<PAGE> 1
<TABLE>
<CAPTION>
----------------------------
OMB APPROVAL
----------------------------
<S> <C> <C>
OMB Number: 3235-0145
Expires: August 31, 1999
UNITED STATES Estimated average burden
SECURITIES AND EXCHANGE COMMISSION hours per expense....14.90
WASHINGTON, D.C. 20549 ----------------------------
</TABLE>
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No.____)*
LAS VEGAS DISCOUNT GOLF & TENNIS, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
No Par Value Per Share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
517668
- --------------------------------------------------------------------------------
(CUSIP Number)
Mr. Perry Rogers Copy to: Anthony D. Decello
Agassi Enterprises, Inc. Investment Advisors
3960 Howard Hughes Parkway, Suite 750 International, Inc.
Las Vegas, Nevada 89109 IMG Center, Suite 100
(702) 227-5700 1360 East 9th Street
Cleveland, Ohio 44114-1782
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 19, 1998
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
page 2 of 22
------- ------
CUSIP No. 517668
-----------------
- --------------------------------------------------------------------------------
1 Names of Reporting Persons.
I.R.S Identification Nos. of above persons (entities only)
ASI Group, L.L.C. 34-1875738
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
---------------------------------------------------------------------
(b) X
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions) Affiliate (AF)
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization Nevada
- --------------------------------------------------------------------------------
7 Sole Voting Power 2,651,265 (including options to
acquire 347,975 shares)
Number Of --------------------------------------------------------------
Shares Bene-
ficially 8 Shared Voting Power 0
Owned by Each --------------------------------------------------------------
Reporting
Person With 9 Sole Dispositive Power 2,651,265 (including options to
acquire 347,975 shares)
--------------------------------------------------------------
10 Shared Dispositive Power 0
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265
(including options to acquire 347,975 shares)
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) N/A
- --------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
(OO) Other
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
INSTRUCTIONS FOR COVER PAGE
(1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the
full legal name of each person for whom the report is filed - i.e., each
person required to sign the schedule itself - including each member of a
group. Do not include the name of a person required to be identified in the
report but who is not a reporting person. Reporting persons that are
entities are also requested to furnish their I.R.S. identification numbers,
although disclosure of such numbers is voluntary, not mandatory (see
"SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below).
(2) If any of the shares beneficially owned by a reporting person are held as a
member of a group and the membership is expressly affirmed, please check
row 2(a). If the reporting person disclaims membership in a group or
describes a relationship with other persons but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)]
(3) The 3rd row is for SEC internal use; please leave blank.
<PAGE> 3
page 3 of 22
------- ------
CUSIP No. 517668
-----------------
- --------------------------------------------------------------------------------
1 Names of Reporting Persons.
I.R.S Identification Nos. of above persons (entities only)
James Earl Rogers
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
---------------------------------------------------------------------
(b) X
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions) Other (00)
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization Nevada
- --------------------------------------------------------------------------------
7 Sole Voting Power 0
Number Of --------------------------------------------------------------
Shares Bene-
ficially by 8 Shared Voting Power 2,651,265 (including options to
Owned by Each acquire 347,975 shares)
Reporting --------------------------------------------------------------
Person With
9 Sole Dispositive Power 0
--------------------------------------------------------------
10 Shared Dispositive Power 2,651,265 (including options to
acquire 347,975 shares)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265
(including options to acquire 347,975 shares)
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) N/A
- --------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
Individual (IN)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
INSTRUCTIONS FOR COVER PAGE
(1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the
full legal name of each person for whom the report is filed - i.e., each
person required to sign the schedule itself - including each member of a
group. Do not include the name of a person required to be identified in the
report but who is not a reporting person. Reporting persons that are
entities are also requested to furnish their I.R.S. identification numbers,
although disclosure of such numbers is voluntary, not mandatory (see
"SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below).
(2) If any of the shares beneficially owned by a reporting person are held as a
member of a group and the membership is expressly affirmed, please check
row 2(a). If the reporting person disclaims membership in a group or
describes a relationship with other persons but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)]
(3) The 3rd row is for SEC internal use; please leave blank.
<PAGE> 4
page 4 of 22
------- ------
CUSIP No. 517668
-----------------
- --------------------------------------------------------------------------------
1 Names of Reporting Persons.
I.R.S Identification Nos. of above persons (entities only)
Andre K. Agassi
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
---------------------------------------------------------------------
(b) X
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions) Personal Funds (PF)
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization Nevada
- --------------------------------------------------------------------------------
7 Sole Voting Power 0
Number Of --------------------------------------------------------------
Shares Bene-
ficially by 8 Shared Voting Power 2,651,265 (including options to
Owned by Each acquire 347,975 shares)
Reporting --------------------------------------------------------------
Person With
9 Sole Dispositive Power 0
--------------------------------------------------------------
10 Shared Dispositive Power 2,651,265 (including options to
acquire 347,975 shares)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265
(including options to acquire 347,975 shares)
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) N/A
- --------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
Individual (IN)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
INSTRUCTIONS FOR COVER PAGE
(1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the
full legal name of each person for whom the report is filed - i.e., each
person required to sign the schedule itself - including each member of a
group. Do not include the name of a person required to be identified in the
report but who is not a reporting person. Reporting persons that are
entities are also requested to furnish their I.R.S. identification numbers,
although disclosure of such numbers is voluntary, not mandatory (see
"SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below).
(2) If any of the shares beneficially owned by a reporting person are held as a
member of a group and the membership is expressly affirmed, please check
row 2(a). If the reporting person disclaims membership in a group or
describes a relationship with other persons but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)]
(3) The 3rd row is for SEC internal use; please leave blank.
<PAGE> 5
page 5 of 22
------- ------
CUSIP No. 517668
-----------------
- --------------------------------------------------------------------------------
1 Names of Reporting Persons.
I.R.S Identification Nos. of above persons (entities only)
Perry Craig Rogers
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
---------------------------------------------------------------------
(b) X
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions) Personal Funds (PF) and other (OO)
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization Nevada
- --------------------------------------------------------------------------------
7 Sole Voting Power 0
Number Of --------------------------------------------------------------
Shares Bene-
ficially by 8 Shared Voting Power 2,651,265 (including options to
Owned by Each acquire 347,975 shares)
Reporting --------------------------------------------------------------
Person With
9 Sole Dispositive Power 0
--------------------------------------------------------------
10 Shared Dispositive Power 2,651,265 (including options to
acquire 347,975 shares)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265
(including options to acquire 347,975 shares)
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) N/A
- --------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
Individual (IN)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
INSTRUCTIONS FOR COVER PAGE
(1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the
full legal name of each person for whom the report is filed - i.e., each
person required to sign the schedule itself - including each member of a
group. Do not include the name of a person required to be identified in the
report but who is not a reporting person. Reporting persons that are
entities are also requested to furnish their I.R.S. identification numbers,
although disclosure of such numbers is voluntary, not mandatory (see
"SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below).
(2) If any of the shares beneficially owned by a reporting person are held as a
member of a group and the membership is expressly affirmed, please check
row 2(a). If the reporting person disclaims membership in a group or
describes a relationship with other persons but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)]
(3) The 3rd row is for SEC internal use; please leave blank.
2
<PAGE> 6
page 6 of 22
------- ------
CUSIP No. 517668
-----------------
- --------------------------------------------------------------------------------
1 Names of Reporting Persons.
I.R.S Identification Nos. of above persons (entities only)
Sunbelt Communications Company 88-0229427
- --------------------------------------------------------------------------------
2 Check the Appropriate Box if a Member of a Group (See Instructions)
(a)
---------------------------------------------------------------------
(b) X
---------------------------------------------------------------------
- --------------------------------------------------------------------------------
3 SEC Use Only
- --------------------------------------------------------------------------------
4 Source of Funds (See Instructions) Bank (BK)
- --------------------------------------------------------------------------------
5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items
2(d) or 2(e)
- --------------------------------------------------------------------------------
6 Citizenship or Place of Organization Nevada
- --------------------------------------------------------------------------------
7 Sole Voting Power 0
Number Of --------------------------------------------------------------
Shares Bene-
ficially by 8 Shared Voting Power 2,651,265 (including options to
Owned by Each acquire 347,975 shares)
Reporting --------------------------------------------------------------
Person With
9 Sole Dispositive Power 0
--------------------------------------------------------------
10 Shared Dispositive Power 2,651,265 (including options to
acquire 347,975 shares)
- --------------------------------------------------------------------------------
11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265
(including options to acquire 347,975 shares)
- --------------------------------------------------------------------------------
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions)
- --------------------------------------------------------------------------------
13 Percent of Class Represented by Amount in Row (11) N/A
- --------------------------------------------------------------------------------
14 Type of Reporting Person (See Instructions)
Corporation (CO)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
INSTRUCTIONS FOR COVER PAGE
(1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the
full legal name of each person for whom the report is filed - i.e., each
person required to sign the schedule itself - including each member of a
group. Do not include the name of a person required to be identified in the
report but who is not a reporting person. Reporting persons that are
entities are also requested to furnish their I.R.S. identification numbers,
although disclosure of such numbers is voluntary, not mandatory (see
"SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below).
(2) If any of the shares beneficially owned by a reporting person are held as a
member of a group and the membership is expressly affirmed, please check
row 2(a). If the reporting person disclaims membership in a group or
describes a relationship with other persons but does not affirm the
existence of a group, please check row 2(b) [unless it is a joint filing
pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check
row 2(b)]
(3) The 3rd row is for SEC internal use; please leave blank.
<PAGE> 7
page 7 of 22
------- ------
CUSIP No. 517668
NOTES TO SCHEDULE 13D FOR
ANDRE K. AGASSI
1. The Reporting Person shares voting and dispositive power as described
in Item 5 of this Schedule 13D.
2. The Reporting Person disclaims beneficial ownership of these shares
pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See
Item 5 of this Schedule 13D.
<PAGE> 8
page 8 of 22
------- ------
CUSIP No. 517668
NOTES TO SCHEDULE 13D FOR
SUNBELT COMMUNICATIONS COMPANY
1. The Reporting Person shares voting and dispositive power as described
in Item 5 of this Schedule 13D.
2. The Reporting Person disclaims beneficial ownership of these shares
pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See
Item 5 of this Schedule 13D.
<PAGE> 9
page 9 of 22
------- ------
CUSIP No. 517668
NOTES TO SCHEDULE 13D FOR
PERRY CRAIG ROGERS
1. The Reporting Person shares voting and dispositive power as described
in Item 5 of this Schedule 13D.
2. The Reporting Person disclaims beneficial ownership of these shares
pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See
Item 5 of this Schedule 13D.
<PAGE> 10
page 10 of 22
------- ------
CUSIP No. 517668
NOTES TO SCHEDULE 13D FOR
JAMES EARL ROGERS
1. The Reporting Person shares voting and dispositive power as described
in Item 5 of this Schedule 13D.
2. The Reporting Person disclaims beneficial ownership of these shares
pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See
Item 5 of this Schedule 13D.
<PAGE> 11
page 11 of 22
------- ------
CUSIP No. 517668
ITEM 1. SECURITY AND ISSUER
The title and class of equity securities to which this Schedule 13D
relates is the Common Stock, no par value per share (the "Common Stock") of Las
Vegas Discount Golf & Tennis, Inc., a Colorado corporation (the "Company"). The
principal executive offices of the Company are located at 5325 South Valley View
Boulevard, Suite 10, Las Vegas, Nevada 89118.
ITEM 2. IDENTITY AND BACKGROUND
(a, b, c and f) This Schedule 13D is being filed by the following
persons:
(i) ASI Group, L.L.C. (the "Reporting Person"), a Nevada
limited liability company engaged in the business of
investing in securities; its principal business
address and its principal office address is 3960
Howard Hughes Parkway, Suite 750, Las Vegas, Nevada
89109; and
(ii) Andre K. Agassi ("Agassi"), an individual, a United
States citizen, having a business address at Agassi
Enterprises, Inc., 3960 Howard Hughes Parkway, Suite
750, Las Vegas, Nevada 89109; Agassi is a
professional tennis player; the services of Agassi
are offered through his wholly owned service
corporation, Agassi Enterprises, Inc., a Nevada
corporation; the principal business address of Agassi
Enterprises, Inc. is 3960 Howard Hughes Parkway,
Suite 750, Las Vegas, Nevada 89109; and
(iii) Sunbelt Communications Company ("Sunbelt"), a Nevada
corporation, engaged in the business of broadcasting;
its business address and its principal office is 1500
Foremaster Lane, Las Vegas, Nevada 89101; and
(iv) James Earl Rogers ("JRogers"), an individual, a
United States citizen, having a business address at
1500 Foremaster Lane, Las Vegas, Nevada 89101;
JRogers is engaged in the business of radio and
television broadcasting and owns television stations
through his wholly-owned corporation, Sunbelt
Communications Company, a Nevada corporation; the
principal business address of Sunbelt Communications
is 1500 Foremaster Lane, Las Vegas, Nevada 89101; and
(v) Perry Craig Rogers ("PRogers"), an individual, a
United States citizen, having a business address at
Agassi Enterprises, Inc., 3960 Howard Hughes Parkway,
Suite 750, Las Vegas, Nevada
<PAGE> 12
page 12 of 22
------- ------
89109; PRogers is engaged in the business of acting
as an attorney and business manager; his principal
business address is at Agassi Enterprises, Inc.,
3960 Howard Hughes Parkway, Suite 750, Las Vegas,
Nevada 89109;
Agassi, Sunbelt and PRogers are the sole members and sole
owners of the Reporting Person. JRogers is a controlling
shareholder of Sunbelt.
Exhibit 2.1 which is attached hereto and incorporated herein in its
entirety by reference, sets forth the name, residence address or business
address and certain employment information and citizenship of each of the
executive officers and directors of Sunbelt.
(d and e) None of the Reporting Person, Agassi, JRogers, PRogers or
Sunbelt or to the best knowledge of the Reporting Person or Sunbelt, the persons
listed in Exhibit 2.1, has, during the past five years, (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors); or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation of such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290)
shares of Common Stock were purchased by the Reporting Person with funds
aggregating $2,500,000. Said funds were provided from personal funds of
affiliates of the Reporting Person, proceeds of bank loans taken by Sunbelt and
other funds of affiliates of the Reporting Person. Sunbelt obtained funds for
this transaction from an additional draw (the "Draw") on an existing loan
between AT&T Commercial Finance Corporation and Sunbelt. The Draw is in the
amount of $1.2 million and bears interest at the commercial paper rate at the
close of business on the first business day of every month plus 2.5%. Sunbelt is
required to make monthly payments of principal and interest through June 1,
2008. In connection with such purchase the Reporting Person was also issued
options to purchase up to Three Hundred Forty Seven Thousand Nine Hundred
Seventy Five (347,975) shares of Common Stock for a price of $1.8392 per share.
ITEM 4. PURPOSE OF TRANSACTION
(a) Pursuant to the terms of the Investment and Voting Agreement
between the Reporting Person and the Company, the Reporting
Person and the Company also entered into an Option Agreement
pursuant to which the Reporting Person was issued options to
purchase up to Three Hundred Forty Seven Thousand Nine Hundred
Seventy Five (347,975) shares of Common Stock for a price of
$1.8392 per share. A copy of each of the Investment
<PAGE> 13
page 13 of 22
------- ------
Agreement and Voting Agreement and the Option Agreement, each
dated as of October 19, 1998 are filed as Exhibits 4.1 and 4.2
respectively to this Schedule 13D and are incorporated herein
by reference.
(b) None.
(c) None.
(d) None.
(e) None.
(f) None.
(g) None.
(h) None.
(i) None.
(j) None.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) As of the date hereof, the Reporting Person may be deemed to
be the beneficial owner of an aggregate of Two Million Six
Hundred Fifty One Thousand Two Hundred Sixty Five (2,651,265)
shares of Common Stock of the Company, representing
approximately thirty one and one-quarter percent (31.25%) of
the Common Stock of the Company, based upon the most recent
available filing of the Company with the Securities and
Exchange Commission. Of the Two Million Six Hundred Fifty One
Thousand Two Hundred Sixty Five (2,651,265) shares, Three
Hundred Forty Seven Thousand Nine Hundred Seventy Five
(347,975) shares are deemed to be beneficially owned by the
Reporting Person by reason of the fact that the Reporting
Person has options to acquire such shares.
None of Agassi, JRogers, PRogers or Sunbelt own any shares of
the Company directly but may be deemed to share beneficial
ownership of all shares of Common Stock owned by the Reporting
Person by virtue of the ownership relationship described in
Item 2.
(b) Subject to its obligations under the Investment and Voting
Agreement described in this Schedule 13D, the Reporting Person
shall have the sole power of voting and disposition with
respect to Two Million Three Hundred Three Thousand Two
Hundred Ninety (2,303,290) shares of Common Stock of the
Company; and assuming the Reporting Person exercises all the
<PAGE> 14
page 14 of 22
------- ------
options it currently owns to acquire shares of the Company's
Common Stock, the Reporting Person shall have the sole power
of voting and disposition with respect to an additional Three
Hundred Forty Seven Thousand Nine Hundred Seventy Five
(347,975) shares of Common Stock of the Company.
By reason of their ownership of the Reporting Person, each of
Sunbelt, PRogers and Agassi may be deemed to share powers of
voting and disposition with respect to Two Million Three
Hundred Three Thousand Two Hundred Ninety (2,303,290) shares
of Common Stock of the Company; and assuming the Reporting
Person exercises all the options it currently owns to acquire
shares of the Company's Common Stock, each of, PRogers, Agassi
and Sunbelt may be deemed to share powers of voting and
disposition with respect to an additional Three Hundred Forty
Seven Thousand Nine Hundred Seventy Five (347,975) shares of
Common Stock of the Company.
By reason of his ownership of Sunbelt, JRogers may be deemed
to share powers of voting and disposition with respect to Two
Million Three Hundred Three Thousand Two Hundred Ninety
(2,303,290) shares of Common Stock of the Company, and
assuming the Reporting Person exercises all the options it
currently owns to acquire shares of the Company's Common
Stock, JRogers may be deemed to share powers of voting and
disposition with respect to an additional Three Hundred Forty
Seven Thousand Nine Hundred Seventy Five (347,975) shares of
Common Stock of the Company.
By reason of their positions as executive officers and
directors of Sunbelt the persons described in Exhibit 2.1
hereto may be deemed to share powers of voting with respect to
Two Million Three Hundred Three Thousand Two Hundred Ninety
(2,303,290) shares of Common Stock of the Company; and
assuming the Reporting Person exercises all the options it
currently owns to acquire shares of the Company's Common Stock
such persons may be deemed to share powers of voting with
respect to an additional Three Hundred Forty Seven Thousand
Nine Hundred Seventy Five (347,975) shares of Common Stock of
the Company.
(c) Set forth on Exhibit 5.1, attached hereto, is information
concerning all transactions in the Company's stock by the
Reporting Person that were effected during the past sixty (60)
days. No transactions in the Company's stock were effected by
any of Agassi, PRogers, JRogers or Sunbelt or the executive
officers and directors of the Reporting Person during the past
sixty (60) days.
(d) None.
<PAGE> 15
page 15 of 22
------- ------
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER
Pursuant to the terms of the Investment and Voting Agreement between
the Reporting Person and the Company, attached as Exhibit 4.1 hereto, the
Reporting Person has a right of first refusal to purchase its pro rata share of
all or any part of any shares of capital stock of the Company (or securities of
any type whatsoever that are, or may become, convertible into shares of common
or preferred stock of the Company) which the Company may propose to sell or
issue. The number of shares of Common Stock of the Company owned by the
Reporting Person by reason of purchase pursuant to the Investment and Voting
Agreement shall be adjusted in the event the Company offers to sell any shares
of its capital stock to any other person or entities at a lower price per share
than the purchase price so paid by the Reporting Person or otherwise on more
favorable terms.
Pursuant to the terms of the Option Agreement, attached as Exhibit 4.2
hereto, the Reporting Person has the option to purchase up to Three Hundred
Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock
of the Company at a price of $1.8392 per share.
The Reporting Person has the right to demand that the Company effect a
registration under the Securities Act of 1934 of the Common Stock of the Company
purchased pursuant to the Investment and Voting Agreement or upon exercise of
the options issued pursuant to the Option Agreement or to participate in any
registration of Common Stock undertaken by the Company as long as the Reporting
Person owns at least five percent (5%) of the Company's outstanding voting
equity securities. Upon request of the Company or the underwriters managing an
underwritten offering of the Company's securities, the Reporting Person will not
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any of the Common Stock of the Company (other than those
included in the registration) without the prior written consent of the Company
or such underwriters, as the case may be, for such period of time (not to exceed
one hundred and twenty (120) days) from the effective date of such registration
as may be requested by the underwriters; provided that the officers and
directors of the Company who own stock of the Company also agree to such
restrictions.
Pursuant to the terms of the Voting Agreement between the Reporting
Person and each of Messrs. Vaso Boreta, Ronald Boreta, and John Boreta and
Boreta Enterprises, Ltd. (collectively, "Boreta"), attached as Exhibit 6.1
hereto and incorporated by reference herein, the Reporting Person and Boreta
agreed that, while the Reporting Person is an equity owner of the Company and/or
Saint Andrews Golf Corporation ("SAGC"), each of the Reporting Person and Boreta
will (a) vote the shares of capital stock of the Company any of them is entitled
to vote as mutually agreed by the Reporting Person and Boreta (provided that no
party will be so required to vote its shares if the subject action implemented
in accordance with such mutual agreement, would in any manner adversely effect
the interests of such party or the Company or SAGC, or adversely affect the
value of
<PAGE> 16
page 16 of 22
------- ------
such shares) and (b) Boreta will, if it acquires additional capital stock of the
Company or SAGC, transfer a portion of such capital stock to the Reporting
Person so as to maintain their relative proportionate direct and indirect equity
ownership in each of the Company and SAGC.
Pursuant to the terms of the Co-Sale Agreement between the Reporting
Person and Boreta, attached as Exhibit 6.2 hereto and incorporated by reference
herein, the Reporting Person and Boreta agreed that, until the fifth anniversary
of such agreement, except with respect to certain limited transactions, if any
of Boreta proposes to sell any shares of capital stock of the Company, the
Reporting Person shall have the right to participate in such sale of capital
stock on the same terms and conditions.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following documents are filed as exhibits:
2.1 Certain information about officers and directors of Sunbelt
Communications Company.
3.1 Amended and Restated Loan Agreement dated as of May 18, 1998,
as subsequently amended, by and between AT&T Commercial
Finance Corporation (and other financial institution who may
hereafter become parties hereto), as Lenders, AT&T Commercial
Finance Corporation, as Agent and Sunbelt Communications
Company, Valley Broadcasting Company, Yuma Broadcasting
Company, Sierra Broadcasting Company, Oregon Trail
Broadcasting Company, Falls Broadcasting Company, Two Ocean
Broadcasting Company, Sierra Radio Company, Radio News
Company, Ruby Mountain Broadcasting Company and Beartooth
Communications Company, as Borrowers.
4.1 Investment and Voting Agreement, dated as of October 19, 1998,
by and between ASI Group, L.L.C. and Las Vegas Discount Golf &
Tennis, Inc.
4.2 Option Agreement, dated as of October 19, 1998, by and between
ASI Group, L.L.C. and Las Vegas Discount Golf & Tennis, Inc.
5.1 Transactions by ASI Group, L.L.C. in Las Vegas Discount Golf &
Tennis, Inc. stock
6.1 Voting Agreement dated as of October 19, 1998, by and among
ASI Group, L.L.C. and Messrs. John Boreta, Ronald Boreta and
Vaso Boreta and Boreta Enterprises Ltd.
6.2 Co-Sale Agreement, dated as of October 19, 1998, by and among
<PAGE> 17
page 17 of 22
------- ------
ASI Group, L.L.C., Las Vegas Discount Golf & Tennis, Inc. and
Messrs. John Boreta, Ronald Boreta and Vaso Boreta and Boreta
Enterprises Ltd.
7.1 Agreement, dated as of October 19, 1998, by and among Andre K.
Agassi, James Earl Rogers, Perry Craig Rogers, ASI Group,
L.L.C. and Sunbelt Communications Company relating to the
filing of a joint acquisition statement.
7.2 Power of Attorney of James Earl Rogers.
<PAGE> 18
page 18 of 22
------- ------
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 19, 1998
-----------------------------------------------------------------------
Date
/s/ Perry Craig Rogers
-----------------------------------------------------------------------
Signature
ASI Group, L.L.C., by Perry Craig Rogers, member
-----------------------------------------------------------------------
Name/Title
<PAGE> 19
page 19 of 22
------- ------
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 19, 1998
-----------------------------------------------------------------------
Date
/s/ Perry Craig Rogers
-----------------------------------------------------------------------
Signature
Perry Craig Rogers
-----------------------------------------------------------------------
Name/Title
<PAGE> 20
page 20 of 22
------- ------
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 19, 1998
-----------------------------------------------------------------------
Date
/s/ Andre K. Agassi
-----------------------------------------------------------------------
Signature
Andre K. Agassi
-----------------------------------------------------------------------
Name/Title
<PAGE> 21
page 21 of 22
------- ------
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 19, 1998
-----------------------------------------------------------------------
Date
/s/ James Earl Rogers, by Perry Craig Rogers, attorney-in-fact
-----------------------------------------------------------------------
Signature
Sunbelt Communications Company by James Earl Rogers, President
by Perry Craig Rogers, attorney-in-fact
-----------------------------------------------------------------------
Name/Title
<PAGE> 22
page 22 of 22
------- ------
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 19, 1998
-----------------------------------------------------------------------
Date
/s/ James Earl Rogers
-----------------------------------------------------------------------
Signature
James Earl Rogers
-----------------------------------------------------------------------
Name/Title
<PAGE> 1
EXHIBIT 2.1
OFFICERS AND DIRECTORS
OF SUNBELT COMMUNICATIONS COMPANY
The following table sets forth the name, resident or business address,
citizenship, present principal occupation or employment, and the name, principal
business and address of any corporation in which employment is conducted by each
executive officer and director of Sunbelt Communications Company.
<TABLE>
<S> <C> <C> <C>
(a) James E. Rogers (a) Beverly Rogers
(b) Sunbelt Communications Company (b) Western States Communications
1500 Foremaster Lane Company
Las Vegas, NV 89101 1500 Foremaster Lane
(c) President Las Vegas, NV 89101
Sunbelt Communications Company (c) Director
1500 Foremaster Lane Sunbelt Communications Company
Las Vegas, NV 89101 1500 Foremaster Lane
(d) No Las Vegas, NV 89101;
(e) No Corporate Marketing Director
(f) USA Western States Communications
Company
1500 Foremaster Lane
Las Vegas, NV 89101
(d) No
(e) No
(f) USA
(a) Rolla Cleaver (a) Ralph Toddre
(b) Valley Broadcasting Company (b) 1790 Vassar Street
1500 Foremaster Lane Reno, NV 89502
Las Vegas, NV 89101 (c) Director
(c) Executive Vice President Sunbelt Communications Company
Sunbelt Communications Company 1500 Foremaster Lane
1500 Foremaster Lane Las Vegas, NV 89101;
Las Vegas, NV 89101; Vice President
General Manager, Western States Communications
Valley Broadcasting Company Company
1500 Foremaster Lane 1500 Foremaster Lane
Las Vegas, NV 89101 Las Vegas, NV 89101
(d) No (d) No
(e) No (e) No
(f) USA (f) USA
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C>
(a) Gene Greenberg (a) Scott Mattox
(b) Valley Broadcasting Company (b) Sunbelt Communications Company
1500 Foremaster Lane 1500 Foremaster Lane
Las Vegas, NV 89101 Las Vegas, NV 89101
(c) Vice President, Sales (c) Treasurer
Sunbelt Communications Company Sunbelt Communications Company
1500 Foremaster Lane 1500 Foremaster Lane
Las Vegas, NV 89101; Las Vegas, NV 89101;
Sales Manager Controller
Valley Broadcasting Company Sunbelt Communications Company
1500 Foremaster Lane 1500 Foremaster Lane
Las Vegas, NV 89101 Las Vegas, NV 89101
(d) No (d) No
(e) No (e) No
(f) USA (f) USA
(a) Bill Fouch (a) Cindy Heinrich
(b) Oregon Trail Broadcasting Company (b) Sunbelt Communications Company
902 E. Sherman Street 1500 Foremaster Lane
Pocatello, ID 83201 Las Vegas, NV 89101
(c) Director (c) Secretary
Sunbelt Communications Company Sunbelt Communications Company
1500 Foremaster Lane 1500 Foremaster Lane
Las Vegas, NV 89101; Las Vegas, NV 89101;
General Manager Director, Human Resources
Oregon Trail Broadcasting Company Sunbelt Communications Company
902 E. Sherman Street 1500 Foremaster Lane
Pocatello, ID 83201 Las Vegas, NV 89101
(d) No (d) No
(e) No (e) No
(f) USA (f) USA
</TABLE>
<PAGE> 1
EXHIBIT 3.1
AMENDED AND RESTATED LOAN AGREEMENT
by and between
AT&T COMMERCIAL FINANCE CORPORATION
(and other financial institutions who may hereafter
become parties hereto), as Lenders
AT&T COMMERCIAL FINANCE CORPORATION, AS AGENT
and
SUNBELT COMMUNICATIONS COMPANY, VALLEY BROADCASTING COMPANY,
YITMA BROADCASTING COMPANY, SIERRA BROADCASTING COMPANY,
OREGON TRAIL BROADCASTING COMPANY,
FALLS BROADCASTING COMPANY,
TWO OCEAN BROADCASTING COMPANY, SIERRA RADIO COMPANY,
RADIO NEWS COMPANY, RUBY MOUNTAIN BROADCASTING COMPANY
and
BEARTOOTH COMMUNICATIONS COMPANY,
as Borrowers
dated as of
May 18, 1998
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
I. DEFINITIONS...................................................................2
II. GENERAL TERMS ..............................................................13
Section 2.01. Tranche A Loans ................................................13
Section 2.02. Tranche B Loans ................................................14
Section 2.03. Prepayments ....................................................15
Section 2.04. Applicable Interest Rates; Payment of Interest................. 17
Section 2.05. Security for the Notes .........................................18
Section 2.06. Use of Proceeds ................................................19
Section 2.07. Termination Fee ................................................19
Section 2.08. Requirements of Law ............................................20
Section 2.09. Taxes .........................................................21
Section 2.10. Indemnification ................................................22
Section 2.11. Payments Under the Notes .......................................22
Section 2.13. Set-Off, Etc ................................................23
Section 2.13. Pro Rata Treatment; Sharing ....................................24
Section 2.14. Replacement of Notes ...........................................25
III. CONDITIONS OF MAKING THE LOANS............................................ 25
Section 3.01. Conditions to Closing ........................................25
Section 3.02. Acquisition Loans ..............................................27
Section 3.03. Supplemental Line ..............................................30
Section 3.04. Lender Approvals ..............................................31
IV. REPRESENTATIONS AND WARRANTIES .............................................32
Section 4.01. Financial Statements ...........................................32
Section 4.02. Organization, Etc ............................................. 32
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 4.03. Authorization; Compliance, Etc ................................ 33
Section 4.04. Governmental and Other Consents................................ 33
Section 4.05. Litigation......................................................33
Section 4.06. Compliance with Laws and Agreements............................ 33
Section 4.07. Title to Properties.............................................34
Section 4.08. Interests in Other Businesses...................................34
Section 4.09. No Insolvency ................................................34
Section 4.10. Full Disclosure ................................................35
Section 4.11. Tax Returns ................................................35
Section 4.12. Pension Plans, Etc .............................................35
Section 4.13. Licenses, Etc ................................................37
Section 4.14. Material Agreements ........................................37
Section 4.15. Ownership of Companies ........................................ 38
Section 4.16. Patents, Trademarks, Etc ......................................38
Section 4.17. Brokers, Etc ................................................38
Section 4.18. Enforceability ................................................38
Section 4.19. Environmental Matters ........................................39
Section 4.20. Studio and Tower Sites ........................................40
Section 4.21. Margin Stock ................................................40
Section 4.22. Investment Company Act ........................................40
Section 4.23. Labor Matters ................................................40
Section 4.24. Recitals ................................................40
V. FINANCIAL COVENANTS ........................................................40
Section 5.01. After Tax Cash Flow ............................................41
Section 5.02. KVBC-TV ........................................................41
Section 5.03. Debt Service Coverage ..........................................41
Section 5.04. Senior Debt to After Tax Cash Flow .............................42
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<S> <C>
Section 5.05. Fixed Charge Coverage Ratio; Current Ratio..................42
Section 5.06. Capital Expenditures....................................... 43
Section 5.07. Corporate Overhead .........................................43
Section 5.08. Restricted Payments.........................................43
VI. AFFIRMATIVE COVENANTS .................................................. 44
Section 6.01. Preservation of Assets; Compliance with Laws, Etc ...........44
Section 6.02. Insurance....................................................44
Section 6.03. Taxes, Etc...................................................45
Section 6.04. Notice of Proceedings, Defaults, Adverse Change, Etc ........46
Section 6.05. Financial Statements and Reports.............................46
Section 6.06. Inspection...................................................48
Section 6.07. Accounting System ...........................................48
Section 6.08. Notice of Purchase of Real Estate and Leases.................48
Section 6.09. Additional Assurances........................................48
Section 6.10. Environmental Indemnification ...............................49
Section 6.11. Ratings Reports .............................................50
Section 6.12. Accounts Payable.............................................50
Section 6.13. Use of Loan Proceeds ........................................50
Section 6.14. Appraisals ..................................................50
Section 6.15. Recommended Corrective Action ...............................51
VII. NEGATIVE COVENANTS..................................................... 51
Section 7.01. Indebtedness.................................................51
Section 7.02. Liens........................................................52
Section 7.03. Disposition of Assets........................................52
Section 7.04. Fundamental Changes; Acquisitions ...........................53
Section 7.05. Management ..................................................56
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<S> <C>
Section 7.06. Sale and Leaseback ........................................56
Section 7.07. Investments................................................56
Section 7.08. Change in Business.........................................56
Section 7.09. Accounts Receivable........................................56
Section 7.10. Transactions with Affiliates.............................. 56
Section 7.11. Amendment of Certain Agreements............................57
Section 7.12. ERISA......................................................57
Section 7.13. Local Marketing Agreements ................................57
Section 7.14. Illegal Activities.........................................58
Section 7.15. Margin Stock...............................................58
Section 7.16. Negative Pledges, Etc......................................58
VIII. DEFAULTS...............................................................58
IX. REMEDIES ON DEFAULT, ETC.................................................62
Section 9.01. Remedies...................................................62
Section 9.02. Default Rate...............................................62
Section 9.03. Effect on Payments........................................ 63
Section 9.04. Consent to Receiver........................................63
X. THE AGENT.................................................................63
Section 10.01. Appointment, Powers and Immunities.........................63
Section 10.02. Reliance by Agent..........................................65
Section 10.03. Events of Default..........................................65
Section 10.04. Rights as a Lender.........................................65
Section 10.05. Indemnification ...........................................66
Section 10.06. Non-Reliance on Agent and other Lenders ...................66
Section 10.07. Failure to Act ...........................................67
Section 10.08. Resignation or Removal of Agent ...........................67
</TABLE>
- iv-
<PAGE> 6
<TABLE>
<S> <C>
Section 10.09. Cooperation of Lenders ...........................................67
XI. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; ACTIONS BY THE
LENDERS ...........................................................................67
XII. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS..........................69
XIII. MISCELLANEOUS................................................................71
Section 13.01. Survival..........................................................71
Section 13.02. Expenses..........................................................71
Section 13.03. Setoffs, Etc .....................................................71
Section 13.04. Governing Law.....................................................72
Section 13.05. Amendment; Modification ..........................................72
Section 13.06. Waiver ...........................................................72
Section 13.07. Notice............................................................73
Section 13.08. Successors and Assigns ...........................................74
Section 13.09. Consent to Jurisdiction, Service of Process.......................74
Section 13.10. Waiver of Jury Trial ...........................................75
Section 13.11. Indemnification; Limitation of Liability .........................75
Section 13.12. Severability .....................................................76
Section 13.13. Section Headings..................................................77
Section 13.14. Amendment of Other Agreements ....................................77
Section 13.15. Accounting Principles ...........................................77
Section 13.16. Knowledge and Discovery ..........................................77
Section 13.17. FCC...............................................................77
Section 13.18. Maximum Enforceability ...........................................78
Section 13.19. Joint and Several Obligations; Suretyship Waivers and Consents ...78
Section 13.20. Several Nature of Lenders' Obligations ...........................80
Section 13.21. Integration ......................................................80
Section 13.22 Counterparts ......................................................81
</TABLE>
-v-
<PAGE> 7
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT is made as of the 18th day
of May, 1998, by and among
SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY
BROADCASTING COMPANY, a Nevada corporation ("VALLEY"); YUMA BROADCASTING
COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada
corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation
("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS");
TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO
COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada
corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada
corporation ("RUBY MOUNTAIN"); and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada
corporation ("BEARTOOTH") (Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls,
Two Ocean, Sierra Radio, Radio News, Ruby Mountain and Beartooth are sometimes
referred to herein individually as a "Borrower" and collectively as the
"Borrowers");
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation
("AT&T-CFC"), and the various other financial institutions which are now, or in
accordance with Article XII hereof hereafter become, parties hereto and
"Lenders" hereunder by execution of the signature pages to this Agreement or
otherwise (collectively, the "Lenders" and each individually, a "Lender"); and
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as agent
for the Lenders (in such capacity, together with its successors and assigns in
such capacity, the "Agent").
