unit Notes, including, without limitation, the due and
punctual payment of interest and principal and the registration requirements
with respect to the securities underlying the Unit Notes, shall be secured by
(i) a pledge of 700,305 shares of the Company's Common Stock owned by John E.
Rayl (the "Pledged Rayl Stock") pursuant to a Pledge Agreement substantially in
the form attached hereto as Exhibit B-1 (the "Rayl Pledge Agreement") and (ii)
a pledge of all the capital stock of Partech Communications Group, Inc. ("PCG")
owned by the Company (the "Pledged PCG Stock") pursuant to a Pledge Agreement
substantially in the form attached hereto as Exhibit
- 4 -
<PAGE> 5
B-2 (the "PCG Stock Pledge Agreement"). The terms and conditions of the Rayl
Pledge Agreement and the PCG Stock Pledge Agreement are hereby incorporated
herein as if they were set forth herein in their entirety.
Section 1.03. LEGENDS; REGISTRATION UNDER THE SECURITIES ACT OF 1933.
The Unit Notes, the Unit Warrants and the securities issuable upon the
conversion of the Units or the Unit Notes and upon exercise of the Unit
Warrants (collectively, the "Unit Securities") have not been registered under
the Act. Each of the Unit Securities shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE EXTENT APPLICABLE, RULE
144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT RELATING TO THE
DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER,
THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE
LAW IS AVAILABLE.
Certain registration rights with respect to the Unit Securities are set
forth in Exhibit A-1 and Exhibit A-2 attached hereto. This offering is not a
public offering and is intended to be made pursuant to Section 4(2) of the Act
and Regulation D as promulgated by the Securities and Exchange Commission
("SEC") under the Act. This offering is also intended to be exempt from the
registration requirements of various state securities laws. A substantial
number of state securities commissions and securities industry associations
have established investor suitability standards for marketing private
offerings of securities within their respective
- 5 -
<PAGE> 6
jurisdictions. Some have also established minimum dollar levels for purchases
in their states. The Company shall comply with these restrictions to the
extent applicable.
Section 1.04. RULE 144 REPORTING. With a view to making
available the benefits of certain rules and regulations of the SEC that may
permit the sale of certain of the securities issuable upon conversion of the
Units (the "Unit Conversion Securities"), Unit Notes, securities issuable under
the Unit Notes (the "Unit Note Securities"), Unit Warrants, securities issuable
under the Unit Warrants (the "Unit Warrant Securities"), Pledged Rayl Stock,
Additional Warrants and/or securities issuable under the Additional Warrants
(the "Additional Warrant Securities") to the public without registration, the
Company shall use its best efforts to:
(a) Make and keep public information regarding the
Company available, as those terms are understood and defined in Rule 144 under
the Act, at all times following the Closing Date (as hereinafter defined);
(b) File with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act");
(c) So long as an Investor owns any Unit Conversion
Securities, Unit Notes, Unit Note Securities, Unit Warrants, Unit Warrant
Securities, Pledged Rayl Stock, Additional Warrants and/or Additional Warrant
Securities, furnish to the Investor forthwith upon written request a written
statement by the Company as to its compliance with the reporting requirements
of Rule 144, and of the Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed as the Investor may reasonably request in availing itself of any rule
or regulation of the SEC allowing the Investor to sell any such securities
without registration.
- 6 -
<PAGE> 7
Section 1.05. CLOSING DATE. The purchase and sale of the
Notes will take place at one or more closings (each referred to herein as the
"Closing") at the offices of Kelley Drye & Warren, 101 Park Avenue, New York,
New York 10178 at 10:00 a.m., on a date as soon as practicable after all the
conditions set forth in Articles V and VI hereof have been satisfied (each, a
"Closing Date"), or at such other location as the Investor and the Company
shall agree. It is anticipated that the initial closing shall take place on or
about June 15, 1994.
Section 1.06. DELIVERY. At the Closing, the Company shall
deliver to the Investor the Unit Notes and Unit Warrants that the Investor is
purchasing against payment of the purchase price therefor by check, wire
transfer, cancellation of indebtedness, or such other form of payment as shall
be mutually agreed upon by the Investor and the Company. In the event that
payment by the Investor is made, in whole or in part, by cancellation of
indebtedness, then the Investor shall surrender to the Company for cancellation
at the Closing any evidence of such indebtedness or shall execute an instrument
of cancellation in form and substance acceptable to the Company. In addition,
the Company at the Closing shall deliver to the Investor choosing to pay any
part of the purchase price of the Units by cancellation of indebtedness, a
check in the amount of any interest accrued on such indebtedness through the
Closing. At the Closing, the Company shall also deliver to the Investor a
fully executed copy of the Rayl Pledge Agreement and the PCG Stock Pledge
Agreement (and all related Closing Documents).
Section 1.07. LIMITATION. Notwithstanding any other
provision of this Agreement (including, without limitation, all Exhibits
hereto) to the contrary, the Investor shall not be required or permitted to
exercise any of the conversion or exercise rights to receive securities of the
Company or the foreclosure rights to obtain Pledged Rayl Stock and Additional
Warrants, if such action by the Investor would result in the Investor
converting into and/or otherwise becoming, the beneficial owner of an aggregate
of more than 5% of the then outstanding shares
- 7 -
<PAGE> 8
of any class of voting equity of the Company, as calculated pursuant to Section
13 of the Exchange Act and the rules promulgated thereunder. The foregoing
shall not prohibit the Investor from receiving any remaining amounts owed under
the Unit Notes to the Investor from the Company.
Section 1.08. EXPENSES. Irrespective of whether the Closing
is effected: (i) the Company shall pay all costs and expenses with respect to
the negotiation, execution, delivery, and performance of this Agreement and the
transactions contemplated hereby, including without limitation, the cost of any
and all required filings under the Act, the Exchange Act or any state
securities or "blue sky" laws, rules or regulations and any related filing
fees; and (ii) the Company shall promptly pay all reasonable legal fees and
expenses incurred by Generation Capital Associates and any other Investor in
connection with this Agreement and the transactions contemplated hereby,
including, without limitation, all costs of preparing definitive documentation
with respect to this offering.
Article II
----------
Representations and Warranties
------------------------------
Section 2.01. INVESTOR REPRESENTATIONS AND WARRANTIES. The
undersigned hereby makes each and every one of the representations and
warranties set forth in Exhibit C hereto, as if such exhibit were set forth
herein in its entirety.
Section 2.02. COMPANY REPRESENTATIONS AND WARRANTIES. The
Company hereby makes each and every one of the representations and warranties
set forth in Exhibit D hereto, as if such exhibit were set forth herein in its
entirety.
- 8 -
<PAGE> 9
Article III
-----------
Use of Proceeds
---------------
Section 3.01. USE OF PROCEEDS. After deducting fees and
expenses incurred in connection with this offering, the net proceeds will be
used for a deposit for purchase of Key West, Florida Radio Station, working
capital of the Company and the placement fee to Berkeley Securities
Corporation.
Article IV
----------
Company Covenants
-----------------
Section 4.01. COMPANY COVENANTS. The Company hereby
covenants, at its own expense, and without any expense to the Investor, as
follows:
(a) To provide and to continue to provide to the
Investor for a period of five (5) years from the Closing Date, copies of all
quarterly and annual financial statements and reports prepared by or on behalf
of the Company or its subsidiaries for public disclosure and copies of all
documents delivered to the Company's stockholders; and
(b) To provide to the Investor for a period of one
year from the Closing Date or until 6 months after the last of the outstanding
Units or Unit Notes is converted and/or Unit Warrants is exercised, whichever
is later, by facsimile transmission, the full text of any written release of
information to the public regarding the Company, or a written summary of any
such information that is released to the public other than in writing. Such
information shall be provided to the Investor concurrently with the release of
such information to the public and in accordance with Section 9.01 hereof,
provided that such information shall be sent by facsimile transmission to each
Investor for whom a facsimile number is set forth on Exhibit I; and
- 9 -
<PAGE> 10
Article V
---------
Conditions to the Investor's Obligations
----------------------------------------
Section 5.01. CONDITIONS. The obligation of the Investor to
purchase the Units at the Closing is subject to the following conditions:
(a) The representations and warranties of the
Company contained in Exhibit D hereto shall be true and correct in all material
respects on and as of the Closing Date.
(b) There shall be no preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, nor any statute, rule, regulation or order promulgated or enacted
by any governmental authority, prohibiting or otherwise restraining the sale or
purchase of the Units.
(c) At the Closing, the Investor shall receive the
written opinion of Company counsel, who shall be reasonably satisfactory to the
Investor, in the form and substance set forth in Exhibit E-1 hereto.
(d) On or prior to the Closing Date, counsel for the
Investor shall have been furnished such documents, certificates and opinions as
they may reasonably require for the purpose of enabling them to review or pass
upon the matters set forth herein, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
(e) Prior to the Closing and except as otherwise
disclosed in the Disclosure Documents, (i) there shall have been no adverse
change nor development involving a prospective change in the condition,
financial or otherwise, prospects or the business activities
- 10 -
<PAGE> 11
of the Company, from the latest dates as of which such condition, prospects or
activities are set forth in this Agreement and the Disclosure Documents; (ii)
there shall have been no transaction, not in the ordinary course of business,
entered into by the Company from the latest date as of which the financial
condition of the Company is set forth in this Agreement and the Disclosure
Documents (iii) the Company shall not be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) no material amount of
the assets of the Company shall have been pledged or mortgaged; and (v) no
action, suit or proceeding, at law or in equity, shall have been pending or
threatened against the Company or affecting any of its respective properties or
businesses before or by any court or federal or state commission, board or
other administrative agency wherein an unfavorable decision, ruling or finding
could materially adversely affect the business, operations, prospects or
financial condition or income of the Company.
(f) On or prior to the Closing Date, each Investor
shall have received certificates of the Company signed by its Chairman of the
Board or President, in his/her representative capacity, dated as of the Closing
Date, to the effect that the conditions set forth in Section 5.01(e) above
shall have been satisfied and that, as of such Closing Date to his/her best
knowledge, the representations and warranties of the Company set forth herein
are true and correct (such certificate shall be in the form of Exhibit E-2
hereto).
(g) Each of the Rayl Pledge Agreement and the PCG
Stock Pledge Agreement shall have been fully executed and delivered to the
Investor.
- 11 -
<PAGE> 12
Article VI
----------
Conditions to the Company's Obligations
---------------------------------------
Section 6.01. CONDITIONS. The obligation of the Company to
sell the Units at the Closing is subject to the following conditions:
(a) The representations and warranties of the
Investor contained in Exhibit C hereto shall be true and correct in all
material respects on and as of the Closing Date.
(b) There shall be no preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, nor any statute, rule, regulation or order promulgated or enacted
by any governmental authority, prohibiting or otherwise restraining the sale or
purchase of the Units.
(c) On or prior to the Closing Date, the Investor
shall deliver a certificate to the Company to the effect that all of the
Investor's representations and warranties set forth herein are true and correct
as of such date (such certificate shall be in the form of Exhibit F hereto).
Article VII
-----------
Disclosure Documents
--------------------
Section 7.01. DISCLOSURE DOCUMENTS. The Company has provided
the Investor with true and correct copies of each of the documents listed on
Exhibit G hereto (the "Disclosure Documents").
- 12 -
<PAGE> 13
Article VIII
------------
Indemnification
---------------
Section 8.01. INDEMNIFICATION. The parties hereby agree to
be bound by the indemnification provisions set forth in Exhibit H hereto, and
the indemnification provisions are hereby incorporated herein as if such
provisions were set forth herein in their entirety.
Article IX
----------
Notices
-------
Section 9.01. NOTICES. All notices provided for in this
Agreement shall be in writing signed by the party giving such notice, and,
except as expressly provided in Section 4.01(b) hereof, delivered personally
(with delivery confirmed by receipt signed by recipient) or sent by overnight
courier or messenger or sent by registered or certified mail (air mail if
overseas), return receipt requested, or by telex, facsimile transmission,
telegram or similar means of communication with delivery confirmed. Notices
shall be deemed to have been received on the date of personal delivery, telex,
facsimile transmission, telegram or similar means of communication, or if sent
by overnight courier or messenger, shall be deemed to have been received on the
next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to have
been received on the third business day after the date of mailing. Notices
shall be sent to the addresses set forth on Exhibit I hereto.
- 13 -
<PAGE> 14
Article X
---------
Conversion
----------
Section 10.01. CONVERSION.
The Units shall be convertible in accordance with Section 1 of the Unit
Note.
Article XI
----------
Issuance of Additional Securities/Indebtedness
----------------------------------------------
Section 11.01. ISSUANCE OF ADDITIONAL SECURITIES/INDEBTEDNESS.
Commencing with the date of the issuance of the Units and ending 90
days after the earlier of (x) the satisfaction in full of all obligations under
the Unit Notes and the sale of all of the Unit Warrants or securities
underlying the Unit Warrants or (y) the thirtieth (30th) day after the
expiration or release of the Underwriter's Holdback with respect to the Warrant
Securities (provided that the Warrant Securities have been registered and are
tradeable during such 30 day period), the Company will not issue any additional
securities (other than those to be issued in the underwritten public offering
currently proposed by the Company) or incur any additional indebtedness without
the prior written consent of the holders of a majority-in-interest of the Units
(which majority must include Generation Capital Associates), except that the
Company may issue securities (i) upon the exercise of outstanding options
issued pursuant to the Company's employee stock option plans existing on the
date hereof as set forth in Schedule D (ii), or (ii) in connection with the
bona fide acquisition(s) of one or more broadcast stations from a third party
in one or more arm's length transaction(s) in which the Company obtains
equivalent value for the issuance of such additional securities or the
incurrence of such additional indebtedness.
- 14 -
<PAGE> 15
Article XII
-----------
Miscellaneous
-------------
Section 12.01.
(a) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY THEREIN, WITHOUT
GIVING EFFECT TO THE RULES OF CONFLICTS OF LAW.
(b) This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
(c) This Agreement represents the entire agreement
between the parties relating to the subject matter hereof, superseding any and
all prior or contemporaneous oral and prior written agreements and
understandings. This Agreement may not be modified or amended nor may any
right be waived except by a writing signed by the party against whom the
modification, amendment or waiver is sought to be enforced.
(d) The warranties, representations and covenants of
the Company and the Investor contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing.
(e) The captions and headings contained herein are
solely for convenience of reference and do not constitute a part of this
Agreement.
(f) There are no finder fees or commissions owed in
connection with the sale of the Units, except for the 10% placement fee payable
by the Company to Berkeley Securities Corporation.
- 15 -
<PAGE> 16
(g) Each of the Exhibits attached hereto is hereby
incorporated herein as if each of such Exhibits were fully set forth herein in
its entirety. Each of such Exhibits is hereby expressly made a part of this
Agreement.
(h) The terms of the offering and of the Units may
only be amended or modified by the agreement of Investors subscribing for
and/or holders of a majority-in-interest of the Units (which majority must
include Generation Capital Associates).
(i) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, intending to be legally bound, the parties
hereto have executed this Agreement and this Agreement has been delivered in
New York, New York as of the 15th day of June, 1994.
PARTECH HOLDINGS CORPORATION
________________________________________
By: John E. Rayl
Its: President and Chief
Executive Officer
INVESTOR:
________________________________________
By:
Its:
Social Security Number or Tax ID Number:
________________________________________
________________________________________
Subscription Amount
- 17 -
<PAGE> 1
Exhibit 4.10
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS
OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS AVAILABLE.
PARTECH HOLDINGS CORPORATION
----------------------------
6% SECURED NOTE
---------------
$__________ New York, New York
No. N-___ June ___, 1994
FOR VALUE RECEIVED, the undersigned, PARTECH HOLDINGS CORPORATION, a
Delaware corporation (the "Company"), hereby promises to pay to the order of
____________________, a _____________________ or ___ assigns (the "Noteholder"),
in lawful money of the United States of America, and in immediately payable
funds, the principal sum of ___________ THOUSAND DOLLARS ($__________). The
principal hereof and any unpaid accrued interest thereon shall be due and
payable on the earlier of (i) September 30, 1994 or (ii) the closing of the
underwritten public offering (as described below under Section 1(a) hereof) or
of any other private or public financing obtained by the Company (unless such
payment date is accelerated as provided in Section 7 hereof or extended by the
Noteholder as provided in Section 3 hereof). Payment of all amounts due
hereunder shall be made at the
<PAGE> 2
address of the Noteholder provided for in Section 8 hereof. The Company further
promises to pay interest at the rate of six per cent (6%) per annum on
the outstanding principal balance hereof, such interest to be payable monthly in
arrears on the 1st day of each month, commencing July 1, 1994 (prorated for any
partial month); provided that in the event that this Note is not repaid in full
at maturity or the Unit Warrant Securities (defined below) have not been
registered and become tradeable by September 30, 1994 (as described in Section 1
of the Unit Warrant (defined below)), the interest rate shall automatically
increase to 15% per annum.
This Note is part of an offering of Convertible Units (the "Units"),
each Unit consisting of one 6% Secured Note (a "Note"), and one Warrant (a "Unit
Warrant"). Each Note is pari passu with each other Note of such series with
respect to all rights and preferences. The Units have been issued pursuant to a
Subscription Agreement dated as of June 15, 1994 between the Company and the
holders of the Notes (the "Subscription Agreement"), which contains
representations and warranties and additional covenants of the Company with
respect to the Units. THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT ARE
INCORPORATED HEREIN BY REFERENCE.
To secure payment of the Notes, (i) John E. Rayl has pledged an
aggregate of 700,305 shares of the Company's common stock, par value $.05 per
share (the "Pledged Rayl Stock") to the holders of the Notes pursuant to a
Pledge Agreement of even date herewith among the Company, such individual and
the holdersof the Notes (the "Rayl Pledge Agreement") and (ii) the Company has
pledged all of the capital stock (the "Pledged PCG Stock") of Partech
Communications Group, Inc. ("PCG") to the holders of the Notes pursuant to a
Pledge Agreement of even date herewith between the Company and the holders
-2-
<PAGE> 3
of the Notes (the "PCG Stock Pledge Agreement"). THE PROVISIONS OF THE RAYL
PLEDGE AGREEMENT AND THE PCG STOCK PLEDGE AGREEMENT ARE INCORPORATED HEREIN BY
REFERENCE.
1. CONVERSION.
----------
(a) CONVERSION. It is contemplated that the Company shall have an
underwritten public offering of its securities (the "Underwritten Public
Offering"). Each Unit Warrant shall entitle its holder to purchase securities
(the "Unit Warrant Securities") of the same class as the underwritten securities
(the "Underwritten Securities"). The Company shall be obligated to register the
Unit Warrant Securities in the same registration statement as the Underwritten
Public Offering, so that holders of such Unit Warrant Securities shall be
entitled to sell same simultaneously with the Underwritten Securities sold for
the account of the Company that are being sold pursuant to such Underwritten
Public Offering, subject only to a 180 day hold-back at the discretion of
Berkeley Securities Corporation (the "Underwriter"). The Company shall be
obligated to bear all costs and expenses (except any discount or commission) of
the Underwritten Public Offering and registration. If the Underwritten Public
Offering is not effective and the Underwritten Securities have not commenced
trading by September 30, 1994 (or if the Underwritten Public Offering is
terminated prior thereto) the holder of Units may, at its option, at any time
thereafter, demand registration, in whole or in part, of the securities into
which the Units or the Unit Warrants are convertible or exercisable (as
described in the next three sentences), at the expense of the Company. The
holder shall be entitled to convert the Units, in whole or in part at any time,
into shares of the Company's common stock, par value $.05 per share (the "Common
Stock"), at a conversion price equal to 50% (subject to reduction as described
- 3 -
<PAGE> 4
below) (the "Conversion Factor") of the closing bid price of the Common Stock
on the day of each such conversion (the "Conversion Shares") (e.g., if the
closing bid price of the Common Stock on the day of conversion is $5, the
holders would receive upon conversion of all of the Units an aggregate of
240,000 ($600,000 / 50% of $5) shares of Common Stock). Alternatively, if the
Notes have then been repaid in full, each Unit Warrant shall be exercisable at
an exercise price of $1.00 per Unit Warrant and shall entitle the holder to
receive a number of shares of Common Stock equal to (i) the original principal
amount of the corresponding Note held by such holder divided by (ii) 100%
(subject to reduction as described below) (the "Alternative Exercise Factor")
of the closing bid price of the Common Stock on the day of the first of such
exercises (the "Alternative Conversion Shares") (e.g., if such closing bid
price of the Common Stock was $5, the holders would receive upon exercise of
all of the Unit Warrants an aggregate of 120,000 ($600,000 / 100% of $5) shares
of Common Stock). Upon any such conversion or exercise under the two
immediately preceding sentences, the holder shall be entitled to receive at no
further cost a warrant to purchase one share of Common Stock exercisable at
100% (subject to reduction as described below) (the "Supplemental Exercise
Factor") of the closing bid price of the Common Stock on the day of the first
of such conversions or exercises for each share of Common Stock issued upon
conversion or exercise (the "Supplemental Warrants"), in substantially the form
attached hereto as Exhibit X.
(b) FAILURE TO EFFECT DEMAND REGISTRATION. In the event such
registration statement is not rendered effective within 45 days after demand
therefor pursuant to Section 6(a), (i) as to the Units, the Conversion Factor
shall be decreased by 2% during each 30 day period (or part thereof) thereafter
(e.g., from 50% to 48%, from 48% to
- 4 -
<PAGE> 5
46%, etc.); and (ii) as to the Unit Warrants and the Supplemental Warrants, the
Alternative Exercise Factor and the Supplemental Exercise Factor, respectively,
shall each be decreased by 4% during each 30 day period (or part thereof)
thereafter (e.g., from 100% to 96%, from 96% to 92%, etc.).
2. EXERCISE OF RIGHTS UNDER PLEDGE AGREEMENT. In the event
Noteholder declares a default pursuant to Section 7 hereof and exercises its
rights under the Rayl Pledge Agreement with respect to any of the Pledged Rayl
Stock, (a) the Pledged Rayl Stock shall be valued at 50% of the closing bid
price on the date of the applicable foreclosure and (b) the Company shall
deliver a warrant (the "Additional Warrant"), in substantially the form attached
hereto as Exhibit X, to purchase one share of Common Stock (the "Additional
Warrant Stock") for each share of the Pledged Rayl Stock foreclosed upon by
Noteholder pursuant to the Pledge Agreement. The Additional Warrant shall be
exercisable by Noteholder at an exercise price per share equal to the closing
bid price of the Common Stock on the day of the first foreclosure pursuant to
the Pledge Agreement.
3. EXTENSION OF MATURITY DATE. The Noteholder shall have the
right, in its sole discretion, to extend the maturity of this Note for up to six
additional consecutive thirty (30) day periods, each such extension exercisable
by the Noteholder delivering to the Company written notice of such extension at
any time prior to the maturity date then in effect.
4. PREPAYMENT. This Note shall not be prepaid, in whole or in
part, without the prior written consent of the Noteholder.
- 5 -
<PAGE> 6
5. TRANSFERABILITY. This Note shall be freely transferable by the
Noteholder provided such transfer is in compliance with applicable federal and
state securities laws.
6. REGISTRATION RIGHTS. (a) In the event the registration
statement with respect to the Underwritten Offering is not effective or the
Underwritten Securities have not commenced trading for any reason whatsoever by
September 30, 1994 (or if the Underwritten Public Offering is terminated prior
thereto), holders of a majority of the Units (which majority must include
Generation Capital Associates) (a "Majority-in-Interest") shall have the right,
exercisable upon written request to the Company, to have the Company file with
the Commission a registration statement and such other documents, including a
prospectus, as may be necessary, in the opinion of counsel to the Majority-in-
Interest, to comply with the provisions of the Act, so as to permit a public
offering of the Conversion Shares or the Alternative Conversion Shares, as the
case may be, the Supplemental Warrants and the securities issuable under the
Supplemental Warrants by the Unitholders or Noteholders, as the case may be (the
"Demand Registration").
(b) In the event the Noteholder declares a default pursuant
to Section 7 hereof and is issued Additional Warrants pursuant to Section 2
hereof as a result thereof, if the Company at any time thereafter proposes to
register any of its securities, or any of the securities of PCG, under the Act,
it shall each such time give written notice to the Noteholder of its intention
so to do. Upon the written request of the Noteholder given within 20 days after
receipt of any such notice from the Company (stating the number of shares of
Pledged Rayl Stock and/or Additional Warrants, or Pledged PCG Stock, as the case
may be, to be disposed of by the Noteholder and the intended method of
disposition), the Company
- 6 -
<PAGE> 7
shall cause all such Pledged Rayl Stock and/or Additional Warrants, or Pledged
PCG Stock, as the case may be, intended to be disposed of, as to which the
Noteholder shall have requested registration thereof, to be registered under
the Act (the "Default Registration") so as to permit the disposition (in
accordance with the methods in the Noteholder's written request) by the
Noteholder of the securities so registered.
(c) In connection with any registration of securities
pursuant to this Section 6, the Company and the Noteholder covenant and agree as
follows (all references to the term "Registration Statement" herein shall
include, as the case may be, the registration statement with respect to the
Demand Registration or the Registration Statement with respect to the Default
Registration):
(i) The Company shall use its best efforts to cause the
Registration Statement to be declared effective at the earliest
possible time, and shall furnish Noteholder such number of prospectuses
as Noteholder shall reasonably request. The Company shall cause the
Registration Statement to remain effective, and shall file all
post-effective amendments necessary, to cause the Registration
Statement to remain effective until nine months following the effective
date of such registration, except in the case of any warrants issuable
hereunder, in which case the Company shall cause the Registration
Statement to remain effective until nine months following the
expiration date of such warrants.
(ii) The Company shall pay all costs, fees and expenses
incurred by the Company and the Noteholder in connection with the
Registration Statement and the offering thereunder including, without
limitation, the Company's legal and accounting fees, fees and expenses
of Noteholder's counsel, printing
- 7 -
<PAGE> 8
expenses and blue sky fees and expenses (but excluding discounts
or selling commissions of any underwriter or broker-dealer acting on
behalf of Noteholder).
(iii) The Company shall take all necessary action which may be
reasonably required in qualifying or registering the securities
included in the Registration Statement for offering and sale under the
securities or blue sky laws of all states reasonably requested by
Noteholder, provided that the Company shall not be obligated to execute
or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such
jurisdiction.
(iv) The Company shall indemnify the Noteholder and each
person, if any, who controls Noteholder within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from the Registration Statement, in
accordance with the terms and conditions set forth in Exhibit H of the
Subscription Agreement.
(v) The Noteholder shall indemnify the Company, its officers
and directors and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against all loss, claim, damage, expense or liability (including
all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever)
- 8 -
<PAGE> 9
to which they may become subject under the Act, the Exchange Act
or otherwise, arising from information furnished by or on behalf of
Noteholder for specific inclusion in the Registration Statement, in
accordance with the terms and conditions set forth in Exhibit H of the
Subscription Agreement.
(vi) The Company shall, as soon as practicable after the
effective date of the Registration Statement, and in any event within
fifteen (15) months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act) an
earnings statement (which need not be audited) complying with Section
11(a) of the Act and covering a period of at least twelve (12)
consecutive months beginning after the effective date of the
Registration Statement.
(vii) The Company shall (A) deliver promptly to Noteholder,
upon request, copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the
Registration Statement and (B) permit Noteholder to perform such
investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the Registration Statement, as
it deems reasonably necessary to comply with applicable securities laws
or rules of the National Association of Securities Dealers, Inc. Such
investigation shall include, but not be limited to, access to financial
and accounting information and opportunities to discuss the business of
the Company with the Company's officers and independent auditors, all
to such reasonable
- 9 -
<PAGE> 10
extent, at such reasonable times and as often as the Noteholder shall
reasonably request.
(viii) The Company shall furnish to the Noteholder a signed
counterpart, addressed to Noteholder, of (A) the opinion of counsel to
the Company, dated the closing date with respect to the Registration
Statement, and (B) the "cold comfort" letter, dated the closing date
with respect to the Registration Statement, in each case, delivered to
any underwriter(s) in connection with the offering.
(ix) The Company shall cause all securities of the Noteholder
registered pursuant to a Registration Statement to be listed on any
national securities exchange or quoted on any automated quotation
system on which similar securities of the Company are then listed or
quoted.
(d) In the case of any Demand Registration effected pursuant to
Section 6(a) hereof: (i) a Majority-in-Interest shall have the right to
designate the managing underwriter in any underwritten offering with respect to
such Demand Registration; (ii) no other securities of the Company shall be
included in the Registration Statement filed with respect to such Demand
Registration, and, if requested by the managing underwriter in the case of an
underwritten offering or by a Majority-in-Interest in the case of a
non-underwritten offering under such Registration Statement, the Company shall
not, and shall cause its officers and directors not to, sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the Company
during the one hundred eighty (180) day period following the effective date of
such Registration Statement; (iii) the Company shall enter into any underwriting
agreement necessary to effect the offer and sale of the securities
- 10 -
<PAGE> 11
included in the Demand Registration; and (iv) notwithstanding anything to the
contrary contained herein, in the case of a Demand Registration on Form S-3 of
securities to be offered on a continuous or delayed basis, the Company shall
keep such Registration Statement effective until all securities included in
such Demand Registration have been sold, provided that Rule 415 under the Act
permits such an offering on a continuous or delayed basis. Notwithstanding
anything to the contrary, so long as the Company and the Underwriter have not
abandoned and are actively proceeding in connection with the Underwritten
Public Offering in good faith subsequent to September 30, 1994, then the
provisions of (i) and (ii) of this Section 6(d) shall not apply until such time
as the Company and the Underwriter have abandoned or are no longer actively
proceeding in connection with such Underwritten Public Offering in good faith.
7. DEFAULT. The occurrence of any one of the following events
shall constitute an Event of Default:
(a) The non-payment, when due, of any principal or interest
pursuant to this Note;
(b) The material breach of any representation or warranty
in this Note or in the Subscription Agreement, the Rayl Pledge
Agreement or the PCG Stock Pledge Agreement;
(c) The material breach of any covenant or undertaking in
this Note or in the Subscription Agreement, the Rayl Pledge Agreement
or the PCG Stock Pledge Agreement, not otherwise provided for in this
Section 7;
- 11 -
<PAGE> 12
(d) The failure to cause the Registration Statement in
connection with the Demand Registration to be declared effective on or
before 45 days after the demand therefor;
(e) The failure of the Company to make payment when due
(subject to any applicable grace period), whether by acceleration or
otherwise, of any indebtedness of the Company or an event of default or
similar event shall occur with respect to such indebtedness, if the
effect of such default or event (subject to any required notice and any
applicable grace period) would be to accelerate the maturity of any
such indebtedness or to permit the holder or holders of such
indebtedness to cause such indebtedness to become due and payable prior
to its expressed maturity;
(f) The commencement by the Company of any voluntary
proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, receivership, dissolution, or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or the adjudication of the Company as insolvent or
bankrupt by a decree of a court of competent jurisdiction; or the
petition or application by the Company for, acquiescence in, or consent
by the Company to, the appointment of any receiver or trustee for the
Company or for all or a substantial part of the property of the
Company; or the assignment by the Company for the benefit of creditors;
or the written admission of the Company of its inability to pay its
debts as they mature; or
(g) The commencement against the Company of any proceeding
relating to the Company under any bankruptcy, reorganization,
arrangement,
- 12 -
<PAGE> 13
insolvency, adjustment of debt, receivership, dissolution or
liquidation law or statute of any jurisdiction, whether now or
hereafter in effect, provided, however, that the commencement of such a
proceeding shall not constitute an Event of Default unless the Company
consents to the same or admits in writing the material allegations of
same, or said proceeding shall remain undismissed for 20 days; or the
issuance of any order, judgment or decree for the appointment of a
receiver or trustee for the Company or for all or a substantial part of
the property of the Company, which order, judgment or decree remains
undismissed for 20 days; or a warrant of attachment, execution, or
similar process shall be issued against any substantial part of the
property of the Company.
Upon the occurrence of any Event of Default, the Noteholder may, by
written notice to the Company, (a) declare all or any portion of the unpaid
principal amount due to Noteholder, together with all accrued interest thereon,
immediately due and payable and/or (b) foreclose upon all or any portion of the
(i) Pledged Rayl Stock in accordance with the Rayl Pledge Agreement and/or (ii)
Pledged PCG Stock in accordance with the PCG Stock Pledge Agreement.
8. NOTICES. Notices to be given hereunder shall be in writing and
shall be deemed to have been sufficiently given if delivered personally (with
delivery confirmed by receipt signed by recipient) or sent by overnight courier
or messenger or sent by registered or certified mail (air mail if overseas),
return receipt requested, or by telex, facsimile transmission, telegram or
similar means of communication with delivery confirmed. Notices shall be deemed
to have been received on the date of personal delivery, telex, facsimile
- 13 -
<PAGE> 14
transmission, telegram or similar means of communication, or if sent by
overnight courier or messenger, shall be deemed to have been received on the
next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to have
been received on the third business day after the date of mailing. The address
of the Company is 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221,
Facsimile Number (614) 538-0670, and the Company shall give written notice of
any change of address to the Noteholder. The address of the Noteholder is as
set forth on Exhibit I to the Subscription Agreement, and the Noteholder shall
give written notice of any change of address to the Company.
9. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Company
consents to the jurisdiction of any court of the State of New York and of any
federal court located in New York. The Company waives personal service of any
summons, complaint or other process in connection with any such action or
proceeding and agrees that service thereof may be made, as the Noteholder may
elect, by certified mail directed to the Company at the location provided for in
Section 8 hereof, or, in the alternative, in any other form or manner permitted
by law.
10. GOVERNING LAW. THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW
YORK AND SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED ENTIRELY THEREIN, WITHOUT GIVING EFFECT TO THE RULES OF CONFLICTS OF
LAW.
11. CONFORMITY WITH LAW. It is the intention of the Company and of
the Noteholder to conform strictly to applicable usury and similar laws.
Accordingly,
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<PAGE> 15
notwithstanding anything to the contrary in this Note, it is agreed that the
aggregate of all charges which constitute interest under applicable usury and
similar laws that are contracted for, chargeable or receivable under or in
respect of this Note, shall under no circumstances exceed the maximum amount of
interest permitted by such laws, and any excess, whether occasioned by
acceleration of maturity of this Note or otherwise, shall be canceled
automatically, and if theretofore paid, shall be either refunded to the Company
or credited on the principal amount of this Note.
IN WITNESS WHEREOF, the Company has signed and sealed this Note and
delivered it in New York, New York as of June ___, 1994.
No. N-___
PARTECH HOLDINGS CORPORATION
By:
___________________________
Name: John E. Rayl
Title: President and Chief Executive
Officer
ATTEST:
_____________________________________________________
Secretary
[Corporate Seal]
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<PAGE> 1
Exhibit 4.11
EXHIBIT X
---------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS
AVAILABLE.
W A R R A N T
-------------
For the Purchase of Common Stock, Par Value $.05 per Share of
PARTECH HOLDINGS CORPORATION
(Incorporated under the Laws of the State of Delaware)
No. _________ Warrant to Purchase _________ Shares
THIS IS TO CERTIFY that, for value received, __________________________
or assigns (the "Holder") is entitled, subject to the terms and conditions set
forth herein, at any time beginning [six months after the initial issuance of
this Warrant] until 5:00 p.m., New York City time, on [five years from the date
of issuance], but not thereafter, to purchase the number of shares set forth
above of Common Stock, par value $.05 per share (the "Common Stock"), of
PARTECH HOLDINGS CORPORATION, a Delaware corporation (the "Company"), from the
Company at a purchase price of ___ Dollars ($____) per share [exercise price
determined in accordance with
<PAGE> 2
Section 1(a), 1(b) or 2, as the case may be, of the Company's 6% Secured Note
issued June __, 1994 (the "Note")], if and to the extent this Warrant is
exercised, in whole or in part, subject in all cases to adjustment as provided
in Section 2 hereof, and to receive a certificate or certificates representing
the shares of Common Stock so purchased, upon presentation and surrender to the
Company of this Warrant, with the form of subscription attached hereto duly
executed, and accompanied, except as provided in Section 1 hereof, by payment
of the purchase price of each share purchased either in cash or by certified or
bank cashier's check payable to the order of the Company. This Warrant shall
be dated the date of its issuance.
1. EXERCISABILITY. The rights represented by this Warrant are
exercisable at the option of the Holder in whole at any time, or in part from
time to time, at the price above specified. In case of the purchase of less
than all the shares as to which this Warrant is exercisable, the Company shall
cancel this Warrant upon the surrender hereof and shall execute and deliver a
new warrant of like tenor for the balance of the shares purchasable hereunder.
Notwithstanding any other provision of this Warrant to the
contrary, the Holder shall not be required or permitted to exercise any of the
exercise rights to receive securities of the Company if such action by
the Holder would result in the Holder becoming the beneficial owner of an
aggregate of more than 5% of the then outstanding shares of any class of voting
equity of the Company, as calculated pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended.
Upon the exercise of this Warrant, the issuance of certificates for
shares of Common Stock and/or other securities, properties or rights underlying
this Warrant shall be made forthwith
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<PAGE> 3
(and in any event within five (5) business days thereafter) without charge to
the Holder including, without limitation, any tax that may be payable in
respect of the issuance thereof, and such certificates shall be issued in the
name of, or in such names as may be directed by, the Holder; provided, however,
that the Company shall not be required to pay any tax in respect of income or
capital gain of the Holder or any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder (a "Transfer Tax"), and the Company shall
not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of any such Transfer Tax or shall have established to the
satisfaction of the Company that any such Transfer Tax has been paid.
In addition to the method of payment set forth herein and in lieu of any
cash payment required hereunder, the Holder shall have the right, at any time
and from time to time, to exercise this Warrant in full or in part by surrender
hereof in exchange for the number of shares of Common Stock equal to the
product of (x) the number of shares as to which this Warrant is being exercised
multiplied by (y) a fraction, the numerator of which is the Market Price (as
defined in Section 2.1 hereof, subject to the next sentence) of the Common
Stock less the Exercise Price (as defined in Section 2.1 hereof) and the
denominator of which is such Market Price. Solely for the purposes of this
Section 1, Market Price shall equal the Market Price on the date on which the
form of election attached hereto is deemed to have been sent to the Company.
- 3 -
<PAGE> 4
2. Adjustments to Exercise Price and Number of Securities.
-------------------------------------------------------
2.1 COMPUTATION OF ADJUSTED EXERCISE PRICE. Except as hereinafter
provided, in case the Company shall at any time after the date hereof issue or
sell any shares of Common Stock, including shares held in the Company's
treasury, shares of Common Stock issued upon the exercise of any options,
rights or warrants to subscribe for shares of Common Stock and shares of Common
Stock issued upon the direct or indirect conversion or exchange of securities
for shares of Common Stock, for a consideration per share less than the
"Exercise Price" (defined below) in effect immediately prior to the issuance or
sale of such shares or the "Market Price" (defined below) per share of Common
Stock on the date immediately prior to the issuance or sale of such shares, or
without consideration, then forthwith upon such issuance or sale, the Exercise
Price shall (until another such issuance or sale) be reduced to the price
(calculated to the nearest full cent) equal to the quotient derived by dividing
(A) an amount equal to the sum of (X) the product of (a) the lower of (i) the
Exercise Price in effect immediately prior to such issuance or sale and (ii)
the Market Price per share of Common Stock on the date immediately prior to
the issuance or sale of such shares, in either event, reduced, but not below
.001, by the positive difference between (u) the Market Price per share of
Common Stock on the date immediately prior to the issuance or sale and (v) the
amount per share received in connection with such issuance or sale, multiplied
by (b) the total number of shares of Common Stock outstanding immediately prior
to such issuance or sale, plus (Y) the aggregate of the amount of all
consideration, if any, received by the Company upon such issuance or sale, by
(B) the total number of shares of Common Stock outstanding immediately after
such issuance or sale;
- 4 -
<PAGE> 5
provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 2.3
hereof.
For the purposes of this Warrant, the term "Exercise Price" shall mean
$_____ per share of Common Stock [exercise price determined in accordance with
Section 1(a), 1(b) or 2, as the case may be, of the Note], as adjusted from
time to time pursuant to the provisions of this Section 2.
For the purposes of any computation to be made in accordance with this
Section 2, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of
the cash consideration therefor shall be deemed to be the amount
of cash received by the Company for such shares (or, if shares
of Common Stock are offered by the Company for subscription, the
subscription price, or, if either of such securities shall be
sold to underwriters or dealers for public offering without a
subscription offering, the public offering price) before
deducting therefrom any compensation paid or discount allowed in
the sale, underwriting or purchase thereof by underwriters or
dealers or others performing similar services, or any expenses
incurred in connection therewith.
- 5 -
<PAGE> 6
(ii) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company) of shares of
Common Stock for a consideration part or all of which shall be
other than cash, the amount of the consideration therefor other
than cash shall be deemed to be the value of such consideration
as determined in good faith by the Board of Directors of the
Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have
been issued immediately after the opening of business on the day
following the record date for the determination of stockholders
entitled to receive such dividend or other distribution and
shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of
Common Stock shall be deemed to involve the issuance of such
shares of Common Stock for a consideration other than cash
immediately prior to the close of business on the date fixed for
the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such
shares of Common Stock shall be determined as provided in
subsection (ii) of this Section 2.1.
- 6 -
<PAGE> 7
(v) The number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon
the exercise of options, rights, warrants and upon the
conversion or exchange of convertible or exchangeable
securities.
(vi) As used herein, the phrase "Market Price" at any date shall be
deemed to be the last reported sale price, or, in case no such
reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in
either case as officially reported by the principal securities
exchange on which the Common Stock is listed or admitted to
trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average closing
bid price as furnished by Nasdaq through the Nasdaq National or
Small Cap Market or similar organization if Nasdaq is no longer
reporting such information, or if the Common Stock is not listed
or admitted to trading on any national securities exchange or
quoted on Nasdaq, as determined in good faith by resolution of
the Board of Directors of the Company, based on the best
information available to it.
2.2 OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE
SECURITIES. In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Exercise Price in effect
- 7 -
<PAGE> 8
or the Market Price immediately prior to the issuance of such options, rights
or warrants, or such convertible or exchangeable securities, or without
consideration, the Exercise Price in effect immediately prior to the issuance
of such options, rights or warrants, or such convertible or exchangeable
securities, as the case may be, shall be reduced to a price determined by
making a computation in accordance with the provisions of Section 2 hereof,
provided that:
(a) The aggregate maximum number of shares of Common Stock,
as the case may be, issuable under such options, rights or
warrants shall be deemed to be issued and outstanding at the
time such options, rights or warrants were issued, and for a
consideration equal to the minimum purchase price per share
provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares in
accordance with the terms of this Warrant), if any, received by
the Company for such options, rights or warrants.
(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of
issuance of such securities, and for a consideration equal to the
consideration (determined in the same manner as consideration received
on the issue or sale of shares of Common Stock in accordance with the
terms of this Warrant) received by the Company for such securities, plus
the minimum consideration, if any, receivable by the Company upon the
conversion or exchange thereof.
- 8 -
<PAGE> 9
(c) If any change shall occur in the price per share
provided for in any of the options, rights or warrants referred to in
subsection (a) of this Section 2.2, or the price per share at which the
securities referred to in subsection (b) of this Section 2.2 are
convertible or exchangeable, such options, rights or warrants or
conversion or exchange rights, as the case may be, shall be deemed to
have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be
deemed to have issued upon such date new options, rights or warrants or
convertible or exchangeable securities at the new price in respect of
the number of shares issuable upon the exercise of such options, rights
or warrants or the conversion or exchange of such convertible or
exchangeable securities.
2.3 SUBDIVISION AND COMBINATION. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision
or increased in the case of combination.
2.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 2, the number of
shares of Common Stock issuable upon the exercise of this Warrant shall be
adjusted to the nearest full amount by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
shares of Common Stock issuable upon exercise of this Warrant immediately prior
to such adjustment and dividing the product so obtained by the adjusted
Exercise Price.
- 9 -
<PAGE> 10
2.5 DEFINITION OF COMMON STOCK. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of Incorporation of the Company, as amended through
the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that the Company shall, after the date hereof, issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of this Warrant either shares of Common Stock or a like number of
such securities with greater or superior voting rights.
2.6 RECLASSIFICATION, MERGER OR CONSOLIDATION. In case of any
reclassification or change of the outstanding shares of Common Stock (other
than a change in par value to no par value, or as a result of a subdivision or
combination) or in case of any consolidation of the Company with, or merger of
the Company with or into, another corporation (other than a consolidation or
merger which does not result in any reclassification or change of the
outstanding Common Stock), the Company, in the case of such a reclassification
or change, or the corporation formed by such consolidation or merger shall
execute and deliver to the Holder a supplemental warrant providing that the
Holder shall have the right thereafter (until the expiration of this Warrant)
to receive, upon exercise of such supplemental warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation or merger by a holder of the number of
shares of Common Stock for which this Warrant might have been exercised
immediately prior to such consolidation, merger, sale or
- 10 -
<PAGE> 11
transfer. Such supplemental warrant shall provide for adjustments which shall
be identical to the adjustments provided in Section 2 hereof. The above
provisions of this Subsection shall similarly apply to successive
reclassifications, changes, consolidations or mergers.
2.7 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Exercise Price shall be made:
(a) Upon the issuance or sale of (i) the shares of Common
Stock issuable upon the exercise of this Warrant, (ii) the shares of
Common Stock and warrants issuable upon the conversion of the Company's
6% Secured Notes and any exercise of such warrants, (iii) the shares of
Common Stock issuable upon the exercise of the Company's options or
warrants outstanding as of June 15, 1994 as set forth in Schedule D(ii),
or (iv) the securities issuable pursuant to the Underwritten Public
Offering, including the Underwriter's options and warrants; or
(b) If the amount of such adjustment shall be less than two
cents per share of Common Stock, provided, however, that in such a
case any adjustment that would otherwise be required then to be made
shall be carried forward and shall be made at the time of, and together
with, the next subsequent adjustment which, together with any adjustment
so carried forward, shall amount to at least two cents (2 cents) per
share of Common Stock.
2.8 DIVIDENDS AND OTHER DISTRIBUTIONS. In the event that the
Company shall, at any time prior to the exercise of this Warrant, declare a
dividend (other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, property,
- 11 -
<PAGE> 12
rights, evidences of indebtedness, securities (other than shares of Common
Stock), whether issued by the Company or by another, or any other thing of
value, the Holder shall thereafter be entitled to receive, in addition to the
shares of Common Stock or other securities and property receivable upon the
exercise thereof, upon the exercise of this Warrant, the same property, assets,
rights, evidences of indebtedness, securities or any other thing of value that
the Holder would have been entitled to receive at the time of such dividend or
distribution as if this Warrant had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution,
the Company shall make appropriate reserves to ensure the timely performance of
the provisions of this Subsection 2.8.
3. REGISTRATION. The registration rights of the Holder and the
obligations of the Company with respect to registration are set forth in the 6%
Secured Note, a copy of which is attached hereto.
4. NO REQUIREMENT TO EXERCISE. Nothing contained in this Warrant
shall be construed as requiring the Holder to exercise this Warrant prior to or
in connection with the effectiveness of a registration statement.
5. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the
holder hereof to any voting rights or other rights as a stockholder of the
Company, or to any other rights whatsoever except the rights herein expressed,
and, except as provided in Section 2.8 hereof, no dividends shall be payable
or accrue in respect of this Warrant or the interest represented hereby or the
shares purchasable hereunder until or unless, and except to the extent that,
this Warrant shall be exercised.
- 12 -
<PAGE> 13
6. EXCHANGE. This Warrant is exchangeable upon the surrender
hereof by the Holder to the Company for new warrants of like tenor representing
in the aggregate the right to purchase the number of shares purchasable
hereunder, each of such new warrants to represent the right to purchase such
number of shares as shall be designated by the Holder at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation hereof, if mutilated, the Company
will make and deliver a new warrant of like tenor and amount, in lieu hereof.
7. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of this Warrant, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests. All fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of shares of
Common Stock or other securities, properties or rights receivable upon exercise
of this Warrant.
8. RESERVATION AND LISTING OF SECURITIES. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of this Warrant, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise hereof. The Company covenants and agrees
that, upon exercise of this Warrant and payment of the Exercise Price, all
- 13 -
<PAGE> 14
shares of Common Stock and other securities issuable upon such exercise shall
be duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as this Warrant shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of this Warrant to be listed (subject
to official notice of issuance) on all securities exchanges and quoted by all
automated quotation reporting systems on or by which the Common Stock may then
be listed and/or quoted.
9. NOTICES TO HOLDER. If at any time prior to the expiration of
this Warrant or its exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock
of the Company, or any option, right or warrant to subscribe therefor;
or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed;
- 14 -
<PAGE> 15
then, in any one or more of said events, the Company shall give written notice
of such event to the Holder at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, or entitled to
vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer
books, as the case may be.
10. INFORMATIONAL REQUIREMENTS. The Company will transmit to the
Holder such information, documents and reports as are generally distributed to
stockholders of the Company concurrently with the distribution thereof to such
stockholders.
11. NOTICE. Notices to be given to the Company or the Holder shall
be deemed to have been sufficiently given if delivered personally (with
delivery confirmed by receipt signed by recipient) or sent by overnight courier
or messenger or sent by registered or certified mail (air mail if overseas),
return receipt requested, or by telex, facsimile transmission, telegram or
similar means of communication with delivery confirmed. Notices shall be
deemed to have been received on the date of personal delivery, telex, facsimile
transmission, telegram or similar means of communication, or if sent by
overnight courier or messenger, shall be deemed to have been received on the
next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the third business day after the date of mailing. The address of
the Company is 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221, Facsimile
Number (614) 538-0670, and the Company shall
- 15 -
<PAGE> 16
give written notice of any change of address to the Holder. The address of the
Holder shall be the address of the Holder as set forth in the books and records
of the Company.
12. CONSENT TO JURISDICTION AND SERVICE. The Company consents to
the jurisdiction of any court of the State of New York, and of any federal
court located in New York, in any action or proceeding arising out of or in
connection with this Warrant. The Company waives personal service of any
summons, complaint or other process in connection with any such action or
proceeding and agrees that service thereof may be made, by certified mail
directed to the Company at the location provided for in Section 11 hereof, or,
in the alternative, in any other form or manner permitted by law.
13. SUCCESSORS. All the covenants and provisions of this Warrant
shall be binding upon and inure to the benefit of the Company, the Holder and
their respective heirs, legal representatives, successors and assigns.
14. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED, CONSTRUED AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE RULES GOVERNING CONFLICTS OF LAW.
- 16 -
<PAGE> 17
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by the signature of its President and its seal affixed and attested by its
Secretary.
Dated: ____________, 199_
PARTECH HOLDINGS CORPORATION
By:_____________________________________
Name:
Title:
[Corporate Seal]
ATTEST:
__________________________________________________
Secretary
- 17 -
<PAGE> 18
ASSIGNMENT
To Be Executed by the Holder
If He/She Desires To Assign The
Warrant In Its Entirety
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers
unto _____________________________________________________________the right to
(Please insert Social Security or other identifying number of Assignee)
purchase _____________ shares of Common Stock of the within named Company
evidenced by the within Warrant, together will all right, title and interest
therein, and does hereby irrevocably constitute and appoint attorney
____________________________________________________ to transfer the said
Warrant on the books of said Company, with full power of substitution in the
premises.
Dated: __________________, 199_
________________________________________
(Signature)
NOTE: The signature to this Assignment must correspond with the name as
written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatever.
SIGNATURE GUARANTEED:
________________________________________
- 18 -
<PAGE> 19
[FORM OF ELECTION TO PURCHASE]
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by this Warrant Certificate
for, and to purchase ________________ shares of Common Stock of PARTECH HOLDINGS
CORPORATION and herewith makes payment of $_________________ therefor, and
requests that the certificates for such shares be issued in the name of, and
delivered to ____________________, whose address is__________________________.
Dated:
Signature_______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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<PAGE> 20
[FORM OF CASHLESS ELECTION TO PURCHASE]
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right, represented by this Warrant Certificate,
to purchase ______________ shares of Common Stock of PARTECH HOLDINGS
CORPORATION and requests that the certificates for such shares be issued in the
name of, and delivered to _______________________________, whose address is
________________________________________________.
Dated:
Signature_______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
_______________________________________
(Insert Social Security or Other
Identifying Number of Holder)
- 20 -
<PAGE> 1
Exhibit 4.12
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR THE SECURITIES
LAWS OF CERTAIN STATES, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE LAWS, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER THE ACT AND APPLICABLE STATE LAW IS
AVAILABLE.
U N I T W A R R A N T
----------------------
PARTECH HOLDINGS CORPORATION
(Incorporated under the Laws of the State of Delaware)
No. W-___
THIS IS TO CERTIFY that, for value received, __________________ or
assigns (the "Holder") is entitled, subject to the terms and conditions set
forth herein, to purchase, at an aggregate purchase price of One Dollar
($1.00), securities of PARTECH HOLDINGS CORPORATION, a Delaware corporation
(the "Company"), from the Company as described herein.
This Warrant shall expire upon the earlier of the exercise or
conversion in full of this Warrant or June __, 1999. This Warrant is part of
an offering of Convertible Units (the "Units"), each Unit consisting of one 6%
Secured Note, (a "Note"), and one Warrant (a "Unit Warrant). Each Unit Warrant
is pari passu with each other Unit Warrant of such series with respect to all
rights and preferences. The Units have been issued pursuant to a
<PAGE> 2
Subscription Agreement dated as of June 15, 1994 between the Company and the
holders of the Unit Warrants (the "Subscription Agreement"), which contains
representations and warranties and additional covenants of the Company with
respect to the Units. THE PROVISIONS OF THE SUBSCRIPTION AGREEMENT ARE
INCORPORATED HEREIN BY REFERENCE.
1. EXERCISABILITY. Upon an underwritten public offering by the
Company of its securities (the "Underwritten Offering"), this Warrant shall be
exercisable to purchase securities identical to those to be offered by the
Company pursuant to the Underwritten Offering (the "Underwritten Securities")
in a number equal to $__,000 divided by 100% (subject to adjustment as provided
below) (the "Exercise Factor") of the public offering price of the Underwritten
Securities (E.G., if the public offering price of the Underwritten Securities
is $10.00, the Holder would receive _,000 ($__,000 / 100% of $10) of such
securities upon exercise of this Warrant). If the registration statement with
respect to the Underwritten Offering is declared effective and the Underwritten
Securities have commenced trading on or prior to September 30, 1994 and the
closing with respect to the Underwritten Offering (the "Closing") takes place
on or prior to October 7, 1994, this Warrant shall (if not previously
exercised) be deemed exercised, without any further action on the part of the
Holder, for the Warrant Securities (defined below) at the Closing. The
securities issuable to the Holder upon exercise of this Warrant (the "Warrant
Securities") shall be included in the registration statement with respect to
the Underwritten Offering for registration under the Securities Act of 1933, as
amended (the "Act"), and the Holder shall be entitled to sell the Warrant
Securities simultaneously with the Underwritten Securities sold for the account
of
- 2 -
<PAGE> 3
the Company pursuant to the Underwritten Offering, subject only to the
Underwriter's Holdback (as defined in Section 4(a) hereof).
In the event the registration statement with respect to the
Underwritten Offering is declared effective or the Underwritten Securities
commence trading after September 30, 1994, or if the Closing does not occur on
or before October 7, 1994, the Exercise Factor shall decrease by 4% (four
percentage points) for each additional month or partial month thereafter (I.E.,
96% for October 1, 1994 through October 31, 1994, 92% for November 1, 1994
through November 30, 1994, etc.).
Notwithstanding anything to the contrary contained in this Warrant or
otherwise, the Holder shall not be required to exercise this Warrant if the
Company has not complied with all of its obligations hereunder.
2. MANNER OF EXERCISE. In case of the purchase of less than all
the securities as to which this Warrant is exercisable, the Company shall
cancel this Warrant upon the surrender hereof and shall execute and deliver a
new warrant of like tenor for the balance of the securities purchasable
hereunder. Upon the exercise of this Warrant, the issuance of certificates for
securities, properties or rights underlying this Warrant shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder including, without limitation, any tax that may be payable
in respect of the issuance thereof, and such certificates shall be issued in
the name of, or in such names as may be directed by, the Holder; provided,
however, that the Company shall not be required to pay any tax in respect of
income or capital gain of the Holder or any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder (a "Transfer Tax"), and the Company
- 3 -
<PAGE> 4
shall not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of any such Transfer Tax or shall have established to the
satisfaction of the Company that any such Transfer Tax has been paid.
If and to the extent this Warrant is exercised, in whole or in part,
the Holder shall be entitled to receive a certificate or certificates
representing the shares of Common Stock so purchased, upon presentation and
surrender to the Company of this Warrant, with the form of subscription
attached hereto duly executed, and accompanied by payment of the purchase
price.
3. ALTERNATIVE EXERCISE. If the Underwritten Offering is not
effective and the Underwritten Securities have not commenced trading by
September 30, 1994 (or if the Underwritten Offering is terminated prior
thereto) and the Notes have then been repaid in full, this Warrant shall
alternatively, at the option of the Holder, be exercisable at an exercise price
of $1.00 per warrant and shall entitle the Holder to receive a number of shares
of the Company's common stock, par value $.05 per share (the "Common Stock"),
equal to (i) the original principal amount of the corresponding Note held by
the Holder divided by (ii) 100% (subject to reduction as described below) (the
"Alternative Exercise Factor") of the closing bid price of the Common Stock on
the day of the first exercise under this Section 3 (the "Alternative Conversion
Shares") (e.g., if such closing bid price of the Common Stock was $5, the
Holder would receive _,000 ($10,000 / 100% of $5) upon exercise of this
Warrant). The Holder may, at its option, any time thereafter demand
registration, in whole or in part, of such Alternative Conversion Shares in
accordance with the provisions of Section 4 hereof.
- 4 -
<PAGE> 5
4. REGISTRATION. (a) The Company shall cause the Warrant
Securities issuable upon exercise of this Warrant to be registered under the
Act pursuant to the registration statement (the "Registration Statement") to be
filed with respect to the Underwritten Offering. The Holder shall be entitled
to sell the Warrant Securities simultaneously with the Underwritten Securities
sold for the account of the Company pursuant to the Underwritten Offering,
subject only to a restriction on selling for a period of 180 days following the
effective date of the registration statement with respect to the Underwritten
Offering (the "Underwriter's Holdback"), which restriction may be waived in the
sole discretion of Berkeley Securities Corporation (the "Underwriter"). The
Company shall use its best efforts to cause the registration statement with
respect to the Underwritten Offering to be declared effective by the Securities
and Exchange Commission (the "Commission") on or before September 30, 1994.
The Company shall cause the registration statement to be declared effective by
the Commission with respect to the Underwritten Offering simultaneously with
respect to the offering of the Warrant Securities, unless holders of a majority
of the Units (which majority must include Generation Capital Associates (a
"Majority-in-Interest") have given the Company prior written consent to the
contrary, which consent may be given or withheld in their sole discretion. The
Company shall take all other action necessary under any federal or state law or
regulation to permit the Securities to be sold or otherwise disposed of, and
will maintain such compliance from the date of effectiveness of the
Registration Statement until nine months from such date in order to effect such
proposed sale or other disposition.
(b) In the event the Registration Statement with respect
to the Underwritten Offering is not effective or the Underwritten Securities
have not commenced
- 5 -
<PAGE> 6
trading for any reason whatsoever by September 30, 1994 (or if the Underwritten
Offering is terminated prior thereto), a Majority-in-Interest shall have the
right, exercisable upon written request to the Company, to have the Company
file with the Commission a registration statement and such other documents,
including a prospectus, as may be necessary, in the opinion of counsel to the
Majority-in-Interest, to comply with the provisions of the Act, so as to permit
a public offering of the Alternative Conversion Shares (the "Demand
Registration").
(c) In connection with the registration of securities
pursuant to Section 4(a) or (b) hereof, the Company and the Holder covenant and
agree as follows:
(i) The Company shall use its best efforts to cause the
Registration Statement to be declared effective at the earliest
possible time, and shall furnish the Holder such number of prospectuses
as the Holder shall reasonably request. The Company shall cause the
Registration Statement to remain effective, and shall file all
post-effective amendments necessary, to cause the Registration
Statement to remain effective until nine months following the effective
date of such registration, except in the case of any warrants issuable
hereunder, in which case the Company shall cause the Registration
Statement to remain effective until nine months following the
expiration date of such warrants.
(ii) The Company shall pay all costs, fees and expenses
incurred by the Company and the Holder in connection with the
Registration Statement and the offering thereunder including, without
limitation, the Company's legal and accounting fees, fees and expenses
of the Holder's counsel, printing expenses
- 6 -
<PAGE> 7
and blue sky fees and expenses (but excluding discounts or selling
commissions of any underwriter or broker-dealer acting on behalf of the
Holder).
(iii) The Company shall take all necessary action which may
be reasonably required in qualifying or registering the securities
included in the Registration Statement for offering and sale under the
securities or blue sky laws of all states reasonably requested by the
Holder, provided that the Company shall not be obligated to execute or
file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such
jurisdiction.
(iv) The Company shall indemnify the Holder and each
person, if any, who controls the Holder within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss,
claim, damage, expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from the Registration Statement, in
accordance with the terms and conditions set forth in Exhibit H of the
Subscription Agreement.
(v) The Holder shall indemnify the Company, its officers
and directors and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against all loss, claim, damage, expense or liability (including
all expenses reasonably incurred in investigating, preparing or
defending against any claim
- 7 -
<PAGE> 8
whatsoever) to which they may become subject under the Act, the
Exchange Act or otherwise, arising from information furnished by or on
behalf of the Holder for specific inclusion in the Registration
Statement, in accordance with the terms and conditions set forth in
Exhibit H of the Subscription Agreement.
(vi) The Company shall, as soon as practicable after the
effective date of the Registration Statement, and in any event within
fifteen (15) months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act) an
earnings statement (which need not be audited) complying with Section
11(a) of the Act and covering a period of at least twelve (12)
consecutive months beginning after the effective date of the
Registration Statement.
(vii) The Company shall (A) deliver promptly to the Holder,
upon request, copies of all correspondence between the Commission and
the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the
Registration Statement and (B) permit the Holder to perform such
investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the Registration Statement, as
it deems reasonably necessary to comply with applicable securities laws
or rules of the National Association of Securities Dealers, Inc. Such
investigation shall include, but not be limited to, access to financial
and accounting information and opportunities to discuss the business of
the Company with the Company's officers and independent auditors, all
to
- 8 -
<PAGE> 9
such reasonable extent, at such reasonable times and as often as the
Holder shall reasonably request.
(viii) The Company shall furnish to the Holder a signed
counterpart, addressed to the Holder, of (A) the opinion of counsel to
the Company, dated the closing date with respect to the Registration
Statement, and (B) the "cold comfort" letter, dated the closing date
with respect to the Registration Statement, in each case, delivered to
the underwriter(s) in connection with the Underwritten Offering.
(ix) The Company shall cause all securities of the Holder
registered pursuant to a Registration Statement to be listed on any
national securities exchange or quoted on any automated quotation
system on which similar securities of the Company are then listed or
quoted.
5. NO REQUIREMENT TO EXERCISE. Nothing contained in this Warrant
shall be construed as requiring the Holder to exercise this Warrant prior to or
in connection with the effectiveness of a registration statement.
6. NO STOCKHOLDER RIGHTS. This Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a stockholder of the
Company, or to any other rights whatsoever except the rights herein expressed,
and, no dividends shall be payable or accrue in respect of this Warrant or the
interest represented hereby or the securities purchasable hereunder until or
unless, and except to the extent that, this Warrant shall be exercised.
7. EXCHANGE. This Warrant is exchangeable upon the surrender
hereof by the Holder to the Company for new warrants of like tenor representing
in the aggregate the
- 9 -
<PAGE> 10
right to purchase the number of securities purchasable hereunder, each of
such new warrants to represent the right to purchase such number of
securities as shall be designated by the Holder at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation hereof, if mutilated, the Company
will make and deliver a new warrant of like tenor and amount, in lieu hereof.
8. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of securities upon the
exercise of this Warrant, nor shall it be required to issue scrip or pay cash
in lieu of fractional interests. All fractional interests shall be eliminated
by rounding any fraction up to the nearest whole number of securities,
properties or rights receivable upon exercise of this Warrant.
9. RESERVATION AND LISTING OF SECURITIES. The Company shall at
all times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of this Warrant,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise hereof. The Company covenants and
agrees that, upon exercise of this Warrant and payment of the purchase price
therefor, all shares of Common Stock and other securities issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as this Warrant
shall be outstanding, the Company shall use its best efforts to cause all
shares of Common Stock issuable upon the
- 10 -
<PAGE> 11
exercise of this Warrant to be listed (subject to official notice of issuance)
on all securities exchanges and quoted by all automated quotation reporting
systems on or by which the Common Stock may then be listed and/or quoted.
10. NOTICES TO HOLDER. If at any time prior to the expiration of
this Warrant or its exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a
dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or
retained earnings, as indicated by the accounting treatment of such
dividend or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock
of the Company, or any option, right or warrant to subscribe therefor;
or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of
all or substantially all of its property, assets and business as an
entirety shall be proposed; then, in any one or more of said events,
the Company shall give written notice of such event to the Holder at
least fifteen (15) days prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on
such
- 11 -
<PAGE> 12
proposed dissolution, liquidation, winding up or sale. Such notice
shall specify such record date or the date of closing the transfer
books, as the case may be.
11. INFORMATIONAL REQUIREMENTS. The Company will transmit to the
Holder such information, documents and reports as are generally distributed to
stockholders of the Company concurrently with the distribution thereof to such
stockholders.
12. NOTICE. Notices to be given to the Company or the Holder
shall be deemed to have been sufficiently given if delivered personally (with
delivery confirmed by receipt signed by recipient) or sent by overnight courier
or messenger or sent by registered or certified mail (air mail if overseas),
return receipt requested, or by telex, facsimile transmission, telegram or
similar means of communication with delivery confirmed. Notices shall be
deemed to have been received on the date of personal delivery, telex, facsimile
transmission, telegram or similar means of communication, or if sent by
overnight courier or messenger, shall be deemed to have been received on the
next delivery day after deposit with the courier or messenger, or if sent by
certified or registered mail, return receipt requested, shall be deemed to be
delivered on the third business day after the date of mailing. The address of
the Company is 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221, Facsimile
Number (614) 538-0670, and the Company shall give written notice of any change
of address to the Holder. The address of the Holder shall be the address of
the Holder as set forth in the books and records of the Company.
13. CONSENT TO JURISDICTION AND SERVICE. The Company consents to
the jurisdiction of any court of the State of New York, and of any federal
court located in New York, in any action or proceeding arising out of or in
connection with this Warrant. The
- 12 -
<PAGE> 13
Company waives personal service of any summons, complaint or other process in
connection with any such action or proceeding and agrees that service thereof
may be made, by certified mail directed to the Company at the location provided
for in Section 12 hereof, or, in the alternative, in any other form or manner
permitted by law.
14. SUCCESSORS. All the covenants and provisions of this Warrant
shall be binding upon and inure to the benefit of the Company, the Holder and
their respective heirs, legal representatives, successors and assigns.
15. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED, CONSTRUED AND
INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE RULES GOVERNING CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by the signature of its President and its seal affixed and attested by its
Secretary and delivered it in New York, New York.
No. W-___
Dated: June __, 1994
PARTECH HOLDINGS CORPORATION
By:_____________________________________
Name: John E. Rayl
Title: President and Chief
Executive Officer
[Corporate Seal]
ATTEST:
____________________________
Secretary
- 13 -
<PAGE> 14
ASSIGNMENT
To Be Executed by the Holder
If He/She Desires To Assign The
Warrant In Its Entirety
FOR VALUE RECEIVED, ____________________ hereby sells, assigns and transfers
unto ___________________________________________________________ the right to
(Please insert Social Security or other identifying number of Assignee)
purchase _____________ securities of the within named Company evidenced by the
within Warrant, together will all right, title and interest therein, and does
hereby irrevocably constitute and appoint attorney ___________________________
to transfer the said Warrant on the books of said Company, with full power of
substitution in the premises.
Dated: __________________, 199_
________________________________________
(Signature)
NOTE: The signature to this Assignment must correspond with the name as
written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatever.
SIGNATURE GUARANTEED:
________________________________________
- 14 -
<PAGE> 15
[FORM OF ELECTION TO PURCHASE]
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by this Warrant Certificate
for, and to purchase securities of PARTECH HOLDINGS CORPORATION and herewith
makes payment of $1.00 therefor, and requests that the certificates for such
securities be issued in the name of, and delivered to _____________________,
whose address is __________________________________________.
Dated:
Signature_______________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate)
________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
- 15 -
<PAGE> 1
Exhibit 5.4
CLOUD KOENIG & OWEN
ATTORNEYS AT LAW
5354 NORTH HIGH STREET, SUITE 3-D
COLUMBUS, OHIO 43214
(614)221-3621 COPY
FAX (614) 221-2698
CLIFFORD R. CLOUD WRITER'S VOICE MAIL
CHARLES A. KOENIG
JAMES D. OWEN
--------------
CRAIG M. JAQUITH June 15, 1994
To the Investors
Listed on Exhibit A to this Letter:
We have acted as counsel to Partech Holdings Corporation (the "Company") (all
references herein to "the Company" shall include all subsidiaries, direct and
indirect, of the Company). This opinion is being rendered to you at the request
of the Company in connection with its issuance of Units pursuant to your
execution of a Subscription Ageement dated as of June 15, 1994. Except as
otherwise provided herein, capitalized terms shall have the meanings assigned
to such terms in the Subscription Agreement and exhibits thereto.
For purposes of rendering the opinions set forth below, we have examined the
Subscription Ageement, the Unit Note, the Unit Warrant, the Rayl Pledge
Agreement, the PCG Stock Pledge Agreement and the exhibits attached thereto,
the Company's Confidential Offering Memorandum dated June 15, 1994, the
Company's Articles of Incorporation, By-Laws, minute books and resolutions,
and certain documents and agreements which we believed to be necessary and
appropriate for the purposes of rendering these opinions. Further, we have
relied upon the representations made to us by officers of the Company
regarding, inter alia, the conduct of the Company's business, the status of
required filings with various federal and state regulatory authorities and
other information we believed to be necessary and appropriate for the purposes
of rendering these opinions. In connection with our examination, we have
assumed that all signatures on executed documents are genuine and that the
parties so executing have the requisite power, authority and legal capacity
necessary therefor, and further, that all documents submitted to us are
authentic. We have further assumed the accuracy and veracity of all
representations made to us by officers of the Company, but we have conducted
no independent investigation to confirm same.
Whenever we use the words "to our knowledge" or words of like import referring
to the knowledge of attorneys of this firm, such language shall mean that during
the course of our representation of the Company no information has come to our
attention that would cause us to believe that any facts material to our
opinions expressed herein are incorrect or that any reliance thereon is
unwarranted. We have not, however, examined any public records or undertaken any
special or independent investigation in connection with any such opinion to
determine the existence or absence of such facts.
This opinion is rendered with respect to the law and facts as they exist or
otherwise pertain on the date hereof, and no opinion or representation is made
with respect to changes or events occurring thereafter.
Based upon, and subject to the foregoing, we are of the opinion that:
(i) the Company has been duly organized and is validly existing as a
corporation in good standing under the laws of its incorporation and is duly
qualified to do business and is in good standing in all jurisdictions in which
the failure to so qualify would have a material adverse effect on the business
of the Company; the Company has the full power and all necessary authorizations
<PAGE> 2
June 15, 1994
Page 2
to enter into the Subscription Agreement, the Rayl Pledge Agreement and the PCG
Stock Pledge Agreement and to execute and issue the Unit Note and Unit Warrant;
and, to our knowledge, the Company has full power and authority and all
necessary authorizations, approvals, licenses, certificates and permits of and
from all governmental regulatory officials and bodies (including, without
limitation, the Federal Communications Commission ("FCC")) to own or lease its
properties and conduct its business, present and proposed, as described in the
Subscription Agreement and the Disclosure Documents and, to our knowledge, is
in compliance with all such authorizations, approvals, orders, licenses,
certificates and permits and with all federal, state and local laws, rules and
regulations applicable to the business in which it is engaged, except where the
failure so to conduct its business would not have a material adverse impact on
its business. No consent, authorization or order of, and no filing with, any
court, government agency or other body is required for the issuance of the Unit
Notes or the Unit Warrants by the Company, or for the issuance by the Company
of the underlying Note Securities or Warrant Securities upon conversion of the
Units or such Unit Notes, exercise of such Unit Warrants or otherwise in
accordance with the terms of the Subscription Agreement, the Unit Notes, the
Unit Warrants, the Rayl Pledge Agreement or the PCG Stock Pledge Agreement
(except to the extent FCC consent to transfer the Pledged Shares is required);
(ii) the Subscription Agreement, the Unit Notes, the Unit Warrants, the
Rayl Pledge Agreement and the PCG Stock Pledge Agreement have each been duly and
validly authorized, executed and delivered by the Company and are valid and
legally binding ageements of the Company, enforceable in accordance with their
terms, except to the extent that the enforceability thereof may be limited by
(a) bankruptcy, insolvency, reorganization, moratorium or similar laws from
time to time in effect and affecting the rights of creditors generally, (b)
limitations upon the power of a court to grant specific performance or any
other equitable remedy, and (c) a finding by a court of competent jurisdiction
that the indemnification provisions therein are in violation of public policy;
(iii) the Unit Notes, the Unit Warrants, the Note Securities and the
Warrant Securities have been duly authorized and are, or in the case of the
Note Securities and Warrant Securities, will be, upon the exercise of and
payment therefor, validly issued, fully paid and non-assessable and the
holders thereof are not and will not be subject to personal liability solely
by reason of being such holders; the Unit Notes, the Unit Warrants, the Note
Securities and the Warrant Securities are not and will not be subject to the
preemptive rights of any stockholder of the Company and all corporate action
required to be taken for the authorization, issue and sale of such securities
have been duly and validly taken; the Unit Notes and the Unit Warrants
constitute valid and binding obligations of the Company to issue and sell, upon
conversion or exercise thereof, the securities of the Company called for
thereby; the certificates representing such securities are in due and proper
form;
(iv) the authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, par value $.05 per share, of which 5,636,906 shares are
issued and 5,629,706 shares are outstanding as of January 31, 1994, and
1,000,000 shares of Preferred Stock, par value $1.00 per share, of which none
are issued and outstanding; all issued and outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with respect
thereto, and are not subject to personal liability solely by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company. To the best of
our knowledge, except as described in Schedule D(ii), and except for the
transactions contemplated by the Subscription Agreement, the Unit Notes, the
Unit Warrants, the Ray Pledge Agreement, the PCG Stock Pledge Agreement and the
Disclosure Documents, there are (A) no outstanding
<PAGE> 3
June 15, 1994
Page 3
warrants, options or rights to subscribe for or purchase any capital stock or
other securities from the Company, (B) no voting trusts or voting ageements
among, or irrevocable proxies executed by, stockholders of the Company, (C) no
existing rights of stockholders to require the Company to register any
securities of the Company or to participate with the Company in any
registration by the Company of its securities, and (D) no agreements among
stockholders providing for the purchase or sale of the Company's capital
stock;
(v) to the best of our knowledge, there is no litigation or governmental
proceeding pending or threatened against, or involving the properties or
business of, the Company which might materially and adversely affect the value
or the operation of the properties or the business of the Company except as
set forth in Schedule D(iv) and except as referred to in the Subscription
Agreement and the Disclosure Documents;
(vi) the Unit Notes, the Unit Warrants, the Note Securities and the
Warrant Securities conform in all material respects to all statements in
relation thereto contained in the Disclosure Documents;
(vii) neither the execution and delivery of the Subscription Agreement,
the Unit Notes, the Unit Warrants, the Rayl Pledge Agreement or the PCG Stock
Pledge Agreement, nor the issue and sale of the Unit Notes, the Unit Warrants,
the Note Securities or the Warrant Securities, nor the consummation of any of
the transactions contemplated therein, nor the compliance by the Company with
the terms and provisions thereof, has conflicted with or will conflict with, or
has resulted in or will result in a breach of, any of the terms and provisions
of, or has constituted or will constitute a default under, or has resulted in
or will result in the creation or imposition of any lien, charge or encumbrance
upon any material property or assets of the Company pursuant to the terms of any
indenture, mortgage, deed of trust, note, loan or credit agreement known to
such counsel or any other agreement or instrument evidencing an obligation for
borrowed money known to such counsel, or any other agreement or instrument
known to such counsel to which the Company is a party or by which the Company
may be bound or to which any of the property or assets of the Company is
subject; nor will such action result in any violation of the provisions of the
Certificate or Incorporation or the By-Laws of the Company or any statute or
any order, rule or regulation known to us to be applicable to the Company of
any court or of any federal, state or, to our knowledge, other regulatory
authority or other governmental body having jurisdiction over the Company
(including, without limitation, the FCC);
(viii) we have participated in the preparation of the Subscription
Agreement, the Unit Notes, the Unit Warrants, the Rayl Pledge Agreement, the
PCG Stock Pledge Agreement and the Disclosure Documents and nothing has come to
our attention to lead us to believe that any of the Subscription Agreement, the
Unit Notes, the Unit Warrants, the Rayl Pledge Agreement, the PCG Stock Pledge
Agreement and the Disclosure Documents or any amendment or supplement thereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
In rendering the foregoing opinion, we have relied upon the representations
made by the Investors as set forth in Exhibit C;
(ix) based upon our knowledge, without independent investigation, other
than matters of public record, the Company owns or possesses, free and clear of
all liens or encumbrances and rights thereto or therein by third parties, the
requisite licenses or other rights to use all trademarks, service marks,
copyrights, service names, trade names, patents, patent applications and
licenses necessary to conduct its business (including, without limitation, any
FCC licenses or such licenses or rights described in the Subscription Agreement
and the Disclosure Documents as being owned
<PAGE> 4
June 15, 1994
Page 4
or possessed by the Company), and there is no claim or action by any person
pertaining to, or proceeding, pending, or, to our knowledge, threatened, which
challenges the exclusive rights of the Company with respect to any trademarks,
service marks, copyrights, service names, trade names, patents, patent
applications and licenses used in the conduct of the Company's businesses
(including, without limitation, any FCC licenses or such licenses or rights
described in the Subscription Agreement and the Disclosure Documents as being
owned or possessed by the Company); the Company's current products, services
and processes do not and will not infringe on the patents currently held by
third parties to the extent known to us;
(x) except as and to the extent set forth in the Subscription Agreement
and the Disclosure Documents, to the best of our knowledge, the Company is not
under any obligation to pay to any third party royalties or fees of any kind
whatsoever with respect to any technology or intellectual properties developed,
employed or used;
(xi) to the best of our knowledge, neither the Company, nor any of its
respective officers, employees or agents, nor any other person acting on
behalf of the Company has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or other
person who is or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed transaction)
which (A) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (B) if not given in the
past, might have had a materially adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Disclosure Documents, or (C) if not continued in the future,
might adversely affect the assets, business, operations or prospects of the
Company;
(xii) to the best of our knowledge, the minute books of the Company
contain a complete summary of all meetings and actions of the directors and
stockholders of the Company since the time of its incorporation (and of any
predecessor to the Company) and reflect all transactions referred to in such
minutes accurately in all respects;
(xiii) 217,704 shares of the Company's common stock owned by John E.
Rayl, evidenced by certificate number CS00600 and dated November 16, 1992 (the
"217,704 Shares"), being a part of the shares pledged by Mr. Rayl under the
Rayl Pledge Agreement, were acquired by Mr. Rayl on or about October 10, 1992,
solely in exchange for a note (the "Note") of the Company held by Mr. Rayl and
surrendered by Mr. Rayl for the 217,704 Shares. The Note had been acquired by
Mr. Rayl on or about July 1, 1991, and the full consideration paid by Mr. Rayl
for said Note was paid by him on or about the date of such acquisition.
Accordingly, for purposes of paragraph (d)(3)(ii) of Rule 144 promulgated under
the Securities Act of 1933, Mr. Rayl is deemed to have acquired the 217,704
Shares at the same time as he acquired the Note, or, in this case, on or about
July 1, 1991. In rendering the foregoing opinion, we have relied upon the
representations made by Mr. Rayl with respect to his acquisition of the Note
and the 217,704 Shares and have examined the Company's minute book and
documents underlying Mr. Rayl's acquisition of the Note, but have not made
any independent verification of said transaction;
(xiv) 100,000 shares of the Company's common stock owned by John E.
Rayl, evidenced by certificates number CS00412 through CS00416, inclusive, and
each dated June 12, 1992 (the "100,000 Shares"), being a part of the shares
pledged by Mr. Rayl under the Rayl Pledge Agreement, were acquired by Mr. Rayl
on or about May 29, 1992, in a transaction involving his
<PAGE> 5
June 15, 1994
Page 5
exercise of registered warrants of the Company. Accordingly, for purposes of
Rule 144, Mr. Rayl has owned the 100,000 Shares for more than two but less than
three years; and
(xv) 382,601 shares of the Company's common stock owned by John E. Rayl,
evidenced by certificates number CS00397 through CS00411, inclusive, and each
dated June 12, 1992, and by certificates number CS00603 through CS00607,
inclusive, and each dated November 16, 1992 (the "382,601 Shares"), being a
part of the shares pledged by Mr. Rayl under the Rayl Pledge Agreement, were
acquired by Mr. Rayl in a series of transactions each of which were completed
more than three years prior to the date of this letter. Accordingly, for
purposes of Rule 144, Mr. Rayl has owned the 382,601 Shares for more than three
years. In rendering the foregoing opinion, we have relied solely upon the
representations made by Mr. Rayl with respect to his acquisition of the 382,601
Shares, and have not made any independent verification of said transactions;
however, nothing has come to our attention which would lead us to believe that
any portion or all of the 382,601 Shares may have been owned by Mr. Rayl for
less than three years.
In closing, we call your attention to the fact that the members of this firm
are licensed to practice law in the State of Ohio. Accordingly, we express no
opinion with respect to the laws of any jurisdiction other than the laws of
the State of Ohio and the United States of America.
/s/ Cloud Koenig & Owen
Cloud Koenig & Owen
<PAGE> 1
EXHIBIT 10.61
AMENDMENT TO
EMPLOYMENT AND GUARANTEE AGREEMENT
THIS AMENDMENT is made and entered into this ____ day of May, 1994 by and
between PARTECH HOLDINGS CORPORATION, a Delaware corporation ("Holdings"),
PARTECH COMMUNICATIONS GROUP, INC., a Nevada corporation ("Communications") and
LEEWARD CAPITAL CORPORATION, an Ohio corporation ("Leeward"), with their
principal place of business at 3366 Riverside Drive, Columbus, Ohio 43221
(hereinafter collectively called "Employer"), and JOHN E. RAYL, with his
principal address at 2706 Tremont Road, Upper Arlington, Ohio 43221
(hereinafter "Employee").
WHEREAS, this Amendment is made to that certain Employment Agreement dated
January 1, 1984 between Leeward and Employee, that certain Employment and
Guarantee Agreement dated March 5, 1984 between Solid State Technology, Inc.,
Leeward, Parquip Energy Corporation and Employee, that certain Amendment to
Employment and Guarantee Agreement dated November 1, 1985 between Holdings,
Leeward and Employee, and that certain Amendment to Employment and Guarantee
Agreement dated July 15, 1993 between Holdings, Communications, Leeward and
Employee (all such Agreements and Amendments hereinafter called the "Employment
Agreement"); and
WHEREAS, Employer and Employee desire by this writing to further amend the
Employment Agreement for the provisions hereinafter described.
NOW, THEREFORE, WITNESSETH that in consideration of the mutual promises and
covenants hereinafter stipulated, the parties hereto agree as follows:
1. COMPENSATION. Notwithstanding anything to the contrary contained in
the Employment Agreement, as amended, Employee's annual base salary shall be
One Hundred Ten Thousand Dollars ($110,000) per year for the fiscal year
commencing May 1, 1994. During each subsequent year of employment hereunder,
Employee's base salary shall be increased by an amount equal to five percent
(5%) of Employer's pre-tax net earnings in excess of One Million Dollars
($1,000,000) per year as determined in accordance with generally accepted
accounting principles for the previous fiscal year, but computed without regard
to Employee's compensation, any net operating loss deductions and the financing
costs associated with any bridge and underwriting financings incurred by
Employer; provided, however, that in no event shall Employee's salary, as
adjusted, be decreased from the amount payable during the previous year of
employment.
2. TERM; RENEWAL. Notwithstanding anything to the contrary contained in
the Employment Agreement, as amended, the term of Employee's employment
hereunder shall continue until April 30, 1999, unless earlier terminated for
cause as provided for in Article Five of the Employment Agreement dated January
1, 1984. The Employment Agreement, as amended, may be renewed for one (1)
additional five (5) year term, commencing on May 1, 1999 and terminating on
April 30, 2004, at the option of Employee, subject to the consent of the Boards
of Directors of Employer. Such option to extend shall be made by Employee
delivering written notice to Employer's Boards of Directors within the six (6)
month period ending on April 30, 1999, and shall become effective unless said
Boards shall deliver Employee, within thirty (30) days after receipt of
Employee's option to extend, the resolutions of the Boards that they decline
to approve such extension. In the event Employee elects not to exercise his
option to renew, then the term of Employee's employment and the Employment
Agreement, as amended, shall automatically renew for additional one (1) year
terms without further action by the parties, unless either party hereto
provides written notice to the other, within ninety (90) days prior to the
expiration of the then current term, of its intention to terminate the
employment effective as of the end the then current term.
3. AUTOMOBILE. Notwithstanding anything to the contrary contained in the
Employment Agreement, as amended, Employee hereby agrees to waive his right to
receive an automobile and expenses associated therewith, as set forth in
Section 3.2 of the Employment Agreement dated January 1, 1984, until further
action by Employer's Boards of Directors. Notwithstanding the foregoing,
Employee shall nevertheless be entitled to reimbursement for use of his
personal
<PAGE> 2
automobile for business purposes at the then prevailing standard
mileage rate allowance established by the Internal Revenue Service, from time
to time.
4. GUARANTEE. Employer hereby, jointly and severally, renew and reaffirm
the guarantee of the Employment Agreement, as amended, as set forth in Section
4.1 (sic) of the Amendment to Employment and Guarantee Agreement dated July 15,
1993.
5. CHANGE OF CONTROL. For purposes hereof, the underwriting presently
contemplated by Holdings for completion in the summer of 1994 shall not be
considered a "Change of Control" as that term is defined in Article Six of the
Employment Agreement dated January 1, 1984.
6. TERMINATION OF THIS AMENDMENT. In the event the underwriting
presently contemplated by Holdings for completion in the summer of 1994 is not
undertaken by Berkeley Securities Corp. on or before September 30, 1994, then
this Amendment shall be void and held for naught, and all modifications
described herein be of no force and effect.
7. NO FURTHER MODIFICATION. Unless otherwise expressly modified herein,
all other terms and conditions of the Employment Agreement, as amended, shall
continue in full force and effect as presently written, and any inconsistencies
between such prior terms and those set forth herein shall be resolved in such a
way as to give full meaning to the provisions set forth in this instant
Amendment without modifying any more than minimally necessary such prior terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Employment
and Guarantee Agreement to be executed as of the day and year first above
written.
EMPLOYERS: EMPLOYEE:
PARTECH HOLDINGS CORPORATION
By: _______________________________ __________________________________
Title John E. Rayl
PARTECH COMMUNICATIONS GROUP, INC.
By: _______________________________
Title
LEEWARD CAPITAL CORPORATION
By: _______________________________
Title
<PAGE> 1
EXHIBIT 10.62
AGREEMENT
This Agreement (the "Agreement") is made as of this 10TH day of May,
1994 by and between PARTECH HOLDINGS CORPORATION, a Delaware corporation having
its principal business address at 3366 Riverside Drive, Suite 200, Columbus,
Ohio 43221 (referred to hereinafter as "Partech") and DWYER & ASSOCIATES, INC.,
a New York corporation having its principal business address at 405 Park
Avenue, New York, NY 10022 (referred to hereinafter as "Associates").
W I T N E S S E T H
WHEREAS Partech is a widely held company subject to the reporting rules of
the Securities Exchange Act of 1934 (the "Act") with its common shares listed
and trading on the Boston Stock Exchange (the "Exchange") and the National
Association of Securities Dealers Automated Quotation System ("NASDAQ"), and
WHEREAS Associates is in the business of providing investment banking, and
financial and advisory services to companies such as Partech; and
WHEREAS Associates has valuable knowledge, understanding, and contacts
which will benefit Partech and Partech's shareholders; and
WHEREAS Partech desires to engage Associates to perform such services on
terms and conditions which are more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto hereby agree as follows:
1. SERVICES.
a. For so long as James B. Dwyer III ("Dwyer") is employed by Associates,
Dwyer will be assigned by Associates to be the representative of Associates for
all services to be performed hereunder. Associates agrees to perform duties
hereunder in a prompt and professional manner and to undertake and perform all
projects, assignments and tasks reasonably requested by Partech relating to
such requested services. Specifically, during the term of this Agreement:
i. Associates shall, upon the execution of this Agreement,
analyze Partech's business and industry with emphasis on Partech's broadcasting
business.
ii. Associates shall bring Partech's radio broadcast station
financing proposal, (the "Project"), to the attention of qualified investors
and/or lenders (the "Authorized Prospect") and Associates shall arrange
meetings between Partech and such Authorized Prospects as may be suitable for
participation in financing of the Project.
b. The parties acknowledge that Associates shall be required to devote
substantial (but not exclusive) time and effort to the performance of its
duties hereunder as Partech shall reasonably require for fulfillment of the
purposes of this Agreement. The parties further understand that Associates is
engaged hereunder by Partech only for the purposes and to the extent required
in this Agreement, and its relationship to Partech shall, during the period of
this Agreement, be that of an independent contractor. Associates shall be
responsible for all contract obligations, such as wages, salaries, brokerage
fees, finder fees, commissions, or any similar compensation, and all of the
withholding taxes and fringe benefits it may have with or on behalf of its
employees or agents, and shall hold Partech harmless from any loss or expense
therefore. Associates shall have no authority to act for or bind Partech
except as expressly set forth herein.
<PAGE> 2
2. TERM. Associates hereby agrees to provide the services described above to
Partech for the term commencing on the date first written above ("Effective
Date") and terminating on the later of September 30, 1994, or the date of
closing or abandonment of any pending transaction which originated during the
term of this Agreement. The term shall continue from month to month after
September 30, 1994, unless terminated by either Partech or Associates in
accordance with Paragraph 10 hereof.
3. ASSOCIATES' AND DWYER'S REPRESENTATIONS AND WARRANTIES. Associates
represents and warrants to Partech that, in connection with services to be
provided to Partech under this Agreement, Associates will not violate any law
or any rule or regulation of any governmental body or self-regulatory
organization, including but not limited to the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc., the Boston
Stock Exchange and any securities exchange registered with the Securities &
Exchange Commission. Associates represents that he has adequate knowledge of
such laws or rules applicable to public companies such as Partech. As a
further inducement for Partech to enter into this Agreement, Dwyer, in his
individual capacity, hereby makes the foregoing representations and warranties
on behalf of Associates and on his own behalf.
4. PAYMENT FOR SERVICES AND EXPENSES.
a. In consideration for the services to be performed hereunder by
Associates, Partech hereby agrees to pay Associates the Transaction
Compensation described in Section 8 hereof. Partech hereby agrees to pay to
Associates a nonrefundable retainer in the amount of Twenty-Five Thousand
Dollars ($25,000), payable as follows: the sum of Five Thousand Dollars
($5,000) shall be paid on or about May 20, and Five Thousand Dollars ($5,000)
per month shall be paid on the first of each month beginning June 1, 1994 and
monthly thereafter through September, 1994.
b. Partech agrees to reimburse Associates for its reasonable
out-of-pocket expenses, which expenses shall not exceed in the aggregate Five
Hundred Dollars ($500.00) per month without the prior written approval of
Partech, provided Cnsultant provides Partech with documentation for all such
expenses.
c. Associates shall submit invoices to Partech on a monthly basis for the
payment of Services and for reimbursement of Expenses. Invoices submitted
shall provide details of the Services performed and/or the expenses incurred
and be accompanied with expense documentation.
d. Partech is under no obligation to enter into an agreement or
arrangement with any Authorized Prospect. In the event an agreement or
arrangement is entered into with an Authorized Prospect, but is not consummated
for any reason whatsoever including, without limitation, a willful default on
the part of either Associates, Partech or the Authorized Prospect, Partech
shall have no liability whatsoever to Associates for any fees, commissions, or
otherwise.
5. COPYRIGHTS. All printed materials produced by Associates which are
intended for distribution to the public shall be approved by Partech prior to
their reproduction and distribution, and, where applicable, necessary copyright
protection marks shall be affixed thereto. All printed materials produced by
Associates for the benefit of Partech, whether copyright protected or not,
shall be the property of Partech.
6. CONFIDENTIALITY
a. Associates shall retain in confidence, and shall require its
employees, consultants, professional representatives, agents and any persons or
entities working with or for Associates in connection with an Authorized
Prospect to retain in confidence, all Confidential Information of
Page 2
<PAGE> 3
Partech, and shall not use or disclose to others, or permit the use or
disclosure of, any such Confidential Information.
b. For purposes of this Agreement, "Confidential Information" means any
information disclosed by Partech to Associates or to Dwyer's representatives
regarding Partech's business, including business plans and strategies,
financial records and data, forecasts, contracts, customers, suppliers,
employees, facilities, ownership and proprietary products. Confidential
Information shall not include information that: (i) is or becomes generally
available to the public; or (ii) is required to be disclosed by law.
c. Upon the termination of this Agreement, Associates shall forthwith
deliver to Partech (without retaining copies thereof) any and all documents or
other written information which constitutes Confidential Information.
7. INDEMNITY.
a. In connection with this Agreement, Partech agrees to indemnify and
hold harmless Associates, and its directors, officers, employees and each
person, if any, who controls Associates within the meaning of Section 15 of the
Securities Act of 1933 or Section 20 of the Securities Exchange Act of 1934
(any and all of whom are referred to as the "Indemnified Party") from and
against any and all losses, claims, damages and liabilities, joint or several
(including all legal or other expenses reasonably incurred by any Indemnified
Party in connection with the preparation for or defense of any claim, action,
or proceeding, whether or not resulting in any liability), to which such
Indemnified Party may become subject under any applicable federal or state law
or otherwise caused by or arising out of, or allegedly caused by or arising out
of this Agreement or any transaction covered by this Agreement or the
performance of the services provided for herein or the breach of any
representation, warranty or covenant contained in this Agreement; provided,
however, that Partech shall not be liable hereunder to the extent that any
loss, claim, damage or liability is found in a final non-appealable judgment by
a court to have resulted from gross negligence or bad faith on the part of the
Indemnified Party in performing the services described herein.
b. In case any action, suit or proceeding shall be brought or threatened,
in writing, against any Indemnified Party, it shall notify Partech within
twenty (20) days after the Indemnified Party receives notice of such action,
suit or proceeding and within thirty (30) days after receipt of notice of such
threat Partech shall have the right to appoint Partech's counsel to defend such
action, suit or proceeding. The Indemnified Party shall promptly supply
Partech's counsel with copies of all documents, pleadings and notices which are
filed, served or submitted in any of the aforementione. No Indemnified Party
shall enter into any settlement without the prior written consent of Partech
and such Indemnified Party shall cooperate with Partech in good faith in
Partech's defense of any claim for indemnification.
8. TRANSACTION COMPENSATION.
a. Associates will be paid a Transaction Fee for each debt, equity or
mezzanine placement and similar or other on or off balance sheet corporate
finance transactions, which results in the receipt by Partech of cash proceeds
from an Authorized Prospect (a "Transaction"). The fee payable to Associates
for each Transaction shall be equal to: (i) one and one-half percent (1-1/2%)
of the of cash proceeds received by Partech from a debt transaction; or (ii)
five percent (5%) of the of the cash proceeds received by Partech from a
mezzanine financing (which shall mean any financing with equity features); or
(iii) seven percent of the cash proceeds received by Partech from an equity
transaction. In the event a Transaction is a combination of two or more
financing types, the fee shall be determined separately for each portion of
such Transaction. Transaction Fees shall be payable hereunder only in the
event, and to the extent, of Partech's receipt of cash proceeds from a
Transaction, and based only upon the amount of the cash proceeds received by
Partech on each such occasion.
Page 3
<PAGE> 4
b. In addition to the Transaction Fee described in subparagraph 8.a
above, Associates shall be granted options ("Options") to purchase Partech's
Five Cent ($.05) per share par value common stock (the "Shares"), under and
pursuant to the terms of the Option Agreement which is attached hereto as
Exhibit A. The number of Shares Associates may become entitled to under any
Options granted hereunder with respect to each Transaction shall be equal to
(i) one-half of the Transaction Fee payable as provided for in paragraph 8(c)
above, DIVIDED BY (ii) the closing bid price of the Shares on the date of
closing of such Transaction (without regard to the date(s) the Transaction may
actually fund) (the "Exercise Price").
c. By way of illustration, if Associates is responsible for the placement
of Two Million Five Hundred Thousand Dollars ($2,500,000) of Mezzanine
financing, Associates would earn a Transaction Fee of One Hundred Twenty Five
Thousand Dollars ($125,000) hereunder, payable in cash pro rata as funds are
received by Partech from the financing. Additionally, assuming a closing bid
price of Partech's stock on the date of closing of the financing transaction to
be $5.00 per share, Associates would be entitled to receive Options to purchase
Twelve Thousand Five Hundred (12,500) Shares at an exercise price of $5.01 per
share being 100.25% of the closing price.
d. The cash portion of any Transaction Compensation payable by Partech to
Associates shall be paid within ten (10) days of the closing or funding, as the
case may be, of such transaction in (i) cash, (ii) securities, or (iii) a
combination of securities and cash, depending upon whether the transaction
involves payment in (i) cash, (ii) securities or (iii) a combination of
securities and cash, and pro-rata as Partech is funded if funded on an
installment basis. The Options payable by Partech to Associates shall be
distributed pursuant to the terms of the Option Agreement as soon as permitted
thereunder, and pro-rata as Partech is funded if funded on an installment
basis.
10. TERMINATION.
This Agreement may be terminated by Partech or Associates after September
30, 1994 with or without cause, effective immediately upon the terminating
party's sending of written notice, by first class U.S. Mail, by telecopier
transmission or by overnight delivery service, to the other party (a
"Termination"). Associates shall be entitled to full Transaction Compensation
in the event that at any time prior to the expiration of twelve (12) months
after a Termination, Partech consummates a financing transaction with any
Authorized Prospect. The representations and warranties of Paragraph 5 hereof
and the indemnities of Paragraph 7 hereof shall survive the termination of this
Agreement.
11. MISCELLANEOUS.
a. Unless otherwise stated, all notices required under this Agreement
shall be in writing and shall be considered given upon delivery by (i) U.S.
Certified Mail, return receipt requested of the written notice, or (ii) a
nationally established overnight courier, delivery receipt acknowledged, or
(iii) facsimile transmission, with receipt acknowledged, to the address of each
party set forth in the heading of this Agreements or to such other address as
either party may substitute by written notice to the other party.
b. This Agreement shall be binding on, and inure to the benefit of, the
parties hereto and their respective heirs, legal representatives, successors
and assigns. Neither party shall assign their obligations hereunder without
written consent of the the other party, which consent shall not be unreasonably
withheld. This Agreement constitutes a personal services agreement by
Associates and, accordingly, may not be assigned or otherwise transferred
(whether by operation of law or otherwise) to any other person or firm for the
purpose of performance without Partech's full knowledge and express written
consent.
Page 4
<PAGE> 5
c. This Agreement constitutes the entire Agreement and understanding
between the parties hereto and integrates all prior negotiations, discussions
and agreements between them. No modifications of the terms of this Agreement
shall be valid unless in writing and signed by an authorized representative of
each party hereto (or their successors).
d. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
e. This Agreement shall be governed by and interpreted under the laws of
the State of Ohio.
DWYER & ASSOCIATES, INC. JAMES B. DWYER III
By:________________________________
___________________________________
Title Signature
405 PARK AVENUE, SUITE 702
- - -----------------------------------
Address
NEW YORK NEW YORK 10022
- - -----------------------------------
City State Zip
___________________________________
Employer Identification Number
PARTECH HOLDINGS CORPORATION
By:________________________________
Title
Page 5
<PAGE> 6
EXHIBIT A
THE REGISTERED HOLDER OF THIS OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, ASSIGN, PLEDGE, HYPOTHECATE OR OTHERWISE TRANSFER THIS OPTION
EXCEPT AS HEREIN PROVIDED. THIS OPTION HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR UNDER THE SECURITIES LAWS OF
ANY STATE.
VOID AFTER 5:00 P.M., COLUMBUS, OHIO TIME, THREE YEARS FROM THE DATE HEREOF.
OPTION AGREEMENT
This Option Agreement (the "Agreement") is dated as of ________, 1994,
between PARTECH HOLDINGS CORPORATION (the "Company"), and DWYER & ASSOCIATES,
INC., 405 Park Avenue, Suite 702, New York, New York 10022 (the "Registered
Holder").
WHEREAS, the Company and the Registered Holder are parties to an Agreement,
dated May _____, 1994 between the Company and the Registered Holder (the
"Agreement"), which Agreement provides for the vesting and issuance of options
to purchase common stock of the Company on terms and conditions as more fully
set forth therein and herein; and
WHEREAS, the Company desires to provide for issuance of option certificates
(the "Option Certificates") representing Options and the issuance of Option
Shares upon the exercise of the Options on such terms and conditions as are
more fully set forth herein; and
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, it is agreed that:
1. OPTIONS/OPTION CERTIFICATES. Each Option shall entitle the holder
(the "Registered Holder" or in the aggregate, the "Registered Holders") in
whose name the Option Certificate shall be registered on the books maintained
by the Company to purchase one (1) share of the Company's $.05 par value Common
Stock (the Option Share or Option Shares) on exercise thereof, subject to
modification and adjustment as provided in Section 7. The Option Certificate
representing the right to purchase Option Shares shall be executed by the
Company's Chief Executive Officer or President and attested to by the Company's
Secretary or Assistant Secretary and delivered to the Registered Holder upon
execution of this Agreement.
Subject to the provisions of Sections 3, 5 and 6, the Company shall deliver
Option Certificates in required whole number denominations to Registered
Holders in connection with any transfer or exchange permitted under this
Agreement. Except as provided in Section 6 hereof, no Option Certificates
shall be issued except: (i) Option Certificates initially issued hereunder;
(ii) Option Certificates issued on or after the initial issuance date, upon the
exercise of any Options, to evidence the unexercised Options held by the
exercising Registered Holder; or (iii) Option Certificates issued after the
initial issuance date upon any transfer or exchange of Option Certificates or
replacement of lost or mutilated Option Certificates.
2. FORM AND EXECUTION OF OPTION CERTIFICATES. The Option Certificates
shall be substantially in the form attached hereto as Exhibit A (the "R Option"
and the "Option Certificate"). The Option Certificates shall be dated as of
the date of their issuance, whether on initial issuance,
<PAGE> 7
transfer or exchange or in lieu of mutilated, lost, stolen or destroyed
Option Certificates. The Option Certificates shall be originally signed by the
Company's Chief Executive Officer or President, attested to by the Company's
Secretary or Assistant Secretary and embossed with the Company's seal and shall
not be valid for any purpose unless so originally signed and embossed.
3. EXERCISE. Subject to the provisions of Sections 4 and 7, the Options
when evidenced by a Option Certificate and such other documents as the Company
may require, may be exercised at a price (the "Exercise Price") of One Hundred
and Twenty-Five Hundredths percent (100.25%) of the NASDAQ closing bid price on
the such Options become vested in accordance with the terms of the Agreement
(the "Option Exercise Price"). Each Option may be exercised in whole or in
part at any time during the period commencing with the date vested (as provided
in the Agreement (the "Initial Exercise Date") and terminating at 5:00 p.m.
Columbus, Ohio time three years from the Option vesting date (the "Termination
Date"). Each Option shall be deemed to have been exercised immediately prior
to the close of business on the date (the "Exercise Date") of the surrender for
exercise of the Option Certificate. The exercise form, attached hereto as
Exhibit B shall be executed by the Registered Holder or his attorney duly
authorized in writing and will be delivered to the Company at its corporate
office together with payment to the order of the Company in cash or by official
bank or certified check, of an amount equal to the aggregate Exercise Price, in
lawful money of the United States of America.
Unless Option Shares may not be issued as provided herein, the person
entitled to receive the number of Option Shares deliverable on such exercise
shall be treated for all purposes as the holder of such Option Shares as of the
close of business on the Exercise Date. In addition, the Company shall also,
at such time, verify that all of the conditions precedent to the issuance of
Option Shares, set forth in Section 4, have been satisfied as of the Exercise
Date. If any one of the conditions precedent set forth in Section 4 are not
satisfied as of the Exercise Date, the Company shall return the Option
Certificate and pertinent Exercise Price payment to the exercising Registered
Holder or may hold the same until all such conditions have been satisfied. The
Company shall not be obligated to issue any fractional share interests in
Option Shares issuable or deliverable on the exercise of any Option or scrip or
cash therefore and such fractional shares shall be of no value whatsoever. If
more than one Option shall be exercised at one time by the same Registered
Holder, the number of full Option Shares which shall be issuable on exercise
thereof shall be computed on the basis of the aggregate number of full Option
Shares issuable on such exercise.
Once the Company has determined that the funds are determined to be
collected, the Company shall notify its common stock transfer agent who shall
cause a common stock share certificate representing the exercised Options to be
issued. The Company may deem and treat the Registered Holder of the Options at
any time as the absolute owner thereof for all purposes, and the Company shall
not be affected by any notice to the contrary. The Options shall not entitle
the holder thereof to any of the rights of shareholders or to any dividend
declared on the Company's Common Stock or Option unless the holder shall have
exercised the Options and purchased the Option Shares prior to the record date
fixed by the Board of Directors of the Company for the determination of holders
of Common Stock entitled to such dividend or other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants
that it will at all times reserve and have available from its authorized Common
Stock such number of shares as shall then be issuable on the exercise of all
outstanding Options. The Company covenants that all Option Shares which shall
be so issuable shall be duly and validly issued, fully paid and nonassessable
and free from all taxes, liens and charges with respect to such issue.
2
<PAGE> 8
The Registered Holder(s) shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of the Options, or the issuance, transfer or delivery of the Options or any
Option Shares on exercise of the Options. In the event the Option Shares are
to be delivered in the name other than the name of the Registered Holder of the
Option Certificate, no such delivery shall be made unless the person requesting
the same has paid to the Company the amount of any such taxes or charges
incident thereto.
5. REGISTRATION OF TRANSFER. The Option Certificates may be transferred
in whole or in part as provided for herein. Option Certificates to be
transferred shall be surrendered to the Company at its corporate office. The
Company shall execute, issue and deliver in exchange therefor the Option
Certificate or Certificates which the holder making the transfer shall be
entitled to receive.
The Company shall keep transfer books at its corporate office which shall
register Option Certificates and the transfer thereof. On due presentment for
registration of transfer of any Option Certificate at such office, the Company
shall execute and the Company shall issue and deliver to the transferee or
transferees a new Option Certificate or Certificates representing an equal
aggregate number of Options. All Option Certificates presented for
registration of transfer or exercise shall be duly endorsed or be accompanied
by a written instrument or instruments or transferred in a form satisfactory to
the Company and the Company's counsel. The Company may require payment of a
sum sufficient to cover any tax or other government charge that may be imposed
in connection therewith.
All Option Certificates so surrendered, or surrendered for exercise or for
exchange in case of mutilated Option Certificates, shall be promptly canceled
by the Company. Prior to due presentment for registration of transfer thereof,
the Company may treat the Registered Holder(s) of any Option Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company), and the parties hereto shall
not be affected by any notice to the contrary.
6. LOSS OR MUTILATION. On receipt by the Company of evidence
satisfactory as to the ownership of the loss, theft, destruction or mutilation
of any Option Certificate, the Company shall execute and deliver in lieu
thereof, a new Option Certificate representing an equal aggregate number of
Options. In the case of loss, theft or destruction of any Option Certificates,
the individual requesting issuance of a new Option Certificate shall be
required to indemnify the Company in an amount satisfactory to the Company. In
the event an Option Certificate is mutilated, such Certificate shall be
surrendered and canceled by the Company prior to delivery of a new Option
Certificate. Applicants for a new Option Certificate shall also comply with
such other regulations and pay such other reasonable charges as the Company may
prescribe.
7. ADJUSTMENT OF EXERCISE PRICE AND SHARES. After each adjustment of the
Exercise Price pursuant to this Section 7, the number of shares of Option
Shares purchasable on the exercise of such Options shall be the number derived
by dividing such adjusted Exercise Price into the original Exercise Price. The
Exercise Price shall be subject to adjustment as follows:
(a) In the event, prior to the expiration of the Options by exercise
or by their terms, the Company shall issue any shares of its Common Stock as a
share dividend or shall subdivide the number of outstanding shares of Common
Stock into a greater number of shares, then, in either of such events, the
Exercise Price per share of Common Stock purchasable pursuant to the Options in
effect at the time of such action shall be reduced proportionately and the
number of shares purchasable pursuant to the Options shall be increased
proportionately. Conversely, in the event the Company shall reduce the number
of shares of its outstanding Common Stock by combining such shares into a
smaller number of shares, then, in such event, the Exercise Price
3
<PAGE> 9
per share purchasable pursuant to the Options in effect at the time of
such action shall be increased proportionately and the number of shares of
Common Stock at that time purchasable pursuant to the Options shall be
decreased proportionately. Any dividend paid or distributed on the Common Stock
in shares of Common Stock of the Company shall be treated as a share dividend
pursuant to the preceding sentence. However, any dividend paid or distributed
on the Common Stock in securities other than Common Stock of the Company,
regardless if exercisable for or convertible into Common Stock of the Company,
shall NOT be treated as a share dividend pursuant to the preceding sentence.
(b) In the event the Company, at any time while the Options shall
remain unexpired and unexercised, shall sell all or substantially all of its
property, and thereafter dissolves, liquidates or winds up its affairs, then NO
provision need be made as part of the terms of any such sale, dissolution,
liquidation or winding up to allow Option holders to exercise all or any
Options held, in order to receive the same kind and amount of any share,
securities or assets as may be issuable, distributable or payable on any such
sale, dissolution, liquidation or winding up with respect to each share of
Common Stock of the Company.
(c) Notwithstanding the provisions of this Section 7, no adjustment
on the Exercise Price shall be made whereby such price is adjusted in an amount
less than $0.05 or until the aggregate of such adjustments shall equal or
exceed $0.05.
(d) No adjustment of the Exercise Price shall be made as a result of
or in connection with: (i) the issuance of Common Stock of the Company
pursuant to options, warrants and share purchase agreements outstanding or in
effect on the date hereof; (ii) the establishment of additional option plans,
common stock purchase warrants or security offerings of the Company, the
modification, renewal or extension of any such plan, warrants or offerings now
in effect or hereafter created, or the issuance of Common Stock on exercise of
any such options or warrants; or (iii) the issuance of Common Stock in
connection with an acquisition or merger of any type.
(e) This Option Agreement shall be incorporated by reference on the
Option Certificates.
Before taking any action which would cause an adjustment reducing the
Exercise Price below the then par value of the shares of Common Stock issuable
upon exercise of the Options, the Company will take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Exercise Price.
Upon any adjustment of the Exercise Price required to be made pursuant
to this Section 7, the Company within thirty (30) days thereafter shall: (i)
notify the Registered Holder of such adjustment setting forth the pertinent
Exercise Price after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based; and
(ii) cause to be mailed to each of the Registered Holder(s) of the Option
Certificates written notice of such adjustment.
4
<PAGE> 10
8. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. In addition to any
adjustments made to the Exercise Price pursuant to Section 7, the Company's
Board of Directors may, in its sole discretion, reduce the Exercise Price of
the Options in effect at any time either for the life of the Options or any
shorter period of time as may be determined by the Company's Board of
Directors. The Company shall notify the Registered Holder of any such
reduction in the Exercise Price.
9. LEGEND. Each Option Certificate and each certificate for Option
Shares purchased under this Option shall bear a legend as follows unless such
Option or Option Shares have been registered under the Act and the issuance
complies with applicable state securities laws:
"The securities represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended (the "Act"). The securities
may not be sold, assigned, pledged, hypothecated or otherwise
transferred except pursuant to an effective registration statement
under the Act and in compliance with applicable state securities
laws, or the Company receives an opinion of counsel, satisfactory
to the Company and Company counsel, that such registration is not
required and that the sale, assignment, pledge, hypothecation or
transfer is in compliance with applicable state securities laws."
10. TRANSFER.
(a) TRANSFERS TO SUCCESSORS. This Option shall not be
transferred sold, assigned or hypothecated.
(b) TRANSFER OF OPTION OR OPTION SHARES. The Registered
Holder and each Transferee Holder, agrees that they shall not sell, assign,
pledge, hypothecate or otherwise transfer the Option or the Option Shares, in
whole or in part, except pursuant to an effective registration under the
Securities Act of 1933, as amended (the "Act") and in compliance with
applicable state securities laws, or the Company receives an opinion of
counsel, satisfactory to the Company and Company counsel, that such
registration is not required and that the sale, assignment, pledge,
hypothecation or transfer is in compliance with applicable federal and state
securities laws. In order to make any sale, assignment, pledge or
hypothecation, the transferor must deliver to the Company the assignment form
attached hereto duly executed and completed, together with the applicable
certificate and payment of all transfer taxes, if any, payable in connection
therewith. As to the Option, the Company shall transfer the transferred Option
on the books of the Company and shall execute and deliver a new Option
Certificate of like tenor to the appropriate assignee(s) expressly evidencing
the right to purchase the number of Option Shares purchasable thereunder. As
to the Option Shares, the Company shall cause its duly authorized common stock
transfer agent to transfer the common stock being transferred.
(c) RESTRICTIONS ON FOREIGN OWNERSHIP, TRANSFER AND NULLITY.
The Registered Holder and Transferee Holder(s) acknowledge that the Company
owns directly and/or indirectly interests in radio station licenses which are
governed by the provisions of the Communications Act and the rules promulgated
thereunder. Accordingly, the Registered Holder and each Transferee Holder:
(a) covenants to the Company that he is not an Alien (as hereinafter defined),
and (b) that he shall not transfer, assign or in any way make available an
interest in this Option or in the Option Shares, to an Alien. In the event
that the Registered Holder is deemed to be an Alien, this Option is null and
void. In the event that any Transferee Holder is deemed to be an Alien, such
Transferee Holder's Option is null and void. The term "Alien" means any person
who is a citizen of a country other than the United States; or any state,
territory, or possession thereof; any entity organized under the laws of a
government other than the government of the United States or any state,
territory, or
5
<PAGE> 11
possession thereof; a government other than the government of the
United States or any state, territory or possession thereof, or an individual
or entity controlled by any of the foregoing.
11. "PIGGY-BACK" REGISTRATION. The Registered Holder (as defined
herein), shall have the one time right commencing with the vesting date of the
Options and for a period of five (5) years thereafter, to include the
Registrable Securities as part of the first registration of securities filed by
the Company subsequent to the date of Option vesting, provided however, that
if, in the opinion of the Company's managing underwriter, broker/dealers or
underwriters as to any such offering, the inclusion of the Registrable
Securities, when added to the securities being registered by the Company or
selling stockholder(s), will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without materially and adversely affecting
the entire offering, then the Company may exclude from such offering all or any
portion of the Registrable Securities requested to be so registered, provided
further, that if any Registrable Securities are so excluded, then the number of
securities to be sold by all stockholders in such public offering shall be
apportioned pro rata among all such selling stockholders, including all
Holder(s) of the Registrable Securities. If any Registrable Securities
requested to be included in an offering pursuant to the "piggy-back" rights
described in this Section are not so included because of the operation of the
first proviso of the preceding sentence, then the Holder(s) of the Registrable
Securities shall have the right to include their Registrable Securities in the
next registration of securities filed by the Company, which right shall again
be subject to the proviso's of this paragraph. In the event of such piggy-back
registration the Company and the Holder(s) shall execute such documents as may
be reasonably required by the Company and Company counsel to carry out such
registration.
(a) TERMS OF REGISTRATION. The Company shall bear all fees
and expenses attendant to registering the Registrable Securities, but the
Holder(s) shall pay any and all underwriting and broker-dealer discounts,
commissions and non-accountable expenses of any underwriter or broker-dealer
selected to sell the Registrable Securities, together with the expenses of any
legal counsel selected by the Holder(s) to represent them in connection with
the sale of the Registrable Securities. The Company shall cause any
registration statement filed pursuant to the demand rights granted hereto to
remain effective for a period of sixteen months from the date of the latest
balance sheet of the audited financial statements contained therein on the
initial effective date of such registration statement.
(b) RESTRICTION ON REGISTRATION. The Company shall not be
obligated to register the Registrable Securities if such securities may be sold
pursuant to the exemption from registration as provided by Rule 144 as
promulgated under the Act, nor shall the Company be obligated to register the
Registrable Securities in any state in which the principal stockholders,
officers, directors or employees of the Company may in any way be obligated to
escrow any of their shares of Capital Stock of the Company or in a state in
which the Company may be restricted from conducting its business in any way,
including but not limited to, qualifying to do business, become subject to tax,
or restricted from issuing additional securities or incur restrictions on
compensating officers, directors or employees.
(c) RIGHT TO REDEEM IN LIEU OF REGISTRATION. The Company may
in its sole discretion, and in lieu of registration of the Registrable
Securities, pay to the Holder(s) an amount equal to the amount which would be
realized by the Holder(s) upon sale of the Registrable Securities reduced by
the Exercise Price plus the expenses, fees and broker/dealer commissions which
would be paid by the Holder(s) in the event of registration and sale of the
Registrable Securities. The Company may elect to make such payment upon notice
to the
6
<PAGE> 12
Holder(s) within 30 days of receipt of a notice of Demand Registration.
12. MODIFICATION OF AGREEMENT. The Company and the Registered Holder
may by supplemental agreement make any changes or corrections in this
Agreement: (i) that they shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or mistake or error herein
contained; or (ii) that they may deem necessary or desirable and which shall
not adversely affect the interest of the holders of Option Certificates;
provided, however, this Agreement shall not otherwise be modified, supplemented
or altered in any respect except with the consent in writing of the Registered
Holders of Option Certificates representing not less than fifty-one percent
(51%) of the Options outstanding. Additionally, except as provided in Sections
7 and 8, no change in the number or nature of the Option Shares purchasable on
exercise of a Option, or increase of the purchase price therefor shall be made
without the consent in writing of the Registered Holder or Transferee Holder of
the Option Certificate representing such Option, other than such changes as are
specifically prescribed or allowed by this Agreement.
13. NOTICES. All notices, demands, elections options or requests
(however characterized or described) required or authorized hereunder shall be
deemed sufficient if made in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by tested telex, telegram or
cable to the principal office of the addressee, and if to the Registered Holder
or Transferee Holder of an Option Certificate, at the address of such holder as
set forth on the books maintained by the Company.
14. BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the Company, the Registered Holder, each Transferee Holder
and their respective successors and assigns. Nothing in this Agreement is
intended or shall be construed to confer upon any other person any right,
remedy or claim or to impose on any other person any duty, liability or
obligation.
15. FURTHER INSTRUMENTS. The parties hereto shall execute and deliver
any and all such other instruments and shall take any and all other actions as
may be reasonably necessary to carry out the intention of this Agreement.
16. SEVERABILITY. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative
for any reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect
adversely any other provision of this Agreement, which shall otherwise remain
in full force and effect and be enforced in accordance with its terms, and the
effect of such holding, declaration or pronouncement shall be limited to the
territory or jurisdiction in which made.
17. WAIVER. All the rights and remedies of either party to this
Agreement are cumulative and not exclusive of any other rights and remedies as
provided by law. No delay or failure on the part of either party in the
exercise of any right or remedy arising from the breach of this Agreement will
constitute a waiver of any other right or remedy. The consent of any party
where required hereunder to act or occurrence shall not be deemed to be a
consent to any other action or occurrence.
18. GENERAL PROVISIONS. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of
Delaware. This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and understandings
relating to the subject matter hereof, and this Agreement may not be modified
or amended or any term or provisions hereof waived or discharged except in
writing, signed by the party against whom such amendment, modification, waiver
or discharge is sought to be
7
<PAGE> 13
enforced. The headings of this Agreement are for convenience and
references only and shall not limit or otherwise affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PARTECH HOLDINGS CORPORATION
By: ___________________________
Title
DWYER & ASSOCIATES, INC.
By: ___________________________
Title
______________________________
Address
______________________________
City State Zip
______________________________
Taxpayer Identification Number
8
<PAGE> 14
EXHIBIT A
PARTECH HOLDINGS CORPORATION_
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NO. R - -01-
------
- - P COMMON STOCK
-------------
PURCHASE OPTIONS
CERTIFICATE FOR COMMON STOCK PURCHASE OPTIONS
This Option Certificate certifies that __________________________
_________________ or registered assigns ("Option Holder"), is the registered
owner of the above indicated number of Options (hereinafter referred to as the
"Option(s)") expiring on February 1, 1995 ("Expiration Date"). One (1) Option
entitles the Option Holder to purchase one (1) share of common stock, $.05 par
value ("Share"), from PARTECH HOLDINGS CORPORATION, a Delaware corporation
("Company"), at a purchase price of One Hundred and Twenty-Five Hundredths
percent (100.25%) of the NASDAQ closing bid price as of the date vested per
share of Common Stock ("Exercise Price"), commencing on the date of this
Certificate and terminating on the Expiration Date ("Exercise Period"), upon
surrender of this Option Certificate with the exercise form hereon duly
completed and executed with payment of the Exercise Price at the office of the
Company being 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221, subject
only to the conditions set forth herein and in a Option Agreement dated as of
February 1, 1994 (the "Option Agreement") between the Company and Option
Holder. The Option Holder may exercise all or any number of Options.
Reference hereby is made to the provisions on the following pages of this
Option Certificate and to the provisions of the Option Agreement, all of which
are incorporated by reference in and made a part of this Option Certificate and
shall for all purposes have the same effect as though fully set forth at this
place.
Upon due presentment for transfer of this Option Certificate at the office
of the Company, a new Option Certificate or Option Certificates of like tenor
and evidencing in the aggregate a like number of Options, subject to any
adjustments made in accordance with the provisions of the Option Agreement,
shall be issued to the transferee in exchange for this Option Certificate,
subject to the limitations provided in the Option Agreement, upon payment to
the Company of any tax or governmental charge imposed in connection with such
transfer.
The Option Holder of the Options evidenced by this Option Certificate may
exercise all or any whole number of such Options during the period and in the
manner stated hereon. The Exercise Price shall be payable in lawful money of
the United States of America and in cash or by certified or bank cashier's
check payable to the order of the Company. If, upon exercise of any Options
evidenced by this Option Certificate, the number of Options exercised shall be
less than the total number of Options so evidenced, there shall be issued to
the Option Holder a new Option Certificate evidencing the number of Options not
so exercised. No Option may be exercised after 5:00 P.M. Columbus, Ohio Time
on the Expiration Date, and any Option not exercised by such time shall become
void, unless extended by the Company.
The Option Agreement provides that neither the Options nor the
underlying common stock shall be sold, assigned, hypothecated or in
any way transferred to or held by or for the account of an Alien. The
term "Alien" means any person who is a citizen of a country other than
the United States; or any state, territory, or possession thereto; any
entity organized under the laws of a government other than the
government of the United States or any state, territory, or possession
thereto; a government other than the government of the United States
or any state, territory or possession thereof, or an individual or
entity controlled by any of the foregoing.
Page 1
<PAGE> 15
The securities represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended (the "Act"). The securities may
not be sold, assigned, pledged, hypothecated or otherwise transferred
except pursuant to an effective registration statement under the Act
and in compliance with applicable state securities laws, or the
Company receives an opinion of counsel, satisfactory to the Company
and Company counsel, that such registration is not required and that
the sale, assignment, pledge, hypothecation or transfer is in
compliance with applicable state securities laws.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
Chief Executive Officer or President and by its Secretary or Assistant
Secretary, each by an original of his signature, and has caused an original
impression of its corporate seal to be imprinted hereon.
Dated: ______________, 199___
<TABLE>
<S> <C> <C>
________________________ __________________________
Signature Signature
(Seal)
________________________ _________________________
Title Title
</TABLE>
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN OR DESTROYED THE
COMPANY WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO THE ISSUANCE OF A
REPLACEMENT CERTIFICATE.
Page 2
<PAGE> 16
FOR VALUE RECEIVED ________________________ HEREBY SELL, ASSIGN AND TRANSFER
UNTO:
PLEASE INSERT SOCIAL SECURITY
OR TAX IDENTIFICATION NUMBER
__________________________________
______________________________________________________
(Please Print Name and Address)
______________________________________________________
______________________________________________________
If said number of Options shall not be all the Options evidenced by the
within Option Certificate, the undersigned requests that a new Option
Certificate evidencing the Options not so transferred be issued in the name of
and delivered to:
______________________________________________________
(Please Print Name and Address)
______________________________________________________
______________________________________________________
___________________________________ Dated:___________________
Signature
NOTICE: The above signature must correspond with the name as written upon the
face of the within Option Certificate in every particular, without alteration
or enlargement or any change whatsoever, or if signed by any other person, the
Form of Assignment thereon must be duly executed and if the certificate
representing the shares or any Option Certificate representing Options not
exercised is to be registered in a name other than that in which the within
Option Certificate is registered, the signature of the holder hereof must be
guaranteed.
Signature Guaranteed:__________________________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
THE FOLLOWING MUST BE EXECUTED BY THE ASSIGNEE OF THIS CERTIFICATE BEFORE
TRANSFER MAY BE MADE ON THE BOOKS OF THE COMPANY:
The undersigned hereby certifies that the assignee of the Options referred to
in the foregoing Assignment:
_____ is an Alien (as defined above) or _____ is not an Alien
and that if any other person can direct or condition the disposition or
transfer of such Option or if such shares are held for the account of any other
person, to the best of the undersigned's knowledge, such other person:
_____ is an Alien (as defined above) or _____ is not an Alien
___________________________________ Dated:___________________
Signature
Page 3
<PAGE> 17
EXHIBIT B
FORM OF ELECTION TO PURCHASE
(TO BE EXECUTED BY THE HOLDER IF HE DESIRES TO EXERCISE
OPTIONS EVIDENCED BY THE WITHIN OPTION CERTIFICATE)
TO: PARTECH HOLDINGS CORPORATION
The undersigned hereby irrevocably elects to exercise ________________
Options, evidenced by the within Option Certificate for, and to purchase
thereunder, ________________ full shares of Common Stock issuable upon
exercise of said Options and delivery of $ ____________ and any applicable
taxes.
The undersigned requests that certificates for such shares be issued
in the name of:
PLEASE INSERT SOCIAL SECURITY
OR TAX IDENTIFICATION NUMBER
__________________________________
________________________________________________________________________________
(Please Print Name and Address)
________________________________________________________________________________
________________________________________________________________________________
If said number of Options shall not be all the Options evidenced by
the within Option Certificate, the undersigned requests that a new Option
Certificate evidencing the Options not so exercised be issued in the name of
and delivered to:
________________________________________________________________________________
(Please Print Name and Address)
________________________________________________________________________________
________________________________________________________________________________
Dated:__________________ __________________________________________________
Signature
NOTICE: The above signature must correspond with the name as written upon the
face of the within Option Certificate in every particular, without alteration
or enlargement or any change whatsoever, or if signed by any other person, the
Form of Assignment thereon must be duly executed and if the certificate
representing the shares or any Option Certificate representing Options not
exercised is to be registered in a name other than that in which the within
Option Certificate is registered, the signature of the holder hereof must be
guaranteed.
Signature Guaranteed:___________________________________________________________
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
<PAGE> 1
EXHIBIT 10.63
PARTECH HOLDINGS CORPORATION
1989 INCENTIVE STOCK OPTION PLAN AGREEMENT
This is a Stock Option Plan Agreement (the "Option Agreement") made
pursuant to the 1989 Incentive Stock Option Plan (the "1989 Plan" or "Plan") of
PARTECH HOLDINGS CORPORATION (the "Company"). The parties to this Option
Agreement are the Company and James B. Dwyer III, (the "Employee" or "Option
Holder") who is an employee of the Company, or of a Related Corporation, as
defined in the Plan.
THE PARTIES AGREE AS FOLLOWS:
1. NUMBER OF SHARES AND PURCHASE PRICE.
-----------------------------------
Effective May 18, 1994 (the "Grant Date"), the Company grants an
Incentive Stock Option ("ISO") to the Employee the right to purchase the number
of shares of common stock at the price set forth below (an "Option").
The employee has the right to purchase Thirty Thousand (30,000) shares of
common stock at a price of $.78125 per share. These option shares are ISO's.
2. VESTING OF ISO'S.
----------------
(a) The Option subject to this Option Agreement shall vest immediately,
unless there is a vesting schedule set forth below in (b).
(b) If a vesting schedule is to apply, it shall be set forth below:
NONE
3. EXERCISE OF OPTIONS.
-------------------
The Option subject to this Option Agreement which is vested and
exercisable (the "Vested Option") may only be exercised under certain
conditions:
(a) The Option Holder has the right to exercise all or a part
of the shares contained in each grant of shares which has vested
under Section 2 of this Agreement and under the Plan.
(b) The Option Holder may only exercise the Vested Option
within the first ten (10) years after the date of their grant. An
Option Holder who is granted an ISO and who owns more than ten
percent (10%) of the total combined voting power of the Company or
its parent or subsidiary corporation at the time the
Option is granted may only exercise the Vested Options which is an
ISO within the first five (5) years after the date of such grant.
(c) To exercise the Vested Option, the Option Holder must
notify the Company in writing, at its principal place of business.
The Company will delivery the shares as soon as possible. However,
if any law or regulation requires the Company to take any action(s)
before issuing the shares, the date of delivery of the
shares may then be postponed as long as reasonably necessary to take
such action.
(d) The purchase price must be paid (i) in cash or by
certified or bank cashier's check in United States Dollars; or (ii)
by delivery to the Company of shares of Company Common Stock with a
fair market value equal to the option price at the time of exercise;
or (iii) by any combination of the foregoing. The purchase price
must be paid by the Option Holder to the Company at the time of
delivery by the Company of the Option shares.
(e) The Vested Option may be exercised by the Option Holder:
(1) While he or she is, and has continually been since the date
of the grant of the Option, an employee of the Company or a
Related Corporation, or
<PAGE> 2
(2) Within three (3) months after the date of termination of
such employment, or
(3) By the estate of the Option Holder, within three (3) months
after the Option Holder's death.
(f) The Vested option may not be exercised unless at the time
of exercise the common stock to be issued qualifies for exemption
from or is registered pursuant to, applicable Federal and state
securities laws. In the event there is not then on file with the
Securities and Exchange Commission under the Securities Act of 1933,
as amended, an effective registration statement, including a
prospectus relating to the shares subject to the ISO, the Employee
will execute and deliver to the Company prior to receipt by him of
any such shares under this Plan, an investment letter in form and
substance satisfactory to the Company, and any other documents or
representations as may be reasonably requested by the Company in its
sole discretion.
4. NON-TRANSFERABILITY OF OPTION.
-----------------------------
This Option is not transferable, and is not subject to attachment,
execution, or other similar process.
5. EXERCISE OF OPTIONS.
-------------------
The Option Holder must designate which Vested Option he or she is
exercising in a writing to the Company. If Option Holder fails to so
designate, earlier granted Options will be deemed first exercised.
6. HOLDING PERIOD FOR ISO.
----------------------
To qualify for ISO treatment under Section 422A of the Internal Revenue
Code of 1986 the Option Holder must not dispose of shares acquired under the
ISO within two (2) years of the date of granting the ISO nor within one (1)
year of the transfer of such shares to him.
7. 1989 INCENTIVE STOCK OPTION PLAN.
--------------------------------
These Options are granted pursuant to the 1989 Incentive Stock Option
Plan of the Company, which Plan is attached hereto and incorporated by
reference herein. The Option Agreement is subject to all terms, conditions and
provisions of the Plan.
8. TERMINATION.
-----------
The Plan Committee may at any time suspend, amend or terminate the Plan,
but may not alter or impair any Option previously granted under the Plan
without the consent of the Option Holder.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date set forth next to their signatures.
PARTECH HOLDINGS CORPORATION
<TABLE>
<S> <C>
Date: ____________________________ By: ______________________________________
Its: _____________________________________
Chief Executive Officer
Date: __________________________ __________________________________________
Mr. James B. Dwyer III, Option Holder
405 Park Avenue (address of Option Holder)
New York, New York 10022
</TABLE>
2
<PAGE> 1
Exhibit 10.64
EXECUTION
---------
TIME BROKERAGE AGREEMENT
------------------------
This Time Brokerage Agreement (the "Agreement") by and between Tropic
of St. Simons, Inc., a Delaware corporation ("Time Broker"), Lee M. Mitchell
("Licensee"), the receiver appointed by order of the Superior Court of Fulton
County, Georgia ("Superior Court") or any successor receiver appointed by said
Court to manage the assets of WMOG (FM) and WMOG (AM) (the "Station"), recites
and provides as follows.
WHEREAS, Licensee has available broadcasting time and is engaged in the
business of radio broadcasting on the Station; and
WHEREAS, Time Broker desires to avail itself of some of the Station's
broadcast time;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the parties hereto have agreed and do agree as of the _______ day of
March, 1994 (the "Commencement Date"), as follows:
W I T N E S S E T H:
1. FACILITIES. Licensee shall broadcast on the Station, or cause
to be broadcast, programs which are presented to it by Time Broker as described
in greater detail on Attachment I hereto. Notwithstanding the foregoing,
Licensee reserves the right to refuse to broadcast any program or programs
containing matter which is, or in the opinion of Licensee may be, or which a
third party claims to be, violative of any right of its or theirs or which may
constitute a personal attack as that term is and has been defined by the
Federal Communications Commission (the "FCC"), or which is deemed to be
indecent or obscene by the FCC. During the term hereof, Time Broker shall
maintain the ability to deliver its programming to Licensee's transmitter site.
2. CONSIDERATION. Time Broker shall pay Licensee for broadcast of
the programs provided hereunder in the amounts specified in Section 1 of
Attachment II hereto. The failure of Licensee to demand or insist upon timely
payment shall not constitute a waiver of its right to do so.
3. TERM. Unless earlier terminated in accordance with the express
provisions
<PAGE> 2
hereof, this Agreement shall continue until the Closing Date as defined in
Section 11.1 of the Purchase Agreement (as defined in Section 21 hereof).
4. PROGRAMS. Time Broker shall furnish or cause to be furnished
the artistic personnel and material for the programs provided pursuant to this
Agreement and all such programs shall be in good taste and in material
accordance with applicable statutes and FCC requirements. All programs provided
by Time Broker hereunder shall be prepared and presented in material conformity
with the standards set forth in Attachment III hereto and shall be transmitted
by Time Broker at its own cost to Licensee's transmitter site.
5. HANDLING OF MAIL. Licensee shall not be required to receive or
handle mail, cables, telegraph or telephone calls in connection with the
programs provided by Time Broker hereunder. Time Broker shall promptiy advise
Licensee of any public or FCC complaint or inquiry known to Time Broker
concerning such programming, and shall provide Licensee with copies of any
letters to Time Broker from the public concerning the foregoing. Time Broker
shall timely respond to all such communications as appropriate.
6. PROGRAMMING AND OPERATING STANDARDS AND PRACTICES.
6.1 COMPLIANCE WITH STANDARDS. Time Broker shall adhere in
all material respects to the standards set forth in Attachment III hereto with
respect to the Station's programming and operations and shall comply with all
applicable statutes and FCC requirements with respect to such programming and
operations. If, in the judgment of Licensee, Time Broker does not adhere in all
material respects to such standards, Licensee may suspend or cancel any
specific program not in compliance, and Time Broker will endeavor to provide
substitute programming therefor. From and after the Commencement Date, Time
Broker shall perform its obligations hereunder in all material respects in a
commercially reasonable manner consistent with industry standards.
6.2 EQUIPMENT AND EXPENDITURES. All transmitting equipment
necessary for broadcasting by the Station shall be maintained by Licensee in a
condition consistent with good engineering practice and in compliance in all
material respects with the applicable rules, regulations and technical
standards of the FCC.
6.3 FCC COMPLIANCE. Time Broker shall maintain and deliver
to Licensee all records and information required by the FCC to be placed in the
public inspection files of the Station pertaining to the broadcast of political
programming and advertisements, in accordance with the provisions of Sections
73. 1940 and 73.3526 of the FCC's rules, and to the broadcast of sponsored
programming addressing political issues or controversial subjects of public
importance, in accordance with the provisions of Section 73.1212 of the FCC's
rules. Time Broker also shall consult with Licensee and adhere strictiy to all
applicable statutes and the rules, regulations and policies of the FCC as
announced from time to time, with respect to the carriage of political
advertisements and programming (including, without limitation, the rights of
candidates and, as appropriate, others to "equal opportunities" and the
carriage of
2
<PAGE> 3
contrasting points of view as mandated by any "fairness" rules with respect to
such "issue-oriented" advertising or programming as may be broadcasf) and the
charges permitted therefor. Time Broker shall provide the Licensee such
documentation relating to such programming as Licensee shall request, and shall
indemnify Licensee for any claim, demand, cost or expense (including reasonable
attorneys' fees) arising from the broadcast of any such material on the Station
during the term of this Agreement.
7. RESPONSIBILITY FOR EMPLOYEES AND EXPENSES. Time Broker shall
employ and be responsible for the salaries, taxes, insurance and costs related
to all personnel used in the production of its programming, and Licensee shall
bear the same responsibility with respect to all personnel used in the
production of its programming and shall, if requested by Time Broker, execute
and deliver a certification in the form of Attachment VIII hereto. Time Broker
shall pay for all costs associated with its program production, all fees to
ASCAP, BMI and SESAC attributable to its programs and for any other copyright
fees attributable to its programming broadcast on the Station. Each party shall
indemnify and hold the other party harmless from all costs and liabilities
imposed on it under this Section 7.