RECITALS:
A. The Borrowers, Radio Sales Company, a Nevada corporation ("Radio
Sales"), and AT&T-CFC are parties to a certain Loan Agreement dated as of
October 2, 1996, and a certain Credit Agreement dated as of October 2, 1996, as
each has been amended from time to time (as amended, collectively, the "ORIGINAL
LOAN AGREEMENTS"), pursuant to which AT&T-CFC made term loans to the Original
Borrowers, and the Original Borrowers issued to AT&T-CFC their promissory notes
in the respective amounts of such term loans, as follows (collectively, the
"ORIGINAL PROMISSORY NOTES"):
(i) that certain Secured Promissory Note dated October 2, 1996, issued
by Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls, Two Ocean. Sierra Radio,
Radio News and Radio Sales (collectively, the "ORIGINAL BORROWERS") to AT&T-CFC
in the original principal amount of $21,200,000;
<PAGE> 8
(ii) that certain Secured Promissory Note of Sunbelt dated
November 1, 1996, issued to AT&T-CFC in the original principal amount of
$3,500,000;
(iii) that certain Secured Promissory Note of Sunbelt dated May 7, 1997,
issued to AT&T-CFC in the original principal amount of $2,500,000;
(iv) that certain Secured Promissory Note of Sunbelt dated July 8, 1997,
issued to AT&T-CFC in the original principal amount of $2,500,000;
(v) that certain Secured Promissory Note of Sunbelt and Beartooth dated
December 1, 1997, issued to AT&T-CFC in the original principal amount of
$2,800,000; and
(vi) that certain Secured Promissory Note of Sunbelt dated December 1,
1997, issued to AT&T-CFC in the original principal amount of $1,200,000.
B. As of the date hereof, the aggregate outstanding and unpaid principal
balance of the Original Promissory Notes is $35,361,390.00.
C. Subsequent to the date of execution of the Original Loan Agreements,
Radio Sales transferred and assigned to Radio News all of the assets and
liabilities of Radio Sales.
D. The Borrowers have applied to AT&T-CFC for additional extensions of
credit.
E. AT&T-CFC is willing to provide such additional financing subject to
the terms and conditions hereinafter set forth.
F. The parties hereto desire to amend and restate the Original Loan
Agreements to reflect the foregoing amendments.
G. The Borrowers, AT&T-CFC and the Agent anticipate that one or more
additional financial institutions will hereafter become parties hereto as
Lenders hereunder, and therefore they desire to amend and restate their
agreements in order to facilitate such additions.
H. For ease of construction, interpretation and administration of their
respective agreements in respect to the foregoing, the parties hereto desire to
amend and restate the Original Loan Agreements in their entirety as hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties, intending to be legally bound hereby, hereby agree,
and hereby amend and restate the Original Loan Agreement in their entirety as a
single agreement, as follows:
I. DEFINITIONS
As used herein the following terms shall have the following respective
meanings:
-2-
<PAGE> 9
ACCOUNTANTS: the meaning specified in Section 6.05.
ACQUISITION: the meaning specified in Section 7.04(a).
ACQUISITION AGREEMENT: with respect to any Permitted Acquisition, the
acquisition, purchase or other agreement which sets forth the terms and
conditions of such Acquisition.
ACQUISITION LOAN(S): a Tranche B Loan, the proceeds of which are used in
whole or in part to pay the purchase price of a Permitted Acquisition.
ADJUSTED NET OPERATING INCOME: for any twelve-month period, the sum of
(a) the Companies' Net Operating Income, (b) cost savings identified by the
Companies in connection with a Permitted Acquisition consummated within such
twelve-month period, which cost savings have been approved and validated by the
Agent in its sole discretion, (c) to the extent not included in the preceding
clauses, the Net Operating Income of all Stations included in such Permitted
Acquisitions occurring during such twelve-month period, and (d) if the
calculation of Adjusted Net Operating Income is being made pursuant to Article
II hereof in connection with a Request for Advance relating to an Acquisition
Loan, the Net Operating Income of the broadcast stations covered by the
Permitted Acquisition.
ADVANCE(S): advance(s) of loan proceeds constituting all or a portion of
a Loan.
AFFILIATE(S): as applied to any Person, a spouse or relative of such
Person within the third degree of consanguinity, any partner, shareholder,
member, director, officer or manager of such Person, any corporation,
association, partnership, joint venture, firm or other entity of which such
Person is a partner, shareholder, venturer, member, director, officer or
manager, and any other Person directly or indirectly controlling, controlled by,
or under common control with, such Person.
AFFILIATE SUBORDINATION AGREEMENTS: the meaning specified in SECTION
2.05.
AGENT: the meaning specified in the Preamble.
AFTER TAX CASH FLOW: for any fiscal period, Net Operating Income minus
cash payments made in respect of taxes.
AGREEMENT: this Amended and Restated Loan Agreement, as the same may be
amended from time to time.
ASSIGNMENT AND ACCEPTANCE: the meaning specified in ARTICLE XII.
ASSUMPTION AGREEMENT: the meaning specified in SECTION 3.02.
AT&T-CFC: AT&T Commercial Finance Corporation, a Delaware corporation.
- 3 -
<PAGE> 10
BASE RATE: a rate per annum equal to two and one-half percentage points
(2.50%) in excess of the Commercial Paper Rate.
BEARTOOTH: the meaning specified in the Preamble.
BENEFIT LIABILITIES: the meaning specified in SECTION 4.12.
BORROWER(S): the meaning specified in the Preamble.
BUSINESS DAY: any day other than a Saturday, Sunday or legal holiday on
which banks in Newark, New Jersey, and New York, New York, are open for the
transaction of a substantial part of their commercial banking business.
CAPITAL EXPENDITURE: any payment made directly or indirectly for the
purpose of acquiring or constructing fixed assets, real property or equipment
which, in accordance with generally accepted accounting principles, would be
added as a debit to the fixed asset account of the Person making such
expenditure, including, without limitation, amounts paid or payable for labor or
under any conditional sale or other title retention agreement or under any Lease
or other periodic payment arrangement which is of such a nature that payment
obligations of the lessee or obligor thereunder would be required by generally
accepted accounting principles to be capitalized on the balance sheet of such
lessee or obligor.
CAPITAL LEASE: any Lease of property (real, personal or mixed) which, in
accordance with generally accepted accounting principles, would be capitalized
on the lessee's balance sheet or for which the amount of the asset and liability
thereunder as if so capitalized should be disclosed in a note to such balance
sheet.
CERCLA: the meaning specified in SECTION 4.19.
CLOSING DATE: the effective date of closing on the transactions
contemplated hereby as evidenced by AT&T-CFC's funding of the initial Advance in
respect of the Tranche B Loans, which Closing Date shall not be later than May
29, 1998, unless the Lenders otherwise agree.
COBRA: the meaning specified in SECTION 4.12.
CODE: the Internal Revenue Code of 1986, as amended from time to time.
COLLATERAL: collectively, any and all collateral referred to herein or
in the Security Documents, or any of them, and any and all other collateral
pledged to the Agent and/or the Lenders from time to time in connection with the
Loan Documents.
COMMERCIAL PAPER RATE: the per annum rate of interest published from
time to time by the Eastern Edition of THE WALL STREET JOURNAL as being the
thirty day "commercial paper" rate (identified in THE WALL STREET JOURNAL as
high-grade unsecured notes sold through dealers by
-4-
<PAGE> 11
major corporations), or if THE WALL STREET JOURNAL shall for any reason cease or
fail to publish a "commercial paper" rate or shall for any reason discontinue
publication or designation of a "commercial paper" rate, such other comparable
interest rate index as the Lender shall reasonably designate in writing to the
Borrowers as a substitute therefor. If THE WALL STREET JOURNAL quotes or
publishes more than one such thirty day "commercial paper" rate, the highest of
such rates will be used.
COMMITMENTS: collectively, the Tranche A Commitment and the Tranche B
Commitment.
COMMONLY CONTROLLED ENTITY: the meaning specified in Section 4.12.
COMPANY OR COMPANIES: the Borrowers and the New Subsidiaries, if any.
CONSOLIDATED OR CONSOLIDATED: wherever used in conjunction with a
financial statement, covenant or definition, such statement, covenant, or
definition shall (unless otherwise specifically defined herein) refer to Sunbelt
and the other Companies on a consolidated basis determined, calculated or
applied in accordance with generally accepted accounting principles, applied on
a consistent basis.
CORPORATE OVERHEAD: during any period, the aggregate amount of (a) all
salaries, bonuses, management fees and other compensation paid or payable to
James Rogers, and (b) all compensation, traveling, entertainment and automobile
expenses of Sunbelt and all other costs and expenses of the Companies, or any of
them, which are not allocable to or incurred directly in the operation of the
Stations, including, without limitation, reasonable accounting, auditing, legal,
office and secretarial expense.
COVENANT COMPLIANCE CERTIFICATE: the quarterly certificate issued and to
be issued by the Companies pursuant to SECTION 6.05(c), in the form of SCHEDULE
6.05 hereto.
CURRENT ASSETS: current assets of a Company, determined in accordance
with generally accepted accounting principles on a basis consistent with that
employed by the Accountants in preparing the financial statements referred to in
SECTION 6.05. For the purposes of SECTION 5.05(b) hereof, Current Assets shall
exclude accounts receivable outstanding more than one hundred twenty (120) days
from date of invoice.
CURRENT LIABILITIES: current liabilities of a Company, determined in
accordance with generally accepted accounting principles on a basis consistent
with that employed by the Accountants in preparing the financial statements
referred to in SECTION 6.05.
DEFAULT RATE: the meaning specified in SECTION 9.02.
EMPLOYEE BENEFIT PLANS; EMPLOYEE PENSION PLAN AND EMPLOYEE WELFARE PLAN:
the respective meanings specified in SECTION 4.12.
-5-
<PAGE> 12
ENVIRONMENTAL LAWS: the meaning specified in SECTION 4.19.
ERISA: the meaning specified in SECTION 4.12.
EVENT OF DEFAULT: the meaning specified in ARTICLE VIII.
FALLS: the meaning specified in the Preamble.
FCC: the Federal Communications Commission or any other federal
governmental agency which may hereafter perform its functions.
FEE LETTER: the letter agreement of even date herewith among the
Borrowers and AT&T- CFC, as amended from time to time.
FINAL ORDER: written action or order issued by the FCC setting forth the
consent of the FCC (a) which has not been reversed, stayed, enjoined, set aside,
annulled or suspended, and (b) with respect to which (i) no requests have been
filed for administrative or judicial review, consideration, appeal or stay, and
the normal time for filing any such requests and for the FCC to set aside the
action on its own motion (whether upon reconsideration or otherwise) has
expired, or (ii) in the event of review, reconsideration or appeal, the time for
further review, reconsideration or appeal has expired.
FISCAL OUARTERS: the three-month periods ending March 31, June 30,
September 30 and December 31.
FISCAL YEAR: the year ending December 31.
FIXED CHARGES: for any fiscal period, the sum of (a) Total Debt Service
for such period (but not more than the amount otherwise permitted by this
Agreement for such period), (b) Capital Expenditures during such period (but not
more than the amount otherwise permitted by SECTION 5.06 hereof for such
period), and (c) taxes paid by the Companies and tax distributions to the
Companies' Stockholders (but not more than the amount otherwise permitted by
SECTION 5.08(b) hereof for such period).
GOVERNMENTAL AUTHORITY: any nation or government, any state or other
political subdivision thereof and any entity exercising any executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government.
GUARANTY: the meaning specified in SECTION 2.05.
GUARANTORS: James Rogers and the James Rogers Trust.
HAZARDOUS MATERIAL: the meaning specified in SECTION 4.19.
-6-
<PAGE> 13
INDEBTEDNESS OR INDEBTEDNESS: as applied to any Person, (a) all items
(except items of capital stock, capital or paid-in surplus or of retained
earnings) which, in accordance with generally accepted accounting principles,
would be included in determining total liabilities as shown on the liability
side of a balance sheet of such Person as at the date as of which Indebtedness
is to be determined, including any Lease which in accordance with generally
accepted accounting principles consistently applied would constitute
indebtedness, (b) all indebtedness secured by any mortgage, pledge, security,
lien or conditional sale or other title retention agreement to which any
property or asset owned or held by such Person is subject, whether or not the
indebtedness secured thereby shall have been assumed, and (c) all indebtedness
of others which such Person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, stock or equity
purchase, capital contribution or otherwise) or otherwise to become directly or
indirectly liable.
INDEMNITEES: the meaning specified in SECTION 6.10.
INTEREST EXPENSE: for any period, the aggregate amount (determined in
accordance with generally accepted accounting principles) of interest accrued
(whether or not paid) during such period 5y the Companies in respect of all
Indebtedness for borrowed money and Capital Leases.
INVOLUNTARY PETITION: the meaning specified in paragraph (1) of ARTICLE
VIII.
JAMES ROGERS: James E. Rogers of Las Vegas, Nevada.
JAMES ROGERS TRUST: The James E. Rogers Trust created under agreement
dated October 9, 1997, as the same may be amended and supplemented from time to
time.
KVBC-TV: television broadcast station KVBC (TV), Channel 3 (Las Vegas,
Nevada).
LEASE(S): any lease of, or other periodic payment arrangement for the
use or possession of, property (real, personal or mixed).
LENDER(S): the meaning specified in the Preamble.
LICENSES: the meaning specified in SECTION 4.13.
LOAN OR LOANS: the Tranche A Loans and the Tranche B Loans.
LOAN DOCUMENTS: this Agreement, the Notes, the Security Documents and
all other documents, certificates, and agreements contemplated by or executed in
connection with the transactions contemplated hereby.
-7-
<PAGE> 14
MAJORITY LENDERS: Lenders holding in the aggregate at least two-thirds
(2/3) of the sum of (i) the aggregate outstanding principal balance of the
Loans, and (ii) the aggregate amount of the unused Commitments, if any,
excluding from such calculation any Lender which has failed or refused to fund a
Loan when required to do so.
MATERIAL ADVERSE EFFECT: any circumstance or event which, individually
or in the aggregate with other such circumstances or events, (a) has had, or
could reasonably be expected to have, an adverse effect on the validity or
enforceability of this Agreement or the other Loan Documents in any material
respect, (b) has had, or could reasonably be expected to have, an adverse effect
on the condition (financial or other), business, results of operations,
prospects or properties of any Company in any material respect, or (c) has
impaired, or could reasonably be expected to impair, the ability of any Company
to fulfill its obligations under this Agreement, the Note(s) to which it is a
party or any other Loan Document to which such Person is a party.
MONTHLY DUE DATES: the first day of each calendar month.
MULTIEMPLOYER PLAN: the meaning specified in SECTION 4.12.
NET INCOME: for any fiscal period, the net income (or loss) of a Person
or a radio or television broadcast station (as applicable), excluding any
extraordinary income or non-cash gains for such period, after deducting all
operating expenses, provisions for all taxes and reserves (including reserves
for deferred income taxes), Corporate Overhead payments and all other proper
deductions, all determined in accordance with generally accepted accounting
principles; PROVIDED, HOWEVER, that income and expenses arising from Trades
shall be excluded in determining Net Income.
NET OPERATING INCOME: for any fiscal period, Net Income of a Person or a
radio or television broadcast station (as applicable) for such period, after
restoring thereto (without duplication) amounts deducted in the computation
thereof for (a) depreciation; (b) amortization (including, without limitation,
Programming amortization); (c) Interest Expense; (d) other non- cash expenses
(excluding provisions for uncollectable accounts) determined in accordance with
generally accepted accounting principles; and (e) taxes in respect of income and
profits; MINUS Programming Payments.
NET SALE PROCEEDS: with respect to any disposition of assets by a
Company, the aggregate amount of all cash payments received by the Companies,
directly or indirectly, in connection with such disposition, whether at the time
thereof or after such disposition under deferred payment arrangements or
investments entered into or received in connection with such disposition, MINUS
the aggregate amount of any reasonable and customary legal, accounting,
regulatory, title and recording tax expenses, transfer taxes, commissions and
other fees and expenses paid at any time by the Companies in connection with
such disposition.
NEW SUBSIDIARIES: wholly-owned subsidiaries of Sunbelt which are either
incorporated and organized by Sunbelt or acquired by Sunbelt through a capital
stock acquisition, from time to
-8-
<PAGE> 15
time for the purpose of acquiring New Stations or FCC construction permits with
the proceeds of the Acquisition Loans.
NEW STATION(S): radio and/or television broadcasting stations not owned
by the Borrowers on the date hereof and FCC construction permits not held by the
Borrowers on the date hereof, but which, in either case, are to be acquired by
one or more Companies from and after the date hereof utilizing the proceeds of
the Acquisition Loans to pay some or all of the purchase price therefor.
NOTE(S): the Tranche A Notes and the Tranche B Notes, as the same may be
amended, extended and restated from time to time.
NOTICE OF DEFAULT: the meaning specified in SECTION 10.03.
OREGON TRAIL: the meaning specified in the Preamble.
OPERATING LEASE: any Lease (real, personal or mixed) other than Capital
Leases.
ORIGINAL BORROWERS: the meaning specified in the Preamble.
ORIGINAL LOAN AGREEMENTS; ORIGINAL PROMISSORY NOTES: the respective
meanings specified in the Preamble.
PARTICIPANT: the meaning specified in SECTION 2.12.
PBGC: the meaning specified in SECTION 4.12.
PERMITTED ACQUISITION: the meaning specified in SECTION 7.04(b).
PERMITTED INVESTMENTS: (a) investments in property to be used by the
Companies, or any of them, in the ordinary course of business; (b) current
assets arising from the sale of goods and services in the ordinary course of
business; (c) investments (of one year or less) in direct or guaranteed
obligations of the United States or any agency thereof, (d) investments (of 90
days or less) in certificates of deposit of Nevada First Bank, a Nevada banking
corporation in an aggregate amount not to exceed $1,000,000, and investments (of
90 days or less) in certificates of deposit of any national or state-chartered
bank having capital, surplus and undivided profits in excess of $10,000,000; (e)
investments (of 90 days or less) in commercial paper given the highest rating by
Standard and Poor's Bond Rating Index or by Moody's Investor Service; (f) shares
and certificates redeemable at any time without penalty and funds invested
solely in money market instruments placed through national or state-chartered
banks within the United States having capital, surplus and undivided profits in
excess of $10,000,000; and (g) advances to employees in the ordinary course of
business for the payment of BONA FIDE properly documented business expenses to
be incurred on behalf of the Companies in an aggregate amount not to exceed Ten
Thousand Dollars ($10,000) outstanding at any time.
-9-
<PAGE> 16
PERSON OR PERSON: any individual, corporation, partnership, joint
venture, trust, limited liability company or unincorporated organization or any
government or any agency or political subdivision thereof.
PLEDGED INTERESTS: the meaning specified in SECTION 13.17.
PREMISES: the meaning specified in SECTION 4.19.
PREPAYMENT PREMIUM PERCENTAGE: the meaning specified in Section 2.03(b).
PROGRAMMING: all programming and film rights and all rights to broadcast
television programming of any kind, whether held under license, lease,
agreement, contract or otherwise for use by any of the Companies in connection
with any of the Stations or the New Stations, including, without limitation, all
rights for programming of movies, television series productions, children's
programming, sports productions, news coverage and other television viewing
products, and the rights to all video tapes, films and other materials now or
hereafter constituting or embodying such programming.
PROGRAMMING PAYMENTS: for any period, all cash payments required to be
made by the Companies, or any of them, in respect of Programming pursuant to
Programming agreements.
PURCHASE MONEY SECURITY AGREEMENT: any agreement pursuant to which a
Company incurs Indebtedness for the limited purpose of funding the acquisition
cost of equipment to be used in the ordinary course of such Company's business,
and pursuant to which the Company grants to the holder of such agreement a
security interest only in such equipment and its proceeds to secure only the
payment of such Indebtedness.
RADIO NEWS: the meaning specified in the Preamble.
RADIO SALES: the meaning specified in the Preamble.
RCRA: the meaning specified in SECTION 4.19.
RECOVERING PARTY AND RECOVERY: the respective meanings specified in
SECTION 2.13(b).
REGULATORY CHANGE: with respect to any Lender, any change after the
Closing Date in any law, rule or regulation (including, without limitation,
Regulation D) of the United States, any state or any other nation or political
subdivision thereof, including, without limitation, the issuance of any final
regulations or guidelines, or the adoption or making after the Closing Date (or,
if later, the date as of which such Person became a Lender) of any
interpretation, directive or request under any such law, rule or regulation
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any court or governmental or monetary authority
charged with the interpretation thereof.
-10-
<PAGE> 17
REQUEST FOR ADVANCE: a signed and completed Request for Advance
submitted by the Companies in the form of SCHEDULE 3.01 A.
RESTRICTED PAYMENT: any distribution or payment of cash or property, or
both, directly or indirectly (a) in respect of Subordinated Debt, or (b) to a
Guarantor, or any Stockholder or other Affiliate of any of the Companies or any
of their respective Affiliates for any reason whatsoever, including, without
limitation, salaries, debt repayment, consulting fees, management fees, expense
reimbursements and dividends, distributions and payments in respect of ownership
interests in the Companies.
RUBY MOUNTAIN: the meaning specified in the Preamble.
SECURITY DOCUMENT(S): the meaning specified in SECTION 2.05.
SELLER: the seller under an Acquisition Agreement.
SENIOR DEBT: at any time, all outstanding Indebtedness of the Companies,
or any of them, to the Lenders, including, without limitation, Indebtedness
incurred pursuant to this Agreement.
SENIOR DEBT SERVICE: for any period, the aggregate amount (determined in
accordance with generally accepted accounting principles) of principal and
interest and premium, commitment fees and other charges (exclusive, however, of
the Termination Fee), if any, required to be paid during such period by the
Companies in respect of Senior Debt.
SIERRA AND SIERRA RADIO: the respective meanings specified in the
Preamble.
STATION(S): the meaning specified in SECTION 4.13.
STOCKHOLDER(S): the meaning specified in SECTION 4.15 and all Persons
who at any time hold or acquire capital stock of Sunbelt or any of the
Companies.
SUBORDINATED DEBT: indebtedness subordinated in writing in right of
payment to the prior payment of Senior Debt, on terms approved by the Lender in
writing.
SUBORDINATION AGREEMENTS: the meaning specified in SECTION 2.05.
SUNBELT: the meaning specified in the Preamble.
SUPPLEMENTAL LINE: Twenty-four Million Six Hundred Thirty-eight Thousand
Six Hundred Ten and no/100 Dollars ($24,638.61 0.00) of the Tranche B Commitment
extended by AT&T-CFC to the Borrowers pursuant to SECTION 2.02(a).
SUPPLEMENTAL LINE EXPIRATION DATE: June 30, 2000, or such later date as
may be consented to by the Lenders holding the Tranche B Notes, in their sole
discretion. The holders of
-11-
<PAGE> 18
the Tranche B Notes shall have no obligation to extend the Supplemental Line
Expiration Date, and any extension of this date will be conditioned upon, INTER
ALIA the payment of a fee equal to one-half of one percent (0.5%) of the unused
Tranche B Commitment on the date of extension.
SURETY: any person who is (or any part of whose assets are) at any time
directly or contingently liable for all or any portion of the Companies'
obligations to the Lender hereunder or under the Notes or Security Documents,
whether pursuant to a guaranty, an assumption agreement, a pledge agreement, or
otherwise and any person to whom any Company is at any time indebted if such
Indebtedness has been subordinated to Indebtedness of the Companies to the
Lender. The term "Surety" shall include the Guarantors.
TAXES: the meaning specified in SECTION 2.09.
TAX REFUND: the meaning specified in SECTION 2.04(c)(i).
TERMINATION FEE: the meaning specified in SECTION 2.07.
TAX LITIGATION: the litigation which the Borrowers will commence as
plaintiffs in the United States District Court for the District of Nevada
against the United States of America seeking a refund of Federal income taxes
paid by the Borrowers in the aggregate amount of approximately $8,974,072, plus
interest and penalties, if any, arising from a certain Notice of Deficiency
issued by the Internal Revenue Service to Sunbelt and its Affiliates dated
February 13, 1998.
TOTAL DEBT SERVICE: for any period, the aggregate amount (determined in
accordance with generally accepted accounting principles) of principal and
interest and premium, commitment fees and other charges, if any, required to be
paid during such period by the Companies in respect of all Indebtedness.
TRADES: those assets and liabilities of the Companies which do not
represent the right to receive payment in cash or the obligation to make payment
in cash and which arise pursuant to so-called "trade" or "barter" transactions.
TRANCHE A COMMITMENT: the aggregate maximum principal amount of all
Tranche A Loans as of the Closing Date (i.e., $30,000,000).
TRANCHE A LENDERS: all Lenders who hold Tranche A Notes.
TRANCHE A LOANS: the meaning specified in SECTION 2.01(a).
TRANCHE A NOTES: the meaning specified in SECTION 2.01(b).
TRANCHE B COMMITMENT: the sum of the outstanding principal balance of
the Tranche B Loans on the Closing Date and the aggregate principal amount of
all Tranche B Loans which the
-12-
<PAGE> 19
Lenders may thereafter make pursuant to SECTION 2.02 in an aggregate amount not
to exceed $30,000,000.
TRANCHE B LOANS: the meaning specified in SECTION 2.02(a).
TRANCHE B NOTES: the meaning specified in SECTION 2.02(b).
TRANSACTION DOCUMENTS: the meaning specified in SECTION 4.02.
TWO OCEAN: the meaning specified in the Preamble.
UNMATURED EVENT OF DEFAULT: any event or condition, which, after notice
or lapse of time, or both, would constitute an Event of Default.
VALLEY: the meaning specified in the Preamble.
YEAR-TO-DATE: at and as of any date, the amount accrued, earned,
received, expended or calculated, as applicable, from the immediately preceding
January 1 through such date.
YUMA: the meaning specified in the Preamble.
All accounting terms not specifically defined herein shall be construed
in accordance with generally accepted accounting principles consistent with
those applied in the preparation of the financial statements referred to in
SECTION 4.01 hereof, PROVIDED, HOWEVER, that in any event income and expenses
arising from Trades shall be excluded in determining Net Income and Net
Operating Income. All references in this Agreement to the call letters and
channel designations of a television broadcast station shall be deemed to
include any subsequent call letters and channel designations corresponding to
any digital television broadcast licenses awarded by the FCC to a Company for
the same or similar market. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders. All references in this Agreement to Articles, Sections,
subsections, paragraphs, clauses or Schedules shall refer to the corresponding
Articles, Sections, subsections, paragraphs, clauses and Schedules,
respectively, contained in or which are attached to or made part of this
Agreement, as applicable, unless specific reference is made to the Articles,
Sections or other subdivisions of, or Schedules to, another agreement or
document.
II. GENERAL TERMS
SECTION 2.01. TRANCHE A LOANS.
(a) LOANS. Subject to the terms and conditions contained in this
Agreement, the Lenders and the Borrowers hereby agree that $30,000,000.00 in
principal amount of the Senior Debt outstanding under the Original Loan
Agreements and held by AT&T-CFC on the Closing Date shall be converted to loans
under this SECTION 2.01 on the Closing Date (such Loans being herein referred to
collectively as the "TRANCHE A LOANS"). By reason of such conversion, the
-13-
<PAGE> 20
Tranche A Commitment shall be deemed to have been fully funded, and the Lenders
shall have no obligation to make any other or further Advances in respect to the
Tranche A Commitment.
(b) NOTES. The Tranche A Loans shall be evidenced by the Borrowers'
Amended and Restated Secured Term Notes in the aggregate principal amount of
$30,000,000.00, each in the form of SCHEDULE 2.01 hereto (with all blanks
appropriately completed) (together with any additional Notes issued to any
assignee of the Tranche A Loans under ARTICLE XII hereof, referred to
collectively as the "TRANCHE A NOTES"), payable on the Closing Date to AT&T-CFC
(or its successors and assigns).
(b) PRINCIPAL IN RESPECT OF TRANCHE A LOANS. The Tranche A Loans shall
be payable by the Borrowers, without setoff, deduction or counterclaim in
ninety-six (96) consecutive monthly installments on the first day of each month
(the "MONTHLY DUE DATES") commencing July 1, 1998, and continuing until June 1,
2006, when all remaining outstanding principal and accrued interest thereon
shall be due and payable in full without setoff, deduction or counterclaim.
Monthly payments of principal in respect of the Tranche A Loans shall be in the
amounts set forth below:
<TABLE>
<CAPTION>
Amount of
Monthly Due Dates During the Period Monthly Principal Payment
- ----------------------------------- -------------------------
<S> <C>
July 1, 1998 through June 1, 1999 $230,000.00
July 1, 1999 through June 1, 2000 $250,000.00
July 1, 2000 through June 1, 2001 $271,000.00
July 1, 2001 through June 1, 2002 $295,000.00
July 1, 2002 through June 1, 2003 $320,000.00
July 1, 2003 through June 1, 2004 $347,000.00
July 1, 2004 through June 1, 2005 $377,000.00
July 1, 2005 through May 1, 2006 $409,000.00
June 1, 2006 The then remaining outstanding and
unpaid principal balance of the
Tranche A Loans.
</TABLE>
SECTION 2.02. TRANCHE B LOANS.
(a) LOANS. Subject to the terms and conditions contained in this
Agreement, the Lenders and the Borrowers hereby agree that the remaining
$5,361,390.00 in principal amount of Senior Debt outstanding under the Original
Loan Agreements and held by AT&T-CFC on the Closing Date shall be converted to
loans under this SECTION 2.02 on the Closing Date. Subject to the terms and
conditions contained in this Agreement, the remaining $24,638,610.00 balance of
the Tranche B Commitment (the "SUPPLEMENTAL LINE") may be borrowed by the
Borrowers (together with any New Subsidiaries who benefit therefrom between the
Closing Date and the Supplemental Line Expiration Date. (The outstanding balance
of Senior Debt described in the first sentence of this SECTION 2.02(a), together
with any Advances made under the Supplemental Line, are referred to collectively
as the "TRANCHE B LOANS"). The Lenders shall have no
-14-
<PAGE> 21
obligation to readvance any principal sums repaid in respect to the Tranche B
Loans, including the Supplemental Line.
(b) NOTES. The Tranche B Loans shall be evidenced by the Borrowers'
Amended and Restated Secured Promissory Notes in the aggregate principal amount
of up to $30,000,000.00, each in the form of SCHEDULE 2.02 hereto (with all
blanks appropriately completed) (together with any additional Notes issued to
any assignee of the Tranche B Loans under ARTICLE XII hereof, referred to
collectively as the "TRANCHE B NOTES"), payable to AT&T-CFC (or its successors
and assigns).
(c) PRINCIPAL IN RESPECT OF TRANCHE B LOANS. The Tranche B Loans shall
be payable by the Borrowers and New Subsidiaries, without setoff, deduction or
counterclaim in one hundred twenty (120) consecutive monthly installments on the
first day of each month (the "MONTHLY DUE DATES") commencing July 1, 1998, and
continuing until June 1, 2008, when all remaining outstanding principal and
accrued interest thereon shall be due and payable in full without setoff,
deduction or counterclaim. Monthly payments of principal in respect of the
Tranche B Loans shall be in the amounts set forth below:
<TABLE>
<CAPTION>
Amount of
---------
Monthly Due Dates During the Period Monthly Principal Payment
----------------------------------- -------------------------
<S> <C>
July 1, 1998 through June 1, 1999 $17,000.00
July 1, 1999 through June 1, 2000 $18,000.00
July 1, 2000 through June 1, 2001 $20,000.00
July 1, 2001 through June 1, 2002 $22,000.00
July 1, 2002 through June 1, 2003 $24,000.00
July 1, 2003 through June 1, 2004 $26,050.00
July 1, 2004 through June 1, 2005 $28,000.00
July 1, 2005 through June 1, 2006 $31,000.00
July 1, 2006 through June 1, 2007 $344,000.00
July 1, 2007 through May 1, 2008 $375,000.00
June 1, 2008 The then remaining outstanding and
unpaid principal balance of the
Tranche B Loans.
</TABLE>
If the Tranche B Commitment is not fully advanced, AT&T-CFC may, at its option,
adjust the payment schedule on a PRO RATA basis based upon the aggregate amount
of Tranche B Loans actually funded.
SECTION 2.03. PREPAYMENTS.
(a) RIGHT OF VOLUNTARY PREPAYMENT. Subject to the provisions hereof, the
Borrowers may at any time prepay the principal of the Notes, in whole or in part
from time to time upon not less than five (5) business days prior written notice
to the Agent, provided that any voluntary prepayment shall be an integral
multiple of Fifty Thousand Dollars ($50,000 00) or such lesser amount as equals
the then outstanding principal amount of the Notes Except as provided in SECTION
2.03(b), each prepayment shall be without premium or penalty Each such
-15-
<PAGE> 22
notice shall specify the prepayment date and the principal amount of the Notes
to be prepaid. Except as provided in SECTION 2.03(c)(i), all prepayments shall,
unless otherwise determined by all of the Lenders, be applied first to
prepayment premiums, second to accrued but unpaid interest, late charges and
fees, then to prepayments of installments of principal of the Notes being
prepaid (PRO RATA based on outstanding unpaid principal balances thereof) in the
inverse order of maturity thereof. The Lenders shall have no obligation to
relend principal balances repaid or prepaid.
(b) Notwithstanding the foregoing, except as otherwise specifically
provided herein, any prepayment of a Loan made prior to June 1, 2001, shall, to
the extent permitted by applicable law, be accompanied by the payment of a
prepayment premium calculated as a percentage (the "PREPAYMENT PREMIUM
PERCENTAGE") of the principal amount so prepaid in accordance with this
paragraph (b). For the purposes hereof, the applicable Prepayment Premium
Percentage shall be based upon the following schedule:
The Prepayment
If prepayment occurs: Premium Percentage
- -------------------- shall be:
---------
From the date hereof through May 31, 2000 2.0%
From June 1, 1998 through May 31,2001 1.0%
Notwithstanding the foregoing, (i) any prepayment of a Note made solely from or
with either the proceeds of a loan made by all of the Lenders to the Companies,
or identifiable Net Income generated by the Stations and retained by the
Companies shall not be subject to the payment of a prepayment premium; (ii) the
first $5,000,000 of principal prepayments of the Notes, if any, made as required
by SECTION 2.03(c)(ii) shall not be subject to the payment of a prepayment
premium; and (iii) the first $13,500,000 of principal prepayment of the Notes,
if any, made as required by SECTION 2.03(c)(i) prior to June 1, 2001, shall be
subject to a prepayment premium based upon a Prepayment Premium Percentage of
one percent (1.0%).
(c) MANDATORY PREPAYMENTS.
(i) TAX REFUND. The Borrowers shall prepay principal IN RESPECT TO THE
TRANCHE B LOANS ONLY in an amount equal to any and all refunds received by
Sunbelt and the other Borrowers (collectively, the "TAX REFUND") from any
decision in, or settlement of, the Tax Litigation, such prepayment to be made
immediately if an Event of Default then exists, or in all other cases within one
hundred twenty (120) days of the date of Sunbelt's receipt of the Tax Refund;
PROVIDED, HOWEVER, that to the extent Sunbelt does not prepay principal of the
Tranche B Loans immediately upon receipt of the Tax Refund in accordance with
the provisions of this paragraph (i), the amount of the Tax Refund so retained
by Sunbelt shall be deposited with a custodian or bank acceptable to the Agent
and specifically pledged to the Agent for the benefit of the Lenders pursuant to
pledge agreements in form and substance acceptable to the Agent and executed by
the Borrowers and consented to by the custodian or depository bank holding such
Tax Refund. The Lenders agree to consider any application made by Sunbelt during
such 120
-16-
<PAGE> 23
day period to apply the Tax Refund toward payment of the purchase price of a
Permitted Acquisition. The amount of the Tax Refund, to the next not used to
consummate a Permitted Acquisition consented to by the Lenders, shall be paid to
the Agent to be applied in accordance with this paragraph (i).
(ii) ASSET DISPOSITIONS. One hundred percent (100%) of the Net Sale
Proceeds of all assets and properties sold or disposed of by the Companies
pursuant to or as part of a disposition permitted by SECTION 7.03 shall be paid
to the Agent on behalf of all of the Lenders; PROVIDED, HOWEVER, that, unless an
Event of Default or Unmatured Event of Default shall have occurred and be then
continuing, such Net Sale Proceeds shall not be required to be paid to the Agent
if such disposition yields Net Sale Proceeds of not more than $100,000, except
to the extent that the aggregate amount of Net Sale Proceeds resulting from all
such Dispositions described in this proviso exceeds $150,000 in any Fiscal Year.
Nothing contained herein is intended to constitute a consent by the Lenders to
any such disposition.
(d) APPLICATION OF REDUCTIONS AND PREPAYMENTS.
All prepayments of the Notes under this SECTION 2.03, (i) shall be made
without set-off, deduction or counterclaim, (ii) shall (except as provided in
SECTION 2.03(c)(i))be applied to payment of the Lenders' Notes PRO RATA (based
upon the outstanding principal balance thereof) and (iii) unless otherwise
specified in this SECTION 2.03, shall be applied FIRST, to pay applicable
prepayment premiums, SECOND, to pay to interest, fees and expenses hereunder,
and THIRD to pay principal of the Notes, PROVIDED that applications of
prepayments of principal shall be made, proportionately, to subsequent scheduled
payments under the Notes, in the inverse order in which they appear.
SECTION 2.04. APPLICABLE INTEREST RATES; PAYMENT OF INTEREST.
(a) INTEREST RATES. Subject to the provisions of SECTION 9.02 hereof,
the outstanding principal balance of each Loan shall bear interest from the date
of the first Advance thereof until payment in full, both before and after
maturity, at a rate or rates per annum calculated from time to time equal to the
Base Rate.