8. OPERATION OF STATION. Notwithstanding anything to the contrary
in this Agreement, Licensee shall retain full authority and power with respect
to the operation of the Station during the term of this Agreement, and shall
take any and all steps necessary to faithfully and continuously do so
throughout the term of this Agreement and shall, if requested by Time Broker,
execute and deliver a certification in the form of Attachment VIII hereto.
Licensee shall maintain all licenses, contracts, leases and other agreements
necessary to the operation of the Station during the term hereof in accordance
with the express provisions of this Agreement. Licensee further agrees and
acknowledges that its responsibility to retain control is an essential element
of the continuing validity and legality of this Agreement. Without limiting the
generality of the provisions of Section 7, Licensee shall provide and pay for
(a) its General Manager for the Station, who shall report solely to, and be
accountable solely to, Licensee and who shall direct the day-to-day operations
of the Station and (b) such other engineering and programming costs and
expenses as are necessary to fulfill its obligations under this Agreement,
including but not limited to all costs of required meter readings and any
remote control facilities to be manned by Licensee's personnel to meet FCC
operating requirements. Licensee shall retain control over the policies,
programming and operations of the Station, including, without limitation, the
right to decide whether to accept or reject any programming or advertisements,
the right to preempt any program in order to broadcast a program deemed by
Licensee to be of greater national, regional or local interest, and the right
to take any other actions necessary to comply with the laws of the United
States, and the rules, regulations, and policies of the FCC, including the
rules regarding the prohibition of unauthorized transfers of control. Licensee
shall be responsible for meeting all applicable operating requirements with
respect to its local service obligations.
3
<PAGE> 4
9. SPECIAL EVENTS. Licensee reserves the right, in its sole
discretion and without liability to Time Broker, to preempt any of Time
Broker's programs, and to use part or all of the time contracted for by Time
Broker hereunder to broadcast events of special importance. In all such cases,
Licensee will use its best efforts to give Time Broker reasonable notice of its
intention to preempt such broadcast or broadcasts, and, in the event of such
preemption, Time Broker shall receive from Licensee the payment credit
specified in Section 2 of Attachment II hereto for the preempted broadcast or
broadcasts.
10. FORCE MAJEURE. No failure or impairment (i. e., failure to
broadcast at the Station's full authorized height and power) of the facilities
of the Station or any delay or interruption in broadcast programs, 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 other
causes behind the reasonable control of Licensee shall constitute an Event of
Default under this Agreement. Licensee shall not be liable to Time Broker with
respect to any such failure or impairment, except to the extend of allowing in
each such case an appropriate payment credit to Time Broker for time or
broadcasts not provided.
11. RIGHTS IN PROGRAMS. All right, titie and interest in and to all
programs provided by Time Broker hereunder, and the right to authorize the use
of such programs in any manner and in any media whatsoever, shall be and
remain vested at all times solely in Time Broker.
12. PAYOLA; PLUGOLA. Time Broker shall execute and deliver to
Licensee an annual Payola Affidavit, substantially in the form attached hereto
as Attachment IV. Time Broker agrees that neither it not its employees or
agents will accept any gift, gratuity or other consideration from any party for
the playing of records, the presentation of any programming or the broadcast of
any commercial announcement over the Station without such broadcast being
announced as sponsored. No commercial message, plug or undue reference shall
be made in any programming presented over the Station to any business venture,
profit-making activity or other interest (other than non-commercial
announcements or bona fide charities, church activities or other public service
activities) without such broadcast being announced as sponsored.
13. COMPLIANCE WITH LAW. Each party shall comply with all laws and
regulations applicable to the conduct of its business and the broadcast of its
programming.
14. INDEMNIFICATION. From and after the Commencement Date, each
party shall indemnify and hold harmless the other pursuant to the terms of the
Indemnification Agreement attached hereto as Attachment VII, and executed and
delivered by the parties herewith.
15. EVENTS OF DEFAULT. Except as expressly set forth Section 10,
the following, after the expiration of the applicable cure periods specified
in Paragraph 15.6, shall constitute Events of Default under the Agreement:
15.1 NON PAYMENT. Time Broker's failure to timely pay the
consideration
4
<PAGE> 5
provided for in Paragraph 2 hereof;
15.2 DEFAULT IN COVENANTS. Time Broker's or Licensee's material
default in the observance or performance of any covenant, condition or
agreement contained herein; or
15.3 BREACH OF REPRESENTATION. Time Broker's or Licensee's
material breach of any representation or warranty made by it herein, or in any
certificate or document furnished pursuant to the provisons hereof, which shall
prove to have been false or misleading in any material respect as of the time
made or furnished.
15.4 DEFAULT UNDER RELATED AGREEMENTS. The occurrence of an
Event of Default under the Purchase Agreement and any other related agreement
with respect to either party.
15.5 INSOLVENCY; BANKRUPTCY; RECEIVERSHIP.
(a) If either party shall (1) fail to pay generally its
debts as they become due, (2) commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or state bankruptcy, insolvency or other similar law, (3) consent or
fail to object to the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official for such party or any
substantial part of such party's property, or to the taking possession by any
such official of any substantial part of the property of such party, or (4)
make any assignment for the benefit of creditors;
(b) The entry of (1) any decree or order for relief
by a court having jurisdiction over either party or its property in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
other similar law, (2) any decree or order for appointment of a receiver,
liquidator, assignee, trustee, custodian, sequestrator or similar official for
either party or any substantial part of such party's property, or (3) any
decree or order for the termination or liquidation of any of the affairs of
either party and any such entry shall continue unstayed and in effect for 60
days; or
(c) If either party shall fail within 60 days after the
commencement of any proceedings against it under the Federal bankruptcy laws or
any other applicable Federal or state bankruptcy, insolvency or similar law, to
have such proceedings dismissed or stayed.
15.6 CURE PRRIODS. An Event of Default pursuant to Sections
15.1 through 15.4 hereof, inclusive, shall not be deemed to have occurred until
thirty (30) days after the non-defaulting party has provided the defaulting
party with written notice specifying the event or events that if not cured
would constitute an Event of Default, and such an event of default has not been
cured. This period may be extended (in writing only, and only by the
non-defaulting party in its sole discretion) for a reasonable period of time if
the defaulting party is acting in good faith to cure and such delay is not
materially adverse to the other party.
5
<PAGE> 6
16. TERMINATION.
16.1 TERMINATION FOR DEFAULT. Either party may terminate
this Agreement upon the occurrence of an uncured Event of Default with respect
to the other party by giving the other party written notice of such termination.
16.2 TERMINATION FOR CHANGE IN FCC RULES OR POLICIES. The
parties believe that the terms of this Agreement meet all of the requirements
of current FCC policy for brokerage agreements and agree that they shall
negotiate in good faith to meet any FCC concern with respect to it if they are
incorrectiy interpreting current FCC policy or if that policy is modified. If
the parties cannot agree within a reasonable time to a modification or
modifications deemed necessary by either party to meet FCC requirements, either
party may terminate this Agreement by giving the other party written notice of
termination. Notwithstanding any termination hereof under this Section 16.2,
the parties shall continue to be bound by their respective obligations under
the Purchase Agreement.
16.3 TERMINATION FOR CLOSING UNDER PURCHASE AGREEMENT. This
Agreement shall immediately terminate upon the occurrence of the Closing under
the Purchase Agreement.
16.4 EVENTS UPON TERMINATION OR EXPIRATION.
(a) Upon any termination or expiration hereof, (f)
Licensee shall be under no further obligation to make available to Time Broker
any further broadcast time or broadcast transmission facilities and all amounts
accrued or payable to Licensee up to the date of termination which have not
been paid shall immediately become due and payable by Time Broker, (if) Time
Broker shall be responsible for debts and obligations of Time Broker resulting
from the use of air time and transmission facilities including, without
limitation, accounts payable and net barter balances, but not for Licensee' s
federal, state, local and other tax liabilities associated with Time Broker's
payments hereunder or for other payments to Licensee, and (iii) in the event
that the Purchase Agreement is terminated prior to the Closing, Time Broker
shall assign to Licensee and Licensee shall assume the Assigned Contracts (as
defined in Section 30) that remain in effect (or that have been renewed,
extended or replaced on substantially similar terms) on the date of such
termination or expiration together (provided that Time Broker has procured the
necessary consents to such reassignment) with all agreements between Time
Broker and others for the sale of broadcast time on the Stations for cash at
reasonable market rates in effect on such date; provided, however, that
Licensee shall not be required to assume any renewal, extension or replacement
of an Assigned Contract that has a remaining term of more than one (1) year
unless such agreements are approved in writing by Licensee in advance. With
respect to any contract assigned to Licensee pursuant to this subjection
16.4(a), all expenses and income arising under such contracts shall be prorated
between Licensee and Time Broker as of the date on which such contracts are
assigned to Licensee (the "Proration Date") in a manner such that the operation
of the Station on or before the Proration Date shall be for the account of
Time Broker and, thereafter for the account of Licensee.
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<PAGE> 7
(b) No expiration or termination hereof shall limit or
impair any party' s rights to receive payments due and owing hereunder on or
before the effective date of such termination.
17. MODIFICATION AND WAIVER. No modification or waiver of any
provision of this Agreement shall in any event be effective unless the same
shall be in writing signed by the party against whom the waiver is sought to be
enforced, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
18. NO WAIVER; REMEDIES CUMMULATIVE. No failure or delay on the part
of Licensee or Time Broker in exercising any right or power hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of Licensee and
Time Broker herein provided are cumulative and are not exclusive of any rights
or remedies which they may otherwise have.
19. CONSTRUCTION. This Agreement shall be construed in accordance
with the laws of the Delaware without reference to confiict of laws principles,
and the obligations of the parties hereto are subject to all federal, state or
municipal laws or regulations now or hereafter in force and to the regulations
of the FCC and all other governmental bodies or authorities presentiy or
hereafter duly constituted.
20. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PARTIES.
20.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF TIME BROKER.
Time Broker hereby represents, warrants and covenants to Licensee as set forth
in this Section 20.1.
20.1.1 CORPORATE ORGANIZATION. Time Broker is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Georgia.
20.1.2 AUTHORIZATION; LAFORCEABILITY. Subject to the
following sentence, this Agreement has been duly executed and delivered by Time
Broker, and Time Broker has the full right, power, authority and legal capacity
to enter into, and perform its obligations under this Agreement, and to
consummate the transactions contemplated hereby. Time Broker shall take all
necessary steps to insure that the execution and delivery of this Agreement and
the consummation of the transactions provided for hereby, are duly authorized by
the Board of Directors of Time Broker, and no other corporate or other
proceedings on the part of Time Broker shall be necessary to authorize the
execution or delivery of this Agreement or the transactions provided for
hereby. With respect to Time Broker, this Agreement is valid, binding and
enforceable in accordance with its terms except as such enforceability may be
limited by bankruptcy and other laws applicable to creditors or by general
principles of equity.
20.1.3 NO CONSENT. Except for such consents as may be
required under
7
<PAGE> 8
the Assignment Agreement (as defined in Section 30), no consent of any other
party and no consent, license, approval or authorization of, or exemption by,
or filing, restriction or declaration with, any governmental authority, bureau,
agency or regulatory authority is required in connection with the execution,
delivery, validity or enforceability of this Agreement.
20.1.4 NO BREACH. Except as set forth on Schedule 20.
1.4, the execution and delivery by Time Broker of this Agreement, the
consummation by Time Broker of the transactions contemplated hereby, and
compliance by Time Broker with the terms hereof, does not and will not:
(i) violate or result in the breach of or
contravene any of the terms, conditions or provisions of, or constitute a
default under, Time Broker's articles of incorporation, bylaws or other
organization documents, or, to the best of Time Broker' s knowledge, in any
material respect, any law, regulation, order, writ, injunction, decree,
determination or award of any court, governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator, applicable to Time
Broker or its assets and properties; or
(ii) result in prohibited action under any term or
provisions of, the material breach of any term or provisions of, the
termination of, or the acceleration or permitting the acceleration of the
performance required by the terms of, or constitute a default under or require
the consent of any party to any loan agreement, indenture, mortgage, deed of
trust or other contract, agreement or instrument, to which Time Broker is a
party or by which it is bound; or
(iii) cause the suspension or revocation of any
authorization, consent, approval or license currentiy in effect with respect to
Time Broker.
20.1.5 ACTIONS AND PROCEEDINGS. There are no actions,
suits, investigations or proceedings pending against Time Broker or, to the
knowledge of Time Broker, threatened in any court or before any arbitrator,
governmental department, commission, bureau, board, agency or instrumentality,
domestic or foreign, to restrain or prohibit, or to obtain damages, a discovery
order or other relief in connection with this Agreement or the consummation of
the transactions contemplated hereby.
20.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF LICENSEE.
Licensee hereby represents, warrants and covenants to Time Broker as set forth
in this Section 20.2.
20.2.1 AUTHORITY. Licensee has been duly appointed as
receiver for the assets of the Station by Order of the Superior Court in Case
No. D-96466 dated November 29, 1993. Pursuant to such appointment, Licensee
has the full power and authority to manage the assets of the Station, to the
extent permitted under the laws of the State of Georgia and the authority of
the Superior Court. Moreover, by virtue of such appointment, Licensee has the
full power and authority to enter into and perform this Agreement and the
transactions contemplated
8
<PAGE> 9
hereby, to the extent permitted under the laws of the State of Georgia and the
authority of the Superior Court.
20.2.2 NO BREACH OR VIOLATION. Except as set forth on
Schedule 20.2.2, the execution and delivery by Licensee of this Agreement, the
consummation by Licensee of the transactions contemplated hereby, and
compliance by Licensee with the terms hereof, does not and will not:
(i) to the best of Licensee's knowledge, in any
material respect, violate any law, regulation, order, writ, injunction, decree,
determination or award of any court, governmental department, board, agency or
instrumentality, domestic or foreign, or any arbitrator, applicable to Licensee
or its assets and properties; or
(ii) result in prohibited action under any term or
provision of, the material breach of any term or provision of, the termination
of, or the acceleration or permitting the acceleration of the performance
required by the terms of, or constitute a default under or require the consent
of any party to any loan agreement, indenture, mortgage, deed of trust or
other contract, agreement or instrument, to which Licensee is a party or by
which it is bound; or
(iii) cause the suspension or revocation of any
authorization, consent, approval or license currentiy in effect with respect to
Licensee.
20.2.3 APPROVALS. Except as set forth on Schedule
20.2.3, no authorizations, approvals or consents from any governmental or
regulatory authorities or agencies are necessary to permit Licensee to execute
and deliver this Agreement and to perform its obligations hereunder.
20.2.4 NO LITIGATION. Except as set forth on Schedule
20.2.4, there are no actions, suits, investigations or proceedings pending or,
to Licensee's knowledge, threatened against or affecting the Assets, in any
court or before any arbitrator, or before or by any governmental department,
commission, bureau, board, agency or instrumentality, domestic or foreign,
which, if adversely determined, would impair the ability of Licensee
to perform its obligations hereunder or would impair or hinder the ability or
right of Time Broker to operate the Station after the Commencement Date in the
manner heretofore operated by Licensee.
20.2.5 CONTRACTS. To Licensee's knowledge, Exhibit A to
the Assignment Agreement (as defined in Section 30 of this Agreement) lists all
of the leases, contracts and agreements to which Licensee is a party with
respect to the Station (the "Contracts") and which Time Broker has agreed to
assume pursuant to Section 30 of this Agreement. Licensee has performed all of
its duties and obligations under each of the Contracts in all material
respects, the failure to perform which would have material adverse effect on the
business, operations or financial condition of the Station. There are no
material defaults under any of the Contracts by Licensee or, to the best of
Licensee's knowledge, by any other party, or any events, which with notice, the
passage of time or both, would constitute a material default
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<PAGE> 10
under any of the Contracts. All Contracts are in full force and effect and
are valid and enforceable in accordance with their respective terms. Except
as shown on Schedule 20.2.6, neither the execution and delivery of this
Agreement, not the consummation of the transactions contemplated hereby does
or will result in a breach or default under, or permit any party to modify any
obligations under, or cause or permit any termination, cancellation or loss of
benefits under, any of the Contracts except for breaches or defaults under
Contracts which by their terms prohibit assignment or require any consent to
assignment. True and complete copies of all of the Contracts have been or
will be delivered by Licensee to Time Broker.
20.2.6 LICENSES. To Licensee's knowledge, Schedule 20.2.6
accurately and completely lists all material authorizations, licenses, permits
and franchises of any private entity or public or governmental body granted or
assigned to Licensee with respect to the Station (the "Licenses"). All of the
Licenses are validly issued and in full force and effect and Licensee has
fulfilled and performed all of its obligations with respect thereto and has
full power and authority to operate thereunder. Licensee holds all licenses
necessary to enable it to conduct its business of operating the Station in all
material respects as presentiy conducted. True and complete copies of each of
the Licenses have been or will be delivered by Licensee to Time Broker.
20.2.7 FCC COMPLIANCE. Except as shown on Schedule
20.2.7, to Licensee's knowledge, the Station has been operated at all times by
Licensee in material accordance with their terms of the Licenses for the
Station, the Federal Communications Act of 1934, as amended ("Communications
Act"), and all applicable rules, regulations and policies of the FCC. Licensee
has timely filed or made all applications, reports, and other disclosures
required by the FCC to be filed or made with respect to the Station. The
Licenses are valid and in full force and effect.
Except as shown on Schedule 20.2.7, to the best of Licensee' s
knowledge, no application, action or proceeding is pending for the renewal or
modification of any of the Licenses and, to the best of Licensee's knowledge,
there is not now issued or outstanding any investigation or material compliant
against Licensee at the FCC as of the date of this Agreement relating to the
Station. To the best of Licensee's knowledge, there is no proceeding pending at
the FCC, and there is no outstanding notice of violation from the FCC as of the
date of this Agreement relating to the Station. To the best of Licensee's
knowledge, (i) there is no reasonable basis for the initiation or issuance by
the FCC of any investigation, proceeding or notice of violation, and (it) is
no reasonable basis on which any third party could file a compliant, which
would prevent or delay favorable FCC action on the FCC Application (as defined
in Section 6.1 of the Purchase Agreement). To the best of Licensee's
knowledge, all fees payable to governmental authorities pursuant to the
Licenses have been paid and no event has occurred which, individually or in the
aggregate, and with or without the giving of notice of the lapse of time or
both, would constitute grounds for revocation thereof and would have a material
adverse effect on the business or financial condition of the Station.
20.2.8 COMPLIANCE WITH LAWS. To the best of Licensee's
knowledge,
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Licensee has all licenses permits or other authorizations of governmental,
regulatory or administrative agencies required to conduct its business with
respect to the Station as currentiy conducted. To the best of Licensee's
knowledge, no judgment, decree, order or notice of violation has been issued
by any such agency or authority which permits, or would permit, revocation,
modification or termination of any governmental permit licenses or
authorization or which results or could result in any material impairment of
any rights thereunder. With respect to the Station, to the best of Licensee's
knowledge, Licensee is in compliance with all applicable federal, state, local
or foreign laws, regulations, statutes, rules, ordinances, directives and orders
and any other requirements of any governmental, regulatory or administrative
agency or authority or court or other tribunal applicable to it.
21. ASSET PURCHASE AGREEMENT. Contemporaneously with the execution and
delivery hereof, Licensee and Time Broker have executed and delivered to each
other an asset purchase agreement (the "Purchase Agreement") regarding the
purchase by Time Broker of all of the assets managed by Licensee used or
useable in the operation of the Station.
22. HEADINGS. The headings contained in this Agreement are
included for convenience only and no such heading shall in any way alter the
meaning of any provision.
23. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
enforceable and binding upon, and inure to the benefit of the parties hereto,
their heirs, successors and assigns. No party shall assign its interest under
this Agreement, by operation of law or otherwise, without the written consent
of the other party, except that Time Broker may assign its rights and
obligations under this Agreement to any permitted assignee under Section 15.8
of the Purchase Agreement, provided that any such assignee agrees to assume
all of Time Broker's obligations hereunder and agrees to be bound by all of
the terms and conditions hereof.
24. COUNTER-PART SIGNATURES. This Agreement may be signed in one or
more counterparts, each of which shall be deemed a duplicate original, binding
on the parties hereto notwithstanding that the parties are not signatory to
the same original or the same counterpart.
25. NOTICES. Any notice required hereunder shall be in writing and
any payment, notice or other communications shall be deemed given when mailed
by certified mail or Federal Express (or similar express courier), postage
prepaid, with retum receipt requested, and addressed in accordance with
Attachment V hereto.
26. ENTIRE AGREEMENT. This Agreement (including the Attachments and
the Purchase Agreement) embodies the entire agreement between the parties and
there are no other agreements, representations, warranties or understandings,
oral or written, between them with respect to the subject matter hereof. No
alteration, modification or change of this Agreement shall be valid unless by
like written instrument signed by each party hereto.
27. SEVERABILITY. If any provision contained in this Agreement is
held to be invalid, illegal or unenforceable, this shall not affect any other
provision hereof, and this Agreement
11
<PAGE> 12
shall be construed as if such invalid, illegal or unenforceable provision or
provisons had not been contained herein.
28. NO JOINT VENTURE. The parties agree that nothing herein shall
constitute a joint venture between them. The parties acknowledge that call
letters, trademarks and other intellectual property shall at all times remain
the property of the respective parties and that neither party shall obtain any
ownership interest in the other party's intellectual property by virtue of this
Agreement.
29. ACCOUNTS RECEIVABLE ASSIGNMENT. Licensee hereby assigns to Time
Broker any and all accounts receivable due to Licensee in excess of $30,000.
Time Broker agrees to collect, on behalf of Licensee, all such accounts
receivable and immediately remit same to Licensee.
30. ASSIGNMENT AND ASSUMPTION OF CONTRACTS. Concurrentiy with the
execution and delivery hereof, Time Broker and Licensee have executed and
delivered to each other an Assignment and Assumption of Contracts (the
"Assignment Agreement") in the form attached as Attachment VI, pursuant to
which Licensee has assigned its rights, and Time Broker has assumed Licensee's
obligations, under certain agreements to which Licensee is a party (the
"Assigned Contracts").
31. RESTRICTION ON SALE OF ASSETS. Except as expressly provided for
herein, Licensee shall not sell, assign, transfer or otherwise convey to any
third party any interest in any material portion of the Assets.
32. PRORATIONS; BILLINGS.
32.1 PRORATIONS. Operations of the Station and the expenses and
liabilities attributable thereto through 12:00 a.m. on the Commencement Date
shall be for the account and the responsibility of Licensee. Other than as
specifically stated in this Agreement, all expenses and liabilities
attributable to Time Broker's operations after 12:01 a.m. on the Commencement
Date shall be for the account of Time Broker. Within sixty (60) days after
the Commencement Date, Licensee and Time Broker shall deliver to each other
statements reflecting the various pro-rated items, including, but not limited
to, prepaid expenses and revenues, telephone and utility charges.
32.2 BILLINGS. Licensee shall perform an end of schedule
billing as soon as practicable after the Commencement Date, but not later than
30 days after the Commencement Date, in order to facilitate future billing by
Time Broker.
33. COOPERATION. Each party will cooperate with the other with
respect to establishing and attaining the strategic and operational goals of
the Station. Without limiting the generality of the foregoing, the parties
shall share mutually beneficial research and other information regarding the
Station and shall attend such meetings as may be reasonably called and convened
by one of the parties in furtherance of the best interests of the Station.
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<PAGE> 13
34. SURVIVAL. The representations and warranties of the parties
hereunder shall survive until the Closing Date, or if the Purchase Agreement
is terminated prior to Closing, the effective date of such termination.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TROPIC OF ST. SIMON, INC.
By:
-------------------------
Name
Title
LEE M. MITCHELL, as receiver
for WMOG (AM) and WMOG (FM)
By:
-------------------------
13
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ATTACHMENT I
------------
PROGRAMMING
-----------
A. For the Station, Time Broker will present to Licensee for
broadcast a format for approximately 160 hours a week. Time Broker shall not
substantially change that format without the prior written consent of Licensee
at least 90 days prior to the implementation of the new format, which consent
shall not be unreasonably withheld.
B. Licensee shall have the right to use at least eight (8)
hours a week of programming on the Station for the presentation of public
affairs programs. Licensee's public affairs programs shall respond to local
area needs and interests which it has ascertained and shall be presented at
times deemed by Licensee to best meet listening needs. Licensee shall maintain
a complete public file (as required by the FCC) and compile and timely file
all required quarterly Issues/Programs lists. Time Broker shall maintain and
deliver to Licensee copies of all operating and programming information
including without limitation EBS announcements and station operating logs,
necessary to maintain either such file or those records required to be kept
by FCC rule or policy.
14
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ATTACHMENT H
------------
CONSIDERATION
-------------
1. CONSIDERATION BY TIME BROKER. From and after the Commencement
Date, and each month thereafter until the Termination Date, Time Broker shall
pay to Licensee $1.00 in cash, plus Time Broker shall reimburse Licensee or
pay directiy all costs and expenses incurred by Licensee in connection with the
maintenance, operation, and insurance of all assets of the Stations.
2. FAILURE TO BROADCAST. Time Broker recognizes that all or part
of the time contracted for by Time Broker hereunder may not be broadcast over
the air due to preemption pursuant to Section 9 of this Agreement or to events
beyond the reasonable control of Licensee pursuant to Section 10 of this
Agreement. In the event scheduled programming referenced herein is not
broadcast for any such reason, Licensee shall promptiy and equitably prorate and
credit amounts payable under this Agreement. In no event shall Licensee be
liable for any consequential or incidental damages relating to its justified
failure or inability to air scheduled programming. If Time Broker, for any
reason, fails to deliver programming for any portion of the time it has
purchased, Time Broker shall not be entitied to any abatement of charges
provided herein, and Licensee shall have the right to substitute programming
of its choosing and to retain the revenues from any advertising broadcast in
any such period.
15
<PAGE> 16
ATTACHMENT II
-------------
PROGRAM AND OPERATING STANDARDS
-------------------------------
Time Broker and Licensee shall cooperate with each other in the
broadcasting of programs of the highest possible standard of excellence.
Without limiting the generality of the foregoing, the parties will observe the
following policies in the preparation, writing and production of their own
(non-syndicated or network) programs:
I. RESPECTFUL OF FAITHS. The subject of religion and references to
particular faiths and tenants shall be treated with respect at all times.
H. CONTROVERSIAL ISSUES. Any discussion of controversial
issues of public importance shall be reasonably balanced with the presentation
of contrasting viewpoints in the course of overall programming; no attacks on
the honesty, integrity, or like personal qualities of any person or group of
person shall be made during the discussion of controversial issues of public
importance; and during the course of political campaigns, Station programs
(other than public forum or talk features) are not to be used as a forum for
editorializing about individual candidates. If such events occur, Licensee may
require that responsive programming be aired. In the event that a statute,
regulation or policy is adopted that requires the airing of responsive
programming, Time Broker agrees to comply with such statute, regulation or
policy and will prepare such responsive programming.
IH. DONATION SOLICITATION. Requests for donations in the form of a
specific amount shall not be made if there is any suggestion that such donation
will result in miracles, physical cures or life-long prosperity. However,
statements generally requesting donations to support a broadcast or church are
permitted.
IV. TREATMENT OF PARAPSYCHOLOGY. The advertising or promotion of
fortune telling, occultism, astrology, phrenology, palm reading, or numerology,
mind-reading, character readings, or subjects of the like nature will not be
broadcast.
V. NO MINISTERIAL SOLICITATIONS. No invitations by a minister
or other individual appealing on the program to have listeners come and visit
him or her for consultation or the like shall be made if such invitation
implies that the listeners will receive consideration, monetary gain, or total
physical cures for illness.
VI. NO VENDING OF MIRACLES . Any exhortation to listeners to
bring money to a church affair or service is prohibited if the exhortation,
affair, or service contains any suggestion that miracles, physical cures, or
prosperity will result.
16
<PAGE> 17
VII. SALE OF RELIGIOUS ARTIFACTS. The offering for sale of religious
artifacts or other items for which listeners would send money is prohibited
unless such items are normally available in ordinary commerce or are clearly
being sold for proper fund-rasing purposes.
VIII. NO MIRACLE SOLICITATION. Any invitation to listeners to meet at places
other than a church and/or to attend other than regular services of a church is
prohibited if the invitation, meeting, or service contains any claim that
miracles, physical cures or prosperity will result.
IX. NO PLUGOLA OR PAYOLA. The mention of any business activity or "plug"
for any commercial, professional, or other related endeavor, except where
contained in an actual commercial message of a sponsor, or otherwise lawful, is
prohibited.
X. NO LOTTERIES. Announcements giving any information about lotteries or
games prohibited by federal or state law or regulations are prohibited.
XI. NO GAMBLING. References to "dream books, " the "straight line, " or
other direct or indirect descriptions or solicitations relative to the "numbers
game," or the "policy game," or any other form of gambling are prohibited.
XII. NO NUMBERS GAMES. References to chapter and verse paragraphs,
paragraph numbers, or song numbers, which involve three digits should be avoided
and, when used, must reasonably relate to a non-gambling activity.
XIII. ELECTION PROCEDURES. At least fifteen (15) days before the start of
any primary or regular election campaign, Time Broker will clear with Licensee's
General Manager the rate Time Broker will charge for the time to be sold to
candidates for public office and/or their supporters to make certain that the
rate charged is in conformance with applicable law and station policy.
XIV. REQUIRED ANNOUNCEMENTS. Time Broker shall broadcast (t) an announcement
in form satisfactory to Licensee at the beginning of each hour to identify the
Station, (ii) an announcement at the beginning of each broadcast day or
appropriate broadcast period to indicate that program time has been purchased by
Time Broker and (iii) any other announcement that may be required by law,
regulation, or Station policy.
XV. COMMERCIAL RECORD KEEPING. No commercial messages or "plugs" shall be
made in programming presented over the Station to any business venture, profit-
making activity, or other interest (other than non-commercial announcements for
BONA FIDE charities, church activities, or other public service activities) in
which Time Broker or its employees is or are directly or indirectly interested
without
17
<PAGE> 18
the same having been approved in advance by Licensee's General
Manager or such broadcast being announced and logged as
sponsored.
XVI. NO ILLEGAL ANNOUNCEMENTS. No announcement or promotion prohibited by
federal or state law or regulation of any lottery or game shall be
made over the Station.
XVII. LICENSEE DISCRETION PARAMOUNT. In accordance with Licensee's
responsibility under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, Licensee reserves the right to
reject or terminate any advertising or programming being presented
over the Station which is in confiict with Station policy or which
in Licensee's sole but reasonable judgment would not serve the public
interest.
XVIII. PROGRAMMING PROHIBITIONS. Time Broker shall not knowingly broadcast
any of the following programs or announcements:
A. FALSE CLAIMS. False or unwarranted claims for any product
or service.
B. UNFAIR IMITATION. Infringements of another advertiser's
rights though plagiarism or unfair imitation of either program
idea or copy, or any other unfair competition.
C. COMMERCIAL DISPARAGEMENT. Any unfair disparagement of
competitors or competitive goods.
D. PROFANITY. Any programs or announcements that are slanderous,
obscene, indecent, profane, vulgar, repulsive or offensive,
either in theme or treatment.
E. UNAUTHENTICATED TESTIMONIALS. Any testimonials which
cannot be authenticated.
F. DESCRIPTIONS OF BODILY FUNCTIONS. Any presentation which
describes in a repellent manner bodily functions.
G. ADVERTISING. Any advertising matter or announcement which may,
in the opinion of Licensee, be injurious or prejudicial to the
interests of the public or the Station, or to honest
advertising and reputable business in general.
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<PAGE> 19
H. CONTESTS. Any contests or promotions which are in any
way misleading or constitute a public nuisance or are
likely to lead to injury to persons or property.
I. TELEPHONE CONVERSATIONS. Any programming in violation of
any statute, regulation or policy, including without
limitation to, Section 73. 1206 of the FCC's rules, or
any successor regulation, dealing with the taping and/or
broadcast of telephone conversations.
Licensee may waive any of the foregoing policies in specific instances
if, in its opinion, good broadcasting in the public interest is served.
In any case where obvious questions of policy or interpretation arise,
Time Broker will attempt in good faith to submit the same to Licensee for
decision before making any commitments in connection therewith.
19
<PAGE> 20
ATTACHMENT IV
-------------
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
-----------------------------
City of _____________________________
County of ____________________________
State of ____________________________
________________________________, being first duly sworn, deposes and
says as follows:
1. The undersigned is __________ (Position) for _________ (the "Station").
2. The undersigned has acted in the above capacity since _______________ .
3. No matter has been broadcast by the Station for which service, money
or other valuable consideration has been directiy or indirectiy paid,
or promised to, or charged, or accepted, by the undersigned from any
person, which matter at the time so broadcast has not been announced
or otherwise indicated as paid for or furnished by such person.
4. So far as the undersigned is aware, no matter has been broadcast by
the Station for which service, money, or other valuable consideration
has been directiy or indirectiy paid, or promised to, or charged, or
accepted by the Station in furnishing programs, from any person, which
matter at the time so broadcast as not been announced or otherwise
indicated as paid for or furnished by such person.
5. In the future, the undersigned will not pay or promise to pay to any
third party, request or receive any service, money, or any other
valuable consideration, direct or indirect, from a third party, in
exchange for the infiuencing of, or the attempt to infiuence, the
preparation or presentation of broadcast matter on the Station.
6. Neither the undersigned nor any family member of the undersigned has
any present direct or indirect ownership in (other than an investment
in a corporation whose stock is publicly traded and held), serves as
an officer or director of (with or without compensation) or serves as
an employee of, any person, firm or corporation engaged in:
a. The publishing of music;
b. The production, distribution (including wholesale and retail
sales outiets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
20
<PAGE> 21
c. The exploitation, promotion, or management of persons rendering
artistic, production and/or other services in the entertainment
field;
d. The ownership or operation of one or more radio or television
stations;
e. The wholesale or retail sale of records intended for public
purchase; or
f. Advertising on the Station.
7. The facts and circumstances relating to any such interest or interests
are as follows:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_____________________________________________.
_________________________________
Affiant
Subcribed and sworn to before me this ____ day of _________, 199__.
_________________________________
Notary Public
My commission Expires:
________________________
21
<PAGE> 22
ATTACHMENT V
------------
NOTICES
-------
If the notice is to Time Broker:
c/o Partech Communications Group, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
Attention: John E. Rayl, CEO
With a copy to:
Charles A. Koenig, Esq.
Cloud, Koenig & Ower
5354 North High Street, Suite 3D
Columbus, Ohio 43214
If the notice is to Licensee:
Lee M. Mitchell, Esq.
One First National Plaza
Chicago, Illinois 60603
With a copy to:
AT&T Commercial Finance Corporation
400 Perimeter Center Terrace
Atlanta, Georgia 30346
Attention: Samuel D. Bush
22
<PAGE> 23
ATTACHMENT VI
-------------
[Form of Assignment and Assumption of Contracts Agreement]
23
<PAGE> 24
ATTACHMENT VII
--------------
[Form of Indemnification Agreement]
24
<PAGE> 25
ATTACHMENT VIII
---------------
CERTIFICATION
____________(A)_____________ ("Licensee"), by its authorized
representative and pursuant to the requirements of Section 73.3555 (a) (2)
(ii) of the Rules of the Federal Communications Commission, 47 C.F.R. 73.3555
(a) (2) (ii), hereby certifies that, as Licensee of Station _____________
(AM/FM) ("Station"), it maintains ultimate control over the Station's
facilities, and over the finances, personnel and programming of the Station,
notwithstanding any provisions of the foregoing Time Brokerage Agreement.
(LICENSEE)
By:
------------------------
Name
Office
_______(B)______________ ("Brokering Station"), by its authorized
representative and pursuant to the requirements of Section 73.3555 (a) (2)
(ii) of the Rules of the Federal Communications Commission, 47 C.F.R. 73.3555
(a) (2) (ii), hereby certifies that, as the Brokering Station, that the
arrangement set forth in the foregoing Time Brokerage Agreement complies with
the provisions of paragraphs (a) (1) and (e) (1) of Section 73.3555 of the
Rules of the Federal Communications Commission, 47 C.F.R. 73.3555.
(BROKERING STATION)
By:
--------------------------
Name
Office
25
<PAGE> 26
SCHEDULE 20.1.4
---------------
None
26
<PAGE> 27
SCHEDULE 20.2.2
---------------
None
27
<PAGE> 28
SCHEDULE 20.2.3
---------------
None
28
<PAGE> 29
SCHEDULE 20.2.4
---------------
None
29
<PAGE> 30
SCHEDULE 20.2.6
---------------
A. Breach with respect to lease contracts agreements - None.
B. List all material authorizations, licenses, permits and franchises of
any private entity or public or governmental body granted or assigned
to Licensee with respect to the Station:
* Business License City of Brunswick, Georgia,
Certificate #1724 dated March 18, 1994, expires December 31, 1994
Licensee: WMOG AM & Island 93/ WBA Broadcasting Inc.
* AM Broadcast Station License Federal Communications Commission
File #BL-910204AD dated March 17, 1991, expires April 1, 1996
Licensee: WBA Corporation
* FM Broadcast Station License Federal Communications Commission
File #BLH-910204KA dated April 22, 1991, expires April 1, 1996
Licensee: WBA Partnership
30
<PAGE> 31
SCHEDULE 20.2.7
---------------
None
31
<PAGE> 1
EXHIBIT 10.65
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of _______________,
1993, by and between RICHARD D. SILVA, whose principal address is 35 Sombrero
Boulevard, Marathon, Florida 33050 ("Seller"), and PCG OF THE FLORIDA KEYS,
INC., a Nevada corporation, whose principal address is 3366 Riverside Drive,
Columbus, Ohio 43221 ("Buyer").
WHEREAS, Seller is the owner of One Hundred (100) shares of common stock of
WKKB, Inc., a Nevada corporation, which shares constitute One Hundred Percent
(100%) of all the issued and outstanding shares of WKKB, Inc.; and
WHEREAS, Seller has assigned to WKKB, Inc. all of his rights, title and
interest in and to that certain construction permit for the radio station WKKB
(FM), and all rights of broadcast and operation incident or appurtenant
thereto, and the Federal Communications Commission ("FCC") has approved such
assignment and recognizes WKKB, Inc. as the sole owner of said construction
permit and broadcast rights appurtenant thereto; and
WHEREAS, Seller is desirous of selling to Buyer, and Buyer is desirous of
acquiring from Seller, Forty-Nine (49) shares of the stock of WKKB, Inc. owned
by Seller, whereby Buyer will become the owner of Forty-Nine Percent (49%) of
all of the issued and outstanding stock of WKKB, Inc.; and
WHEREAS, Seller and Buyer are desirous of entering into a Close Corporation
Agreement of WKKB, Inc., whereby they will agree with respect to certain
matters involving the organization, structure, capitalization and management of
WKKB, Inc.
NOW, THEREFORE, WITNESSETH that in consideration of the mutual promises and
covenants hereinafter stipulated, the parties hereto agree as follows:
1. SALE OF STOCK; PAYMENT OF PURCHASE PRICE. Seller hereby agrees to sell,
convey, assign, set over and transfer onto Buyer, and Buyer hereby agrees to
acquire from Seller, Forty-Nine (49) shares of the common stock of WKKB, Inc.
(the "Shares") in exchange for the sum of Twenty Thousand Dollars ($20,000)
which sum shall constitute the full and absolute consideration to be paid for
the stock acquired hereunder. Such consideration shall be paid in cash by
Buyer to Seller at the Closing of this transaction.
2. DELIVERY OF DOCUMENTS, ETC. Seller shall execute a Stock Power in the
form attached hereto as Exhibit B transferring his ownership interest in the
Shares to Buyer, and shall deliver such Stock Power, together with the share
certificate evidencing such Shares, to Buyer upon the Closing hereof. Buyer
shall execute the Promissory Note evidencing the Purchase Price being paid for
the Shares acquired hereunder, and shall deliver said Promissory Note to Seller
upon the Closing hereof.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. As an inducement to Buyer to
enter into this Agreement, Seller hereby represents and warrants as follows:
(a) CAPITAL STRUCTURE. The authorized capital stock of WKKB, Inc. consists
of One Hundred (100) shares of $0.01 par common stock, of which all One Hundred
(100) shares are issued and outstanding. Other than as described hereinabove,
and except for this Agreement, there are no agreements, arrangements, options,
warrants or other rights or commitments by or with respect to WKKB, Inc.
relating to the issuance, sale, purchase or redemption of any shares of its
capital stock.
<PAGE> 2
(b) TRANSFER OF CONSTRUCTION PERMIT, ETC. Seller has fully transferred and
assigned to WKKB, Inc. all of Seller's rights, title and interest in and to the
FCC construction permit for radio station WKKB (FM), Key Colony Beach, Florida,
together will all rights of broadcast and ownership incident or appurtenant
thereto, and Seller retains no personal claim of right thereto other than
through his stock ownership in WKKB, Inc. Seller will defend WKKB, Inc.'s
right to title and ownership of said construction permit and all appurtenances
thereto against the claims of all others.
(c) FUNDAMENTAL CHANGES. Seller shall take no action to change the capital
stock of WKKB, Inc., whether by stock split, stock dividend, authorization of
additional stock, or otherwise, nor shall Seller allow WKKB, Inc., to become a
party to any plan of merger, consolidation, business combination or
reorganization, without the prior written consent of Buyer.
(d) AUTHORITY. This Agreement, when fully executed, shall constitute a
valid, binding agreement of Seller, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or other laws affecting the
enforceability of creditors' rights generally and the discretion of the courts
in granting equitable remedies. Neither this Agreement, nor the performance of
the transactions contemplated herein, shall cause or constitute a violation of
any agreement, instrument or document to which Seller or WKKB, Inc. is a party
or may be bound, require the approval of any governmental or regulatory
authority, or create or terminate the rights of any party against WKKB, Inc.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. As an inducement to Seller to
enter into this Agreement, Buyer hereby represents and warrants to Seller as
follows:
(a) ORGANIZATION. Buyer is a duly organized and validly existing
corporation, in good standing, under the laws of the state of Nevada. Buyer is
duly qualified as a foreign corporation in all jurisdictions in which it is so
required to qualify in order to conduct business.
(b) AUTHORITY. Buyer has the full power and authority to enter into this
Agreement and to consummate all the transactions required to be performed by it
hereunder. To the extent required, all shareholders' and directors'
resolutions authorizing Buyer to enter into this Agreement and perform the
transactions contemplated hereby have been duly executed and delivered. This
Agreement, when fully executed and delivered, shall constitute a valid and
binding agreement of Buyer, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency or other laws affecting the enforceability
of creditors' rights generally and the discretion of courts in granting
equitable remedies. Neither this Agreement nor the performance of the
transactions contemplated herein shall constitute or cause a violation of
Buyer's Articles of Incorporation, Regulations or By-laws, or of any agreement,
instrument or document to which Buyer is a party or may be bound, require the
approval of any governmental or regulatory authority, or create or terminate
the rights of any party against Buyer.
5. REPRESENTATIONS AND WARRANTIES COMMON TO BUYER AND SELLER. As an
inducement to each party to enter into this Agreement and to consummate the
transactions contemplated herein, each of the parties hereto hereby represents
and warrants to the other party as follows:
(a) BROKERS' OR FINDERS' FEES. Such party has neither entered into any
agreement, nor has any understanding or arrangement, with any person or entity
which would require or result in the payment of any fee, commission or other
form of remuneration or expense whatsoever as a result of any transaction
described or otherwise contemplated herein. Each party hereto hereby agrees to
fully pay any such costs or fees, and to indemnify and hold harmless each other
party hereto against liability therefrom, which may become due and payable by
reason of such indemnifying party's arrangement with any broker, finder or
other person or entity asserting any claim for such costs and fees.
(b) OMISSIONS. Such party has not made any representation or warranty herein
which is false or misleading in any material respect or which omits to state a
fact necessary to make such statement not misleading in any material respect.
2
<PAGE> 3
(c) CONTINUING NATURE. All of the representations and warranties set forth
in this Agreement by such party will continue to be true and correct through
the Closing hereof.
6. CLOSING. The Closing of this transaction shall take place on before the
expiration of fifteen (15) days following execution hereof, at a location
mutually agreeable to the parties hereto. No extension of the Closing shall be
valid unless it is by written consent executed by both parties hereto.
7. CLOSE CORPORATION AGREEMENT. The parties hereto agree to enter into a
Close Corporation Agreement, pursuant to the provisions of Chapter 78A of the
Nevada Revised Statutes (and any other similar applicable statutes), by which
the parties hereto shall agree to the management, operation and capital
structure of WKKB, Inc. The parties hereto further agree that said agreement
shall not be changed, altered or amended except by the unanimous agreement of
all parties thereto, and said agreement shall not terminate until such time as
all but one of the parties thereto shall cease to be a shareholder of WKKB,
Inc.
8. INDEMNIFICATION. Buyer hereby agrees to indemnify and hold Seller
harmless from and against any and all liabilities, losses, expenses, claims or
demands whatsoever arising, resulting, sustained or incurred by Seller in
connection with any material violation or breach of Buyer's representations,
warranties and covenants, or any other provision, set forth herein, subject to
Seller's acts of omission or commission; and Seller hereby agrees to indemnify
and hold Buyer harmless from and against any and all liabilities, losses,
expenses, claims or demands whatsoever arising, resulting, sustained or
incurred by Buyer in connection with any material violation or breach of
Seller's representations, warranties and covenants, or any other provision, set
forth herein, subject to Buyer's acts of omission or commission. Such
indemnification shall include, but shall not be limited to, any and all
reasonable attorneys fees, suits, costs and other expenses as may be incurred
in defending or prosecuting any action or other proceeding brought in
connection with this Agreement and/or this indemnification, including actions
for declaratory judgment, seeking release of liability, or otherwise; provided,
however, that the amount of any such indemnification shall be limited as
prescribed by any court of competent jurisdiction. In the event any claim is
asserted against either party hereto which could constitute a material breach
or violation of any of the representations, warranties, covenants or other
provisions of this Agreement by the other party hereto, or in the event either
party hereto is required to commence any action or other proceeding to assert,
defend or otherwise establish any of its rights or duties under this Agreement,
the party seeking indemnification hereunder shall promptly give written notice
of such claim to the other party who shall, within ten (10) days after the
receipt of such notice, give the party seeking indemnification written notice
of the other party's decision whether or not to defend such claim or to
participate in any action or other proceeding brought hereunder. In the event
the other party decides not to defend or otherwise participate in any action or
other proceeding as described in the preceding sentence, the party seeking
indemnification hereunder may proceed without further notice to the other
party, and the other party shall nevertheless remain fully liable hereunder.
Either party hereto may fully participate contemporaneously with the other
party hereto in any such action or other proceeding, at its own expense,
without affecting in any way the provisions of this indemnification.
9. MISCELLANEOUS.
(a) NOTICES. All necessary notices, demands and requests shall be
deemed to have been fully given when deposited in the United States Mail,
certified mail with postage prepaid, addressed as follows:
If to Buyer: PCG of the Florida Keys, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
Attn: John E. Rayl, President
3
<PAGE> 4
With a copy to: Charles A. Koenig, Esq.
Koenig & Owen
65 South Fifth Street
Columbus, Ohio 43215
If to Seller: Richard L. Silva
Sombrero Marina
35 Sombrero Boulevard
Marathon, Florida 33050
With a copy to: William D. Silva, Esq.
Blair, Joyce & Silva
1825 K Street, N.W.
Washington, D.C. 20006
(b) HEADINGS. The paragraph headings contained in this Agreement are
for convenience of reference only and do not form a part hereof or in any way
modify, interpret or construe the meanings of the parties.
(c) MODIFICATIONS; WAIVER. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
executed with the same formality as this Agreement.
(d) PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, all other provisions shall nevertheless continue
in full force and effect.
(e) CONTROLLING LAW; SITUS. All matters affecting the interpretation
of this Agreement an the rights of the parties hereto in relation to this
Agreement shall be governed an controlled by the laws of the State of Delaware,
and any litigation involving this Agreement shall be instituted, tried and
finally determined only in the Courts of the State of Ohio.
(f) SURVIVAL OF CLOSING AND BINDING EFFECT. It is agreed that all
promises, agreements, covenants, warranties and representations of the parties
hereto which are contained herein shall survive and continue in full force and
effect after the Closing. It is further agreed that every provision of this
Agreement shall be binding upon each of the parties and their respective heirs,
executors, administrators, successors and assigns.
(g) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, and there are no representations, warranties, covenants or
undertakings other than those expressly set forth herein.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representative on the day and year first set
forth above.
________________________________
Richard D. Silva
PCG Of The Florida Keys, Inc.
By: ____________________________
President
5
<PAGE> 1
EXHIBIT 10.66
SECURITY, PLEDGE AND HYPOTHECATION AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of March, 1993, by and
between PCG OF THE FLORIDA KEYS, INC. a Nevada corporation ("Secured Party")
and RICHARD D. SILVA ("Debtor")
WHEREAS, Debtor has this day sold Secured Party forty-nine (49) shares of stock
of WKKB, Inc., and has further granted Secured Party option whereby Secured
Party can resell said forty-nine (49) shares of stock back to Debtor, pursuant
to terms and conditions set forth in a Put Option Agreement between the parties
of even date herewith; and
WHEREAS, in order to induce Secured Party to acquire said shares, Debtor has
agreed to grant Secured Party a security interest in certain stock as provided
hereinafter to secure Debtor's obligation to repurchase said shares pursuant to
the Put Option Agreement.
NOW, THEREFORE, WITNESSETH that in consideration of the mutual promises and
covenants hereinafter stipulated, and good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows.
1. In consideration of Secured Party's agreement to acquire forty-nine (49)
shares of stock of WKKB, Inc. from Debtor, and other good and valuable
consideration granted by Secured Party to Debtor and Guarantor, Debtor has
granted Secured Party an option to resell said shares to Debtor for the sum of
Twenty Thousand Dollars ($20,000), and to secure said obligation of Debtor to
repurchase said shares, Debtor hereby pledges, hypothecates and assigns to
Secured Party, and grants Secured Party a continuing security interest in the
following described stock:
Fifty-one (51) shares of common stock of WKKB, Inc.,
owned by Debtor, as evidenced by certificate no. 1,
together with any and all substitutions, replacements and proceeds thereof,
including, without limitation, any stock rights, stock dividends, cash or
property dividends, liquidating dividends, new securities and other property to
which Debtor may become entitled by reason of ownership of the property
described above and which, if received by Debtor, shall be held in trust and
forthwith delivered to Secured Party to be held hereunder. Debtor hereby
agrees to execute a stock power in the name of Secured Party for the stock
described hereinabove, and to deliver the above-described stock certificate and
stock power to Secured Party upon the execution hereof for Secured Party to
hold as collateral hereunder.
2. Secured Party is hereby authorized by Debtor, in the event of default
under the terms of this Agreement or the Note secured hereby, without prior
notice to Debtor, to cause the property pledged hereunder (or any part thereof)
to be transferred to and registered in the name of Secured Party, or in the
name of any other person or entity designated by Secured Party, and to notify
any persons or entities who may be obligated on the property pledged hereunder
to thereafter make any payments required thereunder to Secured Party. Secured
Party shall have the right to deliver all or any part of the property pledged
hereunder to any other person or entity, whereupon such transferee shall become
vested with all of Secured Party's rights and powers hereunder, and Secured
Party shall thereafter forever be fully released and discharged from any
liability or responsibility hereunder or by reason of such transfer.
3. Debtor represents and warrants that he is the legal and beneficial owner
of the property pledged hereunder; that such property represents fifty-one
percent (51%) of the issued and outstanding capital stock of WKKB, Inc., and
that the total authorized capital stock of WKKB, Inc. consists of one hundred
(100) shares of common stock; that said property was validly issued, is fully
paid and is nonassessable; that said property is not encumbered nor subject to
restrictions on transfer or sale or other disposition in any manner whatsoever
(other than pursuant to applicable securities laws); that Debtor is fully
authorized and empowered to grant a security interest in said property and to
transfer the property as provided hereunder; and that no action will be taken
to cause the property pledged hereunder to constitute less than fifty-one
percent (51%) of the capital stock of WKKB, Inc. nor to restrict or adversely
affect Secured Party's rights to obtain ownership of said property as provided
for hereunder.
4. Debtor assumes full responsibility for the preservation of his interest in
the property pledged hereunder, including taking all steps necessary to
preserve his or Secured Party's rights therein. Secured Party shall have no
responsibility or liability for the loss, deterioration in value or destruction
of all or any of such property, whether by reason of market conditions, passage
of time or otherwise.
<PAGE> 2
5. Upon default by Debtor in the payment or performance of any of the terms
and obligations of the Put Option Agreement or this Agreement, Secured Party
shall have the right to declare any and all amounts due and owing by Debtor to
Secured Party to be immediately due and payable in full, and shall have the
right to take and possess the property pledged hereunder as its own, and shall
have all other rights and remedies provided by law (including those of a
secured party under the Uniform Commercial Code). Secured Party may sell the
property pledged hereunder to satisfy the indebtedness of Debtor, or may retain
the property pledged hereunder in its own name and for its own use for such
purpose, or any combination of the foregoing as Secured Party determines in its
sole discretion. In the event Secured Party retains all or a portion of the
property pledged hereunder as its own in satisfaction of part or all of the
indebtedness of Debtor, Secured Party shall have no obligation to Debtor by
reason of the value of the property pledged hereunder exceeding the amount of
the indebtedness due, and Debtor hereby expressly waives any and all rights he
may have at common law or under the Uniform Commercial Code, or otherwise, for
appraisal of the property pledged hereunder or for any return of any excess
value of said property over the indebtedness due. Debtor hereby consents to
and covenants that the property pledged hereunder shall be deemed to be of
equal or lesser value than the indebtedness owed by him, and that he shall be
entitled to no further rights in said property should Secured Party elect to
transfer title to said property to its own name as provided herein.
6. Debtor hereby expressly waives demand, presentment and notice of protest
or dishonor, and consents to any extension, postponement or renewal of the
indebtedness secured hereby, or to any substitutions, exchange or release of
all or part of the security for said indebtedness, and to the release,
discharge or suspension of any rights or remedies against any person who may be
liable for the payment of said indebtedness, all without prior notice to
Debtor. Any requirement of reasonable notice prior to the disposition or
taking of any or all of the property pledged hereunder shall be met if Secured
party sends such notice by first class mail to Debtor at the address shown
below at least five (5) days prior to the date of any such sale, taking or
other disposition, or other event giving rise to the required notice.
7. Secured Party shall not be required to pursue any other remedy nor to
pursue any other party prior or as a condition to its enforcing its rights
hereunder, it being understood that the pledge and security interest created
hereby is primary, subject to no other condition, precedent or otherwise. Any
failure or delay of Secured Party to exercise any right hereunder shall not be
construed as a waiver of the right to exercise the same or any other right at
any time.
8. MISCELLANEOUS.
(a) NOTICES. All necessary notices, demands and requests shall be
deemed to have been fully given when deposited in the United States Mail,
certified mail with postage prepaid, addressed as follows:
If to Debtor: Richard D. Silva
c/o Sombrero Marina
35 Sombrero Boulevard
Marathon, Florida 33050
If to Secured Party: PCG of the Florida Keys, Inc.
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
(b) MODIFICATIONS; WAIVER. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
executed with the same formality as this Agreement.
(c) PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, all other provisions shall nevertheless continue
in full force and effect.
(d) CONTROLLING LAW; SITUS. All matters affecting the interpretation
of this Agreement an the rights of the parties hereto in relation to this
Agreement shall be governed an controlled by the laws of the State of Ohio and
any litigation involving this Agreement shall be instituted, tried and finally
determined only in the Courts of Franklin County, Ohio.
(e) SURVIVAL; BINDING EFFECT. It is agreed that all promises,
agreements, covenants, warranties and representations of the parties hereto
which are contained herein shall survive and continue in full force and effect
after the execution hereof and until such time as all indebtedness owing
hereunder is paid in full. It is further agreed that every provision of this
Agreement shall be binding upon each of the parties and their respective heirs,
executors, administrators, successors and assigns.
<PAGE> 3
(f) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, and there are no representations, warranties, covenants or
undertakings other than those expressly set forth herein.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representative on the day and year first set
forth above.
DEBTOR:
_____________________________
RICHARD D. SILVA
SECURED PARTY:
PCG OF THE FLORIDA KEYS, INC.
by:__________________________
Title
<PAGE> 1
EXHIBIT 10.67
PUT OPTION AGREEMENT
THIS AGREEMENT is made and entered into this _____ day of _______________,
1993, by and between RICHARD L. SILVA, whose principal address is 35 Sombrero
Boulevard, Marathon, Florida 33050 ("Grantor"), and PCG OF THE FLORIDA KEYS,
INC., a Nevada corporation, whose principal address is 3366 Riverside Drive,
Columbus, Ohio 43221 ("Grantee").
WHEREAS, Grantor is the owner of Fifty-One (51) shares of common stock of WKKB,
Inc., a Nevada corporation, which shares constitute Fifty-One Percent (51%) of
all the issued and outstanding shares of WKKB, Inc., and Grantee is the owner
of Forty-Nine (49) shares of WKKB, Inc., constituting the remaining Forty-Nine
(49%) of the Company's shares; and
WHEREAS, Grantor is desirous of granting to Grantee an option, exercisable at
Grantee's sole option, to repurchase all of Grantees Forty-Nine (49) shares of
stock in WKKB, Inc., whereupon Grantor will become the owner of One Hundred
Percent (100%) of all of the issued and outstanding stock of WKKB, Inc.
NOW, THEREFORE, WITNESSETH that in consideration of the mutual promises and
covenants hereinafter stipulated, the parties hereto agree as follows:
1. GRANT OF OPTION. Grantor hereby grants to Grantee an irrevocable Option
to sell to Grantor all of Grantee's Forty-Nine (49) shares of the common stock
of WKKB, Inc. (the "Shares") in exchange for Grantor's payment of the sum of
Twenty Thousand Dollars ($20,000), which sum shall constitute the full and
absolute consideration to be paid by Grantor for the stock acquired hereunder.
Grantor hereby acknowledges that upon execution hereof, Grantor has created an
unconditional obligation on his part to pay to Grantee the foregoing
consideration in the event Grantee exercises its Option hereunder, and that
Grantor shall pledge certain collateral to Grantee contemporaneously herewith
so as to secure the obligation created hereby.
2. TERM OF OPTION; MANNER OF EXERCISE; PAYMENT. This Option shall remain
the valid and binding obligation of Grantor for a term of one (1) year from the
date Station WKKB, Key Colony Beach, Florida, commences operation, and should
Grantee fail to exercise the Option as hereinafter provided within said term,
then this Option shall terminate and all obligations of Grantor to Grantee
hereunder shall cease. Grantee shall exercise this Option by providing written
notice (in the form attached hereto as Exhibit A) to Grantor within the Option
term. Grantor shall have twenty (20) days following receipt of said notice to
pay Grantee the Option purchase price described in paragraph 1 hereof, which
shall be paid in cash and delivered to Grantee's place of business within said
twenty (20) day period. Upon receipt of payment as required hereinabove,
Grantee shall deliver its share certificate for the Shares together with an
executed stock power in favor of Grantor. In the event Grantor fails to pay
the Option purchase price as required herein, Grantee shall be entitled to
foreclose upon the collateral pledged hereunder in full satisfaction of the
indebtedness due hereunder, and without further obligation to Grantor for any
excess value of said collateral. In the event of such foreclosure, Grantor
hereby agrees to execute any and all applications, documents and instruments
necessary to transfer the collateral to Grantee, including, without limitation,
all filings required by the Federal Communications Commission.
3. REPRESENTATIONS AND WARRANTIES OF GRANTOR. As an inducement to Grantee
to enter into this Agreement, Grantor hereby represents and warrants as
follows:
(a) AUTHORITY. This Agreement, when fully executed, shall constitute a
valid, binding agreement of Grantor, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or other laws affecting the
enforceability of creditors' rights generally and the discretion of the courts
in granting equitable remedies. Neither this Agreement, nor the performance of
the transactions contemplated herein, shall cause or constitute a violation of
any agreement, instrument
<PAGE> 2
or document to which Grantor or WKKB, Inc. is a party or may be bound, require
the approval of any governmental or regulatory authority, or create or
terminate the rights of any party against WKKB, Inc.
4. REPRESENTATIONS AND WARRANTIES OF GRANTEE. As an inducement to Grantor
to enter into this Agreement, Grantee hereby represents and warrants to Grantor
as follows:
(a) ORGANIZATION. Grantee is a duly organized and validly existing
corporation, in good standing, under the laws of the state of Nevada. Grantee
is duly qualified as a foreign corporation in all jurisdictions in which it is
so required to qualify in order to conduct business.
(b) AUTHORITY. Grantee has the full power and authority to enter into this
Agreement and to consummate all the transactions required to be performed by it
hereunder. To the extent required, all shareholders' and directors'
resolutions authorizing Grantee to enter into this Agreement and perform the
transactions contemplated hereby have been duly executed and delivered. This
Agreement, when fully executed and delivered, shall constitute a valid and
binding agreement of Grantee, enforceable in accordance with its terms, subject
to applicable bankruptcy, insolvency or other laws affecting the enforceability
of creditors' rights generally and the discretion of courts in granting
equitable remedies. Neither this Agreement nor the performance of the
transactions contemplated herein shall constitute or cause a violation of
Grantee's Articles of Incorporation, Regulations or By-laws, or of any
agreement, instrument or document to which Grantee is a party or may be bound,
require the approval of any governmental or regulatory authority, or create or
terminate the rights of any party against Grantee.
5. REPRESENTATIONS AND WARRANTIES COMMON TO GRANTEE AND GRANTOR. As an
inducement to each party to enter into this Agreement and to consummate the
transactions contemplated herein, each of the parties hereto hereby represents
and warrants to the other party as follows:
(a) BROKERS' OR FINDERS' FEES. Such party has neither entered into any
agreement, nor has any understanding or arrangement, with any person or entity
which would require or result in the payment of any fee, commission or other
form of remuneration or expense whatsoever as a result of any transaction
described or otherwise contemplated herein. Each party hereto hereby agrees to
fully pay any such costs or fees, and to indemnify and hold harmless each other
party hereto against liability therefrom, which may become due and payable by
reason of such indemnifying party's arrangement with any broker, finder or
other person or entity asserting any claim for such costs and fees.
(b) OMISSIONS. Such party has not made any representation or warranty herein
which is false or misleading in any material respect or which omits to state a
fact necessary to make such statement not misleading in any material respect.
(c) CONTINUING NATURE. All of the representations and warranties set forth
in this Agreement by such party will continue to be true and correct through
the Closing hereof.
6. INDEMNIFICATION. Grantee hereby agrees to indemnify and hold Grantor
harmless from and against any and all liabilities, losses, expenses, claims or
demands whatsoever arising, resulting, sustained or incurred by Grantor in
connection with any material violation or breach of Grantee's representations,
warranties and covenants, or any other provision, set forth herein, subject to
Grantor's acts of omission or commission; and Grantor hereby agrees to
indemnify and hold Grantee harmless from and against any and all liabilities,
losses, expenses, claims or demands whatsoever arising, resulting, sustained or
incurred by Grantee in connection with any material violation or breach of
Grantor's representations, warranties and covenants, or any other provision,
set forth herein, subject to Grantee's acts of omission or commission. Such
indemnification shall include, but shall not be limited to, any and all
reasonable attorneys fees, suits, costs and other expenses as may be incurred
in defending or prosecuting any action or other proceeding brought in
connection with this Agreement and/or this indemnification, including actions
for declaratory judgment, seeking release of liability, or otherwise; provided,
however, that the amount of any such indemnification shall be limited as
prescribed by any court of competent jurisdiction. In the event any claim is
asserted against either party hereto which could constitute a material breach
or
2
<PAGE> 3
violation of any of the representations, warranties, covenants or other
provisions of this Agreement by the other party hereto, or in the event either
party hereto is required to commence any action or other proceeding to assert,
defend or otherwise establish any of its rights or duties under this Agreement,
the party seeking indemnification hereunder shall promptly give written notice
of such claim to the other party who shall, within ten (10) days after the
receipt of such notice, give the party seeking indemnification written notice
of the other party's decision whether or not to defend such claim or to
participate in any action or other proceeding brought hereunder. In the event
the other party decides not to defend or otherwise participate in any action or
other proceeding as described in the preceding sentence, the party seeking
indemnification hereunder may proceed without further notice to the other
party, and the other party shall nevertheless remain fully liable hereunder.
Either party hereto may fully participate contemporaneously with the other
party hereto in any such action or other proceeding, at its own expense,
without affecting in any way the provisions of this indemnification.
7. MISCELLANEOUS.
(a) NOTICES. All necessary notices, demands and requests shall be
deemed to have been fully given when deposited in the United States Mail,
certified mail with postage prepaid, addressed as follows:
If to Grantee: PCG of the Florida Keys, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
Attn: John E. Rayl, President
With a copy to: Charles A. Koenig, Esq.
Koenig & Owen
65 South Fifth Street
Columbus, Ohio 43215
If to Grantor: Richard L. Silva
Sombrero Marina
35 Sombrero Boulevard
Marathon, Florida 33050
With a copy to: William D. Silva, Esq.
Blair, Joyce & Silva
1825 K Street, N.W.
Washington, D.C. 20006
(b) HEADINGS. The paragraph headings contained in this Agreement are
for convenience of reference only and do not form a part hereof or in any way
modify, interpret or construe the meanings of the parties.
(c) MODIFICATIONS; WAIVER. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
executed with the same formality as this Agreement.
(d) PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, all other provisions shall nevertheless continue
in full force and effect.
(e) CONTROLLING LAW; SITUS. All matters affecting the interpretation
of this Agreement an the rights of the parties hereto in relation to this
Agreement shall be governed an controlled by the laws of the State of Delaware,
and any litigation involving this Agreement shall be instituted, tried and
finally determined only in the Courts of the State of Ohio.
(f) SURVIVAL OF CLOSING AND BINDING EFFECT. It is agreed that all
promises, agreements, covenants, warranties and representations of the parties
hereto which are contained herein shall
3
<PAGE> 4
survive and continue in full force and effect after the Closing. It is further
agreed that every provision of this Agreement shall be binding upon each of the
parties and their respective heirs, executors, administrators, successors and
assigns.
(g) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, and there are no representations, warranties, covenants or
undertakings other than those expressly set forth herein.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representative on the day and year first set
forth above.
________________________________
Richard D. Silva
PCG Of The Florida Keys, Inc.
By: ____________________________
President
4
<PAGE> 5
EXHIBIT A
NOTICE OF EXERCISE OF OPTION
RICHARD L. SILVA
c/c Sombrero Marina
35 Sombrero Boulevard
Marathon, Florida 33050
Date:____________________, 199___
The undersigned hereby irrevocably elects to exercise its Option to sell all of
its shares of common stock of WKKB, Inc., consisting of forty-nine (49) of the
issued and outstanding shares of stock of WKKB, Inc., in consideration of the
sum of Twenty Thousand Dollars ($20,000), which is to be paid by you to the
undersigned, in cash, within twenty (20) days following your receipt of this
Notice. Failure on your part to make the payment within said twenty (20) days
shall entitle the undersigned to proceed against the collateral pledged by you
to secure payment of this obligation.
PCG of the Florida Keys, Inc.
By:_____________________________________
Title
5
<PAGE> 1
EXHIBIT 10.68
PURCHASE OPTION AGREEMENT
--------------
THIS AGREEMENT is made and entered into this _____ day of _______________,
1993, by and between RICHARD D. SILVA, whose principal address is 35 Sombrero
Boulevard, Marathon, Florida 33050 ("Seller"), and PCG OF THE FLORIDA KEYS,
INC., a Nevada corporation, whose principal address is 3366 Riverside Drive,
Columbus, Ohio 43221 ("Buyer").
WHEREAS, Seller is the owner of Fifty-One (51) shares of common stock of WKKB,
Inc., a Nevada corporation, which shares constitute Fifty-One Percent (51%) of
all the issued and outstanding shares of WKKB, Inc.; and
WHEREAS, Buyer is the owner of Forty-Nine (49) shares of the stock of WKKB,
Inc., by virtue of Buyer's acquisition earlier this day of said shares from
Seller, which shares constitute Forty-Nine Percent (49%) of all of the issued
and outstanding stock of WKKB, Inc.; and
WHEREAS, Seller is desirous of providing Buyer with an option to purchase
Seller's entire stock ownership in WKKB, Inc., to wit: Seller's Fifty-One (51)
shares of common stock as aforesaid, so as to enable Buyer to become the One
Hundred Percent (100%) owner of WKKB, Inc.
NOW, THEREFORE, WITNESSETH that in consideration of the sum of One Dollar
($1.00) and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and further in consideration of the mutual
promises and covenants hereinafter stipulated, the parties hereto agree as
follows:
1. PURCHASE OPTION. Seller hereby gives, grants, bargains, sells and
conveys to Buyer, its successors and assigns forever, the exclusive right to
purchase Fifty-One (51) shares of common shares of WKKB, Inc., or such other
number of shares as Seller may own from time to time as a result of any change
in the capital structure of WKKB, Inc. (the "Shares"). It is the intention of
the parties hereto that Buyer shall become the owner of One Hundred Percent
(100%) of the capital stock of WKKB, Inc., issued and outstanding, following
its exercise of this Option, and Seller hereby represents and warrants that he
shall take no actions with respect to the Shares or with respect to the capital
structure of WKKB, Inc. which would have the effect or consequences of
preventing Buyer from attaining the ownership position in WKKB, Inc. as
aforesaid. This Option is for the sale by Seller, and the purchase by Buyer,
of all of Seller's Fifty-One Percent (51%) stock ownership interest in WKKB,
Inc., and the sale or purchase of a lesser amount of Seller's stock ownership
interest shall not be permitted hereunder, unless, and then only to the extent,
as Buyer and Seller may agree in writing.
2. PURCHASE PRICE. The purchase price to be paid by Buyer to Seller, his
heirs, successors and assigns forever, for the Shares acquired upon Buyer's
exercise of this Option is One Hundred Twenty-Five Thousand Dollars ($125,000),
which shall be payable by delivery to Seller of Buyer's promissory note (the
"Note"), in the form attached hereto as Exhibit A, in accordance with the terms
and tenor set forth in said Note.
3. EXERCISE OF OPTION. Notice of election to purchase hereunder by Buyer,
or its successors or assigns, shall be made in writing, in the form attached
hereto as Exhibit B, and shall be delivered to Seller on or before the
expiration of the term of this Option. Accompanying said notice, Buyer shall
deliver its duly executed Note for the Purchase Price, which shall be
enforceable against Buyer in accordance with its terms.
4. DELIVERY OF SHARES AND FURTHER DOCUMENTS. Upon exercise by Buyer of its
Option hereunder and delivery of the Purchase Price, Seller shall deliver to
Buyer all share certificates of WKKB, Inc. evidencing Seller's ownership of the
Shares being acquired hereunder, together with all necessary stock powers
required for the transfer of those Shares to Buyer. Further, Seller shall
execute such other documents and instruments as may be necessary to effect such
sale and transfer
1
<PAGE> 2
of the Shares by Seller to Buyer and to obtain the approval of the Federal
Communications Commission of transfer of control of WKKB, Inc. and the C-2 FM
license held by it.
5. TERM. The term of this Option shall be for a period of two (2) years
from date of execution hereof. If Buyer does not exercise its option to
acquire the Shares prior to the expiration of the term of this Option, all of
Buyer's rights to acquire Seller's Shares hereunder shall terminate with no
liability to Seller whatsoever.
6. LEGEND. During the entire term of this Option, Seller's share
certificates evidencing the Shares shall bear the following legend in a
conspicuous manner:
The securities represented by this certificate are subject to an
Option Purchase Agreement dated _______________ ___, 1993, which
grants the exclusive right to PCG of the Florida Keys, Inc., to
purchase all of the shares evidenced hereby, pursuant to the terms
of said Agreement.
7. MISCELLANEOUS.
(a) NOTICES. All necessary notices, demands and requests shall be
deemed to have been fully given when deposited in the United States Mail,
certified mail with postage prepaid, or if hand-delivered, to the following
adressess:
If to Buyer: PCG of the Florida Keys, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
Attn: John E. Rayl, President
With a copy to: Charles A. Koenig, Esq.
Koenig & Owen
65 South Fifth Street
Columbus, Ohio 43215
If to Seller: Richard L. Silva
Sombrero Marina
35 Sombrero Boulevard
Marathon, Florida 33050
With a copy to: William D. Silva, Esq.
Blair, Joyce & Silva
1825 K Street, N.W.
Washington, D.C. 20006
(b) HEADINGS. The paragraph headings contained in this Agreement are
for convenience of reference only and do not form a part hereof or in any way
modify, interpret or construe the meanings of the parties.
(c) MODIFICATIONS; WAIVER. A modification or waiver of any of the
provisions of this Agreement shall be effective only if made in writing and
executed with the same formality as this Agreement.
(d) PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, all other provisions shall nevertheless continue
in full force and effect.
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<PAGE> 3
(e) CONTROLLING LAW; SITUS. All matters affecting the interpretation
of this Agreement an the rights of the parties hereto in relation to this
Agreement shall be governed an controlled by the laws of the State of Nevada,
and any litigation involving this Agreement shall be instituted, tried and
finally determined only in the Courts of the State of Ohio.
(f) SURVIVAL OF CLOSING AND BINDING EFFECT. It is agreed that all
promises, agreements, covenants, warranties and representations of the parties
hereto which are contained herein shall survive and continue in full force and
effect after the Closing. It is further agreed that every provision of this
Agreement shall be binding upon each of the parties and their respective heirs,
executors, administrators, successors and assigns.
(g) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, and there are no representations, warranties, covenants or
undertakings other than those expressly set forth herein.
(h) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Purchase Option
Agreement to be executed by their duly authorized representative on the day and
year first above-written, in duplicate, each of which shall constitute an
original.
SELLER:
WITNESS:
________________________ __________________________
Richard D. Silva
BUYER:
PCG of the Florida Keys, Inc.
WITNESS:
________________________ By: __________________________
Title
3
<PAGE> 4
EXHIBIT B
NOTICE OF EXERCISE OF OPTION
RICHARD L. SILVA
c/c Sombrero Marina
35 Sombrero Boulevard
Marathon, Florida 33050
Date:____________________, 199___
The undersigned hereby irrevocably elects to exercise its Option to purchase
all of your shares of common stock of WKKB, Inc., consisting of Fifty-One
Percent (51%) of the issued and outstanding shares of stock of WKKB, Inc., in
consideration of the sum of One Hundred Twenty-Five Thousand Dollars
($125,000), which is being paid by delivery to you, contemporaneously herewith,
of the undersigned's promissory note in the full amount of said consideration.
PCG of the Florida Keys, Inc.
By:___________________________
Title
4
<PAGE> 1
EXHIBIT 10.69
SECURITY AGREEMENT
THIS AGREEMENT, dated the _____ day of March, 1993, between PCG OF THE
GOLDEN STRAND, INC. having its principal office at 3366 Riverside Drive, Suite
200, Columbus, Ohio 43215 (the "Debtor") and MEDIA GROUP, INC., having its
principal office at______
__________________________________________________________ (the "Secured
Party").
ARTICLE I
CREATION OF SECURITY INTEREST
1. Any amounts disbursed by Secured Party to Debtor, with interest thereon,
shall become additional indebtedness of Debtor secured by this Security
Agreement and the Debtor hereby grants to Secured Party a first security
interest in all the following, which shall be collectively hereinafter
referred to as the "Collateral".
(a) All equipment, machinery, appliances, fixtures, furniture,
furnishings and all other types of tangible, personal property
including all additions thereto, substitutions therefor,
replacements thereof and all insurance proceeds therefrom by
reason of loss or damage thereto located at and used in
connection with the radio station known as WDZD (FM) of
Shallote, North Carolina.
(b) All equipment, machinery, appliances, fixtures, furniture,
furnishings and all other types of tangible, personal property
including all additions thereto, substitutions therefor,
replacements thereof and all insurance proceeds therefrom by
reason of loss or damage thereto located at and used in
connection with the Debtor's business located at any and other
locations;
(e) Debtor hereby grants to Secured Party a first security
interest in all the following: rents, cash, issues and
profits of the premises as further security for the payment of
the obligation secured hereby and grants to the Secured Party
the right to enter.
2. This Agreement and the Collateral serve as security for the performance of
a demand note dated March ___, 1993, which is hereinafter called the
"Note", and any renewal, modification, extension, or refinancing thereof.
A copy of said Note is attached hereto and incorporated herein by
reference as Exhibit "A". The Collateral shall also secure all Debtor's
obligations and liabilities whatsoever and whenever arising out of
Debtor's promises to pay, covenants, warranties, or representations to the
Secured Party from any transaction now or hereafter occuring.
The Collateral shall be held by Secured Party; and so long as no Event of
Default has occurred and is continuing under the Note hereinafter defined
or which with the lapse of time or the giving of notice of both would
constitute such an Event of Default, all such Collateral and other sums
shall be paid and applied as follows: Any amounts from time to time
received by Secured Party shall be applied first to the payment of all
amounts of interest and then to the principal due and payable under the
Note.
<PAGE> 2
3. At its option and without any obligation to do so, Secured Party may
discharge or pay any taxes, liens, security interests, or other,
encumbrances at any time levied or placed on or against the Collateral or
Debtor in breach of this Agreement. Debtor agrees to reimburse Secured
Party on demand for any such payment made or expense incurred pursuant to
the foregoing authorizations. Moneys advanced by Secured Party required
to pay or discharge any of the above shall bear interest at 14% per annum
until paid in full, and in the Event of Default shall bear such interest
at the rate of 20% per annum.
4. Debtor will not cause the Collateral to be sold, transferred, assigned, or
modified without the prior written consent of Secured Party.
5. Debtor shall execute any UCC Financing Statements or other documents from
time to time, alone or with Secured Party, and do such other acts
considered by Secured Party to be reasonably necessary or desirable to
perfect or protect the security interests hereby created and shall pay all
costs and expenses (including, without limitation, reasonable fees and
expenses of counsel and filing fees) related to the preparation and filing
of any financial statements, continuation statements, or any other
documents related to the perfection or protection of the security
interests hereby created. Debtor hereby authorizes Secured Party as
Debtor's agent and attorney in fact to execute and file in any appropriate
office UCC financing statements and similar instruments signed only by
Secured Party. All costs of Secured Party to prepare or obtain such
documents or pay such fees shall, at option of Secured Party, bear
interest at 14% per annum until paid in full, and in the Event of Default
shall bear such interest at the rate of 20% per annum.
6. If an Event of Default occurs and is continuing, Debtor hereby appoints
the Secured Party as Debtor's true and lawful attorney, with full power of
substitution to take any action which the Secured Party may deem necessary
or appropriate to create, perfect, protect, and preserve the secured
interests of the Secured Party in the Collateral. Notwithstanding the
foregoing, upon written direction from the Secured Party and at Secured
Party's expense, Debtor will take all actions necessary or desirable,
including without limitation, litigation, to enforce Debtor's rights in
the Collateral; and, in such event, will pay over to the Secured Party all
profits received from any such action.
ARTICLE II
EVENTS OF DEFAULT
Any of the following events shall constitute an Event of Default hereunder:
(1) Debtor shall fail to make payment of the principal or interest on
the Note when due; or
(2) Debtor shall default in the due observance or performance of any
term, covenant, or representation contained in this Security
Agreement, or
(3) Debtor has made false representations to Secured Party; or
(4) Debtor shall cease doing business as a going concern, make an
assignment for the benefit of creditors, admit in writing its
inability to pay its debts as they become due, file a voluntary
petition in bankruptcy, be adjudicated a bankrupt or an insolvent,
file a petition seeking for itself any reorganization,
readjustment, liquidation, dissolution, or similar arrangement
under any present or future statute, law, or regulation or file
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<PAGE> 3
an answer admitting the material allegations of a petition filed
against it in any such proceeding or fail to have such petition
dismissed within 60 days after filing or consent to or acquiesce
in the appointment of a trustee, receiver, or liquidator of it or
all or any substantial part of it, assets or properties.
ARTICLE III
SECURED PARTY'S REMEDIES
Upon an Event of Default hereunder, Secured Party shall have the rights
and remedies of a secured party under the Uniform Commercial Code as in effect
in the state of Ohio. Without limiting the generality of the foregoing,
Secured party may upon Event of Default exercise the following rights and
remedies:
(1) Accelerate the due date of the Note and request immediate payment
of both principal and interest to date.
(2) Sell the Collateral in its possession.
(3) Debtor hereby agrees that a notice sent to it at least 10 days
before the time of any intended sale or other disposition of the
Collateral is to be made shall be deemed to be reasonable notice of such
sale or other disposition.
(4) Secured Party may incur reasonable attorneys' fees and expenses in
exercising any of its rights and remedies upon default, which fees and
expenses shall become parts of Secured Party's reasonable expenses of
retaking, holding, preparing for sale and the like. Debtor will reimburse
Secured Party on demand for all such expenses.
(5) Debtor agrees that if any warranty or representation contained
herein should prove to be untrue or incorrect in any material respect
when made, the secured Party may at its potion terminate this Agreement
and rescind the loan made hereunder; and Debtor shall pay to Secured
Party the principal amount due on the Note together with accrued interest
plus costs and expenses incurred by the Secured Party arising out of
enforcement of this provision.
ARTICLE IV
MISCELLANEOUS
1. No delay or omission of the Secured Party to exercise any remedy shall
exhaust or impair any remedy of the Secured Party nor shall any waiver by
the Secured Party extend or be taken to affect any subsequent default. No
remedy hereunder is intended to be exclusive of any other remedy but shall
be cumulative to any and every other remedy to which the Secured Party is
entitled. The Secured Party shall not be required to look to, enforce or
exhaust any other security, collateral, or guarantees first.
2. This Security Agreement and the rights and obligations of the parties
hereunder shall be construed and interpreted in accordance with the laws
of the state of Ohio.
3. Any notice or notification required to be given may be given by mailing
such notice, postage
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<PAGE> 4
prepaid, to Debtor's address as it appears at the beginning of this
Security Agreement.
4. All the terms, conditions, and covenants of this Security Agreement shall
inure to the benefit of and to bind the heirs, successors, and assigns of
the respective parties hereto.
5. This Security Agreement may not be changed orally but only by an agreement
in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
6. This Security Agreement shall be without recourse against the Debtor
except as to the warranties and covenants stated herein notwithstanding
anything to the contrary contained in the Note.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
DEBTOR SECURED PARTY
PCG OF THE GOLDEN STRAND, INC. MEDIA GROUP, INC.
By:__________________________ By:___________________________
Title:_______________________ Title:________________________
Page 4
<PAGE> 1
EXHIBIT 10.70
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of August ____, 1993, by and among
ED WINTON, whose principal mailing address is 1401 Maclay Commerce Drive,
Tallahassee, Florida 32312 ("Seller"), PARTECH COMMUNICATIONS GROUP, INC., a
Nevada corporation with its principal executive offices located at 3366
Riverside Drive, Suite 200, Columbus, Ohio 43221 ("Partech"), and Mark T.
Jorgenson d/b/a Jorgenson Broadcast Brokerage, an individual whose office is
located at 2700 West M.L. King Boulevard, Suite 400, Tampa, Florida 33607
(the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, Seller and Partech have agreed to enter into an agreement (the
"Agreement") concerning the acquisition by Partech or Partech's assignee from
Seller of operating FM radio broadcast station and of certain of the assets and
properties which comprise the station known as WMLO-FM (referred to hereafter
as the "Station"); and
WHEREAS, as an indication of Partech's good faith, Partech has agreed to
deposit Ten Thousand Dollars ($10,000.00) (the "Initial Deposit") with the
Escrow Agent upon the parties' complete execution of a Letter of Intent for the
purchase of the Station, and to deposit an additional Forty-Six Thousand
Dollars ($46,000.00) (the "Additional Deposit") with the Escrow Agent upon the
filing of an application for transfer of the Station's license with the FCC,
all such deposits to be held in escrow pursuant to the terms and conditions set
forth in this Escrow Agreement and, if applicable, the Agreement; and
WHEREAS, it is the intention of Seller and Partech that the Escrow Agent
shall receive and hold under the terms of this Escrow Agreement all funds which
the parties may agree to be held under the terms of this Escrow Agreement and
the Agreement (all such funds hereinafter collectively referred to as the
"Deposits").
NOW, THEREFORE, in consideration of the mutual promises of the other.
The parties hereto do hereby agree as follows:
1. DEPOSITS IN ESCROW.
(a) Partech hereby deposits in escrow, and the Escrow Agent
hereby acknowledges receipt of, the Initial Deposit in the amount of Ten
Thousand Dollars ($10,000.00).
(b) The Escrow Agent agrees to accept any Additional Deposit in
accordance with the terms and conditions of this Escrow Agreement and, if
applicable, the Agreement, and agrees to execute and deliver such other
agreements or documents as may be required by the parties.
2. RIGHTS RESPECTING THE DEPOSITS.
(a) Unless and until an Event of Default (as defined herein)
shall occur, the Escrow Agent shall at all times maintain the Deposits in
account number ____________ at ____________ , a national bank, with this
account insured by the Federal Deposit Insurance Corporation.
(b) In the event of the occurrence of a Termination Event,
pursuant to paragraph 3 hereof, then within three (3) days thereafter the
Escrow Agent shall deliver to Partech the Deposits with interest earned thereon
in good funds.
<PAGE> 2
(c) If Seller and Partech or Partech's assignee mutually agree
to terminate this Escrow Agreement or the undertaking contemplated hereby, then
each shall notify the Escrow Agent and within three (3) days thereafter the
Escrow Agent shall deliver to Partech the Deposits with interest earned thereon
in good funds.
(d) In the event Seller and Partech or Partech's assignee
consummate the purchase contemplated hereby under the Agreement, then upon
closing of that transaction, in accordance with the terms of the Agreement, the
Escrow Agent shall deliver to Seller the Deposits with interest earned thereon
in good funds, which shall be applied in full against the portion of the
purchase price due at closing thereof.
(e) In the event of the occurrence of an Event of Default,
pursuant to paragraph 4 hereof, then as soon as possible after the
determination of the Event of Default the Escrow Agent shall deliver to the
non-defaulting party the Deposits with interest earned thereon in good funds,
in the case of Partech as a return of funds deposited hereunder, and in the
case of the Station as liquidated damages hereunder.
(f) In the event a dispute between Partech and Seller is
submitted to a court of competent jurisdiction for final determination, the
final determination of such court with respect to any dispute so submitted,
after all appeals have been taken or the time to appeal shall have expired,
shall be conclusive and binding upon the Escrow Agent, and the Escrow Agent
shall comply with the instructions of such court.
3. TERMINATION EVENTS; TERMINATION OF ESCROW AGREEMENT.
(a) This Escrow shall terminate in the event of the occurrence
of any of the following events (the "Termination Events"):
(i) Seller and Partech or Partech's assignee fail to
execute the Agreement on or before September 30,
1993; or
(ii) Seller and Partech or Partech's assignee fail to
consummate the purchase transaction contemplated
hereunder by the Agreement on or before September
30, 1994, or as may be otherwise
provided; or
(iii) The Agreement terminates pursuant to its terms other
than by reason of breach or default by Partech or
Partech's assignee.
(b) This Escrow Agreement shall terminate and be of no further
force and effect, and the Escrow Agent shall have no further duties hereunder
and shall be released from any further obligations or liabilities hereunder,
when Section 2 hereof is complied with and all of the Deposits and interest
thereon shall have been released in compliance therewith.
4. EVENTS OF DEFAULT.
Any event which is considered an Event of Default under the Agreement
shall in turn be considered an event of default hereunder. To the extent
required by law, the parties hereto incorporate herein those terms of the
Agreement which define or describe Events of Default; otherwise, this Escrow
Agreement makes reference to those terms solely for the purpose of identifying
those events which give rise to an obligation by Escrow Agent hereunder to
deliver the Deposits and interest earned thereon.
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<PAGE> 3
5. RIGHTS AND DUTIES OF THE ESCROW AGENT.
(i) REIMBURSEMENT OF EXPENSES. The Escrow Agent shall be
reimbursed by Seller for any and all fees, expenses and out-of-pocket expenses
incurred by him, if any, in performing his duties under this Escrow Agreement
and all interest earned on the Deposit(s) shall be for the account of Partech.
(ii) DUTIES OF THE ESCROW AGENT. The Escrow Agent shall have no
duties or responsibilities under this Escrow Agreement other than those
specifically set forth in Sections 1 and 2 hereof or in this Section 4. The
Escrow Agent shall have no duty or responsibility (i) to enforce or cause to be
enforced any of the terms and conditions in the Purchase Agreement, the
Employment Agreement or in any of the documents referred to therein or (ii) to
verify the accuracy or sufficiency of any directions or other document received
by him. The Escrow Agent shall be protected in acting upon any directions or
other document believed by him to be given and containing what purports to be
the signature of any authorized officer of Partech and/or Seller.
(iii) LIABILITY OF ESCROW AGENT. The Escrow Agent shall not be
liable for any act or failure to act, other than for willful misconduct or
gross negligence.
(iv) INDEMNITY. Partech and Seller agree to and hereby jointly
and severally indemnify and hold harmless the Escrow Agent and its partners,
employees, attorneys and agents (the "Indemnitees") against and in respect of
all claims, suits, actions, proceedings (formal or informal), investigations,
judgments, deficiencies, damages, settlements, liabilities, losses and legal
and other expenses (including reasonable fees and expenses of attorneys chosen
by the Indemnitees hereunder) as and when incurred, arising out of or based
upon any act or failure to act (other than by reason of willful misconduct or
gross negligence) on the part of the Escrow Agent in connection with any of the
duties required to be performed by the Escrow Agent hereunder.
(v) RESIGNATION. The Escrow Agent may notify Partech and Seller
of his desire to be relieved of any further obligations hereunder. Partech and
Seller shall thereupon agree upon a successor to act as escrow agent hereunder
and, in such event, the Escrow Agent shall deliver the Partech Shares then held
by the Escrow Agent and the accompanying Stock Powers, to such successor escrow
agent.
6. SCOPE OF THIS ESCROW AGREEMENT.
This Escrow Agreement shall serve to govern and shall be
applicable only to the subject matter hereof. No implication, inference or
conclusion shall be drawn from the execution and delivery of this Escrow
Agreement and Partech and Seller understand and agree that upon the termination
of this Escrow Agreement, the rights and obligations of the parties shall be
governed only by the Purchase Agreement and the Employment Agreement and this
Escrow Agreement shall have no effect whatsoever. Nothing contained herein,
however, shall prevent this Escrow Agreement from being solely used for
purposes of enforcing the rights and obligations of the parties hereto with
respect to the escrow provided hereunder and this Escrow Agreement only, and
for no other purpose.
7. MISCELLANEOUS.
(i) ENTIRE AGREEMENT. This Escrow Agreement embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof and may not be
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<PAGE> 4
changed orally, but only by an instrument in writing signed by the party
against whom enforcement of such change is sought.
(ii) NOTICES. All notices, directions and other communications
hereunder shall be in writing and shall be deemed to have been given when
actually received or, with respect to notices, when mailed by certified or
registered United States mail, return receipt requested, as follows:
If to Partech, to:
Partech Communications Group, Inc.
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attention: Mr. John E. Rayl
(614) 538-0660 Fax: (614) 538-0670
If to Seller, to:
WMLO-FM
1401 Maclay Commerce Drive
Tallahassee, Florida 32312
Attention: Mr. Ed Winton, President
(904) 668-6600 Fax: (904) 671-2341
If to the Escrow Agent, to:
Mark Jorgenson
Jorgenson Broadcast Brokerage
2700 West M.L. King Boulevard, Suite 400
Tampa, Florida 33607
(813) 877-3000 Fax: (813) 877-4849
Any party may change its address for notices hereunder by giving
notice of such change to the other parties in accordance with the provisions of
this Section 7(ii).
(iii) HEADINGS. The headings of the sections of this Escrow
Agreement have been inserted for convenience and shall not modify, define,
limit or expand the express provisions of this Escrow Agreement.
(iv) GOVERNING LAW. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio for contracts
made and to be performed in such state without giving effect to the principles
relating to the conflict of law.
(v) BINDING NATURE. This Escrow Agreement shall be binding upon
the parties hereto and their respective successors and assigns.
(vi) COUNTERPARTS. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Escrow Agreement.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first above written.
__________________________________
Ed Winton, Seller
PARTECH COMMUNICATIONS GROUP, INC.
By: __________________________________
Title
______________________________________
MARK JORGENSON, Escrow Agent
5
<PAGE> 1
EXHIBIT 10.71
PROMISSORY NOTE
-----------
$93,228 MARCH 10, 1993
THE UNDERSIGNED ("Maker") hereby promises to pay to the order of MEDIA GROUP,
INC. ("Payee"), its successors and assigns forever, at such address as may be
provided in writing from time to time, the principal sum of NINETY-THREE
THOUSAND TWO HUNDRED TWENTY-EIGHT DOLLARS ($93,228.00), together with interest
thereon at the rate of seven percent (7%) per annum payable as follows:
Commencing on the first day of the first full month following the date hereof,
and continuing on the first day of each month thereafter, Maker shall pay to
Payee equal installments of principal and interest in the amount of One
Thousand Eighty-two and 45/100 Dollars ($1,082.45) per month for sixty (60)
consecutive months, and upon the expiration of sixty-one (61) months following
the date of the first monthly payment required hereunder, Maker shall pay to
Payee the entire unpaid principal balance hereof, together with all unpaid
interest thereon (which final payment is expected to equal Fifty-Four Thousand
Six Hundred Sixty-Six and 19/100 Dollars ($54,666.19). No interest shall accrue
on this Note prior to the last day of the month in which this Note is executed.
This Note may be prepaid, in whole or in part, at any time without penalty to
Maker, in which event the monthly payments thereafter shall be recalculated so
as to take into consideration such prepayment.
This Note shall be secured by a security interest granted to Payee in certain
personal property transferred by Payee to Maker, pursuant to the terms of that
certain Security Agreement of even date herewith. In the event of any default
by Maker under the terms of this Note or said Security Agreement, or in the
event any payment required hereunder is not paid within fifteen (15) days after
its due date, Payee shall, at its sole option, be entitled to accelerate
payment and collection on this Note and to declare all sums hereunder
immediately due and payable, to foreclose upon the collateral securing this
Note, or to avail itself of any and all legal remedies available at law.
All persons now or hereafter liable for the payment of the principal or
interest due on this Note, or any part thereof, do hereby expressly waive
presentment for payment, notice of dishonor, protest and notice of protest, and
agree that the time for the payment hereon may be extended without releasing or
otherwise affecting their liability on this Note.
This Note was executed in Charlotte, North Carolina.
MAKER
ATTEST: PCG OF THE GOLDEN STRAND, INC.
By:_______________________ By:__________________________
Secretary President
<PAGE> 1
EXHIBIT 10.72
AGREEMENT
This Purchase Agreement ("Agreement") is made and entered into this
____ day of December, 1993, between EDWARD WINTON, an individual d/b/a WMLO-FM,
with an address at _____________ ("Seller"), and TROPIC OF TALLAHASSEE, INC., a
Delaware corporation with an address at 3366 Riverside Drive, Suite 200,
Columbus, Ohio 43221 ("Buyer").
Seller is the licensee, owner and operator of Broadcast Station
WMLO(FM) 104.9 mhz, Havana/Tallahassee, Florida (the "Station"). Seller
desires to sell and assign and Buyer desires to purchase and acquire
substantially all of the property and assets used or held for use in the
operation of the Station (the "Transaction"). The parties acknowledge that the
licenses issued by the Federal Communications Commission (the "Commission" or
"FCC") for the operation of the Station may not be assigned without the prior
written consent of the Commission.
Accordingly, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties agree as
follows:
1. ASSETS TO BE CONVEYED. On the Closing Date (as defined
below), Seller shall sell, assign, transfer, and deliver to Buyer and Buyer
shall purchase from Seller, all of the assets used or held for used in the
operation of the Station, other than Excluded Assets (as defined below) (the
"Assets"):
1.1 LICENSES AND AUTHORITIES. All licenses,
permits, permissions, and other authorizations issued for the operation of the
Station by the Commission and other governmental agencies, including, but not
limited to, those listed on Schedule 1.1 and the right to use the Stations'
call letters (the "Station Licenses"), and all applications for modification,
extension, or renewal thereof, and any pending applications for any new
licenses, permits, permissions, authorizations granted or authorizations
pending on the Closing Date, including, but not limited to, those listed on
Schedule 1.1 (the "Station Applications").
1.2 STATION EQUIPMENT. All the fixed and tangible
personal property owned by Seller and used or useful in the operation of the
Station including, but not limited to, the transmitters, towers and studio
equipment and the property listed on Schedule 1.2 together with any
replacements, improvements, or additions thereto made between the date hereof
and the Closing Date (the "Station Equipment").
<PAGE> 2
1.3 CONTRACTS. All rights of Seller for the
benefit of the Station including, without limitation, those rights under: (a)
all agreements, contracts, or leases described on Schedule 1.3; (b) such other
contracts (other than for the sale of time on the Stations), agreements, or
leases entered into (i) with the written consent of Buyer, or (ii) in the
ordinary course of business and consistent with past practice, between the date
of this Agreement and the Closing Date, that do not, in the aggregate, impose
obligations in excess of Twelve Thousand Dollars ($12,000) on Buyer; (c) that
certain Lease Agreement effective December 6, 1989 between WTWC-TV and Seller
regarding the tower and transmitter site (the "Tower Lease Agreement") (the
contracts, agreements, and leases described in clauses (a), (b) and (c) are
collectively referred to as the "Operating Contracts"); (d) all contracts for
the sale of time of the Station for cash (i) at rates substantially in
accordance with the Station's past practices with a remaining term at Closing
of eleven (11) months or less or (ii) entered into after the date hereof with
the written consent of Buyer ("Sales Agreements"); (e) all contracts in effect
as of the date hereof for the sale of time on the Station in exchange for
merchandise or services used or useful for the benefit of the Station to the
extent that such contracts (i) were entered into in the ordinary course of
business, (ii) are preemptible for cash time sales, (iii) obligate the Buyer to
provide advertising time only on a "run of schedule" basis and (iv) have a
remaining term of eleven (11) months or less ("Trade Agreements"); (f) all
contracts for the sale of time on the Station in exchange for programming set
forth on Schedule 1.3 or entered into after the date hereof with the written
consent of Buyer ("Barter Agreements"); and (g) all Trade Agreements in excess
of Five Thousand Dollars ($5,000) entered into after the date hereof with the
written consent of Buyer. In the event that Seller submits any Operating
Contract, Sales Agreement, Trade Agreement or Barter Agreement (together, the
"Contracts") to Buyer for its consent, such consent shall be deemed to have
been given if Buyer does not notify Seller of its rejection of the Contract
within ten (10) days after its receipt of Seller's written request for such
consent.
1.4 REAL PROPERTY. All of Seller's right, title,
and interest in the real property used in the operation of the Station and
owned, leased, or licensed by Seller or its affiliate, as described in Schedule
1.4 (the "Real Property").
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1.5 CALL SIGNS, PROMOTIONAL MATERIALS AND
INTANGIBLES. All of Seller's or its affiliates' rights in the call signs,
copyrights, trademarks, tradenames, slogans, logos, service marks, computer
software (if any), magnetic media, data processing files, systems and programs,
business lists, trade secrets, sales and operating plans, all goodwill of the
Station and other similar intangible property rights used or held for use in
the operation of the Station, including but not limited to the intangible
property identified on Schedule 1.5 (the "Intangible Property").
1.6 RECORDS. All records, including but not
limited to all books of account, customer lists, supplier lists,
non-confidential employee personnel files, local public records file materials,
engineering data, logs, programming records, consultants' reports, ratings
reports, budgets, financial reports and projections, and sales, operating and
business plans, relating to or used in the operation of the Station or
necessary or desirable to show compliance with any law or regulation applicable
to the Station or the operation of the Station and not pertaining solely to
Seller's internal corporate affairs (the "Station Records"); it being
understood that Seller shall have the right to retain copies of any such
records.
1.7 EXCLUDED ASSETS. It is understood and agreed
that the following assets shall not be among the Assets purchased pursuant to
this Agreement: (i) Seller's cash and cash equivalents on hand or in banks,
certificates of deposit, money market funds, and securities; (ii) the articles
of incorporation, bylaws, minute books, stock transfer records and all other
corporate books of Seller; (iii) sales, income and other tax refunds and claim
therefore relating to the period prior to Closing; (iv) life insurance
policies; (v) claims against third parties, based on activities occurring prior
to Closing, other than those claims specifically conveyed or specifically
related to Assets which are conveyed; (vi) claims against officers, directors
and affiliates of Seller; and (vii) assets listed in Schedule 1.7.
2. ASSUMPTION OF LIABILITIES. Buyer shall not assume any of
Seller's liabilities, except liabilities which accrue after the closing of the
transactions contemplated herein (the "Closing") under the Contracts to be
assigned to Buyer pursuant to (and as limited by) Section 1.3 above. If any
Contract requires the consent of third parties for assignment, but (i) such
consent has not been obtained as of the Closing Date, and (ii) in the case of
any consent
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required under any contract designated a "Material Contract" on Schedule 1.3
("Required Consent"), and Buyer waives such condition precedent to the Closing
in its sole discretion, then Buyer shall assume Seller's obligations under such
Contract only for the period after Closing during which Buyer receives the
benefits to which Seller is currently entitled under such Contract (unless
consent is subsequently obtained and such delay has not prejudiced Buyer, and
unless the failure of Buyer to receive benefits under such Contract is due to
Buyer's failure to perform Seller's obligations thereunder after Closing).
3. PURCHASE PRICE AND PAYMENT.
3.1 PURCHASE PRICE. The purchase price for the
assets shall be One Million Six Hundred Fifty Thousand Dollars ($1,650,000)
(the "Asset Purchase Price"). The Purchase Price shall be payable as follows:
3.2 ESCROW DEPOSIT. Prior to the execution of this
Agreement Buyer has placed the sum of Ten Thousand Dollars ($10,000), and upon
the execution of this Agreement Buyer shall place an additional sum of
Fifty-Five Thousand Dollars ($55,000) (together, the "Escrow Deposit"), in
escrow with Mark Jorgenson (the "Escrow Agent") to be held in escrow in
accordance with the Escrow Agreement attached as Exhibit A.
3.3 CASH AT CLOSING. At Closing, Buyer will pay to
Seller by certified bank check or wire transfer of federal funds, pursuant to
wire instructions that Seller shall deliver to Buyer prior to Closing, (i) the
Purchase Price, (ii) less the Escrow Deposit, (iii) less the Term Note, (iv)
plus or minus any adjustments as set forth in Section 4 hereof or elsewhere in
this Agreement.
3.4 TERM NOTE. At Closing, Buyer will deliver to
Seller a note (the "Term Note") in the face amount of One Million Dollars
($1,000,000), which shall bear interest at the rate of Ten Percent (10%) per
annum, amortizable over a ten (10) year period, requiring monthly payments of
principal and interest for sixty (60) months with a balloon payment due at the
end of the sixty-first (61st) month. The Term Note shall be dated, and
interest shall commence to accrue, upon the Closing Date, and the first monthly
payment shall be due thirty (30) days following the Closing Date. The Term
Note shall be substantially in the form as Exhibit B attached hereto.
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3.5 COLLATERAL. Buyer hereby agrees to pledge (to
the extent permitted by law) to Seller, as security for the full and prompt
payment of the Term Note, a security interest in (i) the Assets being acquired
hereunder, which shall not be subordinate to any other indebtedness, and (ii)
the assets acquired by Buyer in connection with their purchase of radio
stations WMFL(AM) and WJPH(FM), Monticello, Florida, which shall be subordinate
to any liens granted to parties in connection with Buyer's acquisition of the
said WMFL(AM) and WJPH(FM). In this regard, Buyer shall deliver to Seller
upon Closing a Security Agreement substantially in the form as that attached
hereto as Exhibit C.
3.6 ALLOCATION. The Asset Purchase Price shall be
allocated among the assets in accordance with the amounts as set forth on
Schedule 3.6. Seller and Buyer agree (i) to jointly complete and separately
file Form 8594 with their federal income tax return for the tax year in which
the Closing occurs, and (ii) that neither Seller nor Buyer will take a position
on any income, transfer or gains tax return, before any governmental agency
charged with the collection of any such tax or in any judicial proceeding that
is an any manner inconsistent with the terms of any such allocation without the
written consent of the other.
4. PRORATIONS AND ADJUSTMENTS. The operation of the Station
and the income and normal operating expenses, including without limitation
assumed liabilities and prepaid expenses, attributable thereto through the date
of the Closing Date (the "Adjustment Date") shall be for the account of Seller
and thereafter for the account of Buyer. Expenses for goods or services
received both before and after the Adjustment Date, power and utilities
charges, frequency discounts, prepaid cash time sales agreements, and rents and
similar prepaid and deferred items shall be prorated between Seller and Buyer
as of the Adjustment Date (the "Closing Date Adjustments"). All special
assessments and similar charges or liens imposed against the Real Property, and
Station Equipment in respect of any period of time through the Adjustment Date,
whether payable in installments or otherwise, shall be the responsibility of
Seller, and amounts payable with respect to such special assessments, charges
or liens in respect of any period of time after the Adjustment Date shall be
the responsibility of Buyer, and such charges shall be adjusted as required
hereunder. A final accounting of prorated items shall be made by Buyer with
the
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cooperation of Seller, and the sum due from one party to the other pursuant to
this Section 4 shall be paid in cash, within sixty (60) days after the Closing
Date.
5. NON-COMPETE AGREEMENT. At Closing, Seller and
Buyer, shall enter into a Non-Compete Agreement substantially in the form as
that attached hereto as Exhibit D (the "Covenant"). The Covenant shall have
a term of three (3) years.
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller makes the following representations and warranties all of which have
been relied upon by Buyer in entering into this Agreement and, except as
otherwise specifically provided, all of which shall be true and correct at
Closing.
6.1 ORGANIZATION. Seller is a sole proprietorship,
validly existing and in good standing under the laws of State of Florida, and
has full power and authority to conduct his business as currently conducted and
proposed to be conducted and to enter into and perform this Agreement. The
address of Seller's chief executive offices, all of Seller's additional places
of business, and the locations of all tangible personal property included in
the Assets are listed in Schedule 6.1(a). Except as set forth in Section
6.1(a), during the past five (5) years Seller has not used, nor to the best of
Seller's knowledge has any prior owner of the Station been known by or used,
any corporate, partnership, fictitious or other name in the conduct of the
Station's business or in connection with the use or operation of the Assets.
6.2 AUTHORIZATION. The execution and delivery of
this Agreement by Seller has been duly authorized by any actions required under
Florida or federal laws. This Agreement has been duly executed by Seller and
delivered to Buyer and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
6.3 NO BREACH. None of (i) the execution, delivery
and performance of this Agreement by Seller, (ii) the consummation of this
Agreement and all other documents or instruments related thereto or executed in
connection therewith or in contemplation of the transaction hereunder (the
"Transaction"), or (iii) Seller's compliance with the terms and conditions
hereof will, with or without the giving of notice or the lapse of time or both,
conflict with, breach
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the terms and conditions of, constitute a default under or violate any
judgment, decree, order, or (except as disclosed in Schedule 6.3(a)) any
agreement, lease or other instrument to which Seller is a party or by which
Seller is legally bound, or any law, rule, or regulation applicable to Seller
or the operation of the Station.
6.4 STATION LICENSES. The Station Licenses are all
of the licenses, permits, and other authorizations used or necessary to operate
the Station as it is now operated and are validly issued in the name of Seller.
The Station Licenses are in full force and effect, are valid for the balance of
the current license term applicable generally to radio stations licensed to
communities in the state where the Station is located, are unimpaired by any
acts or omissions of Seller, Seller's employees, officers, directors, or
shareholders, and are free and clear of any restrictions which might limit the
full operation of the Station (other than restrictions under the terms of the
licenses themselves). Except as set forth on Schedule 6.4, there are no
applications, proceedings, or complaints pending or, to the knowledge of
Seller, threatened which may have an adverse effect on the business or
operation of the Station (other than rulemaking proceedings that apply to the
radio broadcasting industry generally). Seller is not aware of any reason why
those of the Station Licenses subject to expiration might not be renewed in the
ordinary course based on current FCC rules or of any reason why any of the
Station Licenses might be revoked. The Station is in compliance with the
Commission's policy on exposure to radio frequency radiation. No renewal of
any Station License would constitute a major environmental action under the
rules of the Commission. Access to the Station's transmission facilities is
restricted in accordance with the policies of the Commission.
6.5 STATION APPLICATIONS. All information
contained in any Station Applications (as described on Schedule 1.1 hereto) and
which are pending with the Commission is true, complete and accurate in all
material respects.
6.6 TITLE TO ASSETS. Except as set forth on
Schedule 6.6, Seller has good and marketable title to the Assets, free and
clear of all mortgages, deeds of trust, liens, pledges, collateral assignments,
security interests, leases, easements, covenants, restrictions and encumbrances
or other defects of title ("Encumbrances"). To the knowledge of Seller, all
material Encumbrances against any of the Assets are disclosed on Schedule 6.6
hereto.
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6.7 CONDITION OF EQUIPMENT. The equipment listed
on Schedule 1.2 (the "Station Equipment") is available for use in connection
with the operation of the Station constitutes all of the personal property that
is used or held by the Seller for use by the Station, or necessary to operate
the Station as it is now operated. The Station Equipment is sufficient to
permit the Station to operate in accordance with the Station Licenses and the
rules and regulations of the Commission. To the knowledge of Seller, except
(i) as set forth on Schedule 6.7, (ii) as may be disclosed in the Engineering
Report and (iii) to the extent that the Capital Budget contemplates the repair
or replacement of the Station Equipment, there is no material deficiency in the
Operating Equipment. To the knowledge of Seller, the Engineering Report will
disclose no material deficiency in the Operating Equipment not disclosed on
Schedule 6.7 or to be resolved by expenditures planned in the Capital Budget.
6.8 CONDITIONS OF THE REAL PROPERTY. The Real
Property listed on Schedule 1.4 constitutes all the real property owned or
leased by Seller or others in connection with the operation of the Station as
it is now operated. To the knowledge of Seller, there are no encroachments
upon the Real Property used in the transmitter site (the "Transmitter Site") by
any buildings, structures, or improvements located on adjoining real estate
except to the extent such encroachments do not impair the present use of the
property. Seller has received no notice that utility lines serving the
Transmitter Site passes over the lands of others except where appropriate
easements have been obtained. There are no pending or, to the best of Seller's
knowledge, contemplated condemnation or eminent domain proceedings that may
affect the Real Property. To the knowledge of Seller, Seller's use and
occupancy of the Transmitter Site complies in all material respects with all of
Seller's leasehold obligations and with all regulations, codes, ordinances, and
statutes of all applicable governmental authorities, including without
limitation all sanitary laws and regulations, occupational safety and health
regulations, and electrical codes, but excluding Environmental Laws except as
set forth in Section 8.2.2 of this Agreement and there are no material
structural defects in the buildings, structures, and improvements located on
the Transmitter Site. All towers and other structures on the Real Property and
the Land are painted and/or lighted in accordance with the requirements of the
Station Licenses, the Commission, the Federal Aviation Administration and all
applicable requirements of federal, state and local law. The leased premises
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are leased at the rates and for terms ending on the dates shown on Schedule 1.4
pursuant to the agreements described in Schedule 1.4 which are the sole and
complete agreements concerning Seller's use of the leased premises.
6.9 LEASE FOR TOWER AND TRANSMITTER SITE.
(a) The Tower Lease Agreement is in full force and
effect, is not subject to any setoffs and Seller is not in default of any
material provision thereof nor has Seller been notified of any potential event
of default thereunder. The Tower Lease Agreement is assignable to Buyer under
its terms or Seller will obtain any necessary waivers or consents to such
assignment.
(b) Seller is not in default in any of its
obligations arising under the Tower Lease Agreement. Except as provided in the
Tower Lease Agreement, no consent of any person or entity is required for the
transfer of the Tower Lease by Seller to Buyer.
6.10 CONTRACTS. The Contracts are assignable to
Buyer without consent, or, if consent of the other contracting party to the
assignment is required, Seller shall use its reasonable best efforts to secure
such consents before the Closing Date. Each Contract is in full force and
effect and is materially unimpaired by any acts or omissions of Seller,
Seller's employees, officers, directors or shareholders. There has not
occurred as to any Material Contract any material default by Seller or any
event that, with the lapse of time or otherwise, could become a material
default by Seller. To the knowledge of Seller, there has not occurred as to
any Material Contract any material default by any other party thereto or any
event that, with the lapse of time or at the election of any person other than
Seller, could become a material default by such party. Those Contracts whose
stated duration extends beyond the Closing Date will, at Closing, be in full
force and effect and will be materially unimpaired by any acts or omissions of
Seller, Seller's employees, officers, directors or shareholders. Seller has
provided to Buyer true and correct copies of all Contracts (other than Sales
Agreements) that are material to the operation of the Station or create
obligations that in the aggregate are material or create aggregate obligations
of more than Two Thousand Dollars ($2,000), as modified to date, and one or
more forms that is representative of the terms of the Sales Agreements now in
effect. The Contracts as amended through the date of this Agreement, will not
be modified without Buyer's written consent (which shall not be unreasonably
withheld, and which shall be deemed given in the event Buyer has not responded
to a written
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request therefore within ten (10) days). At Closing, Seller shall provide
Buyer with a list showing Trade Agreements and Barter Agreements then in effect
with an analysis of the then-current Trade Balance at no less than monthly
intervals between the date hereof and the Closing Date.
6.11 EMPLOYEES. No employee of the Station is
represented by a union or other collective bargaining unit, no application for
recognition of a collective bargaining unit is now pending before the NLRB with
respect to the Station's employees, and to Seller's knowledge, no concerted
effort to unionize any of the Station's employees is currently in progress.
Except as has been disclosed to Buyer in writing, there are no controversies
pending or, to Seller's knowledge, threatened between Seller and any of the
Station's employees, nor, to Seller's knowledge, are there any facts that could
reasonably result in any such controversy. Seller has no retirement, pension,
profit-sharing, bonuses, severance pay, disability, health, vacation, sick
leave or other employee benefit plans, practices, agreements, or understandings
except as listed or described in Schedule 6.11 (it being understood and
acknowledged that Buyer is not assuming, and shall have no liability with
respect to, any such plans, practices, agreements or understandings).
6.12 LITIGATION. Except as set forth in Schedule
6.12, there is no unsatisfied judgment outstanding, Seller has received no
notice of any litigation, proceeding, claim or investigation of any nature
pending against Seller and, to Seller's knowledge, there is no litigation,
proceeding, claim or investigation of any nature threatened against Seller
which might have an adverse effect on the continued operation of the Station or
impair the value of the Assets or which might have an adverse effect on
Seller's ability to perform in accordance with the terms of this Agreement.
Seller is not aware of any facts that could reasonably result in any such
proceedings.
6.13 PAYMENT OF TAXES. Seller has, or by the
Closing Date will have, paid and discharged all taxes, assessments, excises and
other levies relating to the Assets, excepting such taxes, assessments, and
other levies as will not be due until after the Closing Date and that are to be
prorated between Seller and Buyer pursuant to Section 4.
6.14 COMPLIANCE WITH LAWS. Except as disclosed on
Schedule 6.14 or in the reports to be delivered to Buyer under this Agreement,
or as may be indicated by the remedial actions to be taken under the Capital
Budget, Seller, to the knowledge of Seller, has complied in all
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respects with, and is not in violation of any federal, state, or local laws,
regulations, or orders (other than Environmental Laws) relating to the
operation of the Station. Without limiting the generality of the foregoing:
(a) The Station's transmitting and studio equipment
is operating in accordance with the terms and conditions of the Station
Licenses and all underlying construction permits, and the rules, regulations
and policies of the Commission, including without limitation all regulations
concerning equipment authorization and human exposure to radio frequency
radiation.
(b) Seller has, in the conduct of the Station's
business, complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those concerning
wages, hours, equal employment opportunity, collective bargaining, pension and
welfare benefit plans, and the payment of Social Security and similar taxes,
and Seller is not liable for any arrearages of wages or any tax penalties due
to any failure to comply with any of the foregoing.
(c) Seller has received no notification from the
Commission that Seller's employment practices fail to comply with the
Commission rules and policies.
(d) All ownership reports, employment reports, tax
returns and other documents required to be filed by Seller with the Commission
or other governmental authorities have been filed. Such items as are required
to be placed in the Station's local public records files have been placed in
such files. All proofs of performance and measurements that are required to be
made by Seller with respect to the Station's transmission facilities have been
completed and filed at the Station. All information contained in the foregoing
documents is true, complete and accurate in all material respects.
(e) To Seller's knowledge, the reports to be
delivered to Buyer under this Agreement will not disclose any noncompliance
with this Section 6.14 except as disclosed on Schedule 6.14 or to the extent
that such non-compliance would be cured by improvements undertaken pursuant to
the Capital Budget.
6.15 INSOLVENCY PROCEEDINGS. Seller is not the
subject of any pending or threatened insolvency proceedings of any character,
including without limitation bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary.
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Seller has not made an assignment for the benefit of creditors or taken any
action with a view to or that would constitute a valid basis for the
institution of any such insolvency proceedings. After giving effect to the
Transaction, Seller will have sufficient capital to carry on its business and
transactions, (ii) will be able to pay its debts as they mature or become due,
and (iii) will own assets the fair value of which will be greater than the sum
of all of its liabilities (including contingent liabilities) not specifically
assumed by Buyer pursuant to the terms of this Agreement. Seller is not
insolvent or will become insolvent as a result of entering into this
Transaction.
6.16 CITIZENSHIP. Seller is not a "foreign person"
as defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "Code"). On the Closing Date,
Seller will deliver to Buyer affidavits to that effect, verified as true and
sworn to under penalty of perjury by a duly-authorized officer of Seller. The
affidavits shall also set forth Seller' name, address, taxpayer identification
number, and such additional information as may be required to exempt the
Transaction from the withholding provisions of Section 1445 of the Code. Buyer
shall have the right to furnish copies of the affidavit to the Internal Revenue
Service ("IRS").
6.17 PATENTS, TRADEMARKS, COPYRIGHTS. The call sign
and all slogans, logos, copyrights, trademarks, tradenames, service marks, and
other similar intangible property rights currently used to promote or identify
the Station, or otherwise used in the promotion of the Station's business, are
listed or described on Schedule 1.5 (the "Promotional Rights"). Seller pays no
royalty to anyone with respect to the Promotional Rights. Seller does not have
any knowledge, nor has Seller received any notice to the effect that its use of
any of the Promotional Rights may or are claimed to infringe on the right of
another. Seller has no knowledge of any infringement or unlawful or
unauthorized use of such Promotional Rights, including without limitation the
use of any call sign, slogan or logo by any broadcast or cable station in the
Tallahassee, Florida metropolitan area that may be confusingly similar to the
call sign, slogans, and logos currently used by the Station. To Seller's
knowledge, the operation of the Station does not infringe any copyright,
patent, trademark, tradename, service mark, and other similar right of any
third party.
6.18 FINANCIAL STATEMENTS. Seller has furnished
Buyer with financial statements for the Station for the years ending December
31, 1990, 1991 and 1992 (the "Financial
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Statements") and monthly financial statements for each month ending between
January 1, 1993 and the date of this Agreement (the "Interim Statements").
The Financial Statements and the Interim Statements fairly and accurately
reflect the financial results of the operations of the Station for the periods
indicated based upon consistent reporting standards throughout the periods
involved and as compared with prior periods. Except as reflected in the
Financial Statements, the Interim Statements or otherwise disclosed to Buyer in
writing, no event has occurred since the preparation of the most recent Interim
Statement that would make the Financial Statements or the Interim Statements
misleading in any material respect.
6.19 UTILITIES. All utilities that are required for
the current occupancy and use of the Station and the Real Property for the
purposes for which such properties are presently being used by Seller,
including without limitation electric, water, sewer, telephone and similar
services, have been connected and, to the knowledge of Seller, are in good
working order. By the Closing Date, Seller will have paid all charges for such
utilities, including without limitation any "tie-in" charges or connection
fees, except for those charges that will to become due until after the Closing
Date and that are to be prorated between Seller and Buyer pursuant to Section
4.
6.20 NO NEGATIVE TRADE BALANCE. As of the Closing
Date, the Trade Agreements and Barter Agreements to be assumed by Buyer shall
not, in the aggregate, have a negative Trade Balance (as described below), for
trades or barters which personally benefited, directly or indirectly, Seller or
his immediate family members, in excess of Five Thousand Dollars ($5,000).
"Trade Balance" means the difference between the aggregate value of time owed
pursuant to the Trade Agreements and Barter Agreements (based upon the rates
for cash sales on the Stations in effect on the date of this Agreement) and the
aggregate value of goods and services to be received (after the Closing Date)
pursuant to the Trade Agreements and Barter Agreements. The Trade Balance is
"negative" if the value of time owed subsequent to the Closing Date exceeds the
value of goods and services to be received by Buyer subsequent to the Closing
Date.
6.21 NO MISLEADING STATEMENTS. To Seller's
knowledge, no statement made by Seller to Buyer and no statement as set forth
in this Agreement, or information delivered or to be delivered to Buyer in
satisfaction of a requirement of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit a material fact
necessary in
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order to make such statements or information in light of the circumstances
under which such statement or information is delivered not misleading.
7. REPRESENTATIONS AND WARRANTIES OR BUYER. Subject to the
qualifications set forth on Schedule 7, Buyer makes the following
representations and warranties, all of which have been relied upon by Seller in
entering into this Agreement and, except as set forth on Schedule 7 or as
otherwise specifically provided, all of which shall be true and correct as of
Closing.
7.1 ORGANIZATION. Buyer is a corporation duly
organized, validly existing, and in good standing, under the laws of the State
of Delaware, is duly qualified to do business in the State of Florida and has
full corporate power and authority to enter into and perform this Agreement.
7.2 AUTHORIZATION. The execution and delivery of
this Agreement by Buyer has been duly authorized by all necessary corporate
action on the part of Buyer. Evidence of such authorization shall be delivered
to Seller at Closing. This Agreement has been duly executed by Buyer and
delivered to Seller and constitutes a legal, valid, and binding obligation of
Buyer, enforceable in accordance with its terms.
7.3 NO BREACH. None of (i) the execution, delivery
and performance of this Agreement by Buyer, (ii) the consummation of the
Transaction, or (iii) Buyer's compliance with the terms and conditions hereof
will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms and conditions of, constitute a default under,
or violate Buyer's articles of incorporation, bylaws, any judgement, decree,
order, agreement, lease or other instrument to which Buyer is a party or by
which Buyer is legally bound, or any law, rule or regulation applicable to
Buyer.
7.4 LITIGATION. There is no action, suit,
investigation or other proceedings pending or, to Buyer's knowledge, threatened
which may adversely affect Buyer's ability to perform in accordance with the
terms of this Agreement, and Buyer is unaware of any facts which could
reasonably result in any such proceeding.
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7.5 NO MISLEADING STATEMENTS. To Buyer's
knowledge, no statement made by Buyer to Seller set forth in this Agreement,
contains or will contain any untrue statement of a material fact.
7.6 QUALIFICATION AS BROADCAST LICENSEE. As a
licensee of commercial radio stations (the "Tropic Stations"), Buyer knows of
no fact that would, under the Communications Act of 1934, as amended, or the
rules, regulations and policies of the FCC, disqualify Buyer from becoming the
licensee of the Station. There are no proceedings, complaints, notices of
forfeiture, claims, investigations pending or, to the knowledge of Buyer,
threatened against any or in respect of any of the Tropic Stations that would
materially impair the qualifications of Buyer to become a licensee of the
Station or delay the FCC's processing of the Assignment Applications.
8. ENVIRONMENTAL MATTERS.
8.1 DEFINITIONS.
8.1.1 "Hazardous Materials" means substances defined
as "hazardous wastes," "hazardous substances," "toxic substance," "pollutants,"
"contaminants," "radioactive materials," "petroleum or any fraction thereof,"
under and regulated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substances control Act ("TSCA"). 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act. ("RCRA"), 42 U.S.C. Section 9601 et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act 42, U.S.C. Section 300f et seq.; The Clean Air Act ("CAA"),42 U.S.C.
Section 7401 et seq.; or any analogous federal or state law; and in the rules,
regulations or ordinances adopted, or other enforceable criteria and guidelines
promulgated pursuant to the preceding laws; all as in effect as of the Closing
Date (collectively the "Environmental Laws").
8.1.2 "Environmental Conditions" means conditions of
environment, including the ocean, natural resources (including flora and
fauna), soil, surface water, ground water, any present or potential drinking
water supply, subsurface strata or the ambient air, relating
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to or arising out of the use, handling, storage, treatment, recycling,
generation, transportation, release, spilling, leaking, pumping, pouring,
emptying, discharging, injecting, escaping, leaching, disposal, dumping or
threatened release of Hazardous Material by Seller or Seller's predecessors in
interest or onto or into the Real Property or Land. With respect to claims by
employees, Environmental Conditions also includes the exposure of persons to
Hazardous Materials introduced to the environment prior to the Closing Date,
within a work place on the Real Property.
8.1.3 "Environmental Noncompliance" means: (1) the
release or threatened release of any Hazardous Materials into the environment,
any storm drain, sewer, septic system or publicly owned treatment works, in
violation of any effluent or emission limitations, standards or other
Environmental Law; (2) any material noncompliance with applicable Environmental
Laws; (3) any facility operations, procedures, designs, etc. which do not
conform in all material respects to applicable statutory or regulatory
requirements of the CAA, the CWA, the TSCA, the RCRA or any other applicable
Environmental Laws intended to protect public health, welfare and the
environment; (4) the failure to have obtained material permits, variances or
other authorizations required under applicable Environmental Laws for the
operation of any equipment, process, facility or any other activity; (5) the
operation of any facility or equipment in violation any material permit
condition, schedule of compliance, or administrative or court order.
8.1.4 "Environmental Claims" means claim, demands,
suits, causes of action for personal injury or property damage (including any
depreciation of property values and lost use of property) arising directly or
indirectly out of Environmental Noncompliance; claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA, or other
applicable Environmental Laws; a requirement to implement a "corrective action"
plan pursuant to any order or permit issued pursuant to RCRA; claims for
restitution, contribution or indemnity from third parties or any governmental
agency arising directly or indirectly out of Environmental Conditions or
Environmental Noncompliance; fines, penalties, liens against property arising
directly or indirectly out of Environmental Conditions or Environment
Noncompliance; claims for injunctive relief or other orders or notices of
violation from federal, state or local agencies or courts arising directly or
indirectly out of Environmental Conditions or Environmental Noncompliance; and
with
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regard to any present or former employees, claims for exposure to or injury
from Environmental Conditions.
8.1.5 "Expenses" includes any liability, loss, cost
or expense arising directly or indirectly from an Environmental Condition or
Environmental Noncompliance, including, without limitation, costs of
investigation, cleanup, remedial or response action, the cost associated with
posting financial assurances for the completion of response, remedial or
corrective actions, the preparation of any closure or other necessary or
required plans or analyses, or other reports or analyses submitted to or
prepared by regulating agencies, including the cost of health assessments,
epidemiological studies and the like, retention of engineers and other expert
consultants, legal counsel, capital improvements, operation and maintenance
testing and monitoring cost, power and utility costs and pumping taxes or fees,
and administrative costs incurred by governmental agencies.
8.2 SELLER'S ENVIRONMENTAL DISCLOSURES. The
matters set forth in this Section constitute disclosures of Seller which shall
be true and accurate as of the Closing Date. In the event that, during the
period between the execution of this Agreement and the Closing Date, Seller
learns, or has reason to believe, that any of the following disclosures may
cease to be true, Seller hereby covenants to give notice thereof to Buyer as
promptly as reasonably possible. Except as set forth or described in the
Environmental Assessments on Schedule 8.2, Seller hereby discloses that to the
knowledge of Seller:
8.2.1 NO PROCEEDINGS. There are no Environmental
Claims pending against Seller or, to the best of Seller's knowledge pending
against Seller's studio landlord or transmitter and tower site landlord, based
on Environmental Conditions or Environmental Noncompliance at the Real
Property, or any part thereof, or otherwise arising from Seller's activities at
the Real Property involving Hazardous Materials, including proceedings under
CERCLA, RCRA, or any other Environmental Laws based on the off-site
transportation, treatment, storage, recycling or disposal of Hazardous
Materials generated by Seller;
8.2.2 ENVIRONMENTAL COMPLIANCE. With respect to
operations being conducted at the Real Property by the Seller, such operations
are being conducted in compliance with and are in compliance with all of the
applicable Environmental Laws;
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8.2.3 ASBESTOS. There are no structures,
improvements, equipment, activities, fixtures or facilities owned by or
otherwise under the control of Seller on the Real Property which are
constructed with, use or otherwise contain unencapsulated friable
asbestos-containing construction materials. For the purposes of this
subsection: (1) "asbestos" means fibrous forms of chrysotile (fibrous
serpentine), crocidolite (fibrous reibecktite), amosite (fibrous
cummingtonite-grunerite), fibrous tremolite, fibrous actinolite, and fibrous
anthophyllite, to the extent regulated under applicable Environmental Laws; (2)
"asbestos-containing construction materials" means any manufactured
construction material which contains more than one-tenth of one percent
asbestos by weight;
8.2.4 HAZARDOUS MATERIALS. Except with respect to
ordinary course operations, processes and activities involving the use of
Hazardous Materials conducted in material compliance with applicable
Environmental Laws, there are no structures, improvements, equipment, fixtures,
activities or facilities owned by or under the control of Seller on the Real
Property which use or contain (in amounts or concentrations requiring
remediation under applicable Environmental Laws) Hazardous Materials or
equipment containing concentrations of polychlorinated biphenyls subject to
TSCA regulations, except to the extent that such use or presence does not
constitute a condition Environmental Noncompliance; and
8.2.5 RELEASES. There are no processes, operations,
or any other activities involved in Seller's use of the studio or tower and
transmitter site which currently result in the release of threatened release of
Hazardous Materials into the environment in excess applicable reportable
quantities, except to the extent that such releases or threatened releases do
not constitute a condition of Environmental Noncompliance.
8.3 COMPLETE DISCLOSURE. Seller has no knowledge
of any environmental matters other than those that will be disclosed in the
Environmental Assessments as set forth on Schedule 8.2.
9. PRE-CLOSING OBLIGATIONS. The parties covenant and agree
as follows with respect to the period prior to the Closing Date:
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9.1 APPLICATIONS FOR COMMISSION CONSENT. As soon
as possible, but in no event later than fifteen (15) business days after the
date of this Agreement, Seller and Buyer shall join in and file an application
or applications requesting the Commission's written consent to the assignment
of the Station Licenses from Seller to Buyer (the "Assignment Applications"),
and they will diligently take all steps necessary or desirable and proper to
prosecute expeditiously the Assignment Applications and to obtain the
Commission's determination that approval of the Assignment Applications will
serve the public interest, convenience, and necessity. The failure by either
party to timely file or diligently prosecute its portion of the Assignment
Applications shall be deemed a material breach of this Agreement.
9.2 OTHER GOVERNMENTAL CONSENTS. Promptly
following the execution of this Agreement, Seller and Buyer shall proceed to
prepare and file with the appropriate governmental authorities (other than the
Commission) such requests, if any, for approval or waiver as may be required
from such governmental authorities in connection with the Transaction, and
shall jointly, diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such requests for approval or
waiver and all proceedings necessary to secure such approvals and waivers.
9.3 FINANCIAL INFORMATION. Between the date hereof
and the Closing Date, Seller shall furnish Buyer with monthly financial
statements within thirty (30) days after the end of each calendar month, and
with such additional data concerning the Station's financial condition as are
prepared by Seller in the ordinary course of business.
9.4 CONSENTS. Seller shall use its reasonable best
efforts to obtain the consents of the other contracting parties to the
assignment of the Contracts that require such consent and to the assignment of
the Tower Lease Agreement.
9.5 ENGINEERING REPORT. Within sixty (60) days of
the date of this Agreement, Seller shall deliver to Buyer (a) a report prepared
by a consulting communications engineer acceptable to Buyer concerning the
condition of the Station Equipment and (b) a report prepared by an AIA
certified consultant acceptable to Buyer concerning the compliance of Seller's
transmitter and tower improvements on the Real Property with applicable access,
fire, proposed zoning and other land-use laws (together, the "Engineering
Report"). If the Engineering Report
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discloses the need for modifications (other than those contemplated in the
Capital Budget) that in Buyer's reasonable judgement involve expenses in excess
of $5,000.00, Buyer shall deliver in writing to Seller, within 30 days of
receipt of the Engineering Report, Buyer's objections to such matters.
Thereafter, at any time prior to the Closing Date, Seller shall have the
option, but not the obligation, to take such action as Seller and Buyer shall
agree upon in order to satisfy Buyer's objections. If Seller fails or declines
to take such actions, Buyer shall have the option to either terminate this
Agreement or consummate the transactions contemplated herein including
accepting the Station Equipment and the transmitter and tower improvements
subject to such conditions.
9.6 CONFIDENTIALITY. Each party agrees that any
and all information learned or obtained by it from the other (and that is not
otherwise public or known in the radio broadcast industry) shall be
confidential and agrees not to disclose any such information to any person
whatsoever other than as is necessary for the purpose of effecting the
Transaction or as otherwise required by law.
9.7 ACCESS. Between the date hereof and the
Closing Date, Seller shall give, upon prior notice, Buyer or representatives of
Buyer (including underwriters, lenders, consultants and investors) reasonable
access to the Assets (to the Extent permitted by the Tower Lease Agreement) and
to the books and records of Seller relating to the business and operation of
the Station. It is expressly understood that, pursuant to this Section, Buyer,
at its sole expense, shall be entitled to make such engineering inspections of
the Station and transmitter and tower site, and such audits of the Station's
financial records, as Buyer may desire, so long as the same do not unreasonably
interfere with Seller's operations of the Station.
9.8 EMPLOYEE MATTERS. Seller has provided to Buyer
an accurate list of all current employees of the Station on Schedule 9.8 (the
"Station Employees") together with a description of the terms and conditions of
their respective employment and their duties as of the date of this Agreement.
Seller shall promptly notify Buyer of any changes that occur prior to Closing
with respect to such information. On or prior to Closing, Seller shall
compensate each of the Station's employees for all accrued commissions, accrued
vacations, sick leave and other accrued benefits. Seller shall terminate the
employment of all the Station Employees effective on the Closing Date.
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9.9 OPERATIONS PRIOR TO CLOSING. Between the date
of this Agreement and the Closing Date:
(a) Seller shall operate the Station in the normal
and usual manner, generally consistent with Seller's past practice and the
rule, regulations, and policies of the Commission, and shall conduct the
Station's business only in the ordinary course. To the extent consistent with
such operations, Seller shall use its reasonable best efforts
to: (i) maintain the present entertainment format of the Station and the
quality of its programs; (ii) keep available for Buyer the services and number
of the Station's present employees reasonably necessary for the operation of
the Station; (iii) preserve the Station's present customers and business
relations; (iv) satisfy Seller's obligations under the Trade Agreements; (v)
continue to make expenditures and engage in activities designed to promote the
Station; (vi) continue making capital expenditures in accordance with the
capital expenditure budget for the Station set forth in Schedule 9.9(a)(vi)(the
"Capital Budget") and otherwise consistent with past station practice (it being
understood that the Capital Budget contemplates expenditures to be made after
the projected Closing Date which will not be Seller's responsibility); and
(vii) undertake to collect its accounts receivable in accordance with Seller's
normal and customary collection practices.
(b) Seller shall: (i) subject to Section 14.3,
maintain the Assets in their present condition (reasonable wear and tear normal
use excepted); and (ii) maintain all inventories of supplies, tubes, and spare
parts at levels generally consistent with the Station's prior practices.
(c) Seller shall maintain its books and records in
the usual and ordinary manner, on a basis consistent with prior periods.
(d) Seller shall comply with all laws, rules,
ordinances and regulations applicable to it, to the Assets and to the business
and operation of the Station, the failure with which to comply could have a
material adverse affect on any of the Assets, the Station or the business or
operations of the Station.
(e) Seller shall perform all Contracts and its
obligations under the Tower Lease Agreement without material default and shall
pay all of Seller's trade accounts payable in a timely manner; provided,
however, that Seller may dispute, in good faith, any alleged obligation of
Seller.
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(f) Seller shall not, without the express written
consent of Buyer which shall not be unreasonably withheld, and which shall be
deemed given in the event Buyer has not responded to a written request therefor
within ten (10) days: (i) sell or agree to sell or otherwise dispose of any of
the Assets (A) other than in the ordinary course of business, and (B) unless
such Assets are replaced prior to Closing by assets of equal or greater worth,
quality and utility: (ii) acquiesce in any infringement, unauthorized use or
impairment of the Intangible Property or change the Station's call signs; (iii)
enter into any employment contract on behalf of the Station unless the same is
terminable at will and without penalty; or (iv) enter into any other contract,
lease or agreement that will be binding on Buyer after Closing, except for (A)
Sales Agreements, Trade Agreements, and Barter Agreements to the extent
consistent with Section 1.3, and (B) other contracts, leases and agreements
that in the aggregate will not impose obligations on Buyer in excess of Twelve
Thousand Dollars ($12,000).
9.10 ADVERSE DEVELOPMENTS. Seller shall promptly
notify Buyer of any materially adverse developments that occur prior to Closing
with respect to the Assets or the operation of the Station; provided, however,
that Seller's compliance with the disclosure requirements of this Section 9.10
shall not relieve Seller of any obligation with respect to any representation,
warranty or covenant of Seller in this Agreement or waive any condition to
Buyer's obligations under this Agreement.
9.11 ADMINISTRATIVE VIOLATIONS. If Seller receives
any finding, order, complaint, citation or notice prior to the Closing Date
which states that any aspect of the Station's operations violates any rule or
regulation of the Commission or of any other governmental authority (an
"Administrative Violation"), including without limitation any rule or
regulation concerning environmental protection, the employment of labor, or
equal employment opportunity, Seller shall promptly notify Buyer of the
Administrative Violation, remove or correct the Administrative Violation, and
be responsible for the payment of all costs associated therewith, including any
fines or back pay that may be assessed.
9.12 BULK SALES ACT. Seller agrees to indemnify,
defend, and hold Buyer harmless against any claims, liabilities, costs, or
expenses, including reasonable attorneys' fees, that Buyer may incur as a
result of the failure to comply with the bulk sales provisions of the
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Uniform Commercial Code or similar laws.