(b) INTEREST PAYMENT DATES. Interest on the Loans shall be payable
monthly in arrears without setoff, deduction or counterclaim on the Monthly Due
Dates and at maturity, whether by reason of acceleration, payment, prepayment or
otherwise. If the initial Advance in respect of a Loan is made on or before the
15th day of the month, the first interest payment in respect of such Loan will
be due on the first Monthly Due Date occurring after the date of such Advance;
in all other cases, the first interest payment in respect of a Loan will be the
second Monthly Due Date occurring after the date of such initial Advance.
(c) INTEREST CALCULATIONS. Interest shall be computed on the basis of a
three hundred sixty-five (365) day year counting the actual number of days
elapsed. Each change in the interest rate hereunder and under the Notes which is
tied to the Commercial Paper Rate shall take effect
-17-
<PAGE> 24
without notice as of the first (1st) day of each month based upon the first
Commercial Paper Rate in effect for the first Business Day of such month.
(d) DEFAULT RATE. The interest rate(s) in effect from time to time are
also subject to increase from time to time in accordance with the provisions of
Section 9.02.
SECTION 2.05. SECURITY FOR THE NOTES.
Each Company's obligations and indebtedness to the Lenders and to the
Agent hereunder and under the Notes shall be secured at all times by:
(a) Amended and Restated Security Agreements of the Companies granting
to the Agent and the Lenders a continuing first priority perfected security
interest in all presently owned and hereafter acquired tangible and intangible
personal property and fixtures of the Companies (except for licenses and permits
issued by the FCC to the extent it is unlawful to grant a security interest in
such licenses and permits), subject only to any prior liens expressly permitted
under this Agreement;
(b) except as may be waived by the Agent, first mortgages or deeds of
trust on all presently owned and hereafter acquired real estate owned by the
Companies, subject only to any prior liens expressly permitted under this
Agreement, together with mortgagee's title insurance policies acceptable to the
Agent;
(c) except as may be waived by the Agent, first priority perfected
collateral assignments of, or leasehold mortgages or deeds of trust in respect
of, all real estate leases in which the Companies now have or may in the future
have an interest, subject only to any prior liens expressly permitted under this
Agreement, together with such third party consents, lien waivers, mortgagee
waivers and estoppel certificates as the Agent shall reasonably require;
(d) one or more Pledge Agreements executed by all stockholders of the
Companies effecting thereby a first priority perfected pledge of (i) all
presently outstanding and hereafter issued shares of capital stock of the
Companies, (ii) all voting trust certificates issued in respect of the capital
stock of the Companies, or any extension or renewal thereof, and (iii) all
warrants, options and other rights to acquire any such shares;
(e) first priority perfected collateral assignments of such construction
contracts, management agreements, programming agreements, network affiliation
agreements, joint sales agreements, local marketing agreements, licenses,
permits, authorizations and agreements as the Agent shall deem necessary to
protect its interests, subject only to any prior lien expressly permitted under
this Agreement, together with such third party consents, lien waivers and
estoppel certificates as the Agent shall reasonably require;
(f) the subordination in favor of the Lenders, pursuant to subordination
agreements satisfactory to the Agent in form and substance (collectively, the
"AFFILIATE SUBORDINATION
-18-
<PAGE> 25
AGREEMENTS"), of all indebtedness of the Companies to any Affiliates of the
Companies, designated by the Agent;
(g) the subordination in favor of the Lenders, pursuant to subordination
agreements satisfactory to the Agent in form and substance (collectively, the
"SUBORDINATION AGREEMENTS"), of all indebtedness of the Borrowers to any lenders
to the Companies and any creditors of such Companies holding a note or
non-competition agreement executed by the Companies, as obligor thereunder,
designated by the Agent, together with UCC-3 and such other lien subordination
documents as the Agent shall require;
(h) the absolute and unconditional, joint and several Guaranty of the
Guarantors (the "GUARANTY") which shall be limited to $5,000,000 plus interest
and collection costs as provided therein; and
(i) to the extent provided therein, Intercreditor Agreements in form and
substance acceptable to the Agent with Pioneer Citizens Bank and Community Bank
of Nevada.
All agreements and instruments described or contemplated in this SECTION
2.05, together with any and all other agreements and instruments heretofore or
hereafter securing the Notes and each Company's obligations hereunder or
otherwise executed in connection with this Agreement, shall in all respects be
acceptable to the Agent and its special counsel in form and substance, and such
agreements and instruments, as the same may be amended from time to time, are
sometimes hereinafter referred to collectively as the "SECURITY DOCUMENTS" and
individually as a "SECURITY DOCUMENT". Each Company agrees to take such action
as the Lenders or the Agent may reasonably request from time to time in order to
cause the Lenders and the Agent to be secured at all times as described in this
SECTION 2.05, and the Lenders' security interests to be perfected at all times.
SECTION 2.06. USE OF PROCEEDS.
(a) LOANS. $30,000,000.00 of the Tranche A Loans, and $5,361,390.00 of
the Tranche B Loans are in substitution and replacement of the aggregate
principal amount of the Borrowers' outstanding Senior Debt under the Original
Loan Agreements, and represent a continuation (not a refinancing or reborrowing)
of the outstanding obligations of the Borrowers with respect to such Senior
Debt. The remaining $24,638,610.00 in proceeds of Advances available under the
Tranche B Commitment shall be used exclusively in accordance with SCHEDULE 2.06
hereto.
SECTION 2.07. TERMINATION FEE.
In consideration of AT&T-CFC entering into this Agreement, the Borrowers
agree jointly and severally to pay to AT&T-CFC a non-refundable fee (the
"TERMINATION FEE") in accordance with the Fee Letter.
-19-
<PAGE> 26
SECTION 2.08. REQUIREMENTS OF LAW.
(a) In the event that any Regulatory Change shall:
(i) change the basis of taxation of any amounts payable to any Lender
under this Agreement or the Notes in respect of any Loans (other than taxes
imposed on the net income of such Lender);
(ii) impose or modify any reserve, compulsory loan assessment, special
deposit or similar requirement relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of, any applicable office
of such Lender; or
(iii) impose any other conditions affecting this Agreement in respect of
Loans (or any of such extensions of credit, assets, deposits or liabilities);
and the result of any of the foregoing shall be to increase such Lender's costs
of making or maintaining any Loans, or to reduce any amount receivable by such
Lender hereunder in respect of any of its Loans, in each case only to the extent
that such additional amounts are not included in the Base Rate applicable to
such Loans, then the Borrowers shall pay on demand to such Lender, through the
Agent, and from time to time as specified by such Lender, such additional
amounts as such Lender shall reasonably determine are sufficient to compensate
such Lender for such increased cost or reduced amount receivable.
(b) If at any time after the date of this Agreement any Lender shall
have determined that the applicability of any law, rule, regulation or guideline
adopted after the Closing Date pursuant to, or arising after the Closing Date
out of, the July 1988 report of the Basle Committee on Lending Regulations and
Supervisory Practices entitled "International Convergence of Capital Measurement
and Capital Standards", or the adoption or implementation after the Closing Date
of any other Regulatory Change regarding capital adequacy or any change after
the Closing Date in the interpretation or administration thereof by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof (whether or not having the force of
law), has or will have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of the existence of its obligations hereunder to a level below
that which such Lender or its holding company could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's policies
with respect to capital adequacy) by an amount reasonably deemed by such Lender
to be material, then from time to time following written notice by such Lender
to the Borrowers as provided in paragraph (c) of this SECTION 2.08, within
fifteen (15) days after demand by such Lender, the Borrowers shall pay to such
Lender, through the Agent, such additional amount or amounts as such Lender
shall reasonably determine will compensate such Lender or such corporation, as
the case may be, for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to this SECTION 2.08, it shall promptly notify the Borrowers of the
event by reason of which it has become so entitled. A certificate setting forth
in reasonable detail the computation of any
-20-
<PAGE> 27
additional amounts payable pursuant to this SECTION 2.08 submitted by such
Lender to the Borrowers shall be presumed correct in the absence of manifest
error. The covenants contained in this SECTION 2.08 shall survive the
termination of this Agreement and the payment of the outstanding Notes. No
failure on the part of any Lender to demand compensation under paragraph (a) or
(b) above on any one occasion shall constitute a waiver of its rights to demand
compensation on any other occasion. The protection of this SECTION 2.08 shall be
available to each Lender regardless of any possible contention of the invalidity
or inapplicability of any law, regulation or other condition which shall give
rise to any demand by such Lender for compensation thereunder.
SECTION 2.09. TAXES.
(a) All payments made by the Borrowers under this Agreement and the
Notes shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
(all such taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "TAXES"); PROVIDED, HOWEVER, that the term
"TAXES" shall not include net income taxes or franchise taxes (imposed in lieu
of net income taxes) imposed on the Agent or any Lender, as the case may be, as
a result of a present or former connection or nexus between the jurisdiction of
the government or taxing authority imposing such tax (or any political
subdivision or taxing authority thereof or therein) and the Agent or such
Lender. If any Taxes are required to be withheld from any amounts payable to the
Agent or any Lender hereunder or under the Notes, the amounts so payable to the
Agent or such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender (after payment of all Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes. Whenever any Taxes are payable by the Borrowers in
respect of this Agreement or the Notes, as promptly as possible thereafter the
Borrowers shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by the Borrowers showing payment thereof. If the Borrowers fail to pay
any Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the
Borrowers shall, jointly and severally, indemnify the Agent and the Lenders for
any incremental taxes, interest or penalties that may become payable by the
Agent or any Lender as a result of any such failure. If, after any payment of
Taxes by the Borrowers under this Section, any part of any Tax paid by the Agent
or any Lender is subsequently recovered by the Agent or such Lender, the Agent
or such Lender shall reimburse the Borrowers to the extent of the amount so
recovered. A certificate of an officer of the Agent or such Lender setting forth
the amount of such recovery and the basis therefor shall, in the absence of
manifest error, be conclusive. The agreements in this subsection shall survive
the termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder.
(b) Each Lender, if any, that is not incorporated under the laws of the
United States or a state thereof agrees that prior to the first date as of which
any payment is required to be made to it hereunder it will deliver to the
Borrowers and the Agent (i) two duly completed copies of
-21-
<PAGE> 28
United States Internal Revenue Service Form 1001 or 4224 or successor applicable
form, as the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9
or successor applicable form. Each such Lender also agrees to deliver to the
Borrowers and the Agent two further copies of the said Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms or other manner of certification,
as the case may be, on or before the date that any such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrowers, and such extensions or
renewals thereof as may reasonably be requested by the Borrowers or the Agent,
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrowers and the Agent.
Such Lender shall certify (x) in the case of a Form 1001 or 4224, that it is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes and (y) in the case of a
Form W-8 or W-9, that it is entitled to an exemption from United States backup
withholding tax.
SECTION 2.10. INDEMNIFICATION. The Borrowers shall pay to the Agent, for
the account of each Lender, upon the request of such Lender delivered to the
Agent and thereafter delivered by the Agent to the Borrowers, such amount or
amounts as shall compensate such Lender for any loss, cost or expense incurred
by such Lender (as reasonably determined by such Lender) as a result of any
payment or prepayment. Such indemnification may include an amount equal to the
excess, if any, of (i) the amount of interest which would have accrued on the
amount so prepaid for the period from the date of such prepayment (if such date
is not a Monthly Due Date) through the next Monthly Due Date at the applicable
rate of interest for such Loans provided for herein (excluding, however, the
Applicable Margin included therein, if any) over (ii) the amount of interest (as
reasonably determined by such Lender) which would have accrued to such Lender on
such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank eurodollar market. The provisions of this SECTION
2.11 shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder. The determination by each such
Lender of the amount of any such loss or expense, when set forth in a written
notice delivered to the Agent (and thereafter delivered by the Agent to the
Borrowers), containing such Lender's calculation thereof in reasonable detail,
shall be presumed correct in the absence of manifest error.
SECTION 2.11. PAYMENTS UNDER THE NOTES. All payments and prepayments
made by the Borrowers of principal of, and interest on, the Notes and other sums
and charges payable under this Agreement, shall be made via wire transfer in
immediately available funds to the Agent, for the benefit of the Lenders, for
receipt by the Agent not later than 2:00 P.M. (New York Time), on the date on
which such payment shall become due. The failure by the Borrowers to make any
such payment by such hour shall not constitute a default hereunder so long as
payment is received later that day, provided that any such payment made after
2:00 P.M. (New York Time), on such due date shall be deemed to have been made on
the next Business Day for the purpose of calculating interest on amounts
outstanding on the Notes. The Borrowers shall, at the time of making each
payment under this Agreement or the Notes, specify to the Agent the Notes or
-22-
<PAGE> 29
amounts payable by the Borrowers hereunder to which such payment is to be
applied (and in the event that it fails to so specify, or if an Event of Default
has occurred and is continuing, the Agent may distribute such payments in such
manner as the Majority Lenders may direct or, absent such direction, as it
determines to be appropriate, subject to the provisions of SECTION 2.13). If any
payment hereunder or under the Notes shall be due and payable on a day which is
not a Business Day, such payment shall be deemed due on the next following
Business Day and interest shall be payable at the applicable rate specified
herein through such extension period. Each payment received by the Agent under
this Agreement or any Note or other Loan Document for the account of a Lender
shall be paid promptly (and in any event within one (1) Business Day of receipt)
to such Lender, in immediately available funds, for the account of such Lender
for the Note in respect to which such payment is made.
SECTION 2.12. SET-OFF, ETC. Each Borrower agrees that, in addition to
(and without limitation of) any right of set-off, bankers' lien or counterclaim
a Lender may otherwise have, each Lender shall be entitled, at its option, to
offset balances held by it (other than accounts as to which the Borrower is
acting solely as a fiduciary) for the account of such Borrower at any of its
offices, against any principal of or interest on the Notes held by such Lender
or other fees or charges owed to such Lender hereunder which are not paid when
due (regardless of whether such balances are then due to such Borrower), in
which case it shall promptly notify the Borrowers and the Agent thereof,
provided that such Lender's failure to give such notice shall not affect the
validity thereof and (as security for any Indebtedness hereunder) each Borrower
hereby grants to the Agent and the Lenders a continuing security interest in any
and all balances, credit, deposits, accounts or moneys of the Borrower
maintained with the Agent and any Lender now or hereafter (other than accounts
as to which the Borrower is acting solely as a fiduciary). If a Lender shall
obtain payment of any principal, interest or other amounts payable under this
Agreement through the exercise of any right of set-off, banker's lien or
counterclaim or otherwise, it shall promptly purchase from the other Lenders
participations in (or, if and to the extent specified by such Lender, direct
interests in) the Note(s) held by the other Lenders in such amounts, and make
such other adjustments from time to time as shall be equitable, to the end that
all the Lenders shall share the benefit of such payment (net of any expenses
which may be incurred by such Lender in obtaining or preserving such benefit)
pro rata in accordance with the unpaid principal amounts of and interest on the
Note(s) held by each of them within one Business Day of such event. To such end,
the Lenders shall make appropriate adjustments among themselves (by the resale
of participations sold or otherwise) within five (5) Business Days if such
payment is rescinded or must otherwise be restored. Each Borrower agrees that
any Lender or any other Person which purchases a participation (or direct
interest) in the Note(s) held by any or all of the Lenders (each being
hereinafter referred to as a "PARTICIPANT") may exercise all rights of set-off,
bankers' lien, counterclaim or similar rights with respect to such participation
as fully as if such Participant were a direct holder of Notes in the amount of
such participation, provided that the Borrower was notified of such purchase.
Nothing contained herein shall be deemed to require any Participant to exercise
any such right or shall affect the right of any Participant to exercise, and
retain the benefits of exercising, any such right with respect to any
indebtedness or obligation of the Borrowers, other than the Borrowers'
indebtedness and obligations under this Agreement.
-23-
<PAGE> 30
SECTION 2.13. PRO RATA TREATMENT; SHARING.
(a) Except to the extent otherwise provided herein and with respect to
the Termination Fee payable to AT&T-CFC under the Fee Letter and prepayments of
principal made with the proceeds of the Tax Refund: (i) each borrowing from the
Lenders shall be made from the Lenders and each reduction of the Commitments
shall be applied to the Notes held by the Lenders PRO RATA according to the
amounts of their respective Commitments; (ii) each payment and prepayment of
principal of the Notes shall be made to the Lenders PRO RATA in accordance with
the respective unpaid principal amounts of the respective Notes held by the
Lenders; (iii) each payment of interest on the Notes shall be made for the
accounts of the Lenders and each payment of sums and charges payable under this
Agreement (except for fees which are payable in accordance with SECTION 2.07)
shall be made to the Lenders PRO RATA in accordance with the respective unpaid
principal amounts of, and interest on, the Loans made by each of them
(calculated, as applicable, for each day of the relevant payment period); (iv)
each payment under SECTION 2.08, 2.09 and 2.10 shall be made to each Lender in
the amount required to be paid to such Lender pursuant to such Section for
losses suffered or costs incurred by, such Lender; and (v) notwithstanding the
foregoing, but subject to the proviso set forth at the end of this clause (v),
after and during the continuance of an Event of Default, each distribution of
cash, property, securities or other value received by any Lender, directly or
indirectly, in respect of the Borrowers' Indebtedness hereunder, whether
pursuant to any attachment, garnishment, execution or other proceedings for the
collection thereof or pursuant to any bankruptcy, reorganization, liquidation or
other similar proceeding, after payment of collection and other expenses as
provided herein and in the Security Documents, shall be apportioned among the
Lenders PRO RATA in accordance with the respective unpaid principal amounts of
and interest on the Notes held by each of them; provided, however, that
notwithstanding any provision contained herein to the contrary, all sums
received by the Agent in respect to the Tax Refund (including, without
limitation, proceeds realized in respect to any security interest therein),
shall be applied first to the Tranche B Loans until payment in full thereof, and
the balance only, if any, to the Tranche A Loans.
(b) Notwithstanding the foregoing, if any Lender (a "RECOVERING PARTY")
shall receive any such distribution referred to in SECTION 2.13(a)(v) (a
"RECOVERY") in respect thereof, such Recovering Party shall pay to the Agent for
distribution to the Lenders as set forth herein their respective pro rata shares
of such Recovery, as set forth herein, unless the Recovering Party is legally
required to return any Recovery, in which case each party receiving a portion of
such Recovery shall return to the Recovering Party its PRO RATA share of the sum
required to be returned without interest. For purposes of this Agreement,
calculations of the amount of the PRO RATA share of each Lender shall be rounded
to the nearest whole dollar.
(c) Each Borrower acknowledges and agrees that, if any Recovering Party
shall be obligated to pay to the other Lenders a portion of any Recovery
pursuant to SECTION 2.13(b) and shall make such Recovery payment, the Borrowers
shall be deemed to have satisfied its obligations in respect of Indebtedness
held by such Recovering Party only to the extent of the Recovery actually
retained by such Recovering Party after giving effect to the PRO RATA payments
by such Recovering Party to the other Lenders. The obligations of each Borrower
in respect of
-24-
<PAGE> 31
Indebtedness held by each other Lender shall be deemed to have been satisfied to
the extent of the amount of the Recovery distributed to each such other Lender
by the Recovering Party.
SECTION 2.14. REPLACEMENT OF NOTES. Upon receipt of notice to the
Borrowers of the loss, theft, destruction or mutilation of any Note and, in the
case of any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory to the Borrowers, or in the case of any such
mutilation, upon the surrender of such Note for cancellation, the Borrowers will
execute and deliver, in lieu of such lost, stolen, destroyed, or mutilated Note,
a new Note of like tenor.
III. CONDITIONS OF MAKING THE LOANS
SECTION 3.01. CONDITIONS TO CLOSING.
The obligation of the Lenders to consummate the transactions evidenced
hereby and to make the initial Advance in respect of the Tranche B Loans
hereunder, is subject to the satisfaction of the following conditions on the
Closing Date:
(a) The representations and warranties set forth in this Agreement and
in the Security Documents shall be true and correct on and as of the date hereof
and shall be true and correct in all material respects as of the date each
Advance is made, and the Borrowers shaH have performed all obligations which
were to have been performed by them hereunder prior to the date the Advance is
made.
(b) The Borrowers shall have executed and delivered to the Agent (or
shall have caused to be executed and delivered to the Agent by the appropriate
Persons) the following (each of which shall be in form and substance
satisfactory to the Agent):
(i) The Notes;
(ii) The Security Documents, together with any other documents
required or contemplated by the terms thereof;
(iii) Certified copies of resolutions of the Board of Directors of
each Company, with incumbency certificate, authorizing the execution and
delivery of this Agreement, the Notes and the Security Documents, as applicable;
(iv) A copy of the corporate charter or articles of incorporation,
certified by the Secretary of State of the state of organization, of each
Company;
(v) A certified copy of the by-laws of each Company;
(vi) Certificates of good standing (both as to corporation law and
tax matters) issued by the state in which each Company is organized and any
other state in which it is authorized, qualified or required to be qualified to
transact business;
-25-
<PAGE> 32
(vii) True and correct copies of all material consents, contracts,
licenses, instruments and other documents specified in SCHEDULES 4.04, 4.13,
4.14 and 4.15;
(viii) Certificates of insurance evidencing all insurance coverage and
policy provisions required in this Agreement and the Security Documents;
(ix) A pay-off letter, UCC termination statements and mortgage and lien
releases from all lenders and creditors who are being paid with the proceeds of
the Loans;
(x) If available, a complete copy of the complaint filed by Sunbelt in
the Tax Litigation;
(xi) A certificate of the Borrowers confirming that, as of the date of
the Advance, all representations and warranties contained in the Loan Documents
are true, accurate and complete, and no Event of Default or Unmatured Event of
Default exists; and
(xiv) Such other supporting documents and certificates as the Lenders
may reasonably request, including, without limitation, current financial
statements of each Borrower, engineering reports, appraisals and environmental
and Hazardous Material assessments, reports and questionnaires as the Lenders
may reasonably request.
(c) The Lenders and the Agent shall have received the favorable written
opinions of general counsel for the Borrowers and FCC counsel for the Borrowers
dated as of the Closing Date, satisfactory to the Agent in scope and substance.
(d) The Lenders and the Agent shall have received (i) engineering,
technical and operational reports and environmental reports on the Stations in
form and substance acceptable to the Agent, and (ii) environmental
questionnaires and other evidence satisfactory to the Agent confirming the
absence of any Hazardous Material on the Premises.
(e) The Agent shall have received written evidence reasonably
satisfactory to the Agent and its counsel that, except as otherwise disclosed in
SCHEDULE 4.20, all Leases covering tower and transmitter sites used by the
Stations have lease terms (including all extension and renewal options
exerciseable unilaterally by the Borrowers) through June 1, 2008.
(f) All legal matters incident to the transactions hereby contemplated
shall be satisfactory to special counsel for the Lenders.
(g) Neither an Event of Default nor an Unmatured Event of Default shall
have occurred and be continuing.
(h) The Borrowers shall have executed and delivered to the Agent and the
Lender(s) prior to 10:00 A.M. (New York time) at least one (1) Business Day
prior to the date of the requested Advance, a Request for Advance in the form of
SCHEDULE 3.01 hereto.
-26-
<PAGE> 33
(i) After taking into account the requested Advance, the ratio of the
Companies' Senior Debt (including the amount of the requested Advance) to the
Companies' consolidated Net Operating Income for the most recently ended twelve
(12) month period, is less than or equal to 4.25:1.00.
(k) The Borrowers shall have executed and delivered to the Agent a
certificate of representations, warranties, compliance and non-default
satisfactory in form and substance to the Agent.
(1) The Agent shall have approved of the use of all proceeds of the
Loans, including all working capital needs being paid from the proceeds of the
Loans.
SECTION 3.02. ACQUISITION LOANS. Without in any way limiting the
discretion of the Majority Lenders to approve or withhold approval of any
Acquisition or to impose additional conditions upon their consent to such
Acquisitions, the obligation of the Lenders holding the Tranche B Commitment to
make any Acquisition Loan under the Supplemental Line is also subject to the
satisfaction of the following conditions as of the date of the requested
Advance:
(A) ACQUISITION CLOSING.
(i) The transactions contemplated by the applicable Acquisition
Agreement shall have been consummated (except for the payment of that portion of
the Purchase Price thereunder being paid with the proceeds of such Acquisition
Loan) substantially in accordance with the terms thereof and, in any event, in a
manner reasonably satisfactory to the Agent, including, without limitation, (A)
the repayment in full in cash (simultaneously with, and from the proceeds of,
the Acquisition Loan or otherwise) of all Indebtedness of the applicable
Seller(s) related to the assets and properties transferred under such
Acquisition Agreement which is not being assumed by the buyer, and (B) the valid
assumption by the buyer of all other liabilities of the applicable Seller(s) in
respect of such assets and properties transferred under such Acquisition
Agreement, other than liabilities not subject to assumption under such
Acquisition Agreement which are otherwise addressed in a manner reasonably
satisfactory to the Agent.
(ii) The Agent shall have received evidence of the receipt of all
licenses, permits, approvals and consents, if any, required with respect to such
Acquisition and any other related transaction contemplated by this Agreement
(including, without limitation, any necessary consents of the FCC to the sale
contemplated by such Acquisition Agreement as evidenced by a Final Order, and
any other required consents or filings of or with applicable governmental
authorities or other third parties).
(iii) The applicable Seller(s) shall have consented to the collateral
assignment to the Agent of the rights of the Companies under the Acquisition
Agreement and any other agreements executed thereunder, as required under
SECTION 2.05.
-27-
<PAGE> 34
(iv) The Agent shall have received copies of the legal opinions
delivered by the Seller(s) pursuant to the applicable Acquisition Agreement in
connection with such Acquisition, together with a letter from each Person
delivering an opinion (or authorization within the opinion) authorizing reliance
thereon by the Lender.
(v) Any other conditions imposed by the Majority Lenders in giving their
consent (if required hereunder) to such Permitted Acquisition.
(b) OFFICER'S CERTIFICATES AS TO COMPLIANCE, SOLVENCY, DOCUMENTS, ETC.
The Companies shall have provided to the Agent one or more compliance and other
closing certificates, in forms satisfactory to the Agent, executed on behalf of
the Companies by their chief executive officer or chief financial officer,
certifying as to satisfaction by the Companies of the conditions to lending set
forth in this ARTICLE III and, specifically, as to certain matters reasonably
specified therein.
(c) SPECIAL COMPLIANCE CERTIFICATE. The Companies shall have executed
and delivered to the Agent a certificate of representations, warranties,
compliance and non-default satisfactory in form and substance to the Lender,
together with updated versions of all Schedules to this Agreement and of the
Exhibits to the Companies' Security Agreements, and otherwise adjusting the
Companies' representations and warranties contained herein and therein, to the
extent appropriate in connection with such Acquisition and approved by the Agent
in writing in its sole discretion (which certificate, only if so approved, shall
be deemed an amendment of this Agreement and such Security Documents and shall
be incorporated by reference herein and therein).
(d) DUE DILIGENCE. The Agent and its counsel shall have completed their
due diligence review with respect to the proposed Permitted Acquisition,
including a review of all material agreements, and shall be reasonably satisfied
with the results of such review.
(e) OTHER DELIVERIES. The Companies (including, without limitation, all
New Subsidiaries who are formed as part of the transaction contemplated by the
Acquisition Loan) shall have executed and/or delivered to the Agent (or shall
have caused to be executed and delivered to the Agent by the appropriate
persons), the following:
(i) All lien searches reasonably required by the Agent with
respect to the assets to be acquired pursuant to such Acquisition and the
applicable Seller(s) (and their predecessors as owners of such assets), together
with all Uniform Commercial Code financing statements and termination statements
and all Mortgages and related title insurance policies reasonably required by
the Agent in connection with the Companies' compliance with the provisions of
SECTION 2.05;
(ii) Certified copies of the resolutions of the Boards of
Directors of the Companies, authorizing such Acquisition;
-28-
<PAGE> 35
(iii) Such certificates of public officials and copies of
material consents, agreements and other documents and such other supporting
documents and information as the Lender shall reasonably request (including,
without limitation, all employment contracts of key employees with appropriate
non-compete clauses therein);
(iv) Not more than five (5) Business Days after the Companies'
execution and delivery thereof, the applicable Acquisition Agreement, including
detailed schedules of all owned and leased real property to be acquired
thereunder;
(v) If requested by the Agent, engineering reports,
environmental site assessments or such other information (including
environmental questionnaires) with respect to owned and leased real properties,
which shall be reasonably satisfactory in all respects to the Agent;
(vi) Such Uniform Commercial Code, Federal tax lien and
judgment searches as the Agent shall reasonably require, the results thereof to
disclose no liens except liens permitted by this Agreement and liens to be
discharged upon completion of such Acquisition;
(vii) A balance sheet for the Companies and the Station(s) to
be acquired and updated projections, PRO FORMA, of the Acquisition and the
proposed Advances and showing financial covenant compliance, and all other
financial information required by Section 7.04;
(viii) A current balance sheet of the Seller and related
statements of income;
(ix) Certificates of insurance evidencing the additional
insurance coverage and policy provisions required in this Agreement;
(x) Such other supporting documents and certificates as the
Agent may reasonably request, including, without limitation, an Assumption
Agreement in form and substance acceptable to the Agent pursuant to which such
New Subsidiary shall assume as co-borrower all obligations of the Borrowers
under the Loan Documents (an "ASSUMPTION AGREEMENT") and Security Documents from
all New Subsidiaries who are formed as part of the transactions contemplated by
the Acquisition Loan; and
(xi) The Lenders holding the Tranche B Commitment shall have
approved the Acquisition which is to be financed or refinanced by the
Acquisition Loan as a Permitted Acquisition.
(e) Opinions. The Agent shall have received the favorable written
opinions of general, FCC and local counsel to the Companies, dated the date of
such Advances, addressed to the Agent and reasonably satisfactory to the Agent
in scope and substance.
-29-
<PAGE> 36
(f) LEGAL FEES. All reasonable legal fees and expenses of counsel to the
Lenders and the Agent referred to in SECTION 13.02 incurred through the date of
such Advances shall have been paid in full.
(g) REVIEW BY LENDER'S COUNSEL. All legal matters incident to the
transactions hereby and contemplated shall be reasonably satisfactory to counsel
for the Agent.
(h) COMMITMENT LIMIT. The amount of the requested Advance plus the
aggregate original principal amount of all other Loans (after taking into
consideration any and all other contemporaneous Advances being made by the
Lenders) shall not exceed four and one-quarter (4.25) multiplied by the
Companies' consolidated Adjusted Net Operating Income for the most recently
ended twelve (12) month period.
(i) PREPAID INTEREST. The Borrowers shall have paid the anticipated
amount of interest which shall accrue on the Acquisition Loan from the date of
funding through the end of the month in which such Acquisition Loan is funded.
(j) TAX REFUND. If available, the Borrowers shall have used the full
balance of the Tax Refund then in existence, if any, to pay the purchase price
before receiving an Advance in respect to a Permitted Acquisition,
SECTION 3.03. SUPPLEMENTAL LINE. The obligation of the Lenders holding
the Tranche B Commitment to make any Advance under the Supplemental Line is
subject to the following conditions:
(a) All warranties and representations set forth (or, with respect to
representations and warranties contained in the Original Agreement, confirmed)
in this Agreement shall be true and correct in all material respects as of the
date such Advances are made, except to the extent they relate specifically to an
earlier date or are affected by transactions permitted hereunder occurring after
the date hereof (or, as applicable, the Closing Date).
(b) After giving effect to such Advances (both as of the proposed date
thereof and, on a pro forma basis, the last day of the most recent fiscal
quarter for which financial statements have been delivered to the Lenders or
required under Section 6.05), no Event of Default and no Unmatured Event of
Default shall have occurred and be continuing. Each telephonic or written
request for such Advance shall constitute a representation to such effect as of
the date of such request and as of the date of such borrowing.
(c) No event(s) shall have occurred, and no circumstance(s) shall exist,
which individually or in the aggregate with other such circumstances or events,
(i) has had, or could reasonably be expected to have, an adverse effect on the
validity or enforceability of this Agreement or the other Loan Documents in any
material respect, (ii) has had, or could reasonably be expected to have, a
Material Adverse Effect, other than any such events or circumstances which are
generally applicable to the radio broadcast industry or to general economic
conditions, or (iii) has impaired, or could reasonably be expected to impair,
the ability of the Borrowers to fulfill
-30-
<PAGE> 37
their obligations under this Agreement, the Notes or any other Loan Document to
which any Borrower is a party.
(d) The Agent shall have received a properly completed Request for
Advance together with all such financial and other information as the Agent
shall require to substantiate the current and PRO FORMA certifications of no
Event of Default and no Unmatured Event of Default contained therein.
(e) The Agent shall have received such other supporting documents and
certificates as the Agent and the Majority Lenders may reasonably request.
(f) The Advance shall be made on not less than five (5) Business Days
notice on or before the Supplemental Line Expiration Date, and shall not be less
than $250,000.00. A Request for Advance must be received by 10:00 a.m. to be
effective as a notice received on such day.
(g) The Agent shall have approved the Borrowers' proposed use of the
requested Advance after having received from the Borrowers such documentary
evidence as the Agent shall have reasonably requested.
(h) After taking into account the requested Advance, the ratio of the
Companies' Senior Debt (including the amount of the requested Advance) to the
Companies' consolidated Adjusted Net Operating Income for the most recently
ended twelve (12) month period, is less than 4.25:1.00.
SECTION 3.04. LENDER APPROVALS. For purposes of determining compliance
with the conditions precedent referred to in SECTIONS 3.01, 3.02 and 3.03, as of
the date hereof, as of the Closing Date, or, with respect to Advances made
hereafter, as of the date of such Advances the Lenders shall be deemed to have
consented to, approved or accepted or be satisfied with each document or other
matter which is the subject of such Lender's consideration under any of the
provisions of such Sections, unless an officer of the Agent responsible for the
transactions contemplated by the Loan Documents shall have received written
notice from such Lender at least five (5) Business Days prior to the date hereof
or the applicable borrowing date, as the case may be, specifying its objection
thereto and such Lender shall have failed to make available such Lender's
ratable share of such Advances, as the case may be.
IV. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to the Lenders and the
Agent (which representations and warranties shall survive the delivery of the
Notes and the making of the Loans) that:
-31-
<PAGE> 38
SECTION 4.01. FINANCIAL STATEMENTS.
The Borrowers have heretofore furnished to the Lenders and the Agent the
audited balance sheets of the Borrowers as at December 31, 1997, and the
internally prepared balance sheets of the Borrowers as at March 31, 1998, and
the statement of operations, changes in stockholders' equity and changes in
financial position of the Borrowers for the fiscal year or other period ending
on each such date. Said financial statements and balance sheets have been
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with that of preceding periods, and are complete and correct
in all material respects and fairly present the financial condition of the
Borrowers as at said dates and the results of operations of the Borrowers for
the periods indicated. Since December 31, 1997, there has occurred no material
adverse change in the Borrowers' individual or consolidated business, assets,
properties or condition (financial or otherwise) other than as disclosed in said
balance sheets and financial statements. The Borrowers have no contingent
obligations, liabilities for taxes or unusual long-term commitments except as
specifically mentioned in the foregoing financial statements. All financial
projections submitted to the Lenders and the Agent by the Borrowers are
reasonable in light of all information presently known by the Borrowers.
SECTION 4.02. ORGANIZATION, ETC.
(a) Each Company (i) is a corporation duly organized and validly
existing under the laws of the State of Nevada and is duly qualified to transact
business in each jurisdiction where the nature of its activities requires such
qualification, (ii) has the power and authority to own its properties and to
carry on its business as now being conducted and as presently contemplated, and
(iii) has the power and authority to execute and deliver, and perform its
obligations under this Agreement, the Notes and the Security Documents
(collectively, the "TRANSACTION DOCUMENTS") to which it is a party or
signatory. Sunbelt owns eighty percent (80%) of the issued and outstanding
capital stock of Beartooth and all of the issued and outstanding capital stock
of each of the other Companies; otherwise, each Company has no subsidiaries as
of the date hereof.
(b) Effective September 1, 1997, pursuant to an Assignment and
Assumption Agreement dated [undated], 1997, Radio Sales transferred to Radio
News all of the assets and liabilities of Radio Sales, and Radio News assumed
the payment and performance of all such liabilities. Effective September 15,
1997, Radio Sales was dissolved in accordance with all requirements of
applicable law.
-32-
<PAGE> 39
SECTION 4.03. AUTHORIZATION; COMPLIANCE, ETC.
The execution and delivery of, and the performance by each Company of
its obligations under, the Transaction Documents have been duly authorized by
all requisite corporate action and will not violate any provision of law, any
order, judgment or decree of any court or other agency of government (including,
without limitation, the FCC), the corporate charters, articles of incorporation
or by-laws of the Companies, or any indenture, agreement or other instrument to
which any of the Companies is a party, or by which any of the Companies is
bound, or be in conflict with, result in a breach of, or constitute (with due
notice or lapse of time or both) a default under, or except as may be permitted
under this Agreement, result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the property or assets of
the Companies pursuant to, any such indenture, agreement or instrument. Each of
the Transaction Documents constitutes the valid and binding obligation of the
Companies, enforceable against the Companies in accordance with its terms.
SECTION 4.04. GOVERNMENTAL AND OTHER CONSENTS.
Except as described in SCHEDULE 4.04 hereto, none of the Companies is
required to obtain any consent, approval or authorization from, or to file any
declaration or statement with, any governmental instrumentality or other agency,
including, without limitation, the FCC, or any other Person, in connection with
or as a condition to the execution, delivery or performance of any of the
Transaction Documents. All consents, approvals and authorizations described in
SCHEDULE 4.04 have been duly granted and are in full force and effect on the
date hereof and all filings described in such Schedule have been properly and
timely made.
SECTION 4.05. LITIGATION.
Except as disclosed in SCHEDULE 4.05 hereto, there is no action, suit or
proceeding at law or in equity or by or before any governmental instrumentality
or other agency, including, without limitation, the FCC or any arbitration board
or tribunal, now pending or, to the knowledge of any of the Companies,
threatened (nor is any basis therefor known to the Companies), (a) which
questions the validity of any of the Transaction Documents, or any action taken
or to be taken pursuant hereto or thereto, or (b) against or affecting any of
the Companies which, if adversely determined, either in any case or in the
aggregate, would have a Material Adverse Effect.
SECTION 4.06. COMPLIANCE WITH LAWS AND AGREEMENTS.
Except as otherwise disclosed in SCHEDULE 4.06 hereto, none of the
Companies is party to any agreement or instrument or subject to any corporate or
other restriction which could have a Material Adverse Effect. None of the
Companies is in violation of any provision of its corporate charter, articles of
incorporation or by-laws and no Company is in violation of any material
indenture, agreement or instrument to which it is a party or by which it is
bound or, to the best of the Companies' knowledge and belief, of any provision
of law, the violation of which could have a Material Adverse Effect, or any
order, judgment or decree of any court or other Governmental Authority
(including, without limitation, the FCC). Without limiting the scope of the
foregoing,
-33-
<PAGE> 40
(a) each Company is in compliance in all material respects with all federal and
state laws and regulations, including all federal and state securities laws and
regulations and all rules, regulations and administrative orders of the FCC, the
violation of which could have a material adverse effect upon the Companies. and
(b) none of the Companies has or is now engaged in any illegal activity,
including without limitation, a pattern of racketeering activity, that could
subject any of the Companies' assets to forfeiture or seizure.
SECTION 4.07. TITLE TO PROPERTIES.
Except as specified on SCHEDULE 4.07 hereto, each Company has good title
to all of its properties and assets (including, without limitation, the assets
shown on the financial statements referred to in SECTION 4.01), free and clear
of all mortgages, security interests, restrictions, liens and encumbrances of
any kind, including, without limitation, liens or encumbrances in respect of
unpaid taxes, except liens and encumbrances permitted under this Agreement. Each
Company enjoys quiet possession under all Leases to which it is a party as
lessee, and all of such Leases are valid, subsisting and in full force and
effect. None of such Leases contains any provision restricting the incurrence of
indebtedness by the lessee.
SECTION 4.08. INTERESTS IN OTHER BUSINESSES.
None of the Companies holds or owns any of the issued and outstanding
capital stock, partnership interests or other ownership interests. or any rights
to acquire the same, of any corporation, partnership, firm or entity, except
that (a) Sunbelt holds and owns eighty percent (80%) of the issued and
outstanding capital stock of Beartooth and one hundred percent (100%) of the
issued and outstanding capital stock of each of the other Companies, (b) Valley
holds capital stock in two corporations, Alta Development Company and Microwave,
Inc., and (c) Sunbelt holds 120,000 shares of common stock of Nevada First Bank,
a Nevada banking corporation.
SECTION 4.09. NO INSOLVENCY.
Neither the borrowings made by the Companies under this Agreement nor
the execution, delivery and performance of the Notes and the Security Documents
render or will render any of the Companies insolvent or unable to pay its debts
as they become due; none of the Companies is contemplating either the filing of
a petition by it under any state or federal bankruptcy or insolvency laws or the
liquidating of all or a substantial portion of its property, and the Companies
have no knowledge of any person contemplating the filing of any such petition
against any of the Companies.
SECTION 4.10. FULL DISCLOSURE.
No statement of fact made by or on behalf of any Person (other than the
Lenders and the Agent) in this Agreement, the Security Documents, or any
certificate or schedule furnished to the Lender pursuant hereto or thereto
contains any untrue statement of a material fact or omits to state any material
fact necessary to make statements contained therein or herein not misleading.
-34-
<PAGE> 41
To the best of the Companies' knowledge. there is no fact presently known to the
Companies which has not been disclosed to the Lenders and the Agent in writing
which materially affects adversely, or, as far as the Companies can foresee,
could have a Material Adverse Effect.
SECTION 4.11. TAX RETURNS.
Except as set forth in SCHEDULE 4.11 hereto, each Company has filed all
federal, state and local tax returns required to be filed, and has paid or made
adequate provision for the payment of all material federal, state and local
taxes, franchise fees, charges and assessments. The federal income tax returns
of the Companies have been examined by the Internal Revenue Service (or closed
by applicable statute) for all tax periods prior to and including the tax year
ending December 31, 1995. All deficiencies that have been asserted against the
Companies as a result of such examination have been paid or finally settled or
are being contested in good faith, and no issue has been raised in any such
examination that, by application of similar principles reasonably can be
expected to result in the assertion of a material deficiency for any other year
not so examined, except to the extent that such deficiency has been reserved for
in the financial statements described in SECTION 4.01. No Company has taken any
reporting positions for which it does not have a reasonable basis and does not
anticipate any further material tax liability with respect to the tax years that
have not been closed. For purposes of this SECTION 4.11, the term "Company"
shall include each other Person with which any Company files consolidated or
combined income tax returns or reports.
SECTION 4.12. PENSION PLANS, ETC.
(a) Plans. Except as set forth in SCHEDULE 4.12 hereto, neither the
Companies nor any entity with which any Company would be aggregated (a "COMMONLY
CONTROLLED ENTITY") under Section 414(b), (c), (m), or (o) of the Code,
maintains or contributes to any pension, profit sharing or other similar plan
providing for a program of deferred compensation to any employee or former
employee.
(b) FUNDING OF EMPLOYEE BENEFIT PLANS. All contributions and other
payments required to be made by the Companies or any Commonly Controlled Entity
to all employee benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which either any
of the Companies or any Commonly Controlled Entity maintains or to which any of
them contributes (the "EMPLOYEE BENEFIT PLANS") have been made or reserves
adequate for such purposes have been set aside and reflected on the Companies'
financial statements. With respect to any such Employee Benefit Plan which is an
employee pension benefit plan, as defined in Section 3(2) of ERISA (an "EMPLOYEE
PENSION PLAN"), there is no accumulated funding deficiency, as defined in
Section 302 of ERISA and Section 412 of the Code, and no waiver has been applied
for or obtained from the Internal Revenue Service of any minimum funding
requirement under Section 412 of the Code. No lien has arisen under Section
412(n) of the Code with respect to the assets of the Companies. The Companies
have no reason to believe that the level of contributions required to be made to
each multi employer plan, as defined in Section 4001(a)(3) of ERISA to which any
Company or any Commonly Controlled
-35-
<PAGE> 42
Entity contributed or contributes (a "MULTIEMPLOYER PLAN") is not sufficient to
maintain the level of benefits under such plan now in effect or scheduled to
become effective in the future.
(c) FIDUCIARY DUTIES, PROHIBITED TRANSACTIONS AND ADMINISTRATION.
Neither the Companies nor any Commonly Controlled Entity has breached any
fiduciary duty imposed on it under Part 4 of Title I of ERISA with respect to
any Employee Benefit Plan and has not engaged in any prohibited transaction, as
defined in Title I of ERISA and Section 4975 of the Code, involving any Employee
Benefit Plan for which no exemption is available. Each Employee Benefit Plan has
been and is administered in accordance with its terms and applicable laws, rules
and regulations.
(d) STATUS OF FUNDED PENSION PLANS. Each funded Employee Pension Plan
has been determined by the Internal Revenue Service to be qualified under
Section 401(a) or Section 403(a) of the Code and nothing has occurred which
would cause the loss of such qualification or the imposition of any tax
liability or penalty under the Code or ERISA on the Companies. With respect to
each Employee Pension Plan which is subject to Title IV of ERISA, other than
Multiemployer Plans, (1) neither any Company nor any Commonly Controlled Entity
has failed to make required contributions or incurred any liability to the
Pension Benefit Guaranty Corporation ("PBGC"), (2) no reportable event, as
defined in Section 4043(b) of ERISA, has occurred, (3) the actuarial present
value of the benefit liabilities, as defined in Section 4001(a)(16) of ERISA
("BENEFIT LIABILITIES"), does not exceed the net assets available to provide the
Benefit Liabilities. Neither any Company nor any Commonly Controlled Entity
knows of any facts or circumstances which might give rise to any liability to
the PBGC under Title IV of ERISA (other than for premium payments). With respect
to Multiemployer Plans, neither any Company nor any Commonly Controlled Entity
has withdrawn or partially withdrawn, as described in Subtitle E of Title IV of
ERISA, from any such plan and thereby incurred any obligation to discharge a
withdrawal liability (including but not limited to any contingent or secondary
withdrawal liability) within the meaning of Sections 4201 and 4202 of ERISA to
any Multiemployer Plan, and there exists no condition or set of circumstances
which presents a risk of the occurrence of any withdrawal from or the partition,
termination, reorganization or insolvency of any Multiemployer Plan which could
result in any liability to the Companies or any Commonly Controlled Entity.
(e) STATUS OF EMPLOYEE WELFARE PLANS. No Employee Benefit Plan which is
an employee welfare benefit plan, as defined in Section 3(1) of ERISA (an
"EMPLOYEE WELFARE PLAN"), provides for continuing benefits or coverage for any
participant (or beneficiary) after the termination of the participant's
employment except as may be required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") and regulations thereunder or
by applicable state statutory law. With respect to any Employee Welfare Plan,
each Borrower and each Commonly Controlled Entity have complied with the notice
and continuation coverage requirements of COBRA and regulations thereunder such
that there would not result in any loss of deduction under Section 162 of the
Code or any tax, penalty or liability to the Companies.
-36-
<PAGE> 43
(f) CLAIMS. There are no claims (other than claims for benefits in the
normal course), actions or lawsuits asserted or instituted with respect to, and
neither any Company nor any Commonly Controlled Entity has knowledge of any
threatened claims or litigation with respect to, any Employee Benefit Plan
(other than a Multiemployer Plan) or any fiduciary thereof.
SECTION 4.13. LICENSES, ETC.
SCHEDULE 4.13 hereto accurately and completely lists all material
authorizations, licenses, permits and franchises granted or assigned to the
Companies by the FCC or any other public or governmental agency or regulatory
body (with the exception of local business licenses held and maintained by the
Borrowers in accordance with applicable local law), including (a) all material
authorizations, licenses, permits and franchises for the operation of Television
Station KVBC (TV) (Channel 3) (licensed to Las Vegas, Nevada), Television
Station KYMA (TV) (Channel 11) (licensed to Yuma, Arizona), Television Station
KXTF (TV) (Channel 35) (formerly know as KKVI (TV) (licensed to Twin Falls,
Idaho), Television Station KPVI (TV) (Channel 6) (licensed to Pocatello, Idaho),
Television Station KJWY (TV) (Channel 2) (formerly known as KJVI (TV) (licensed
to Jackson, Wyoming), Television Station KRNV (TV) (Channel 4) (licensed to
Reno, Nevada), Radio Station KRNV (FM) (licensed to Reno, Nevada), Television
Station KENV (TV) (Channel 10) (licensed to Elko, Nevada), and Television
Station KTVH (TV) (Channel 12) (licensed to Helena, Montana) (the "STATIONS"),
and (b) all construction permits granted or assigned to the Companies by the
FCC, and the same constitute the only material licenses, permits or franchises
or other authorizations of any public or governmental agency or regulatory body
required or advisable in connection with the conduct by the Companies of their
business as presently conducted or proposed to be conducted (such licenses,
permits, franchises and authorizations, together with any extensions or renewals
thereof and any additional licenses, permits, franchises or authorizations
hereafter issued to the Companies, being herein sometimes referred to
collectively as the "LICENSES"). All existing Licenses are in full force and
effect, are duly issued in the name of, or validly assigned to, the Companies
and the Companies have full power and authority to operate thereunder. Such
Schedule also specifies the expiration date of each existing License. SCHEDULE
4.13 hereto shall be supplemented from time to time with a list of all material
Licenses hereafter issued to the Companies with respect to the New Stations at
the time of funding each Acquisition Loan.
SECTION 4.14. MATERIAL AGREEMENTS.
SCHEDULE 4.14 hereto accurately and completely list all material
agreements to which each of the Companies is a party, including, without
limitation, all Leases, network affiliation, programming, engineering,
consulting, employment, management and related agreements, if any, which are
presently in effect in connection with the conduct of the Companies' business
and the operation of the Stations and the New Stations. All of the foregoing
agreements are valid, subsisting and in full force and effect and neither the
Companies nor, to the best of the Companies' knowledge and belief, any other
parties, are in material default thereunder.
-37-
<PAGE> 44
SECTION 4.15. OWNERSHIP OF COMPANIES.
SCHEDULE 4.15 hereto correctly sets forth the number of shares of the
Companies' capital stock of each class authorized, the name of each of its
stockholders (the "STOCKHOLDERS"), and the number of shares of each class of
such capital stock owned by such Stockholders. Such Schedule also sets forth the
name of each Person holding a voting trust certificate in respect of the shares
of capital stock of the Companies and the number of shares of the capital stock
of the Companies deposited in exchange for each such certificate. All of said
outstanding shares are validly issued, fully paid and non-assessable and are
owned by such Stockholders as specified in such Schedule, free of any
assignment, pledge, lien, security interest, charge, option or other
encumbrance, except for liens and security interests granted to the Lenders and
the Agent, transfer restrictions noted on the certificate evidencing such
shares, transfer restrictions imposed by the FCC and other encumbrances
specified in such Schedule. Such Schedule also sets forth a description of all
warrants, options and other rights to acquire shares of the Companies' capital
stock of any class and the names of the holders thereof. None of the Companies
is obligated in any manner to issue any additional shares, or options or rights
to acquire any such shares, of its capital stock.
SECTION 4.16. PATENTS, TRADEMARKS, ETC.
Each Company owns or possesses all the patents, trademarks, service
marks, trade names, broadcast call letters, copyrights and licenses, and all
rights with respect to the foregoing, necessary for the conduct of its business
as now conducted, without any known conflict with the rights of others.
SECTION 4.17. BROKERS. ETC.
The Companies have not dealt with any broker, finder, commission agent
or other similar person in connection with the Loans or the transactions
contemplated by this Agreement, and the Companies are not under any obligation
to pay, and the Companies covenant and agree to indemnify and hold harmless the
Lenders and the Agent from and against, any broker's fee, finder's fee or
commission in connection with such transactions.
SECTION 4.18. ENFORCEABILITY.
Assuming that this Agreement and the Security Documents have been duly
authorized, executed and delivered by the Lenders and the Agent, this Agreement,
each Note and the Security Documents constitute the legal, valid and binding
obligations of the Companies, enforceable against the Companies in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally.
-38-
<PAGE> 45
SECTION 4.19. ENVIRONMENTAL MATTERS.
Except as may be otherwise specifically stated in SCHEDULE 4.19 hereto:
(a) neither the Companies nor, to the best of the Companies' knowledge
and belief, any other Person has ever caused, permitted, or suffered to exist
any oil, friable asbestos, hazardous waste, hazardous substance, or other
hazardous or toxic material (as defined under applicable law including, but not
limited to, the Comprehensive Environmental Response, Comprehension and
Liability Act of 1980 ["CERCLA"], 42 U.S.C. Sections 9601(14) and (33), the
Resource Conservation and Recovery Act ["RCRA"], 42 U.S.C. Section 6903(5), the
Toxic Substances Control Act, or any comparable state statute or regulation
[collectively, "ENVIRONMENTAL LAWS"] all of which material is collectively
referred to herein as "HAZARDOUS MATERIAL") to be spilled, released, placed,
held, located or disposed of on, nor, to the best of the Companies' knowledge
and belief, are any now existing on, any real estate legally or beneficially
owned by each Borrower or leased by any of the Companies (the "PREMISES"), or
into the atmosphere, any body of water, any wetlands or the Premises, in any
manner which violates any applicable Environmental Law;
(b) to the best of the Companies' knowledge and belief after due
inquiry, no portion of the Premises has ever been used (whether by the Companies
or, to the best of the Companies' knowledge and belief, by any other Person) as
a treatment, storage or disposal (whether permanent or temporary) site for any
Hazardous Material;
(c) to the best of the Companies' knowledge and belief after due
inquiry, no portion of the no notice of violation, lien or other notice has been
issued by any governmental agency with respect to the environmental condition of
the Premises, the improvements thereon, any other property owned by the
Companies, or any other property which was previously included in the property
description of the Premises or such other real property, or with respect to the
release of Hazardous Material at, upon, under or within the Premises, the
improvements or such other real property, or the past or ongoing migration of
Hazardous Material from neighboring lands or to the Premises or the
improvements;
(d) to the best of the Companies' knowledge and belief after due
inquiry, no friable asbestos-containing materials, PCBs, radon gas, or urea
formaldehyde foam insulation are located or present at, upon, under or within
the Premises or any improvements thereon;
(e) to the best of the Companies' knowledge and belief, no underground
storage tanks, whether in use or closed, are on or under the Premises; and
(f) to the best of the Companies' knowledge and belief after due
inquiry, the Premises and all operations conducted on the Premises are in
compliance with all Environmental Laws.
-39-
<PAGE> 46
SECTION 4.20. STUDIO AND TOWER SITES.
SCHEDULE 4.20 hereto completely and accurately lists or shall list for
each Company (a) each real estate location utilized by such Person as a studio,
transmitter or tower site in the operation of any of the Stations, and (b) each
other parcel of real estate owned or leased by such Person. As to each such
site, SCHEDULE 4.20 sets forth (a) the name(s) of the record owner(s) of such
site, (b) in the case of each leased site, the date of the Lease (and all
amendments thereto), the expiration date thereof and the terms of any applicable
renewal or extension options exerciseable unilaterally by the tenant thereunder,
(c) the street address of such site, and (d) the legal description for such
site. Expect as specified in SCHEDULE 4.20, none of the improved real property
owned or leased by any Company that is required to be mortgaged under SECTION
2.05 is situated in a flood zone designated as type "A" "B" or "V" by the U.S.
Department of Housing and Urban Development.
SECTION 4.21. MARGIN STOCK. The Borrowers do not own or have any present
intention of acquiring any "MARGIN STOCK" within the meaning of Regulation U (12
CFR Part 221), of the Board of Governors of the Federal Reserve System (herein
called "MARGIN STOCK").
SECTION 4.22. INVESTMENT COMPANY ACT. None of the Borrowers is an
"INVESTMENT COMPANY" within the meaning of the Investment Company Act of 1940,
as amended, or a "HOLDING COMPANY," or a "SUBSIDIARY COMPANY" of a "HOLDING
COMPANY," or an "AFFILIATE" of a "HOLDING COMPANY," or of a "SUBSIDIARY COMPANY"
of a "HOLDING COMPANY," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
SECTION 4.23. LABOR MATTERS. None of the Borrowers is experiencing any
strike, labor dispute, slow down or work stoppage due to labor disagreements
which could reasonably be expected to have a Material Adverse Effect; there is
no such strike, dispute, slow down or work stoppage threatened against any of
the Borrowers; and none of the Borrowers is subject to any collective bargaining
or similar arrangements.
SECTION 4.24. RECITALS.
All recitals contained in the Preamble are true and correct.
V. FINANCIAL COVENANTS.
The Borrowers jointly and severally covenant and agree that, so long as
the Lenders, or any of them, have any obligation to extend credit to the
Borrowers, or any of them, hereunder, or there remains outstanding any portion
of the principal of, or interest on, the Notes, or there remains outstanding any
other Indebtedness of the Borrowers or any other Companies, or any of them, to
the Lenders or the Agent, or any of them, whether now existing or arising
hereafter and whether under this Agreement, the Notes, the Security Documents or
otherwise:
-40-
<PAGE> 47
SECTION 5.01. AFTER TAX CASH FLOW.
The Companies shall maintain for each period of twelve (12) consecutive
months ending on the last day of each Fiscal Quarter during the respective
periods indicated below, consolidated After Tax Cash Flow of not less than the
respective amounts set forth below:
<TABLE>
<CAPTION>
For Twelve Month Period Ending as of each The Companies' Consolidated
March 31, June 30, September 30 and December 31, After Tax Cash Flow to be not
as follows: less than:
----------- ----------
<S> <C>
June 30, 1998, through and including September 30, 1998 $11,000,000.00
December 31, 1998, through and including September 30, 1999 $11,500,000.00
December 31, 1999, through and including September 30, 2000 $12,000,000.00
December 31, 2000, through and including September 30, 2001 $13,000,000.00
December 31, 2001, and thereafter $14,000,000.00
</TABLE>
SECTION 5.02. KVBC-TV.
Valley shall maintain for each period of twelve (12) consecutive months
ending on the last day of each Fiscal Quarter during the respective periods
indicated below, KVBC-TV's Net Operating Income plus its Corporate Overhead of
not less than the respective amounts set forth below:
<TABLE>
<CAPTION>
KVBC-TV's Net Operating
For Twelve Month Period Ending as of each March 31, Income plus its Corporate
June 30, September 30 and December 31 , as follows: Overhead to be not less than:
- ---------------------------------------------------- -----------------------------
<S> <C>
June 30, 1998, through and including September 30, 1998 $15,000,000.00
December 31, 1998, through and including September 30, 1999 $16,000,000.00
December 31, 1999, through and including September 30, 2000 $16,800,000.00
December 31, 2000, through and including September 30, 2001 $17,500,000.00
December 31, 2001, and thereafter $18,000,000.00
</TABLE>
SECTION 5.03. DEBT SERVICE COVERAGE.
The Companies shall maintain on a consolidated basis for each period of
twelve (12) consecutive months ending on the last day of each Fiscal Quarter
during the respective periods indicated below, a ratio of consolidated After Tax
Cash Flow to Senior Debt Service of not less than the respective ratios set
forth below:
-41-
<PAGE> 48
<TABLE>
<CAPTION>
For Twelve Month Period Ending as of each Ratio of Consolidated After Tax
March 31, June 30, September 30 and December 31, Cash Flow to Senior Debt Service
as follows: to be not less than:
----------- --------------------
<S> <C>
June 30, 1998, through and including September 30, 1998 1.75:1.00
December 31, 1998, through and including September 30, 1999 1.50:1.00
December 31, 1999, through and including September 30, 2000 1.50:1.00
December 31, 2000, through and including September 30, 2001 1.50:1.00
December 31, 2001, and thereafter 1.75:1.00
</TABLE>
SECTION 5.04. SENIOR DEBT TO AFTER TAX CASH FLOW.
The Companies shall maintain on a consolidated basis for each Fiscal
Year ending on the respective dates indicated below, a ratio of the Companies'
Senior Debt to the Companies' consolidated After Tax Cash Flow for such Fiscal
Year of not more than the respective ratios set forth below:
<TABLE>
<CAPTION>
Ratio of Senior Debt to
For Fiscal Year Ending: After Tax Cash Flow to
---------------------- be not
more than:
----------
<S> <C>
December 31, 1998 6.00:1.00
December 31, 1999 5.20:1.00
December 31, 2000 4.70:1.00
December 31, 2001 4.00:1.00
December 31, 2002, and each December 31 thereafter 3.50:1.00
</TABLE>
SECTION 5.05. FIXED CHARGE COVERAGE RATIO; CURRENT RATIO.
(a) The Companies shall maintain on a consolidated basis at all times as
of the last day of each Fiscal Quarter, a ratio of (i) the Companies'
consolidated Net Operating Income for the preceding twelve (12) months to (ii)
the Companies' Fixed Charges during such period of not less than 1.10:1.00.
(b) The Companies shall maintain on a combined basis at all times as of
the last day of each Fiscal Quarter, a ratio of (i) the Companies' consolidated
Current Assets to (ii) their consolidated Current Liabilities of not less than
1.50:1.00.
-42-
<PAGE> 49
SECTION 5.06. CAPITAL EXPENDITURES.
Without the prior written consent of the Majority Lenders, the Companies
shall not make or incur Capital Expenditures in excess of (a) Five Million
Dollars ($5,000,000) in the aggregate during Fiscal Year ending December 31,
1998, or (b) one hundred five percent (105%) of the maximum amount permitted to
be made hereunder during the prior Fiscal Year, in each Fiscal Year beginning
with the Fiscal Year ending December 31, 1999; PROVIDED, HOWEVER, that Capital
Expenditures to the extent financed with the proceeds of the Supplemental Line,
and up to $3,000,000 in leasehold and real estate improvements made during
Fiscal Year 1998 at the Helena, Montana, and Pocatello, Idaho, studio sites,
shall be excluded from the calculation of Capital Expenditures for the purposes
of this SECTION 5.06.
SECTION 5.07. CORPORATE OVERHEAD.
Subject to SECTION 9.03, the Companies shall not pay Corporate Overhead
which exceeds (a) $4,600,000 in the aggregate during Fiscal Year ending December
31, 1998, or (b) in each subsequent Fiscal Year, an amount equal to one hundred
five percent (105%) of the aggregate maximum amount permitted to. be paid
hereunder during the preceding Fiscal Year.
SECTION 5.08. RESTRICTED PAYMENTS.
(a) Except as permitted by SECTION 5.07, 5.08(b) or 5.08(c) hereof, the
Companies will not directly or indirectly declare, order, pay or make any
Restricted Payment or set aside any sum or property therefor without the
Lender's prior written consent.
(b) Subject to the limitations and restrictions set forth in the
Affiliate Subordination Agreement, unless an Event of Default shall then exist,
each Company may transfer cash in the form of intercompany loans for the limited
purpose of funding working capital needs of the Companies, subject to
appropriate documentation satisfactory of the Lender in its sole discretion.
(c) Each Company may pay salaries, bonuses and other employee
compensation in the ordinary course of business to (i) James Rogers as part of
Corporate Overhead subject to the limitations set forth in SECTION 5.07, and
(ii) other Stockholders who are employed by such Company and who individually
hold not more than 5% of the capital stock of Sunbelt.
VI. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any Lender has any
obligation to extend credit to the Borrowers, or any of them, hereunder, or
there remains outstanding any portion of the principal of, or interest on, the
Notes, or there remains outstanding any other Indebtedness of the Borrowers or
the other Companies, or any of them, to the Lenders or the Agent, or any of
them, whether now existing or arising hereafter and whether under this
Agreement, the Notes, or otherwise, each Borrower will, and Sunbelt will cause
each New Subsidiary to:
-43-
<PAGE> 50
SECTION 6.01. PRESERVATION OF ASSETS; COMPLIANCE WITH LAWS, ETC.
Do or cause to be done all things necessary to preserve, renew and keep
in full force and effect each Company's existence as a corporation, and all
material rights, licenses, permits and franchises (including all Licenses) and
comply in every material respect with all laws and regulations applicable to it
and all material agreements to which it is a party, the violation of which could
have a Material Adverse Effect; at all times maintain, preserve and protect all
material trade names (including the call letters of the Stations and the New
Stations) and preserve all the remainder of its material property used or useful
in the conduct of its business and keep the same in good repair, working order
and condition (reasonable wear and tear and damage by fire or other casualty
excepted), and from time to time, make or cause to be made all needful and
proper repairs, renewals, replacements, betterments and improvements thereto, so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
SECTION 6.02. INSURANCE.
Keep all of its insurable properties used or useful in the operation of
the Stations, and now or hereafter owned, adequately insured at all times
against loss or damage by fire or other casualty to the extent customary with
respect to like properties of companies conducting similar businesses; maintain
commercial general liability, auto liability, broadcaster's liability and
worker's compensation insurance insuring each Company to the extent customary
with respect to companies conducting similar businesses, and maintain business
interruption insurance with extra expense in respect of the Stations and the New
Stations and the broadcasting businesses conducted by the Companies, in amount
and form acceptable to the Agent, in each case issued by financially sound and
reputable insurers, and, upon request of the Agent, furnish to the Agent
satisfactory evidence of the same prior to the Closing Date and on or before any
expiration date with respect to such insurance; notify the Agent of any material
change in the insurance maintained on a Company's properties after the date
hereof and furnish the Agent satisfactory evidence of any such change; maintain
insurance with respect to its tower, transmission and studio facilities and
related equipment and other insurable properties in an amount equal to the full
replacement cost thereof; provide that each insurance policy shall: (a) as
appropriate, name the Agent as an additional insured and/or as loss payee
pursuant to a so-called "standard mortgagee clause", (b) provide that no action
of the Companies or any tenant or sub-tenant shall void such policy as to the
Agent, and (c) provide that the Agent shall be notified of any proposed
cancellation of such policy at least thirty (30) days in advance thereof and
will have the opportunity to correct any deficiencies justifying such proposed
cancellation. In the event that any Company shall default in the performance of
its obligations under this SECTION 6.02, the Agent may, at its option, effect
such insurance coverage with an insurer acceptable to the Agent and add the
premium(s) paid therefor to the principal amount of the indebtedness incurred
pursuant hereto, and the amount of such premium shall be payable by the
Companies on demand with interest thereon at the highest rate payable hereunder.
In the event of a property or casualty loss, and so long as no Event of Default
exists, the Companies shall be paid directly by the insurer the proceeds of any
insurance for such loss not exceeding $100,000 per occurrence, provided that the
Companies shall use such proceeds for the restoration or replacement of the
- 44 -
<PAGE> 51
property or asset which was the subject of such casualty loss. In all other
instances, the insurance proceeds shall be paid to the Agent, and the Agent may
deliver to the Companies the proceeds of any insurance thereon, provided that
(i) the Companies shall use such proceeds for the restoration or replacement of
the property or asset which was the subject of such loss, (ii) the Companies
shall have demonstrated to the reasonable satisfaction of the Agent that such
property or asset will be restored to substantially its previous condition or
will be replaced by substantially identical property or assets, and (iii) if the
Agent and the Lenders had a security interest in and lien upon the property or
asset which was the subject of such loss, the Agent shall have received if
requested by it, a favorable opinion from the Borrowers' counsel, in form and
substance satisfactory to the Agent, as to the priority of the Agent's and
Lenders' security interest in and lien upon such restored or replaced property
or asset. Notwithstanding the foregoing, in lieu of delivering such proceeds to
the Companies, the Agent shall have the right (x) to retain such proceeds if in
excess of $100,000 for the purpose of making disbursement thereof to any
contractors, subcontractors and materialmen to whom payment is owed in
connection with such restoration, or (y) to apply such proceeds in payment of
the Notes in the event of a total casualty loss to the insured properties.
SECTION 6.03. TAXES, ETC.
Pay and discharge or cause to be paid and discharged all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income and profits or upon any of its property, real, personal or mixed, or upon
any part thereof; before the same shall become in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might
become a lien or charge upon such properties or any part thereof; PROVIDED,
HOWEVER, that such Company shall not be required to pay and discharge or cause
to be paid and discharged any such tax, assessment, charge, levy or claim so
long as the validity thereof shall be contested in good faith by appropriate
proceedings and it shall have set aside on its books adequate reserves with
respect to any such tax, assessment, charge, levy or claim, so contested; and
PROVIDED, FURTHER that, in any event, payment of any such tax, assessment,
charge, levy or claim shall be made before any of its property shall be seized
or sold in satisfaction thereof.
SECTION 6.04. NOTICE OF PROCEEDINGS, DEFAULTS, ADVERSE CHANGE, ETC.
Promptly (and in any event within five days of Companies' discovery
thereof; give written notice to the Agent of (a) any proceedings instituted or
threatened by or in any federal, state or local court or before any commission
or other regulatory body, whether federal, state or local, which, if adversely
determined, could have a material adverse effect upon its business, operations,
properties, assets, or condition, financial or otherwise; (b) any notices of
default received by a Company (together with copies thereof; if requested by the
Agent) with respect to alleged defaults under or violations of any of its
material licenses, permits or franchises (including the Licenses), or any
material agreements to which any Borrower is a party or any alleged defaults
with respect to any evidence of material Indebtedness of any Borrower or any
mortgage, indenture or other agreement relating thereto; (c) any material
adverse change in the condition, financial or otherwise, of any Company; (d) the
occurrence of any Event of Default or Unmatured Event of Default; and (e) all
material pleadings, filings, judgments, orders and
-45-
<PAGE> 52
settlements in respect to the Tax Litigation (together with copies thereof, if
requested by the Agent).
SECTION 6.05. FINANCIAL STATEMENTS AND REPORTS.
Furnish to the Agent (with copies to each Lender):
(a) Within one hundred fifty (150) days after the end of each Fiscal
Year, the audited consolidated and consolidating audited balance sheets of the
Companies, and statements of income, changes in financial position and sources
and uses of funds, together with supporting schedules, prepared and certified by
independent certified public accountants selected by the Companies and
acceptable to the Agent (the "ACCOUNTANTS"), the form of such statements to be
satisfactory to the Agent and otherwise in form and substance satisfactory to
the Agent, showing the financial condition of the Companies at the close of such
Fiscal Year (beginning with Fiscal Year ending December 1997) and the results of
operations during such year, containing supplemental schedules reporting balance
sheets for each of the Stations markets (including detailed revenue sources,
income and retained earnings statements and statements of cash flows) and
containing a statement to the effect that such Accountants have examined the
provisions of ARTICLE V of this Agreement and that, to the best of their
knowledge, no Event of Default or Unmatured Event of Default has occurred by
reason of a covenant default thereunder (or, if such an event has occurred, a
statement explaining its nature and extent); PROVIDED, HOWEVER, that in issuing
such statement, such Accountants shall not be required to exceed the scope of
normal auditing procedures conducted in connection with their opinion referred
to above;
(b) Within sixty (60) days after the end of each month, (i) the
consolidated and consolidating balance sheets of the Companies, and statements
of income, together with supporting schedules, prepared by the Companies in
accordance with generally accepted accounting principles, consistently applied,
and certified by their chief financial officer, such balance sheets to be as of
the end of such month and such statements of income to be for the month then
ended and the period from the beginning of the then current Fiscal Year to the
end of such month (in each case subject to normal audit and year-end
adjustments) and including for each Station and New Station, a profit and loss
statement (which includes detailed revenue sources) and balance sheet and (ii)
whenever requested by the Agent or a Lender, monthly accounts payable and
accounts receivable aging reports in form acceptable to the requesting party;
(c) Concurrently with the delivery of any annual financial statements
required by SECTION 6.05(a) and any monthly financial statements required by
SECTION 6.05(b) for the months of March, June, September and December in each
year, (i) a Covenant Compliance Certificate in the form of SCHEDULE 6.05 hereto
signed by the chief financial officer of each Company setting forth the
calculations contemplated in ARTICLE V of this Agreement, and certifying as to
the fact that such Person has examined the provisions of this Agreement and that
no Event of Default or Unmatured Event of Default has occurred (or, if such an
event has occurred, a statement explaining its nature and extent and setting
forth the steps the Borrowers propose to take to cure or prevent any Event of
Default), and (ii) listings of Trades payable and Trades receivable of
-46-
<PAGE> 53
each Company accompanying the annual financial statements and, if requested by
the Agent, in connection with the monthly statements for March, June and
September;
(d) Promptly upon circulation thereof; copies of any material written
reports issued by a Company to any of its Stockholders or any material creditors
relating to such Company's financial condition;
(e) Promptly upon their becoming available, and in any event within
thirty (30) Business Days following receipt thereof; (i) if subscribed to by any
of the Companies (whether pursuant to the provisions of SECTION 6.11 hereof or
otherwise), all Nielsen and other ratings reports applicable to each Company
with respect to the television broadcast markets in which the Companies'
television broadcast Stations are located, and (ii) copies of all material
contracts relating to the Stations;
(f) Promptly upon their becoming available, and in any event within five
(5) Business Days after the receipt or filing thereof by any Company, copies of
any periodic or special reports filed by such Company with the FCC, if such
reports indicate any material change in the business, operations, affairs or
condition of such Company or if copies thereof are requested by the Agent, and
copies of any material notices and other material communications from the FCC
which specifically relate to any Company, any Station or New Station, or any
License;
(g) At least thirty (30) days prior to the beginning of each Fiscal
Year, a budget for such Fiscal Year containing projections of income and
expenses for each Company in form acceptable to the Agent;
(h) Promptly upon receipt thereof; and in any event within five (5) days
after such receipt, copies of all material filings and rulings in the Tax
Litigation and copies of all correspondence and notices received by a Borrower
from the Internal Revenue Service relating to any adverse action or
determination by the Internal Revenue Service in respect to such Company's tax
status under the Code;
(i) As soon as reasonably possible and in any event within ten (10) days
after request therefor, such other information regarding the operations, assets,
business, affairs and financial condition of the Companies, or any of them, as
any Lender or the Agent may reasonably request from time to time; and
(j) Within one hundred twenty (120) days of the end of each Fiscal Year,
updated and current personal financial statements of the Guarantors and if
requested by the Agent, copies of the Guarantors' most recent Federal income tax
returns.
SECTION 6.06. INSPECTION.
Permit employees, agents and representatives of the Lenders and the
Agent to inspect, during normal business hours, the Premises and each Company's
books and records and to make abstracts or reproductions thereof.
-47-
<PAGE> 54
SECTION 6.07. ACCOUNTING SYSTEM.
Maintain a standard system of accounting in accordance with generally
accepted accounting principles consistently applied and maintain the Fiscal Year
as its fiscal year.
SECTION 6.08. NOTICE OF PURCHASE OF REAL ESTATE AND LEASES.
Subject to SECTION 7.13 hereof; promptly notify the Agent in the event
that any Borrower shall purchase any real estate or enter into any Lease of real
estate or of equipment material to the operation of the Stations, supply the
Agent with a copy of the related purchase agreement or of such Lease, as the
case may be, and, without limiting the generality of SECTION 2.05, if requested
by the Agent, execute and deliver, or cause to be executed and delivered, to the
Agent a deed of trust or mortgage or assignment, together with landlord
consents, in the case of leased property, satisfactory in form and substance to
the Agent, granting a valid first lien on such property (subject to the
provisions of SECTIONS 2.05 and 7.02).
SECTION 6.09. ADDITIONAL ASSURANCES.