9.13 CONTROL OF STATION. This Agreement shall not
be consummated until after the Commission has given its written consent
thereto, and notwithstanding anything herein to the contrary, between the date
of this Agreement and the Closing Date, Buyer shall not directly or indirectly
control, supervise or direct, or attempt to control, supervise or direct the
operation of the Station. Such operations shall be the sole responsibility of
Seller.
10. CONDITIONS PRECEDENT.
10.1 MUTUAL CONDITIONS. The obligation of both
Seller and Buyer to consummate this Agreement is subject to the satisfaction of
each of the following conditions:
10.1.1 COMMISSION CONSENT. The Commission shall have
granted its consent to the Assignment Applications and such FCC Consent shall
have become a Final Order (as defined below). Final Order means an order or
action of the Commission that, by reason of expiration of time or exhaustion of
remedies, is no longer subject to administrative or judicial reconsideration or
review.
10.1.2 ABSENCE OF LITIGATION. As of the Closing Date,
no action, claim, suite or proceeding seeking to enjoin, restrain, or prohibit
the consummation of the Transaction shall be pending before any court, the
Commission, or any other governmental authority; provided, however, that this
condition may not be invoked by a party if any such action, suit, or
proceeding was solicited or encouraged by, or instituted as a result of any act
or omission of, such party.
10.2 CONDITIONS TO BUYERS'S OBLIGATION. In addition
to satisfaction of the mutual conditions contained in Section 10.1, the
obligation of Buyer to consummate this Agreement is subject to the satisfaction
of each of the following conditions:
10.2.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller to Buyer shall be true, complete, and
correct in all material respects as of the Closing Date with the same force and
effect as if then made.
10.2.2 COMPLIANCE WITH CONDITIONS. All of the terms,
conditions and covenants to be complied with or performed by Seller on or
before Closing Date shall have been timely complied with and performed in all
material respects.
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10.2.3 NO ADVERSE DEVELOPMENT. There shall not be or
have been any (a) breach by Seller or any Affiliate of Seller, or failure to
be in full force in effect on the Closing Date, of any Material Contract; or
(b) any other adverse change in the business or prospects of either the Station
or the condition of the Assets. No adverse development shall have occurred
with respect to the Station that results in an impairment to the ability of the
Station to operate as it is now operated or represents an impairment of the
value of the Station or Assets being conveyed.
10.2.4 ENGINEERING REPORT. Buyer shall have timely
received the Engineering Report which shall reveal nothing inconsistent with
Seller's representations, warranties or disclosures hereunder, or to which
Buyer has an express right to object hereunder except to the extent such
inconsistencies have been expressly waived by Buyer.
10.2.5 VALIDITY OF STATION LICENSE. On the Closing
Date, Seller shall be the owner and holder of the Station Licenses to the
extent that such authorizations can be owned or held by Seller under the
Communications Act of 1934, as amended; the Station Licenses shall be in
unconditional full force and effect, valid for the balance of the current
license term applicable generally to radio stations licensed to communities in
the state where the Station is located; and the Station Licenses shall be
unimpaired by any acts or omissions of Seller or Seller's employees, agents,
officers, directors or shareholders.
10.2.6 CLOSING DOCUMENTS. Seller shall deliver to
Buyer all of the closing documents specified in Section 11.2.1, all of which
documents shall be dated as of the Closing Date, duly executed, and in a form
customary in the state where the Assets are located and reasonably acceptable
to Buyer.
10.2.7 THIRD PARTY CONSENTS. Seller shall have
obtained all Required Consents to the assignment of the Material Contracts, as
listed on Schedule 1.3, and all consents necessary for the assignment of the
Tower Lease Agreement from Seller to Buyer such that Buyer will enjoy all of
the rights and privileges of Seller under the Contracts and the Tower Lease
Agreement subject only to the same obligations as are binding on Seller
thereunder, pursuant to the present terms thereof.
10.2.8 ESTOPPEL CERTIFICATES. Seller shall have
obtained such fee owner's consents and mortgagee's estoppel and non-disturbance
agreements with respect to the leases for
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the Leased Premises as are reasonably requested by Buyer not less than ten (10)
days prior to the Closing Date.
10.2.9 SETTLEMENT OF CLAIMS. Seller shall have
settled any and all claims against Seller that affect or concern the
Assets.
10.2.10 TITLE TO ASSETS. Seller shall hold and be able
to deliver to Buyer on the Closing Date good and indefeasible title to the
Assets.
10.3 CONDITIONS TO SELLER'S OBLIGATION. In addition
to satisfaction of the mutual conditions contained in Section 10.2, the
obligation of Seller to consummate this Agreement is subject to satisfaction of
each of the following conditions:
10.3.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer to Seller shall be true, complete and
correct in all material respects as of the Closing Date with the same force and
effect as if then made.
10.3.2 COMPLIANCE WITH CONDITIONS. All of the terms,
conditions and covenants to be complied with or performed by Buyer on or before
the Closing Date shall have been timely complied with and performed in all
material respects.
10.3.3. PAYMENT. Buyer shall pay and/or deliver to
Seller the consideration set forth in Section 3.
10.3.4 CLOSING DOCUMENTS. Buyer shall deliver to Seller
all the closing documents specified in Section 11.2.2, all of which documents
shall be dated as of the Closing Date, duly executed, and in a form customary
in transactions of this type and reasonably satisfactory to Seller.
11. CLOSING.
11.1 CLOSING DATE. The Closing hereunder shall
occur on a date mutually agreeable to Buyer and Seller as soon as possible but
in any event no later than ten (10) business days after the Commission's action
granting its consent to the Assignment Application has become a Final Order
(the "Closing Date"), and shall be effective as of 11:59 P.M. on the Closing
Date; provided, however, that in the event a Final Order is not received on or
before March 31, 1994, then, unless Buyer and Seller agree to extend such
deadline to September 30, 1994, this
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Agreement shall be terminated as of such date and held to be void ab initio,
and all monies previously delivered to the Escrow Agent or any party hereto
shall be returned to the conveying party and all liabilities and obligations
hereunder shall cease to exist (except to the extent required to unwind the
Transaction contemplated hereunder). The Closing shall take place at the
office of Buyer's counsel in Columbus, Ohio, or at such other location as may
be mutually agreeable to Buyer and Seller, commencing at 10:00 A.M. on the
Closing Date. If, as of the Closing Date, any condition precedent described in
Section 10 has not been satisfied, the party for whom such condition precedent
is to be performed shall have the option to excuse the performance of such
condition precedent at or before the Closing and simultaneously therewith
postpone the Closing until a date ten (10) days after all such conditions have
been (or are able to be) performed, and such postponed date shall constitute
the new Closing Date for all purposes hereunder.
11.2 PERFORMANCE AT CLOSING. The following
documents shall be executed and delivered at Closing.
11.2.1 BY RECEIVER. Receiver shall deliver to Buyer:
(a) A certificate executed by Receiver attesting
to Receiver's compliance with the matters set forth in Section 10.2.1, 10.2.2
and 10.2.3, together with certified copies of any Orders of the Superior Court
authorizing the Transactions contemplated hereby and a conformed copy of the
Tower Lease Agreement;
(b) One or more assignments transferring to Buyer
all of the interests of Seller in and to the Station Licenses, the Station
Applications, and all other licenses, permits, and authorizations issued by any
other governmental authorities that are used in or necessary for the lawful
operation of the Station;
(c) One or more bills of sale conveying to Buyer
the Station Equipment and Assets;
(d) One or more assignments, together with all
required consents, assigning to Buyer all of the Contracts, Station
Records, Tower Lease Agreement, Studio Lease and the Intangible Property;
(e) The Covenant;
(f) Opinions of Seller's Counsel in the form set
forth in Exhibit E; and
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(g) The affidavit described in Section 6.15 above.
11.2.2 BY BUYER. Buyer shall deliver to Seller:
(a) A certificate executed by Buyer attesting to
Buyer's compliance with the matters set forth in Section 10.3.1 and 10.3.2,
together with appropriate evidence of Buyer's authorization to enter into and
consummate this Agreement;
(b) The Purchase Price and the payment due pursuant
to the Covenant;
(c) The Term Note and Security Agreement;
(c) Such assumption agreements and other
instruments and documents as are required to make, confirm, and evidence
Buyer's assumption of and obligation to pay, perform, or discharge Seller's
obligations under the Contracts to the extent the same are to be assumed by
Buyer pursuant to the terms of this Agreement; and
(d) Opinions of Buyer's Counsel in the form set
forth in Exhibit F.
11.2.3 OTHER DOCUMENTS AND ACTS. The parties will
also execute such other documents and perform such other acts, before and after
the Closing Date, as may be necessary for the complete implementation and
consummation of this Agreement.
12. POST-CLOSING OBLIGATIONS. The parties covenant and agree
as follows with respect to the period subsequent to the Closing Date:
12.1. INDEMNIFICATION.
12.1.1 BUYER'S RIGHT TO INDEMNIFICATION. Seller
undertakes and agrees to indemnify, defend by counsel acceptable to Buyer, and
hold harmless Buyer, its parent, affiliates, successors and assigns and their
respective directors, officers, employees, shareholders, representatives and
agents (hereinafter referred to collectively as "Buyer Indemnitees") from and
against and in respect of any and all direct losses, costs, liabilities,
claims, obligations, Environmental Claims and Expenses, diminution in value and
expenses, including reasonable attorneys' fees, incurred or suffered by a Buyer
Indemnitee arising from (i) the claims of third parties with respect to
operation of the Station or ownership of the Assets prior to Closing not
expressly assumed by Buyer pursuant to this Agreement or otherwise consented to
by Buyer in
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writing; (ii) a breach, misrepresentation, or other violation of any of
Seller's covenants, warranties or representations contained in this Agreement;
(iii) all liabilities of Seller or the Station not expressly assumed by Buyer
pursuant to this Agreement or otherwise consented to by Buyer in writing; (iv)
all liens, charges, or encumbrances on any of the Assets which are not
expressly permitted by this Agreement or otherwise consented to by Buyer in
writing; (v) all Administrative Violations and alleged Administrative
Violations occurring prior to Closing; and (vi) any breach or default by Seller
under any Contract, prior to Closing. The foregoing indemnity is intended by
Seller to cover all acts, suits, proceedings, claims, demands, assessments,
adjustments, diminution in value, costs, and expenses with respect to any and
all of the specific matters in this indemnity set forth but shall not extend to
indirect, consequential or punitive damages except to the extent such damages
are due on account of third party claims. Notwithstanding the foregoing,
Seller shall have no obligation to indemnify the Buyer unless and until the
aggregate amount of damages exceeds $25,000, at which time indemnification for
the full amount of all damages (including the first $25,000) shall be due.
12.1.2 SELLER'S RIGHT TO INDEMNIFICATION. Buyer
undertakes and agrees to indemnify, defend by counsel acceptable to Seller, and
hold harmless Seller and Seller's respective subsidiaries, affiliates,
successors and assigns, directors, officers, employees, shareholders, partners,
representatives and agents (hereinafter referred to collectively as "Seller
Indemnitees"), from and against and in respect of any and all losses, costs,
liabilities, claims, obligations and expenses, including reasonable attorneys'
fees (and including without limitation any of the foregoing with respect to
environmental matters), incurred or suffered by a Seller Indemnitee arising
from (i) the operation of the Station or ownership or operation of the Assets
after Closing (including without limitation environmental conditions and
claims, and Environmental Noncompliance to the extent resulting from or
attributable to the conduct of Buyer after the Closing Date); (ii) a breach,
misrepresentation, or other violation of any of Buyer's covenants, warranties
and representations contained in this Agreement; (iii) all liabilities under
the Contracts assumed by Buyer pursuant to this Agreement; and (iv) any breach
or default by Buyer under any Contract after Closing. The foregoing indemnity
is intended by Buyer to cover all acts, suits, proceedings, claims, demands,
assessments, adjustments, costs, and expenses with respect to any and all of
the
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specific matters in this indemnity set forth but shall not extend to indirect
or consequential damages except to the extent such damages are due on account
of third party claims. None of the foregoing indemnities apply to claims for
environmental conditions or Environmental Noncompliance to the extent such do
not result from or are not attributable to the conduct of Buyer after the
Closing Date. Notwithstanding the foregoing, Buyer shall have no obligation to
indemnify the Seller unless and until the aggregate amount of damages exceeds
$25,000, at which time indemnification for the full amount of all damages
(including the first $25,000) shall be due.
12.1.3 CONDUCT OF PROCEEDINGS. If any claim or
proceeding covered by the foregoing agreements to indemnify and hold harmless
shall arise, the party who seeks indemnification (the "Indemnified Party")
shall give written notice thereof to the other party (the "Indemnitor")
promptly after the Indemnified Party learns of the existence of such claim or
proceeding; provided, however, that the Indemnified Party's failure to give the
Indemnitor prompt notice shall not bar the Indemnified Party's right to
indemnification unless such failure has materially prejudiced the Indemnitor's
ability to defend the claim or proceeding. The Indemnitor shall have the right
to employ counsel reasonably acceptable to the Indemnified Party to defend
against any such claim or proceeding, or to compromise, settle or otherwise
dispose of the same, if the Indemnitor deems it advisable to do so, all at the
expense of the Indemnitor; provided that the Indemnitor shall not have the
right to control the defense of any such claim or proceeding unless it has
acknowledged in writing its obligation to indemnify the Indemnified Party fully
from all liabilities incurred as a result of such claim or proceeding and then
and periodically thereafter provides the Indemnified Party with reasonably
sufficient evidence of the ability of the Indemnitor to satisfy any such
liabilities. The parties will fully cooperate in any such action, and shall
make available to each other any books or records useful for the defense of any
such claim or proceeding. If the Indemnitor fails to acknowledge in writing
its obligation to defend or contest such obligation against or settle such
claim or proceeding within twenty (20) days after receiving notice thereof from
the Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate), the Indemnified Party shall be free
to dispose of the matter, at the expense of the Indemnitor, in any way in which
the Indemnified Party deems to be in its best interest.
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12.1.4 INDEMNIFICATION SOLE REMEDY. Except for
specific performance of Seller's obligation to effectively and lawfully convey
the Assets to Buyer as provided in this Agreement, and except for the right of
Seller to sue Buyer in the event of default by Buyer under the Term Note and
Security Agreement given by Buyer to Seller as provided in this Agreement, the
right to indemnification hereunder shall be the exclusive post-Closing remedy
of any party in connection with or arising out of this Agreement, including
without limitation, any breach by another party of its representations,
warranties, or covenants in this Agreement. SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES EXCEPT AS EXPRESSLY SET FORTH HEREIN, AND HEREBY DISCLAIMS ALL
IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Except for specific
performance of Seller's obligation to effectively and lawfully convey the
Assets to Buyer as provided in this Agreement, and except for Buyer's
obligations under the Term Note and Security Agreement given by Buyer to Seller
as provided in this Agreement, each party hereby releases and discharges the
other party from any liability or claim with respect to post-closing remedies
for which there is not an express indemnity under this Agreement.
12.1.5 RIGHT OF OFFSET. Each of Buyer and Seller
shall have the right to offset against amounts owing to the other any amounts
owing to such party pursuant to this Agreement, provided that such party shall
first follow the procedures set forth in Section 13.1 hereof.
12.2 CERTIFICATION OF FINANCIAL STATEMENTS. After
the Closing Date, the chief financial officer of Seller and/or Seller shall
cooperate and provide and shall cause the accounting firm or firms, if any,
responsible for the preparation of the financial statements for the Station to
provide such further assurances as it is willing to provide concerning the
accuracy of the pre-closing financial statements of the Station as Buyer or
Buyer's accountants may reasonably request in connection with any public
offering of Buyer.
12.3 ACCOUNTING FOR ACCOUNTS RECEIVABLES. After the
Closing Date, Buyer will collect all accounts receivable of Seller for a period
of at least sixty (60) days following Closing. Buyer shall provide to Seller a
weekly accounting of all accounts
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receivable of Seller so collected, and, at the end of such sixty (60) day
period, shall remit to Seller, in cash, all accounts receivable of Seller so
collected, less any amounts applied by Buyer to the payment of Seller's
obligations as approved by Seller. After said sixty (60) day period, Seller
shall have sole responsibility for collection of and accounting for all
accounts receivable of Seller, unless the parties hereto agree to a
continuation of the arrangement first set forth in this Section 12.3 or to some
other collection arrangement. For purposes of this Section, the term "accounts
receivable of Seller" shall mean all uncollected sales made by Seller in his
operation of the Station prior to the Closing Date. Buyer agrees that with
respect to any collections made on accounts receivable from customers with whom
both Buyer and Seller have accounts receivable, and which accounts are not in
dispute, such collections shall first be credited to the accounts receivable of
Seller from such customer before any credit shall be given for such collections
to receivables from such customer arising after the Closing Date.
13. DEFAULT AND REMEDIES.
13.1 BREACH AND OPPORTUNITY TO CURE. If either
party believes the other to be in default hereunder, the nondefaulting party
shall provide the defaulting party with notice specifying in reasonable detail
the nature of such default. If such default has not been cured by the earlier
of: (i) the Closing Date, or (ii) within twenty-one (21) days after delivery
of such notice, then the party giving such notice may (x) terminate this
Agreement, (y) extend the Closing Date under Section 11.1 (but no such
extension shall constitute a waiver of such nondefaulting party's right to
terminate as a result of such default), and/or (z) exercise the remedies
available to such party pursuant to Sections 13.2 or 13.3 hereof, subject to
the right of the other party to contest such action through appropriate
proceedings, or pursuant to Section 12.1.5 hereof.
13.2 SELLER'S REMEDIES. Buyer recognizes that if
the Transaction is not consummated as a result of Buyer's default, Seller would
be entitled to compensation. The parties, therefore, agree that if this
Agreement is not consummated due to the default of Buyer, Seller, provided that
Seller is not in default and has otherwise complied with its obligations under
this Agreement, shall be entitled to the Escrow Deposit. The parties agree
that this sum shall constitute liquidated damages and shall be in lieu of any
and all other relief to which Seller might otherwise be entitled due to Buyer's
failure to consummate, or default under, this Agreement.
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13.3 BUYER'S REMEDIES. Seller agrees that the
Assets include unique property that cannot be readily obtained on the open
market and that Buyer would be irreparably injured if this Agreement is not
specifically enforced after default. Therefore, Buyer shall have the rights to
specifically enforce Seller's performance under this Agreement and to sue for
damages, and Seller agrees to waive the defense in any such suit that Buyer has
an adequate remedy at law and to interpose no opposition, legal, or otherwise,
as to the propriety of specific performance as a remedy. In the event Buyer
elects to terminate this Agreement as a result of Seller's default instead of
seeking specific performance, Buyer shall be entitled to the return of the
Escrow Deposit and to recover Buyer's damages.
14. TERMINATION.
14.1 ABSENCE OF COMMISSION CONSENT. This Agreement
may be terminated at the option of either party upon notice to the other if a
Final Order approving the Assignment Applications has not been obtained on or
before March 31, 1994, unless Buyer and Seller agree to extend such deadline
until September 30, 1994; provided, however, that neither party may terminate
this Agreement if such party is in default hereunder, or if a delay in any
decision or determination by the Commission respecting the Assignment
Applications has been caused or contributed to by such party's action or
inaction with respect to the Assignment Applications. In the event of
termination pursuant to this Section, the Escrow Deposit shall be returned to
the Buyer and the parties shall be released and discharged from any further
obligation hereunder unless the failure to obtain such Final Order is
attributable to Buyer, as provided in this Section, and Seller is not in
default and has otherwise complied with its obligations under this Agreement,
in which case the Escrow Deposit shall be released to Seller as liquidated
damages pursuant to Section 13.2.
14.2 DAMAGE.
14.2.1 RISK OF LOSS. The risk of loss or damage to
the Assets shall be upon Seller at all times prior to the Closing. In the
event of loss or damage, Seller shall promptly notify Buyer thereof and use its
reasonable best efforts to repair, replace or restore the lost or damaged
property to its former condition as soon as possible. If such repair,
replacement, or restoration has not been completed prior to the Closing Date,
Buyer, at its option:
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(a) elect to consummate the Transaction
in which event Seller shall assign to Buyer all of Seller's rights to insurance
proceeds related to such casualty under any applicable insurance policies; or
(b) elect to postpone the Closing Date,
with prior consent of the Commission if necessary, which consent both parties
will use their reasonable best efforts to obtain, for such reasonable period of
time (not to exceed ninety (90) days) as is necessary for Seller if Seller so
elects in its sole discretion to repair, replace, or restore the lost or
damaged property to its former condition. If, after the expiration of that
extension period, the lost or damaged property has not been adequately
repaired, replaced or a restored, Buyer may terminate this Agreement, and the
parties shall be released and discharged from any further obligation hereunder,
except to the extent of the return to Buyer of the Escrow Deposit.
14.2.2 FAILURE OF BROADCAST TRANSMISSION. Seller
shall give prompt written notice to Buyer if either of the following (a
"Specified Event") shall occur: (i) the regular broadcast transmissions of the
Station in the normal and usual manner is interrupted or discontinued other
than for routine maintenance or repairs for more than three (3) hours; or (ii)
the Station is operated at less than its licensed antenna height above average
terrain or at less than ninety percent (90%) of its licensed effective radiated
power other than for routine maintenance or repairs for more than three (3)
hours. If any Specified Event persists for more than seventy-two (72) hours
or, in the event of weather conditions or utility failure affecting generally
the Station in the market served by the Station, ninety-six (96) hours, whether
or not consecutive, during any period of thirty (30) consecutive days, then
Buyer may, at its option: (i) terminate this Agreement by written notice given
to Seller not more than ten (10) days after the expiration such thirty (30) day
period, or (ii) proceed in the manner set forth in Section 14.2.1. In the
event of termination of this Agreement by Buyer pursuant to this Section, the
Escrow Deposit shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
14.2.3 RESOLUTION OF DISAGREEMENTS. If the parties are
unable to agree upon the extent of any loss or damage, the cost to repair,
replace or restore any lost or damaged property, the adequacy of any repair,
replacement, or restoration of any lost or damaged property, or any other
matter arising under this Section 14.2, the disagreement shall be referred to a
qualified
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consulting communications engineer mutually acceptable to Seller and Buyer who
is a member of the Association of Federal Communications Consulting Engineers,
whose decision shall be final, binding upon and non-appealable by the parties,
and whose fees and expenses shall be paid one-half by Seller and one-half by
Buyer.
14.3 LEGAL ACTIONS. If, prior to the Closing Date,
any action, suit, or proceeding shall have been instituted by or before any
court or other governmental authority (other than the Commission) to enjoin,
restrain, or prohibit the consummation of the Transaction, the Closing may be
adjourned at the option of either party, with prior consent of the Commission
if necessary, which consent both parties will use their reasonable best efforts
to obtain, for a period of up to ninety (90) days, and if, at the end of such
period, the action, suit, or proceeding shall not have been favorably resolved,
either party may, by written notice to the other, terminate this Agreement;
provided, however, that if such action, suit, or proceeding shall have been
solicited or encouraged by, or instituted as a result of any act or omission of
either Seller or Buyer, then such party shall not have any right of adjournment
or termination pursuant to this Section. In the event oftermination pursuant
to this Section, the Escrow Deposit shall be returned to Buyer and the parties
shall be released and discharged from any further obligation hereunder unless
Buyer is in default or has otherwise failed to comply with its obligations
under this Agreement and Seller is not in default and has otherwise complied
with its obligations hereunder, in which case the Escrow Deposit shall be
released to Seller as liquidated damages pursuant to Section 13.2.
15. GENERAL PROVISIONS.
15.1 BROKERAGE. Seller represents to Buyer that
Seller shall pay the fees of Jorgenson Broadcast Brokerage as broker in
connection with the Transaction. The parties agree to indemnify and hold each
other harmless against any claim from any other broker or finder based upon any
agreement, arrangement, or understanding alleged to have been made by the
indemnifying party.
15.2 EXPENSES. Except as otherwise provided herein,
all expenses involved in the preparation and consummation of this Agreement
shall be borne by the party incurring the same whether or not the Transaction
is consummated. All Commission filing fees for
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the Assignment Application or Applications shall be shared equally by Buyer and
Seller. Seller shall make the payments for Commission filing fees and Buyer
shall reimburse Seller for its portion of such payments. All recording costs
for instruments of transfer, and all stamp, sales, use and transfer taxes shall
be paid by Seller.
15.3 NOTICES. All notices, requests, demands, and
other communications pertaining to this Agreement shall be in writing and shall
be deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such communication is intended, or three (3) business days after the
date mailed by certified or registered U.S. mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to Seller:
WMLO-FM
1401 Maclay Commerce Drive
Tallahassee, Florida 32312
Attention: Mr. Ed Winton, President
(904) 668-6600 Fax: (904) 668-9995
with copies (which shall not constitute
notice) to:
T. Michael Jankowski
Collier, Shannon, Rill & Scott
3050 K Street, N.W.
Suite 400
Washington, D.C. 20007
(202) 342-8415 Fax: (202) 338-5534
and
Stuart E. Goldberg
Ervin, Varn, Jacobs, Odom & Ervin
Post Office Drawer 1170
Tallahassee, Florida 32032
(904) 224-9135: Fax: (904) 222-9164
(b) If to Buyer:
Mr. John E. Rayl
Partech Communications Group, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
(614) 538-0660 Fax: (614) 538-0670
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with copies (which shall not constitute
notice) to:
Charles A. Koenig, Esq.
Cloud Koenig & Owen
5354 North High Street, Suite 3D
Columbus, Ohio 43214
(614) 221-3621 Fax: (614) 221-2698
Any party may change its address for notices by notice to the others given
pursuant to this Section.
15.4 ATTORNEY'S FEES. If any party initiates any
litigation against any other involving this Agreement, the prevailing party in
such action shall be entitled to receive reimbursement from the other party for
all reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
15.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATION RIGHTS. The several representations and warranties of the
parties contained herein, and the parties respective indemnification rights
pursuant to Section 12, shall survive the Closing for a period of eighteen (18)
months, at which time, the same shall expire (except for claims asserted during
such eighteen (18) month period); provided, however, that representations and
warranties with respect to title and authorization shall survive in perpetuity.
15.6 EXCLUSIVE DEALINGS. For so long as this
Agreement remains in effect, neither Seller, its officers, directors,
employees, shareholders, or partners or owners, as the case may be, nor any
person acting on Seller's behalf, shall, directly or indirectly, solicit or
initiate any offer from, or conduct any negotiations with, any person other
than Buyer or Buyer's assignee(s) concerning the acquisition of the Station or
Stations.
15.7 WAIVER. Unless otherwise specifically agreed
in writing to the contrary: (i) the failure of any party at any time to
require performance by another of any provision of this Agreement shall not
affect such party's right thereafter to enforce the same; (ii) no waiver by any
party of any default by any other shall be valid unless in writing and
acknowledged by an authorized representative of the nondefaulting party, and no
such waiver shall be taken or held to be a waiver by such party of any other
preceding or subsequent default; and (iii) no extension of
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time granted by any party for the performance of any obligation or act by any
other party shall be deemed to be an extension of time for the performance of
any other obligation or act hereunder.
15.8 ASSIGNMENT. No party may assign its rights or
obligations hereunder without the prior written consent of the other parties
except: (i) Buyer may assign its rights and obligations to a corporation,
partnership or other business entity that controls, is controlled by, or is
under common control with Buyer, provided that Buyer shall remain liable for
all obligations under this Agreement, and (ii) Buyer may make a collateral
assignment of its rights under this Agreement to any lender who provides funds
to Buyer for the acquisition or operation of the Station. Seller agrees to
execute acknowledgments of such assignment(s) and collateral assignment(s) in
such forms as Buyer or Buyer's lender(s) may from time to time request.
Subject to the foregoing, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the parties hereto and their respective
successors and assignees.
15.9 ENTIRE AGREEMENT. This Agreement, the Exhibits
and Schedules hereto (which are incorporated by reference herein), constitute
the entire agreement between the parties with respect to the subject matter
hereof and referenced herein, supersede and terminate any prior agreements
between the parties (written or oral). This Agreement may not be altered or
amended except by an instrument n writing signed by all parties hereto.
15.10 COUNTERPARTS. This Agreement may be signed in
any number of counterparts with the same effect as if the signatures on each
such counterpart were on the same instrument.
15.11 CONSTRUCTION. The Section headings of this
Agreement are for convenience only and in no way modify, interpret or construe
the meaning of specific provisions of the Agreement. As used herein, the
neuter gender shall also denote the masculine and feminine, and the masculine
gender shall also denote the neuter and feminine, where the context so permits,
and "knowledge" of a party means only the actual knowledge and awareness of the
executive officers of such party.
15.12 SCHEDULES AND EXHIBITS. The Schedules and
Exhibits to this Agreement are a material part of this Agreement.
15.13 SEVERABILITY. If any one or more
of the provisions contained in this
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Agreement should be found invalid, illegal or unenforceable in any respect, the
validity, legality, and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby. Any illegal or
unenforceable terms shall be deemed to be void and of no force and effect only
to the minimum extent necessary to bring such term within the provisions of
applicable law and such term, as so modified, and the balance of this agreement
shall then by fully enforceable.
15.14 CHOICE OF LAW. For all matters regarding
claims asserted by Seller under this Agreement, this Agreement and all matters
regarding such claims shall be governed by and construed in accordance with the
laws of the State of Florida, without regard to the choice of law rules
utilized in that jurisdiction. For all matters regarding claims asserted by
Buyer under this Agreement, this Agreement and all matters regarding such
claims shall be governed by and construed in accordance with the laws of the
State of Ohio, without regard to the choice of law rules utilized in that
jurisdiction. In the event both parties assert a claim with respect to the
same or related matters under this Agreement, the laws of the state applicable
to the first party asserting such claim in a lawsuit or similar such proceeding
shall govern all such claims and all matters relating thereto (including
defenses, counterclaims, crossclaims, third-party claims, setoffs, rights and
duties), and this Agreement.
15.15 COUNSEL. Each party has been represented by
its own counsel in connection with the negotiation and preparation of this
Agreement and, consequently, each party hereby waives the application of any
rule of law that would otherwise be applicable in connection with the
interpretation of this Agreement, including but not limited to any rule of law
to the effect that any provision of this Agreement shall be interpreted or
construed against the party whose counsel drafted that provision.
15.16 PUBLIC STATEMENTS. Prior to the Closing Date,
neither Seller nor Buyer shall, without the prior written approval of the other
party, make any press release or other public announcement concerning the
transactions contemplated by this Agreement except (i) Seller and Buyer shall
issue a mutually agreeable public announcement press release promptly after the
signing of this Agreement; and (ii) to the extent that either party shall be so
obligated by law, in which case the other party shall be so advised and the
parties shall use their best efforts to cause a
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mutually agreeable release or announcement to be issued.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by a respective duly authorized officer as of the date
first written above.
BUYER:
TROPIC OF TALLAHASSEE, INC.
By:_________________________________
Title: _____________________________
SELLER:
____________________________________
Edward Winton
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EXHIBIT 10.73
EXHIBIT C
SECURITY AGREEMENT
THIS AGREEMENT, dated the _____ day of _______________, 199__, between
TROPIC OF TALLAHASSEE, INC. having its principal office at 3366 Riverside
Drive, Suite 200, Columbus, Ohio 43215 (the "Debtor") and EDWARD WINTON, having
his principal office at __________________________________________ (the "Secured
Party").
ARTICLE I
CREATION OF SECURITY INTEREST
1. Any amounts disbursed by Secured Party to Debtor, with interest thereon,
shall become additional indebtedness of Debtor secured by this Security
Agreement and the Debtor hereby grants to Secured Party a first security
interest in all the following, which shall be collectively hereinafter
referred to as the "Collateral".
(a) All equipment, machinery, appliances, fixtures, furniture,
furnishings and all other types of tangible and intangible personal
property, including all additions thereto, substitutions therefor,
replacements thereof and all insurance proceeds therefrom by reason of
loss or damage thereto located at and used in connection with the
radio station known as WMLO (FM) of Tallahassee, Florida, which
property comprises the "Assets" as that term is defined in a certain
Purchase Agreement entered into by and between Debtor and Secured
Party, dated September ___, 1993; and
(b) All equipment, machinery, appliances, fixtures, furniture,
furnishings and all other types of tangible, personal property
including all additions thereto, substitutions therefor, replacements
thereof and all insurance proceeds therefrom by reason of loss or
damage thereto located at and used in connection with the Debtor's
radio station business known as WMLO (FM), and which is located at
any other locations.
2. This Agreement and the Collateral serve as security for the performance of
a Term Note dated __________________, 199__, which is hereinafter called
the "Note", and any renewal, modification, extension, or refinancing
thereof. A copy of said Note is attached hereto and incorporated herein
by reference as Exhibit "A". The Collateral shall also secure all
Debtor's obligations and liabilities whatsoever and whenever arising out
of Debtor's promises to pay, covenants, warranties, or representations to
the Secured Party from any transaction now or hereafter occuring.
The Collateral shall be held by Secured Party; and so long as no Event of
Default has occurred and is continuing under the Note hereinafter defined
or which with the lapse of time or the giving of notice of both would
constitute such an Event of Default, all such Collateral and other sums
shall be paid and applied as follows: Any amounts from time to time
received by Secured Party shall be applied first to the payment of all
amounts of interest and then to the
<PAGE> 2
principal due and payable under the Note.
3. At its option and without any obligation to do so, Secured Party may
discharge or pay any taxes, liens, security interests, or other,
encumbrances at any time levied or placed on or against the Collateral or
Debtor in breach of this Agreement. Debtor agrees to reimburse Secured
Party on demand for any such payment made or expense incurred pursuant to
the foregoing authorizations. Moneys advanced by Secured Party required
to pay or discharge any of the above shall bear interest at fourteen
percent (14%) per annum until paid in full.
4. Debtor shall execute any UCC Financing Statements or other documents from
time to time, alone or with Secured Party, and do such other acts
considered by Secured Party to be reasonably necessary or desirable to
perfect or protect the security interests hereby created and shall pay all
costs and expenses (including, without limitation, reasonable fees and
expenses of counsel and filing fees) related to the preparation and filing
of any financial statements, continuation statements, or any other
documents related to the perfection or protection of the security
interests hereby created. Debtor hereby authorizes Secured Party as
Debtor's agent and attorney in fact to execute and file in any appropriate
office UCC financing statements and similar instruments signed only by
Secured Party.
5. If an Event of Default occurs and is continuing, Debtor hereby appoints
the Secured Party as Debtor's true and lawful attorney, with full power of
substitution to take any action which the Secured Party may deem necessary
or appropriate to create, perfect, protect, and preserve the secured
interests of the Secured Party in the Collateral. Notwithstanding the
foregoing, upon written direction from the Secured Party and at Secured
Party's expense, Debtor will take all actions necessary or desirable,
including without limitation, litigation, to enforce Debtor's rights in
the Collateral; and, in such event, will pay over to the Secured Party all
profits received from any such action.
ARTICLE II
EVENTS OF DEFAULT
Any of the following events, unless cured by Debtor within thirty (30)
days following written notice from Secured Party of any such event, shall
constitute an Event of Default hereunder:
(1) Debtor shall fail to make payment of the principal or interest
on the Note when due; or
(2) Debtor shall default in the due observance or performance of any
term, covenant, or representation contained in this Security
Agreement, or
(3) Debtor has made material false representations to Secured Party
which significantly damages Secured Party's interest in the
Collateral; or
(4) Debtor shall cease doing business as a going concern, make an
assignment for the benefit of creditors, admit in writing its
inability to pay its debts as they become due, file a voluntary
petition in bankruptcy, be adjudicated a bankrupt or an
insolvent, file a petition seeking for itself any reorganization,
readjustment, liquidation, dissolution, or similar arrangement
under any present or future statute, law, or regulation or file
an answer admitting the material allegations of a petition filed
against it in any such proceeding or fail to have such petition
dismissed within 60 days after filing or consent to or acquiesce
in the appointment of a trustee,
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receiver, or liquidator of it or all or any substantial part of
it, assets or properties.
ARTICLE III
SECURED PARTY'S REMEDIES
1. Upon an Event of Default hereunder, Secured Party shall have the rights
and remedies of a secured party under the Uniform Commercial Code as in
effect in the state of Ohio. Without limiting the generality of the
foregoing, Secured party may upon Event of Default exercise the following
rights and remedies:
(a) Accelerate the due date of the Note and request immediate payment
of both principal and interest to date, unless Debtor shall bring all
Note arrearages current within ten (10) days after receipt of the
aforesaid notice from Secured Party; and/or
(b) Sell the Collateral in its possession; provided that Secured
Party shall first send Debtor a notice, at least ten (10) days before
the time of any intended sale or other disposition of the Collateral
is to be made, which Debtor agrees shall be deemed to be reasonable
notice of such sale or other disposition.
2. Secured Party may incur reasonable attorneys' fees and expenses in
exercising any of its rights and remedies upon default, which fees and
expenses shall become parts of Secured Party's reasonable expenses of
retaking, holding, preparing for sale and the like. Debtor will reimburse
Secured Party on demand for all such expenses.
3. Debtor agrees that if any warranty or representation contained herein
should prove to be untrue or incorrect in any material respect when
made, the secured Party may at its potion terminate this Agreement and
rescind the loan made hereunder; and Debtor shall pay to Secured Party the
principal amount due on the Note together with accrued interest plus costs
and expenses incurred by the Secured Party arising out of enforcement of
this provision.
ARTICLE IV
MISCELLANEOUS
1. No delay or omission of the Secured Party to exercise any remedy shall
exhaust or impair any remedy of the Secured Party nor shall any waiver by
the Secured Party extend or be taken to affect any subsequent default. No
remedy hereunder is intended to be exclusive of any other remedy but shall
be cumulative to any and every other remedy to which the Secured Party is
entitled. The Secured Party shall not be required to look to, enforce or
exhaust any other security, collateral, or guarantees first.
2. This Security Agreement and the rights and obligations of the parties
hereunder shall be construed and interpreted in accordance with the laws
of the state of Delaware.
3. Any notice or notification required to be given may be given by mailing
such notice, postage prepaid, to the intended party's address as it
appears at the beginning of this Security
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Agreement.
4. All the terms, conditions, and covenants of this Security Agreement shall
inure to the benefit of and to bind the heirs, successors, and assigns of
the respective parties hereto.
5. This Security Agreement may not be changed orally but only by an agreement
in writing signed by the party against whom enforcement of any waiver,
change, modification, or discharge is sought.
6. This Security Agreement shall be without recourse against the Debtor
except as to the warranties and covenants stated herein notwithstanding
anything to the contrary contained in the Note.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
DEBTOR: SECURED PARTY:
TROPIC OF TALLAHASSEE, INC. EDWARD WINTON
By:_______________________ _________________________
Title: ___________________
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EXHIBIT 10.74
EXHIBIT B
PROMISSORY NOTE
______
$1,000,000.00 ___________, 199__
THE UNDERSIGNED ("Maker") hereby promises to pay to the order of EDWARD WINTON
("Payee"), his successors and assigns forever, at such address as may be
provided in writing from time to time, the principal sum of ONE MILLION DOLLARS
($1,000,000.00), together with interest thereon at the rate of ten percent
(10%) per annum payable as follows: Commencing on the thirtieth (30th) day
following the date hereof, and continuing on the same day of each month
thereafter, Maker shall pay to Payee equal installments of principal and
interest in the amount of Thirteen Thousand Two Hundred Fifteen and 07/100
Dollars ($13,215.07) per month for sixty (60) consecutive months, and upon the
expiration of sixty-one (61) months following the date of the first monthly
payment required hereunder, Maker shall pay to Payee the entire unpaid
principal balance hereof, together with all unpaid interest thereon (which
final payment is expected to equal Six Hundred Twenty-One Thousand Nine Hundred
Seventy-Two and 59/100 Dollars ($621,972.59) plus interest). No interest shall
accrue on this Note prior to the date on which this Note is executed.
This Note may be prepaid, in whole or in part, at any time without penalty to
Maker, in which event the monthly payments thereafter shall be recalculated so
as to take into consideration such prepayment.
This Note shall be secured by a security interest granted to Payee in certain
personal property transferred by Payee to Maker and certain other personal
property owned by Maker, pursuant to the terms of that certain Security
Agreement of even date herewith. In the event of a sale of substantially all
of the property securing this Note, Maker shall be required to make, on the
date of closing of such sale, a lump sum payment to Payee equal to the lesser
of (i) the remaining principal balance due on this Note, or (ii) Two Hundred
Fifty Thousand Dollars ($250,000.00), which payment shall be treated as a
partial prepayment hereon. In the event of any default by Maker under the
terms of this Note or said Security Agreement, or in the event any payment
required hereunder is not paid within fifteen (15) days after its due date,
Payee shall, at its sole option, be entitled to foreclose upon the collateral
securing this Note and to avail itself of any and all legal remedies available
at law.
All persons now or hereafter liable for the payment of the principal or
interest due on this Note, or any part thereof, do hereby expressly waive
presentment for payment, notice of dishonor, protest and notice of protest, and
agree that the time for the payment hereon may be extended without releasing or
otherwise affecting their liability on this Note.
Notwithstanding anything to the contrary, this Note shall be governed by and
construed in accordance with the laws of the State of Florida.
This Note was executed in _________________, __________.
MAKER
ATTEST: TROPIC OF TALLAHASSEE, INC.
By:_______________________ By:_____________________________
Secretary President
<PAGE> 1
EXHIBIT 10.75
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of October ____, 1993, by and
among WBA BROADCASTING, INC., a Georgia corporation with its principal mailing
address being One First National Plaza, Chicago, Illinois 60603 ("Seller"),
PARTECH COMMUNICATIONS GROUP, INC., a Nevada corporation with its principal
executive offices located at 3366 Riverside Drive, Suite 200, Columbus, Ohio
43221 ("Partech"), and MARK JORGENSON d/b/a JORGENSON BROADCAST BROKERAGE, an
individual whose office is located at 2700 West M.L. King Blvd., Suite 400,
Tampa, Florida 33607 (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, Seller and Partech have agreed to enter into an agreement (the
"Agreement") concerning the acquisition by Partech or Partech's assignee from
Seller of operating FM and AM radio broadcast stations and of certain of the
assets and properties which comprise the stations known as WMOG-FM and WMOG-AM
(collectively referred to hereafter as the "Station"); and
WHEREAS, as an indication of Partech's good faith, Partech has agreed to
deposit Ten Thousand Dollars ($10,000.00) (the "Initial Deposit") with the
Escrow Agent following the parties' complete execution of a Letter of Intent
for the purchase of the Station, and to deposit an additional Forty-Six
Thousand Dollars ($46,000.00) (the "Additional Deposit") with the Escrow Agent
upon the filing of an application for transfer of the Station's license with
the FCC, all such deposits to be held in escrow pursuant to the terms and
conditions set forth in this Escrow Agreement and, if applicable, the
Agreement; and
WHEREAS, it is the intention of Seller and Partech that the Escrow Agent
shall receive and hold under the terms of this Escrow Agreement all funds which
the parties may agree to be held under the terms of this Escrow Agreement and
the Agreement, if any (the "Deposits").
NOW, THEREFORE, in consideration of the mutual promises of the other.
The parties hereto do hereby agree as follows:
1. DEPOSITS IN ESCROW.
(a) Partech hereby deposits in escrow, and the Escrow Agent
hereby acknowledges receipt of the Deposit in the amount of Ten Thousand
Dollars ($10,000.00).
(b) The Escrow Agent agrees to accept any Additional Deposit in
accordance with the terms and conditions of this Escrow Agreement and, if
applicable, the Agreement, and agrees to execute and deliver such other
agreements or documents as may be required by the parties.
2. RIGHTS RESPECTING THE DEPOSITS.
(a) Unless and until an Event of Default (as defined herein)
shall occur, the Escrow Agent shall at all times maintain the Deposits in
account number ____________ at ____________ , a national bank, with this
account insured by the Federal Deposit Insurance Corporation.
(b) In the event of the occurrence of a Termination Event,
pursuant to paragraph 3 hereof, then within three (3) days thereafter the
Escrow Agent shall deliver to Partech the Deposits with interest earned thereon
in good funds.
(c) If Seller and Partech or Partech's assignee mutually
agree to terminate this Escrow
<PAGE> 2
Agreement or the undertaking contemplated hereby, then each shall notify the
Escrow Agent and within three (3) days thereafter the Escrow Agent shall
deliver to Partech the Deposits with interest earned thereon in good funds.
(d) In the event Seller and Partech or Partech's assignee
consummate the purchase contemplated hereby under the Agreement, then upon
closing of that transaction, in accordance with the terms of the Agreement, the
Escrow Agent shall deliver to Seller the Deposits with interest earned thereon
in good funds, which shall be applied in full against the portion of the
purchase price due at closing thereof.
(e) In the event of the occurrence of an Event of Default,
pursuant to paragraph 4 hereof, then as soon as possible after the
determination of the Event of Default the Escrow Agent shall deliver to the
non-defaulting party the Deposits with interest earned thereon in good funds,
in the case of Partech as a return of funds deposited hereunder, and in the
case of Seller as liquidated damages hereunder.
(f) In the event a dispute between Partech and Seller is
submitted to a court of competent jurisdiction for final determination, the
final determination of such court with respect to any dispute so submitted,
after all appeals have been taken or the time to appeal shall have expired,
shall be conclusive and binding upon the Escrow Agent, and the Escrow Agent
shall comply with the instructions of such court.
3. TERMINATION EVENTS; TERMINATION OF ESCROW AGREEMENT.
(a) This Escrow shall terminate in the event of the occurrence
of any of the following events (the "Termination Events"):
(i) Seller and Partech or Partech's assignee fail to
execute the Agreement on or before December 15, 1993;
or
(ii) Seller and Partech or Partech's assignee fail to
consummate the purchase transaction contemplated
hereunder by the Agreement on or before November 30,
1994 or as otherwise as may be provided; or
(iii) The Agreement terminates pursuant to its terms other
than by reason of breach or default by Partech or
Partech's assignee.
(b) This Escrow Agreement shall terminate and be of no further
force and effect, and the Escrow Agent shall have no further duties hereunder
and shall be released from any further obligations or liabilities hereunder,
when Section 2 hereof is complied with and all of the Deposits and interest
thereon shall have been released in compliance therewith.
4. EVENTS OF DEFAULT.
Any event which is considered an Event of Default under the Agreement
shall in turn be considered an event of default hereunder. To the extent
required by law, the parties hereto incorporate herein those terms of the
Agreement which define or describe Events of Default; otherwise, this Escrow
Agreement makes reference to those terms solely for the purpose of identifying
those events which give rise to an obligation by Escrow Agent hereunder to
deliver the Deposits and interest earned thereon.
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<PAGE> 3
5. RIGHTS AND DUTIES OF THE ESCROW AGENT.
(i) REIMBURSEMENT OF EXPENSES. The Escrow Agent shall be
reimbursed by Seller for any and all fees, expenses and out-of-pocket expenses
incurred by him, if any, in performing his duties under this Escrow Agreement.
(ii) DUTIES OF THE ESCROW AGENT. The Escrow Agent shall have no
duties or responsibilities under this Escrow Agreement other than those
specifically set forth in Sections 1 and 2 hereof or in this Section 4. The
Escrow Agent shall have no duty or responsibility (i) to enforce or cause to be
enforced any of the terms and conditions in the Agreement or in any of the
documents referred to therein or (ii) to verify the accuracy or sufficiency of
any directions or other document received by him. The Escrow Agent shall be
protected in acting upon any directions or other document believed by him to be
given and containing what purports to be the signature of any authorized
officer of Partech and/or Seller.
(iii) LIABILITY OF ESCROW AGENT. The Escrow Agent shall not be
liable for any act or failure to act, other than for willful misconduct or
gross negligence.
(iv) INDEMNITY. Partech and Seller agree to and hereby jointly
and severally indemnify and hold harmless the Escrow Agent and its partners,
employees, attorneys and agents (the "Indemnitees") against and in respect of
all claims, suits, actions, proceedings (formal or informal), investigations,
judgments, deficiencies, damages, settlements, liabilities, losses and legal
and other expenses (including reasonable fees and expenses of attorneys chosen
by the Indemnitees hereunder) as and when incurred, arising out of or based
upon any act or failure to act (other than by reason of willful misconduct or
gross negligence) on the part of the Escrow Agent in connection with any of the
duties required to be performed by the Escrow Agent hereunder.
(v) RESIGNATION. The Escrow Agent may notify Partech and Seller
of his desire to be relieved of any further obligations hereunder. Partech and
Seller shall thereupon agree upon a successor to act as escrow agent hereunder
and, in such event, the Escrow Agent shall deliver the Deposits then held by
the Escrow Agent to such successor escrow agent.
6. SCOPE OF THIS ESCROW AGREEMENT.
This Escrow Agreement shall serve to govern and shall be
applicable only to the subject matter hereof. No implication, inference or
conclusion shall be drawn from the execution and delivery of this Escrow
Agreement, and Partech and Seller understand and agree that upon the
termination of this Escrow Agreement the rights and obligations of the parties
shall be governed only by the Agreement and that this Escrow Agreement shall
have no effect whatsoever. Nothing contained herein, however, shall prevent
this Escrow Agreement from being solely used for purposes of enforcing the
rights and obligations of the parties hereto with respect to the escrow
provided hereunder and this Escrow Agreement only, and for no other purpose.
7. MISCELLANEOUS.
(i) ENTIRE AGREEMENT. This Escrow Agreement embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof and may not be changed orally, but only by an instrument in writing
signed by the party against whom enforcement of such change is sought.
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<PAGE> 4
(ii) NOTICES. All notices, directions and other communications
hereunder shall be in writing and shall be deemed to have been given when
actually received or, with respect to notices, when mailed by certified or
registered United States mail, return receipt requested, as follows:
If to Partech, to:
Partech Communications Group, Inc.
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attention: Mr. John E. Rayl
(614) 538-0660 Fax: (614) 538-0670
If to Seller, to:
Mr. Lee M. Mitchell, Receiver
Sidley & Austin
1 First National Plaza
Chicago, Illinois 60603
with a copy (which shall not constitute notice) to:
AT&T Commercial Finance Corporation
400 Perimeter Center Terrace
Atlanta, Georgia 30346
Attention: Mr. Samuel D. Bush
(404) 804-6403 Fax: (404) 804-6440
If to the Escrow Agent, to:
Mark Jorgenson
Jorgenson Broadcast Brokerage
2700 West M. I. King Blvd., Suite 400
Tampa, Florida 33607
(813) 877-3000 Fax: (813) 8774849
Any party may change its address for notices hereunder by giving
notice of such change to the other parties in accordance with the provisions of
this Section 7(ii).
(iii) HEADINGS. The headings of the sections of this Escrow
Agreement have been inserted for convenience and shall not modify, define,
limit or expand the express provisions of this Escrow Agreement.
(iv) GOVERNING LAW. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio for contracts
made and to be performed in such state without giving effect to the principles
relating to the conflict of law.
(v) BINDING NATURE. This Escrow Agreement shall be binding upon
the parties hereto and their respective successors and assigns.
(vi) COUNTERPARTS. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Escrow Agreement.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first above written.
PARTECH COMMUNICATIONS GROUP, INC.
By: __________________________________
Title: _______________________________
WBA BROADCASTING, INC.
By: __________________________________
Title: _______________________________
______________________________________
MARK JORGENSON Escrow Agent
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<PAGE> 1
EXHIBIT 10.76
AGREEMENT
This Purchase Agreement ("Agreement") is made and entered into this
____ day of March, 1994, between LEE M. MITCHELL, in his capacity as receiver
("Receiver") for the Stations (described below), AT&T COMMERCIAL FINANCE
CORPORATION, a Delaware corporation ("AT&T") and TROPIC OF ST. SIMONS, INC., a
Delaware corporation ("Buyer").
WHEREAS, Receiver has been appointed as the receiver for the assets
of Broadcast Stations WMOG (FM) ____ mhz and WMOG (AM) ___ mhz, of St. Simons
Island and Brunswick, Georgia (the "Stations"), in accordance with the Order of
the Superior Court for Fulton County, Georgia (the "Superior Court"), Case No.
D-96466, and is the licensee of such Stations; and
WHEREAS, AT&T has made an offer to purchase the assets of the
Stations, and the Superior Court has approved the sale of such assets to AT&T
or its assignee, in accordance with the Order of the Superior Court dated July
26, 1993; and
WHEREAS, AT&T has agreed to assign to Buyer AT&T's rights to acquire
the assets of the Stations; and
WHEREAS, Buyer desires to purchase and acquire substantially all
of the property and assets used or held for use in the operation of the
Stations, and Receiver and AT&T desire to sell and assign to Buyer all rights
of ownership in and to the Stations, to the extent the Receiver and AT&T are
capable of and empowered to transfer same under applicable laws (the
"Transaction"); and
WHEREAS, the parties hereto acknowledge that the licenses issued by
the Federal Communications Commission (the "Commission" or "FCC") for the
operation of the Stations may not be assigned without the prior written consent
of the Commission; and
WHEREAS, the parties hereto are contemporaneously entering into a
Time Brokerage Agreement for the Stations, pursuant to which Receiver will
broadcast Buyer's programming and Buyer will undertake to assume the Stations'
contracts.
NOW, THEREFORE, WITNESSETH that in consideration of the mutual
promises and covenants hereinafter stipulated, and for other good and valuable
consideration, the receipt and
<PAGE> 2
sufficiency of which is hereby acknowledged by all parties hereto, the parties
agree as follows:
1. ASSETS TO BE CONVEYED. On the Closing Date (as defined
below), Receiver shall sell, assign, transfer, and deliver to Buyer, and Buyer
shall purchase from Receiver, all of Receiver's rights, title and interest in
the assets used or held for use in the operation of the Stations, other than
Excluded Assets (as defined below) (the "Assets"):
1.1 LICENSES AND AUTHORITIES. All licenses,
permits, permissions, and other authorizations issued for the operation of the
Stations by the Commission and other governmental agencies, including, but not
limited to, those listed on Schedule 1.1 and the right to use the Stations'
call letters (the "Stations Licenses"), and all applications for modification,
extension, or renewal thereof, and any pending applications for any new
licenses, permits (including construction permits), permissions, authorizations
granted or authorizations pending on the Closing Date, including, but not
limited to, those listed on Schedule 1.1 (the "Stations Applications").
1.2 STATIONS EQUIPMENT. All the fixed and tangible
personal property used or useful in the operation of the Stations including,
but not limited to, the transmitters, towers, ground system, and studio
equipment and the property listed on Schedule 1.2 together with any
replacements, improvements, or additions thereto made between the date hereof
and the Closing Date (the "Stations Equipment").
1.3 CONTRACTS. All rights owned, held or otherwise
existing for the benefit of the Stations including, without limitation, those
rights under all agreements, contracts or leases of described in the Time
Brokerage Agreement (the "Operating Contracts"), including, as set forth on
Schedule 1.3: (a) all contracts for the sale of time of the Stations for cash
at rates substantially in accordance with the Station's past practices with a
remaining term at Closing of eleven (11) months or less ("Sales Agreements");
(b) all contracts in effect as of the date hereof for the sale of time on the
Stations in exchange for merchandise or services used or useful for the benefit
of the Stations to the extent that such contracts (i) were entered into in the
ordinary course of business, (ii) are preemptible for cash time sales, (iii)
obligate the Buyer to provide advertising time only on a "run of schedule"
basis and (iv) have a remaining term of eleven (11) months or less ("Trade
Agreements"); (c) all contracts for the sale of time on the Stations in
exchange for programming
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("Barter Agreements"); and (d) all Operating Contracts and Sales, Barter and
Trade Agreements entered into after the date hereof with the written consent of
Buyer. In the event that Receiver submits any Operating Contract, Sales
Agreement, Trade Agreement or Barter Agreement (together, the "Contracts") to
Buyer for its consent, such consent shall be deemed to have been given if Buyer
does not notify Receiver of its rejection of the Contract within ten (10) days
after its receipt of Receiver's written request for such consent.
1.4 REAL PROPERTY. All right, title, and interest
in the real property used in the operation of the Stations, as described in
Schedule 1.4, or acquired for the benefit of the Stations, with the written
consent of Buyer, between the date of this Agreement and Closing Date
(together, the "Real Property").
1.5 CALL SIGNS, PROMOTIONAL MATERIALS AND
INTANGIBLES. All rights in the call signs, copyrights, trademarks, tradenames,
slogans, logos, service marks, computer software, magnetic media, data
processing files, systems and programs, business lists, trade secrets, sales
and operating plans, goodwill and other similar intangible property rights used
or held for use in the operation of the Stations, including but not limited to
the intangible property identified on Schedule 1.5 (the "Intangible Property").
1.6 RECORDS. All records, including but not
limited to all books of account, customer lists, supplier lists,
non-confidential employee personnel files, local public records file materials,
engineering data, logs, programming records, consultants' reports, ratings
reports, budgets, financial reports and projections, and sales, operating and
business plans, relating to or used in the operation of the Stations or
necessary or desirable to show compliance with any law or regulation applicable
to the Stations or the operation of the Stations and not pertaining solely to
Receiver's internal affairs (the "Stations Records"); it being understood that
Receiver shall have the right to retain copies of any such records.
1.7 ACCOUNTS RECEIVABLE. The accounts receivables
arising from the operation of the Station (the "Receivables").
1.8 EXCLUDED ASSETS. It is understood and agreed
that the following assets shall not be among the Assets purchased pursuant to
this Agreement: (i) sales, income and other tax refunds and claim therefore
relating to the period prior to Closing; (ii) life insurance policies;
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<PAGE> 4
(iii) claims against third parties, based on activities occurring prior to
Closing, other than those claims specifically conveyed or specifically related
to Assets which are conveyed; and (iv) assets listed in Schedule 1.8.
2. ASSUMPTION OF LIABILITIES. Buyer shall not assume any of
Receiver's or the Stations' liabilities, except liabilities of the Stations
under the Time Brokerage Agreement or as otherwise expressly assumed by Buyer.
3. PURCHASE PRICE AND PAYMENT.
3.1 PURCHASE PRICE. The purchase price for the
assets shall be Five Hundred Sixty Thousand Dollars ($560,000) (the "Asset
Purchase Price"). The Purchase Price shall be payable as follows:
3.2 ESCROW DEPOSIT. Prior to the execution of this
Agreement, Buyer has placed the sum of Ten Thousand Dollars ($10,000), and upon
the execution of this Agreement Buyer shall place an additional sum of
Forty-Six Thousand Dollars ($46,000) (together, the "Escrow Deposit"), in
escrow with Mark Jorgenson (the "Escrow Agent") to be held in escrow in
accordance with the Escrow Agreement attached as Exhibit A.
3.3 CASH AT CLOSING. At Closing, Buyer will pay to
Receiver by certified bank check or wire transfer of federal funds, pursuant to
wire instructions that Receiver shall deliver to Buyer prior to Closing, (i)
the Purchase Price, (ii) less the Escrow Deposit (iii) plus or minus any
adjustments as set forth in Section 4 hereof or elsewhere in this Agreement.
3.4 ALLOCATION. The Asset Purchase Price shall be
allocated among the assets in accordance with the amounts as set forth on
Schedule 3.4. Receiver and Buyer agree (i) to jointly complete and separately
file Form 8594 with any federal income tax return which they may file for the
tax year in which the Closing occurs, and (ii) that neither Receiver nor Buyer
will take a position on any income, transfer or gains tax return, before any
governmental agency charged with the collection of any such tax or in any
judicial proceeding that is an any manner inconsistent with the terms of any
such allocation without the written consent of the other.
4. PRORATIONS AND ADJUSTMENTS. The operation of the Stations
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and the income and normal operating expenses, including without limitation
assumed liabilities and prepaid expenses, attributable thereto shall be
prorated between Receiver and Buyer in accordance with the provisions of the
Time Brokerage Agreement. A final accounting of prorated items shall be made
by Buyer with the cooperation of Receiver, and the sum due from one party to
the other pursuant to this Section 4 shall be paid in cash, within sixty (60)
days after the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF RECEIVER.
Receiver makes the following representations and warranties all of which have
been relied upon by Buyer in entering into this Agreement and, except as
otherwise specifically provided, all of which shall be true and correct at
Closing. All representations and warranties hereinafter stated shall be to the
best of Receiver's knowledge, and Buyer understands and agrees that Receiver
shall be under no duty to make inquiries of any facts not now known to him
which could materially affect the below-stated representations and warranties.
5.1 AUTHORITY. Receiver has been duly appointed as
receiver for the assets of the Stations by Order of the Superior Court in Case
No. D-96466. Pursuant to such appointment, Receiver has the full power and
authority to manage the assets of the Stations, to the extent permitted under
the laws of the State of Georgia and the authority of the Superior Court.
Moreover, by virtue of such appointment, Receiver has the full power and
authority to enter into and perform this Agreement and the Transactions
contemplated hereby, to the extent permitted under the laws of the State of
Georgia and the authority of the Superior Court.
5.2 AUTHORIZATION. Subject to Section 16 hereof,
the execution and delivery of this Agreement by Receiver has been duly
authorized by all necessary actions of the Superior Court and as otherwise
required, and copies of any such authorizing documents shall be delivered to
Buyer at Closing. This Agreement has been duly executed by Receiver and
delivered to Buyer and constitutes a legal, valid and binding obligation of
Receiver, enforceable against Receiver in accordance with its terms.
5.3 NO BREACH. None of (i) the execution, delivery
and performance of this Agreement by Receiver, (ii) the consummation of this
Agreement and all other documents or instruments related thereto or executed in
connection therewith or in contemplation of the
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transaction hereunder (the "Transaction"), or (iii) Receiver's compliance with
the terms and conditions hereof will, with or without the giving of notice or
the lapse of time or both, conflict with, breach the terms and conditions of,
constitute a default under, or violate any judgment, decree, order, or (except
as disclosed in Schedule 5.3) any agreement, lease or other instrument to
which, to the extent applicable to the operation of the Stations, Receiver is a
party or by which, to the extent applicable to the operation of the Stations,
Receiver is legally bound, or any law, rule, or regulation applicable to
Receiver or the operation of the Stations.
5.4 STATIONS LICENSES. Except as set forth on
Schedule 5.4, there are no applications, proceedings, or complaints pending or,
to the knowledge of Receiver, threatened which may have an adverse effect on
the business or operation of the Stations (other than rulemaking proceedings
that apply to the radio broadcasting industry generally). Receiver is not
aware of any reason why those of the Stations Licenses subject to expiration
might not be renewed in the ordinary course based on current FCC rules or of
any reason why any of the Stations Licenses might be revoked.
5.5 TITLE TO ASSETS. Pursuant to the Order of the
Superior Court in Case No. D-96466, dated November 29, 1993, Receiver has the
power and the authority to convey good and marketable title to the Assets, free
and clear of all mortgages, deeds of trust, liens, pledges, collateral
assignments, security interests, leases, easements, covenants, restrictions and
encumbrances or other defects of title ("Encumbrances"), except those
Encumbrances disclosed on Schedule 5.5.
5.6 CONDITION OF EQUIPMENT. Receiver makes no
warranty or representation herein with respect to the condition,
merchantability or fitness of the Stations Equipment, or that it is adequate
for its present use or the use intended by Buyer. Buyer is acquiring the
Stations Equipment in an "as is" condition, and Buyer has made any
investigation of the condition of the Stations Equipment required by Buyer
prior to consummating this Transaction.
5.7 CONDITIONS OF THE REAL PROPERTY. Receiver has
received no notice of any encroachments upon the Real Property used in the
transmitter site (the "Transmitter Site") by any buildings, structures, or
improvements located on adjoining real estate, except to the extent such
encroachments do not impair the present use of the property. Receiver has
received no notice
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that utility lines serving the Transmitter Site passes over the lands of others
except where appropriate easements have been obtained. Receiver has received
no notice that there are any pending or contemplated condemnation or eminent
domain proceedings that may affect the Real Property. Receiver has received no
notice that the present use and occupancy of the Transmitter Site fails to
comply in any material respects with all leasehold obligations and with all
regulations, codes, ordinances, and statutes of all applicable governmental
authorities, including without limitation all sanitary laws and regulations,
occupational safety and health regulations, and electrical codes. Receiver has
received no notice that any of the towers and other structures on the Real
Property and the Land are not painted and/or lighted in accordance with the
requirements of the Stations Licenses, the Commission, the Federal Aviation
Administration or any applicable requirements of federal, state and local law.
5.8 CONTRACTS. If any Contract is not assignable
to Buyer without consent of the other contracting party, Receiver shall use its
reasonable best efforts to secure such consents before the Closing Date.
Receiver has provided to Buyer true and correct copies of all Contracts (other
than Sales Agreements) that are material to the operation of the Stations or
create obligations that in the aggregate are material or create aggregate
obligations of more than Two Thousand Dollars ($2,000), as modified to date,
and one or more forms that is representative of the terms of the Sales
Agreements now in effect. The Contracts as amended through the date of this
Agreement, will not be modified without Buyer's written consent (which shall
not be unreasonably withheld, and which shall be deemed given in the event
Buyer has not responded to a written request therefore within ten (10) days).
5.9 EMPLOYEES. Receiver has received no
notification from the Commission that Receiver's employment practices fail to
comply with the Commission rules and policies.
5.10 LITIGATION. Except as set forth in Schedule
5.10, to the knowledge of Receiver, there is no unsatisfied judgment
outstanding, and Receiver has received no notice of any litigation, proceeding,
claim or investigation of any nature pending against the Stations and, to
Receiver's knowledge, there is no litigation, proceeding, claim or
investigation of any nature threatened against the Stations which might have an
adverse effect on the continued operation of
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the Stations or impair the value of the Assets or which might have an
adverse effect on Receiver's ability to perform in accordance with the terms of
this Agreement. Except as set forth in Schedule 5.10, Receiver is not aware of
any facts that could reasonably result in any such proceedings.
5.11 PAYMENT OF TAXES. Receiver has, or by the
Closing Date will have, paid and discharged all taxes, assessments, excises and
other levies relating to the Assets during the period of Receiver's
receivership, excepting such taxes, assessments, and other levies as will not
be due until after the Closing Date and that are to be prorated pursuant to
Section 4.
5.12 COMPLIANCE WITH LAWS. Except as disclosed on
Schedule 5.12 or in the reports to be delivered to Buyer under this Agreement,
Receiver has received no notice that he has not complied in all material
respects with, or that he is in violation of, any federal, state, or local
laws, regulations, or orders relating to the operation of the Stations.
5.13 CITIZENSHIP. Receiver is not a "foreign
person" as defined in Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended, and the regulations thereunder (the "Code"). On the Closing Date,
Receiver will deliver to Buyer sworn affidavits to that effect, which shall
also set forth Receiver's name, address, taxpayer identification number, and
such additional information as may be required to exempt the Transaction from
the withholding provisions of Section 1445 of the Code. Buyer shall have the
right to furnish copies of the affidavit to the Internal Revenue Service
("IRS").
5.14 PATENTS, TRADEMARKS, COPYRIGHTS. Except as set
forth on Schedule 5.14, Receiver does not have any knowledge, nor has Receiver
received any notice to the effect, that its use of any of the call sign and
slogans, logos, copyrights, trademarks, tradenames, service marks, and other
similar intangible property rights currently used to promote or identify the
Stations, or otherwise used in the promotion of the Station's business, as
listed or described on Schedule 1.5 (the "Promotional Rights") may or are
claimed to infringe on the right of another. Receiver has no knowledge of any
infringement or unlawful or unauthorized use of such Promotional Rights. To
Receiver's knowledge, the operation of the Stations does not infringe any
copyright, patent, trademark, tradename, service mark, and other similar right
of any third party.
5.15 NO MISLEADING STATEMENTS. To Receiver's
knowledge, no statement
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made by Receiver to Buyer and no statement as set forth in this Agreement, or
information delivered or to be delivered to Buyer in satisfaction of a
requirement of this Agreement, contains or will contain any untrue statement of
a material fact or omits or will omit a material fact necessary in order to
make such statements or information in light of the circumstances under which
such statement or information is delivered not misleading.
6. REPRESENTATIONS AND WARRANTIES OF AT&T. AT&T makes the
following representations and warranties, all of which have been relied upon by
Buyer in entering into this Agreement and, except as otherwise specifically
provided, all of which shall be true and correct as of Closing.
6.1 ORGANIZATION. AT&T is a corporation duly
organized, validly existing, and in good standing, under the laws of the State
of Delaware, is duly qualified to do business in the State of Georgia and has
full corporate power and authority to enter into and perform this Agreement.
6.2 AUTHORIZATION. The execution and delivery of
this Agreement by AT&T has been duly authorized by all necessary corporate
action on the part of AT&T. Evidence of such authorization shall be delivered
to Buyer at Closing. This Agreement has been duly executed by AT&T and
delivered to Buyer and constitutes a legal, valid, and binding obligation of
AT&T, enforceable in accordance with its terms.
6.3 NO BREACH. None of (i) the execution, delivery
and performance of this Agreement by AT&T, (ii) the consummation of the
Transaction, or (iii) AT&T's compliance with the terms and conditions hereof
will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms and conditions of, constitute a default under,
or violate AT&T's articles of incorporation, bylaws, any judgment, decree,
order, agreement, lease or other instrument to which AT&T is a party or by
which AT&T is legally bound, or any law, rule or regulation applicable to AT&T.