From time to time hereafter, execute and deliver or cause to be executed
and delivered, such additional instruments, certificates and documents, and take
all such actions, as the Agent shall reasonably request for the purpose of
implementing or effectuating the provisions of this Agreement, the Notes or the
Security Documents, and upon the exercise by the Agent of any power, right,
privilege or remedy pursuant to this Agreement or the Security Documents which
requires any consent, approval, registration, qualification or authorization of
any governmental authority or instrumentality, exercise and deliver all
applications, certifications, instruments and other documents and papers that
the Agent may be so required to obtain.
SECTION 6.10. ENVIRONMENTAL INDEMNIFICATION.
In respect of all environmental matters:
(a) comply strictly and in all respects with the requirements of all
federal, state, and local Environmental Laws; notify the Agent promptly in the
event of any spill, release or disposal of Hazardous Material on, or hazardous
waste pollution or contamination affecting, the Premises; forward to the Agent
promptly any notices relating to such matters received from any governmental
agency; and pay promptly when due any fine or assessment against the Premises;
PROVIDED, HOWEVER, that the Borrowers shall not be required to pay any such fine
or assessment so long as the validity thereof shall be diligently contested in
good faith by appropriate proceedings and they shall have set aside on their
books adequate reserves with respect to any such fine or assessment so
contested; and PROVIDED FURTHER that, in any event, payment of any such fine or
assessment shall be made before any of their property shall be seized or sold in
satisfaction thereof;
-48-
<PAGE> 55
(b) promptly notify the Agent upon becoming aware of any fact or change
in circumstances that would or reasonably could be expected to cause any of the
representations and warranties contained in SECTION 4.19 hereof to cease to be
true for any time before all Senior Debt is paid in full;
(c) not become involved, and will not knowingly permit any tenant of the
Premises to become involved, in any operations at the Premises generating,
storing, disposing, or handling Hazardous Material or any other activity that
could lead to the imposition on any Lender or the Agent, a Borrower or the
Premises of any liability or lien under any Environmental Laws;
(d) immediately contain any Hazardous Material found on the Premises and
remove any Hazardous Material found on the Premises in violation of any
applicable Environmental Law, which work must be done in compliance with
applicable Environmental Laws and at the Borrowers' expense; and the Borrowers
agree that the Agent has the right, at its sole option but at the Borrowers'
expense, to have an environmental engineer or other representative review the
work being done;
(e) promptly upon the request of the Agent, based upon the Agent's
reasonable belief that a hazardous waste or other environmental problem exists
with respect to the Premises, provide the Agent with an environmental site
assessment report or an update of any existing report, all in scope, form and
content and performed by such company as may be reasonably satisfactory to the
Agent; and
(f) indemnify, protect, defend, and hold harmless each of the Lenders
and the Agent, and each of their respective Affiliates, officers, directors,
employees, attorneys, consultants and agents (collectively called the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages (including, without limitation, consequential damages), penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for and consultants of such Indemnitees in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against such Indemnitees (whether direct, indirect, or
consequential) now or hereafter arising as a result of any claim for
environmental cleanup costs, any resulting damage to the environment and any
other environmental claims against any Borrower, any Lender, the Agent or the
Premises. The provisions of this SECTION 6.10(f) shall continue in effect and
shall survive (among other things) any termination of this Agreement, payment
and satisfaction of the Notes, and release of any Collateral.
-49-
<PAGE> 56
SECTION 6.11. RATINGS REPORTS.
Subscribe to and maintain in full force and effect at all times (to the
extent the same may be available) at Borrowers' expense not less than one rating
report service covering (a) each of the television broadcast markets in which
the Companies' television broadcast Stations are located, and (b) if reasonably
requested by the Lender, any radio broadcast markets in which any radio
broadcast Station is located.
SECTION 6.12. ACCOUNTS PAYABLE.
Cause each Company to pay each of its accounts payable not later than
one hundred twenty (120) days following its respective due date; PROVIDED,
HOWEVER, that a Company shall not be required to pay any account payable so long
as the validity thereof shall be contested in good faith by appropriate
proceedings and such Company shall have set aside adequate reserves with respect
thereto.
SECTION 6.13. USE OF LOAN PROCEEDS.
Use and expend the proceeds of each Advance solely in accordance with
the requirements of this Agreement.
SECTION 6.14. APPRAISALS.
If any Lender determines in good faith that it is required, by
applicable law or by the Comptroller of the Currency or any other Governmental
Authority, to obtain appraisals as to the market value of any Collateral, obtain
such appraisals, at the sole cost and expense of the Borrowers and in conformity
with all requirements of applicable law, as in effect from time to time.
SECTION 6.15. RECOMMENDED CORRECTIVE ACTION.
Within six (6) months of the Closing Date, complete to the reasonable
satisfaction of the Agent all corrective actions described in SCHEDULE 6.15.
VII. NEGATIVE COVENANTS
Each Borrower covenants and agrees that, so long as any Lender has any
obligation to extend credit to the Borrowers, or any of them, hereunder, or
there remains outstanding any portion of the principal of; or interest on, any
Note, or there remains outstanding any other Indebtedness of the Borrowers or
the Companies, or any of them, to any Lender or the Agent, whether now existing
or arising hereafter and whether under this Agreement, the Notes, or otherwise,
unless the Agent shall otherwise consent in writing, it will not, directly or
indirectly, and Sunbelt will not permit any New Subsidiary to, directly or
indirectly:
-50-
<PAGE> 57
SECTION 7.01. INDEBTEDNESS.
Incur, create, assume, become or be liable in any manner with respect
to, or permit to exist, any Indebtedness or liability of a Company, whether
direct, indirect or contingent, except:
(a) Indebtedness to the Lender under this Agreement, the Notes, and
otherwise;
(b) Indebtedness with respect to trade obligations and other normal
accruals in the ordinary course of business;
(c) Indebtedness under Capital Leases and Purchase Money Security
Agreements relating to the purchase price of office and non-essential broadcast
equipment to be used in the business of the Companies to the extent such
Indebtedness was permitted by Article V hereof at the time incurred; PROVIDED,
HOWEVER, that the aggregate unpaid principal balance of all such Indebtedness
shall not exceed $2,000,000 outstanding at any time;
(d) Indebtedness to any Affiliate, provided that such Indebtedness is
subject to the applicable Affiliate Subordination Agreement;
(e) Indebtedness existing on the date hereof and described in Schedule
7.01 attached hereto; PROVIDED, HOWEVER, that the terms of such Indebtedness
shall not be modified or amended, nor shall payment thereof be extended, without
the prior written consent of the Lender;
(f) Indebtedness in respect of endorsements of negotiable instruments
for collection in the ordinary course of business; and
(g) Subordinated Debt consented to by the Majority Lenders.
SECTION 7.02. LIENS.
Create, incur, assume, suffer or permit to exist any mortgage, pledge,
lien, charge or other encumbrance of any nature whatsoever on any of the assets
or capital stock of a Company, now or hereafter owned, other than:
(a) liens securing the payment of taxes, either not yet due or the
validity of which is being contested in good faith by appropriate proceedings,
and as to which it shall have set aside on its books adequate reserves;
(b) deposits under workmen's compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or Leases, or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds arising in the ordinary course of business;
-51-
<PAGE> 58
SECTION 7.01. Indebtedness.
Incur, create, assume, become or be liable in any manner with respect
to, or permit to exist, any Indebtedness or liability of a Company, whether
direct, indirect or contingent, except:
(a) Indebtedness to the Lender under this Agreement, the Notes, and
otherwise;
(b) Indebtedness with respect to trade obligations and other normal
accruals in the ordinary course of business;
(c) Indebtedness under Capital Leases and Purchase Money Security
Agreements relating to the purchase price of office and non-essential broadcast
equipment to be used in the business of the Companies to the extent such
Indebtedness was permitted by Article V hereof at the time incurred; PROVIDED,
HOWEVER, that the aggregate unpaid principal balance of all such Indebtedness
shall not exceed $1,000,000 outstanding at any time;
(d) Indebtedness to any Affiliate, provided that such Indebtedness is
subject to the applicable Affiliate Subordination Agreement;
(e) Indebtedness existing on the date hereof and described in SCHEDULE
7.01 attached hereto; PROVIDED, HOWEVER, that the terms of such Indebtedness
shall not be modified or amended, nor shall payment thereof be extended, without
the prior written consent of the Lender;
(f) Indebtedness in respect of endorsements of negotiable instruments
for collection in the ordinary course of business; and
(g) Subordinated Debt consented to by the Majority Lenders.
SECTION 7.02. LIENS.
Create, incur, assume, suffer or permit to exist any mortgage, pledge,
lien, charge or other encumbrance of any nature whatsoever on any of the assets
or capital stock of a Company, now or hereafter owned, other than:
(a) liens securing the payment of taxes, either not yet due or the
validity of which is being contested in good faith by appropriate proceedings,
and as to which it shall have set aside on its books adequate reserves;
(b) deposits under workmen's compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or Leases, or to secure
statutory obligations or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds arising in the ordinary course of business;
-51-
<PAGE> 59
(c) liens imposed by law, such as carriers', warehousemen's or
mechanics' liens, incurred by it in good faith in the ordinary course of
business, and liens with respect to judgments but only to the extent that (i)
any such judgment does not otherwise constitute an Event of Default pursuant to
clause (m) of ARTICLE VIII, and (ii) either (A) such lien is not prior or senior
to any of the liens granted to the Lenders and the Agent pursuant to the
Security Documents, or (B) such lien attaches solely to property of the
Borrower, if any, with respect to which the Lenders and the Agent do not assert
a lien.
(d) security interests and liens in favor of the Lenders and the Agent;
(e) Capital Leases described in SECTION 7.01(c) and security interests
granted by Purchase Money Security Agreements to the extent permitted by SECTION
7.01(c), provided that each such lien shall at all times be limited solely to
the item or items of property so acquired;
(f) restrictions, easements and minor irregularities in title which do
not and will not interfere with the occupation, use and enjoyment by the
Borrower of such properties and assets in the normal course of its business as
presently conducted or materially.impair the value of such properties and assets
for the purpose of such business;
(g) security interests and liens securing the Indebtedness permitted by
Sections 7.01(e) to the extent set forth in said SCHEDULE 7.01; and
(h) any other liens existing on the date hereof and described in
SCHEDULE 7.02 attached hereto.
SECTION 7.03. DISPOSITION OF ASSETS.
Sell, lease, transfer or otherwise dispose of any of the properties,
assets, rights, Licenses or franchises of or used by a Company to any Person,
except in connection with the replacement of equipment with other equipment of
at least equal utility and value (provided that the Lenders' and Agent's lien
upon such newly-acquired equipment has the same priority as the Lenders' and
Agent's lien upon the replaced equipment) and the disposition without
replacement of obsolete assets not material, individually or in the aggregate,
to the operation of its business; PROVIDED, HOWEVER, that in no event shall any
Company sell, lease, transfer or dispose of any material portion of the assets
of; or enter into any time brokerage agreement, local marketing agreement or
similar arrangement in respect of; a Station or a New Station without the prior
written consent of the Lenders, which consent will not be unreasonably withheld
by the Lenders in the case of an arms' length fair market value sale of any
broadcast property or real estate; and provided further, that all the Net Sales
Proceeds of any sale or disposition shall be paid to the Agent and applied to
the partial payment of Senior Debt.
SECTION 7.04. FUNDAMENTAL CHANGES; ACQUISITIONS.
(a) (i) Form any subsidiary (other than the New Subsidiaries which shall
become co-borrowers pursuant to the Assumption Agreements) or otherwise change
the legal structure or
-52-
<PAGE> 60
organization of any Company; (ii) permit or suffer any material amendment of its
articles of organization, corporate charter, articles of incorporation,
operating agreement or by-laws, as applicable; (iii) permit or suffer any
amendment of any other agreement which could have a Material Adverse Effect;
(iv) dissolve, liquidate, consolidate with or merge with, or otherwise acquire
any radio or television broadcast property or all or any substantial portion of
the ownership interests or assets or properties of any corporation, partnership
or other entity or any other material assets (in each case, an "ACQUISITION"),
other than pursuant to Permitted Acquisitions and Capital Expenditures permitted
hereunder and other than purchases of inventory and supplies in the ordinary
course of business; or (v) redeem any capital stock, except for redemptions
effected solely by the issuance of securities (A) in respect of which the
Companies have no obligation to redeem or to pay cash distributions or dividends
or to accord any other preferential treatment, (B) the issuance of which does
not result in any Event of Default and (C) which shall have been collaterally
assigned or pledged to the Agent and the Lenders as required hereunder.
(b) As used herein, the term "PERMITTED ACQUISITION" shall mean any
Acquisition made after the Closing Date by a Company of radio or television
broadcast properties, PROVIDED, HOWEVER, that, in each case, the following
conditions shall have been satisfied in full:
(A) If such Acquisition involves the purchase of stock or other
ownership interests, the same shall be effected in such a manner as to
assure that the acquired entity is either a New Subsidiary or is
promptly merged into a Company, with such Company being the surviving
entity;
(B) (1) No later than ninety (90) days prior to the consummation
of any such Acquisition or, if earlier, ten (10) Business Days after the
execution and delivery of the related Acquisition Agreement, the
Companies shall have delivered to the Agent copies of executed
counterparts of such Acquisition Agreement, together with all Schedules
thereto, the forms of any additional agreements or instruments to be
executed at the closing thereunder (to the extent available), and all
applicable financial information, including historical financial
statements (including, without limitation, trailing twelve month
financial statements for each station to be acquired, and current
accounts receivable and accounts payable agings), a detailed Capital
Expenditures budget and five (5) year projections, updated to reflect
such Acquisition and any related transactions, a PRO FORMA balance sheet
of the Companies as of the projected date of the Permitted Acquisition
showing the financial condition of the consolidated entities after
giving effect to the proposed Acquisition, and a description of the
properties and markets accompanied by applicable market rating books and
other information as the Agent shall require, (2) promptly following a
request therefor, the Companies shall have delivered to the Agent copies
of such other documents relating to such Acquisition as the Agent shall
have reasonably requested, (3) all of the foregoing shall be
satisfactory to the Agent, in its sole discretion and
-53-
<PAGE> 61
acting in good faith, and (4) promptly following the consummation of
such Acquisition, the Companies shall have delivered to the Agent
certified copies of the agreements, instruments and documents referred
to above, to the extent the same have been executed and delivered at the
closing under such Acquisition Agreement;
(C) The aggregate Purchase Price payable by the Companies in
connection with such Acquisition (other than earn-outs, customary
post-closing adjustments, escrows, holdbacks, indemnities and Seller
notes and non-competition agreements permitted by the Majority Lenders)
shall be payable in full on the date of such Acquisition;
(D) The Companies shall not, in connection with any such
Acquisition, assume or remain liable with respect to any Indebtedness
(including any material tax or ERISA liability) of the related Seller,
except (i) to the extent permitted under SECTION 7.01 and (ii)
obligations of the Seller incurred in the ordinary course of business
and necessary or desirable to the. continued operation of the underlying
properties, and any other such liabilities or obligations not permitted
to be assumed or -otherwise supported by Companies hereunder shall be
paid in full or released as to the assets being so acquired on or before
the consummation of such Acquisition;
(E) All other assets and properties acquired in connection with
any such Acquisition shall be free and clear of any liens, charges and
other encumbrances other than as permitted under SECTION 7.02;
(F) The Companies shall have complied with all of the provisions
of SECTIONS 2.05 and ARTICLE III including the execution and delivery of
such additional agreements, instruments, certificates, documents,
consents, environmental site assessments, engineering studies and
reports, opinions and other papers as the Agent may require;
(G) Immediately prior to any such Acquisition and after giving
effect thereto, no Event of Default or Unmatured Event of Default shall
have occurred or be continuing, including any default under the
provisions of ARTICLE V, (1) determined on a PRO FORMA basis as of the
end of and for the fiscal quarter most recently ended prior to the date
of such Acquisition for which financial statements are required to be
provided (and have been so delivered) under SECTION 6.05 and (2) as
reflected in the Companies' updated Projections referred to above, and
the Companies shall provide to the Agent a certificate signed on behalf
of the Companies by their chief financial officer demonstrating such
compliance in reasonable detail;
-54-
<PAGE> 62
(H) All FCC licenses and assets acquired in connection with the
Acquisition shall be acquired by a Company (which, if a New Subsidiary
shall have executed an Assumption Agreement and such Security Documents
as shall be required in accordance with SECTION 2.05 hereof), subject
only to the security interests granted to the Agent by the Security
Documents; and
(I) Any such Acquisition shall have been approved in writing by
the Majority Lenders, in their sole discretion acting in good faith,
after review of all information required hereby has been delivered to
the Agent and the Agent's completion of such inspection and cash flow
audit of the stations to be acquired as the Agent shall require.
(c) Consent to any Acquisition shall be in the sole discretion
of the Majority Lenders acting in good faith and shall be subject to any and all
conditions designated by the Agent in the exercise of its sole discretion,
including without limitation, compliance with the provisions of SECTION 2.05 and
the execution and delivery of such additional agreements, instruments,
certificates, documents, consents, environmental site assessments, opinions and
other papers as the Agent may require. Any pre-approval by the Agent or Lenders
of a proposed Acquisition shall be communicated to Sunbelt within thirty (30)
days of the Agent's receipt of a complete information package which complies
with the requirements hereof; but such pre-approval shall be subject to the
Agent's completion of its final due diligence and receipt of all environmental
reviews, engineering studies, technical reviews and questionnaires, financial
statement reviews and all required contracts and representations of the Seller.
SECTION 7.05. MANAGEMENT.
Turn over the management of the properties, assets, rights, licenses and
franchises of any Company to any Person other than the Stockholders or, to the
extent permitted by applicable FCC rules and regulations, a full-time employee
of a Company.
SECTION 7.06. SALE AND LEASEBACK.
Enter into any arrangements, directly or indirectly, with any Person
whereby a Company or Station shall sell or transfer any property, real, personal
or mixed, used or useful in its business, whether now owned or hereafter
acquired, and thereafter rent or lease such property.
SECTION 7.07. INVESTMENTS.
Except for (a) Permitted Investments; (b) Sunbelt's existing investment
in 120,000 shares of $1.00 par value common stock of Nevada First Bank, a Nevada
banking corporation; and (c) Valley's existing investment in the capital stock
of Microwave, Inc., and Alta Development Company, permit any Company to
purchase, invest in or otherwise acquire or hold securities
-55-
<PAGE> 63
(including, without limitation, capital stock and interests in general or
limited partnerships, either as a general or limited partner or otherwise) and
evidences of indebtedness of; or make loans or advances to, or enter into any
arrangement for the purpose of providing funds or credit to, any other Person.
SECTION 7.08. CHANGE IN BUSINESS.
Permit any Company to engage, directly or indirectly, in any business
other than that of operating the Stations.
SECTION 7.09. ACCOUNTS RECEIVABLE.
Sell, assign, discount or dispose in any way of any of a Company's
accounts receivable, promissory notes or trade acceptances held by any Company,
with or without recourse, except for collection (including endorsements) in the
ordinary course of business.
SECTION 7.10. TRANSACTIONS WITH AFFILIATES.
Except as may be otherwise specifically permitted by this Agreement,
enter into any transaction, including, without limitation, the purchase, sale or
exchange of property or assets or the rendering or accepting of any service with
or to any Affiliate of any Company except in the ordinary course of business and
pursuant to the reasonable requirements of such Company's business and upon
terms not less favorable to such Company than it could obtain in a comparable
arm's-length transaction with a third party other than such Affiliate.
SECTION 7.11. AMENDMENT OF CERTAIN AGREEMENTS.
Amend or modify in any material respect any License, any agreement or
instrument evidencing Subordinated Debt, or any material agreement listed in
SCHEDULE 4.14 to which any Company is a party, without the prior written consent
of the Majority Lenders.
SECTION 7.12. ERISA.
(a) Fail, or permit any Commonly Controlled Entity to fail, to comply
with the requirements of ERISA with respect to any Employee Benefit Plan; (b)
permit any funded Employee Pension Plan to lose its qualified status under
Section 401(a) or 403(a) of the Code; (c) fail, or permit any Commonly
Controlled Entity to fail, to meet the minimum funding standards of Section 302
of ERISA and Section 412 of the Code; (d) fail, or permit any Commonly
Controlled Entity to fail, to discharge any obligations to the PBGC with respect
to the termination of an Employee Pension Plan or to any Multiemployer Plan on
account of its withdrawal or partial withdrawal therefrom or allow to exist any
event or condition which presents a substantial risk of Borrower incurring
liability to the PBGC by reason of the termination of any Employee Pension Plan;
(e) create or adopt, or permit any Commonly Controlled Entity to create or
adopt, any new Employee Pension Plan without the prior written consent of the
Lender; (f) modify, or permit any Commonly Controlled Entity to modify, any
-56-
<PAGE> 64
existing Employee Pension Plan so as to increase its obligations thereunder,
except in the ordinary course of business consistent with past practice or with
the prior written consent of the Lender; (g) create or adopt any new Employee
Welfare Plan or modify any existing Employee Welfare Plan, or permit any
Commonly Controlled Entity to create or adopt any new Employee Welfare Plan or
modify any existing Employee Welfare Plan, to provide continuing benefits or
coverage for any participant (or beneficiary) after the termination of the
participant's employment except as may be required by COBRA, regulations
thereunder or applicable state statutory law or with the prior written consent
of the Lender; or (h) engage, or permit any Commonly Controlled Entity to
engage, in any transaction which would reasonably result in the assessment of a
direct or indirect liability to Borrower or any Commonly Controlled Entity under
Section 409 or 502 of ERISA or Section 4975 of the Code.
SECTION 7.13. LOCAL MARKETING AGREEMENTS.
Enter into any time brokerage or local marketing agreement without the
Majority Lenders' prior written consent. In the event that a Company shall seek
to enter into a time brokerage agreement or local marketing agreement in respect
to a radio or television station which is not then owned or operated by a
Company, the Majority Lenders shall provide the Companies with a preliminary
approval or rejection in response to the Companies' providing the Agent with a
preliminary outline of the terms of such agreement; and the final terms of any
approved agreement consummated by the Companies shall not be materially
different from the outline approved by the Lenders.
SECTION 7.14. ILLEGAL ACTIVITIES.
Engage in any conduct or activity, including, without limitation, a
pattern of racketeering activity, that could subject any of a Company's assets
to forfeiture or seizure.
SECTION 7.15. MARGIN STOCK.
Use or permit the use of any of the proceeds of the Loans, directly or
indirectly, for the purpose of purchasing or carrying, or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry, any Margin Stock or for any other purpose which might constitute the
transactions contemplated hereby a "PURPOSE CREDIT" within the meaning of
Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve
System, or cause any Loan, the application of proceeds thereof or this Agreement
to violate Regulation G, Regulation U, Regulation T or Regulation X of the Board
of Governors of the Federal Reserve System or any other regulation of such Board
or the Securities Exchange Act of 1934, as amended, or any rules or regulations
promulgated under such statutes.
SECTION 7.16. NEGATIVE PLEDGES, ETC.
Enter into any agreement (excluding this Agreement or any other Loan
Document) prohibiting (a) the Companies from amending or otherwise modifying
this Agreement or any
-57-
<PAGE> 65
other Transaction Document, or (b) the creation or assumption of any lien upon
the properties, revenues or assets of the Companies, whether now owned or
hereafter acquired.
VIII. DEFAULTS
Each of the following events (each of which is herein sometimes called
an "EVENT OF DEFAULT") shall constitute an Event of Default under this
Agreement:
(a) any representation or warranty made in this Agreement, a Security
Document, or any other Transaction Document, or in any report, certificate,
financial statement or other instrument furnished in connection with this
Agreement, or the borrowings hereunder, shall prove to be false or misleading in
any material respect; or
(b) default in the payment of any installment of the principal of a Note
or the principal of any other Indebtedness of any of the Companies to the
Lenders or the Agent, whether now existing or hereafter arising, when the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment or by acceleration or otherwise, and continuation of such default
for ten (10) days following the date such payment is due and payable; or
(c) default in the payment of any fee, rental, expense, or other
obligation payable by any of the Companies to the Lenders or the Agent, or any
installment of any interest or premium on a Note or on or in respect of any
other Indebtedness of any of the Companies to the Lenders or the Agent, whether
now existing or hereafter arising, when the same shall become due and payable,
whether at the due date thereof or at a date fixed for prepayment or by
acceleration or otherwise, and continuation of such default for ten (10) days
following the date such payment is due and payable; or
(d) default in the due observance or performance by any Person other
than the Lenders or the Agent of any covenant, condition or agreement contained
in Articles II, III, V, VI and VII of this Agreement, or in any Security
Document and, in the case of a default under any Security Document, continuance
of such default unremedied for more than the applicable period of grace, if any,
specified thereon; or
(e) default in the due observance or performance of any other covenant,
condition or agreement, on the part of any Person other than the Lenders or the
Agent to be observed or performed pursuant to the terms hereof or any other
agreement by and between any of the Companies on the one hand and the Lender on
the other, which default shall continue unremedied for forty-five (45) days
after the earlier to occur of (i) a Borrower's discovery of such default, or
(ii) written notice thereof from the Agent to the Companies; PROVIDED, HOWEVER,
that if such default cannot be remedied, then such default shall be deemed to be
an Event of Default as of the date of the occurrence thereof; or
(f) for any reason any Security Document at any time shall not be in
full force and effect in all material respects or shall not be enforceable in
all material respects in accordance
-58-
<PAGE> 66
with its terms, or any material security interest or material lien granted
pursuant thereto shall fail to be perfected, or any party thereto other than the
Lenders or the Agent shall contest the validity of any material lien granted
under, or shall seek to disaffirm or reduce its obligations under, any Security
Document; or
(g) any Event of Default, as defined in any Security Document and the
continuance of such default unremedied for more than the applicable period of
grace, if any, specified therein; or
(h) default with respect to any Subordinated Debt or any other evidence
of Indebtedness of any of the Companies for borrowed money; default with respect
to any other Indebtedness or under any agreement giving rise to monetary
remedies, which, when aggregated with all other such defaults, exceeds $50,000,
if the effect of such default is to permit the holder of such Indebtedness to
accelerate the maturity of such Indebtedness; or if any Indebtedness is not paid
at maturity; or
(i) the on-the-air broadcast operations of a Station shall be
interrupted at any time for more than seventy-two (72) hours (or, in the event
of FORCE MAJEURE, ninety-six (96) hours), whether or not consecutive, during any
period often (10) consecutive days; or
(j) (i) any Company shall lose, fail to keep in force, suffer the
termination, suspension or revocation of; or terminate, forfeit or suffer an
amendment to, any License at any time held by it, which would have a material
adverse effect on the operations of such Company; (ii) the FCC shall schedule or
conduct a hearing on the renewal or revocation of any material License held by
any Company and the Majority Lenders shall reasonably and in good faith believe
that the result thereof shall be the termination, revocation, suspension, or
material adverse amendment of such License; or (iii) any governmental regulatory
authority shall commence an action or proceeding seeking the termination,
suspension, revocation or material adverse amendment of any material License
held by any Company and the Majority Lenders shall reasonably and in good faith
believe that the result thereof shall be the termination, revocation, suspension
or material adverse amendment of such License; or
(k) any Company shall (i) discontinue its business or operation of a
Station or a New Station, (ii) apply for or consent to the appointment of a
receiver, trustee, custodian or liquidator of it or any of its property, (iii)
admit in writing its inability to pay its debts as they mature, (iv) make a
general assignment for the benefit of creditors, (v) be adjudicated a bankrupt
or insolvent or be the subject of an order for relief under Title 11 of the
United States Code, or (vi) file a voluntary petition in bankruptcy, or a
petition or an answer seeking reorganization or an arrangement with creditors or
to take advantage of any bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation law or statute, or an answer admitting the
material allegations of a petition filed against it in any proceeding under any
such law, or corporate action shall be taken for the purpose of effecting any of
the foregoing; or
(1) there shall be filed against any Company an involuntary petition
seeking reorganization of such Company or the appointment of a receiver,
trustee, custodian or liquidator of any Company or any material part of its
assets, or an involuntary petition under any
-59-
<PAGE> 67
bankruptcy, reorganization or insolvency law of any jurisdiction, whether now or
hereafter in effect (any of the foregoing petitions being herein referred to as
an "INVOLUNTARY PETITION"); or
(m) final, non-appealable judgment for the payment of money which, when
aggregated with all other outstanding judgments against the Companies, or any of
them, exceeds $50,000, shall be rendered against the Companies, or any of them,
if the same shall remain undischarged (unless fully bonded upon terms
satisfactory to the Agent) for a period of thirty (30) consecutive days; or an
execution in respect of any judgment against the Companies, or any of them,
shall have issued; or
(n) the occurrence of any attachment of any deposits or other property
of the Companies, or any of them, in the hands or possession of a Lender or the
Agent, or the occurrence of any attachment of any other property of the
Companies, or any of them, in an amount exceeding $50,000 in the aggregate which
shall not be discharged or fully bonded on terms satisfactory to the Agent
within thirty (30) days of the date of such attachment, or if an execution in
respect of such judgment shall have issued; or
(o) the occurrence of any event or condition described in paragraph (k)
or (1) with respect to any Surety; or
(p) James Rogers shall die or be judicially declared incompetent; or for
any reason James Rogers shall cease to be actively engaged as chief executive
officer of the Borrowers and New Subsidiaries in the management of the Stations
and the New Stations; or for any reason James Rogers shall cease to function or
serve as the sole trustee of the James Rogers Trust; or
(q) for any reason (i) less than one hundred percent (100%) of the
issued and outstanding capital stock of each Company (other than Beartooth), or
less than eighty percent (80%) of the issued and outstanding capital stock of
Beartooth, is pledged to the Agent on behalf of the Lender on terms acceptable
to the Agent, or (ii) the Guarantors shall own less than eighty percent (80 %)
of the issued and outstanding capital stock of Sunbelt, or (iii) Sunbelt shall
own less than eighty percent (80%) of the issued and outstanding capital stock
of Beartooth; or
(r) (i) the occurrence of any event (after the expiration of any
applicable cure period provided in the applicable network affiliation agreement)
under any network affiliation agreement to which a Company is a party, which may
be used by the television network as the basis for termination of such
agreement, or (ii) any Company's network affiliation agreement shall be
terminated, or (iii) any Company's network affiliation agreement shall be
amended in any material manner, or the format of any radio station operated by a
Company changed in any material manner, without the prior written consent of the
Majority Lenders (which consent shall not be unreasonably withheld) and the
Companies shall fail to refinance and pay in full all Indebtedness of the
Companies to the Lender within one hundred twenty (120) days of the Agent's
giving notice to the Borrowers of the Lenders objection to such event or
occurrence; or
-60-
<PAGE> 68
(s) any Company or any material part of its business or assets shall be
the subject of any seizure or forfeiture proceeding or action instituted or
conducted by any agency, office or department of state or federal government; or
(t) any Lease of real estate used or to be used by any Company as a
studio, tower or transmitter site (i) shall not be renewed by the Company or the
landlord thereunder at least ninety (90) days (or one (1) year in the case of
Valley's existing tower site on Black Mountain in Clark County, Nevada) prior to
its scheduled expiration or termination date, unless the Agent consents thereto
after having received from the Companies evidence and assurances acceptable to
the Agent that (A) the Company has obtained a replacement location which is not
less favorable to the Company and its business operations pursuant to a signed
written Lease acceptable to the Agent, and (B) the Company will be able to
relocate to such replacement premises without adversely affecting its continued
business operations or station signal, or (ii) shall be in default as a result
of the Company's failure to observe or abide by all terms, conditions and
covenants contained therein, or (iii) shall be the subject of a default notice
or eviction notice initiated or sent by the landlord thereof to the Company or
the Agent; or
(u) James Rogers s,hall be convicted by any state, local or federal
authority of the commission of a felony; or James Rogers shall cease to function
or serve as the sole trustee of the James Rogers Trust; or
(v) the FCC does not issue to a Company, in the usual course specified
by the FCC's rules and policies generally applicable to the broadcast television
industry's imminent transition to digital television facilities, all
authorizations, including transition authorizations, necessary for its
television broadcast Station's or New Station's construction and operation of
digital television facilities; or a Company fails to construct, or initiate
operation from, authorized digital television facilities by or before the times
specified for construction and operation in the initial digital television
authorizations issued to such Company by the FCC for its Station or New Station.
Upon the occurrence of any such Event of Default and at any time thereafter
during the continuance of such Event of Default, at the election of the Majority
Lenders, the Commitments shall terminate and the Notes and all other
Indebtedness of the Companies, and each of them, to the Lenders and the Agent
shall immediately become due and payable, both as to principal and interest,
fees and charges, without presentment, demand, or protest, all of which are
hereby expressly waived, anything contained herein or in the Notes or other
evidence of such indebtedness to the contrary notwithstanding (except in the
case of an Event of Default under paragraph (k) or (1) of this ARTICLE VIII, in
which event the Commitments shall automatically terminate and such Indebtedness
shall automatically become due and payable). In the event of an acceleration of
the Companies' Indebtedness hereunder as a result of the filing of an
Involuntary Petition as specified in paragraph (1) of this ARTICLE VIII, such
acceleration shall be rescinded, and the Borrowers' rights hereunder reinstated,
if; within sixty (60) days following the filing of such Involuntary Petition,
such Involuntary Petition shall have been dismissed, and there shall then exist
no other Event of Default or Unmatured Event of Default under this Agreement
-61-
<PAGE> 69
IX. REMEDIES ON DEFAULT, ETC.
SECTION 9.01. REMEDIES.
In case any one or more Events of Default shall occur and be continuing,
the Agent, on behalf of the Lenders, may proceed to protect and enforce the
Lenders' and the Agent's rights by an action at law, suit in equity or other
appropriate proceeding, whether for the specific performance of any agreement
contained in this Agreement, any Security Document, any Loan Document or the
Notes or for an injunction against a violation of any of the terms hereof or
thereof or in and of the exercise of any power granted hereby or thereby or by
law. No right conferred upon the Agent or the Lenders hereby or by any Security
Document, Loan Document or the Notes shall be exclusive of any other right
referred to herein or therein or now or hereafter available at law, in equity,
by statute or otherwise.
SECTION 9.02. DEFAULT RATE.
Without regard to whether the Agent has exercised any other rights or
remedies hereunder, the applicable interest rate under each Note shall at the
option of the holder of such Note, but only to the extent permitted by law, be
increased to a rate per annum (the "DEFAULT RATE") equal to the interest rate
then in effect pursuant to SECTION 2.04, plus (a) four percent (4.0%) upon the
occurrence of an Event of Default as defined in either paragraph (b) or (c) of
ARTICLE VIII hereof; or (b) two percent (2.0%) upon the occurrence of any other
Event of Default defined in ARTICLE VIII hereof.
SECTION 9.03. EFFECT ON PAYMENTS.
If an Event of Default shall have occurred and be continuing, the
Companies shall not (a) make payments in respect of Corporate Overhead in excess
of Three Million Dollars ($3,000,000) per Fiscal Year, or (b) make any other
Restricted Payments to the Stockholders or anY Affiliates.
SECTION 9.04. CONSENT TO RECEIVER.
Without limiting the generality of the foregoing or limiting in any way
the rights of the Lenders and the Agent under the Security Documents or
otherwise under applicable law, and to the extent permitted by the FCC, at any
time after the occurrence, and during the continuance, of an Event of Default,
the Agent, at the direction of the Majority Lenders, shall be entitled to apply
for and have a receiver or receiver and manager appointed under state, or
Federal law of the United States by a court of competent jurisdiction in any
action taken by the Agent or the Lenders to enforce their rights and remedies
hereunder and under the Security Documents in order to manage, protect,
preserve, sell and otherwise dispose of all or any portion of the Collateral and
continue the operation of the business of the respective Borrowers, and to
collect all revenues and profits thereof and apply the same to the payment of
all expenses and other charges of such receivership. including the compensation
of the receiver, and to the payment of the Notes until a sale or other
disposition of such Collateral shall be finally made and
-62-
<PAGE> 70
consummated. EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY RIGHT
TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AS PROVIDED
ABOVE. EACH BORROWER GRANTS SUCH WAIVER AND CONSENT KNOWINGLY AFTER HAVING
DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, ACKNOWLEDGES THAT THE
UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS
CONSIDERED ESSENTIAL BY THE MAJORITY LENDERS IN CONNECTION WITH THE ENFORCEMENT
OF THEIR RIGHTS AND REMEDIES HEREUNDER AND UNDER THE SECURITY DOCUMENTS, AND THE
AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES
WAS A MATERIAL FACTOR IN INDUCING THE LENDERS TO MAKE (AND COMMIT TO MAKE) THE
LOANS TO THE BORROWERS, AND AGREES TO ENTER INTO ANY AND ALL STIPULATIONS IN ANY
LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN CONNECTION WITH THE
FOREGOING AND TO COOPERATE FULLY WITH THE AGENT AND THE LENDERS AND THE AGENT IN
CONNECTION WITH THE ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL
OR ANY PORTION OF THE COLLATERAL.
X. THE AGENT.
SECTION 10.01. APPOINTMENT, POWERS AND IMMUNITIES.
(a) Each Lender hereby irrevocably (subject to SECTION 10.08) designates
and appoints AT&T-CFC, which designation and appointment is coupled with an
interest, as the Agent of such Lender under this Agreement and the other
Transaction Documents, and each such Lender irrevocably authorizes AT&T-C FC, as
the Agent of such Lender, to take such action on its behalf under the provisions
of this Agreement and the other Transaction Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Agreement and the other Transaction Documents, together with such
other powers as are reasonably incidental thereto.
(b) The Agent (which term as used in this sentence and in SECTION 10.05
and such first sentence of SECTION 10.06 hereof shall include reference to its
Affiliates and its own and such Affiliates' officers, directors, employees and
agents) shall not: (i) have any duties or responsibilities to be a trustee for
any Lender; (ii) be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by it under, this
Agreement, or for the due execution, legality, value, validity, effectiveness,
genuineness, enforceability, perfection or sufficiency of this Agreement, any
Note, any Security Document or any other document referred to or provided for
herein or for any failure by the Borrowers or any other Person to perform any of
its obligations hereunder or thereunder; (iii) be required to initiate or
conduct any litigation or collection proceedings hereunder, except to the extent
requested by the Majority Lenders; and (iv) be responsible for any action taken
or omitted to be taken by it hereunder or under any other
-63-
<PAGE> 71
document or instrument referred to or provided for herein or in connection
herewith, except for its own gross negligence or willful misconduct.
(c) The Agent may employ and consult with agents, attorneys-in-fact,
public accountants and other experts selected by it and shall not be responsible
for the negligence or misconduct of any such agents, attorneys-in-fact, public
accountants or other experts it selects with reasonable care.
(d) Subject to the foregoing, to ARTICLE XI and to the provisions of any
intercreditor agreement among the Lenders in effect from time to time, the Agent
shall, on behalf of the Lenders, (i) hold and apply any and all Collateral, and
the proceeds thereof; at any time received by it, in accordance with the
provisions of the Security Documents and this Agreement; (ii) exercise any and
all rights, powers and remedies of the Lenders under this Agreement or any of
the Security Documents, including the giving of any consent or waiver or the
entering into of any amendment; (iii) execute, deliver and file UCC financing
statements, mortgages, deeds of trust, lease assignments and other such
agreements, and possess instruments on behalf of any or all of the Lenders; and
(iv) in the event of acceleration of any Borrower's Indebtedness hereunder, sell
or otherwise liquidate or dispose of any portion of the Collateral held by it
and otherwise exercise the rights of the Lenders hereunder and under the
Security Documents.
(e) The Lenders hereby authorize the Agent, at its option and in its
discretion, to release any lien or security interest granted to or held by the
Agent upon any Collateral (i) upon termination of the Commitments and payment in
full of all of the Senior Debt, (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition expressly permitted
hereunder or under any other Loan Document or to which the Majority Lenders have
consented or (iii) otherwise pursuant to and in accordance with the provisions
of any applicable Loan Document. Upon request by the Agent at any time, the
Lenders will confirm in writing the Agent's authority to release Collateral
pursuant to this Section.
SECTION 10.02. RELIANCE BY AGENT. The Agent shall be entitled to rely
upon any certification, notice or other communication (including any
communication by telephone, telex, facsimile transmission, telegram or cable)
believed by it to be genuine and correct and to have been signed or sent by or
on behalf of the proper Person or Persons, and upon advice and statements of
legal counsel, independent accountants and other experts selected by the Agent.
The Agent may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof; in form
satisfactory to the Agent, signed by such payee and including the agreement of
the assignee or transferee to be bound hereby as it would have been if it had
been an original Lender hereunder. As to any matters not expressly provided for
by this Agreement, the Agent shall in all cases be fully protected in acting, or
in refraining from acting, hereunder in accordance with instructions signed by
the Majority Lenders and any action taken or failure to act pursuant thereto
shall be binding on the Lenders.
SECTION 10.03. EVENTS OF DEFAULT. The Agent shall not be deemed to have
knowledge of the occurrence of an Event of Default (other than the non-payment
of principal of or interest on the Notes which it holds as a Lender hereunder)
unless such Agent has received written notice
-64-
<PAGE> 72
from any Lender or any Borrower specifying such Event of Default and stating
that such notice is a "NOTICE OF DEFAULT". In the event that the Agent receives
such a notice of the occurrence of an Event of Default, the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment). The Agent shall (subject to SECTION 10.07) take such
action with respect to such Event of Default as shall be directed by the
Majority Lenders, as provided under ARTICLE XI, provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action on behalf of the Lenders, or refrain from taking
such action, with respect to such Event of Default as it shall deem advisable in
the best interest of the Lenders.
SECTION 10.04. RIGHTS AS A LENDER. With respect to its Commitments and
the Loans made by AT&T-CFC hereunder, and the Notes issued to it, AT&T-CFC shall
have the same rights and powers under this Agreement as any other Lender and may
exercise the same as though it were not acting as the Agent; and the terms
"Lender", "Lenders" and "Majority Lenders" shall, unless otherwise expressly
indicated, include AT&T-CFC in its individual capacity. The Agent and its
Affiliates may, without having to account therefor to the Lenders and without
giving rise to any fiduciary or other similar duty to any Lender, accept
deposits from, lend money to and generally engage in any kind of banking, trust
or other business with the Borrowers and any of their Affiliates as if it were
not acting as an agent and as if CFC were not a Lender, and the Agent may accept
fees and other consideration from or on behalf of the Borrowers for services in
connection with this Agreement or otherwise without having to account for the
same to the Lenders.
SECTION 10.05. INDEMNIFICATION. The Lenders agree to indemnify the Agent
(to the extent not reimbursed under SECTION 13.02, but without limiting the
obligations of the Borrowers under such SECTION 13.02), ratably in accordance
with the respective aggregate principal amounts of the Notes held by such
Lenders, from and against any and all liabilities, obligations, losses, damages,
penalties, action, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this Agreement or any
Security Document or Loan Document or any other document contemplated by or
referred to herein or the transactions contemplated by or referred to herein or
therein (including, without limitation, the costs and expenses which the
Borrowers are obligated to pay under SECTION 13.02) or the enforcement of any of
the terms of this Agreement or of any Security Document or of any such other
documents, or in any way relating to any action taken or omitted by the Agent
under this Agreement, provided that no Lender shall be liable for any of the
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including counsel fees, but exclusive of
any costs and expenses of syndications) incurred by the Agent in connection with
the preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of;
or legal advice in respect of rights or responsibilities under, this Agreement,
to the extent that the Agent is not reimbursed for such expenses by the
Borrowers.
-65-
<PAGE> 73
SECTION 10.06. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender
agrees that it has, independently and without reliance on the Agent or any other
Lenders, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and its own decision
to enter into this Agreement and that it will, independently and without
reliance upon the Agent or any other Lenders, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement. The
Agent does not make any warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement. The
Agent shall not be required to inquire or keep itself informed as to the
performance or observance by the Borrowers of this Agreement or any other
document referred to or provided for herein or to inspect the properties or
books of the Borrowers. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder, the Agent shall have no duty or responsibility to provide any Lender
with any credit or other information concerning the affairs, financial condition
or businesses of the Borrowers or any Affiliates of the Borrowers which may come
into the possession of the Agent or any of its Affiliates. Notwithstanding the
foregoing, the Agent will provide to the Lenders any and all information
reasonably requested by them and reasonably available to the Agent promptly upon
such request.
SECTION 10.07. FAILURE TO ACT. Except for action expressly required of
the Agent hereunder, the Agent shall in all cases be fully justified in failing
or refusing to act hereunder unless it shall be indemnified to its satisfaction
by the Lenders against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action.
SECTION 10.08. RESIGNATION OR REMOVAL OF AGENT. AT&T-CFC (or any other
Agent hereunder), may resign as the Agent at any time by giving thirty (30)
days' prior written notice thereof to the Lenders and the Borrowers. Any such
resignation or removal shall take effect at the end of such thirty (30) day
period or upon the earlier appointment of a successor Agent by the Majority
Lenders as provided below. Upon any resignation, the Majority Lenders shall
appoint a successor agent from among the Lenders or, if such appointment is
deemed inadvisable or impractical by the Majority Lenders, another financial
institution with a combined capital and surplus of at least $500,000,000. Upon
the acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent. After the effective
date of the resignation of an Agent hereunder, the retiring Agent shall be
discharged from its duties and obligations hereunder, provided that the
provisions of this ARTICLE X shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Agent. In the event that there shall not be a duly appointed and acting Agent,
the Borrowers agree to make each payment due to the Agent hereunder and under
the Notes, if any, directly to each Lender entitled thereto, pursuant to written
instructions provided by the retiring Agent, and to provide copies of each
certificate or other document required to be furnished to the Agent hereunder,
if any, directly to each Lender.
-66-
<PAGE> 74
SECTION 10.09. COOPERATION OF LENDERS. Each Lender shall (a) promptly
notify the other Lenders and the Agent of any Event of Default known to such
Lender under this Agreement and not reasonably believed to have been previously
disclosed to the other Lenders; (b) provide the other Lenders and the Agent with
such information and documentation as such other Lenders or the Agent shall
reasonably request in the performance of their respective duties hereunder,
including, without limitation, all information relative to the outstanding
balance of principal, interest and other sums owed to such Lender by each
Borrower but excluding internally generated reports and analyses and other
customarily confidential materials; and (c) cooperate with the Agent with
respect to any and all collections and/or foreclosure procedures at any time
commenced against the Borrowers or otherwise in respect of the Collateral by the
Agent in the name and on behalf of the Lenders.
XI. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; ACTIONS BY THE
LENDERS.
(a) This Agreement (including the Schedules hereto) and the other Loan
Documents constitute the entire agreement of the parties herein and supersede
any and all prior agreements, written or oral, as to the matters contained
herein, and no modification or waiver of any provision hereof or of the Notes or
any other Loan Document, nor consent to the departure by the Borrowers or any
other Person therefrom, shall be effective unless the same is in writing, and
then such waiver or consent shall be effective only in the specific instance,
and for the purpose, for which given. Except as hereinafter provided or in cases
where the consent of all Lenders is required by the terms of this Agreement or
other Loan Document, the consent of the Majority Lenders shall be required and
sufficient (i) to amend, with the consent of the Borrowers who are parties
thereto, any term of this Agreement, the Notes or any other Loan Document; (ii)
to waive the observance of any term of this Agreement, the Notes or any other
Loan Document (either generally or in a particular instance or either
retroactively or prospectively); (iii) to take or refrain from taking any action
under this Agreement, the Notes, any other Loan Document or applicable law,
including, without limitation, (A) the acceleration of the payment of the Notes,
(B) the termination of the Commitments, (C) the exercise of the Agent's and the
Lenders' remedies hereunder and under the Security Documents and (D) the giving
of any approvals, consents, directions or instructions required under this
Agreement or the Security Documents; PROVIDED, HOWEVER, that no such amendment,
waiver or consent shall, without the prior written consent of all of the Lenders
(other than a Defaulting Lender and, with respect to matters addressed in clause
(1) below only such Lenders holding Senior Debt directly affected thereby), (1)
extend the fixed maturity or reduce (except for reductions in the amortization
schedule based upon and reflecting the Borrowers' failure to borrow the full
amount of a Commitment) the principal amount of; or reduce the amount or extend
the time of payment of any principal of; or interest on, any Note, (2) increase
or extend any Commitment of any Lender (it being understood that waivers or
modifications of conditions precedent, covenants, or Events of Default shall not
constitute any such increase or extension), (3) release any guaranty or any
Collateral, unless (x) such release of Collateral is in connection with a
Disposition permitted under SECTION 7.03 or to which any required consent of the
Majority Lenders has been given and (y) substantially all of the Net Sale
Proceeds of such sale are used to repay the Borrowers' indebtedness to the
Lenders hereunder or otherwise used in a manner permitted hereunder, (4) change
the fraction or
-67-
<PAGE> 75
percentage referred to in the definition of "MAJORITY LENDERS" contained in
Article I, (5) change any other provisions requiring the consent of all of the
Lenders or the Majority Lenders or (6) amend the provisions of this ARTICLE XI,
or (7) consent to the assignment or transfer by a Company of any of its rights
or obligations under the Loan Documents; and PROVIDED FURTHER, that no such
amendment, waiver, consent or other action shall (y) increase the dollar amount
Commitment of any Lender over the amount thereof then in effect without the
consent of such Lender, and (z) without the consent of the Agent, amend, modify
or waive any provision of ARTICLE X as it applies to the Agent, or any other
provision of any Loan Document as it relates to the rights or obligations of the
Agent; and PROVIDED FURTHER, that neither notice to, nor consent of; the
Companies shall be required for any modification, amendment or waiver of the
provisions of the Loan Documents specifying or governing the number or
percentage of lenders required to consent to any act or omission under the Loan
Documents or defining "MAJORITY LENDERS".
(b) Any amendment or waiver effected in accordance with this ARTICLE XI
shall be binding upon each holder of any Note at the time outstanding, each
future holder of any Note and the Borrowers. The Lenders' failure to insist
(directly or through the Agent) upon the strict performance of any term,
condition or other provision of this Agreement, any Note, or any of the Security
Documents, or to exercise any right or remedy hereunder or thereunder, shall not
constitute a waiver by the Lenders of any such term, condition or other
provision or default or Event of Default in connection therewith, nor shall a
single or partial exercise of any such right or remedy preclude any other or
future exercise, or the exercise of any other right or remedy; and any waiver of
any such term or condition or other provision or of any such default or Event of
Default shall not affect or alter this Agreement, any Note or any of the
Security Documents, and each and every term, condition and other provision of
this Agreement, the Notes and the Security Documents shall, in such event,
continue in full force and effect and shall be operative with respect to any
other then existing or subsequent default or Event of Default in connection
therewith. An Event of Default hereunder and a default under any Note or under
any of the Security Documents shall be deemed to be continuing unless and until
waived in writing by the Majority Lenders or all of the Lenders, as provided in
paragraph (a) above.
XII. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrowers, the Lenders, the Agent and their respective successors and assigns,
and all subsequent holders of any of the Notes or any portion hereof.
(b) Each Lender may assign its rights and interests under this
Agreement, the Notes and the Security Documents in whole or in part, and sell
participations in the Notes and the Security Documents as security therefor,
PROVIDED as follows:
(i) No Lender shall make any assignment (other than assignment in full)
other than to a separately organized branch or an Affiliate of the same Lender,
if; after giving effect thereto, such Lender would hold less than $5,000,000 of
the then aggregate outstanding principal amount of the Notes.
-68-
<PAGE> 76
(ii) Any such assignment made other than to a separately organized
branch, or an Affiliate of; a Lender shall reflect an assignment of such
assigning Lender's Notes which is in an aggregate principal amount of at least
$5,000,000, and if greater, shall be an integral multiple of $1,000,000.
(iii) Notwithstanding any provision of this Agreement to the contrary,
each Lender may at any time assign all or any portion of its rights under this
Agreement and each of the other Loan Documents, including, without limitation,
the Notes held by such Lender, to a Federal Reserve Bank (or equivalent thereof
in the case of Lenders chartered outside of the United States); provided that no
such assignment shall release a Lender from any of its obligations and
liabilities under the Loan Documents. Any Federal Reserve Bank (or equivalent
thereof) which receives such an assignment from any Lender may make further
assignments of such rights in accordance with the provisions of this Section.
(iv) Any assignments made hereunder shall be pursuant to an instrument
of assignment and acceptance (the "ASSIGNMENT AND ACCEPTANCE") substantially in
the form of Schedule 12.01 and the parties to each such assignment shall execute
and deliver to the Agent for its acceptance the Assignment and Acceptance
together with any Note or Notes subject thereto. Upon such execution and
delivery, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least two (2) Business Days after
the execution thereof; (A) the assignee thereunder shall become a party hereto,
to the Loan Documents and to the Intercreditor Agreement and, to the extent
provided in such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder with a commitment as set forth therein and (B) the assigning
Lender thereunder shall, to the extent provided in such assignment, be released
from its obligations under this Agreement as to that portion of its obligation
being so assigned and delegated. The Assignment and Acceptance shall be deemed
to amend this Agreement to the extent, and only to the extent, necessary to
reflect the addition of the assignee as a Lender and the resulting adjustment of
Commitments arising from the purchase by and delegation to such assignee of all
or a portion of the rights and obligations of such assigning Lender under this
Agreement.
(v) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee together with the Note subject to such
assignment and payment by the assignee to the Agent of a registration and
processing fee of $2,000.00, the Agent shall accept such Assignment and
Acceptance. Promptly upon delivering such Assignment and Acceptance to the
Agent, the assigning Lender shall give notice thereof to the Borrowers and the
other Lenders. Within five (5) Business Days after receipt of such notice, the
Borrowers shall execute and deliver to the Agent in exchange for such
surrendered Note(s) a new Note or Notes payable to the order of such assignee in
an amount equal to the portion of the Loan(s) assumed by such assignee pursuant
to such Assignment and Acceptance and a new Note or Notes payable to the order
of the assigning Lender in an amount equal to the portion of the Loans retained
by it hereunder. Such new Notes shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form
provided in Article II. The canceled Notes surrendered by the assigning Lender
shall be returned to the Borrowers upon the execution and delivery of such new
Notes.
-69-
<PAGE> 77
(vi) Each Lender may sell participations in all or a portion of its
rights and obligations under this Agreement (including, without limitation, all
or a portion of its Commitments and the Notes held by it); PROVIDED, HOWEVER,
that, (A) the selling Lender shall remain obligated under this Agreement to the
extent as it would if it had not sold such participation, (B) the selling Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (C) at no time shall the selling Lender agree with such
participant to take or refrain from taking any action hereunder or under any
other Loan Document, except that the selling Lender may agree not to consent,
without such participant's consent, to any of the actions referred to ARTICLE
XI, to the extent that the same require the consent of each Lender hereunder,
(D) all amounts payable by the Borrowers hereunder shall be determined as if
such Lender had not sold such participation and no participant shall be entitled
to receive any greater amount pursuant to this Agreement than the selling Lender
would have been entitled to receive in respect of the amount of the
participation transferred by such Lender to such participant had no such
transfer occurred, and (E) the Borrowers, the Agent, and the other Lenders shall
continue to deal solely and directly with the selling Lender in connection with
such Lender's rights and obligations under this Agreement.
(vii) Except during the existence of an Event of Default, no assignment
by a Lender referred to above other than to a separately organized branch or
Affiliate of such Lender and other than under paragraph (b)(iii) hereof shall be
permitted without the prior written consent of the Agent, which consent shall
not be unreasonably withheld or delayed.
(viii) No Borrower may assign any of its rights or delegate any of its
duties or obligations hereunder.
(ix) Any Lender may, in connection with any assignment or participation
pursuant to this Section, disclose to the assignee or participant any
information relating to the Borrowers furnished to such Lender by or on behalf
of the Borrowers and such assignee or participant shall treat such information
as confidential.
XIII. MISCELLANEOUS
SECTION 13.01. SURVIVAL.
This Agreement and all covenants, agreements, representations and
warranties made herein and in the certificates delivered pursuant hereto, shall
survive the making by the Lenders of the Loans and shall continue in full force
and effect so long as the Notes or any other Indebtedness of the Companies, or
any of them, to the Lenders is outstanding and unpaid or any Lender has any
obligation to make credit extensions hereunder.
SECTION 13.02. EXPENSES.
The Borrowers agree jointly and severally to reimburse the Agent and the
Lenders upon demand for all reasonable out-of-pocket costs, charges,
liabilities, documentary stamp taxes,
-70-
<PAGE> 78
intangible taxes, any other taxes due under any applicable state law (exclusive
of taxes measured or imposed in terms of any Lender's net income) and any other
reasonable expenses of the Agent and the Lenders (including reasonable fees and
disbursements of (i) counsel to the Agent and the Lenders, (ii) the appraisers
and engineers referred to in SECTION 4.18(a) and (b) hereof and SECTION 6.10(d)
hereof; and (iii) agents of the Agent and the Lenders not regularly in their
employ) in connection with (a) the preparation, negotiation, interpretation,
execution and delivery of this Agreement, the Notes, any Security Documents and
any other agreements or documents relating thereto, (b) the making and
administration of the Loans, (c) any amendments, modifications, consents or
waivers in respect thereof; (d) any enforcement of any of the Transaction
Documents, (e) any proceedings with respect to the bankruptcy, reorganization,
insolvency readjustment of debt, dissolution or liquidation of the Borrower or
any party to any Security Document, (f) any claims by third parties relating to
the foregoing, and (g) any appraisal, studies or reports required by this
Agreement.
SECTION 13.03. SETOFFS, ETC.
The Borrowers agree that, in addition to (and without limitation of) any
right of set-off; bankers lien or counterclaim the Lenders and Agent may
otherwise have, each Lender shall be entitled at its option, to offset balances
held by it for the account of the Borrowers, or any of them, at any of its
offices, against any Indebtedness or other fees or charges owed to such Lender
hereunder if the same are not paid when due (regardless of whether such balances
are then due to the Borrowers) or if a Borrower becomes insolvent, howsoever
evidenced, or if any Event of Default occurs, and that such offset balances may
be applied toward the payment of any Indebtedness of the Borrowers to the
Lenders or to any purchaser of any participations in the Notes, whether or not
such Indebtedness or any part thereof shall then be due; in which case such
Lender shall promptly notify the Borrowers thereof; PROVIDED, HOWEVER, that such
Lender's failure to give such notice shall not affect the validity thereof.
SECTION 13.04. GOVERNING LAW.
THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SAID STATE.
SECTION 13.05. AMENDMENT; MODIFICATION.
No modification or waiver of any provision of this Agreement, or of the
Notes or any other Loan Document, nor consent to any departure by the Borrowers
therefrom, shall in any event be effective unless the same shall be in writing,
and then such waiver or consent shall be effective only in the specific
instance, and for the purpose, for which given. No notice to, or demand on, the
Borrowers, in any case, shall entitle the Borrowers to any other or future
notice or demand in the same, similar or other circumstances.
-71-
<PAGE> 79
SECTION 13.06. WAIVER.
The failure by the Agent or any Lender to insist upon the strict
performance of any term, condition or other provision of this Agreement, the
Notes or any of the Security Documents or other Transaction Documents, or to
exercise any right or remedy hereunder or thereunder, shall not constitute a
waiver by the Agent or the Lenders of any such term, condition or other
provision or default or Event of Default in connection therewith; and any waiver
of any such term, condition or other provision or of any such default or Event
of Default shall not affect or alter this Agreement, the Notes or any of the
Security Documents or other Transaction Documents, and each and every term,
condition and other provision of this Agreement, the Notes, the Security
Documents and other Transaction Documents shall, in such event, continue in full
force and effect and shall be operative with respect to any other then existing
or subsequent default or Event of Default in connection therewith. An Event of
Default hereunder or under any of the Security Documents shall be deemed to be
continuing unless and until waived in writing by the Lenders.
SECTION 13.07. NOTICE.
All notices, requests, demands and other communications provided for
hereunder shall be in writing and either mailed, sent by nationally recognized
overnight courier service, or delivered to the applicable party at the addresses
indicated below.
If to the Agent:
AT&T COMMERCIAL FINANCE CORPORATION
44 Whippany Road
Morristown, New Jersey 07962
Attention: Michael V. Monahan, Vice President
with a copy (which shall not constitute notice) to:
AT&T COMMERCIAL FINANCE CORPORATION
44 Whippany Road
Morristown, New Jersey 07962
Attention: Corporate Counsel
and with a copy (which shall not constitute notice) to:
Andrew J. Chlebus, Esq.
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
- 72 -
<PAGE> 80
If to any Lender, to it at the address set forth on the appropriate
signature page hereto or, with respect to any assignee under ARTICLE XII, at the
address designated by such assignee in a written notice to the other parties
hereto.
If to the Borrowers or any of them:
c/o Sunbelt Communications Company
1500 Foremaster Lane
Las Vegas, Nevada 89101
Attention: James E. Rogers, President
with a copy (which shall not constitute notice) to:
c/o Sunbelt Communications Company
1500 Foremaster Lane
Las Vegas, Nevada 89101
Attention: Joan Zucker
and a copy (which shall not constitute notice) to:
Earl Monsey, Esq.
Monsey & Andrews
3900 Paradise Road, Suite 283
Las Vegas, Nevada 89109
and a copy (which shall not constitute notice) to:
Suzanne Rogers, Esq.
455 Capitol Mall, Suite 604
Sacramento, CA 95818
or, as to each party, at such other address as shall be designated by such
parties in a written notice to the other party complying as to delivery with the
terms of this Section. All such notices, requests, demands and other
communication shall be deemed given upon the earliest to occur of (a) the third
day following deposit thereof in the United States mail, (b) twelve noon local
time on the first business day following timely deposit thereof with a
nationally recognized overnight courier service with effective instructions to
such courier to make delivery on the next business day, or (c) receipt by the
party to whom such notice is directed.
SECTION 13.08. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Borrowers, the Agent and the Lenders and their respective successors and
assigns, except that the Borrowers shall not have the right to assign any of
their rights hereunder or delegate any of their obligations
- 73 -
<PAGE> 81
hereunder without the prior written consent of the Lenders. Any such
impermissible assignment or delegation shall be void and of no effect.
SECTION 13.09. CONSENT TO JURISDICTION, SERVICE OF PROCESS.
Each Borrower, to the extent that it may lawfully do so, hereby consents
to the jurisdiction of the courts of the States of Nevada, Arizona, California,
Idaho, Wyoming, Montana and New Jersey and the United States District Courts for
the Districts of Nevada, Arizona, California, Idaho, Wyoming, Montana and New
Jersey, as well as to the jurisdiction of all courts from which an appeal may be
taken from such courts, for the purpose of any suit, action or other proceeding
arising out of any of its obligations arising hereunder or under the Notes, the
Security Documents or any other Transaction Documents, or with respect to the
transactions contemplated hereby, and expressly waives any and all objections it
may have as to venue in any of such courts. In addition, to the extent that it
may lawfully so do, each Borrower hereby consents to the service of process by
U.S. certified or registered mail, return receipt requested, addressed to the
Borrower at the address to which notices are to be given hereunder.
SECTION 13.10. WAIVER OF JURY TRIAL.
EACH BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR
WITH RESPECT TO THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER
AGREEMENTS EXECUTED IN CONNECTION HEREWITH. NEITHER THE BORROWERS NOR ANY
ASSIGNEE OF OR SUCCESSOR TO THE BORROWERS, SHALL SEEK A JURY TRIAL IN ANY
LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION OR PROCEDURE BASED
UPON, OR ARISING OUT OF, THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS OR
ANY OF THE OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS ENTERED INTO IN
CONNECTION HEREWITH OR THEREWITH OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR
AMONG THE PARTIES HERETO, OR ANY OF THEM. NO PARTY WILL SEEK TO CONSOLIDATE ANY
SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN
WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS
SECTION 13.10 HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE
PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED
WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 13.10
WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
SECTION 13.11. INDEMNIFICATION; LIMITATION OF LIABILITY.
(a) Each Borrower agrees to protect, indemnify and hold harmless the
Indemnitees from and against any and all liabilities, obligations, losses,
damages (including, without limitation, consequential damages), penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for and consultants of such Indemnitees in
- 74 -
<PAGE> 82
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated a party thereto), which may
be imposed on, incurred by, or asserted against such Indemnitees (whether
direct, indirect, or consequential and whether based on any federal or state
laws or other statutory regulations, including, without limitation, securities,
environmental and 'commercial laws and regulations, under common law or at
equitable cause or on contract or otherwise) in any manner relating to or
arising out of (i) any act or omission of the Borrowers, any Affiliate of any
such Persons, or any other Person with respect to (x) the transactions evidenced
by or relating to this Agreement, the Notes or any of the Security Documents or
other Loan Documents, or any act, event or transaction related or attendant
thereto, (y) the agreements of Lenders contained herein, the making of the
Loans, or the management of the Loans or the Collateral, or (z) the use or the
intended use of the proceeds of the Loans hereunder; or (ii) any claim, cause of
action, event or circumstances relating to the business, assets, properties,
licenses or operations of the Borrowers, including, without limitation, all
claims relating to or arising out of the condition, quality, maintenance or use
of any asset which constitutes Collateral, the manner in which the Borrowers
operates the Stations and their business, and the Borrowers' compliance with the
rules and regulations of the FCC and other applicable law; PROVIDED, HOWEVER,
that the Borrowers shall have no obligation to any Indemnitee under this SECTION
13.11 with respect to matters indemnified hereby which are caused by or
resulting from the willful misconduct or gross negligence of such Indemnitee. To
the extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law
or public policy, the Borrowers shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified matters incurred by the Indemnitees.
(b) To the extent permitted by applicable law, no claim may be made by
the Borrowers or any other Person against the Indemnitees for any special,
indirect, consequential or punitive damages in respect of any claim for breach
of contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement, the Notes, or any of the Security
Documents or any act, omission or event occurring in connection therewith; and
the Borrowers hereby waive, release and agree not to sue upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor. No Indemnitee shall be liable for any action taken or
omitted to be taken by it or them under or in connection with any of the
above-referenced documents, except for its or their own gross negligence or
willful misconduct.
(c) The provisions of this SECTION 13.11 shall continue in effect and
shall survive (among other things) any termination of this Agreement, payment
and satisfaction of the Notes, and release of any Collateral.
SECTION 13.12. SEVERABILITY.
(a) Any provision of this Agreement, the Notes or any of the Security
Documents which 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
- 75 -
<PAGE> 83
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction.
(b) All agreements between the Borrowers and the Lenders are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of maturity of the Indebtedness or otherwise, shall the
amount paid or agreed to be paid to the Lenders for the use, forbearance or
detention of the Indebtedness evidenced hereby or incurred pursuant hereto
exceed the maximum permissible under applicable law. If; from any circumstances
whatsoever, fulfillment of any provision hereof; at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, IPSO FACTO, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any circumstance any Lender
should ever receive as interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be applied to the
reduction of the principal balance evidenced hereby and not to the payment of
interest. As used herein, the term "APPLICABLE LAW" shall mean the law in effect
as of the date hereof; provided, however, that in the event there is a change in
the law which results in a higher permissible rate of interest, then this
Agreement shall be governed by such new law as of its effective date. This
provision shall control every other provision of all Transaction Documents
between the Borrowers and the Lenders.
SECTION 13.13. SECTION HEADINGS.
Any Article and Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 13.14. AMENDMENT OF OTHER AGREEMENTS.
All references in this Agreement to other documents and agreements to
which the Lenders are not a party shall be deemed to refer to such documents and
agreements as presently constituted and not as hereafter amended or modified
unless the Majority Lenders shall have expressly consented to in writing
pursuant to ARTICLE XI.
SECTION 13.15. ACCOUNTING PRINCIPLES.
All references in this Agreement to any calculations or determinations
made in accordance with generally accepted accounting principles shall mean, for
any fiscal period, such principles applied on a basis consistent with (a) the
application of the same in prior fiscal periods, (b) that employed by the
Accountants in preparing the financial statements referred to in SECTION 4.01
hereof.
SECTION 13.16. KNOWLEDGE AND DISCOVERY.
All references in this Agreement to "KNOWLEDGE" of; or "DISCOVERY" by, a
Borrower shall be deemed to include any such knowledge of; or discovery by, any
of the holders of common stock of such Borrowers or any of such Borrower's
executive officers.
- 76 -
<PAGE> 84
SECTION 13.17. FCC.
Notwithstanding anything to the contrary contained herein or in any of
the Security Documents, the Agent and the Lenders will not take any action
pursuant to this Agreement or any of the Security Documents that would
constitute or result in any assignment of an FCC license or any change of
control of the Stations if such assignment of license or change of control would
require under then existing law (including the written rules and regulations
promulgated by the FCC), the prior approval of the FCC, without first obtaining
such approval of the FCC. Bach Lender and the Agent specifically agree that (a)
voting rights in the capital stock or voting trust certificate of the Borrowers
(the "PLEDGED INTERESTS") will remain with the holders of such voting rights
upon and following the occurrence of an Event of Default unless any required
prior approvals of the FCC to the transfer of such voting rights to the Lenders
or the Agent shall have been obtained; (b) upon and following the occurrence of
any Event of Default and foreclosure upon the Pledged Interests by the Lenders
or the Agent, there will be either a private or public sale of the Pledged
Interests; and (c) prior to the exercise of voting rights by the purchaser at
any such sale, the prior consent of the FCC pursuant to 47 U.S.C. Section 310(d)
will be obtained. The Borrowers agree to take any action which the Lenders or
the Agent may reasonably request in order to obtain and enjoy the full rights
and benefits granted to the Lender by this Agreement including specifically, at
the Borrowers' own cost and expense, the use of the best efforts of the
Borrowers to assist in obtaining approval of the FCC for any action or
transaction contemplated by this Agreement or the Security Documents which is
then required by law, and specifically, without limitation, upon request
following the occurrence of an Event of Default, to prepare, sign and file (or
cause to be prepared, signed or filed) with the FCC any portion of any
application or applications for consent to the assignment of license or transfer
of control required to be signed by the Borrowers and necessary or appropriate
under the FCC's rules and regulations for approval of any sale or transfer of
any of the capital stock or assets of the Borrowers or any transfer of control
over any FCC license.
SECTION 13.18. MAXIMUM ENFORCEABILITY.
Notwithstanding any provision contained in this Agreement or any
Security Document to the contrary, in the event of any bankruptcy or insolvency
proceeding involving any Company or in the event of any challenge to the full
enforceability of all or any of this Agreement or any Security Document by any
creditor of any Company or a trustee, receiver or debtor-in-possession of; for
or in respect to any Company, the liability of such Company hereunder, under the
Notes, and pursuant to any related Security Documents shall be limited to the
lesser of the following amounts MINUS, in either case, one dollar ($1.00):
(i) the lowest amount which would render such entity's undertakings
pursuant to this Agreement or any related security document a fraudulent
conveyance under the laws of the State of Nevada or other similar or analogous
law or statute of the state having jurisdiction over the subject matter; or
- 77 -
<PAGE> 85
(ii) the lowest amount which would render such entity's undertakings
pursuant to this Agreement or any related Security Document a fraudulent
transfer under Section 548 of the Bankruptcy Code of 1978, as amended.
This provision shall control every other provision of this Agreement, the Notes
or any related Security Document.
SECTION 13.19. JOINT AND SEVERAL OBLIGATIONS; SURETYSHIP WAIVERS
AND CONSENTS.
(a) Each covenant, agreement, obligation, representation and warranty of
the Borrowers contained herein constitutes the joint and several undertaking of
each Borrower.
(b) Each Borrower acknowledges that the obligations of such Borrower
undertaken herein might be construed to consist, at least in part, of the
guaranty of obligations of persons or entities other than such Borrower
(including the other Borrowers party hereto) and, in full recognition of that
fact, each Borrower consents and agrees that the Lenders and Agent may, at any
time and from time to time, without notice or demand, whether before or after
any actual or purported termination, repudiation or revocation of this Agreement
by any one or more Borrowers, and without affecting the enforceability or
continuing effectiveness hereof as to such Borrower: (i) with the consent of the
other Borrowers, supplement, restate, modify, amend, increase, decrease, extend,
renew or otherwise change the time for payment or the terms of this Agreement or
any part thereof; including any increase or decrease of the rate(s) of interest
thereon; (ii) supplement, restate, modify, amend, increase, decrease or waive,
or enter into or give any agreement, approval or consent with respect to, this
Agreement or any part thereof, or any of the Security Documents, or any
condition, covenant, default, remedy, right, representation or term thereof or
thereunder; (iii) accept partial payments; (iv) release, reconvey, terminate,
waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer or
enforce any security or guarantees, and apply any security and direct the order
or manner of sale thereof as the Agent and the Lenders in their sole and
absolute discretion may determine; (v) release any person from any personal
liability with respect to this Agreement or any part thereof; (vi) settle,
release on terms satisfactory to the Lenders or by operation of applicable law
or otherwise liquidate or enforce any security or guaranty in any manner,
consent to the transfer of any security and bid and purchase at any sale; or
(vii) consent to the merger, change or any other restructuring or termination of
the corporate or partnership existence of any Borrower or any other person, and
correspondingly restructure the obligations evidenced hereby, and any such
merger, change, restructuring or termination shall not affect the liability of
any Borrower or the continuing effectiveness hereof; or the enforceability
hereof with respect to all or any part of the obligations evidenced hereby.
(c) The Lenders and the Agent may enforce this Agreement independently
as to each Borrower and independently of any other remedy or security the
Lenders and the Agent at any time may have or hold in connection with the
obligations evidenced hereby, and it shall not be necessary for the Lenders and
the Agent to marshal assets in favor of any Borrower or any other person or to
proceed upon or against or exhaust any security or remedy before proceeding to
enforce this Agreement. Each Borrower expressly waives any right to require the
Lenders and
- 78 -
<PAGE> 86
the Agent to marshal assets in favor of any Borrower or any other Person or to
proceed against any other Borrower or any Collateral provided by any Person, and
agrees that the Lenders and the Agent may proceed against Borrowers or any
Collateral in such order as they shall determine in their sole and absolute
discretion.
(d) The Lenders' and the Agent's rights hereunder shall be reinstated
and revived, and the enforceability of this Agreement shall continue, with
respect to any amount at any time paid on account of the Borrowers' obligations
to the Lenders which thereafter shall be required to be restored or returned by
the Lenders, all as though such amount had not been paid.
(e) To the maximum extent permitted by applicable law, each Borrower
expressly waives any and all defenses now or hereafter arising or asserted by
reason of (i) any disability or other defense of any other Borrower with respect
to the obligations evidenced hereby, (ii) the unenforceability or invalidity of
any security or guaranty for the obligations evidenced hereby or the lack of
perfection or continuing perfection or failure of priority of any security for
the obligations evidenced hereby, (iii) the cessation for any cause whatsoever
of the liability of any other Borrower (other than by reason of the full payment
and performance of all Obligations), (iv) any failure of the Agent and the
Lenders to comply with applicable law in connection with the sale or other
disposition of any Collateral or other security for any Obligation, (v) any act
or omission of the Agent and the Lenders or others that directly or indirectly
results in or aids the discharge or release of any Borrower or the Obligations
evidenced hereby or any security or guaranty there for by operation of law or
otherwise, (vi) the avoidance of any lien in favor of the Agent and the Lenders
for any reason, or (vii) any action taken by the Agent the Lenders that is
authorized by this Section or any other provision hereof or of any Security
Document. Until such time, if any, as all of the Obligations have been paid and
performed in full and no portion of any Commitment of any Lender to Borrowers
under any agreement remains in effect, no Borrower shall have any right of
subrogation, contribution, reimbursement or indemnity, and each Borrower
expressly waives any right to enforce any remedy that the Agent and the Lenders
now have or hereafter may have against any other Person and waives the benefit
of; or any right to participate in, any Collateral now or hereafter held by
Agent and the Lenders.