6.4 TITLE TO ASSETS. AT&T warrants that Receiver
will convey to Buyer, at the Closing of this transaction, good and marketable
title to the Assets, free and clear of all mortgages, deeds of trust, liens,
pledges, collateral assignments, security interests, leases,
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easements, covenants, restrictions and encumbrances or other defects of title
("Encumbrances"), except those Encumbrances disclosed on Schedule 5.5.
6.5 LITIGATION. There is no action, suit,
investigation or other proceedings pending or, to AT&T's knowledge, threatened
which may adversely affect AT&T's ability to perform in accordance with the
terms of this Agreement, and AT&T is unaware of any facts which could
reasonably result in any such proceeding.
6.6 NO MISLEADING STATEMENTS. To AT&T's knowledge,
no statement made by AT&T to Buyer and no statement as set forth in this
Agreement, or information delivered or to be delivered to Buyer in satisfaction
of a requirement of this Agreement, contains or will contain any untrue
statement of a material fact or omits or will omit a material fact necessary in
order to make such statements or information in light of the circumstances
under which such statement or information is delivered not misleading.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. Subject to the
qualifications set forth on Schedule 7, Buyer makes the following
representations and warranties, all of which have been relied upon by Receiver
in entering into this Agreement and, except as set forth on Schedule 7 or as
otherwise specifically provided, all of which shall be true and correct as of
Closing.
7.1 ORGANIZATION. Buyer is a corporation duly
organized, validly existing, and in good standing, under the laws of the State
of Delaware, is duly qualified to do business in the State of Georgia and has
full corporate power and authority to enter into and perform this Agreement.
7.2 AUTHORIZATION. The execution and delivery of
this Agreement by Buyer has been duly authorized by all necessary corporate
action on the part of Buyer. Evidence of such authorization shall be delivered
to Receiver at Closing. This Agreement has been duly executed by Buyer and
delivered to Receiver and constitutes a legal, valid, and binding obligation of
Buyer, enforceable in accordance with its terms.
7.3 NO BREACH. None of (i) the execution,
delivery and performance of
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this Agreement by Buyer, (ii) the consummation of the Transaction, or (iii)
Buyer's compliance with the terms and conditions hereof will, with or without
the giving of notice or the lapse of time or both, conflict with, breach the
terms and conditions of, constitute a default under, or violate Buyer's
articles of incorporation, bylaws, any judgment, decree, order, agreement,
lease or other instrument to which Buyer is a party or by which Buyer is
legally bound, or any law, rule or regulation applicable to Buyer.
7.4 LITIGATION. There is no action, suite,
investigation or other proceedings pending or, to Buyer's knowledge, threatened
which may adversely affect Buyer's ability to perform in accordance with the
terms of this Agreement, and Buyer is unaware of any facts which could
reasonably result in any such proceeding.
7.5 NO MISLEADING STATEMENTS. To Buyer's
knowledge, no statement made by Buyer to Receiver and no statement as set forth
in this Agreement, or information delivered or to be delivered to Receiver in
satisfaction of a requirement of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit a material fact
necessary in order to make such statements or information in light of the
circumstances under which such statement or information is delivered not
misleading.
7.6 QUALIFICATION AS BROADCAST LICENSEE. As a
licensee of commercial radio stations (the "Tropic Stations"), Buyer knows of
no fact that would, under the Communications Act of 1934, as amended, or the
rules, regulations and policies of the FCC, disqualify Buyer from becoming the
licensee of the Stations. There are no proceedings, complaints, notices of
forfeiture, claims, investigations pending or, to the knowledge of Buyer,
threatened against any or in respect of any of the Tropic Stations that would
materially impair the qualifications of Buyer to become a licensee of the
Stations or delay the FCC's processing of the Assignment Applications.
8. ENVIRONMENTAL MATTERS.
8.1 ENVIRONMENTAL DISCLOSURES. The matters set
forth in this Section constitute disclosures of Receiver and AT&T which shall
be true and accurate as of the Closing Date. In the event that, during the
period between the execution of this Agreement and the Closing
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Date, either Receiver or AT&T learns, or has reason to believe, that any of the
following disclosures may cease to be true, such party hereby covenants to give
notice thereof to Buyer as promptly as reasonably possible. Except as set
forth or described in the Environmental Assessments on Schedule 8.1, Receiver
hereby discloses that to the knowledge of Receiver, and AT&T hereby discloses
that to the knowledge of AT&T:
8.1.1 NO PROCEEDINGS. In connection with any
applicable Environmental Laws (as defined below), there are no
(i) claims, demands, suits, causes of action, claims for the
recovery of response costs;
(ii) administrative or judicial orders directing the
performance of investigations, response or remedial actions;
(iii) a requirement to implement a "corrective action" plan
pursuant to any order or permit issued;
(iv) claims for restitution, contribution or indemnity from
third parties or any governmental agency;
(v) fines, penalties, liens against any of the Stations'
property;
(vi) claims for injunctive relief or other orders or notices
of violation from federal, state or local agencies or courts;
and
(vii) with regard to any present or former employees, claims
for exposure to or injury from any environmental conditions
pending against Receiver or pending against the Stations' studio landlord or
transmitter and tower site landlord.
8.1.2 DEFINITIONS. For purposes hereof,
"Environmental Laws" shall refer to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substances control Act ("TSCA"). 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act. ("RCRA"), 42 U.S.C. Section 9601 et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act 42, U.S.C. Section 300f et seq.; The Clean Air Act ("CAA"),42 U.S.C.
Section 7401 et seq.; or any analogous federal or state law; and in the rules,
regulations or ordinances adopted, or other enforceable criteria and guidelines
promulgated pursuant to the preceding laws, all as in effect as of the Closing
Date.
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9. PRE-CLOSING OBLIGATIONS. The parties covenant and agree
as follows with respect to the period prior to the Closing Date:
9.1 APPLICATIONS FOR COMMISSION CONSENT. As
soon as possible after the date of this Agreement, Receiver, AT&T (as
necessary) and Buyer shall join in and file an application or applications
requesting the Commission's written consent to the assignment of the Stations
Licenses from Receiver to Buyer (the "Assignment Applications"), and they will
diligently take all steps necessary or desirable and proper to prosecute
expeditiously the Assignment Applications and to obtain the Commission's
determination that approval of the Assignment Applications will serve the
public interest, convenience, and necessity. The failure by either party to
timely file or diligently prosecute its portion of the Assignment Applications
shall be deemed a material breach of this Agreement.
9.2 OTHER GOVERNMENTAL CONSENTS. Promptly
following the execution of this Agreement, Receiver, AT&T (as necessary) and
Buyer shall proceed to prepare and file with the appropriate governmental
authorities (other than the Commission) such requests, if any, for approval or
waiver as may be required from such governmental authorities in connection with
the Transaction, and shall jointly, diligently and expeditiously prosecute, and
shall cooperate fully with each other in the prosecution of, such requests for
approval or waiver and all proceedings necessary to secure such approvals and
waivers.
9.3 FINANCIAL INFORMATION. Between the date hereof
and the Closing Date, Receiver and AT&T shall furnish Buyer with monthly
operating statements in the form currently prepared for the Stations within ten
(10) days after the end of each calendar month, and with such additional data
concerning the Stations' financial condition as may reasonably be requested by
Buyer.
9.4 CONSENTS. Receiver shall use his reasonable
best efforts to obtain all required consents of the other contracting parties
to the assignment of the Contracts.
9.5 ENGINEERING REPORT. Prior to Closing, Buyer
shall obtain (a) an engineering report concerning the condition of the Stations
Equipment, and (b) a report concerning the compliance of the tower and
transmitter improvements on the Real Property with applicable
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access, fire, proposed zoning and other land-use laws (together, the
"Engineering Report"). If the Engineering Report discloses the need for
modifications that in Buyer's reasonable judgment involve expenses in excess of
$5,000.00, Buyer shall deliver in writing to Receiver and AT&T, within thirty
(30) days of receipt of the Engineering Report, Buyer's objections to such
matters. Thereafter, at any time prior to the Closing Date, Receiver or AT&T
shall have the option, but not the obligation, to take such action as they and
Buyer shall agree upon in order to satisfy Buyer's objections. If Receiver and
AT&T fail or decline to take such actions, Buyer shall have the option to
either terminate this Agreement or consummate the transactions contemplated
herein including accepting the Stations Equipment and the Tower subject to such
conditions. The costs of the Engineering Report shall be paid by Buyer.
9.6 TITLE INSURANCE. Within sixty (60) days of the
date of this Agreement, Receiver or AT&T shall deliver to Buyer the commitment
of a title insurance company reasonably satisfactory to Buyer agreeing to issue
to Buyer, at standard rates, the standard and customary form of owner's title
insurance policies covering title in the Real Property for amounts specified by
Buyer that would reasonably compensate Buyer for the loss of title or use of
such property (the "Title Commitment"). Buyer shall have a period of thirty
(30) days following receipt of the last of the surveys required pursuant to
Section 9.7 hereof and the Title Commitment to deliver in writing to Receiver
any objections that Buyer may have to material Encumbrances contained or set
forth in such surveys or the Title Commitment. An Encumbrance shall be only
deemed material if such Encumbrance would impair the current use of the Real
Property or the operation of the Stations, or constitute Encumbrances for due
but unpaid taxes, assessments or any other monetary obligations to any party.
Any items which are non-material or to which Buyer does not object within such
thirty (30) day period shall be deemed to be "Permitted Encumbrances." If
Buyer timely delivers such written notice of such title objections, then
Receiver or AT&T shall have the option, but not the obligation, to satisfy such
objections to the satisfaction of Buyer at or before the Closing, If Receiver
and AT&T are unable or unwilling to so correct such matter, then Buyer shall
have the right to either waive such objection and accept title to the Real
Property subject to such matter or terminate this Agreement. If Buyer so
declines to terminate this Agreement, then such matter shall be deemed as an
additional Permitted Encumbrance. The costs of the Title Commitment and the
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policy to be issued pursuant to the Title Commitment (the "Title Policies")
shall be paid by Receiver.
9.7 SURVEYS. Within sixty (60) days of the date of
this Agreement, Receiver or AT&T shall deliver to Buyer surveys of the Real
Property sufficient to remove the "survey exception" contained in The
Commitment and the Title Policies to the maximum extent allowed by the the
State of Georgia.
9.8 CONFIDENTIALITY. Each party agrees that any
and all information learned or obtained by it from the other (and that is not
otherwise public or known in the radio broadcast industry) shall be
confidential and agrees not to disclose any such information to any person
whatsoever other than as is necessary for the purpose of effecting the
Transaction or as otherwise required by law.
9.9 ACCESS. Between the date hereof and the
Closing Date, Receiver or AT&T shall give, upon prior notice, Buyer or
representatives of Buyer (including underwriters, lenders, consultants and
investors) reasonable access to the Assets and to the books and records of
Receiver and AT&T relating to the business and operation of the Stations. It
is expressly understood that, pursuant to this Section, Buyer, at its sole
expense, shall be entitled to make such engineering inspections of the Stations
and surveys of the Real Property, and such audits of the Stations' financial
records as Buyer may desire, so long as the same do not unreasonably interfere
with the present operations of the Stations.
9.10 EMPLOYEE MATTERS. Receiver or AT&T has
provided to Buyer an accurate list of all current employees of the Stations on
Schedule 9.10 ( the "Stations Employees") together with a description of the
terms and conditions of their respective employment and their duties as of the
date of this Agreement. Receiver shall promptly notify Buyer of any changes
that occur prior to Closing with respect to such information. On or prior to
Closing, Receiver shall compensate each of the Station's employees for all
accrued commissions, accrued vacations, sick leave and other accrued benefits.
Receiver shall terminate the employment of all the Stations Employees effective
on the Closing Date.
9.11 OPERATIONS PRIOR TO CLOSING. Between the date
of this Agreement and
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the Closing Date:
(a) Receiver shall operate the Stations in
accordance with the provisions of the Time Brokerage Agreement;
(b) Receiver shall comply with all laws, rules,
ordinances and regulations applicable to it, to the Assets and to the business
and operation of the Stations, the failure with which to comply could have a
material adverse affect on any of the Assets, the Stations or the business or
operations of the Stations.
(c) Receiver shall not, without the express written
consent of Buyer which shall not be unreasonably withheld, and which shall be
deemed given in the event Buyer has not responded to a written request therefor
within ten (10) days: (i) sell or agree to sell or otherwise dispose of any of
the Assets (A) other than in the ordinary course of business, and (B) unless
such Assets are replaced prior to Closing by assets of equal or greater worth,
quality and utility: (ii) acquiesce in any infringement, unauthorized use or
impairment of the Intangible Property or change the Stations' call signs; (iii)
enter into any employment contract on behalf of the Stations unless the same is
terminable at will and without penalty; or (iv) enter into any other contract,
lease or agreement that will be binding on Buyer after Closing, except for (A)
Sales Agreements, Trade Agreements and Barter Agreements to the extent
consistent with Section 1.3, and (B) other contracts, leases and agreements
that in the aggregate will not impose obligations on Buyer in excess of Two
Thousand Dollars ($2,000).
9.12 ADVERSE DEVELOPMENTS. Receiver and AT&T shall
promptly notify Buyer of any materially adverse developments that occur prior
to Closing with respect to the Assets or the operation of the Stations;
provided, however, that compliance with the disclosure requirements of this
Section 9.12 shall not relieve Receiver or AT&T of any obligation with respect
to any representation, warranty or covenant in this Agreement or waive any
condition to Buyer's obligations under this Agreement.
9.13 ADMINISTRATIVE VIOLATIONS. If Receiver or AT&T
receives any finding, order, complaint, citation or notice prior to the Closing
Date which states that any aspect of the Stations' operations violates any rule
or regulation of the Commission or of any other governmental authority (an
"Administrative Violation"), including without limitation any rule or
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regulation concerning environmental protection, the employment of labor, or
equal employment opportunity, Receiver shall promptly notify Buyer of the
Administrative Violation, remove or correct the Administrative Violation, and
be responsible for the payment of all costs associated therewith, including any
fines or back pay that may be assessed.
9.14 BULK SALES ACT. Pursuant to Section 12.1
hereof, AT&T agrees to indemnify, defend, and hold Buyer harmless against any
claims, liabilities, costs, or expenses, including reasonable attorneys' fees,
that Buyer may incur as a result of the failure to comply with the bulk sales
provisions of the Uniform Commercial Code or similar laws.
9.15 CONTROL OF STATIONS. This Agreement shall not
be consummated until after the Commission has given its written consent
thereto, and notwithstanding anything herein to the contrary, between the date
of this Agreement and the Closing Date, Buyer shall not directly or indirectly
control, supervise or direct, or attempt to control, supervise or direct the
operation of the Stations. Such operations shall be the sole responsibility of
Receiver.
9.16 COMPLETION OF EXHIBITS. The parties
acknowledge that all schedules to this Agreement (the "Schedules") have not
been completed. Within fourteen (14) days following execution of this
Agreement, Receiver and AT&T shall complete the Schedules and deliver them to
Buyer and shall deliver to Buyer true and correct copies of all Contracts
(other than Sales Agreements), as modified to date, to be assumed by Buyer
pursuant to this Agreement and not previously delivered pursuant to Section
5.8, it being understood that no such Contracts delivered under this Section
9.16 shall be material to the operation of the Stations nor shall such
Contracts create obligations that in the aggregate are material nor create
aggregate obligations of more than Two Thousand Dollars ($2,000). This
Agreement shall be subject to rescission by Buyer if the Schedules are not
completed, and all such Schedules and Contracts are not delivered to Buyer,
within fourteen (14) days following execution of this Agreement, or if Buyer is
for any reason not satisfied with the contents or substance of any such
Schedules or Contacts delivered therewith.
10. CONDITIONS PRECEDENT.
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10.1 MUTUAL CONDITIONS. The obligation of Receiver,
AT&T and Buyer to consummate this Agreement is subject to the satisfaction of
each of the following conditions:
10.1.1 COMMISSION CONSENT. The Commission shall have
granted its consent to the Assignment Applications and such FCC Consent shall
have become a Final Order (as defined below). Final Order means an order or
action of the Commission that, by reason of expiration of time or exhaustion of
remedies, is no longer subject to administrative or judicial reconsideration or
review.
10.1.2 ABSENCE OF LITIGATION. As of the Closing Date,
no action, claim, suit or proceeding seeking to enjoin, restrain, or prohibit
the consummation of the Transaction shall be pending before any court, the
Commission, or any other governmental authority; provided, however, that this
condition may not be invoked by a party if any such action, suit, or
proceeding was solicited or encouraged by, or instituted as a result of any act
or omission of, such party.
10.2 CONDITIONS TO BUYERS'S OBLIGATION. In addition
to satisfaction of the mutual conditions contained in Section 10.1, the
obligation of Buyer to consummate this Agreement is subject to the satisfaction
of each of the following conditions:
10.2.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Receiver and AT&T to Buyer shall be true,
complete, and correct in all material respects as of the Closing Date with the
same force and effect as if then made.
10.2.2 COMPLIANCE WITH CONDITIONS. All of the terms,
conditions and covenants to be complied with or performed by Receiver and AT&T
on or before Closing Date shall have been timely complied with and performed in
all material respects.
10.2.3 NO ADVERSE DEVELOPMENT. There shall not be or
have been any (a) breach by Receiver or AT&T or (b) any other adverse change
in the business or prospects of either the Stations or the condition of the
Assets, other than as may be caused by Buyer under the Time Brokerage Agreement
entered into between Buyer and Receiver on even date herewith. No adverse
development shall have occurred with respect to the Stations that results in an
impairment to the ability of the Stations to operate as it is now operated or
represents an impairment of the value of the Stations or Assets being conveyed.
10.2.4 TITLE COMMITMENT, SURVEY AND ENGINEERING
REPORT. Buyer shall have
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timely received the Title Commitment and Survey, and Buyer shall (at its
option) obtain the Engineering Report, none of which shall reveal anything
inconsistent with Receiver's and AT&T's representations, warranties or
disclosures hereunder, or with Buyer's investigation of the Stations Equipment
and Real Estate, except to the extent such inconsistencies have been expressly
waived by Buyer.
10.2.5 VALIDITY OF STATIONS LICENSES; AUTHENTICITY OF
STATIONS APPLICATION. On the Closing Date, Receiver shall be the owner and
holder of the Stations Licenses to the extent that such authorizations can be
owned or held by Receiver under the Communications Act of 1934, as amended; the
Stations Licenses and the construction permit authorizing an increase to 6,000
watts of broadcast power for WMOG (FM) (the "Construction Permit") are all of
the licenses, permits, and other authorizations used or necessary to operate
the Stations as they are now operated and are validly issued in the name of
Receiver; the Stations Licenses shall be in full force and effect, valid for
the balance of the current license term applicable generally to radio stations
licensed to communities in the state where the Stations are located; and the
Stations Licenses shall be unimpaired by any acts or omissions of Receiver or
Receiver's employees, agents, officers, directors or shareholders, and are free
and clear of any restrictions which might limit the full operation of the
Stations (other than restrictions under the terms of the licenses themselves);
the Stations are in compliance with the Commission's policy on exposure to
radio frequency radiation; no renewal of any Stations License would constitute
a major environmental action under the rules of the Commission; access to the
Stations' transmission facilities is restricted in accordance with the policies
of the Commission; and all information contained in any Stations Applications
pending with the Commission is true, complete and accurate in all material
respects.
10.2.6 CLOSING DOCUMENTS. Receiver and AT&T shall
deliver to Buyer all of the closing documents specified in Section 11.2.1, all
of which documents shall be dated as of the Closing Date, duly executed, and in
a form customary in the state where the Assets are located and reasonably
acceptable to Buyer.
10.2.7 THIRD PARTY CONSENTS. Receiver shall have
obtained all required Consents to the assignment of the Material Contracts, as
listed on Schedule 1.3.
10.2.8 ESTOPPEL CERTIFICATES. Receiver shall have
obtained such fee owner's
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consents and mortgagee's estoppel and non-disturbance agreements with respect
to the leases for the Leased Premises as are reasonably requested by Buyer not
less than ten (10) days prior to the Closing Date.
10.2.9 SETTLEMENT OF CLAIMS. Receiver shall have
settled any and all claims against Receiver or the Stations that affect or
concern the Assets.
10.2.10 TITLE TO ASSETS. Receiver shall hold and be
able to deliver to Buyer on the Closing Date title to the Assets by Deed, Bill
of Sale or Assignment, as the case may be, with fiduciary covenants only. All
Orders of the Superior Court necessary to authorize and empower Receiver to
transfer to Buyer good and marketable title to the Assets, free and clear of
all Encumbrances (except Permitted Encumbrances), have been or will be
obtained, certified copies of which will be delivered to Buyer no later than at
Closing.
10.2.11 ASSIGNMENT OF PURCHASE RIGHTS. AT&T shall hold
and be able to deliver to Buyer on the Closing Date an assignment of all of its
rights to purchase the Assets, which rights shall not be subordinate to the
rights of others nor subject to liens, encumbrances or conditions, except as
provided in this Agreement.
10.3 CONDITIONS TO RECEIVER'S AND AT&T'S
OBLIGATIONS. In addition to satisfaction of the mutual conditions contained in
Section 10.2, the obligations of Receiver and AT&T to consummate this Agreement
is subject to satisfaction of each of the following conditions:
10.3.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer to Receiver shall be true, complete and
correct in all material respects as of the Closing Date with the same force and
effect as if then made.
10.3.2 COMPLIANCE WITH CONDITIONS. All of the terms,
conditions and covenants to be complied with or performed by Buyer on or before
the Closing Date shall have been timely complied with and performed in all
material respects.
10.3.3. PAYMENT. Buyer shall pay and/or deliver to
Receiver the consideration set forth in Section 3.
10.3.4 CLOSING DOCUMENTS. Buyer shall deliver to
Receiver all the closing documents specified in Section 11.2.2, all of which
documents shall be dated as of the Closing Date, duly executed, and in a form
customary in transactions of this type and reasonably
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satisfactory to Receiver.
11. CLOSING.
11.1 CLOSING DATE. The Closing hereunder shall
occur on a date mutually agreeable to Buyer, AT&T and Receiver as soon as
possible but in any event no later than ten (10) business days after the
Commission's action granting its consent to the Assignment Application has
become a Final Order (the "Closing Date"), and shall be effective as of 11:59
P.M. on the Closing Date; provided, however, that in the event a Final Order is
not received on or before May 31, 1994, then, unless Buyer, AT&T and Receiver
agree to extend such deadline to November 30, 1994, this Agreement shall be
terminated as of such date and held to be void ab initio, and all monies
previously delivered to the Escrow Agent or any party hereto shall be returned
to the conveying party and all liabilities and obligations hereunder shall
cease to exist (except to the extent required to unwind the Transaction
contemplated hereunder). The Closing shall take place at the office of Buyer's
counsel in Columbus, Ohio, commencing at 10:00 A.M. on the Closing Date. If,
as of the Closing Date, any condition precedent described in Section 10 has not
been satisfied, the party for whom such condition precedent is to be performed
shall have the option to excuse the performance of such condition precedent at
or before the Closing and simultaneously therewith postpone the Closing until a
date ten (10) days after all such conditions have been (or are able to be)
performed, and such postponed date shall constitute the new Closing Date for
all purposes hereunder.
11.2 PERFORMANCE AT CLOSING. The following
documents shall be executed and delivered at Closing.
11.2.1 BY RECEIVER AND AT&T. Receiver and/or
AT&T shall deliver to Buyer:
(a) Certified copies of all Orders of the Superior
Court granting Receiver's authority to enter into and perform the Transactions
contemplated hereby, and to deliver title to the Assets free and clear of
Encumbrances (except Permitted Encumbrances);
(b) An assignment executed by AT&T granting to
Buyer all of AT&T's rights to acquire the Assets of the Stations, together with
certified copies of all (i) corporate
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resolutions of AT&T authorizing said assignment, and (ii) Orders of the
Superior Court granting AT&T the right to acquire the Assets in its name or in
the name of its assignee;
(c) One or more assignments transferring to Buyer
all of the interests of Receiver in and to the Stations Licenses, the Stations
Applications, the Construction Permit and all other licenses, permits, and
authorizations issued by any other governmental authorities that are used in or
necessary for the lawful operation of the Stations;
(d) One or more fiduciary deeds conveying to Buyer
indefeasible fee simple title to the Real Property, subject to the Permitted
Encumbrances and all consents to such deeds necessary for the legally
enforceable conveyance of such interests;
(e) One or more bills of sale conveying to Buyer
the Stations Equipment and Assets;
(f) One or more assignments, together with all
required consents, assigning to Buyer all of the Contracts, Stations Records,
Studio Lease, and the Intangible Property; and
(g) The affidavit described in Section 5.13 above.
11.2.2 BY BUYER. Buyer shall deliver to Receiver:
(a) A certificate executed by Buyer attesting to
Buyer's compliance with the matters set forth in Section 10.3.1 and 10.3.2,
together with appropriate evidence of Buyer's authorization to enter into and
consummate this Agreement;
(b) The Purchase Price; and
(c) Such assumption agreements and other
instruments and documents as are required to make, confirm, and evidence
Buyer's assumption of and obligation to pay, perform, or discharge Receiver's
obligations under the Contracts to the extent the same are to be assumed by
Buyer pursuant to the terms of this Agreement.
11.2.3 OTHER DOCUMENTS AND ACTS. The parties will
also execute such other documents and perform such other acts, before and after
the Closing Date, as may be necessary for the complete implementation and
consummation of this Agreement.
12. POST-CLOSING OBLIGATIONS. The parties covenant and agree as
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follows with respect to the period subsequent to the Closing Date:
12.1 INDEMNIFICATION.
12.1.1 BUYER'S RIGHT TO INDEMNIFICATION. AT&T
undertakes and agrees to indemnify, defend by counsel reasonably acceptable to
Buyer, and hold harmless Buyer, its parent, affiliates, successors and assigns
and their respective directors, officers, employees, shareholders,
representatives and agents (hereinafter referred to collectively as "Buyer
Indemnitees") from and against and in respect of any and all direct losses,
costs, liabilities, claims, obligations and expenses, including reasonable
attorneys' fees, incurred or suffered by a Buyer Indemnitee arising from (i)
the claims of third parties with respect to operation of the Stations or
ownership of the Assets prior to Closing not expressly assumed by Buyer
pursuant to this Agreement or otherwise consented to by Buyer in writing; (ii)
a breach, misrepresentation or other violation of any of AT&T's covenants,
warranties or representations contained in this Agreement; (iii) an absolute
breach, misrepresentation or other violation of any of Receiver's covenants,
warranties or representations contained in this Agreement, without regard to
whether Receiver had personal knowledge of facts giving rise to such breach;
(iv) all liabilities of Receiver or the Stations not expressly assumed by Buyer
pursuant to this Agreement or otherwise consented to by Buyer in writing; (v)
all liens, charges, or encumbrances on any of the Assets which are not
expressly permitted by this Agreement or otherwise consented to by Buyer in
writing; (vi) all Administrative Violations and alleged Administrative
Violations occurring prior to Closing; and (vii) any breach or default by
Receiver under any Contract, prior to Closing. Receiver undertakes and agrees
to indemnify, defend by counsel acceptable to Buyer, and hold harmless all
Buyer Indemnitees from and against and in respect of any and all direct losses,
costs, liabilities, claims, obligations, diminution in value and expenses,
including reasonable attorneys' fees, incurred or suffered by a Buyer
Indemnitee arising from an intentional breach, misrepresentation or other
violation of any of Receiver's covenants, warranties or representations
contained in this Agreement; provided, however, that Receiver's grant of
indemnification hereunder shall not be effective unless Receiver has personal
knowledge (prior to Closing) of facts giving rise to such intentional breach,
misrepresentation or other violation of any of Receiver's covenants, warranties
or representations contained in this Agreement. The foregoing indemnity is
intended by Receiver and AT&T to cover
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all acts, suits, proceedings, claims, demands, assessments, adjustments,
diminution in value, costs, and expenses with respect to any and all of the
specific matters in this indemnity set forth but shall not extend to indirect,
consequential or punitive damages except to the extent such damages are due on
account of third party claims. Notwithstanding the foregoing, Receiver and
AT&T shall have no obligation to indemnify Buyer unless and until the aggregate
amount of damages exceeds Twenty Five Thousand Dollars ($25,000), at which time
indemnification for the full amount of all damages (including the first Twenty
Five Thousand Dollars ($25,000)) shall be due; provided, however, that such
indemnification shall not exceed Five Hundred Sixty Thousand Dollars ($560,000).
12.1.2 RECEIVER'S RIGHT TO INDEMNIFICATION. Buyer
undertakes and agrees to indemnify, defend by counsel reasonably acceptable to
Receiver, and hold harmless Receiver and Receiver's respective subsidiaries,
affiliates, successors and assigns, directors, officers, employees,
shareholders, partners, representatives and agents (hereinafter referred to
collectively as " Receiver Indemnitees"), from and against and in respect of
any and all losses, costs, liabilities, claims, obligations and expenses,
including reasonable attorneys' fees, incurred or suffered by a Receiver
Indemnitee arising from (i) the operation of the Stations or ownership or
operation of the Assets after Closing; (ii) a breach, misrepresentation, or
other violation of any of Buyer's covenants, warranties and representations
contained in this Agreement; (iii) all liabilities under the Contracts assumed
by Buyer pursuant to this Agreement; and (iv) any breach or default by Buyer
under any Contract after Closing. The foregoing indemnity is intended by Buyer
to cover all acts, suits, proceedings, claims, demands, assessments,
adjustments, costs, and expenses with respect to any and all of the specific
matters in this indemnity set forth but shall not extend to indirect or
consequential damages except to the extent such damages are due on account of
third party claims. None of the foregoing indemnities apply to claims for
environmental matters to the extent such do not result from or are not
attributable to the conduct of Buyer after the Closing Date. Notwithstanding
the foregoing, Buyer shall have no obligation to indemnify Receiver unless and
until the aggregate amount of damages exceeds Twenty Five Thousand Dollars
($25,000), at which time indemnification for the full amount of all damages
(including the first Twenty Five Thousand Dollars ($25,000)) shall be due;
provided, however, that such indemnification shall not
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exceed Five Hundred Sixty Thousand Dollars ($560,000).
12.1.3 CONDUCT OF PROCEEDINGS. If any claim or
proceeding covered by the foregoing agreements to indemnify and hold harmless
shall arise, the party who seeks indemnification (the "Indemnified Party")
shall give written notice thereof to the other party (the "Indemnitor")
promptly after the Indemnified Party learns of the existence of such claim or
proceeding; provided, however, that the Indemnified Party's failure to give the
Indemnitor prompt notice shall not bar the Indemnified Party's right to
indemnification unless such failure has materially prejudiced the Indemnitor's
ability to defend the claim or proceeding. The Indemnitor shall have the right
to employ counsel reasonably acceptable to the Indemnified Party to defend
against any such claim or proceeding, or to compromise, settle or otherwise
dispose of the same, if the Indemnitor deems it advisable to do so, all at the
expense of the Indemnitor; provided that the Indemnitor shall not have the
right to control the defense of any such claim or proceeding unless it has
acknowledged in writing its obligation to indemnify the Indemnified Party fully
from all liabilities incurred as a result of such claim or proceeding and then
and periodically thereafter provides the Indemnified Party with reasonably
sufficient evidence of the ability of the Indemnitor to satisfy any such
liabilities. The parties will fully cooperate in any such action, and shall
make available to each other any books or records useful for the defense of any
such claim or proceeding. If the Indemnitor fails to acknowledge in writing
its obligation to defend or contest such obligation against or settle such
claim or proceeding within twenty (20) days after receiving notice thereof from
the Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate), the Indemnified Party shall be free
to dispose of the matter, at the expense of the Indemnitor, in any way in which
the Indemnified Party deems to be in its best interest.
12.1.4 INDEMNIFICATION SOLE REMEDY. Except for
specific performance of Receiver's and AT&T's obligations to effectively and
lawfully assign rights in and to and convey the Assets to Buyer as provided in
this Agreement, the right to indemnification hereunder shall be the exclusive
post-Closing remedy of any party in connection with or arising out of this
Agreement, including without limitation, any breach by another party of its
representations, warranties, or covenants in this Agreement. RECEIVER MAKES NO
REPRESENTATIONS OR
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WARRANTIES EXCEPT AS EXPRESSLY SET FORTH HEREIN, AND HEREBY DISCLAIMS ALL
IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Except for specific
performance of Receiver's and AT&T's obligations to effectively and lawfully
assign rights in and to and convey the Assets to Buyer as provided in this
Agreement, each party hereby releases and discharges all other parties from any
liability or claim with respect to post-closing remedies for which there is not
an express indemnity under this Agreement. Notwithstanding anything contained
herein to the contrary, the indemnification provided under this Section 12
shall be available only to the extent of claims asserted under Section 12.1.3
during the period commencing on the date hereof and ending six (6) months
following the Closing Date, and there shall be no right to indemnification for
claims asserted thereafter; provided, however, that in the case of payroll
taxes, income taxes and similar or related taxes, charges, penalties and
interest, there shall be no time limitation on a party's right to seek
indemnification hereunder.
12.1.5 RIGHT OF OFFSET. Buyer and Receiver shall each
have the right to offset against amounts owing to the other any amounts owing
to such party pursuant to this Section 12.
12.2 CERTIFICATION OF FINANCIAL STATEMENTS. After
the Closing Date, Receiver shall cooperate and provide and shall cause the
accounting firms, if any, responsible for the preparation of the Stations'
financial statements to provide such further assurances as it is willing to
provide concerning the accuracy of the pre-closing financial statements of the
Stations as Buyer or Buyer's accountants may reasonably request in connection
with any public offering of Buyer.
13. DEFAULT AND REMEDIES.
13.1 BREACH AND OPPORTUNITY TO CURE. If either
party believes the other to be in default hereunder, the nondefaulting party
shall provide the defaulting party with notice specifying in reasonable detail
the nature of such default. If such default has not been cured by the earlier
of: (i) the Closing Date, or (ii) within twenty-one (21) days after delivery of
such notice, then the party giving such notice may (x) terminate this
Agreement, (y) extend the Closing Date under Section 11.1 hereof (but no such
extension shall constitute a waiver of such nondefaulting party's right to
terminate as a result of such default), and/or (z) exercise the remedies
available to
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such party pursuant to Sections 12.1.5, 13.2 or 13.3 hereof, subject to the
right of the other party to contest such action through appropriate
proceedings.
13.2 RECEIVER'S REMEDIES. Buyer recognizes that if
the Transaction is not consummated as a result of Buyer's default, Receiver
would be entitled to compensation, the extent of which is extremely difficult
and impractical to ascertain. The parties, therefore, agree that if this
Agreement is not consummated due to the default of Buyer, Receiver, provided
that Receiver and AT&T are not in default and have otherwise complied with
their obligations under this Agreement, shall be entitled to the Escrow
Deposit. The parties agree that this sum shall constitute liquidated damages
and shall be in lieu of any and all other relief to which Receiver might
otherwise be entitled due to Buyer's failure to consummate, or default under,
this Agreement.
13.3 BUYER'S REMEDIES. Receiver and AT&T agree that
the Assets include unique property that cannot be readily obtained on the open
market and that Buyer would be irreparably injured if this Agreement is not
specifically enforced after default. Therefore, Buyer shall have the rights to
specifically enforce Receiver's and AT&T's performance under this Agreement and
to sue for damages, and Receiver and AT&T agree to waive the defense in any
such suit that Buyer has an adequate remedy at law and to interpose no
opposition, legal, or otherwise, as to the propriety of specific performance as
a remedy. In the event Buyer elects to terminate this Agreement as a result of
Receiver's or AT&T's default instead of seeking specific performance, Buyer
shall be entitled to the return of the Escrow Deposit and to recover Buyer's
damages.
14. TERMINATION.
14.1 ABSENCE OF COMMISSION CONSENT. This Agreement
may be terminated at the option of either party upon notice to the other if a
Final Order approving the Assignment Applications has not been obtained on or
before November 30, 1994, unless Buyer and Receiver agree to extend such
deadline; provided, however, that neither party may terminate this Agreement if
such party is in default hereunder, or if a delay in any decision or
determination by the Commission respecting the Assignment Applications has been
caused or contributed to by such party's action or inaction with respect to the
Assignment Applications. In the event of termination
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pursuant to this Section, the Escrow Deposit shall be returned to the Buyer and
the parties shall be released and discharged from any further obligation
hereunder unless the failure to obtain such Final Order is attributable to
Buyer, as provided in this Section, and Receiver and AT&T are not in default
and have otherwise complied with their obligations under this Agreement, in
which case the Escrow Deposit shall be released to Receiver as liquidated
damages pursuant to Section 13.2.
14.2 DAMAGE.
14.2.1 RISK OF LOSS. The risk of loss or damage to
the Assets shall be upon Receiver at all times prior to the Closing. In the
event of loss or damage, Receiver shall promptly notify Buyer thereof and use
his reasonable best efforts to repair, replace or restore the lost or damaged
property to its former condition as soon as possible. If such repair,
replacement, or restoration has not been completed prior to the Closing Date,
Buyer, at its option:
(a) elect to consummate the Transaction
in which event Receiver shall assign to Buyer all of Receiver's rights to
insurance proceeds related to such casualty under any applicable insurance
policies; or
(b) elect to postpone the Closing Date,
with prior consent of the Commission if necessary, which consent both parties
will use their reasonable best efforts to obtain, for such reasonable period of
time (not to exceed ninety (90) days) as is necessary for Receiver if Receiver
so elects in his sole discretion to repair, replace, or restore the lost or
damaged prop0rty to its former condition. If, after the expiration of that
extension period, the lost or damaged property has not been adequately
repaired, replaced or a restored, Buyer may terminate this Agreement, and the
parties shall be released and discharged from any further obligation hereunder.
14.2.2 FAILURE OF BROADCAST TRANSMISSION. Receiver
and AT&T shall give prompt written notice to Buyer if either of the following
(a "Specified Event") shall occur: (i) the regular broadcast transmissions of
the Stations in the normal and usual manner is interrupted or discontinued
other than for routine maintenance or repairs for more than one hour; or (ii)
the Stations is operated at less than its licensed antenna height above average
terrain or at less than ninety percent (90%) of its licensed effective radiated
power other than for routine maintenance or repairs for more than one hour. If
any Specified Event persists for more than seventy-two (72)
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hours or, in the event of weather conditions or utility failure affecting
generally the Stations in the market served by the Stations, ninety-six (96)
hours, whether or not consecutive, during any period of thirty (30) consecutive
days, then Buyer may, at its option: (i) terminate this Agreement by written
notice given to Receiver not more than ten (10) days after the expiration such
thirty (30) day period, or (ii) proceed in the manner set forth in Section
14.2.1. In the event of termination of this Agreement by Buyer pursuant to
this Section, the Escrow Deposit shall be returned to Buyer and the parties
shall be released and discharged from any further obligation hereunder.
14.2.3 RESOLUTION OF DISAGREEMENTS. If the parties are
unable to agree upon the extent of any loss or damage, the cost to repair,
replace or restore any lost or damaged property, the adequacy of any repair,
replacement, or restoration of any lost or damaged property, or any other
matter arising under this Section 14.2, the disagreement shall be referred to a
qualified consulting communications engineer mutually acceptable to Receiver
and Buyer who is a member of the Association of Federal Communications
Consulting Engineers, whose decision shall be final, binding upon and
non-appealable by the parties, and whose fees and expenses shall be paid
one-half by Receiver and one-half by Buyer.
14.3 LEGAL ACTIONS. If, prior to the Closing Date,
any action, suit, or proceeding shall have been instituted by or before any
court or other governmental authority (other than the Commission) to enjoin,
restrain, or prohibit the consummation of the Transaction, the Closing may be
adjourned at the option of either party, with prior consent of the Commission
if necessary, which consent both parties will use their reasonable best efforts
to obtain, for a period of up to ninety (90) days, and if, at the end of such
period, the action, suit, or proceeding shall not have been favorably resolved,
either party may, by written notice to the other, terminate this Agreement;
provided, however, that if such action, suit, or proceeding shall have been
solicited or encouraged by, or instituted as a result of any act or omission of
either Receiver or Buyer, then such party shall not have any right of
adjournment or termination pursuant to this Section. In the event of
termination pursuant to this Section, the Escrow Deposit shall be returned to
Buyer and the parties shall be released and discharged from any further
obligation hereunder unless Buyer is in default or has otherwise failed to
comply with its obligations under this Agreement and Receiver and AT&T are not
in default and have otherwise complied with their obligations hereunder, in
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which case the Escrow Deposit shall be released to Receiver as liquidated
damages pursuant to Section 13.2.
15. GENERAL PROVISIONS.
15.1 BROKERAGE. AT&T represents to Buyer that AT&T
has retained, and shall pay the fees of, Jorgenson Broadcast Brokerage as
broker in connection with the Transaction. The parties agree to indemnify and
hold each other harmless against any claim from any other broker or finder
based upon any agreement, arrangement, or understanding alleged to have been
made by the indemnifying party.
15.2 EXPENSES. Except as otherwise provided herein,
all expenses involved in the preparation and consummation of this Agreement,
and all Commission filing fees for the Assignment Application or Applications,
shall be borne by the party incurring the same whether or not the Transaction
is consummated. All recording costs for instruments of transfer, and all
stamp, sales, use and transfer taxes shall be paid by Receiver.
15.3 NOTICES. All notices, requests, demands, and
other communications pertaining to this Agreement shall be in writing and shall
be deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such communication is intended, or three (3) business days after the
date mailed by certified or registered U.S. mail, return receipt requested,
postage prepaid, addressed as follows:
(a) If to Receiver:
Lee M. Mitchell, Esq.
One First National Plaza
Chicago, Illinois 60603
(312) 853-7539 Fax: (312) 853-7036
(b) If to AT&T:
AT&T Commercial Finance Corporation
400 Perimeter Center Terrace
Atlanta, Georgia 30346
Attn: Samuel D. Bush
(404) 804-6403 Fax: (404) 804-6440
with copies (which shall not
constitute notice) to:
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Barbara A. Meserole, Esq.
AT&T Capital Corporation
44 Whippany Road, Room 2420
Morristown, New Jersey 07962-1983
(201) 397-3458 Fax: (201) 397-3165
(c) If to Buyer:
c/o Partech Communications Group,
Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
Attn: John E. Rayl, CEO
(614) 538-0660 Fax: (614) 538-0670
with copies (which shall not
constitute notice) to:
Charles A. Koenig, Esq.
Cloud Koenig & Owen
5354 North High Street, Suite 3D
Columbus, Ohio 43214
(614) 221-3621 Fax: (614) 221-2698
Any party may change its address for notices by notice to the others given
pursuant to this Section.
15.4 ATTORNEY'S FEES. If any party initiates any
litigation against any other involving this Agreement, the prevailing party in
such action shall be entitled to receive reimbursement from the other party for
all reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
15.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATION RIGHTS. The several representations and warranties of the
parties contained herein, and the parties respective indemnification rights
pursuant to Section 12, shall survive the Closing for a period of eighteen (18)
months, at which time, the same shall expire (except for claims asserted during
such eighteen (18) month period); provided, however, that representations and
warranties with respect to title and authorization shall survive in perpetuity.
15.6 EXCLUSIVE DEALINGS. For so long as this
Agreement remains in effect, neither Receiver, AT&T, nor any of their officers,
directors, employees, shareholders, or partners or owners, as the case may be,
nor any person acting on Receiver's or AT&T's behalf, shall, directly or
indirectly, solicit or initiate any offer from, or conduct any negotiations
with, any person other than Buyer or Buyer's assignee(s) concerning the
acquisition of the Stations.
15.7 WAIVER. Unless otherwise specifically agreed
in writing to the
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contrary: (i) the failure of any party at any time to require performance by
another of any provision of this Agreement shall not affect such party's right
thereafter to enforce the same; (ii) no waiver by any party of any default by
any other shall be valid unless in writing and acknowledged by an authorized
representative of the nondefaulting party, and no such waiver shall be taken
or held to be a waiver by such party of any other preceding or subsequent
default; and (iii) no extension of time granted by any party for the
performance of any obligation or act by any other party shall be deemed to be
an extension of time for the performance of any other obligation or act
hereunder.
15.8 ASSIGNMENT. No party may assign its rights or
obligations hereunder without the prior written consent of the other parties
except: (i) Buyer may assign its rights and obligations to a corporation,
partnership or other business entity that controls, is controlled by, or is
under common control with Buyer, provided that Buyer shall remain liable for
all obligations under this Agreement, (ii) Buyer may make a collateral
assignment of its rights under this Agreement to any lender who provides funds
to Buyer for the acquisition or operation of the Stations, (iii) AT&T may
assign its rights and obligations to a corporation, partnership or other
business entity that controls, is controlled by, or is under common control
with AT&T, provided that AT&T shall remain liable for all obligations under
this Agreement and (iv) Receiver may transfer his rights and obligations to a
successor receiver duly appointed by the Superior Court. Receiver and AT&T
agree to execute acknowledgments of such assignment(s) and collateral
assignment(s) in such forms as Buyer or Buyer's lender(s) may from time to time
request. Subject to the foregoing, this Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the parties hereto and their
respective successors and assignees.
15.9 ENTIRE AGREEMENT. This Agreement, the Exhibits
and Schedules hereto (which are incorporated by reference herein), constitute
the entire agreement between the parties with respect to the subject matter
hereof and referenced herein, supersede and terminate any prior agreements
between the parties (written or oral). This Agreement may not be altered or
amended except by an instrument n writing signed by all parties hereto.
15.10 COUNTERPARTS. This Agreement may be signed in
any number of counterparts with the same effect as if the signatures on each
such counterpart were on the same instrument.
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15.11 CONSTRUCTION. The Section headings of this
Agreement are for convenience only and in no way modify, interpret or construe
the meaning of specific provisions of the Agreement. As used herein, the
neuter gender shall also denote the masculine and feminine, and the masculine
gender shall also denote the neuter and feminine, where the context so permits,
and "knowledge" of a party means only the actual knowledge and awareness of the
executive officers of such party.
15.12 SCHEDULES AND EXHIBITS. The Schedules and
Exhibits to this Agreement are a material part of this Agreement.
15.13 SEVERABILITY. If any one or more of the
provisions contained in this Agreement should be found invalid, illegal or
unenforceable in any respect, the validity, legality, and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable terms shall be deemed to be
void and of no force and effect only to the minimum extent necessary to bring
such term within the provisions of applicable law and such term, as so
modified, and the balance of this agreement shall then by fully enforceable.
15.14 CHOICE OF LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
without regard to the choice of law rules utilized in that jurisdiction.
15.15 COUNSEL. Each party has been, or has had the
opportunity to be, represented by its own counsel in connection with the
negotiation and preparation of this Agreement and, consequently, each party
hereby waives the application of any rule of law that would otherwise be
applicable in connection with the interpretation of this Agreement, including
but not limited to any rule of law to the effect that any provision of this
Agreement shall be interpreted or construed against the party whose counsel
drafted that provision.
15.16 PUBLIC STATEMENTS. Prior to the Closing Date,
neither Receiver, AT&T nor Buyer shall, without the prior written approval of
the other parties, make any press release or other public announcement
concerning the transactions contemplated by this Agreement except (i) Receiver,
AT&T and Buyer shall issue a mutually agreeable public announcement press
release promptly after the signing of this Agreement; and (ii) to the extent
that either party shall be so
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obligated by law, in which case the other party shall
be so advised and the parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued.
16. RECEIVER. Notwithstanding anything in this Agreement to
the contrary, it is expressly understood and agreed to by Buyer that (i) each
and all of the warranties, indemnities, representations, covenants,
undertakings and agreements made herein by or on the part of Receiver, although
in form purporting to be the warranties, indemnities, representations,
covenants, undertakings and agreements of the Receiver, nevertheless are not
made as personal warranties, indemnities, representations, covenants,
undertakings and agreements by the Receiver or with the purpose or intention of
binding the Receiver personally; (ii) this Agreement is executed and delivered
by the Receiver not in his own right, but solely in the exercise of such powers
as have been conferred on him as Receiver; (iii) no personal liability or
personal responsibility is assumed by, nor shall at any time be asserted or
enforceable against, Lee M. Mitchell by reason of or arising from this
Agreement or any warranty, indemnity, representation, covenant, undertaking or
agreement contained herein, either express or implied, and any such personal
liability is expressly waived and released by Buyer; and (iv) Buyer shall look
solely to the Assets or Excluded Assets for the satisfaction of any liability
of the Receiver by reason of or arising from this Agreement and shall not under
any circumstances seek recourse against the personal assets of Lee M. Mitchell.
[signature page follows]
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IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by a respective duly authorized officer as of the date
first written above.
RECEIVER:
LEE M. MITCHELL
______________________________________
Lee M. Mitchell
AT&T:
AT&T COMMERCIAL FINANCE CORPORATION
By:______________________________________
Title: _________________________________
BUYER:
TROPIC OF ST. SIMONS, INC.
By:______________________________________
Title: _________________________________
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<PAGE> 1
EXHIBIT 10.77
PURCHASE AGREEMENT
This Purchase Agreement ("Agreement") is made and entered into this
17th day of June, 1994, between WHITE BROADCASTING CORPORATION, a Michigan
corporation with an address at 685 East Long Lake, Bloomfield Hills, Michigan
48304 ("Seller"), and TROPIC OF KEY WEST, INC., a Nevada corporation with an
address at 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221 ("Buyer").
Seller is the licensee, owner and operator of Broadcast Station
WIIS-FM, 107.1 mhz, Key West, Florida (the "Station"). Seller desires to sell
and assign and Buyer desires to purchase and acquire substantially all of the
property and assets used or held for use in the operation of the Station (the
"Transaction"). The parties acknowledge that the license issued by the Federal
Communications Commission (the "Commission" or "FCC") for the operation of the
Station may not be assigned without the prior written consent of the
Commission.
Accordingly, in consideration of the foregoing and of the mutual
promises, covenants, and conditions set forth below, the parties agree as
follows:
1. ASSETS TO BE CONVEYED. On the Closing Date (as defined
below), Seller shall sell, assign, transfer, and deliver to Buyer and Buyer
shall purchase from Seller, all of the assets used or held for used in the
operation of the Station, other than Excluded Assets (as defined below) (the
"Assets"):
1.1 LICENSES and AUTHORIZATIONS. All licenses,
permits, permissions, and other authorizations issued for the operation of the
Station by the Commission and other governmental agencies, including, but not
limited to, those listed on Schedule 1.1 and the right to use the Stations'
call letters (the "Station Licenses"), and all applications for modification,
extension, or renewal thereof, and any pending applications for any new
licenses, permits, permissions, authorizations granted or authorizations
pending on the Closing Date, including, but not limited to, those listed on
Schedule 1.1 (the "Station Applications").
1.2 STATION EQUIPMENT. All the fixed and tangible
personal property owned by Seller and used or useful in the operation of the
Station including, but not limited to, the transmitters, towers and studio
equipment and the property listed on Schedule 1.2 together with any
replacements, improvements, or additions thereto made between the date hereof
and the Closing Date (the "Station Equipment").
1.3 CONTRACTS. All rights of Seller for the
benefit of the Station including, without limitation, those rights under: (a)
all agreements, contracts, or leases described on Schedule 1.3; (b) such other
contracts (other than for the sale of time on the Station), agreements, or
leases entered into (i) with the written consent of Buyer, or (ii) in the
ordinary course of business and consistent with past practice, between the date
of this Agreement and the Closing Date, that do not, in the aggregate, impose
obligations in excess of Two Thousand Dollars ($2,000) on Buyer; (the
contracts, agreements and leases described in clauses (a) and (b) are
collectively referred to as the "Operating Contracts"); (c) all contracts for
the sale of time of the Stations for cash (i) at rates substantially in
accordance with the Station's past practices with a
<PAGE> 2
remaining term at Closing of eleven (11) months or less or (ii) entered into
after the date hereof with the written consent of Buyer ("Sales Agreements");
(d) all contracts in effect as of the date hereof for the sale of time on the
Station in exchange for merchandise or services used or useful for the benefit
of the Station to the extent that such contracts (i) were entered into in the
ordinary course of business, (ii) are preemptible for cash time sales,
(iii) obligate the Buyer to provide advertising time only on a "run of
schedule" basis and (iv) have a remaining term of eleven (11) months or less
("Trade Agreements"); (e) all contracts for the sale of time on the Station
in exchange for programming set forth on Schedule 1.3 or entered into after
the date hereof with the written consent of Buyer ("Barter Agreements"); and
(f) all Trade Agreements entered into after the date hereof with the written
consent of Buyer. In the event that Seller submits any Operating Contract,
Sales Agreement, Trade Agreement or Barter Agreement (together, the
"Contracts") to Buyer for its consent, such consent shall be deemed to have
been given if Buyer does not notify Seller of its rejection of the Contract
within ten (10) days after its receipt of Seller's written request for such
consent. In the event that the Trade Agreements and Barter Agreements to be
assumed have a negative Trade Balance (as defined below) in excess of Five
Thousand Dollars ($5,000), Buyer will receive credit against the Purchase
Price for such excess amount (as defined in Section 3). "Trade Balance"
means the difference between the aggregate value of time owed pursuant to
the Trade Agreements and Barter Agreements (based upon the rates for cash
sales on the Stations in effect on the date of this Agreement) and the
aggregate value of goods and services to be received (after the Closing Date)
pursuant to the Trade Agreements and Barter Agreements. The Trade Balance
is "negative" if the value of time owed subsequent to the Closing Date
exceeds the value of goods and services to be received subsequent to the
Closing Date.
1.4 REAL PROPERTY. All of Seller's right, title,
and interest in the real property used in the operation of the Station and
owned, leased, or licensed by Seller or its affiliate, as described in Schedule
1.4 (together, the "Real Property").
1.5 CALL SIGNS, PROMOTIONAL MATERIALS AND
INTANGIBLES. All of Seller's or its affiliates' rights in the call signs,
copyrights, trademarks, tradenames, slogans, logos, service marks, computer
software (if any), magnetic media, data processing files, systems and programs,
business lists, trade secrets, sales and operating plans, all goodwill of the
Station and other similar intangible property rights used or held for use in
the operation of the Station, including but not limited to the intangible
property identified on Schedule 1.5 (the "Intangible Property").
1.6 RECORDS. All records, including but not
limited to all books of account, customer lists, supplier lists,
non-confidential employee personnel files, local public records file materials,
engineering data, logs, programming records, consultants' reports, ratings
reports, budgets, financial reports and projections, and sales, operating and
business plans, relating to or used in the operation of the Station or
necessary or desirable to show compliance with any law or regulation applicable
to the Station or the operation of the Station and not pertaining solely to
Seller's internal corporate affairs (the "Station Records"); it being
understood that Seller shall have the right to retain copies of any such
records.
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1.7 EXCLUDED ASSETS. It is understood and agreed
that the following assets shall not be among the Assets purchased pursuant to
this Agreement: (i) Seller's cash and cash equivalents on hand or in banks,
certificates of deposit, money market funds, and securities; (ii) Seller's
accounts receivable; (iii) the articles of incorporation, bylaws, minute books,
stock transfer records and all other corporate books of Seller; (iv) sales,
income and other tax refunds and claim therefore relating to the period prior
to Closing; (v) life insurance policies; (vi) claims against third parties,
based on activities occurring prior to Closing, other than those claims
specifically conveyed or specifically related to Assets which are conveyed;
(vii) claims against officers, directors and affiliates of Seller; and (viii)
assets listed in Schedule 1.7.
2. ASSUMPTION OF LIABILITIES. Buyer shall not assume any of
Seller's liabilities, except liabilities which accrue after the closing of the
transactions contemplated herein (the "Closing") under the Contracts to be
assigned to Buyer pursuant to (and as limited by) Section 1.3 above. If any
Contract requires the consent of third parties for assignment, but (i) such
consent has not been obtained as of the Closing Date, and (ii) in the case of
any consent required under any contract designated a "Material Contract" on
Schedule 1.3 ("Required Consent"), and Buyer waives such condition precedent to
the Closing in its sole discretion, then Buyer shall assume Seller's
obligations under such Contract only for the period after Closing during which
Buyer receives the benefits to which Seller is currently entitled under such
Contract (unless consent is subsequently obtained and such delay has not
prejudiced Buyer, and unless the failure of Buyer to receive benefits under
such Contract is due to Buyer's failure to perform Seller's obligations
thereunder after Closing).
3. PURCHASE PRICE AND PAYMENT.
3.1 PURCHASE PRICE. The purchase price for the
assets shall be Three Hundred Twenty-Five Thousand Dollars ($325,000) (the
"Asset Purchase Price"). The Purchase Price shall be payable as follows:
3.2 ESCROW DEPOSIT. Upon the execution of this
Agreement, Buyer will place the sum of Twenty-Five Thousand Dollars ($25,000),
(the "Escrow Deposit"), in an escrow account in Barnett Bank of Tampa, Florida
under the control of Jorgenson Broadcast Brokerage (the "Escrow Agent") to be
held in escrow pending the Closing or the termination of the Purchase
Agreement.
3.3 CASH AT CLOSING. At Closing, Buyer will pay to
Seller by certified bank check or wire transfer of federal funds, pursuant to
wire instructions that Seller shall deliver to Buyer prior to Closing, (i) the
Purchase Price, (ii) less the Escrow Deposit, (iii) plus or minus any
adjustments as set forth in Section 4 hereof or elsewhere in this Agreement.
3.4 ALLOCATION. The Asset Purchase Price shall be
allocated among the assets in accordance with the amounts as set forth on
Schedule 3.4. Seller and Buyer agree (i) to
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<PAGE> 4
jointly complete and separately file Form 8594 with their federal income tax
return for the tax year in which the Closing occurs, and (ii) that neither
Seller nor Buyer will take a position on any income, transfer or gains tax
return, before any governmental agency charged with the collection of any such
tax or in any judicial proceeding that is an any manner inconsistent with the
terms of any such allocation without the written consent of the other.
4. PRORATIONS AND ADJUSTMENTS. The operation of the Station
and the income and normal operating expenses, including without limitation
assumed liabilities and prepaid expenses, attributable thereto through the date
of the Closing Date (the "Adjustment Date") shall be for the account of Seller
and thereafter for the account of Buyer. Expenses for goods or services
received both before and after the Adjustment Date, power and utilities
charges, frequency discounts, prepaid cash time sales agreements, and rents and
similar prepaid and deferred items shall be prorated between Seller and Buyer
as of the Adjustment Date (the "Closing Date Adjustments"). All special
assessments and similar charges or liens imposed against the Real Property, and
Station Equipment in respect of any period of time through the Adjustment Date,
whether payable in installments or otherwise, shall be the responsibility of
Seller, and amounts payable with respect to such special assessments, charges
or liens in respect of any period of time after the Adjustment Date shall be
the responsibility of Buyer, and such charges shall be adjusted as required
hereunder. A final accounting of prorated items shall be made by Buyer with
the cooperation of Seller, and the sum due from one party to the other pursuant
to this Section 4 shall be paid in cash, within sixty (60) days after the
Closing Date.
5. NON-COMPETE AGREEMENT. At Closing, Seller and Buyer,
shall enter into a Non-Compete Agreement substantially in the form as that
attached hereto as Exhibit B (the "Covenant"). The Covenant shall have a
term of four (4) years.
6. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller makes
the following representations and warranties all of which have been relied upon
by Buyer in entering into this Agreement and, except as otherwise specifically
provided, all of which shall be true and correct at Closing.
6.1 ORGANIZATION. Seller is a corporation, validly
existing and in good standing under the laws of State of Michigan, and has full
power and authority to conduct the business as currently conducted and proposed
to be conducted and to enter into and perform this Agreement. The address of
Seller's chief executive offices, all of Seller's additional places of
business, and the locations of all tangible personal property included in the
Assets are listed in Schedule 6.1. Except as set forth in Section 6.1, during
the past five (5) years Seller has not used, nor to the best of Seller's
knowledge has any prior owner of the Station been known by or used, any
corporate, partnership, fictitious or other name in the conduct of the
Station's business or in connection with the use or operation of the Assets.
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6.2 AUTHORIZATION. The execution and delivery of
this Agreement by Seller has been duly authorized by any actions required under
Florida or federal laws. This Agreement has been duly executed by Seller and
delivered to Buyer and constitutes a legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
6.3 NO BREACH. None of (i) the execution, delivery
and performance of this Agreement by Seller, (ii) the consummation of this
Agreement and all other documents or instruments related thereto or executed in
connection therewith or in contemplation of the transaction hereunder (the
"Transaction"), or (iii) Seller's compliance with the terms and conditions
hereof will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms and conditions of, constitute a default under
or violate any judgment, decree, order, or (except as disclosed in Schedule
6.3) any agreement, lease or other instrument to which Seller is a party or by
which Seller is legally bound, or any law, rule, or regulation applicable to
Seller or the operation of the Station.
6.4 STATION LICENSES. The Station Licenses are all
of the licenses, permits, and other authorizations used or necessary to operate
the Station as it is now operated and are validly issued in the name of Seller.
The Station Licenses are in full force and effect, are valid for the balance of
the current license term applicable generally to radio stations licensed to
communities in the state where the Station is located, are unimpaired by any
acts or omissions of Seller, Seller's employees, officers, directors, or
shareholders, and are free and clear of any restrictions which might limit the
full operation of the Station (other than restrictions under the terms of the
licenses themselves). Except as set forth on Schedule 6.4, there are no
applications, proceedings, or complaints pending or, to the knowledge of
Seller, threatened which may have an adverse effect on the business or
operation of the Station (other than rulemaking proceedings that apply to the
radio broadcasting industry generally). Seller is not aware of any reason why
those of the Station Licenses subject to expiration might not be renewed in the
ordinary course based on current FCC rules or of any reason why any of the
Station Licenses might be revoked. The Station is in compliance with the
Commission's policy on exposure to radio frequency radiation. No renewal of
any Station License would constitute a major environmental action under the
rules of the Commission. Access to the Station's transmission facilities is
restricted in accordance with the policies of the Commission.
6.5 STATION APPLICATIONS. All information
contained in any Station Applications (as described on Schedule 1.1 hereto) and
which are pending with the Commission is true, complete and accurate in all
material respects.
6.6 TITLE TO ASSETS. Except as set forth on
Schedule 6.6, Seller has good and marketable title to the Assets, free and
clear of all mortgages, deeds of trust, liens, pledges, collateral assignments,
security interests, leases, easements, covenants, restrictions and encumbrances
or other defects of title ("Encumbrances"). To the knowledge of Seller, all
material Encumbrances against any of the Assets are disclosed on Schedule 6.6
hereto.
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<PAGE> 6
6.7 CONDITION OF EQUIPMENT. The equipment listed
on Schedule 1.2 (the "Station Equipment") is available for use in connection
with the operation of the Station constitutes all of the personal property that
is used or held by the Seller for use by the Station, or necessary to operate
the Station as it is now operated. The Station Equipment is sufficient to
permit the Station to operate in accordance with the Station Licenses and the
rules and regulations of the Commission. To the knowledge of Seller, except
(i) as set forth on Schedule 6.7, (ii) as may be disclosed in the Engineering
Report and (iii) to the extent that the Capital Budget contemplates the repair
or replacement of the Station Equipment, there is no material deficiency in the
Operating Equipment. To the knowledge of Seller, the Engineering Report will
disclose no material deficiency in the Operating Equipment not disclosed on
Schedule 6.7 or to be resolved by expenditures planned in the Capital Budget.
6.8 CONDITIONS OF THE REAL PROPERTY. The Real
Property listed on Schedule 1.4 constitutes all the real property owned or
leased by Seller or others in connection with the operation of the Station as
it is now operated. To the knowledge of Seller, there are no encroachments
upon the Real Property used in the transmitter site (the "Transmitter Site") by
any buildings, structures, or improvements located on adjoining real estate
except to the extent such encroachments do not impair the present use of the
property. Seller has received no notice that utility lines serving the
Transmitter Site passes over the lands of others except where appropriate
easements have been obtained. There are no pending or, to the best of Seller's
knowledge, contemplated condemnation or eminent domain proceedings that may
affect the Real Property. To the knowledge of Seller, Seller's use and
occupancy of the Transmitter Site complies in all material respects with all of
Seller's leasehold obligations and with all regulations, codes, ordinances, and
statutes of all applicable governmental authorities, including without
limitation all sanitary laws and regulations, occupational safety and health
regulations, and electrical codes, but excluding Environmental Laws except as
set forth in Section 8.2.2 of this Agreement and there are no material
structural defects in the buildings, structures, and improvements located on
the Transmitter Site. All towers and other structures on the Real Property and
the Land are painted and/or lighted in accordance with the requirements of the
Station Licenses, the Commission, the Federal Aviation Administration and all
applicable requirements of federal, state and local law. The leased premises
are leased at the rates and for terms ending on the dates shown on Schedule 1.4
pursuant to the agreements described in Schedule 1.4 which are the sole and
complete agreements concerning Seller's use of the leased premises.
6.9 LEASE FOR TOWER AND TRANSMITTER SITE. The
Tower Lease Agreement is in full force and effect, is not subject to any
setoffs and Seller is not in default of any material provision thereof nor has
Seller been notified of any potential event of default thereunder. The Tower
Lease Agreement is assignable to Buyer under its terms or Seller will obtain
any necessary waivers or consents to such assignment. Except as provided in
the Tower Lease Agreement, no consent of any person or entity is required for
the transfer of the Tower Lease by Seller to Buyer.
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<PAGE> 7
6.10 CONTRACTS. The Contracts are assignable to
Buyer without consent, or, if consent of the other contracting party to the
assignment is required, Seller shall use its reasonable best efforts to secure
such consents before the Closing Date. Each Contract is in full force and
effect and is materially unimpaired by any acts or omissions of Seller,
Seller's employees, officers, directors or shareholders. There has not
occurred as to any Material Contract any material default by Seller or any
event that, with the lapse of time or otherwise, could become a material
default by Seller. To the knowledge of Seller, there has not occurred as to
any Material Contract any material default by any other party thereto or any
event that, with the lapse of time or at the election of any person other than
Seller, could become a material default by such party. Those Contracts whose
stated duration extends beyond the Closing Date will, at Closing, be in full
force and effect and will be materially unimpaired by any acts or omissions of
Seller, Seller's employees, officers, directors or shareholders. Seller has
provided to Buyer true and correct copies of all Contracts (other than Sales
Agreements) that are material to the operation of the Station or create
obligations that in the aggregate are material or create aggregate obligations
of more than Two Thousand Dollars ($2,000), as modified to date, and one or
more forms that is representative of the terms of the Sales Agreements now in
effect. The Contracts as amended through the date of this Agreement, will not
be modified without Buyer's written consent (which shall not be unreasonably
withheld, and which shall be deemed given in the event Buyer has not responded
to a written request therefore within ten (10) days). At Closing, Seller shall
provide Buyer with a list showing Trade Agreements and Barter Agreements then
in effect with an analysis of the then-current Trade Balance at no less than
monthly intervals between the date hereof and the Closing Date.
6.11 EMPLOYEES. No employee of the Station is
represented by a union or other collective bargaining unit, no application for
recognition of a collective bargaining unit is now pending before the NLRB with
respect to the Station's employees, and to Seller's knowledge, no concerted
effort to unionize any of the Station's employees is currently in progress.
Except as has been disclosed to Buyer in writing, there are no controversies
pending or, to Seller's knowledge, threatened between Seller and any of the
Station's employees, nor, to Seller's knowledge, are there any facts that could
reasonably result in any such controversy. Seller has no retirement, pension,
profit-sharing, bonuses, severance pay, disability, health, vacation, sick
leave or other employee benefit plans, practices, agreements, or understandings
except as listed or described in Schedule 6.11 (it being understood and
acknowledged that Buyer is not assuming, and shall have no liability with
respect to, any such plans, practices, agreements or understandings).
6.12 LITIGATION. Except as set forth in Schedule
6.12, there is no unsatisfied judgment outstanding, Seller has received no
notice of any litigation, proceeding, claim or investigation of any nature
pending against Seller and, to Seller's knowledge, there is no litigation,
proceeding, claim or investigation of any nature threatened against Seller
which might have an adverse effect on the continued operation of the Station or
impair the value of the Assets or which might have an adverse effect on
Seller's ability to perform in accordance with the terms of this Agreement.
Seller is not aware of any facts that could reasonably result in any such
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proceedings.
6.13 PAYMENT OF TAXES. Seller has, or by the
Closing Date will have, paid and discharged all taxes, assessments, excises and
other levies relating to the Assets, excepting such taxes, assessments, and
other levies as will not be due until after the Closing Date and that are to be
prorated between Seller and Buyer pursuant to Section 4.
6.14 COMPLIANCE WITH LAWS. Except as disclosed on
Schedule 6.14 or in the reports to be delivered to Buyer under this Agreement,
or as may be indicated by the remedial actions to be taken under the Capital
Budget, Seller, to the knowledge of Seller, has complied in all respects with,
and is not in violation of any federal, state, or local laws, regulations, or
orders (other than Environmental Laws) relating to the operation of the
Station. Without limiting the generality of the foregoing:
(a) The Station's transmitting and studio equipment
is operating in accordance with the terms and conditions of the Station
Licenses and all underlying construction permits, and the rules, regulations
and policies of the Commission, including without limitation all regulations
concerning equipment authorization and human exposure to radio frequency
radiation.
(b) Seller has, in the conduct of the Station's
business, complied in all material respects with all applicable laws, rules and
regulations relating to the employment of labor, including those concerning
wages, hours, equal employment opportunity, collective bargaining, pension and
welfare benefit plans, and the payment of Social Security and similar taxes,
and Seller is not liable for any arrearages of wages or any tax penalties due
to any failure to comply with any of the foregoing.