SECTION 13.20. SEVERAL NATURE OF LENDERS' OBLIGATIONS.
Notwithstanding anything in this Agreement or any other Loan Document to
the contrary, all obligations of the Lenders hereunder shall be several, and not
joint, in nature, and in the event any Lender fails to perform any of its
obligations hereunder or thereunder, the Companies shall have no recourse
against the Agent or any other Lender who has performed its obligations
hereunder.
SECTION 13.21. INTEGRATION.
(a) This Agreement supersedes the Borrowers' application for the Loans,
the Lenders' commitments and proposal letters in respect of the Loans, and all
other prior written or oral agreements and representations between the parties
hereto and their respective agents, employees or officers with respect to the
credit facilities extended hereby, and this Agreement,
- 79 -
<PAGE> 87
together with the other Transaction Documents, constitutes the entire agreement
of the parties hereto with respect to the subject matter hereof.
(b) This Agreement constitutes an amendment and restatement of the
Original Loan Agreements in their entirety and supersedes any inconsistent terms
or provisions contained in the Original Loan Agreements. All Indebtedness of the
Borrowers under the Original Loan Agreements shall hereafter constitute
Indebtedness subject to this Agreement.
SECTION 13.22 COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which, taken together, shall constitute one and
the same Agreement.
*THE NEXT PAGE IS THE SIGNATURE PAGE*
- 80 -
<PAGE> 88
IN WITNESS WHEREOF, the Agent, the Lenders and the Borrowers have caused
this Agreement to be duly executed as a sealed instrument by their respective
duly authorized officers, all as of the day and year first above written.
SUNBELT COMMUNICATIONS COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
VALLEY BROADCASTING COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
YUMA BROADCASTING COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
SIERRA BROADCASTING COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
OREGON TRAIL BROADCASTING
COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
FALLS BROADCASTING COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
- 81 -
<PAGE> 89
TWO OCEAN BROADCASTING COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
SIERRA RADIO COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
RADIO NEWS COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
RUBY MOUNTAIN BROADCASTING
COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
BEARTOOTH COMMUNICATIONS
COMPANY
By: /s/ James E. Rogers
--------------------------
Title: President
- 82 -
<PAGE> 90
AGENT:
AT&T COMMERCIAL FINANCE
CORPORATION, as Agent
By: /s/ Michael V. Monahan
--------------------------
Title: Vice President
LENDER:
AT&T COMMERCIAL FINANCE
CORPORATION
By: /s/ Michael V. Monahan
--------------------------
Title: Vice President
Lending Office for all Loans:
44 Whippany Road
Morristown, New Jersey 07962
Telecopier No.: 201-397-4196
Telephone No.: 201-397-3000 or
201-397-3482
Address for Notices:
44 Whippany Road
Morristown, New Jersey 07962
Attention: Michael V. Monahan,
Vice President
With a copy to:
AT&T Commercial Finance Corporation
44 Whippany Road
Morristown, New Jersey 07962
Attention: Corporate Counsel
- 83 -
<PAGE> 91
And a copy to:
Andrew J. Chlebus, Esq.
Edwards & Angell
2700 Hospital Trust Tower
Providence, Rhode Island 02903
Tranche A Commitment: $30,000,000
Tranche B Commitment: $30,000,000
- 84 -
<PAGE> 92
INDEX OF SCHEDULES
------------------
Schedule 2.01A - $30,000,000 Amended and Restated E&A
Secured Term Note of Borrowers
Schedule 2.0IB - $30,000,000 Amended and Restated E&A
Secured Promissory Note of Borrowers
Schedule 2.06 - Use of Proceeds E&A
Schedule 3.01 - Request for Advance Form E&A
Schedule 4.04 - Governmental and Other Consents Borrowers
Schedule 4.05 - Pending Litigation Borrowers
Schedule 4.06 - Compliance with Laws and Agreements Borrowers
Schedule 4.07 - Liens Borrowers
Schedule 4.11 - Tax Returns and Taxes Borrowers
Schedule 4.12 - Pension Plans, Etc. Borrowers
Schedule 4.13 - Licenses Borrowers
Schedule 4.14 - Material Agreements Borrowers
Schedule 4.15 - Ownership of Borrowers Borrowers
Schedule 4.19 - Environmental Matters Borrowers
Schedule 4.20 - Studio and Tower Sites; Other Real Estate Borrowers
Owned
Schedule 6.05 - Periodic Reporting Certificate E&A
Schedule 6.15 - Recommended Corrective Action Lender
Schedule 7.01 - Indebtedness (to include all mortgage Borrowers
indebtedness, automobile loans and other
Indebtedness)
Schedule 7.02 - Liens (to include all mortgage indebtedness, Borrowers
automobile loans and other Indebtedness)
Schedule 12.01 - Assignment and Acceptance E&A
<PAGE> 93
SCHEDULE 2.01A
---------------
AMENDED AND RESTATED SECURED TERM NOTE
--------------------------------------
$30,000,000.00 May 18, 1998
FOR VALUE RECEIVED, the undersigned, SUNBELT COMMUNICATIONS COMPANY, a
Nevada corporation, VALLEY BROADCASTING COMPANY, a Nevada corporation, YUMA
BROADCASTING COMPANY, a Nevada corporation, SIERRA BROADCASTING COMPANY, a
Nevada corporation, OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation,
FALLS BROADCASTING COMPANY, a Nevada corporation, TWO OCEAN BROADCASTING
COMPANY, a Nevada corporation, SIERRA RADIO COMPANY, a Nevada corporation, RADIO
NEWS COMPANY, a Nevada corporation, RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada
corporation, and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation
(collectively, the "MAKERS"), do hereby jointly and severally promise to pay to
the order of AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, with
its principal place of business at 44 whippany Road, Morristown, New Jersey
07962 (the "LENDER"), the principal sum of Thirty Million Dollars
($30,000,000.00) (the "PRINCIPAL") in ninety-five (95) consecutive monthly
installments of principal on the first day of each consecutive month ("MONTHLY
DUE DATES") commencing July 1, 1998, in the following amounts:
<TABLE>
<CAPTION>
MONTHLY DUE DATES DURING THE PERIOD AMOUNT OF MONTHLY PRINCIPAL PAYMENT
- ----------------------------------- -----------------------------------
<S> <C>
July 1, 1998 through June 1, 1999 $230,000.00
July 1, 1999 through June 1, 2000 $250,000.00
July 1, 2000 through June 1, 2001 $271,000.00
July 1, 2001 through June 1, 2002 $295,000.00
July 1, 2002 through June 1, 2003 $320,000.00
July 1, 2003 through June 1, 2004 $347,000.00
July 1, 2004 through June 1, 2005 $377,000.00
July 1, 2005 through May 1, 2006 $409,000.00
</TABLE>
plus a final installment of all remaining Principal then outstanding being due
and payable on June 1, 2006. The Makers hereby jointly and severally promise, to
the extent permitted by law, to pay to the holder hereof on each Monthly Due
Date commencing July 1, 1998, and upon payment in full hereof, interest on the
outstanding unpaid balance of Principal from time to time from the date of
advance until payment in full at a rate per annum equal to two and one-half
percentage points (2.50%) above the thirty (30) day "commercial paper" rate
published from time to time by the Eastern Edition of THE WALL STREET JOURNAL
(identified in THE WALL STREET JOURNAL as the interest rate for high-grade
unsecured notes sold through dealers by major corporations), or such other rate
designated by the Lender in substitution therefor pursuant to the Loan Agreement
(as hereinafter defined) (the "COMMERCIAL PAPER RATE"), with each change in such
rate to become effective on the first (1st) day of each month based upon the
first such Commercial Paper Rate published for such month by THE WALL STREET
JOURNAL. Interest on the Principal shall be calculated on the basis of a three
hundred sixty-five (365) day year counting the actual number of days elapsed.
The interest rate charged hereunder is further subject to increase, to
the extent permitted by applicable law, from time to time in accordance with
Section 9.02 of the Loan Agreement (as hereinafter defined). Any payment of
principal or interest not paid within ten (10) days of the
<PAGE> 94
date the same is due and payable shall, to the extent permitted by applicable
law, be subject to a late and handling charge of five percent (5%) of the
overdue payment; PROVIDED, HOWEVER, that the Lender's acceptance of payment of
such charge shall not be construed or be deemed to constitute a waiver of any
such default or any "Event of Default" (as defined in the Loan Agreement).
All Principal and interest hereunder are payable in lawful money of the
United States of America to the Agent (as hereinafter defined), as Agent for the
Lender, in accordance with the terms of the Loan Agreement.
The Makers of this Note, for themselves and their respective legal
representatives, successors and assigns, hereby expressly waive presentment,
protest, notice of protest, presentment for the purpose of accelerating
maturity, and diligence in collection, and consent that the Lender may release
or surrender, exchange or substitute any personal property or other collateral
security now held or which may hereafter be held as security for the payment of
this Note, and may extend the time for payment.
This Note (a) is one of the "Tranche A Notes" referred to in the
Amended and Restated Loan Agreement of even date herewith, among the Makers, the
Lender and certain other financial institutions who may become "Lenders"
thereunder, and AT&T Commercial Finance Corporation, as Agent for such Lenders
(the "AGENT"), as the same may be amended, extended or restated from time to
time (the "LOAN AGREEMENT"), (b) is being issued to amend and restate certain
indebtedness outstanding on the date hereof as set forth in the Loan Agreement,
and (c) is entitled to the benefits thereof, and the Loan Agreement and all
other instruments evidencing and/or securing the indebtedness hereunder are
hereby made part of this Note and are deemed incorporated herein in full. This
Note is secured by and entitled to the benefits of certain "Security Documents"
(as defined in the Loan Agreement). The occurrence or existence of an "Event of
Default" as defined in the Loan Agreement or in any other agreement or
instrument securing and/or evidencing this indebtedness shall constitute a
default under this Note and shall entitle the Lender to accelerate the entire
indebtedness hereunder and take such other action as may be provided for in the
said agreements.
This Note may be prepaid in accordance with the terms and provisions
set forth in the Loan Agreement and reference is made thereto for rights and
restrictions as to the prepayment hereof, including, without limitation,
prepayment penalties pursuant to Section 2.03 thereof.
All agreements between the Makers, or any of them, and the Lender are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Lender for the use,
forbearance or detention of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision hereof or of the Loan Agreement, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any circumstance the
Lender should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the principal balance evidenced hereby and not to the payment
of interest. As used herein, the term "applicable law" shall mean the law in
effect as of the date hereof, provided, however, that in the event there is a
change in the law which results in a higher permissible rate of interest, then
this Note shall be governed by such new law as of its effective date. This
provision shall control every other provision of all agreements between the
Makers and the Lender.
2
<PAGE> 95
THIS NOTE AND ALL TRANSACTIONS HEREUNDER AND/OR EVIDENCED HEREIN SHALL
BE GOVERNED BY, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SAID STATE.
If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of any attorney for collection, through legal
proceedings or otherwise, the Makers hereby agree jointly and severally to pay a
reasonable attorney's fee to the holder hereof together with reasonable costs
and expenses of collection.
IN WITNESS WHEREOF, the Makers have caused this Note to be executed by
their respective duly authorized officers as of the date first above written.
Witness: SUNBELT COMMUNICATIONS COMPANY
___________________________ By:________________________
Title: President
Witness: VALLEY BROADCASTING COMPANY
___________________________ By:________________________
Title: President
Witness: YUMA BROADCASTING COMPANY
____________________________ By:_________________________
Title: President
Witness: SIERRA BROADCASTING COMPANY
____________________________ By:_________________________
Title: President
Witness: OREGON TRAIL BROADCASTING
COMPANY
___________________________ By:________________________
Title: President
3
<PAGE> 96
Witness: FALLS BROADCASTING COMPANY
___________________________ By:__________________________
Title: President
Witness: TWO OCEAN BROADCASTING COMPANY
____________________________ By:__________________________
Title: President
Witness: SIERRA RADIO COMPANY
___________________________ By:__________________________
Title: President
Witness: RADIO NEWS COMPANY
___________________________ By:__________________________
Title: President
Witness: RUBY MOUNTAIN BROADCASTING
COMPANY
_____________________________ By:__________________________
Title: President
Witness: BEARTOOTH COMMUNICATION
COMPANY
___________________________ By:__________________________
Title: President
4
<PAGE> 97
SCHEDULE 2.01B
--------------
AMENDED AND RESTATED SECURED PROMISSORY NOTE
--------------------------------------------
$30,000,000.00 May 18, 1998
FOR VALUE RECEIVED, the undersigned, SUNBELT COMMUNICATIONS COMPANY, a
Nevada corporation, VALLEY BROADCASTING COMPANY, a Nevada corporation, YUMA
BROADCASTING COMPANY, a Nevada corporation, SIERRA BROADCASTING COMPANY, a
Nevada corporation, OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation,
FALLS BROADCASTING COMPANY, a Nevada corporation, TWO OCEAN BROADCASTING
COMPANY, a Nevada corporation, SIERRA RADIO COMPANY, a Nevada corporation, RADIO
NEWS COMPANY, a Nevada corporation, RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada
corporation, and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation
(collectively, the "MAKERS"), do hereby jointly and severally promise to pay to
the order of AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, with
its principal place of business at 44 Whippany Road, Morristown, New Jersey
07962 (the "LENDER"), the principal sum of up to Thirty Million Dollars
($30,000,000.00), or, if less, the aggregate principal amount of all Advances
made to the Makers pursuant to Section 2.02 of the Loan Agreement (as
hereinafter defined) (the "PRINCIPAL") in one hundred nineteen (119) consecutive
monthly installments of principal on the first day of each consecutive month
("MONTHLY DUE DATES") commencing July 1, 1998, in the following amounts:
MONTHLY DUE DATES DURING THE PERIOD AMOUNT OF MONTHLY PRINCIPAL PAYMENT
- ----------------------------------- -----------------------------------
July 1, 1998 through June 1, 1999 $ 17,000.00
July 1, 1999 through June 1, 2000 $ 18,000.00
July 1, 2000 through June 1, 2001 $ 20,000.00
July 1, 2001 through June 1, 2002 $ 22,000.00
July 1, 2002 through June 1, 2003 $ 24,000.00
July 1, 2003 through June 1, 2004 $ 26,050.00
July 1, 2004 through June 1, 2005 $ 28,000.00
July 1, 2005 through June 1, 2006 $ 31,000.00
July 1, 2006 through June 1, 2007 $344,000.00
July 1, 2007 through May 1, 2008 $375,000.00
plus a final installment of all remaining Principal then outstanding being due
and payable on June 1, 2008. The Makers hereby jointly and severally promise, to
the extent permitted by law, to pay to the holder hereof on each Monthly Due
Date commencing July 1, 1998, and upon payment in full hereof, interest on the
outstanding unpaid balance of Principal from time to time from the date of
advance until payment in full at a rate per annum equal to two and one-half
percentage points (2.50%) above the thirty (30) day "commercial paper" rate
published from time to time by the Eastern Edition of THE WALL STREET JOURNAL
(identified in THE WALL STREET JOURNAL as the interest rate for high-grade
unsecured notes sold through dealers by major corporations), or such other rate
designated by the Lender in substitution therefor pursuant to the Loan Agreement
(as hereinafter defined) (the "COMMERCIAL PAPER RATE"), with each change in such
rate to become effective on the first (1st) day of each month based upon the
first such Commercial Paper Rate published for such month by THE WALL STREET
JOURNAL. Interest on the Principal shall be calculated on the basis of a three
hundred sixty-five (365) day year counting the actual number of days elapsed.
<PAGE> 98
The interest rate charged hereunder is further subject to increase, to
the extent permitted by applicable law, from time to time in accordance with
Section 9.02 of the Loan Agreement (as hereinafter defined). Any payment of
principal or interest not paid within ten (10) days of the date the same is due
and payable shall, to the extent permitted by applicable law, be subject to a
late and handling charge of five percent (5%) of the overdue payment; PROVIDED,
HOWEVER, that the Lender's acceptance of payment of such charge shall not be
construed or be deemed to constitute a waiver of any such default or any "Event
of Default" (as defined in the Loan Agreement).
All Principal and interest hereunder are payable in lawful money of the
United States of America to the Agent (as hereinafter defined), as Agent for the
Lender, in accordance with the terms of the Loan Agreement.
The Makers of this Note, for themselves and their respective legal
representatives, successors and assigns, hereby expressly waive presentment,
protest, notice of protest, presentment for the purpose of accelerating
maturity, and diligence in collection, and consent that the Lender may release
or surrender, exchange or substitute any personal property or other collateral
security now held or which may hereafter be held as security for the payment of
this Note, and may extend the time for payment.
This Note (a) is one of the "Tranche B Notes" referred to in the
Amended and Restated Loan Agreement of even date herewith among the Makers, the
Lender and certain other financial institutions who may become "Lenders"
thereunder, and AT&T Commercial Finance Corporation, as Agent for the Lenders
(the "AGENT"), as the same may be amended, extended or restated from time to
time (the "LOAN AGREEMENT"), (b) is being issued to amend and restate certain
indebtedness outstanding on the date hereof as set forth in the Loan Agreement,
and (c) is entitled to the benefits thereof, and the Loan Agreement and all
other instruments evidencing and/or securing the indebtedness hereunder are
hereby made part of this Note and are deemed incorporated herein in full. This
Note is secured by and entitled to the benefits of certain "Security Documents"
(as defined in the Loan Agreement). The occurrence or existence of an "Event of
Default" as defined in the Loan Agreement or in any other agreement or
instrument securing and/or evidencing this indebtedness shall constitute a
default under this Note and shall entitle the Lender to accelerate the entire
indebtedness hereunder and take such other action as may be provided for in the
said agreements.
This Note may be prepaid in accordance with the terms and provisions
set forth in the Loan Agreement and reference is made thereto for rights and
restrictions as to the prepayment hereof, including, without limitation,
prepayment penalties pursuant to Section 2.03 thereof.
All agreements between the Makers, or any of them, and the Lender are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of acceleration of maturity of the indebtedness evidenced hereby or
otherwise, shall the amount paid or agreed to be paid to the Lender for the use,
forbearance or detention of the indebtedness evidenced hereby exceed the maximum
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision hereof or of the Loan Agreement, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any circumstance the
Lender should ever receive as interest an amount which would exceed the highest
lawful rate, such amount which would be excessive interest shall be applied to
the reduction of the principal balance evidenced hereby and not to the payment
of interest. As used herein, the term "applicable law" shall mean the law in
effect as of the date hereof, provided, however, that in the event there is a
change in the law which results in a higher permissible rate of interest, then
this Note shall be governed by such new law as of its effective date. This
2
<PAGE> 99
provision shall control every other provision of all agreements between the
Makers and the Lender.
THIS NOTE AND ALL TRANSACTIONS HEREUNDER AND/OR EVIDENCED HEREIN SHALL
BE GOVERNED BY, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SAID STATE.
If this Note shall not be paid when due and shall be placed by the
holder hereof in the hands of any attorney for collection, through legal
proceedings or otherwise, the Makers hereby agree jointly and severally to pay a
reasonable attorney's fee to the holder hereof together with reasonable costs
and expenses of collection.
IN WITNESS WHEREOF, the Makers have caused this Note to be executed by
their respective duly authorized officers as of the date first above written.
Witness: SUNBELT COMMUNICATIONS COMPANY
___________________________ By:_________________________
Title: President
Witness: VALLEY BROADCASTING COMPANY
____________________________ By:_________________________
Title: President
Witness: YUMA BROADCASTING COMPANY
____________________________ By:_________________________
Title: President
Witness: SIERRA BROADCASTING COMPANY
___________________________ By:_________________________
Title: President
Witness: OREGON TRAIL BROADCASTING
COMPANY
___________________________ By:_________________________
Title: President
3
<PAGE> 100
Witness: FALLS BROADCASTING COMPANY
____________________________ By:__________________________
Title: President
Witness: TWO OCEAN BROADCASTING COMPANY
____________________________ By:__________________________
Title: President
Witness: SIERRA RADIO COMPANY
_____________________________ By:__________________________
Title: President
Witness: RADIO NEWS COMPANY
___________________________ By:__________________________
Title: President
Witness: RUBY MOUNTAIN BROADCASTING
COMPANY
___________________________ By:__________________________
Title: President
Witness: BEARTOOTH COMMUNICATIONS
COMPANY
____________________________ By:__________________________
Title: President
4
<PAGE> 101
SCHEDULE 2.06 TO AMENDED AND RESTATED LOAN AGREEMENT
----------------------------------------------------
USE OF PROCEEDS
---------------
The proceeds of the Tranche B Loans shall be used solely for the following
purposes, subject, in each case, to the prior approval of the proposed use of
the loan proceeds by the holder(s) of the Tranche B Note(s):
1. to fund the payment of an existing assessed Federal Income Tax
deficiency which will be the subject of the Tax Litigation;
2. to pay the purchase price of one or more radio or television
broadcast properties to be acquired by Sunbelt, any of the Borrowers or any
other wholly-owned subsidiary of Sunbelt who becomes a Co-Borrower of such
Acquisition Loan;
3. to fund capital expenditures associated with conversion to digital
television broadcasting;
4. to fund working capital needs of Sunbelt and any of its wholly-owned
subsidiaries; and
5. to fund other usual and customary corporate purposes of Sunbelt and
its wholly-owned subsidiaries.
<PAGE> 102
AUTHORIZATION AND REQUEST FOR ADVANCE
-------------------------------------
May , 1998
AT&T Commercial Finance Corporation, as Agent
44 Whippany Road
Morristown, New Jersey 07962
Gentlemen:
Pursuant to the provisions of Article III of that certain Amended and
Restated Loan Agreement dated May 18, 1998, between the undersigned, as
borrowers, certain "Lenders" described therein, and you, as Agent for the
Lenders (the "Agreement"), the undersigned, as borrowers, hereby request an
advance of $ to be made on May , 1998, which Advance shall be
evidenced by the undersigned's $30,000,000.00 Amended and Restated Secured
Promissory Note dated May 18, 1998.
The undersigned hereby represent and warrant to you that no event has
occurred and is continuing, or would result from the proposed Advance, which
constitutes an "Event of Default" or "Unmatured Event of Default", as those
terms are defined in the Agreement.
The proceeds of the requested Advance are to be used for the purposes
set forth on the attached exhibit.
You are hereby authorized and directed to remit the proceeds of the
Advance in accordance with the following instructions:
1. By issuing your check in the amount of $14,197,799.00 made payable
to "Internal Revenue Service" (in payment of the assessed Federal income tax
deficiency of Sunbelt Communications Company), and by sending said check via
Overnight Courier Service to [ ] for delivery to the Internal Revenue Service on
or before May 25, 1998.
2. To:
The officer signing below hereby individually represents that he is an
authorized officer of the Borrowers named below and is authorized to request the
Advance on behalf of the undersigned Borrowers.
Very truly yours,
SUNBELT COMMUNICATIONS COMPANY
By:___________________________
Title:
<PAGE> 103
SIERJJA BROADCASTING COMPANY
By:__________________________
Title:
YUMA BROADCASTING COMPANY
By:__________________________
Title:
VALLEY BROADCASTING COMPANY
By:__________________________
Title:
TWO OCEAN BROADCASTING COMPANY
By:___________________________
Title:
OREGON TRAIL BROADCASTING
COMPANY
By:__________________________
Title:
FALLS BROADCASTING COMPANY
By:___________________________
Title:
SIERRA RADIO COMPANY
By:__________________________
Title:
RADIO NEWS COMPANY
By:__________________________
Title:
-2-
<PAGE> 104
RUBY MOUNTAIN BROADCASTING
COMPANY
By:___________________________
Title:
BEARTOOTH COMMUNICATIONS
COMPANY
By:__________________________
Title:
-3-
<PAGE> 105
SCHEDULE 4.04
-------------
GOVERNMENTAL AND OTHER CONSENTS
-------------------------------
No consents are necessary in connection with or as a condition to the execution,
delivery or performance of any of the Transaction Documents. However, copies of
the loan agreements and any documents executed pursuant thereto must be filed
with the FCC witliin thirty days of closing.
<PAGE> 106
SCHEDULE 4.05
-------------
PENDING LITIGATION
------------------
1. FCC INQUIRY OF KVBC ADVERTISING
By letter dated June 6, 1991, the FCC issued a Notice of Inquiry as to
an allegation that station KVBC aired announcements promoting lottery
activities. Specifically, it is alleged that in each of the five promotions
broadcast by KVBC, while non-purchasing entrants were allowed to participate,
the persons playing various casino games at the host establishment were able to
obtain sufficient bonus entries to put them on "an unequal footing with
non-purchasing participants."
By letter dated July 9, 1991, KVBC responded to the inquiry of the FCC,
denying that any of the promotions were unsuitable for broadcast in violation of
18 U.S.C. Section 1304 or Section 73.1211 of the FCC Rules.
By letter dated July 29, 1992, and officially released August 5, 1992,
the FCC did issue a Notice of Apparent Liability (Hereinafter referred to as the
NAL) against KVBC for a forfeiture in the amount of $12,500, pursuant to Section
503(b) of the Communications Act of 1934, as amended, for willful and repeated
violation of the antilottery broadcast provisions of the United States Code, 18
U.S.C. Section 1304, and Section 73.1211. Regarding the forfeiture proceeding,
KVBC was afforded an opportunity to "show, in writing, why a forfeiture penalty
should not be imposed or should be reduced, or to pay the forfeiture."
By letter dated September 9, 1992, KVBC did in fact respond to the
FCC's Complaints and Investigations Branch objecting to the forfeiture assessed
in the NAL issued against KVBC and asking that it be found not warranted and
thus rescinded or reduced. To date, no response has been received from the FCC
in response to KVBC's appeal.
2. SEXTON V. SUNBELT BROADCASTING CO. DBA KVBC-TV3; Charge of Sex
Discrimination; NERC #0427-950210L and EEOC #34B95065 1; Charging Party:
Lisa Sexton
On May 1, 1995, the Equal Rights Commission formally notified Sunbelt
Broadcasting Company that a charge of sex discrimination was filed against the
Company by Lisa Sexton, a former employee of KVBC. Ms. Sexton alleges that she
feels she was discriminated against because of her sex and was subjected to
harassment, disparate treatment and suspension which forced her to resign her
position as Technical Director at KVBC.
Pursuant to her charge, Ms. Sexton requests a remedy of back pay from
the date of the alleged forced termination to the date of settlement/judgment
and removal of adverse information from her personnel file.
<PAGE> 107
Schedule 4.05
Pending Litigation
Page 2
- --------------------
On May 25, 1995, KVBC provided a position statement to the
NERC and requested that Ms. Sexton's charges by disrnissed as she was
not subjected to any form of discriminatory conduct while employed by
the Company.
On June 5, 1995, the parties participated in an informal
settlement conference. However, no agreement was reached and the EEOC
requested additional information to enable it to further investigate
the matter. The Company has complied with this request.
On February 9, 1998, the NERC contacted the Company to request
a phone conference be scheduled to provide comparative salary
information about a male co- worker who was hired as a Technical
Director and paid more than Ms. Sexton in the same position. On
February 11, 1998, when the Company attempted to schedule the requested
telephone conference with the NERC, the NERC informed the Company that
they had since been in contact with a witness who brought forth a claim
that gender bias statements were made repeatedly by one of the named
parties in the charge. Therefore, as a result of this alleged evidence,
the NERC advised the Company that they plan to further investigate this
charge by interviewing witnesses and would request additional
information in writing.
On March 13, 1997, the NERC requested written responses
regarding whether any formal or informal gender harassment complaints
were filed against the individuals named in the charge, management
harassment training and comparative salary information. The Company
provided the requested information to the NERC on April 24, 1998, to
assist them in their continued investigation of this charge.
The Company does not believe that any claim or assessment will
result from this charge.
3. WALLING v. VALLEY BROADCASTING COMPANY, JAMES E. ROGERS, MARK GURANIK,
et al.; Case No. A362608
On August 6, 1996, Sheila Walling filed a Complaint in the
District Court for the State of Nevada alleging damages due to a
Sunbelt Broadcasting Company employee's negligent operation of a
company vehicle. Plaintiff seeks damages in the amount of $10,000. By
letter dated August 15, 1996, the Company tendered defense of this suit
to Fireman's Fund Insurance Company. Fireman's Fund accepted tender and
secured legal representation to answer the Complaint.
On September 9, 1996, an Amended Complaint was filed
reflecting the change in Defendants from Sunbelt Broadcasting Company
to Valley Broadcasting Company. An Answer to the Amended Complaint was
filed on October 14, 1996.
<PAGE> 108
Schedule 4.05
Pending Litigation
Page 3
Discovery has been completed in this case and the parties have
agreed to submit the case to binding arbitration. An arbitration
hearing is scheduled for May 13, 1998.
4. BAILEY v. BEARTOOTH COMMUNICATIONS COMPANY, SUNBELT COMMUNICATIONS
COMPANY, et al.; Case No. CDV-9800021
On January 15, 1998, Pam Bailey, a former employee of
Beartooth Communications Company ("Beartooth") filed a Complaint
against Beartooth, Sunbelt Communications Company ("Sunbelt"), and
William Stebbins in the Montana First Judicial District Court alleging
that she was wrongly terminated from her employment with Beartooth. An
Answer on behalf of Beartooth, Sunbelt and William Stebbins was filed
on March 11, 1998, with the Montana First Judicial District Court.
<PAGE> 109
SCHEDULE 4.06
-------------
COMPLIANCE WITH LAWS AND AGREEMENTS
-----------------------------------
No Borrower is party to any agreement or instrument or subject to any corporate
or other restriction which materially and adversely affects its business,
operations, properties, assets or condition, financial or otherwise.
<PAGE> 110
SCHEDULE 4.07
-------------
LIENS
-----
All Liens listed on Schedule 7.02 hereto.
<PAGE> 111
SCHEDULE 4.11 TO LOAN AGREEMENT
-------------------------------
TAX RETURNS AND TAXES
---------------------
Each Borrower has filed all federal, state and local tax returns required to be
filed, and has paid or made adequate provision for the payment of all material
federal, state, and local taxes, franchise fees, charges and assessments. The
federal income tax returns of the Borrowers have been examined by the Internal
Revenue Service for all tax periods prior to and including the tax year ending
December 31, 1994.
The Company received notice from the Internal Revenue Service (IRS) that the
service is assessing taxes, penalties and interest totaling approximately
$13,700,000. This amount is related to the settlement of a debt dispute which
the IRS asserts affects the 1994 tax year. The Company intends to pay the
balance assessed by the IRS and sue for a refund in District Court. The Company
believes that it has meritorious grounds for refund claims. SCHEDULE 4.12 TO
LOAN AGREEMENT Pension Plans. Etc.
<PAGE> 112
SCHEDULE 4.12 TO LOAN AGREEMENT
-------------------------------
PENSION PLAN, ETC.
------------------
Sunbelt Communications Company maintains a 401k Retirement Plan which is
available to any employee of any of the subsidiary companies who is over the age
of twenty-one (21) and has been with the company for over one year. The Plan is
managed by Prudential Securities and allows employees who choose to enroll to
defer, tax free, sums of up to 15% of their gross income. Those monies are
delivered by Sunbelt to Prudential Securities for depositing into the employees'
accounts. Sunbelt and its subsidiary companies (collectively "the Corporations")
do not have a commitment to match or contribute to the employees' fund. However,
the Corporation have made voluntary contributions to the Plan since 1994.
On April 1, 1998, Sunbelt Communications Company added a Section 125 Premium
Only Plan (P.O.P.) which is available to any employee of any of the subsidiary
companies that work over 30 hours per week and have been with the company for 90
days from their month of hire. The Plan is managed by Benefit America and allows
employees to pay insurance premiums on a pre-tax basis. The monies are delivered
by Sunbelt to Colonial Life & Accident Insurance Company.