(c) Seller has received no notification from the
Commission that Seller's employment practices fail to comply with the
Commission rules and policies.
(d) All ownership reports, employment reports, tax
returns and other documents required to be filed by Seller with the Commission
or other governmental authorities have been filed. Such items as are required
to be placed in the Station's local public records files have been placed in
such files. All proofs of performance and measurements that are required to be
made by Seller with respect to the Station's transmission facilities have been
completed and filed at the Station. All information contained in the foregoing
documents is true, complete and accurate in all material respects.
(e) To Seller's knowledge, the reports to be
delivered to Buyer under this Agreement will not disclose any noncompliance
with this Section 6.14 except as disclosed on Schedule 6.14 or to the extent
that such non-compliance would be cured by improvements undertaken pursuant to
the Capital Budget.
6.15 INSOLVENCY PROCEEDINGS. Seller is not the
subject of any pending or threatened insolvency proceedings of any character,
including without limitation bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary. Seller
has not made an assignment for the benefit of creditors or taken any action
with a view to or that would constitute a valid basis for the institution of
any such insolvency proceedings. After
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giving effect to the Transaction, Seller will have sufficient capital to carry
on its business and transactions, (ii) will be able to pay its debts as they
mature or become due, and (iii) will own assets the fair value of which will be
greater than the sum of all of its liabilities (including contingent
liabilities) not specifically assumed by Buyer pursuant to the terms of this
Agreement. Seller is not insolvent or will become insolvent as a result of
entering into this Transaction.
6.16 CITIZENSHIP. Seller is not a "foreign person"
as defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended, and the regulations thereunder (the "Code"). On the Closing Date,
Seller will deliver to Buyer affidavits to that effect, verified as true and
sworn to under penalty of perjury by a duly-authorized officer of Seller. The
affidavits shall also set forth Seller' name, address, taxpayer identification
number, and such additional information as may be required to exempt the
Transaction from the withholding provisions of Section 1445 of the Code. Buyer
shall have the right to furnish copies of the affidavit to the Internal Revenue
Service ("IRS").
6.17 PATENTS, TRADEMARKS, COPYRIGHTS. The call sign
and all slogans, logos, copyrights, trademarks, tradenames, service marks, and
other similar intangible property rights currently used to promote or identify
the Station, or otherwise used in the promotion of the Station's business, are
listed or described on Schedule 1.5 (the "Promotional Rights"). Seller pays no
royalty to anyone with respect to the Promotional Rights. Seller does not have
any knowledge, nor has Seller received any notice to the effect that its use of
any of the Promotional Rights may or are claimed to infringe on the right of
another. Seller has no knowledge of any infringement or unlawful or
unauthorized use of such Promotional Rights, including without limitation the
use of any call sign, slogan or logo by any broadcast or cable station in the
Key West, Florida geographical area that may be confusingly similar to the call
sign, slogans, and logos currently used by the Station. To Seller's knowledge,
the operation of the Station does not infringe any copyright, patent,
trademark, tradename, service mark, and other similar right of any third party.
6.18 FINANCIAL STATEMENTS. Seller has furnished
Buyer with financial statements for the Station for the years ending December
31, 1990, 1991 and 1992 (the "Financial Statements") and monthly financial
statements for each month ending between January 1, 1993 and the date of this
Agreement (the "Interim Statements"). The Financial Statements and the
Interim Statements fairly and accurately reflect the financial results of the
operations of the Station for the periods indicated based upon consistent
reporting standards throughout the periods involved and as compared with prior
periods. Except as reflected in the Financial Statements, the Interim
Statements or otherwise disclosed to Buyer in writing, no event has occurred
since the preparation of the most recent Interim Statement that would make the
Financial Statements or the Interim Statements misleading in any material
respect.
6.19 UTILITIES. All utilities that are required for
the current occupancy and use of the Station and the Real Property for the
purposes for which such properties are presently being used by Seller,
including without limitation electric, water, sewer, telephone and similar
services, have been connected and, to the knowledge of Seller, are in good
working order. By the
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Closing Date, Seller will have paid all charges for such utilities, including
without limitation any "tie-in" charges or connection fees, except for those
charges that will become due until after the Closing Date and that are to be
prorated between Seller and Buyer pursuant to Section 4.
6.20 NO MISLEADING STATEMENTS. To Seller's
knowledge, no statement made by Seller to Buyer and no statement as set forth
in this Agreement, or information delivered or to be delivered to Buyer in
satisfaction of a requirement of this Agreement, contains or will contain any
untrue statement of a material fact or omits or will omit a material fact
necessary in order to make such statements or information in light of the
circumstances under which such statement or information is delivered not
misleading.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. Subject to the
qualifications set forth on Schedule 7, Buyer makes the following
representations and warranties, all of which have been relied upon by Seller in
entering into this Agreement and, except as set forth on Schedule 7 or as
otherwise specifically provided, all of which shall be true and correct as of
Closing.
7.1 ORGANIZATION. Buyer is a corporation duly
organized, validly existing, and in good standing, under the laws of the State
of Nevada, is duly qualified to do business in the State of Florida and has
full corporate power and authority to enter into and perform this Agreement.
7.2 AUTHORIZATION. The execution and delivery of
this Agreement by Buyer has been duly authorized by all necessary corporate
action on the part of Buyer. Evidence of such authorization shall be delivered
to Seller at Closing. This Agreement has been duly executed by Buyer and
delivered to Seller and constitutes a legal, valid, and binding obligation of
Buyer, enforceable in accordance with its terms.
7.3 NO BREACH. None of (i) the execution, delivery
and performance of this Agreement by Buyer, (ii) the consummation of the
Transaction, or (iii) Buyer's compliance with the terms and conditions hereof
will, with or without the giving of notice or the lapse of time or both,
conflict with, breach the terms and conditions of, constitute a default under,
or violate Buyer's articles of incorporation, bylaws, any judgment, decree,
order, agreement, lease or other instrument to which Buyer is a party or by
which Buyer is legally bound, or any law, rule or regulation applicable to
Buyer.
7.4 LITIGATION. There is no action, suit,
investigation or other proceedings pending or, to Buyer's knowledge, threatened
which may adversely affect Buyer's ability to perform in accordance with the
terms of this Agreement, and Buyer is unaware of any facts which could
reasonably result in any such proceeding.
7.5 NO MISLEADING STATEMENTS. To Buyer's
knowledge, no statement made by Buyer to Seller set forth in this Agreement,
contains or will contain any untrue statement of a material fact.
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7.6 QUALIFICATION AS BROADCAST LICENSEE. As a
licensee of commercial radio stations (the "Tropic Stations"), Buyer knows of
no fact that would, under the Communications Act of 1934, as amended, or the
rules, regulations and policies of the FCC, disqualify Buyer from becoming the
licensee of the Station. There are no proceedings, complaints, notices of
forfeiture, claims, investigations pending or, to the knowledge of Buyer,
threatened against any or in respect of any of the Tropic Stations that would
materially impair the qualifications of Buyer to become a licensee of the
Station or delay the FCC's processing of the Assignment Applications.
8. ENVIRONMENTAL MATTERS.
8.1 DEFINITIONS.
8.1.1 "Hazardous Materials" means substances defined
as "hazardous wastes," "hazardous substances," "toxic substance," "pollutants,"
"contaminants," "radioactive materials," "petroleum or any fraction thereof,"
under and regulated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986 ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substances control Act ("TSCA"). 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act. ("RCRA"), 42 U.S.C. Section 9601 et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act 42, U.S.C. Section 300f et seq.; The Clean Air Act ("CAA"),42 U.S.C.
Section 7401 et seq.; or any analogous federal or state law; and in the rules,
regulations or ordinances adopted, or other enforceable criteria and guidelines
promulgated pursuant to the preceding laws; all as in effect as of the Closing
Date (collectively the "Environmental Laws").
8.1.2 "Environmental Conditions" means conditions of
environment, including the ocean, natural resources (including flora and
fauna), soil, surface water, ground water, any present or potential drinking
water supply, subsurface strata or the ambient air, relating to or arising out
of the use, handling, storage, treatment, recycling, generation,
transportation, release, spilling, leaking, pumping, pouring, emptying,
discharging, injecting, escaping, leaching, disposal, dumping or threatened
release of Hazardous Material by Seller or Seller's predecessors in interest or
onto or into the Real Property or Land. With respect to claims by employees,
Environmental Conditions also includes the exposure of persons to Hazardous
Materials introduced to the environment prior to the Closing Date, within a
work place on the Real Property.
8.1.3 "Environmental Noncompliance" means: (1) the
release or threatened release of any Hazardous Materials into the environment,
any storm drain, sewer, septic system or publicly owned treatment works, in
violation of any effluent or emission limitations, standards or other
Environmental Law; (2) any material noncompliance with applicable Environmental
Laws; (3) any facility operations, procedures, designs, etc. which do not
conform in all material respects to applicable statutory or regulatory
requirements of the CAA, the CWA, the TSCA, the RCRA or any other applicable
Environmental Laws intended to protect public health, welfare and the
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environment; (4) the failure to have obtained material permits, variances or
other authorizations required under applicable Environmental Laws for the
operation of any equipment, process, facility or any other activity; (5) the
operation of any facility or equipment in violation any material permit
condition, schedule of compliance, or administrative or court order.
8.1.4 "Environmental Claims" means claim, demands,
suits, causes of action for personal injury or property damage (including any
depreciation of property values and lost use of property) arising directly or
indirectly out of Environmental Noncompliance; claims for the recovery of
response costs, or administrative or judicial orders directing the performance
of investigations, response or remedial actions under CERCLA, RCRA, or other
applicable Environmental Laws; a requirement to implement a "corrective action"
plan pursuant to any order or permit issued pursuant to RCRA; claims for
restitution, contribution or indemnity from third parties or any governmental
agency arising directly or indirectly out of Environmental Conditions or
Environmental Noncompliance; fines, penalties, liens against property arising
directly or indirectly out of Environmental Conditions or Environment
Noncompliance; claims for injunctive relief or other orders or notices of
violation from federal, state or local agencies or courts arising directly or
indirectly out of Environmental Conditions or Environmental Noncompliance; and
with regard to any present or former employees, claims for exposure to or
injury from Environmental Conditions.
8.1.5 "Expenses" includes any liability, loss, cost
or expense arising directly or indirectly from an Environmental Condition or
Environmental Noncompliance, including, without limitation, costs of
investigation, cleanup, remedial or response action, the cost associated with
posting financial assurances for the completion of response, remedial or
corrective actions, the preparation of any closure or other necessary or
required plans or analyses, or other reports or analyses submitted to or
prepared by regulating agencies, including the cost of health assessments,
epidemiological studies and the like, retention of engineers and other expert
consultants, legal counsel, capital improvements, operation and maintenance
testing and monitoring costs, power and utility costs and pumping taxes or
fees, and administrative costs incurred by governmental agencies.
8.2 SELLER'S ENVIRONMENTAL DISCLOSURES. The
matters set forth in this Section constitute disclosures of Seller which shall
be true and accurate as of the Closing Date. In the event that, during the
period between the execution of this Agreement and the Closing Date, Seller
learns, or has reason to believe, that any of the following disclosures may
cease to be true, Seller hereby covenants to give notice thereof to Buyer as
promptly as reasonably possible. Except as set forth or described in the
Environmental Assessments on Schedule 8.2, Seller hereby discloses that to the
knowledge of Seller:
8.2.1 NO PROCEEDINGS. There are no Environmental
Claims pending against Seller or, to the best of Seller's knowledge pending
against Seller's studio landlord or transmitter and tower site landlord, based
on Environmental Conditions or Environmental Noncompliance at the Real
Property, or any part thereof, or otherwise arising from Seller's activities at
the Real
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Property involving Hazardous Materials, including proceedings under CERCLA,
RCRA, or any other Environmental Laws based on the off-site transportation,
treatment, storage, recycling or disposal of Hazardous Materials generated by
Seller;
8.2.2 ENVIRONMENTAL COMPLIANCE. With respect to
operations being conducted at the Real Property by the Seller, such operations
are being conducted in compliance with and are in compliance with all of the
applicable Environmental Laws;
8.2.3 ABESTOS. There are no structures,
improvements, equipment, activities, fixtures or facilities owned by or
otherwise under the control of Seller on the Real Property which are
constructed with, use or otherwise contain unencapsulated friable
asbestos-containing construction materials. For the purposes of this
subsection: (1) "asbestos" means fibrous forms of chrysotile (fibrous
serpentine), crocidolite (fibrous reibecktite), amosite (fibrous
cummingtonite-grunerite), fibrous tremolite, fibrous actinolite, and fibrous
anthophyllite, to the extent regulated under applicable Environmental Laws; (2)
"asbestos-containing construction materials" means any manufactured
construction material which contains more than one-tenth of one percent
asbestos by weight;
8.2.4 HAZARDOUS MATERIALS. Except with respect to
ordinary course operations, processes and activities involving the use of
Hazardous Materials conducted in material compliance with applicable
Environmental Laws, there are no structures, improvements, equipment, fixtures,
activities or facilities owned by or under the control of Seller on the Real
Property which use or contain (in amounts or concentrations requiring
remediation under applicable Environmental Laws) Hazardous Materials or
equipment containing concentrations of polychlorinated biphenyls subject to
TSCA regulations, except to the extent that such use or presence does not
constitute a condition Environmental Noncompliance; and
8.2.5 RELEASES. There are no processes, operations,
or any other activities involved in Seller's use of the studio or tower and
transmitter site which currently result in the release of threatened release of
Hazardous Materials into the environment in excess applicable reportable
quantities, except to the extent that such releases or threatened releases do
not constitute a condition of Environmental Noncompliance.
8.3 COMPLETE DISCLOSURE. Seller has no knowledge
of any environmental matters other than those that will be disclosed in the
Environmental Assessments as set forth on Schedule 8.2.
9. PRE-CLOSING OBLIGATIONS. The parties covenant and agree
as follows with respect to the period prior to the Closing Date:
9.1 APPLICATIONS FOR COMMISSION CONSENT. As soon as
possible, but in no event later than fifteen (15) business days after the date
of this Agreement, Seller and Buyer shall join in and file an application or
applications requesting the Commission's written consent to the assignment of
the Station Licenses from Seller to Buyer (the "Assignment Applications"), and
they will diligently take all steps necessary or desirable and proper to
prosecute expeditiously the
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Assignment Applications and to obtain the Commission's determination that
approval of the Assignment Applications will serve the public interest,
convenience, and necessity. The failure by either party to timely file or
diligently prosecute its portion of the Assignment Applications shall be deemed
a material breach of this Agreement.
9.2 OTHER GOVERNMENTAL CONSENTS. Promptly
following the execution of this Agreement, Seller and Buyer shall proceed to
prepare and file with the appropriate governmental authorities (other than the
Commission) such requests, if any, for approval or waiver as may be required
from such governmental authorities in connection with the Transaction, and
shall jointly, diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such requests for approval or
waiver and all proceedings necessary to secure such approvals and waivers.
9.3 FINANCIAL INFORMATION. Between the date hereof
and the Closing Date, Seller shall furnish Buyer with monthly financial
statements within thirty (30) days after the end of each calendar month, and
with such additional data concerning the Station's financial condition as are
prepared by Seller in the ordinary course of business.
9.4 CONSENTS. Seller shall use its reasonable best
efforts to obtain the consents of the other contracting parties to the
assignment of the Contracts that require such consent and to the assignment of
the Tower Lease Agreement.
9.5 ENGINEERING REPORT. Within sixty (60) days of
the date of this Agreement, Seller shall deliver to Buyer (a) a report prepared
by a consulting communications engineer acceptable to Buyer concerning the
condition of the Station Equipment and (b) a report prepared by an AIA
certified consultant acceptable to Buyer concerning the compliance of Seller's
transmitter and tower improvements on the Real Property with applicable access,
fire, proposed zoning and other land-use laws (together, the "Engineering
Report"). If the Engineering Report discloses the need for modifications
(other than those contemplated in the Capital Budget) that in Buyer's
reasonable judgment involve expenses in excess of $5,000.00, Buyer shall
deliver in writing to Seller, within 30 days of receipt of the Engineering
Report, Buyer's objections to such matters. Thereafter, at any time prior to
the Closing Date, Seller shall have the option, but not the obligation, to take
such action as Seller and Buyer shall agree upon in order to satisfy Buyer's
objections. If Seller fails or declines to take such actions, Buyer shall have
the option to either terminate this Agreement or consummate the transactions
contemplated herein including accepting the Station Equipment and the
transmitter and tower improvements subject to such conditions.
9.6 CONFIDENTIALITY. Each party agrees that any
and all information learned or obtained by it from the other (and that is not
otherwise public or known in the radio broadcast industry) shall be
confidential and agrees not to disclose any such information to any person
whatsoever other than as is necessary for the purpose of effecting the
Transaction or as otherwise required by law.
9.7 ACCESS. Between the date hereof and the
Closing Date, Seller shall give, upon prior notice, Buyer or representatives of
Buyer (including underwriters, lenders,
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consultants and investors) reasonable access to the Assets (to the Extent
permitted by the Tower Lease Agreement) and to the books and records of Seller
relating to the business and operation of the Station. It is expressly
understood that, pursuant to this Section, Buyer, at its sole expense, shall be
entitled to make such engineering inspections of the Station and transmitter
and tower site, and such audits of the Station's financial records, as Buyer
may desire, so long as the same do not unreasonably interfere with Seller's
operations of the Station.
9.8 EMPLOYEE MATTERS. Seller has provided to Buyer
an accurate list of all current employees of the Station on Schedule 9.8 (the
"Station Employees") together with a description of the terms and conditions of
their respective employment and their duties as of the date of this Agreement.
Seller shall promptly notify Buyer of any changes that occur prior to Closing
with respect to such information. On or prior to Closing, Seller shall
compensate each of the Station's employees for all accrued commissions, accrued
vacations, sick leave and other accrued benefits. Seller shall terminate the
employment of all the Station Employees effective on the Closing Date.
9.9 OPERATIONS PRIOR TO CLOSING. Between the date
of this Agreement and the Closing Date:
(a) Seller shall operate the Station in the normal
and usual manner, generally consistent with Seller's past practice and the
rule, regulations, and policies of the Commission, and shall conduct the
Station's business only in the ordinary course. To the extent consistent with
such operations, Seller shall use its reasonable best efforts to: (i) maintain
the present entertainment format of the Station and the quality of its
programs; (ii) keep available for Buyer the services and number of the
Station's present employees reasonably necessary for the operation of the
Station; (iii) preserve the Station's present customers and business relations;
(iv) satisfy Seller's obligations under the Trade Agreements; (v) continue to
make expenditures and engage in activities designed to promote the Station;
(vi) continue making capital expenditures in accordance with the capital
expenditure budget for the Station set forth in Schedule 9.9(a)(vi)(the
"Capital Budget") and otherwise consistent with past station practice (it being
understood that the Capital Budget contemplates expenditures to be made after
the projected Closing Date which will not be Seller's responsibility); and
(vii) undertake to collect its accounts receivable in accordance with Seller's
normal and customary collection practices.
(b) Seller shall: (i) subject to Section 14.3,
maintain the Assets in their present condition (reasonable wear and tear
normal use excepted); and (ii) maintain all inventories of supplies, tubes,
and spare parts at levels generally consistent with the Station's prior
practices.
(c) Seller shall maintain its books and records in
the usual and ordinary manner, on a basis consistent with prior periods.
(d) Seller shall comply with all laws, rules,
ordinances and regulations applicable to it, to the Assets and to the business
and operation of the Station, the failure with which to comply could have a
material adverse affect on any of the Assets, the Station or the business or
operations of the Station.
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(e) Seller shall perform all Contracts and its
obligations under the Tower Lease Agreement without material default and shall
pay all of Seller's trade accounts payable in a timely manner; provided,
however, that Seller may dispute, in good faith, any alleged obligation of
Seller.
(f) Seller shall not, without the express written
consent of Buyer which shall not be unreasonably withheld, and which shall be
deemed given in the event Buyer has not responded to a written request therefor
within ten (10) days: (i) sell or agree to sell or otherwise dispose of any of
the Assets (A) other than in the ordinary course of business, and (B) unless
such Assets are replaced prior to Closing by assets of equal or greater worth,
quality and utility: (ii) acquiesce in any infringement, unauthorized use or
impairment of the Intangible Property or change the Station's call signs; (iii)
enter into any employment contract on behalf of the Station unless the same is
terminable at will and without penalty; or (iv) enter into any other contract,
lease or agreement that will be binding on Buyer after Closing, except for (A)
Sales Agreements, Trade Agreements, and Barter Agreements to the extent
consistent with Section 1.3, and (B) other contracts, leases and agreements
that in the aggregate will not impose obligations on Buyer in excess of Two
Thousand Dollars ($2,000).
9.10 ADVERSE DEVELOPMENTS. Seller shall promptly
notify Buyer of any materially adverse developments that occur prior to Closing
with respect to the Assets or the operation of the Station; provided, however,
that Seller's compliance with the disclosure requirements of this Section 9.10
shall not relieve Seller of any obligation with respect to any representation,
warranty or covenant of Seller in this Agreement or waive any condition to
Buyer's obligations under this Agreement.
9.11 ADMINISTRATIVE VIOLATIONS. If Seller receives
any finding, order, complaint, citation or notice prior to the Closing Date
which states that any aspect of the Station's operations violates any rule or
regulation of the Commission or of any other governmental authority (an
"Administrative Violation"), including without limitation any rule or
regulation concerning environmental protection, the employment of labor, or
equal employment opportunity, Seller shall promptly notify Buyer of the
Administrative Violation, remove or correct the Administrative Violation, and
be responsible for the payment of all costs associated therewith, including any
fines or back pay that may be assessed.
9.12 BULK SALES ACT. Seller agrees to indemnify,
defend, and hold Buyer harmless against any claims, liabilities, costs, or
expenses, including reasonable attorneys' fees, that Buyer may incur as a
result of the failure to comply with the bulk sales provisions of the Uniform
Commercial Code or similar laws.
9.13 CONTROL OF STATION. This Agreement shall not
be consummated until after the Commission has given its written consent
thereto, and notwithstanding anything herein to the contrary, between the date
of this Agreement and the Closing Date, Buyer shall not directly or indirectly
control, supervise or direct, or attempt to control, supervise or direct the
operation of the Station. Such operations shall be the sole responsibility of
Seller.
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10. CONDITIONS PRECEDENT.
10.1 MUTUAL CONDITIONS. The obligation of both
Seller and Buyer to consummate this Agreement is subject to the satisfaction of
each of the following conditions:
10.1.1 COMMISSION CONSENT. The Commission shall have
granted its consent to the Assignment Applications and such FCC Consent shall
have become a Final Order (as defined below). Final Order means an order or
action of the Commission that, by reason of expiration of time or exhaustion of
remedies, is no longer subject to administrative or judicial reconsideration or
review.
10.1.2 ABSENCE OF LITIGATION. As of the Closing
Date, no action, claim, suit or proceeding seeking to enjoin, restrain, or
prohibit the consummation of the Transaction shall be pending before any court,
the Commission, or any other governmental authority; provided, however, that
this condition may not be invoked by a party if any such action, suit, or
proceeding was solicited or encouraged by, or instituted as a result of any act
or omission of, such party.
10.2 CONDITIONS TO BUYER'S OBLIGATION. In addition
to satisfaction of the mutual conditions contained in Section 10.1, the
obligation of Buyer to consummate this Agreement is subject to the satisfaction
of each of the following conditions:
10.2.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller to Buyer shall be true, complete, and
correct in all material respects as of the Closing Date with the same force and
effect as if then made.
10.2.2 COMPLIANCE WITH CONDITIONS. All of the terms,
conditions and covenants to be complied with or performed by Seller on or
before Closing Date shall have been timely complied with and performed in all
material respects.
10.2.3 NO ADVERSE DEVELOPMENT. There shall not be or
have been any (a) breach by Seller or any Affiliate of Seller, or failure to
be in full force in effect on the Closing Date, of any Material Contract; or
(b) any other adverse change in the business or prospects of either the Station
or the condition of the Assets. No adverse development shall have occurred
with respect to the Station that results in an impairment to the ability of the
Station to operate as it is now operated or represents an impairment of the
value of the Station or Assets being conveyed.
10.2.4 ENGINEERING REPORT. Buyer shall have timely
received the Engineering Report which shall reveal nothing inconsistent with
Seller's representations, warranties or disclosures hereunder, or to which
Buyer has an express right to object hereunder except to the extent such
inconsistencies have been expressly waived by Buyer.
10.2.5 VALIDITY OF STATION LICENSES. On the Closing
Date, Seller shall be the owner and holder of the Station Licenses to the
extent that such authorizations can be owned or held by Seller under the
Communications Act of 1934, as amended; the Station Licenses shall be in
unconditional full force and effect, valid for the balance of the current
license term applicable generally to radio stations licensed to communities in
the state where the Station is located; and the Station Licenses shall be
unimpaired by any acts or omissions of Seller or Seller's employees, agents,
officers, directors or shareholders.
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10.2.6 CLOSING DOCUMENTS. Seller shall deliver to
Buyer all of the closing documents specified in Section 11.2.1, all of which
documents shall be dated as of the Closing Date, duly executed, and in a form
customary in the state where the Assets are located and reasonably acceptable
to Buyer.
10.2.7 THIRD PARTY CONSENTS. Seller shall have
obtained all Required Consents to the assignment of the Material Contracts, as
listed on Schedule 1.3, and all consents necessary for the assignment of the
Tower Lease Agreement from Seller to Buyer such that Buyer will enjoy all of
the rights and privileges of Seller under the Contracts and the Tower Lease
Agreement subject only to the same obligations as are binding on Seller
thereunder, pursuant to the present terms thereof.
10.2.8 ESTOPPEL CERTIFICATES. Seller shall have
obtained such fee owner's consents and mortgagee's estoppel and non-disturbance
agreements with respect to the leases for the Leased Premises as are reasonably
requested by Buyer not less than ten (10) days prior to the Closing Date.
10.2.9 SETTLEMENT OF CLAIMS. Seller shall have
settled any and all claims against Seller that affect or concern the Assets.
10.2.10 TITLE TO ASSETS. Seller shall hold and be
able to deliver to Buyer on the Closing Date good and indefeasible title to the
Assets.
10.3 CONDITIONS TO SELLER'S OBLIGATION. In addition
to satisfaction of the mutual conditions contained in Section 10.2, the
obligation of Seller to consummate this Agreement is subject to satisfaction of
each of the following conditions:
10.3.1 REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer to Seller shall be true, complete and
correct in all material respects as of the Closing Date with the same force and
effect as if then made.
10.3.2 COMPLIANCE WITH CONDITIONS. All of the terms,
conditions and covenants to be complied with or performed by Buyer on or before
the Closing Date shall have been timely complied with and performed in all
material respects.
10.3.3 PAYMENT. Buyer shall pay and/or deliver to
Seller the consideration set forth in Section 3.
10.3.4 CLOSING DOCUMENTS. Buyer shall deliver to
Seller all the closing documents specified in Section 11.2.2, all of which
documents shall be dated as of the Closing Date, duly executed, and in a form
customary in transactions of this type and reasonably satisfactory to Seller.
11. CLOSING.
11.1 CLOSING DATE. The Closing hereunder shall
occur on a date mutually agreeable to Buyer and Seller as soon as possible but
in any event no later than fifteen (15) business days after the Commission's
action granting its consent to the Assignment Application has become a Final
Order (the "Closing Date"), and shall be effective as of 11:59 P.M. on the
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Closing Date; provided, however, that in the event a Final Order is not
received on or before March 31, 1995, then (unless the parties agree to an
extension of such deadline) this Agreement shall be terminated as of such date
and held to be void ab initio, and all monies previously delivered to the
Escrow Agent or any party hereto shall be returned to the conveying party and
all liabilities and obligations hereunder shall cease to exist (except to the
extent required to unwind the Transaction contemplated hereunder). The Closing
shall take place at the office of Buyer's counsel in Columbus, Ohio, or at such
other location as may be mutually agreeable to Buyer and Seller, commencing at
10:00 A.M. on the Closing Date. If, as of the Closing Date, any condition
precedent described in Section 10 has not been satisfied, the party of the
absence of such condition precedent at or before the Closing and simultaneously
therewith postpone the Closing until a date ten (10) days after all such
conditions have been (or are able to be) performed, and such postponed date
shall constitute the new Closing Date for all purposes hereunder.
11.2 PERFORMANCE AT CLOSING. The following
documents shall be executed and delivered at Closing.
11.2.1 BY SELLER. Seller shall deliver to Buyer:
(a) A certificate executed by Seller attesting to
Seller's compliance with the matters set forth in Section 10.2.1, 10.2.2
and 10.2.3 together with certified copies of (i) the Articles of Incorporation
and Bylaws, or other organization documents, if any, of Seller, (ii) the
Tower Lease Agreement, and (iii) a resolution of Seller's directors
authorizing Seller to enter into and consummate this Agreement;
(b) One or more assignments transferring to Buyer
all of the interests of Seller in and to the Station Licenses, the Station
Applications, and all other licenses, permits, and authorizations issued by any
other governmental authorities that are used in or necessary for the lawful
operation of the Station;
(c) One or more bills of sale conveying to Buyer
the Station Equipment and Assets;
(d) One or more assignments, together with all
required consents, assigning to Buyer all of the Contracts, Station
Records, Tower Lease Agreement, Studio Lease and the Intangible Property;
(e) The Covenant;
(f) Opinions of Seller's Counsel in the form
set forth in Exhibit C; and
(g) The affidavit described in Section 6.15 above.
11.2.2 BY BUYER. Buyer shall deliver to Seller:
(a) A certificate executed by Buyer attesting to
Buyer's compliance with the matters set forth in Section 10.3.1 and 10.3.2,
together with appropriate evidence of Buyer's authorization to enter into and
consummate this Agreement;
(b) The Purchase Price and the payment due pursuant
to the Covenant;
(c) Such assumption agreements and other
instruments and documents as are required to make, confirm, and evidence
Buyer's assumption of and obligation to pay,
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perform, or discharge Seller's obligations under the Contracts to the extent
the same are to be assumed by Buyer pursuant to the terms of this Agreement;
and
(d) Opinions of Buyer's Counsel in the form set
forth in Exhibit D.
11.2.3 OTHER DOCUMENTS AND ACTS. The parties will
also execute such other documents and perform such other acts, before and after
the Closing Date, as may be necessary for the complete implementation and
consummation of this Agreement.
12. POST-CLOSING OBLIGATIONS. The parties covenant and agree
as follows with respect to the period subsequent to the Closing Date:
12.1. INDEMNIFICATION.
12.1.1 BUYER'S RIGHT TO INDEMNIFICATION. Seller
undertakes and agrees to indemnify, defend by counsel acceptable to Buyer, and
hold harmless Buyer, its parent, affiliates, successors and assigns and their
respective directors, officers, employees, shareholders, representatives and
agents (hereinafter referred to collectively as "Buyer Indemnitees") from and
against and in respect of any and all direct losses, costs, liabilities,
claims, obligations, Environmental Claims and Expenses, diminution in value and
expenses, including reasonable attorneys' fees, incurred or suffered by a Buyer
Indemnitee arising from (i) the claims of third parties with respect to
operation of the Station or ownership of the Assets prior to Closing not
expressly assumed by Buyer pursuant to this Agreement or otherwise consented to
by Buyer in writing; (ii) a breach, misrepresentation, or other violation of
any of Seller's covenants, warranties or representations contained in this
Agreement; (iii) all liabilities of Seller or the Station not expressly assumed
by Buyer pursuant to this Agreement or otherwise consented to by Buyer in
writing; (iv) all liens, charges, or encumbrances on any of the Assets which
are not expressly permitted by this Agreement or otherwise consented to by
Buyer in writing; (v) all Administrative Violations and alleged Administrative
Violations occurring prior to Closing; and (vi) any breach or default by Seller
under any Contract, prior to Closing. The foregoing indemnity is intended by
Seller to cover all acts, suits, proceedings, claims, demands, assessments,
adjustments, diminution in value, costs, and expenses with respect to any and
all of the specific matters in this indemnity set forth but shall not extend to
indirect, consequential or punitive damages except to the extent such damages
are due on account of third party claims. Notwithstanding the foregoing,
Seller shall have no obligation to indemnify the Buyer unless and until the
aggregate amount of damages exceeds $25,000, at which time indemnification for
the full amount of all damages (including the first $25,000) shall be due.
12.1.2 SELLER'S RIGHT TO INDEMNIFICATION. Buyer
undertakes and agrees to indemnify, defend by counsel acceptable to Seller, and
hold harmless Seller and Seller's respective subsidiaries, affiliates,
successors and assigns, directors, officers, employees, shareholders, partners,
representatives and agents (hereinafter referred to collectively as "Seller
Indemnitees"), from and against and in respect of any and all losses, costs,
liabilities, claims, obligations and expenses, including reasonable attorneys'
fees (and including without limitation any of the
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foregoing with respect to environmental matters), incurred or suffered by a
Seller Indemnitee arising from (i) the operation of the Station or ownership or
operation of the Assets after Closing (including without limitation
environmental conditions and claims, and Environmental Noncompliance to the
extent resulting from or attributable to the conduct of Buyer after the Closing
Date); (ii) a breach, misrepresentation, or other violation of any of Buyer's
covenants, warranties and representations contained in this Agreement; (iii)
all liabilities under the Contracts assumed by Buyer pursuant to this
Agreement; and (iv) any breach or default by Buyer under any Contract after
Closing. The foregoing indemnity is intended by Buyer to cover all acts,
suits, proceedings, claims, demands, assessments, adjustments, costs, and
expenses with respect to any and all of the specific matters in this indemnity
set forth but shall not extend to indirect or consequential damages except to
the extent such damages are due on account of third party claims. None of the
foregoing indemnities apply to claims for environmental conditions or
Environmental Noncompliance to the extent such do not result from or are not
attributable to the conduct of Buyer after the Closing Date. Notwithstanding
the foregoing, Buyer shall have no obligation to indemnify the Seller unless
and until the aggregate amount of damages exceeds $25,000, at which time
indemnification for the full amount of all damages (including the first
$25,000) shall be due.
12.1.3 CONDUCT OF PROCEEDINGS. If any claim or
proceeding covered by the foregoing agreements to indemnify and hold harmless
shall arise, the party who seeks indemnification (the "Indemnified Party")
shall give written notice thereof to the other party (the "Indemnitor")
promptly after the Indemnified Party learns of the existence of such claim or
proceeding; provided, however, that the Indemnified Party's failure to give the
Indemnitor prompt notice shall not bar the Indemnified Party's right to
indemnification unless such failure has materially prejudiced the Indemnitor's
ability to defend the claim or proceeding. The Indemnitor shall have the right
to employ counsel reasonably acceptable to the Indemnified Party to defend
against any such claim or proceeding, or to compromise, settle or otherwise
dispose of the same, if the Indemnitor deems it advisable to do so, all at the
expense of the Indemnitor; provided that the Indemnitor shall not have the
right to control the defense of any such claim or proceeding unless it has
acknowledged in writing its obligation to indemnify the Indemnified Party fully
from all liabilities incurred as a result of such claim or proceeding and then
and periodically thereafter provides the Indemnified Party with reasonably
sufficient evidence of the ability of the Indemnitor to satisfy any such
liabilities. The parties will fully cooperate in any such action, and shall
make available to each other any books or records useful for the defense of any
such claim or proceeding. If the Indemnitor fails to acknowledge in writing
its obligation to defend or contest such obligation against or settle such
claim or proceeding within twenty (20) days after receiving notice thereof from
the Indemnified Party (or such shorter time specified in the notice as the
circumstances of the matter may dictate), the Indemnified Party shall be free
to dispose of the matter, at the expense of the Indemnitor, in any way in which
the Indemnified Party deems to be in its best interest.
12.1.4 INDEMNIFICATION SOLE REMEDY. Except for
specific performance of
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<PAGE> 22
Seller's obligation to effectively and lawfully convey the Assets to Buyer as
provided in this Agreement, the right to indemnification hereunder shall be the
exclusive post-Closing remedy of any party in connection with or arising out of
this Agreement, including without limitation, any breach by another party of
its representations, warranties, or covenants in this Agreement. SELLER MAKES
NO REPRESENTATIONS OR WARRANTIES EXCEPT AS EXPRESSLY SET FORTH HEREIN, AND
HEREBY DISCLAIMS ALL IMPLIED WARRANTIES, INCLUDING WITHOUT LIMITATION, THE
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. Except for
specific performance of Seller's obligation to effectively and lawfully convey
the Assets to Buyer as provided in this Agreement, and except for Buyer's
obligations under the Term Note and Security Agreement given by Buyer to Seller
as provided in this Agreement, each party hereby releases and discharges the
other party from any liability or claim with respect to post-closing remedies
for which there is not an express indemnity under this Agreement.
12.1.5 RIGHT OF OFFSET. Each of Buyer and Seller
shall have the right to offset against amounts owing to the other any amounts
owing to such party pursuant to this Agreement, provided that such party shall
first follow the procedures set forth in Section 13.1 hereof.
12.2 CERTIFICATION OF FINANCIAL STATEMENTS. After
the Closing Date, the chief financial officer of Seller and/or Seller shall
cooperate and provide and shall cause the accounting firm or firms, if any,
responsible for the preparation of the financial statements for the Station to
provide such further assurances as it is willing to provide concerning the
accuracy of the pre-closing financial statements of the Station as Buyer or
Buyer's accountants may reasonably request in connection with any public
offering of Buyer.
12.3 Accounting for Accounts Receivables. After the
Closing Date, Buyer will collect all accounts receivable of Seller for a period
of at least sixty (60) days following Closing. Buyer shall provide to Seller a
weekly accounting of all accounts receivable of Seller so collected, and, at
the end of such sixty (60) day period, shall remit to Seller, in cash, all
accounts receivable of Seller so collected, less any amounts applied by Buyer
to the payment of Seller's obligations as approved by Seller. After said sixty
(60) day period, Seller shall have sole responsibility for collection of and
accounting for all accounts receivable of Seller, unless the parties hereto
agree to a continuation of the arrangement first set forth in this Section 12.3
or to some other collection arrangement. For purposes of this Section, the
term "accounts receivable of Seller" shall mean all uncollected sales made by
Seller in his operation of the Station prior to the Closing Date. Buyer agrees
that with respect to any collections made on accounts receivable from customers
with whom both Buyer and Seller have accounts receivable, and which accounts
are not in dispute, such collections shall first be credited to the accounts
receivable of Seller from such customer before any credit shall be given for
such collections to receivables from such customer arising after the Closing
Date.
13. DEFAULT AND REMEDIES.
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13.1 BREACH AND OPPORTUNITY TO CURE. If either
party believes the other to be in default hereunder, the nondefaulting party
shall provide the defaulting party with notice specifying in reasonable detail
the nature of such default. If such default has not been cured by the earlier
of: (i) the Closing Date, or (ii) within twenty-one (21) days after delivery
of such notice, then the party giving such notice may (x) terminate this
Agreement, (y) extend the Closing Date under Section 11.1 (but no such
extension shall constitute a waiver of such nondefaulting party's right to
terminate as a result of such default), and/or (z) exercise the remedies
available to such party pursuant to Sections 13.2 or 13.3 hereof, subject to
the right of the other party to contest such action through appropriate
proceedings, or pursuant to Section 12.1.5 hereof.
13.2 SELLER'S REMEDIES. Buyer recognizes that if
the Transaction is not consummated as a result of Buyer's default, Seller would
be entitled to compensation. The parties, therefore, agree that if this
Agreement is not consummated due to the default of Buyer, Seller, provided that
Seller is not in default and has otherwise complied with its obligations under
this Agreement, shall be entitled to the Escrow Deposit. The parties agree
that this sum shall constitute liquidated damages and shall be in lieu of any
and all other relief to which Seller might otherwise be entitled due to Buyer's
failure to consummate, or default under, this Agreement.
13.3 BUYER'S REDEMIES. Seller agrees that the
Assets include unique property that cannot be readily obtained on the open
market and that Buyer would be irreparably injured if this Agreement is not
specifically enforced after default. Therefore, Buyer shall have the rights to
specifically enforce Seller's performance under this Agreement and to sue for
damages, and Seller agrees to waive the defense in any such suit that Buyer has
an adequate remedy at law and to interpose no opposition, legal, or otherwise,
as to the propriety of specific performance as a remedy. In the event Buyer
elects to terminate this Agreement as a result of Seller's default instead of
seeking specific performance, Buyer shall be entitled to the return of the
Escrow Deposit and to recover Buyer's damages.
14. TERMINATION.
14.1 ABSENCE OF COMMISSION CONSENT. This Agreement
may be terminated at the option of either party upon notice to the other if a
Final Order approving the Assignment Applications has not been obtained on or
before March 31, 1995, (unless Buyer and Seller agree to extend such deadline);
provided, however, that neither party may terminate this Agreement if such
party is in default hereunder, or if a delay in any decision or determination
by the Commission respecting the Assignment Applications has been caused or
contributed to by such party's action or inaction with respect to the
Assignment Applications. In the event of termination pursuant to this Section,
the Escrow Deposit shall be returned to the Buyer and the parties shall be
released and discharged from any further obligation hereunder unless the
failure to obtain such Final Order is attributable to Buyer, as provided in
this Section, and Seller is not in default and has otherwise complied with its
obligations under this Agreement, in which case the Escrow Deposit shall be
released to Seller as liquidated damages pursuant to Section 13.2.
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<PAGE> 24
14.2 DAMAGE.
14.2.1 RISK OF LOSS. The risk of loss or damage to
the Assets shall be upon Seller at all times prior to the Closing. In the
event of loss or damage, Seller shall promptly notify Buyer thereof and use its
reasonable best efforts to repair, replace or restore the lost or damaged
property to its former condition as soon as possible. If such repair,
replacement, or restoration has not been completed prior to the Closing Date,
Buyer, at its option:
(a) elect to consummate the Transaction
in which event Seller shall assign to Buyer all of Seller's rights to insurance
proceeds related to such casualty under any applicable insurance policies; or
(b) elect to postpone the Closing Date,
with prior consent of the Commission if necessary, which consent both parties
will use their reasonable best efforts to obtain, for such reasonable period of
time (not to exceed ninety (90) days) as is necessary for Seller if Seller so
elects in its sole discretion to repair, replace, or restore the lost or
damaged property to its former condition. If, after the expiration of that
extension period, the lost or damaged property has not been adequately
repaired, replaced or a restored, Buyer may terminate this Agreement, and the
parties shall be released and discharged from any further obligation hereunder,
except to the extent of the return to Buyer of the Escrow Deposit.
14.2.2 FAILURE OF BROADCAST TRANSMISSION. Seller
shall give prompt written notice to Buyer if either of the following (a
"Specified Event") shall occur: (i) the regular broadcast transmissions of the
Station in the normal and usual manner is interrupted or discontinued other
than for routine maintenance or repairs for more than three (3) hours; or (ii)
the Station is operated at less than its licensed antenna height above average
terrain or at less than ninety percent (90%) of its licensed effective radiated
power other than for routine maintenance or repairs for more than three (3)
hours. If any Specified Event persists for more than seventy-two (72) hours
or, in the event of weather conditions or utility failure affecting generally
the Station in the market served by the Station, ninety-six (96) hours, whether
or not consecutive, during any period of thirty (30) consecutive days, then
Buyer may, at its option: (i) terminate this Agreement by written notice given
to Seller not more than ten (10) days after the expiration such thirty (30) day
period, or (ii) proceed in the manner set forth in Section 14.2.1. In the
event of termination of this Agreement by Buyer pursuant to this Section, the
Escrow Deposit shall be returned to Buyer and the parties shall be released and
discharged from any further obligation hereunder.
14.2.3 RESOLUTION OF DISAGREEMENTS. If the parties are
unable to agree upon the extent of any loss or damage, the cost to repair,
replace or restore any lost or damaged property, the adequacy of any repair,
replacement, or restoration of any lost or damaged property, or any other
matter arising under this Section 14.2, the disagreement shall be referred to a
qualified consulting communications engineer mutually acceptable to Seller and
Buyer who is a member of the Association of Federal Communications Consulting
Engineers, whose decision shall be final, binding upon and non-appealable by
the parties, and whose fees and expenses shall be paid one-half by Seller and
one-half by Buyer.
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14.3 LEGAL ACTIONS. If, prior to the Closing Date,
any action, suit, or proceeding shall have been instituted by or before any
court or other governmental authority (other than the Commission) to enjoin,
restrain, or prohibit the consummation of the Transaction, the Closing may be
adjourned at the option of either party, with prior consent of the Commission
if necessary, which consent both parties will use their reasonable best efforts
to obtain, for a period of up to ninety (90) days, and if, at the end of such
period, the action, suit, or proceeding shall not have been favorably resolved,
either party may, by written notice to the other, terminate this Agreement;
provided, however, that if such action, suit, or proceeding shall have been
solicited or encouraged by, or instituted as a result of any act or omission of
either Seller or Buyer, then such party shall not have any right of adjournment
or termination pursuant to this Section. In the event of termination pursuant
to this Section, the Escrow Deposit shall be returned to Buyer and the parties
shall be released and discharged from any further obligation hereunder unless
Buyer is in default or has otherwise failed to comply with its obligations
under this Agreement and Seller is not in default and has otherwise complied
with its obligations hereunder, in which case the Escrow Deposit shall be
released to Seller as liquidated damages pursuant to Section 13.2.
15. GENERAL PROVISIONS.
15.1 BROKERAGE. Seller represents to Buyer that
Seller shall pay the fees of Jorgenson Broadcast Brokerage as broker in
connection with the Transaction, And Jorgenson shall compensate The Connelly
Company out of such sum for its services provided to this transaction. The
parties agree to indemnify and hold each other harmless against any claim from
any other broker or finder based upon any agreement, arrangement, or
understanding alleged to have been made by the indemnifying party.
15.2 EXPENSES. Except as otherwise provided herein,
all expenses involved in the preparation and consummation of this Agreement
shall be borne by the party incurring the same whether or not the Transaction
is consummated. All Commission filing fees for the Assignment Application or
Applications shall be shared equally by Buyer and Seller. Seller shall make
the payments for Commission filing fees and Buyer shall reimburse Seller for
its portion of such payments. All recording costs for instruments of transfer,
and all stamp, sales, use and transfer taxes shall be paid by Seller.
15.3 NOTICES. All notices, requests, demands, and
other communications pertaining to this Agreement shall be in writing and shall
be deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such communication is intended, or three (3) business days after the
date mailed by certified or registered U.S. mail, return receipt requested,
postage prepaid, addressed as follows:
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<TABLE>
<S> <C>
(a) If to Seller:
White Broadcasting
685 East Long Lake
Bloomfield Hills, Michigan 48304
Attention: Mr. J. Larry White
(810) 644-5443 Fax: (810) 644-1094
with copies (which shall not constitute notice) to:
James J. Freeman, Esq.
Reed, Smith, Shaw & McClay
1200 18th Street, N.W.
Washington, D.C. 20036
(202) 457-8624 Fax: (202) 457-6113
(b) If to Buyer:
Mr. John E. Rayl
Partech Communications Group, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
(614) 538-0660 Fax: (614) 538-0670
with copies (which shall not constitute notice) to:
Charles A. Koenig, Esq.
Cloud Koenig & Owen
5354 North High Street, Suite 3D
Columbus, Ohio 43214
(614) 221-3621 Fax: (614) 221-2698
</TABLE>
Any party may change its address for notices by notice to the others given
pursuant to this Section.
15.4 ATTORNEY'S FEES. If any party initiates any
litigation against any other involving this Agreement, the prevailing party in
such action shall be entitled to receive reimbursement from the other party for
all reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
15.5 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
INDEMNIFICATION RIGHTS. The several representations and warranties of the
parties contained herein, and the parties respective indemnification rights
pursuant to Section 12, shall survive the Closing for a period of eighteen (18)
months, at which time, the same shall expire (except for claims asserted during
such eighteen (18) month period); provided, however, that representations and
warranties with respect to title and authorization shall survive in perpetuity.
15.6 EXCLUSIVE DEALINGS. For so long as this
Agreement remains in effect, neither Seller, its officers, directors,
employees, shareholders, or partners or owners, as the case may be, nor any
person acting on Seller's behalf, shall, directly or indirectly, solicit or
initiate any offer from, or conduct any negotiations with, any person other
than Buyer or Buyer's assignee(s) concerning the acquisition of the Station or
Stations.
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<PAGE> 27
15.7 WAIVER. Unless otherwise specifically agreed
in writing to the contrary: (i) the failure of any party at any time to
require performance by another of any provision of this Agreement shall not
affect such party's right thereafter to enforce the same; (ii) no waiver by any
party of any default by any other shall be valid unless in writing and
acknowledged by an authorized representative of the nondefaulting party, and no
such waiver shall be taken or held to be a waiver by such party of any other
preceding or subsequent default; and (iii) no extension of time granted by any
party for the performance of any obligation or act by any other party shall be
deemed to be an extension of time for the performance of any other obligation
or act hereunder.
15.8 ASSIGNMENT. No party may assign its rights or
obligations hereunder without the prior written consent of the other parties
except: (i) Buyer may assign its rights and obligations to a corporation,
partnership or other business entity that controls, is controlled by, or is
under common control with Buyer, provided that Buyer shall remain liable for
all obligations under this Agreement, and (ii) Buyer may make a collateral
assignment of its rights under this Agreement to any lender who provides funds
to Buyer for the acquisition or operation of the Station. Seller agrees to
execute acknowledgments of such assignment(s) and collateral assignment(s) in
such forms as Buyer or Buyer's lender(s) may from time to time request.
Subject to the foregoing, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by the parties hereto and their respective
successors and assignees.
15.9 ENTIRE AGREEMENT. This Agreement, the Exhibits
and Schedules hereto (which are incorporated by reference herein), constitute
the entire agreement between the parties with respect to the subject matter
hereof and referenced herein, supersede and terminate any prior agreements
between the parties (written or oral). This Agreement may not be altered or
amended except by an instrument in writing signed by all parties hereto.
15.10 COUNTERPARTS. This Agreement may be signed in
any number of counterparts with the same effect as if the signatures on each
such counterpart were on the same instrument.
15.11 CONSTRUCTION. The Section headings of this
Agreement are for convenience only and in no way modify, interpret or construe
the meaning of specific provisions of the Agreement. As used herein, the
neuter gender shall also denote the masculine and feminine, and the masculine
gender shall also denote the neuter and feminine, where the context so permits,
and "knowledge" of a party means only the actual knowledge and awareness of the
executive officers of such party.
15.12 SCHEDULES AND EXHIBITS. The Schedules and
Exhibits to this Agreement are a material part of this Agreement.
15.13 SEVERABILITY. If any one or more of the
provisions contained in this Agreement should be found invalid, illegal or
unenforceable in any respect, the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable terms shall be deemed to be
void and of no force and effect only to the minimum extent necessary to bring
such term within the provisions of
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applicable law and such term, as so modified, and the balance of this agreement
shall then be fully enforceable.
15.14 CHOICE OF LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware, without regard to the choice of law rules utilized in that
jurisdiction.
15.15 COUNSEL. Each party has been represented by
its own counsel in connection with the negotiation and preparation of this
Agreement and, consequently, each party hereby waives the application of any
rule of law that would otherwise be applicable in connection with the
interpretation of this Agreement, including but not limited to any rule of law
to the effect that any provision of this Agreement shall be interpreted or
construed against the party whose counsel drafted that provision.
15.16 PUBLIC STATEMENTS. Prior to the Closing Date,
neither Seller nor Buyer shall, without the prior written approval of the other
party, make any press release or other public announcement concerning the
transactions contemplated by this Agreement except (i) Seller and Buyer shall
issue a mutually agreeable public announcement press release promptly after the
signing of this Agreement; and (ii) to the extent that either party shall be so
obligated by law, in which case the other party shall be so advised and the
parties shall use their best efforts to cause a mutually agreeable release or
announcement to be issued.
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed by a respective duly authorized officer as of the date
first written above.
BUYER:
TROPIC OF KEY WEST, INC.
By: /s/ JOHN RAYL / CEO
------------------------------------
Title: ________________________________
SELLER:
WHITE BROADCASTING
By: J LARRY WHITE
----------------------------------
Title: PRESIDENT
-------------------------------
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<PAGE> 1
EXHIBIT 10.78
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT dated as of May ____, 1994, by and among WHITE
BROADCASTING, whose principal mailing address is 685 East Long Lake, Bloomfield
Hills, Michigan 48304 ("Seller"), PARTECH COMMUNICATIONS GROUP, INC., a Nevada
corporation with its principal executive offices located at 3366 Riverside
Drive, Suite 200, Columbus, Ohio 43221 ("Partech"), and Mark T. Jorgenson d/b/a
Jorgenson Broadcast Brokerage, an individual whose office is located at 2700
West M.L. King Boulevard, Suite 400, Tampa, Florida 33607 (the "Escrow
Agent").
W I T N E S S E T H :
WHEREAS, Seller and Partech have agreed to enter into an agreement (the
"Agreement") concerning the acquisition by Partech or Partech's assignee from
Seller of an operating FM radio broadcast station and of certain of the assets
and properties which comprise the station known as WIIS-FM (referred to
hereafter as the "Station"); and
WHEREAS, as an indication of Partech's good faith, Partech has agreed to
deposit Twenty-Five Thousand Dollars ($25,000.00) (the "Deposit") in an escrow
account in Barnett Bank of Tampa, Florida under the control of the Escrow Agent
upon the parties' complete execution of a Purchase Agreement for the purchase
of the Station, with such deposit to be held in escrow pursuant to the terms
and conditions set forth in this Escrow Agreement and, if applicable, the
Agreement; and
WHEREAS, it is the intention of Seller and Partech that the Escrow Agent
shall control under the terms of this Escrow Agreement all funds which the
parties may agree to be held under the terms of this Escrow Agreement and the
Agreement (all such funds hereinafter collectively referred to as the
"Deposit").
NOW, THEREFORE, in consideration of the mutual promises of the other.
The parties hereto do hereby agree as follows:
1. DEPOSITS IN ESCROW.
(a) Partech hereby deposits in escrow, and the Escrow Agent
hereby acknowledges receipt of, the Deposit in the amount of Twenty-Five
Thousand Dollars ($25,000.00).
(b) The Escrow Agent agrees to accept any Deposit in accordance
with the terms and conditions of this Escrow Agreement and, if applicable, the
Agreement, and agrees to execute and deliver such other agreements or documents
as may be required by the parties.
2. RIGHTS RESPECTING THE DEPOSITS.
(a) Unless and until an Event of Default (as defined herein)
shall occur, the Escrow Agent shall at all times maintain the Deposit in
account number ____________ at Barnett Bank of Tampa, Florida, A NATIONAL BANK,
with this account insured by the Federal Deposit Insurance Corporation.
(b) In the event of the occurrence of a Termination Event,
pursuant to paragraph 3 hereof, then within three (3) days thereafter the
Escrow Agent shall deliver to Partech the Deposit with interest earned thereon
in good funds.
<PAGE> 2
(c) If Seller and Partech or Partech's assignee mutually agree
to terminate this Escrow Agreement or the undertaking contemplated hereby, then
each shall notify the Escrow Agent and within three (3) days thereafter the
Escrow Agent shall deliver to Partech the Deposit with interest earned thereon
in good funds.
(d) In the event Seller and Partech or Partech's assignee
consummate the purchase contemplated hereby under the Agreement, then upon
closing of that transaction, in accordance with the terms of the Agreement, the
Escrow Agent shall return to Partech the Deposit with interest earned thereon
in good funds.
(e) In the event of the occurrence of an Event of Default,
pursuant to paragraph 4 hereof, then as soon as possible after the
determination of the Event of Default the Escrow Agent shall deliver to the
non-defaulting party the Deposit with interest earned thereon in good funds, in
the case of Partech as a return of funds deposited hereunder, and in the case
of the Station as liquidated damages hereunder.
(f) In the event a dispute between Partech and Seller is
submitted to a court of competent jurisdiction for final determination, the
final determination of such court with respect to any dispute so submitted,
after all appeals have been taken or the time to appeal shall have expired,
shall be conclusive and binding upon the Escrow Agent, and the Escrow Agent
shall comply with the instructions of such court.
3. TERMINATION EVENTS; TERMINATION OF ESCROW AGREEMENT.
(a) This Escrow shall terminate in the event of the occurrence
of any of the following events (the "Termination Events"):
(i) Seller and Partech or Partech's assignee fail to
execute the Agreement on or before __________, 1994; or
(ii) Seller and Partech or Partech's assignee fail to
consummate the purchase transaction contemplated
hereunder by the Agreement on or before ____________,
1994, or as may be otherwise provided; or
(iii) The Agreement terminates pursuant to its terms other
than by reason of breach or default by Partech or
Partech's assignee.
(b) This Escrow Agreement shall terminate and be of no further
force and effect, and the Escrow Agent shall have no further duties hereunder
and shall be released from any further obligations or liabilities hereunder,
when Section 2 hereof is complied with and all of the Deposit and interest
thereon shall have been released in compliance therewith.
4. EVENTS OF DEFAULT.
Any event which is considered an Event of Default under the Agreement
shall in turn be considered an event of default hereunder. To the extent
required by law, the parties hereto incorporate herein those terms of the
Agreement which define or describe Events of Default; otherwise, this Escrow
Agreement makes reference to those terms solely for the purpose of identifying
those events which give rise to an obligation by Escrow Agent hereunder to
deliver the Deposit and interest earned thereon.
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<PAGE> 3
5. RIGHTS AND DUTIES OF THE ESCROW AGENT.
(i) REIMBURSEMENT OF EXPENSES. The Escrow Agent shall be
reimbursed by Seller for any and all fees, expenses and out-of-pocket expenses
incurred by him, if any, in performing his duties under this Escrow Agreement
and all interest earned on the Deposit shall be for the account of Partech.
(ii) DUTIES OF THE ESCROW AGENT. The Escrow Agent shall have no
duties or responsibilities under this Escrow Agreement other than those
specifically set forth in Sections 1 and 2 hereof or in this Section 4. The
Escrow Agent shall have no duty or responsibility (i) to enforce or cause to be
enforced any of the terms and conditions in the Purchase Agreement or in any
of the documents referred to therein or (ii) to verify the accuracy or
sufficiency of any directions or other document received by him. The Escrow
Agent shall be protected in acting upon any directions or other document
believed by him to be given and containing what purports to be the signature of
any authorized officer of Partech and/or Seller.
(iii) LIABILITY OF ESCROW AGENT. The Escrow Agent shall not be
liable for any act or failure to act, other than for willful misconduct or
gross negligence.
(iv) INDEMNITY. Partech and Seller agree to and hereby jointly
and severally indemnify and hold harmless the Escrow Agent and its partners,
employees, attorneys and agents (the "Indemnitees") against and in respect of
all claims, suits, actions, proceedings (formal or informal), investigations,
judgments, deficiencies, damages, settlements, liabilities, losses and legal
and other expenses (including reasonable fees and expenses of attorneys chosen
by the Indemnitees hereunder) as and when incurred, arising out of or based
upon any act or failure to act (other than by reason of willful misconduct or
gross negligence) on the part of the Escrow Agent in connection with any of the
duties required to be performed by the Escrow Agent hereunder.
(v) RESIGNATION. The Escrow Agent may notify Partech and Seller
of his desire to be relieved of any further obligations hereunder. Partech and
Seller shall thereupon agree upon a successor to act as escrow agent hereunder
and, in such event, the Escrow Agent shall deliver the Deposit then held by the
Escrow Agent to such successor escrow agent.
6. SCOPE OF THIS ESCROW AGREEMENT.
This Escrow Agreement shall serve to govern and shall be
applicable only to the subject matter hereof. No implication, inference or
conclusion shall be drawn from the execution and delivery of this Escrow
Agreement and Partech and Seller understand and agree that upon the termination
of this Escrow Agreement, the rights and obligations of the parties shall be
governed only by the Purchase Agreement and this Escrow Agreement shall have no
effect whatsoever. Nothing contained herein, however, shall prevent this
Escrow Agreement from being solely used for purposes of enforcing the rights
and obligations of the parties hereto with respect to the escrow provided
hereunder and this Escrow Agreement only, and for no other purpose.
7. MISCELLANEOUS.
(i) ENTIRE AGREEMENT. This Escrow Agreement embodies the entire
agreement and understanding among the parties relating to the subject matter
hereof and may not be changed orally, but only by an instrument in writing
signed by the party against whom
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<PAGE> 4
enforcement of such change is sought.
(ii) NOTICES. All notices, directions and other communications
hereunder shall be in writing and shall be deemed to have been given when
actually received or, with respect to notices, when mailed by certified or
registered United States mail, return receipt requested, as follows:
If to Partech, to:
Partech Communications Group, Inc.
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attention: Mr. John E. Rayl
(614) 538-0660 Fax: (614) 538-0670
If to Seller, to:
WHITE BROADCASTING
685 East Long Lake
Bloomfield Hills, Michigan
Attention: Mr. J. Larry White
() Fax: ()
If to the Escrow Agent, to:
Mark Jorgenson
Jorgenson Broadcast Brokerage
2700 West M.L. King Boulevard, Suite 400
Tampa, Florida 33607
(813) 877-3000 Fax: (813) 877-4849
Any party may change its address for notices hereunder by giving
notice of such change to the other parties in accordance with the provisions of
this Section 7(ii).
(iii) HEADINGS. The headings of the sections of this Escrow
Agreement have been inserted for convenience and shall not modify, define,
limit or expand the express provisions of this Escrow Agreement.
(iv) GOVERNING LAW. This Escrow Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio for contracts
made and to be performed in such state without giving effect to the principles
relating to the conflict of law.
(v) BINDING NATURE. This Escrow Agreement shall be binding upon
the parties hereto and their respective successors and assigns.
(vi) COUNTERPARTS. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same Escrow Agreement.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first above written.
WHITE BROADCASTING
By: __________________________________
Title
PARTECH COMMUNICATIONS GROUP, INC.
By: __________________________________
Title
_______________________________________
MARK JORGENSON, Escrow Agent
5
<PAGE> 1
EXHIBIT 10.79
EXHIBIT B
NON-COMPETE AGREEMENT
THIS NON-COMPETE AGREEMENT (the "Agreement") is made as of this
_____ day of ______________, 1994, by and among WHITE BROADCASTING, d/b/a
WIIS-FM, with an address at 685 East Long Lake, Bloomfield Hills, Michigan
48304 (the "Seller") and TROPIC OF KEY WEST, INC., a Nevada corporation, with
an address of 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221 (the
"Buyer").
RECITALS
WHEREAS, Seller is the licensee of Station WIIS-FM (the
"Station"); and
WHEREAS, Buyer and Seller have entered into a Purchase Agreement
dated ________________, 1994 pursuant to which Seller has agreed to sell and
assign and Buyer has agreed to purchase and acquire substantially all of the
property and assets used or useful in the operation of the Station; and
WHEREAS, on _______________ the Federal Communications Commission
(the "Commission" or "FCC") granted its consent to the assignment of the
Station Licenses (as defined in the Purchase Agreement) from Seller to Buyer;
and
WHEREAS, Buyer and Seller intend to consummate the transaction
contemplated by the Purchase Agreement by executing such documents and
instruments and by otherwise fulfilling their respective obligations under the
Purchase Agreement on the Closing Date of even date herewith; and
WHEREAS, the parties hereto wish to enter into a non-compete
agreement with respect to the Station and the area surrounding the Station,
upon the terms and subject to the conditions hereinafter set forth.
1
<PAGE> 2
NOW THEREFORE, in consideration of the foregoing recitals and the
mutual promises set forth herein, the parties hereto agree as follows:
1. CONSIDERATION. In consideration of Seller's obligations
hereunder, Buyer has paid Seller on the date of this Agreement the sum of
_____________ ($__________), which sum is part of the total Consideration under
the Purchase Agreement.
2. NON-COMPETITION/NON-INTERFERENCE.
A. For a period of four (4) years from the date of this
Agreement (the "Noncompetition Period"), Seller agrees that neither he nor his
Affiliates (as defined below) shall, directly or indirectly, (i) own, manage,
operate, control, join, assist, lend money to, guarantee the obligation of, or
participate in the ownership, management, operation or control of, or be
connected as consultant, stockholder, director, officer, employee, or partner
with, or participate in any manner with the start-up or set-up of, any
Competitive Business (as defined below), or (ii) solicit or induce any employee
of Buyer to terminate such employment or become employed by any person or
entity other than Buyer. "Competitive Business" means any AM or FM radio
station, as defined in Part 73 of the FCC's rules and regulations, the
transmitter, studio site or city of license of which is located within, or the
1mV/m contour of which encompasses in whole or part, the Restricted Region (as
defined below); provided, however, notwithstanding anything herein to the
contrary, that information delivery and other activities not using voice
signals shall not be deemed to be Competitive Business, nor shall Seller or his
Affiliates be deemed to be prohibited from engaging in any of the following:
television, cable TV, cable TV programming, data transfer and transmission
using radio or other frequencies and their subcarriers, cellular radio, paging
and distribution of signals by satellites. "Restricted Region" means the area
encompassing a fifty (50) mile radius of the Station's current FM and/or AM
transmitter sites. An "Affiliate" means any other person or entity that
controls or is controlled by either of the Seller. Notwithstanding anything
herein to the contrary, the restrictions of this Non-Competition Agreement
shall not (x) apply to the activities of any publicly-held company less than
five percent (5%) of the equity of which is owned directly or indirectly by
Seller or his Affiliates; or (y) prevent Seller's or his Affiliates'
acquisition of or entering into a joint venture or other similar arrangement
with a business less than ten percent (10%) of the revenues of which derive
from a Competitive Business; provided, however, that the Seller
2
<PAGE> 3
agrees to divest or cause the divestment of such Competitive Business within
one (1) year of the date of the acquisition or entry into such joint venture
or other similar arrangement.
B. Seller acknowledges and agrees that the provisions of
this Section 2 have been specifically negotiated and carefully tailored with a
view to preventing the serious and irreparable injury that Buyer will suffer in
the event of competition by Seller with Buyer in the Restricted Region during
the Non-Competition Period. Buyer is providing the benefits set forth in this
Agreement in reliance on Seller's representation that the restrictions on it
set forth in this Section 2 will not impose an undue hardship on Seller because
of the availability of other opportunities with respect to the operation of
radio stations. Seller further acknowledges that his breach of this Section 2
will cause irreparable injury and damage to Buyer, the exact amount of which
will be difficult to ascertain, and that the remedies at law for any such
breach would be inadequate. Accordingly, if Seller breaches this Section 2,
then Buyer shall be entitled to injunctive relief without posting bond or other
security. If Seller violates this Section 2 and Buyer brings legal action for
injunctive or other relief, Buyer shall not, as a result of the time involved
in obtaining such relief, be deprived of the benefit of the full period of
non-competition set forth in this Section 2. Accordingly, the covenant set
forth in this Section 2 shall be deemed to have the duration set forth herein,
computed from the date such relief is granted but reduced by the time expired
between the date the Non-Competition Period began to run and the date of the
first violation of Section 2 by such Seller.
C. In the event that, despite the express agreement of
Buyer and Seller, any provision of this Section 2 shall be determined by any
court or other tribunal of competent jurisdiction to be unenforceable for any
reason whatsoever, the parties agree that this Section 2 shall be interpreted
to extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum extent in any and all other respects as to which it may
be enforceable, all as determined by such court or tribunal.
3. NOTICES. All notices, requests, demands, and other
communications pertaining to this Agreement shall be in writing and shall be
deemed duly given when delivered personally (which shall include delivery by
Federal Express or other nationally recognized reputable overnight courier
service that issues a receipt or other confirmation of delivery) to the party
for whom such
3
<PAGE> 4
communication is intended, or three (3) business days after the date mailed by
certified or registered U.S. mail, return receipt requested, postage prepaid,
addressed as follows:
(a) If to Seller:
Mr. J. Larry White
White Broadcasting
685 East Long Lake
Bloomfield Hills, Michigan 48304
() Fax: ()
with copies (which shall not constitute notice) to:
and
(b) If to Buyer:
Mr. John E. Rayl
Partech Communications Group, Inc.
3366 Riverside Drive, Suite 200
Columbus, Ohio 43221
(614) 538-0660 Fax: (614) 538-0670
with copies (which shall not constitute notice) to:
Charles A. Koenig
Cloud Koenig & Owen
5354 North High Street, Suite 3D
Columbus, Ohio 43214
(614) 221-3621 Fax: (614) 221-2698
Any party may change its address for notices by notice to the others given
pursuant to this Section.
4. ATTORNEY'S FEES. If any party initiates any litigation
against any other involving this Agreement, the prevailing party in such action
shall be entitled to receive reimbursement from the other party for all
reasonable attorneys' fees and other costs and expenses incurred by the
prevailing party in respect of that litigation, including any appeal, and such
reimbursement may be included in the judgment or final order issued in that
proceeding.
5. WAIVER. Unless otherwise specifically agreed in writing to
the contrary: (i) the failure of any party at any time to require performance
by another of any provision of this Agreement shall not affect such party's
right thereafter to enforce the same; (ii) no waiver by any
4
<PAGE> 5
party of any default by any other shall be valid unless in writing and
acknowledged by an authorized representative of the nondefaulting party, and no
such waiver shall be taken or held to be a waiver by such party of any other
preceding or subsequent default; and (iii) no extension of time granted by any
party for the performance of any obligation or act by any other party shall be
deemed to be an extension of time for the performance of any other obligation
or act hereunder.
6. NON-ASSIGNMENT. The duties of each party hereunder shall
not be assignable; provided, however, that Buyer may assign its rights under
this Agreement to, and this Agreement shall thereafter be binding upon and
inure to the benefit of, any subsequent license of the Station and such
assignee shall thereupon be deemed substituted for Buyer upon the terms and
subject to the conditions hereof.
7. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
referenced herein, and supersedes and terminates any prior agreements between
the parties (written or oral). This Agreement may not be altered or amended
except by an instrument in writing signed by all parties hereto.
8. COUNTERPARTS. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures on each such counterpart
were on the same instrument.
9. SEVERABILITY. If any one or more of the provisions
contained in this Agreement should be found invalid, illegal or unenforceable
in any respect, the validity, legality, and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired
thereby. Any illegal or unenforceable terms shall be deemed to be void and of
no force and effect only to the minimum extent necessary to bring such term
within the provisions of applicable law and such term, as so modified, and the
balance of this agreement shall then by fully enforceable.
10. CHOICE OF LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the choice of law rules utilized in that jurisdiction.
11. COUNSEL.. Each party has been represented by its own
counsel in connection with the negotiation and preparation of this Agreement
and, consequently, each party hereby waives the application of any rule of law
that would otherwise be applicable in connection with the
5
<PAGE> 6
interpretation of this Agreement, including but not limited to any rule of law
to the effect that any provision of this Agreement shall be interpreted or
construed against the party whose counsel drafted that provision.
IN WITNESS WHEREOF, each of the parties has caused this Agreement
to be executed by a respective duly authorized officer as of the date first
written above.
SELLER:
WHITE BROADCASTING
By:_______________________________________
Title:____________________________________
BUYER:
TROPIC OF KEY WEST, INC.
By:_______________________________________
Title:____________________________________
6
<PAGE> 1
EXHIBIT 10.80
AGREEMENT
___________
THIS AGREEMENT (the "Agreement") is entered into as of this 31st day of
May, 1994 by and between PARTECH HOLDINGS CORPORATION, a Delaware corporation
("Partech") having its principal place of business at 3366 Riverside Drive,
Suite 200, Columbus, Ohio 43221 and PARTECH COMMUNICATIONS GROUP, INC., a
Nevada corporation ("PCG" and together with Partech as "GUARANTORS") a
wholly-owned subsidiary of Partech having its principal place of business at
3366 Riverside Drive, Suite 200, Columbus, Ohio 43221 on the one hand and JOHN
E. RAYL, ("PLEDGOR") an individual, having his principal business address at
3366 Riverside Drive, Suite 200, Columbus, Ohio 43221.
W I T N E S S E T H
WHEREAS, Partech and PCG are parties to a certain borrowing undertaking
(the "Loan") which is more fully described in the form of Subscription
Agreement, a copy of which is attached attached hereto as Exhibit A;
WHEREAS, Pledgor has undertaken to provide additional collateral (the
"Pledged Shares") to the Loan under the terms and conditions which are more
fully set forth in the Rayl Pledge Agreement, a copy of which is attached
hereto as Exhibit B; and
WHEREAS, the Pledgor and the Guarantors desire to provide for replacement
of the Pledgor's collateral in the event such collateral is converted by the
lender(s) of the Loan and used as full or partial satisfaction of Partech's
obligation under the Loan.
NOW THEREFORE, WITNESSETH that in consideration of the mutual promises and
covenants hereinafter stipulated, the parties hereto agree as follows:
1. PLEDGOR'S PLEDGE OF COLLATERAL. The Pledgor shall pledge up to 700,305
shares of Partech Holdings Corporation $.05 par value common stock (the
"Pledged Shares") as additional security for the Loan under those terms and
conditions as more fully set forth in the Rayl Pledge Agreement.
2. PLEDGOR'S RIGHT OF CONTRIBUTION.
a. Upon the event of conversion of Pledged Shares pursuant to the
terms of the Rayl Pledge Agreement, in whole or in part, by any one or all of
the Pledgees, Partech shall replace such securities with securities of a like
kind (the "Like Kind Shares"). The number of Like Kind Shares to be delivered
to the Pledgor shall be an amount equal to the number of Pledged Shares
converted by the Pledgee multiplied by two (2); by way of example, if a Pledgee
converts 10,000 Pledged Shares then Partech shall deliver to the Pledgor 20,000
shares of like kind.
b. Partech covenants that it will at all times reserve and have
available from its authorized Common Stock such number of shares as shall then
be issuable on its obligation to replace the Pledged Shares. Partech covenants
that all Like Kind Shares which shall be so issuable shall be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to such issue. Partech shall pay all documentary, stamp or
similar taxes and other governmental charges that may be imposed with respect
to the issuance of the Like Kind Shares.
c. Each Like Kind Share Certificate shall bear a legend as follows
unless such Like Kind Shares have been registered under the Act and the
issuance complies with applicable state securities laws:
<PAGE> 2
"The securities represented by this certificate have been acquired
for investment and have not been registered under the Securities
Act of 1933, as amended (the "Act"). The securities may not be
sold, assigned, pledged, hypothecated or otherwise transferred
except pursuant to an effective registration statement under the
Act and in compliance with applicable state securities laws, or the
Company receives an opinion of counsel, satisfactory to the Company
and Company counsel, that such registration is not required and
that the sale, assignment, pledge, hypothecation or transfer is in
compliance with applicable state securities laws."
d. The Pledgor acknowledges that the Guarantors own directly and/or
indirectly interests in radio station licenses which are governed by the
provisions of the Communications Act and the rules promulgated thereunder.
Accordingly, the Pledgor: (a) covenants to the Guarantors that he is not an
Alien (as hereinafter defined), and (b) that he shall not transfer, assign or
in any way make available an interest in this Agreement, to an Alien. The
term "Alien" means any person who is a citizen of a country other than the
United States; or any state, territory, or possession thereof; any entity
organized under the laws of a government other than the government of the
United States or any state, territory, or possession thereof; a government
other than the government of the United States or any state, territory or
possession thereof, or an individual or entity controlled by any of the
foregoing.
3. REGISTRATION. Partech, upon the one time written demand (the
"Demand Notice") of the Pledgor (as defined herein), agrees to use its best
efforts to register, on one occasion, all or any portion of the Pledgor's
Pledged Shares or Like Kind Shares (the "Registrable Securities"), as requested
by the Pldegor. On such occasion, Partech will use its best efforts to file an
appropriate registration statement covering the Registrable Securities within
one-hundred twenty (120) days after receipt of the Demand Notice and to use its
best efforts to have such registration statement declared effective promptly
thereafter. In the event of registration Partech and the Pledgor shall execute
such documents as may be reasonably required by Partech and Partech's counsel
to carry out such registration.
a. TERMS OF REGISTRATION. Partech shall bear all fees and
expenses attendant to registering the Registrable Securities, but the Pledgor
shall pay any and all underwriting and broker-dealer discounts, commissions and
non-accountable expenses of any underwriter or broker-dealer selected to sell
the Registrable Securities, together with the expenses of any legal counsel
selected by the Pledgor to represent him in connection with the sale of the
Registrable Securities. Partech shall cause any registration statement filed
pursuant to the demand rights granted hereto to remain effective for a period
of sixteen months from the date of the latest balance sheet of the audited
financial statements contained therein on the initial effective date of such
registration statement.
b. RIGHT TO REDEEM IN LIEU OF REGISTRATION. Partech may in its
sole discretion, and in lieu of registration of the Registrable Securities,
purchase the Registrable Securities from the Pledgor for amount equal to the
amount which would be realized by the Pledgor upon his sale of the Registrable
Securities less the expenses, fees and broker/dealer commissions which would
normally be paid by the Pledgor in the event of registration and sale of the
Registrable Securities. Partech may elect to make such payment upon notice to
the Pledgor within 30 days of receipt of a notice of Demand Registration.
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<PAGE> 3
4. GUARANTORS' INDEMNITY.
a. The Guarantors, jointly and severally, hereby agree to indemnify
and hold harmless the Pledgor and each of his heirs, executors, administrators,
successors and assigns, from any loss, claim, damage, cost, lawsuit, attorney's
and accountant's fees, deficiency, assessment, administrative order, fine,
penalty, action, proceeding, judgment or expense, including in all cases the
reasonable fees and expenses of counsel, resulting from or by reason of any act
or failure to act on the part of the Guarantors, the Loan or the transactions
contemplated therein or herein.
b. The parties hereto intend that the replacement of converted Pledged
Shares with Like Kind Shares shall qualify for like kind treatment for federal
income tax purposes in accordance with Internal Revenue Code Section 1031. The
Guarantors and the Pledgor agree that each shall file their income tax returns
consistent with the requirements of such section and shall provide each other
with such information as may be required to file accordingly. Further, the
Guarantors, jointly and severally, hereby agree to indemnify and hold harmless
the Pledgor and each of his heirs, executors, administrators, successors and
assigns, from any loss, claim, damage, cost, lawsuit, attorney's and
accountant's fees, deficiency, assessment, administrative order, interest,
fine, penalty, action, proceeding, judgment or expense which may be assessed
against or determined to be owing by the Pledgor in respective of any federal,
state or local tax including but not limited to income taxes, capital gains
taxes, surtaxes, transaction taxes, intangible taxes, transfer taxes, estate
taxes, or any other tax and any interest and penalties thereon which Pledgor
may have become due and owing as result of or by reason of the Loan or the
transactions contemplated therein or herein. In the event such taxes, interest
and/or penalties may be assessed, the Pledgor may, at his sole option, elect to
challenge such assessment or pay such assessment. In the event Pledgor elects
to pay such assessment, Guarantors shall, within 5 days of notice, pay to
Pledgor the sum owing in good funds. In the event Pledgor elects to challenge
such assessment, Guarantors shall cooperate with Pledgor in such challenge or
defense. Guarantors shall regularly reimburse Pledgor for the costs of such
challenge and defense by payment in good funds within 5 days of Pledgors
request for reimbursement. In the event Pledgor's challenge and/or defense is
unsuccessful and Pledgor is assessed, Guarantors shall, within 5 days of
notice, pay to Pledgor the sum owing in good funds.
5. DURATION OF THIS AGREEMENT. This Agreement and the guarantee hereunder
shall remain in full force and effect until the date on which all of the
Guarantors' obligations under the Loan are satisfied. Upon such satisfaction,
all remaining Pledged Securities shall be returned to Pledgor together with all
Like Kind Shares and this Agreement shall terminate.
6. MISCELLANEOUS.
a. TRANSFER OF THIS AGREEMENT. The parties hereto hereby agree that
the Pledgor may transfer in whole or in part his rights, title and interest
under and pursuant to this Agreement to any other individuals or entities
without notice to the Guarantors; upon any such transfer, all of the terms,
conditions and covenants herein shall enure to the benefit of and be binding
upon such transferees.
b. AUTHORIZATION. All corporate action on the part of the Guarantors
and their respective officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the performance by
the Guarantors of their respective obligations hereunder has been duly taken.
This Agreement, when executed and delivered by the Guarantors, shall constitute
a valid and legally binding obligation of the Guarantors, enforceable in
accordance with its terms.
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<PAGE> 4
c. COMPLIANCE WITH OTHER INSTRUMENTS. Neither of the Guarantors is in
violation of any provision of (a) their respective Certificates of
Incorporation or By-Laws, as presently in effect, (b) any material agreement,
or (c) any federal or state judgment, writ decree, order, statute, rule or
governmental regulation applicable to the Guarantors, as the case may be, the
violation of which would have a material and adverse effect on the Guarantors
or the transactions contemplated as to the Loan or hereby. The Guarantors
respective execution and delivery of this Agreement and their consummation of
the transactions contemplated hereby will not result in any such violation or
conflict with, constitute a default or require any consent under (a), (b) or
(c) above, or result in the creation of any lien, charge or encumbrance on any
of their respective properties or assets as contemplated herein.
d. NOTICES. All notices, demands, elections options or requests
(however characterized or described) required or authorized hereunder shall be
deemed sufficient if made in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by tested telex, telegram or
cable to the principal office of the addressee, and if to the Registered Holder
or Transferee Holder of an Option Certificate, at the address of such holder as
set forth on the books maintained by the Company.
e. BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the Company, the Registered Holder, each Transferee Holder
and their respective successors and assigns. Nothing in this Agreement is
intended or shall be construed to confer upon any other person any right,
remedy or claim or to impose on any other person any duty, liability or
obligation.
f. FURTHER INSTRUMENTS. The parties hereto shall execute and deliver
any and all such other instruments and shall take any and all other actions as
may be reasonably necessary to carry out the intention of this Agreement.
g. SEVERABILITY. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative
for any reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect
adversely any other provision of this Agreement, which shall otherwise remain
in full force and effect and be enforced in accordance with its terms, and the
effect of such holding, declaration or pronouncement shall be limited to the
territory or jurisdiction in which made.
h. WAIVER. All the rights and remedies of either party to this
Agreement are cumulative and not exclusive of any other rights and remedies as
provided by law. No delay or failure on the part of either party in the
exercise of any right or remedy arising from the breach of this Agreement will
constitute a waiver of any other right or remedy. The consent of any party
where required hereunder to act or occurrence shall not be deemed to be a
consent to any other action or occurrence.
i. GENERAL PROVISIONS. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of Ohio. This
Agreement embodies the entire agreement and understanding between the parties
and supersedes all prior agreements and understandings relating to the subject
matter hereof, and this Agreement may not be modified or amended or any term or
provisions hereof waived or discharged except in writing, signed by the party
against whom such amendment, modification, waiver or discharge is sought to be
enforced. The headings of this Agreement are for convenience and references
only and shall not limit or otherwise affect the meaning hereof.
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<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PARTECH HOLDINGS CORPORATION PARTECH COMMUNICATIONS GROUP, INC.
By:/s/ THOMAS E. REYNOLDS By: /s/ THOMAS E. REYNOLDS
---------------------- ----------------------
Title Title
JOHN E. RAYL
/s/ JOHN E. RAYL
- - -----------------------------------
Page 5
<PAGE> 1
Exhibit 10.81
PCG STOCK PLEDGE AGREEMENT
--------------------------
PLEDGE AGREEMENT dated as of June 15, 1994 by and among PARTECH
HOLDINGS CORPORATION, a Delaware corporation, with principal offices at 3366
Riverside Drive, Suite 200, Columbus, Ohio 43221 (the "Company" or the
"Pledgor"); PARTECH COMMUNICATIONS GROUP, INC., a Nevada corporation, with
principal offices at 3366 Riverside Drive, Suite 200, Columbus, Ohio 43221
("PCG"); the purchasers of the Company's 6% Secured Notes (the "Notes")
listed on Schedule A hereto (each, a "Pledgee"; collectively, the
"Pledgees"); and KELLEY DRYE & WARREN ("KDW") as representative of the
Pledgees, solely for the limited purpose of holding the Pledged
Securities as further described herein.
THE TERMS AND CONDITIONS of this Agreement are as follows:
1. THE PLEDGED SECURITIES. The property subject to this Agreement
(referred to collectively hereinafter as either the "Pledged Securities" or
the "collateral") is:
(a) The securities identified in Schedule B hereto; and
(b) All proceeds of any of the foregoing.
2. DELIVERY AND PLEDGE.
(a) The Pledgor has previously delivered or is delivering herewith
to KDW the Pledged Securities identified in Schedule B hereto, together with
stock powers duly endorsed in blank (Pledgor shall deliver four (4) executed
stock powers duly endorsed in blank, with signature guaranteed). All Pledged
Securities shall be held in pledge in accordance with the terms of this
Agreement as security for the payment and performance of all of (i) the
Company's obligations and agreements now existing or hereafter arising under
the Subscription Agreement (in the form attached hereto as Exhibit Y) between
the Company and each of the parties listed
<PAGE> 2
on Schedule A hereto and (ii) the Notes issued by the Company. The
obligations and agreements referred to herein are hereinafter collectively
referred to as the "Obligations." Each purchaser of a Note from the Company
shall execute a counterpart of the signature page to this Agreement and by such
signature shall become a party hereto, as a Pledgee, and shall be entitled to
the rights and preferences afforded a Pledgee hereunder. The rights and
preferences of each Pledgee shall be equal and ratable based upon the principal
amount of such Pledgee's Note as compared to all Notes outstanding.
(b) Pledgor hereby grant to the Pledgees a possessory lien and a
security interest in the Pledged Securities pursuant to the Uniform Commercial
Code as in effect in the State of New York from time to time (the "UCC") for
the security purposes hereinabove stated. The Pledgor covenants and agrees
that it will maintain and preserve the lien of the pledge hereunder as a first
lien on the Pledged Securities, and the interest of the Pledgees therein,
against the claims and demands of all persons who may claim the same.
(c) Subject to the actual exercise by Pledgor of its right in respect
of the Pledged Securities as permitted by the terms of this Agreement, Pledgee
shall have and may exercise all rights of a pledgee with respect to the Pledged
Securities, provided, however, that the Pledgees may not register the Pledged
Securities in their name or in the name of their nominee or nominees, as
pledgees, unless a default occurs in accordance with Section 6 hereof.
3. VOTING RIGHTS. Pledgor shall have the right to vote the Pledged
Securities until a foreclosure on the Pledged Securities pursuant to Section 8
of this Agreement.
4. REPRESENTATION AND WARRANTIES OF THE PLEDGOR. The Pledgor hereby
makes the
-2-
<PAGE> 3
following representations and warranties with respect to the Pledged
Securities, all of which shall survive so long as the Company has any
obligation under the Notes.
(a) The Pledgor has good and marketable title to all of the
Pledged Securities as sole owner thereof, free and clear of all liens,
charges and encumbrances whatsoever, and full power and lawful authority
to pledge the same hereunder, free and clear of any other pledge,
assignment, lien, charge or encumbrance.
(b) None of the Pledged Securities is subject to any prohibition
against encumbering, pledging, hypothecating or, subject to Federal
Communications Commission ("FCC") consent, assigning or otherwise transferring
the same or requires notice or consent in connection therewith.
(c) The Pledgor has full power and authority to execute,
deliver and perform its obligations under this Pledge Agreement and to pledge
the collateral in accordance with the terms hereof. This Pledge Agreement has
been duly executed and delivered by Pledgor and constitutes the legal,
valid and binding agreement of Pledgor.
(d) This Pledge Agreement creates a valid first lien and
perfected security interest in the collateral.
5. COVENANTS OF PLEDGOR.
(a) The Pledgor hereby covenants and agrees that for so long
as this Pledge Agreement shall remain in force and effect, it will not
sell, convey or dispose of any of the collateral or any interest therein, or
create, incur or permit to exist any pledge, mortgage, lien, charge,
encumbrance or other security interest whatsoever with respect to any of the
collateral.
- 3 -
<PAGE> 4
(b) The Pledgor hereby covenants and agrees to defend each
of the Pledgees' respective right, title and security interest in and to
the collateral against the claims of any person, firm, corporation or other
entity.
(c) The Pledgor hereby covenants and agrees to immediately
take all action necessary, at the direction of the Pledgees, or their
counsel (including, without limitation, using its best efforts to ensure
that PCG's transfer agent effects a registered transfer to each of the
respective Pledgees of all securities which constitute a part of the
collateral), to transfer such securities to the respective Pledgee's name
after the occurrence of any event of default described in Section 7 hereof.
(d) The Pledgor hereby covenants and agrees to indemnify and
hold the Pledgees harmless if the securities which constitute part of the
collateral are not promptly re-registered in the name of the requesting
Pledgee upon such Pledgee's request after the occurrence of any event of
default described in Section 7 hereof.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR AND PCG.
(a) Pledgor and PCG hereby represent and warrant that PCG is, and
hereby covenant and agree that they shall cause PCG to continue to be, the
owner of all of the capital stock of each subsidiary of the Company that holds
an FCC license.
(b) The Pledgor and PCG hereby covenant and agree to take all
action to permit for the foreclosure upon any or all of the Pledged
Securities, the transfer of such securities to the respective Pledgee's name
and any subsequent sale thereof by such Pledgee after the occurrence of any
event of default described in Section 7 hereof which action may be
- 4 -
<PAGE> 5
necessary or advisable (and within their power to so do) pursuant to any
federal, state or local communications statute, law, rule or regulation.
7. EVENTS OF DEFAULT. Any of the following shall constitute an
Event of Default under this Agreement:
(a) A default under any of the Notes;
(b) If the Pledgor fails to perform or observe any term,
covenant or agreement on its part to be performed or observed contained in this
Agreement;
(c) If the Pledgor attempts to sell or otherwise transfer any
of the Pledged Securities or permit any of the Pledged Securities to become
subject to any pledge, assignment, lien, charge or encumbrance other than
the pledge under this Agreement.
8. REMEDIES ON DEFAULT. In the event that an Event of Default, as
defined above, shall have occurred, each Pledgee shall have the right to
foreclose upon such Pledgee's pro rata share or any part thereof of the
Pledged Securities and shall become the owner of such number of shares of
PCG's capital stock as shall equal the total amount of shares due the
Pledgee hereunder in accord with the terms of this Section 8. Pledgee shall
promptly notify the Pledgor of its election to foreclose. Each Pledgee may
exercise its rights hereunder in whole or in part at such Pledgee's discretion.
Further, in addition to the foregoing and in no way limiting the
foregoing, with respect to the Pledged Securities, each Pledgee shall also
have the rights and remedies of a secured party under the Uniform
Commercial Code as in effect in the State of New York as of the date
thereof; provided that, prior to such time all voting rights associated with
the Collateral shall remain with the Pledgor.
- 5 -
<PAGE> 6
Each Pledgee's right to foreclose on Pledged Securities shall be limited
to the pro rata portion of the Pledged Securities which are allocated to
such Pledgee in accordance with the following sentence. Pledged Securities
shall be allocated based upon the percentage of Notes held by such Pledgee
as compared to the total Notes outstanding. Upon the payment of a Note, or
portion thereof, the remaining Pledged Securities allocated with respect to
the Pledgee of such Note shall remain allocated to the Pledgee of such Note,
with respect to any remaining Notes, or portions thereof, still held by
such Pledgee. Upon the satisfaction in full of all Notes held by such
Pledgee, any Pledged Securities which remain allocated to such Pledgee shall
be redistributed among the remaining Pledgees on a pro rata basis of the
amount of Notes held by each of such remaining Pledgees as compared to the
remaining Notes outstanding at the time of such redistribution. For purposes
of calculations hereunder, Notes held by the Company shall not be considered
outstanding, nor shall such Notes be entitled to the benefits of the pledge
hereunder.
Neither the Pledgor nor anyone claiming through or under it,
including its successors and assigns, shall or will set up, claim or seek to
take advantage of any appraisement, valuation, stay, extension, redemption or
other law now or hereafter in force, in order to prevent, delay or otherwise
hinder the enforcement of the lien and pledge hereunder, or the absolute
sale or other disposition of the Pledged Securities or the final and
absolute delivery into possession thereof of the purchaser or purchasers
or other transferees thereof. The Pledgor, for itself and all who may claim
through or under it, including its heirs, legal representatives, successors
and assigns, hereby waives the benefit of all such laws and hereby waives all
right of appraisement
- 6 -
<PAGE> 7
and redemption to which it or any of them may be entitled under any state or
federal law and any and all right to have the Pledged Securities or any
part thereof marshalled upon any foreclosure, sale or other enforcement
thereof.
All rights, remedies and powers conferred upon the Pledgees by this
Agreement shall, to the extent not prohibited by law, be deemed cumulative
and not exclusive of any thereof or of any other rights, remedies and powers
available to the Pledgees under the UCC or otherwise at law or in equity for
enforcement of this Agreement, the Notes or any of the other Obligations.
To the extent this Agreement modifies certain remedies or provides
remedies which conflict with remedies provided by the UCC, this Agreement
shall control to the maximum extent provided by law. The Pledgor hereby
expressly waives any rights under the UCC which would limit the provisions of
any part of this Agreement. The Pledgor hereby agrees and acknowledges that
the rights and remedies provided herein or hereby to the Pledgees are fair,
reasonable and equitable in all respects. No delay or omission of a Pledgee
to exercise any right, remedy or power accruing upon any default shall
impair any such right, remedy or power, or shall be construed to be a waiver
of any such default or acquiescence therein. Every right, remedy and power
conferred hereby may be exercised from time to time and as often as a Pledgee
shall deem expedient. No waiver of any default shall extend to or
affect any subsequent default or impair any right, remedy or power available
to such Pledgee or any other Pledgee. No single or partial exercise of any
right, remedy or power by any Pledgee shall preclude other or further
exercises thereof by such Pledgee or any other Pledgee.
The Pledgor agrees that, in connection with any action or proceeding
arising out of or
- 7 -
<PAGE> 8
relating to the Notes, this Agreement or the Pledged Securities:
(a) The Pledgor waives the right to trial by jury and all
defenses and right to interpose any setoff or counterclaim of any nature,
except and only to the extent such defense pertains to the existence of an
Event of Default;
(b) The Pledgor consents to the jurisdiction of any court of the
State of New York and of any federal court located in New York;
(c) The Pledgor waives personal service of any summons,
complaint or other process in connection with any such action or
proceeding and agrees that service thereof may be made, as Pledgee may
elect, by certified mail directed to Pledgor at its address for notice
provided for in Section 20 hereof or, in the alternative, in any other form
or manner permitted by law; and
(d) The Pledgor agrees that all of the Pledged Securities
constitute equal security for all of the Notes, and agree that the Pledgees
shall be entitled to sell or otherwise deal with any or all of the Pledged
Securities, in any order or simultaneously as Pledgee shall determine in its
sole discretion, as provided in this Section 8, free of any requirement
for the marshalling of assets or other restrictions upon such Pledgee in
dealing with the Pledged Securities except as otherwise expressly provided
in this Section 8.
9. KDW AS REPRESENTATIVE. Upon the election by one or more
Pledgees to foreclose upon Pledged Securities hereunder, such Pledgee(s)
shall notify KDW of such election simultaneously with its notice to the
Company and the Pledgor in accordance with the provisions of Section 8
hereof. As soon as practicable after receipt of such notice, KDW will
deliver to
- 8 -
<PAGE> 9
PCG's transfer agent at the address provided on Schedule B sufficient
share certificates and stock powers executed by the Pledgor, previously
delivered to KDW hereunder, with respect to the shares to be foreclosed upon
hereunder, subject to the limitations provided in Section 8 hereof, with a
notice that such documents are being delivered by KDW merely as an agent for
one or more Pledgees under this Pledge Agreement, with instructions to
cause certificates evidencing the shares not foreclosed upon to be issued
in the name of the Pledgor and returned to KDW. KDW shall continue to hold
the certificates returned to it in accordance with the terms of this
Agreement.
All additional instructions to the transfer agent, with respect to
foreclosed shares, shall come from either PCG or the respective Pledgee(s).
KDW is acting as a depositary of the Pledged Securities for the benefit of
the Pledgees. Neither KDW nor any Pledgee shall have the power to act for
or give instructions on behalf of any Pledgee hereunder other than itself.
Neither KDW nor any Pledgee shall assume any duty on behalf of any Pledgee
nor shall they be deemed to have any such duty absent a written agreement
signed by KDW and/or such Pledgee agreeing to accept such duty. KDW shall not
be responsible for any act or failure to act by any party other than KDW. KDW
shall not be responsible for any act or failure to act on its part or on the
part of its agents or employees except in the case of its own willful
malfeasance or gross negligence. Without limiting the foregoing, KDW shall be
under no duty to investigate a claim by any Pledgee, the Company, PCG or
PCG's transfer agent and shall incur no liability for distributing shares to
PCG's transfer agent, the Pledgor, the Company or a Pledgee upon a request
to do so. KDW may act or refrain from acting hereunder with respect
- 9 -
<PAGE> 10
to any matter referred to herein upon the advice of counsel.
10. DURATION OF THE PLEDGE AND REASSIGNMENT TO PLEDGOR.
(a) This Agreement and the pledge hereunder shall remain in full
force and effect until the date on which all of the Pledgor's Obligations are
satisfied. Upon such satisfaction, all remaining Pledged Securities shall be
returned to PCG for distribution to the Pledgor and this Agreement shall
terminate.
(b) To the extent that the proceeds of the Pledged
Securities in accordance with Section 8 reduce the principal due under such
Notes (after payment of interest, costs and other obligations due under
the Notes or hereunder), the respective Pledgee(s) shall assign, without
recourse, the respective Note(s) or portion(s) thereof to Pledgor, subject
to Pledgor's agreement to subordinate its Notes to all other outstanding
Note Obligations of the Company. Notes held by the Pledgor hereunder shall
not be entitled to the benefits of the Pledge hereunder. The respective
Pledgee(s) shall execute such assignments and other instruments as may be
reasonably requested by the Pledgor to implement such assignment of the
Note(s) to the Pledgor.
11. TRANSFER OF PLEDGE AGREEMENT. The parties hereto hereby agree
that each of the respective Pledgees may transfer in whole or in part their
respective rights, title and interest under and pursuant to this Pledge
Agreement to any other individuals or entities without notice to the
Pledgor; upon any such transfer, all of the terms, conditions and covenants
herein shall enure to the benefit of and be binding upon such transferees.
Upon any such transfer, all of the rights to the collateral of such Pledgee
shall be transferred to such transferees.
12. AUTHORIZATION. All corporate action on the part of the Company,
PCG and their
- 10 -
<PAGE> 11
respective officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement and the performance
by the Company and PCG of their respective obligations hereunder has been duly
taken. This Agreement, when executed and delivered by the Company, shall
constitute a valid and legally binding obligation of the Company, enforceable
in accordance with its terms.
13. COMPLIANCE WITH OTHER INSTRUMENTS. Neither the Company nor PCG
is in violation of any provision of (a) their respective Certificates of
Incorporation or By-Laws, as presently in effect, (b) any material agreement,
or (c) any federal or state judgment, writ, decree, order, statute, rule
or governmental regulation applicable to the Company or PCG, as the case
may be, the violation of which would have a material and adverse effect on
the Company or PCG, as the case may be, or the transactions contemplated
hereby. The Company's and PCG's respective execution and delivery of this
Agreement and their consummation of the transactions contemplated hereby will
not result in any such violation or conflict with, constitute a default or
require any consent under (a), (b) or (c) above, or result in the creation of
any lien, charge or encumbrance on any of their respective properties or
assets as contemplated herein.
14. ADDITIONAL COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees to immediately take all action necessary, at the
direction of any of the Pledgees, to transfer the Pledged Securities,
subject to the limitation of the number of shares allocated to such
Pledgee(s) under Section 8 hereof, to or upon the order of such Pledgee(s)
after the occurrence of a default hereunder (including, without limitation,
using its best efforts to ensure
- 11 -
<PAGE> 12
that PCG's transfer agent effects a registered transfer to or upon the order
of each such Pledgee that number of shares of PCG's capital stock calculated
in accordance with Section 8 hereof which each such Pledgee is entitled to
receive upon an Event of Default hereunder.
15. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless each
Pledgee and each of the Pledgee's stockholders, directors, officers, partners
and agents and each of their respective heirs, executors, administrators,
successors and assigns, from any loss, claim, damage, cost, lawsuit,
attorney's and accountant's fees, deficiency, assessment, administrative
order, fine, penalty, action, proceeding, judgment or expense, including
in all cases the reasonable fees and expenses of counsel, resulting from
or by reason of (a) any inaccuracy in any of the representations, or
breach of the warranties made by the Company in this Agreement or in
connection with this Agreement in any document executed and/or delivered by or
on behalf of the Company and (b) any failure of the Company to perform any
covenant or agreement set forth in this Agreement.
(b) PCG hereby agrees to indemnify and hold harmless each of the
Pledgees and each of the Pledgees' stockholders, directors, officers, partners
and agents and each of their respective heirs, executors, administrators,
successors and assigns, from any loss, claim, damage, cost, lawsuit,
attorney's and accountant's fees, deficiency, assessment, administrative
order, fine, penalty, action, proceeding, judgment or expense, including
in all cases, the reasonable fees and expenses of counsel, resulting from
or by reason of (a) any inaccuracy in any of the representations, or
breach of the warranties made by PCG in this Agreement or in
- 12 -
<PAGE> 13
connection with this Agreement in any document executed and or delivered by
or on behalf of PCG and (b) any failure of PCG to perform any covenant or
agreement set forth in this Agreement.
(c) Each Pledgee hereby agrees to indemnify and hold
harmless the Company, PCG and their respective stockholders, directors,
officers, partners and agents and each of their respective heirs, executors,
administrators, successors and assigns, from any loss, claim, damage, cost,
lawsuit, attorney's and accountant's fees, deficiency, assessment,
administrative order, fine, penalty, action, proceeding, judgment or
expense, including in all cases the reasonable fees and expenses of
counsel, resulting from or by reason of (a) any inaccuracy in any of the
representations, or breach of the warranties made by such Pledgee in this
Agreement or in connection with this Agreement in any document executed and
or delivered by such Pledgee and (b) any failure of such Pledgee to
perform any covenant or agreement set forth in this Agreement.
(d) The Company, PCG and each of the Pledgees hereby agree to
indemnify and hold harmless KDW and its partners and agents and each of
their respective heirs, executors, administrators, successors and assigns,
from any loss, claim, damage, cost, lawsuit, attorney's and accountant's
fees, deficiency, assessment, administrative order, fine, penalty, action,
proceeding, judgment or expense, including in all cases the reasonable fees
and expenses of counsel, resulting from or by reason of KDW's holding of the
Pledged Securities other than claims resulting from KDW's willful malfeasance
or gross negligence.
16. EXPENSES OF THE INVESTOR. All reasonable expenses incurred by any
Pledgee in
- 13 -
<PAGE> 14
connection with the exercise by such Pledgee of any of its respective
rights hereunder, including, without limitation, any attorney fee,
brokerage fees, and commissions in connection with any sale of the
collateral hereunder shall be promptly paid by the Company upon demand made
by such Pledgee.
17. REMEDIES. Each right, power and remedy provided for herein or
now or hereafter existing at law, in equity, by statute or otherwise, shall
be cumulative, and the exercise or forbearance of exercise by any party of
any one or more of such rights, powers or remedies shall not preclude the
simultaneous or later exercise by such party of any or all of such other
rights, powers or remedies, nor shall any failure to enforce any of such
rights, powers or remedies be deemed to constitute a waiver thereof.
18. FURTHER ASSURANCES. The Company and PCG shall at any time and
from time to time upon the written request of any Pledgee, execute and
deliver such further documents, including without limitation, representation
letters, and do such further acts and things as such Pledgee(s) may reasonably
request in order to effectuate the purposes of this Agreement and in order to
create, preserve and perfect the interest granted pursuant hereto or to
enable such Pledgee(s) to enforce its/their rights hereunder.
The Pledgor hereby agrees to give, execute, deliver, file and/or
record any financing statement, notice, instrument, document, agreement or
other papers that may be necessary or reasonably desirable (in the
judgment of any Pledgee or its counsel) to create, preserve, perfect or
validate any security interest granted pursuant hereto or to enable the
Pledgees or any one of them to exercise and enforce their rights hereunder
with respect to such security interest.
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<PAGE> 15
19. AMENDMENTS; WAIVER; CONSENT. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Pledgor
therefrom, shall in any event be effective unless the same shall be in
writing and signed by each Pledgee, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
20. NOTICES. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally
(with delivery confirmed by receipt signed by the recipient) or sent by
overnight courier or messenger or sent by registered or certified mail (air
mail if overseas), return receipt requested, or by telex, facsimile
transmission, telegram or similar means of communication with delivery
confirmed. Notices shall be deemed to have been received on the date of
personal delivery, telex, facsimile transmission, telegram or similar means
of communication, or if sent by overnight courier or messenger, shall be
deemed to have been received on the next delivery day after deposit with the
courier or messenger, or if sent by certified or registered mail, return
receipt requested, shall be deemed to have been received on the third business
day after the date of mailing. Notices shall be sent to the addresses set
forth on Schedule C.
21. GOVERNING LAW. THIS AGREEMENT AND ALL DOCUMENTS DELIVERED IN
CONNECTION THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE RULES OF
CONFLICTS OF LAW.
22. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit
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<PAGE> 16
of the parties hereto and their respective heirs, legal representatives,
successors and assigns, except that the Pledgor shall not have the right to
assign any rights hereunder without the prior written consent of all Pledgees.
23. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute but one and the
same agreement.
24. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provisions in
any other jurisdiction.
25. HEADINGS. The headings preceding the text of this Agreement are
inserted solely for convenience of reference and shall not constitute a
part of this Agreement nor affect its meaning, construction or effect.
IN WITNESS WHEREOF, and in consideration of the agreements contained
herein and intending to be legally bound hereby, Pledgees hereby execute
this Agreement, and Pledgor, PCG and KDW as Representative have caused this
Agreement to be executed by their respective officers or partners thereunto
duly authorized, as of the date first above written.
PARTECH HOLDINGS CORPORATION,
as Pledgor and as the Company
By:
_________________________________________
Name: John E. Rayl
Title: President and Chief
Executive Officer
- 16 -
<PAGE> 17
PARTECH COMMUNICATIONS GROUP,
INC.
By:
_________________________________________
Name:_____________________________________
Title:____________________________________
KELLEY DRYE & WARREN,
as Representatives of the Pledgees
By:
_________________________________________
Name: Lawrence B. Fisher
Title: Partner
Pledgees:
GENERATION CAPITAL ASSOCIATES
By:
_________________________________________
Name: Frank Hart
Title: General Partner
__________________________________________
Name: Peter Prescott
JULES and AMOS SWIMMER, joint tenants
By:
_________________________________________
Name: Jules Swimmer
__________________________________________
Name: Jules Swimmer
- 17 -
<PAGE> 18
RSH PARTNERS
By:
_________________________________________
Name: Horace Hertz
Title: General Partner
TGR VENTURES, INC.
By:
_________________________________________
Name:
Title:
________________________________
By:
_________________________________________
Name:
Title:
________________________________
By:
_________________________________________
Name:
Title:
________________________________
By:
_________________________________________
Name:
Title:
- 18 -
<PAGE> 19
Schedule A
----------
Partech Holdings Corporation - Investor List
--------------------------------------------
Note
--------
1. Generation Capital Associates $300,000
Attn: Mr. Frank Hart
617 West End Avenue
New York, NY 10024
Tel: (212) 787-5541
Fax: (212) 496-6292
2. Peter Prescott $25,000
27341 Vista Azul
Capistrano Beach, CA 92624
Tel:
Fax:
3. Jules and Amos Swimmer $20,000
Joint Tenants
901 Dove Street, Suite 230
Newport Beach, CA 92660
Tel:
Fax:
4. Jules Swimmer $15,000
901 Dove Street, Suite 230
Newport Beach, CA 92660
Tel:
Fax:
5. RSH Partners $10,000
Attn: Mr. Horace Hertz
Park Place Tower
3333 Michaelson Drive, Suite 550
Irvine, CA 92715
Tel:
Fax:
- 19 -
<PAGE> 20
6. TGR Ventures, Inc. $ 10,000
7. $
8. $
9. $
10. $
- 20 -
<PAGE> 21
Schedule B
----------
Partech Holdings Corporation 1,000 Shares
All shares are shares of capital stock of Partech Communications
Group, Inc., $.01 par value per share.
- 21 -
<PAGE> 22
Schedule C
----------
ADDRESSES FOR NOTICES
---------------------
To the Pledgor:
Partech Holdings Corporation
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attn: Mr. John Rayl
Telephone: (614) 538-0660
Facsimile: (614) 538-0670
To PCG:
Partech Communications Group, Inc.
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attn: Mr. John Rayl
Telephone: (614) 538-0660
Facsimile: (614) 538-0670
To the Investors:
To each Investor at the address
provided in Schedule A hereto
- 22 -
<PAGE> 23
With a copy to:
Kelley Drye & Warren
101 Park Avenue
New York, NY 10178
Attn: Lawrence B. Fisher
Telephone: (212) 808-7800
Facsimile: (212) 808-7898
and
Horowitz, Cutler & Beam
2 Venture Plaza, Suite 380
Irvine, CA 92718
Attn: M. Richard Cutler
Telephone: (714) 453-0300
Facsimile: (714) 453-9416
To KDW:
Kelley Drye & Warren
101 Park Avenue
New York, NY 10178
Attn: Deborah Saltzman
Telephone: (212) 808-7507
Facsimile: (212) 808-7897
- 23 -
<PAGE> 1
Exhibit 10.82
RAYL PLEDGE AGREEMENT
---------------------
PLEDGE AGREEMENT dated as of June 15, 1994 by and among PARTECH
HOLDINGS CORPORATION, a Delaware corporation, with principal offices at 3366
Riverside Drive, Suite 200, Columbus, Ohio 43221 (the "Company"); JOHN E. RAYL
(the "Pledgor"); the purchasers of the Company's 6% Secured Notes (the "Notes")
listed on Schedule A hereto (each, a "Pledgee"; collectively, the "Pledgees");
and KELLEY DRYE & WARREN ("KDW") as representative of the Pledgees, solely for
the limited purpose of holding the Pledged Securities as further described
herein.
THE TERMS AND CONDITIONS of this Agreement are as follows:
1. THE PLEDGED SECURITIES. The property subject to this Agreement
(referred to collectively hereinafter as either the "Pledged Securities" or the
"collateral") is:
(a) The securities identified in Schedule B hereto; and
(b) All proceeds of any of the foregoing.
2. DELIVERY AND PLEDGE.
(a) The Pledgor has previously delivered or is delivering
herewith to KDW the Pledged Securities identified in Schedule B hereto,
together with stock powers duly endorsed in blank (Pledgor shall deliver one
(1) or more executed stock powers duly endorsed in blank, with signature
guaranteed for each certificate). All Pledged Securities shall be held in
pledge in accordance with the terms of this Agreement as security for the
payment and performance of all of (i) the Company's obligations and agreements
now existing or hereafter arising under the Subscription Agreement (in the form
attached hereto as Exhibit Y) between the Company and each of the parties
listed on Schedule A hereto and (ii) the Notes issued by the Company. The
obligations and agreements referred to herein are hereinafter collectively
<PAGE> 2
referred to as the "Obligations." Each purchaser of a Note from the Company
shall execute a counterpart of the signature page to this Agreement and by such
signature shall become a party hereto, as a Pledgee, and shall be entitled to
the rights and preferences afforded a Pledgee hereunder. The rights and
preferences of each Pledgee shall be equal and ratable based upon the principal
amount of such Pledgee's Note as compared to all Notes outstanding.
(b) Pledgor hereby grants to the Pledgees a possessory lien and
a security interest in the Pledged Securities pursuant to the Uniform
Commercial Code as in effect in the State of New York from time to time (the
"UCC") for the security purposes hereinabove stated. The Pledgor covenants and
agrees that he will maintain and preserve the lien of the pledge hereunder as
a first lien on the Pledged Securities, and the interest of the Pledgees
therein, against the claims and demands of all persons who may claim the same.
(c) Subject to the actual exercise by Pledgor of his right in
respect of the Pledged Securities as permitted by the terms of this Agreement,
Pledgee shall have and may exercise all rights of a pledgee with respect to the
Pledged Securities, provided, however, that the Pledgees may not register the
Pledged Securities in their name or in the name of their nominee or nominees,
as pledgees, unless a default occurs in accordance with Section 6 hereof.
3. VOTING RIGHTS. Pledgor shall have the right to vote the Pledged
Securities until a foreclosure on the Pledged Securities pursuant to Section 7
of this Agreement.
4. REPRESENTATION AND WARRANTIES. The Pledgor hereby makes the
following representations and warranties with respect to the Pledged
Securities, all of which shall survive so long as the Company has any
obligation under the Notes.
- 2 -
<PAGE> 3
(a) The Pledgor has good and marketable title to all of the
Pledged Securities as sole owner thereof, free and clear of all liens, charges
and encumbrances whatsoever, and full power and lawful authority to pledge the
same hereunder, free and clear of any other pledge, assignment, lien, charge or
encumbrance.
(b) None of the Pledged Securities is subject to any prohibition
against encumbering, pledging, hypothecating or assigning the same or requires
notice or consent in connection therewith.
(c) The Pledgor has fully paid for the Pledged Securities and
has held: (i) 382,601 of the Pledged Securities for more than three years, (ii)
100,000 of the Pledged Securities for more than two years, and such 100,000 of
the Pledged Securities have been registered pursuant to the Securities Act of
1933, as amended (the "Act") and are freely tradeable, and (iii) since July 1,
1991, 217,704 of the Pledged Securities, in each such case, for purposes of
future sales pursuant to Securities and Exchange Commission ("SEC") Rule 144,
and the pledge hereunder is intended to be a bona fide pledge for purposes of
such rule.
(d) The Pledgor has full power and authority to execute,
deliver and perform his obligations under this Pledge Agreement and to pledge
the collateral in accordance with the terms hereof. This Pledge Agreement has
been duly executed and delivered by Pledgor and constitutes the legal, valid
and binding agreement of Pledgor.
(e) This Pledge Agreement creates a valid first lien and
perfected security interest in the collateral.
- 3 -
<PAGE> 4
(f) Neither the Pledgor nor any other parties whose sales of
securities are aggregated with Pledgor's sales pursuant to SEC Rule 144 has
sold, assigned, transferred or otherwise disposed of any securities of the
Company within ninety (90) days prior to the date hereof.
5. COVENANTS OF PLEDGOR AND THE COMPANY.
(a) The Pledgor hereby covenants and agrees that for so long as
this Pledge Agreement shall remain in force and effect, he will not sell,
convey or dispose of any of the collateral or any interest therein, or create,
incur or permit to exist any pledge, mortgage, lien, charge, encumbrance or
other security interest whatsoever with respect to any of the collateral.
(b) The Pledgor hereby covenants and agrees to defend each of
the Pledgees' respective right, title and security interest in and to the
collateral against the claims of any person, firm, corporation or other entity.
(c) The Pledgor hereby covenants and agrees to immediately take
all action necessary, at the direction of the Pledgees, or their counsel
(including, without limitation, using its best efforts to ensure that the
Company's transfer agent effects a registered transfer to each of the
respective Pledgees of all securities which constitute a part of the
collateral), to transfer such securities to the respective Pledgee's name after
the occurrence of an event of default described in Section 6 hereof.
(d) The Pledgor hereby covenants and agrees to indemnify and
hold the Pledgees harmless if the securities which constitute part of the
collateral are not promptly
- 4 -
<PAGE> 5
re-registered in the name of the requesting Pledgee upon such Pledgee's request
after the occurrence of any event of default described in Section 6 hereof.
(e) The Pledgor hereby covenants and agrees that he shall not
sell, assign, transfer or otherwise dispose of securities issued by the Company
which would be aggregated under SEC Rule 144 with any sales by any Pledgee.
(f) The Pledgor hereby covenants and agrees that he will use
his best efforts to ensure that all parties whose sales of securities would be
aggregated with such Pledgor's sales pursuant to SEC Rule 144 shall comply with
the covenant contained in Section (e) hereof.
(g) The Pledgor hereby covenants and agrees to cause the
Company, and the Company hereby covenants and agrees, to keep available
adequate current public information with respect to the Company in accordance
with SEC Rule 144(c) at all times until the termination of this Agreement
pursuant to Section 9 hereof.
6. EVENTS OF DEFAULT. Any of the following shall constitute an
Event of Default under this Agreement:
(a) A default under any of the Notes;
(b) If the Pledgor fails to perform or observe any term,
covenant or agreement on his part to be performed or observed contained in this
Agreement;
(c) If the Pledgor attempts to sell or otherwise transfer any
of the Pledged Securities or permit any of the Pledged Securities to become
subject to any pledge, assignment, lien, charge or encumbrance other than the
pledge under this Agreement.
- 5 -
<PAGE> 6
7. REMEDIES ON DEFAULT. In the event that an Event of Default, as
defined above, shall have occurred, each Pledgee shall have the right to
foreclose upon such Pledgee's pro rata share or any part thereof of the Pledged
Securities and shall become the owner of such number of shares of the Company's
Common Stock as shall equal the total amount of shares due the Pledgee
hereunder in accord with the terms of this Section 7. Pledgee shall promptly
notify the Pledgor and the Company of its election to foreclose. Each Pledgee
may exercise its rights hereunder in whole or in part at such Pledgee's
discretion. Further, in addition to the foregoing and in no way limiting the
foregoing, with respect to the Pledged Securities, each Pledgee shall also have
the rights and remedies of a secured party under the Uniform Commercial Code as
in effect in the State of New York as of the date thereof; provided that, prior
to such time all voting rights associated with the Collateral shall remain with
the Pledgor. The Company shall instruct its transfer agent to rely on an
opinion of Horowitz, Cutler & Beam with respect to Rule 144 as legal counsel in
connection with the transfer of any part of the Pledged Securities under SEC
Rule 144 pursuant hereto.
Each Pledgee's right to foreclose on Pledged Securities shall be
limited to the pro rata portion of the Pledged Securities which are allocated
to such Pledgee in accordance with the following sentence. Pledged Securities
shall be allocated based upon the percentage of Notes held by such Pledgee as
compared to the total Notes outstanding. Upon the payment of a Note, or
portion thereof, the remaining Pledged Securities allocated with respect to the
Pledgee of such Note shall remain allocated to the Pledgee of such Note, with
respect to any remaining Notes, or portions thereof, still held by such
Pledgee. Upon the satisfaction in full of all Notes held
- 6 -
<PAGE> 7
by such Pledgee, any Pledged Securities which remain allocated to such Pledgee
shall be redistributed among the remaining Pledgees on a pro rata basis of the
amount of Notes held by each of such remaining Pledgees as compared to the
remaining Notes outstanding at the time of such redistribution. For purposes
of calculations hereunder, Notes held by the Company or the Pledgor shall not
be considered outstanding, nor shall such Notes be entitled to the benefits of
the pledge hereunder. In the event a Pledgee takes possession of any of the
Pledged Securities, the Company's obligations under the Notes held by such
Pledgee, with respect to such Pledgee, shall be reduced in an amount equal to
the greater of (i) the actual amount received by such Pledgee upon any sale or
sales of such Pledged Securities made within 90 days of foreclosure thereon or
(ii) one-half of the closing bid price of the Company's Common Stock on the
date of the notice of default (unless such date is not a business day, in which
case the date shall be the next following business day) giving rise to such
action, multiplied by the number of Pledged Securities for which Pledgee has
elected to take possession; provided, however, the amount of the Company's
obligation under such Notes, with respect to such Notes, shall be increased by
an amount equal to the costs, if any, incurred by such Pledgee (including,
without limitation, the fees and expenses of counsel) in taking possession of
the Pledged Securities and of selling the Pledged Securities pursuant to SEC
Rule 144.
Neither the Pledgor nor anyone claiming through or under him,
including his successors and assigns, shall or will set up, claim or seek to
take advantage of any appraisement, valuation, stay, extension, redemption or
other law now or hereafter in force, in order to prevent, delay or otherwise
hinder the enforcement of the lien and pledge hereunder, or the
- 7 -
<PAGE> 8
absolute sale or other disposition of the Pledged Securities or the final and
absolute delivery into possession thereof of the purchaser or purchasers or
other transferees thereof. The Pledgor, for himself and all who may claim
through or under him, including his heirs, legal representatives, successors
and assigns, hereby waives the benefit of all such laws and hereby waives all
right of appraisement and redemption to which he or any of them may be entitled
under any state or federal law and any and all right to have the Pledged
Securities or any part thereof marshalled upon any foreclosure, sale or other
enforcement thereof.
All rights, remedies and powers conferred upon the Pledgees by this
Agreement shall, to the extent not prohibited by law, be deemed cumulative and
not exclusive of any thereof or of any other rights, remedies and powers
available to the Pledgees under the UCC or otherwise at law or in equity for
enforcement of this Agreement, the Notes or any of the other Obligations,
except as such may be limited by this Section 7 with respect to the value
attributable to the Pledged Securities.
To the extent this Agreement modifies certain remedies or provides
remedies which conflict with remedies provided by the UCC, this Agreement shall
control to the maximum extent permitted by law. The Pledgor hereby expressly
waives any rights under the UCC which would limit the provisions of any part of
this Agreement. The Pledgor hereby agrees and acknowledges that the rights and
remedies provided herein or hereby to the Pledgees are fair, reasonable and
equitable in all respects. No delay or omission of a Pledgee to exercise any
right, remedy or power accruing upon any default shall impair any such right,
remedy or power, or shall be construed to be a waiver of any such default or
acquiescence therein. Every
- 8 -
<PAGE> 9
right, remedy and power conferred hereby may be exercised from time to time and
as often as a Pledgee shall deem expedient. No waiver of any default shall
extend to or affect any subsequent default or impair any right, remedy or power
available to such Pledgee or any other Pledgee. No single or partial exercise
of any right, remedy or power by any Pledgee shall preclude other or further
exercises thereof by such Pledgee or any other Pledgee.
The Pledgor agrees that, in connection with any action or proceeding
arising out of or relating to the Notes, this Agreement or the Pledged
Securities:
(a) The Pledgor waives the right to trial by jury and all
defenses and right to interpose any setoff or counterclaim of any nature,
except and only to the extent such defense pertains to the existence of an
Event of Default;
(b) The Pledgor consents to the jurisdiction of any court of the
State of New York and of any federal court located in New York;
(c) The Pledgor waives personal service of any summons,
complaint or other process in connection with any such action or proceeding and
agrees that service thereof may be made, as Pledgee may elect, by certified
mail directed to Pledgor at his address for notice provided for in Section 19
hereof or, in the alternative, in any other form or manner permitted by law;
and
(d) The Pledgor agrees that all of the Pledged Securities
constitute equal security for all of the Notes, and agree that the Pledgees
shall be entitled to sell or otherwise deal with any or all of the Pledged
Securities, in any order or simultaneously as Pledgee shall determine in its
sole discretion, as provided in this Section 7, free of any
- 9 -
<PAGE> 10
requirement for the marshalling of assets or other restrictions upon such
Pledgee in dealing with the Pledged Securities except as otherwise expressly
provided in this Section 7.
Notwithstanding any other provision of this Agreement (including,
without limitation, all Exhibits hereto), no Pledgee shall be permitted to
exercise any of the conversion rights to receive securities of the Company or
the foreclosure rights to obtain Pledged Securities and Additional Warrants (as
defined in the Notes), if such action by such Pledgees would result in such
Pledgee converting into and or foreclosing upon and becoming the beneficial
owner of an aggregate of more than 5% of shares of the then outstanding shares
of any class of voting equity of the Company, as calculated pursuant to Section
13 of the Securities and Exchange Act of 1934, as amended. The foregoing shall
not prohibit the Pledgee from receiving any remaining amount due such Pledgee
under the Notes.
8. KDW AS REPRESENTATIVE. Upon the election by one or more Pledgees
to foreclose upon Pledged Securities hereunder, such Pledgee(s) shall notify
KDW of such election simultaneously with its notice to the Company and the
Pledgor in accordance with the provisions of Section 7 hereof. As soon as
practicable after receipt of such notice, KDW will deliver to the Company's
transfer agent at the address provided on Schedule B sufficient share
certificates and stock powers executed by the Pledgor, previously delivered to
KDW hereunder, with respect to the shares to be foreclosed upon hereunder,
subject to the limitations provided in Section 7 hereof, with a notice that
such documents are being delivered by KDW merely as an agent for one or more
Pledgees under this Pledge Agreement, with instructions to cause certificates
evidencing the shares not foreclosed upon to be issued in the name of the
Pledgor and returned
- 10 -
<PAGE> 11
to KDW. KDW shall continue to hold the certificates returned to it in
accordance with the terms of this Agreement.
All additional instructions to the transfer agent, with respect to
foreclosed shares, shall come from either the Company or the respective
Pledgee(s). KDW is acting as a depositary of the Pledged Securities for the
benefit of the Pledgees. Neither KDW nor any Pledgee shall have the power to
act for or give instructions on behalf of any Pledgee hereunder other than
itself. Neither KDW nor any Pledgee shall assume any duty on behalf of any
Pledgee nor shall they be deemed to have any such duty absent a written
agreement signed by KDW and/or such Pledgee agreeing to accept such duty. KDW
shall not be responsible for any act or failure to act by any party other than
KDW. KDW shall not be responsible for any act or failure to act on its part or
on the part of its agents or employees except in the case of its own willful
malfeasance or gross negligence. Without limiting the foregoing, KDW shall be
under no duty to investigate a claim by any Pledgee, the Company or the
Company's transfer agent and shall incur no liability for distributing shares
to the Company's transfer agent, the Pledgor, the Company or a Pledgee upon a
request to do so. KDW may act or refrain from acting hereunder with respect to
any matter referred to herein upon the advice of counsel.
9. DURATION OF THE PLEDGE AND REASSIGNMENT TO PLEDGOR. This
Agreement and the pledge hereunder shall remain in full force and effect until
the date on which all of the Pledgor's Obligations are satisfied. Upon such
satisfaction, all remaining Pledged Securities shall be returned to the Company
for distribution to the Pledgor and this Agreement shall terminate.
- 11 -
<PAGE> 12
10. TRANSFER OF PLEDGE AGREEMENT. The parties hereto hereby agree
that each of the respective Pledgees may transfer in whole or in part their
respective rights, title and interest under and pursuant to this Pledge
Agreement to any other individuals or entities without notice to the Pledgor;
upon any such transfer, all of the terms, conditions and covenants herein shall
enure to the benefit of and be binding upon such transferees. Upon any such
transfer, all of the rights to the collateral of such Pledgee shall be
transferred to such transferees.
11. AUTHORIZATION. All corporate action on the part of the Company
and its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement and the performance by the Company of
its obligations hereunder has been duly taken. This Agreement, when executed
and delivered by the Company, shall constitute a valid and legally binding
obligation of the Company, enforceable in accordance with its terms.
12. COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of any provision of (a) its Certificate of Incorporation or By-Laws,
as presently in effect, (b) any material agreement, or (c) any federal or state
judgment, writ, decree, order, statute, rule or governmental regulation
applicable to the Company, the violation of which would have a material and
adverse effect on the Company or the transactions contemplated hereby. The
Company's execution and delivery of this Agreement and its consummation of the
transactions contemplated hereby will not result in any such violation or
conflict with, constitute a default or require any consent under (a), (b) or
(c) above, or result in the creation of any lien, charge or encumbrance on any
of its properties or assets as contemplated herein.
- 12 -
<PAGE> 13
13. ADDITIONAL COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees to immediately take all action necessary, at the direction
of any of the Pledgees, to transfer the Pledged Securities, subject to the
limitation of the number of shares allocated to such Pledgee(s) under Section 7
hereof, to or upon the order of such Pledgee(s) after the occurrence of a
default hereunder (including, without limitation, using its best efforts to
ensure that (i) the Company's transfer agent effects a registered transfer to
or upon the order of each such Pledgee that number of shares of the Company's
Common Stock calculated in accordance with Section 7 hereof which each such
Pledgee is entitled to receive upon an Event of Default hereunder and (ii) the
Company and its counsel promptly, upon the request of any such Pledgee, shall
furnish the Company's transfer agent with any and all documentation necessary
to allow the Pledgee to sell such shares pursuant to SEC Rule 144).
14. INDEMNIFICATION.
(a) The Company hereby agrees to indemnify and hold harmless
each Pledgee and each of the Pledgee's stockholders, directors, officers,
partners and agents and each of their respective heirs, executors,
administrators, successors and assigns, from any loss, claim, damage, cost,
lawsuit, attorney's and accountant's fees, deficiency, assessment,
administrative order, fine, penalty, action, proceeding, judgment or expense,
including in all cases the reasonable fees and expenses of counsel, resulting
from or by reason of (a) any inaccuracy in any of the representations, or
breach of the warranties made by the Company in this Agreement or in connection
with this Agreement in any document executed and/or delivered by or on behalf
- 13 -
<PAGE> 14
of the Company and (b) any failure of the Company to perform any covenant or
agreement set forth in this Agreement.
(b) The Pledgor hereby agrees to indemnify and hold harmless
each of the Pledgees and each of the Pledgees' stockholders, directors,
officers, partners and agents and each of their respective heirs, executors,
administrators, successors and assigns, from any loss, claim, damage, cost,
lawsuit, attorney's and accountant's fees, deficiency, assessment,
administrative order, fine, penalty, action, proceeding, judgment or expense,
including in all cases, the reasonable fees and expenses of counsel, resulting
from or by reason of (a) any inaccuracy in any of the representations, or
breach of the warranties made by the Pledgor in this Agreement or in connection
with this Agreement in any document executed and or delivered by or on behalf
of the Pledgor and (b) any failure of the Pledgor to perform any covenant or
agreement set forth in this Agreement.
(c) Each Pledgee hereby agrees to indemnify and hold harmless
the Company and its stockholders, directors, officers, partners and agents and
each of their respective heirs, executors, administrators, successors and
assigns, from any loss, claim, damage, cost, lawsuit, attorney's and
accountant's fees, deficiency, assessment, administrative order, fine,
penalty, action, proceeding, judgment or expense, including in all cases the
reasonable fees and expenses of counsel, resulting from or by reason of (a) any
inaccuracy in any of the representations, or breach of the warranties made by
such Pledgee in this Agreement or in connection with this Agreement in any
document executed and or delivered by such
- 14 -
<PAGE> 15
Pledgee and (b) any failure of such Pledgee to perform any covenant or
agreement set forth in this Agreement.
(d) The Company, the Pledgor and each of the Pledgees hereby
agree to indemnify and hold harmless KDW and its partners and agents and each
of their respective heirs, executors, administrators, successors and assigns,
from any loss, claim, damage, cost, lawsuit, attorney's and accountant's fees,
deficiency, assessment, administrative order, fine, penalty, action,
proceeding, judgment or expense, including in all cases the reasonable fees and
expenses of counsel, resulting from or by reason of KDW's holding of the
Pledged Securities other than claims resulting from KDW's willful malfeasance
or gross negligence.
15. EXPENSES OF THE INVESTOR. All reasonable expenses incurred by
any Pledgee in connection with the exercise by such Pledgee of any of its
respective rights hereunder, including, without limitation, any attorney fee,
brokerage fees, and commissions in connection with any sale of the collateral
hereunder shall be promptly paid by the Company upon demand made by such
Pledgee.
16. REMEDIES. Each right, power and remedy provided for herein or
now or hereafter existing at law, in equity, by statute or otherwise, shall be
cumulative, and the exercise or forbearance of exercise by any party of any one
or more of such rights, powers or remedies shall not preclude the simultaneous
or later exercise by such party of any or all of such other rights, powers or
remedies, nor shall any failure to enforce any of such rights, powers or
remedies be deemed to constitute a waiver thereof.
- 15 -
<PAGE> 16
17. FURTHER ASSURANCES. The Company and the Pledgor shall at any
time and from time to time upon the written request of any Pledgee, execute and
deliver such further documents, including without limitation, representation
letters, and do such further acts and things as such Pledgee(s) may reasonably
request in order to effectuate the purposes of this Agreement and in order to
create, preserve and perfect the interest granted pursuant hereto or to enable
such Pledgee(s) to enforce its/their rights hereunder.
The Pledgor hereby agrees to give, execute, deliver, file and/or
record any financing statement, notice, instrument, document, agreement or
other papers that may be necessary or reasonably desirable (in the judgment of
any Pledgee or its counsel) to create, preserve, perfect or validate any
security interest granted pursuant hereto or to enable the Pledgees or any one
of them to exercise and enforce their rights hereunder with respect to such
security interest.
18. AMENDMENTS; WAIVER; CONSENT. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Pledgor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by each Pledgee, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
19. NOTICES. All notices provided for in this Agreement shall be in
writing signed by the party giving such notice, and delivered personally (with
delivery confirmed by receipt signed by recipient) or sent by overnight courier
or messenger or sent by registered or certified mail (air mail if overseas),
return receipt requested, or by telex, facsimile
- 16 -
<PAGE> 17
transmission, telegram or similar means of communication with delivery
confirmed. Notices shall be deemed to have been received on the date of
personal delivery, telex, facsimile transmission, telegram or similar means of
communication, or if sent by overnight courier or messenger, shall be deemed to
have been received on the next delivery day after deposit with the courier or
messenger, or if sent by certified or registered mail, return receipt
requested, shall be deemed to have been received on the third business day
after the date of mailing. Notices shall be sent to the addresses set forth on
Schedule C.
20. GOVERNING LAW. THIS AGREEMENT AND ALL DOCUMENTS DELIVERED IN
CONNECTION THEREWITH SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE RULES OF
CONFLICTS OF LAW.
21. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns, except that the Pledgor shall not have
the right to assign any rights hereunder without the prior written consent of
all Pledgees.
22. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement.
23. SEVERABILITY OF PROVISIONS. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of
- 17 -
<PAGE> 18
this Agreement or affecting the validity or enforceability of such provisions
in any other jurisdiction.
24. HEADINGS. The headings preceding the text of this Agreement are
inserted solely for convenience of reference and shall not constitute a part
of this Agreement nor affect its meaning, construction or effect.
- 18 -
<PAGE> 19
IN WITNESS WHEREOF, and in consideration of the agreements contained
herein and intending to be legally bound hereby, Pledgees and Pledgor hereby
execute this Agreement, and the Company and KDW as Representative have caused
this Agreement to be executed by their respective officers or partners
thereunto duly authorized, as of the date first above written.
PARTECH HOLDINGS CORPORATION
By:
_________________________
Name: John E. Rayl
Title: President and Chief Executive
Officer
Pledgor:____________________
Name: John E. Rayl
KELLEY DRYE & WARREN,
as Representatives of the Pledgees
By:_________________________
Name: Lawrence B. Fisher
Title: Partner
Pledgees:
GENERATION CAPITAL ASSOCIATES
By:__________________________
Name: Frank Hart
Title: General Partner
- 19 -
<PAGE> 20
__________________________________________
Name: Peter Prescott
JULES and AMOS SWIMMER, Joint
Tenants
By:__________________________________________
Name: Jules Swimmer
__________________________________________
Name: Jules Swimmer
RSH PARTNERS
By:__________________________________________
Name: Horace Hertz
Title: General Partner
TGR VENTURES, INC.
By:__________________________________________
Name:
Title:
- 20 -
<PAGE> 21
_________________________________
By:__________________________________________
Name:
Title:
_________________________________
By:__________________________________________
Name:
Title:
_________________________________
By:__________________________________________
Name:
Title:
_________________________________
By:__________________________________________
Name:
Title:
_________________________________
By:__________________________________________
Name:
Title:
- 21 -
<PAGE> 22
SCHEDULE A
----------
PARTECH HOLDINGS CORPORATION - INVESTOR LIST
--------------------------------------------
NOTE
--------
1. Generation Capital Associates $300,000
Attn: Mr. Frank Hart
617 West End Avenue
New York, NY 10024
Tel: (212) 787-5541
Fax: (212) 496-6292
2. Peter Prescott $25,000
27341 Vista Azul
Capistrano Beach, CA 92624
Tel:
Fax:
3. Jules and Amos Swimmer $20,000
Joint Tenants
901 Dove Street, Suite 230
Newport Beach, CA 92660
Tel:
Fax:
4. Jules Swimmer $15,000
901 Dove Street, Suite 230
Newport Beach, CA 92660
Tel:
Fax:
5. RSH Partners $10,000
Attn: Mr. Horace Hertz
Park Place Tower
3333 Michaelson Drive, Suite 550
Irvine, CA 92715
Tel:
Fax:
- 22 -
<PAGE> 23
6. TGR Ventures, Inc. $ 10,000
7. $
8. $
9. $
10. $
- 23 -
<PAGE> 24
SCHEDULE B
----------
John E. Rayl 700,305 Shares
All shares are shares of Common Stock of Partech Holdings Corporation,
$.05 par value per share.
- 24 -
<PAGE> 25
SCHEDULE C
----------
ADDRESSES FOR NOTICES
---------------------
To the Company:
Partech Holdings Corporation
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Attn: Mr. John E. Rayl
Telephone: (614) 538-0660
Facsimile: (614) 538-0670
To the Pledgor:
John E. Rayl
c/o Partech Holdings Corporation
3366 Riverside Drive
Suite 200
Columbus, Ohio 43221
Telephone: (614) 538-0660
Facsimile: (614) 538-0670
To the Investors:
To each Investor
at the address
provided in
Schedule A hereto
- 25 -
<PAGE> 26
With a copy to:
Kelley Drye & Warren
101 Park Avenue
New York, NY 10178
Attn: Lawrence B. Fisher
Telephone: (212) 808-7800
Facsimile: (212) 808-7898
and
Horowitz, Cutler & Beam
2 Venture Plaza, Suite 380
Irvine, CA 92718
Attn: M. Richard Cutler
Telephone: (714) 453-0300
Facsimile: (714) 453-9416
To KDW:
Kelley Drye & Warren
101 Park Avenue
New York, NY 10178
Attn: Deborah Saltzman
Telephone: (212) 808-7507
Facsimile: (212) 808-7897
To Horowitz, Cutler & Beam:
2 Venture Plaza, Suite 380
Irvine, CA 92718
Attn: M. Richard Cutler
Telephone: (714) 453-0300
Facsimile: (714) 453-9416
- 26 -
<PAGE> 27
To the Company's transfer agent:
Continental Stock Transfer & Trust Company
2 Broadway
New York, NY 10004
Attn: William Seegraver
Telephone: (212) 509-4000
Fascimile: (212) 349-1360
- 27 -