<PAGE> 113
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
VALLEY BROADCASTING COMPANY
KVBC - LAS VEGAS, NV
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KVBC Black Mountain, Henderson 60.00-66.00 MHz Main/Alternate Transmitter 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 A WAN-579 Las Vegas Studio 6975-7000 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A WLF-289 Blk. Mtn. Transmitter Site 6900-6925 MHz Transmitter-Studio Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
4 A KB-96756 Various Remote Locations 1990-2500 MHz Remote (ENG) Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
5 A KB-96742 Various (As Needed) 13075-13200 MHz Remote Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
6 A KGA-566 Auxiliary Radio 153.17 MHz Operational Communications WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
7 Bus KB-27842 Two-Way Voice Communication 151.805 MHz Portables (Handheld) 3/24/03
- -----------------------------------------------------------------------------------------------------------------------------------
8 A BLP00787 ENG Vehicle 26.1 MHz Talent Cueing WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
9 PFM WPJB744 Fitzgerald Hotel 21975.0000 MHz Intracity Relay 12/14/00
- -----------------------------------------------------------------------------------------------------------------------------------
10 PFM WPJC517 KVBC Studio 23175.0000 MHz Intracity Relay 01/11/01
- -----------------------------------------------------------------------------------------------------------------------------------
11 A WGV-754 Mount Ella near Caliente 7075-7100 MHz Intercity Translator Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
12 A WGV-755 Highland Peak near Pioche 6900-6925 MHz Intercity Translator Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
13 A WGV-756 Cave Mountain near Ely 7100-7125 MHz Intercity Translator Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
14 A WGV-757 Prospect Peak near Eureka 7000-7025 MHz Intercity Translator relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
15 T K58BC Squaw Peak near Ely 734-740 MHz Ely-Mc Gill Translator 10/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
16 T K57BU Prospect Peak near Eureka 728-734 MHz Eureka Translator 10/l/98
- -----------------------------------------------------------------------------------------------------------------------------------
17 T K06KD Austin Summit near Austin 82-88 MHz Austin Translator 10/l/98
- -----------------------------------------------------------------------------------------------------------------------------------
18 T K40CQ Spirit Mountain near Laughlin 626-632 MHz Laughlin/Bullhead Translator 10/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
19 S E873698 Various Locations (SNG) 14000-14500 MHz Satellite Feeds As Required 09/18/07
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
SIERRA BROADCASTING COMPANY
KRNV - RENO, NV
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KRNV Red Peak 66.00-72.00 MHz Main Transmitter 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 A KFO24 Slide Mountain 6900-6925 MHz ENG Intercity (Relay) WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A KPV58 Studio 6950-6975 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
4 A WMU394* Slide Mountain 7075-7100 MHz Intercity Relay(Ch 56 Tahoe City) WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
5 A WMU395 Studio 6875-6900 MHz Intercity Relay (Ch,56 Tahoe City) WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
6 A WMU396* Slide Mountain 7075-7100 MHz Intercity Relay (Ward Peak) WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
7 A KF8027 TV Pickup 6875-6900 MHz Remote Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
8 A KB97294 TVPickup 1990-2110 MHz Remote Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
9 N/A E880662 Studio TVRO C /Ku Band Satellite Feeds As Required DELETED
- -----------------------------------------------------------------------------------------------------------------------------------
10 T K13QV Fallon 210-216 MHz Fallon Translator 10/l/98
- -----------------------------------------------------------------------------------------------------------------------------------
Tahoe Mountain/South Lake
11 T K33CN Tahoe/Meyers (California) 584-590+ MHz Tahoe Translator 12/l/98
- -----------------------------------------------------------------------------------------------------------------------------------
12 T K50CM Slide Mountain 686-692+ MHz Tahoe west shore 10/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
13 T K52DN Duckhill 698-704+ MHz Carson City Translator 10/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
14 LPTV K56BW Tahoe City (California) 722-728 MHz Tahoe City Translator 12/1/98
- -----------------------------------------------------------------------------------------------------------------------------------
15 A KOP355 Auxiliary Radio (2 way) 161.70/161.73 MHz Remote Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
16 A KOP356 Auxiliary Radio (2 way) 161.70/161.73 MHz Communications DELETED
- -----------------------------------------------------------------------------------------------------------------------------------
17 S E900116 Various Locations (SNG) 14000-1450O MHz Satellite Feeds As Required 04/06/00
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
*Each license is for the same transmitter that feeds two antennas
- -----------------------------------------------------------------------------------------------------------------------------------
</FN>
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
YUMA BROADCASTING COMPANY
KYMA - YUMA, AZ
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KYMA Black Mountain, California 198-204 MHz Main Transmitter 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 A WL1423 Yuma Studio 6875-6900 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A WMU568 KYMA Transmitter Site, Blk.Mtn.,CA 6975-7000 MHz Transmitter-Studio Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
4 PFM WNET589 Yuma Studio 956.0 MHz Studio-Transmitter Data Link 12/24/07
- -----------------------------------------------------------------------------------------------------------------------------------
5 PFM WPND938 KYMA Transmitter Site, Blk. Mtn., CA 959.6 MHz Transmitter-Studio Data Link 11/7/02
- -----------------------------------------------------------------------------------------------------------------------------------
6 A KC26103 Various Locations (Dual Band) 1990/2110 MHz Remote (ENG) Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
2450/2467 MHz
- -----------------------------------------------------------------------------------------------------------------------------------
7 PFM WNTA202 Yuma Studio 23025 MHz TV Relay(Studio-Cable) 11/17/99
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 116
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
OREGON TRAIL BROADCASTING
COMPANY
KPVI - POCATELLO, ID
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KPVI 82-88 MHz Main Transmitter 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 A WAB321 Pocatello Studio 2008-2025 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A WAB322 Pocatello Transmitter 6975-7000 MHz Transmitter-Studio Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
4 PFM WPNA841 Pocatello Studio 21825- MHz KJWY Microwave Carrier Feed 07/30/01
- -----------------------------------------------------------------------------------------------------------------------------------
5 A KA45335 Pocatello Area Pocatello ENG 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
6 Bus KNFK230 Pocatello, ID 461.46 MHz Communications 11/04197
- -----------------------------------------------------------------------------------------------------------------------------------
7 T K13VK Arco, ID 210-216 MHz Arco Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
8 T K09VD Ashton, ID 186-192 MHz Ashton Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
9 T K13VI Blackfoot, ID 210-216 MHz Blackfoot Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
10 T K040H Willow Creek, ID 66-72 MHz Intercity Relay (KO7VI) 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
11 T K07VI Challis, ID 174-180 MHz Challis Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
12 T K09UZ Freds Mountain, WY 186-192 MHz Driggs Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
13 T K120E Firth, ID 204-210 MHz Firth Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
14 T K12NZ Idaho Falls, ID 204-210 MHz Idaho Falls Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
15 T K120A Pocatello, ID 204-210 MHz Pocatello Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
16 T K120B St. Anthony, ID 204-210 MHz St. Anthony Translator 10/01198
- -----------------------------------------------------------------------------------------------------------------------------------
17 T K13UF Rexburg, ID 210-216 MHz Rexburg Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
18 T K13VJ Shelley, ID 210-216 MHz Shelley Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 117
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
FALLS BROADCASTING COMPANY
KXTF - TWIN FALLS, ID
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KXTF Flat Top Butte, Jerome, ID 596-602 MHz Main Transmitter 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 A WMU823 Flat Top Butte, Jerome, ID 596-602 MHz Intercity Relay (Sun Valley) WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A WLP366 Twin Falls, ID 682-688 MHz Intercity Relay (KKVI) DELETED
- -----------------------------------------------------------------------------------------------------------------------------------
4 A WPJA615 Flat Top Butte, Jerome, ID 12800-12825 MHz Transmitter-Studio Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
5 A WPJA616 Twin Falls, ID 12850-12875 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
6 T KO2NO Rupert, ID 56-61 MHz Rupert Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
7 T KO4NO Paul, ID 66-72 MHz Paul Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
8 T KO5IX Twin Falls, ID 76-82 MHz Twin Falls Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
9 T KO7UL Burley, ID 174-180 MHz Burley Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
10 T KO8VK Jerome, ID 180-186 MHz Jerome Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
11 T K63BX Declo, ID 764-780 MHz Burley Area Translator 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 118
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
TWO OCEAN BROADCASTING
COMPANY
KJWY - JACKSON, WY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KJWY Jackson, WY 54-60 MHz Main Transmitter 10/01/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 PFM WPNE392 Jackson Studio 21825-21850 MHz Studio Transmitter Link 04/22/02
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 119
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
RUBY MOUNTAIN BROADCASTING
COMPANY
KENV-ELKO,NV
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KENV Grindstone Mountain 192.0-198.0 MHz Main Transmitter 10/1/06
- -----------------------------------------------------------------------------------------------------------------------------------
2 A WPNG807 Elko Studio 12.700-12.725GHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A WPNG806 Elko Transmitter 13.075-13.100GHz Transmitter-Studio Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
4 A WMV408 Warm Springs, NV 6950-0-6975.0MHz TV Intercity Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
5 A WMW736 Winnemucca, NV 6950.0-6975.0MHz TV Intercity Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
6 A WMW737 Marys Mtn., NV 6875.0-6900.0MHz TV Intercity Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
7 A WPJ699 Toulon Peak, NV 7025.0-7050.0MHz TV Intercity Relay WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 120
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
SIERRA RADIO COMPANY
KRNV-FM - RENO, NV
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KRNV-FM Red Peak (Class C3) 101.7 MHz Main Transmitter 10/l/05
- -----------------------------------------------------------------------------------------------------------------------------------
2 A WLJ464 1790 Vassar Street 949.0 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A WLF995 1500 East Prater Way (Sparks) 948.5 MHz ????????????? WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 121
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
BEARTOOTH COMMUNICATIONS
COMPANY
KTVH - HELENA, MT
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 M KTVH Hogback Ridge 204.0-210.0 MHz Main Transmitter 4/l/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 A KPF67 Helena Studio 7025-7050 MHz Studio-Transmitter Link WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
3 A KB-96034 Various Remotes TV Remote Pickup WMSL
- -----------------------------------------------------------------------------------------------------------------------------------
461.500MHz &
4 Bus WPCS400 Studio & Transmitter Sites 466.500MHz Communications 7/19/98
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 122
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
FCC LICENSE LIST
- -----------------------------------------------------------------------------------------------------------------------------------
TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION
- -----------------------------------------------------------------------------------------------------------------------------------
DATE
- -----------------------------------------------------------------------------------------------------------------------------------
SUNBELT COMMUNICATIONS
COMPANY
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Winnemucca, NV; CP issued 6/26/95;
1 M KWNV Ext. Granted 3/13/98 174.0-180.0MHz Main Transmitter CP Ext. 9/13/98
- -----------------------------------------------------------------------------------------------------------------------------------
2 M KBOA Lewistown, MT Main Transmitter 12/12/99
- -----------------------------------------------------------------------------------------------------------------------------------
3 M KBBJ Havre, MT Main Transmitter 12/8/99
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 123
Schedule 4.14 Material Agreement
Borrower: Valley Broadcasting Company
Programming Agreements:
- ----------------------
Distribution/Title
BUENA VISTA/REGIS 97-98
BUENA VISTA/REGIS 98-99
KINGWORLD/AM JRNL 97/96
KINGWORLD/AM JRNL 98/99
KINGWORLD/HLYWDSQ98/99
KINGWORLD/HLYWDSQ99/00
KINGWORLD/HLYWDSQ00/01
KINGWORLD/JEOP,97-98 MF
KINGWORLD/JEOP,97-98 WE
KINGWORLD/JEOP,98-99 MF
KINGWORLD/JEOP,98-99 WE
KINGWORLD/JEOP,99-00 MF
KINGWORLD/JEOP,99-00 WE
KINGWORLD/JEOP,00-01 MF
KINGWORLD/JEOP,00-01 WE
KINGWORLD/JEOP,01-02 MF
KINGWORLD/JEOP,01-02 WE
KINGWORLD/Mr Food 97-98
KINGWORLD/Mr Food 98-99
KINGWORLD/Mr Food 99-00
KINGWORLD/Mr Food 00-01
KINGWORLD/Mr Food 01-02
KINGWRLD, Wheel 97-98 MF
KINGWRLD, Wheel 97-98 WE
KINGWRLD, Wheel 98-99 MF
KINGWRLD, Wheel 98-99 WE
KINGWRLD, Wheel 99-00
KINGWRLD, Wheel 00-01
KINGWRLD, Wheel 01-02
NEWS SVC/NEWS TRAVEL
PARAMOUNT, MONTEL 97/98
PARAMOUNT, MONTEL 98/99
PARAMOUNT, MONTEL 99/00
PARAMOUNT, REAL TV 97/98
PARAMOUNT, REAL TV 98/99
PARAMOUNT, REAL TV 99/00
Leases:
- ------
Antenna Lease Telecom Towers 9/3096 7/31/01
Antenna Site Agreement/Spirit Nextel Communicatio 11/1/95 10/31/98
Other Agreements:
- ----------------
Affiliation Agreement, as evidenced by letter of October 2, 1995, by and
between NBC AND KVBC. 8-1-95 to 7-31-04
MSNBC Interactive News Provider Agreements, as evidenced by letter dated
July 12, 1996 by and among MSNBC, NBC and KVBC
ASCAP annual music license agreement
BMI annual music license agreement
SESAC annual music license agreement
Blair National Sales Rep 1-1-94 to 12-31-98
Various BLM/STATE OF NEVADA land leases as follows:
Highland Mt. Ella Austin Summit
Prospect Peak Cave Mountain
State Of Nevada/Baby Your Baby 7-1-97 to 6-30-99
<PAGE> 124
VALLEY BROADCASTING COMPANY
EMPLOYEE AGREEMENTS
<TABLE>
<CAPTION>
NAME
- ------------------------------------------------------------------------
<S> <C> <C>
1 Boesing Rachel
- ----- ------------ -----------------------------------------------------
2 Cheese Rikki
- ----- ------------ -----------------------------------------------------
3 Escalante Stacey
- ----- ------------ -----------------------------------------------------
4 Fredericks John
- ----- ------------ -----------------------------------------------------
5 Fuentes Rick
- ----- ------------ -----------------------------------------------------
6 Garcia Laura
- ----- ------------ -----------------------------------------------------
7 Hawley Thomas
- ----- ------------ -----------------------------------------------------
8 Haws Scott
- ----- ------------ -----------------------------------------------------
9 Holland Madeleine
- ----- ------------ -----------------------------------------------------
10 Kiem Lisa
- ----- ------------ -----------------------------------------------------
11 Kotnick Joyce
- ----- ------------ -----------------------------------------------------
12 Lippai Brain
- ----- ------------ -----------------------------------------------------
13 Manteris Sue
- ----- ------------ -----------------------------------------------------
14 Mattox Scott
- ----- ------------ -----------------------------------------------------
15 Overall John
- ----- ------------ -----------------------------------------------------
16 Pierce Katherine
- ----- ------------ -----------------------------------------------------
17 Pierce Jennifer
- ----- ------------ -----------------------------------------------------
18 Pritchard Kathryn
- ----- ------------ -----------------------------------------------------
19 Radetich Nina
- ----- ------------ -----------------------------------------------------
20 Rahn Debbie
- ----- ------------ -----------------------------------------------------
21 Rosch Denise
- ----- ------------ -----------------------------------------------------
22 Smith Andrew
- ----- ------------ -----------------------------------------------------
23 Spears Darcy
- ----- ------------ -----------------------------------------------------
24 Stanton Brenda
- ----- ------------ -----------------------------------------------------
25 Tannebaum Nathan
- ----- ------------ -----------------------------------------------------
26 Tenney Kendall
- ----- ------------ -----------------------------------------------------
27 Wilson Dan
- ----- ------------ -----------------------------------------------------
</TABLE>
<PAGE> 125
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: YUMA BROADCASTING COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
AGDAY NETWORK AGDAY 97-98 KING WORLD JEOPARDY 97-99
ALL AMERICAN TELEVISION BAYWATCH KING WORLD MR. FOOD
BEAU & ARROW PRODUCTIONS KWIK WITZ 97-98 KING WORLD OPRAH WINFREY 97-00
CA FARM BUREAU VOICE OF AGRICULTURE KING WORLD WHEEL OF FORTUNE 97-99
CALIFORNIA LOTTERY BIG SPIN MTM THE CAPE
CNN CNN NEWS SATELLITE SVC PARAMOUNT REAL TV 97-98
COLUMBIA RICKI LAKE 97-98 PARAMOUNT WILD THINGS 97-98
DORIS WINDKLER SENIOR REPORT RYSHER COMEDY SHOWCASE 97-98
EYEMARK GEORGE MICHAEL SPORTS MACHINE RYSHER F/X 97-98
IVANHOE BROADCAST PRESCRIPTION HEALTH STEVE ROTFIELD PRODUCTIONS LIGHTER SIDE OF SPORTS 1996
KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN TWI (FORMERLY KNOWN AS GGP) TV.COM
KING WORLD GERALDO 97-98 US CHAMBER OF COMMERCE FIRST BUSINESS 97-96
KING WORLD INSIDE EDITION 97-99
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
ALBERTS, STEVE HOWELL, JAMES
ALCARAZ, ADRIANNA MARRIES, DAN
BRANDT, JENNIFER POTTER, SEAN
ELLIOT, DANIELLE STONE, SHANNON
HIRSHEK, STEPHEN TUNNEL, KEVIN
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
RIGHT OF WAY GRANT (TRANSMITTER SITE) BUREAU OF LAND MGMT 12/26/97 2017
EL CENTRO STUDIO LEASE PACIFIC VIEW COMPANY 10/14/03 AUTO RENEWAL
FIRE BARN LEASE (Garage for Microwave Truck) CITY OF IMPERIAL 12/6/93 11/14/96
</TABLE>
OTHER AGREEMENTS:
----------------
1 Affiliation agreement, as evidenced by letter of October 2, 1995, by and
between NBC and KYMA
2 MSNBC interactive News Provider Agreement, dated September 27, 1996, by and
among MSNBC, NBC, and Yuma Broadcasting Company
3 BMI license agreement
4 ASCAP Local Television Blanket License
5 SESAC Broadcast Performance License for TV Station
<PAGE> 126
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: SIERRA BROADCASTING COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
ABOUT THE HOUSE YOUR NEW HOUSE MTM DR. QUINN, MEDICINE WOMAN 97-98
OF ENTERTAINMENT AMERICAN ATHLETE PARAMOUNT THIS MORNINGS BUSINESS
ECLIPSE TV AMERICA'S PASSION PARAMOUNT WILD THINGS
EYEMARK PENSACOLA WINGS OF GOLD PARAMOUNT ENTERTAINMENT TONIGHT 97-96
EYEMARK PSI FACTOR PARAMOUNT HARDCOPY 97-99
HEARST ENTERTAINMENT SUCCESS BY SIX PARAMOUNT MAURY POVICH
HEARST ENTERTAINMENT B SMITH WITH STYLE PARAMOUNT MONTEL WILLIAMS
KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN PHOENIX SPORTS NEWS SATELLITE
KING WORLD AMERICAN JOURNAL 97-98 TWENTIETH TELEVISION NYPD BLUE
KING WORLD MR. FOOD 1998 TWENTIETH TELEVISION NFL FILMS PRESENTS
KING WORLD INSIDE EDITION VOL III 97-98 TWENTIETH TELEVISION NFL SPECIALS
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
BHAKTA, KAUSIK HOPKINS, JOHN
BROWN, BILL JESCHKE, GREGG
BROWN, DAWN KILLORAN, JON
CALABRESE, TISHA MAHAN, KEVIN
CAMPBELL, VICTORIA MOEN, TRICIA
COLE, DAWN MOUSEL, LISE
DOUMITE, KERRY PAGAYUNAN, EMUTO
FINLEY, DAVE SHEEHAN, SHELBY
FROMME, JOHN SHELTON, WILLIAM
GILBERT, BRANDON THOMPSON, NICOLE
GRIFFITHS, TIERRA VICKREY, D. NEAL
HART, JOE WOFFARD, CHRISTINE
HOPKINS, JOHN
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
SPECIAL USE PERMIT (Tahoe Mountain Antenna Site) UNITED STATES FOREST SERVICE 01/12/97 NONE GIVEN
SPECIAL USE PERMIT (Side Mountain Antenna Site) UNITED STATES FOREST SERVICE 09/25/62 NONE GIVEN
RIGHT-OF-WAY GRANT (Red Peak Transmitter Site) BUREAU OF LAND MGMT 08/30/61 08/29/2011
TRANSLATOR K568W (Tahoe City, CA) GAVILAN COMMUNICATIONS 07/16/91 07/16/2001
</TABLE>
OTHER AGREEMENTS:
----------------
1 Affiliation agreement, as evidenced by letter of October 2, 1995, by and
between NBC and KRNV
2 AP Membership Agreement with the Associated Press, as amended May 5, 1997.
3 BMI license agreement
4 ASCAP Local Television Blanket License
5 SESAC Broadcast Performance License for TV Station
<PAGE> 127
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: OREGON TRAIL BROADCASTING COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
ABOUT THE HOUSE YOUR NEW HOUSE KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN
BRIARGATE MEDIA MASQUERADE KINGWORLD INSIDE EDITION 97-96
BUENA VISTA BUENA VISTA I FEATURES KINGWORLD JEOPARDY 97-99
BUENA VISTA DISNEY MAGIC II KINGWORLD WHEEL OF FORTUNE 97-99
BUENA VISTA LIVE WITH REGIS & KATHIE LEE 97-96 KINGWORLD MR. FOOD 97-99
BUENA VISTA HONEY I SHRUNK THE KIDS (SERIES) MULLER MEDIA PRIME TARGETS II
BUENA VISTA SISKEL & EBERT PARAMOUNT PORTFOLIO XIII
BUENA VISTA DISNEY IMAGINATION III PARAMOUNT MONTEL WILLIAMS 97-98
COLUMBIA TRI-STAR DATING GAME 97-98 QUALITRON MEDIA AGDAY 97-98
COLUMBIA TRI-STAR NEWLYWED GAME 97-98 RYSHER SOLDIER OF FORTUNE
COLUMBIA TRI-STAR RIKKI LAKE TWENTIETH TV CENTURY 16
EYEMARK PENSACOLA WINGS OF GOLD WALL STREET TV GROUP WALL STREET JOURNAL REPORT
IVANHOE BROADCAST TODAY'S BREAKTHROUGHS WORLDVISION ENTERTAINMENT AMERICA'S DUMBEST CRIMINALS
IVANHOE BROADCAST PRESCRIPTION: HEALTH
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
ALEXANDER, JAMES MEYERS, JERRY RUSSELL
AUSTIN, LESLIE PALMER, TODD
BEAUDOIN, SCOTT PARKER, JENNIFER
CAMP, KRISTEN PETCASH, DOUGLAS
CARPONELLI, LISA REICHELT, DAVE
COARI, KEVIN REYNOLDS, JAY
COHEN, REED ROSENBERG, JO
DIXON, DUFFIE SCHROEDER, TROY
ELLIS COLLARD, TONIA SMITH, JEFFREY
FRANK, KEITH STEVENS, SCOTT
HEBERTSON, TREVOR THOMAS, AMY
HUTCHINS, AARON VADNAIS, ATHENA
McATEER, SEAN WICKERSHAM, CAREY
McDOUGALL, ED YOUNG, JOHN
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
IDAHO FALLS PROFESSIONAL BLDG WASHINGTON FEDERAL S&L 02/04/86 2/28/89 MO-TO-MO
TRANSMITTER BLDG & TOWER LEASE E. POCATELLO STAKE OF THE LDS CHURCH 03/05/73 03/31/98
CENTER STREET STUDIO LEASE ALBERT & RUTH MINTON 03/01/78 02/28/03
RIGHT-OF-WAY GRANT (Flat Top Butte) BUREAU OF LAND MGMT 06/04/84 01/01/16
RIGHT-OF-WAY GRANT (Willow Creek Summit) BUREAU OF LAND MGMT 10/06/92 10/08/72
TRANSLATOR K13VK ROLLAND D. JONES 03/28/89 03/28/98
TRANSLATOR K09VD GREENLINE EO. COMPANY 07/06/90 NONE GIVEN
TRANSLATOR K13VI REEVE NORMAN 05/10/88 05/09/98
TRANSLATOR K07VI ROBERT MAYFIELD 09/01/89 08/31/99
TRANSLATOR K120E GLENN CEDERBERG 06/28/88 06/27/98
TRANSLATOR K120A W.H. EHRSTROM 02/01/91 02/01/01
TRANSLATOR K120B FREMONT 6D #125 06/10/88 06/08/98
TRANSLATOR K13VJ KENT CARLSON 06/13/88 06/12/98
TRANSLATOR K12NZ DAVE KINGSTON 11/03/92 NONE GIVEN
TRANSLATOR K13UF SPENSER LARSEN 01/02/90 01/01/00
TRANSLATOR K09UZ GRAND TARGHEE FOREST SVC
</TABLE>
OTHER AGREEMENTS:
----------------
1 Affiliation agreement, as evidenced by letter of January 22, 1996, by and
between NBC and KPVI
2 BMI license agreement
3 ASCAP Local Television Blanket License
4 SESAC Broadcast Performance License for TV Station
<PAGE> 128
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: FALLS BROADCASTING COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
ACI FILM LEADER 5 97-98 PARAMOUNT NICK NEWS 96-98
BAER MEDIA RACELINE 97-98 PARAMOUNT PARAMOUNT HOLIDAY SPECIALS
BUENA VISTA BLOSSOM 96-99 PARAMOUNT PARAMOUNT PLUS II 96-98
BUENA VISTA BOY MEETS WORLD 97-2000 PARAMOUNT PARAMOUNT PLUS III 96-98
BUENA VISTA BV I (Features) 91-2004 PARAMOUNT FAMILY FESTIVAL V 98-99
CARSEY WERNER GRACE UNDER FIRE 97-2002 PARAMOUNT PORTFOLIO XV 96-99
CARSEY WERNER THIRD ROCK FROM THE SUN 99-2002 PARAMOUNT REAL TV 97-98
COLUMBIA DATING GAME PARAMOUNT THIS MORNINGS BUSINESS 97-98
COLUMBIA MAD ABOUT YOU 96-2000 PARAMOUNT VIPER 97-98
COLUMBIA MARRIED W/CHILDREN 91-98 SAB DOMESTIC SERVICES MARVEL SUPER HEROES 97-98
COLUMBIA MARRIED W/CHILDREN 98-99 SABAN DOMESTIC SERVICES THE ALL NEW CAPTAIN KANGAROO
97-98
COLUMBIA NEWLYWED GAME TIMBERWOLF PRODUCTIONS OUTDOORSMAN 97-98
COLUMBIA RICKI LAKE 97-99 TURNER PICTURES TURNER LEGENDS IV 97-98
COLUMBIA TRISTAR VIBE 97-98 TWENTIETH TELEVISION NFL FILM PRESENTS 97-98
COLUMBIA TRISTAR WALKER TEXAS RANGER 97-98 TWENTIETH TELEVISION NFL SPECIALS 96-98
EYEMARK PENSACOLA-WINGS OF GOLD TWENTIETH TV MASH 96-98
ITC DISTRIBUTION ITC NETWORK VII 98-99 TWENTIETH TV SIMPSONS 96-2001
KINGWORLD GERALDO 97-98 TWENTIETH TV COPS 98-99
MAXAM PSI FACTOR TWENTIETH TV CENTURY 17 96-2000
MGM OUTER LIMITS 97-99 TWENTIETH TV MYPD BLUE
MTM DR. QUINN, MEDICINE WOMAN 96-98 TWENTIETH TV X-FILES 97-99
PARAMOUNT STAR TREK 96-99 WARNER BROS LEGENDS IV 97-98
PARAMOUNT HARD COPY 97-98
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
NONE
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
LEASE AGREEMENT FOR OFFICE SPACE (STUDIO) GUDREN, L.L.C. 01/10/96 01/31/2000
TRANSMITTER W/TOWER & ANTENNA SITE LICENSE RADIO SERVICE CO. 08/17/88 08/31/93
TRANSLATOR K07UL ROBERT LARSEN 05/23/88 05/22/98
TRANSLATOR K63BX LEASE GEORGE KELLEY 02/21/96 12/31/2000
TRANSLATOR K08KV THOMAS NEWMAN 05/25/88 05/25/98
TRANSLATOR K04NO RALPH W. SCHNEIDER 05/10/88 05/09/98
TRANSLATOR K02NO WAYNE SUNDERLAND 11/23/96 11/22/98
TRANSLATOR K05IX FRANK MCMULLIN 10/05/88 10/04/98
</TABLE>
OTHER AGREEMENTS
----------------
1 FOX Affiliation Agreement
2 BMI license agreement
3 ASCAP Local Television Blanket License
4 SESAC Broadcast Performance License for TV Station
<PAGE> 129
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: TWO OCEAN BROADCASTING COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
NONE
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
NONE
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
SNOW KING MOUNTAIN TOWER LEASE CRECELIUS-LUNDQUIST COMMUNICATIONS 11/03/88 11/02/93
STUDIO LEASE HORN INVESTMENT COMPANY 12/19/95 12/31/97
</TABLE>
OTHER AGREEMENTS:
----------------
1 Affiliation Agreement, as evidenced by letter of January 22, 1996, by and
between NBC and KM (Now KWY)
2 BMI Escro agreement
3 SESAC Broadcast Performance License for TV Station
<PAGE> 130
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: RADIO NEWS COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
SKY VIEW TRAFFIC TRAFFIC REPORTS
UNITED STATIONS
TALK RADIO NETWORK AUDIO HELPER
Programming Agreement, effective December 15, 1994, by and between Compass
Communications Company and Radio News Company
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
FRISCH, PAT RANGE, JULIE
LORENZON, J.R. VILLANUCCI, JIM
MALONE, KEVIN
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
NONE
</TABLE>
OTHER AGREEMENTS:
----------------
1 Representation Agreement by and between Radio Sales Company (now Radio News
Company) and Compass Communications Company
2 Agreement between Vanik's Voice Works for voice services
3 Agreement dated July 1, 1995 with Associated Press for news services
OTHER AGREEMENTS:
----------------
1 FOX Affiliation Agreement
2 BMI license agreement
3 ASCAP Local Television Blanket License
4 SESAC Broadcast Performance License for TV Station
<PAGE> 131
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: SIERRA RADIO COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
ASSOCIATED PRESS AP All News Radio Agreement J & K, INC. JOHN & KEN SHOW
CNN UNISTAR RADIO NETSTAR SUSAN POWTER SHOW
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
NONE
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
TRANSMITTER & ANTENNA (Duck Hill) HIGH SIERRA COMMUNICATIONS
</TABLE>
OTHER AGREEMENTS:
----------------
1 Engineering Services Agreement with XMT Services
<PAGE> 132
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: BEARTOOTH COMMUNICATIONS COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
ACI FILMLEADER 5 PARAMOUNT STAR TREK: DEEP SPACE NINE 97-98
ALL AMERICAN TELEVISION BAYWATCH PARAMOUNT STAR TREK: VOYAGER 97-98
BUENA VISTA LIVE WITH REGIS & KATHIE LEE PARAMOUNT WILD THINGS 97-98
BUENA VISTA KEENAN IVORY WAYANS SHOW 97-98 PARAMOUNT FAMILY FESTIVAL V
COLUMBIA TRI-STAR WALKER, TEXAS RANGER 97-99 PARAMOUNT FAMILY FESTIVAL 2
COLUMBIA TRI-STAR DATING GAME PARAMOUNT PARAMOUNT PLUS II
COLUMBIA TRI-STAR NEWLYWED GAME PARAMOUNT PARAMOUNT PORTFOLIO
EYEMARK BOB VILLA'S HOME AGAIN 97-99 PARAMOUNT PARAMOUNT PORTFOLIO XV
EYEMARK GEORGE MICHAEL SPORTS MACHINE STEVE ROTFIELD PRODUCTIONS LIGHTER SIDE OF SPORTS
KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN TWENTIETH TELEVISION NFL FILMS PRESENTS
MCA HERCULES/XENA 97-98 TWENTIETH TELEVISION NFL SPECIALS
MULLER MEDIA PRIME TARGETS 97-98 TWENTIETH TV STUDENT BODIES 97-98
NATIONAL WEATHER
NETWORK STUDI ENIGMA THEATER TWENTIETH TV X-FILES 97-99
NEW LINE BIG TICKET MOVIE PACKAGE TWENTIETH TV CENTURY 16
NEW WORLD ACCESS HOLLYWOOD 96-98 TWENTIETH TV CENTURY 17
PARAMOUNT ENTERTAINMENT TONIGHT WARNER BROTHERS DOMESTIC EXTRA: WEEKEND 97-98
PARAMOUNT MONTEL WILLIAMS WORLD VISION PICTIONARY 97-98
PARAMOUNT NICK NEWS 97-98 WORLDVISION JUDGE JUDY 97-98
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
PEAK, CHRISTINA McDONOUGH, JULIANNE
GARDNER, ERIC McGONIGAL, TIM
HEIDENREICH, ARIK
LAMB, JULIE
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
BROADCAST FACILITY AGREEMENT CARROLL COLLEGE 09/23/97 09/22/2047
SPECIAL USE PERMIT FOR US FOREST SVC-HELENA
COMMUNICATIONS (Pending) RANGER DISTRICT PENDING
SUBLEASE AGREEMENT (with Rural Fire Council) BIG SKY BROADCASTING 01/18/95 12/31/99
SUBLEASE AGREEMENT
(with Dept. of Transportation) BIG SKY BROADCASTING 01/18/95 12/31/99
SUBLEASE AGREEMENT
(with Last Change Public Radio Assoc.) BIG SKY BROADCASTING 11/14/94 ORALLY RENEWED
AGREEMENT FOR USE OF SPACE
(with Dept. of Military Affairs) BIG SKY BROADCASTING 08/18/88 INDEFINITE TERM
</TABLE>
OTHER AGREEMENTS:
----------------
1 NBC Affiliation Agreement entered into by NBC and Beartooth Communications on
September 17, 1997
2 Nielsen Agreement
3 Associated Press Membership Agreement
4 BMI license agreement
5 ASCAP Local Television Blanket License
6 SESAC Agreement
<PAGE> 133
EXHIBIT B
- ---------
REVISED SCHEDULE 4.14
TO LOAN AND CREDIT AGREEMENT
Material Agreements
BORROWER: BEARTOOTH COMMUNICATIONS COMPANY
PROGRAMMING AGREEMENTS:
<TABLE>
<CAPTION>
DISTRIBUTOR TITLE DISTRIBUTOR TITLE
----------- ----- ----------- -----
<S> <C> <C> <C>
NONE
EMPLOYEE AGREEMENTS:
NAME NAME
---- ----
NONE
LEASES:
NAME LESSOR/GRANTOR DATE EXPIRATION
---- -------------- ---- ----------
STUDIO LEASE GREAT BASIN COLLEGE 07/27/96 07/27/2046
TOWER SITE LEASE ELKO TV DISTRICT 02/20/97 02/19/2007
</TABLE>
OTHER AGREEMENTS:
----------------
1 NBC Affiliation Agreement entered into by NBC and Ruby Mountain Broadcasting
on October 2, 1995
2 Associated Press Membership Agreement, as amended May 5, 1997
3 BMI License agreement
4 ASCAP Local Television Blanket License dated April 15, 1997
<PAGE> 134
SCHEDULE 4.15
-------------
OWNERSHIP OF BORROWERS
----------------------
SUNBELT COMMUNICATIONS COMPANY
Parent Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
25,000 1967.50 1782.50 21,250.00
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No of Shares Percentage
==============================================================
<S> <C> <C>
James E. Rogers 1,750.00 88.94
Rolla Cleaver 56.25 2.86
Gene Greenberg 37.50 1.91
James E. Rogers 39.75 2.02
(Trustee for the Children
of Elizabeth Ruybalid)
Cheryl Purdue 34.00 1.73
Beverly Rogers 50.00 2.54
(Trustee)
==============================================================
</TABLE>
Remainder of This Page Intentionally Left Blank
-9-
<PAGE> 135
Schedule 4.15
Ownership of Borrowers
Page 2
- --------------------------
VALLEY BROADCASTING COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
50,000 3.750 3343.75 42,906.25
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 3,750 100.00%
Company
==============================================================
</TABLE>
YUMA BROADCASTING COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 1,000 -0- 1,500
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 1,000 100.00%
Company
==============================================================
</TABLE>
<PAGE> 136
Schedule 4.15
Ownership of Borrowers
Page 3
- -----------------------
SIERRA BROADCASTING COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
200,000 25,000 25,000 150,000
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 25,000 100.00%
Company
==============================================================
</TABLE>
OREGON TRAIL BROADCASTING COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 100 -0- 2,400
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 100 100.00%
Company
==============================================================
</TABLE>
<PAGE> 137
Schedule 4.15
Ownership of Borrowers
Page 4
- -------------------------
FALLS BROADCASTING COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 100 -0- 2,400
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 100 100.00%
Company
==============================================================
</TABLE>
TWO OCEAN BROADCASTING COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 100 -0- 2,400
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 100 100.00%
Company
==============================================================
</TABLE>
<PAGE> 138
Schedule 4.15
Ownership of Borrowers
Page 5
- ----------------------------
SIERRA RADIO COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 100 -0- 2,400
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder. No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 100 100.00%
Company
==============================================================
</TABLE>
RADIO NEWS COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 100 -0- 2,400
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 100 100.00%
Company
==============================================================
</TABLE>
<PAGE> 139
Schedule 4.15
Ownership of Borrowers
Page 6
- --------------------------
RUBY MOUNTAIN BROADCASTING COMPANY
Subsidiary Capital Stock:
<TABLE>
<CAPTION>
Number of Shares -
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
2,500 100 -0- 2,400
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No. of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 100 100.00%
Company
==============================================================
</TABLE>
Remainder of This Page Intentionally Left Blank
<PAGE> 140
Schedule 4.15
Ownership of Borrowers
Page 7
- ------------------------
BEARTOOTH COMMUNICATIONS COMPANY
Subsidiary Capital Stock:
Number of Shares -
<TABLE>
<CAPTION>
==============================================================
Authorized Issued and Treasury Unissued
Outstanding
==============================================================
<S> <C> <C> <C>
25,000 1,000 -0- 24,000
==============================================================
</TABLE>
Stock Ownership -
<TABLE>
<CAPTION>
==============================================================
Shareholder No of Shares Percentage
==============================================================
<S> <C> <C>
Sunbelt Communications 800** 80.00%
Company
J.W. Radeck 100** 10.00%
William Sanders 100** 10.00%
==============================================================
</TABLE>
**700 of those shares owned by Sunbelt (as evidenced by Stock Certificate No.2),
and all of those shares owned by Mrs. Radeck and Mr. Sanders (as evidenced by
Stock Certificate No(s). 3 and 4 respectively) are subject to certain rights
and/or restrictions as more particularly described in the Stock Contribution,
Put and Redemption Agreement by and between Beartooth, Sunbelt, Mrs. Radeck and
Mr. Sanders dated as of May 5, 1997; a true and correct copy of which has
previously been delivered to AT&T.
<PAGE> 141
SCHEDULE 4.19
-------------
Environmental Matters
NONE
<PAGE> 142
SCHEDULE 4.20
-------------
Studio and Tower Sites, Other Real Estate Owned
-----------------------------------------------
VALLEY BROADCASTING COMPANY
Studio:
-------
a. Record Owner: Valley Broadcasting Company
b. Street Address: 1500 Foremaster Lane
Lasvegas,NV 89101
Transmitter/Antenna:
- --------------------
a. Record Owner; Fidelity Properties
b. Date of Lease 1: July 20, 1988
c. Expiration Date: July 19, 1997
d. Date of Lease 2: September 27, 1996; Commencing July 20, 1997
e. Expiration Date: July 31, 2001
f. Renewal Options: None
g. Legal Description: Black Mountain
Section 25, Township 22 South, Range 62
East, MDM
Henderson, Nevada
YUMA BROADCASTING COMPANY
Studio:
-------
a. Record Owner: Yuma Broadcasting Company
b. Street Address: 1385 S. Pacific Avenue
Yuma,AZ 85365
Transmitter/Antenna:
- --------------------
a. Record Owner: Bureau of Land Management
b. Date of Grant: December 28, 1987
c. Expiration Date: December 27, 2017
d. Renewal Options: May be renewed at expiration
e. Legal Description: Black Mountain, California
40 Kilometers Northwest of Yuma, Arizona
Sections 11 and 12, Township 13 South, Range
30 East, SBM
Imperial County, California
<PAGE> 143
Loan Agreement - Schedule 4.20
Page 2
- --------------------------------
SIERRA BROADCASTING COMPANY
Studio:
-------
a. Record Owner: Sierra Broadcasting Company
b. Street Address: 1790 Vassar Street
Reno, NV 89502
Transmitter/Antenna:
- --------------------
a. Record Owner: Bureau of Land Management
b. Date of Grant: August 30, 1961
c. Expiration Date: August 20, 2011
d. Renewal Options: None
e. Legal Description: Red Peak
4.1 miles North of Reno Post Office
Reno, Nevada
OREGON TRAIL BROADCASTING COMPANY
Pocatello Studio:
-----------------
a. Record Owner: Oregon Trail Broadcasting Company
b. Street Address: 902 East Sherman
Pocatello, ID 83201
Idaho Falls Satellite Studio:
- -----------------------------
a. Record Owner: Washington Federal Savings and Loan
b. Date of Lease: February 4, 1986
c. Expiration Date: Month-to-Month
d. Street Address: 482 Constitution Way
Idaho Falls, ID 83402
Transmitter/Antenna:
- --------------------
a. Record Owner: East Pocatello Stake of the Church of
Jesus Christ of Latter-Day Saints
b. Date of Lease: March 6, 1973
c. Expiration Date: March 31, 1998
d. Renewal Options: None
e. Legal Description: Approximately 5 miles Northeast of center of
Pocatello, Idaho Southeast 1/4 of Southwest
1/4 of Southeast 1/2 of Section 3, Township
6 South, Range 35 East, BM Bannock
County, Idaho
<PAGE> 144
Loan Agreement - Schedule 4.20
Page 3
- --------------------------------
FALLS BROADCASTING COMPANY
Studio:
-------
a. Record Owner: Gudrun L.L.C.
b. Date of Lease: January 10, 1996
c. Expiration Date: January 31, 2000
d. Renewal Options: May be renewed with consent 120 days prior
to expiration
e. Street Address: 1061 Blue Lakes Blvd. N.
Twin Falls,ID 83301
Transmitter/Antenna:
- --------------------
a. Record Owner: Bureau of Land Management
BLM Use Permit No. IO-4600 to Radio Service
Company
b. Date of Lease: August 17, 1988
c. Expiration Date: August 16, 1998
d. Renewal Options: None
e. Legal Description: Flat Top Butte
8.4 Kilometers East of Jerome, Idaho
Latitude 40deg 42'42" North, Longitude
114 deg 24'43" West
TWO OCEAN BROADCASTING COMPANY
Studio:
-------
a. Record Owner: Horn Investment Co.
b. Date of Lease: December 19, 1995
c. Expiration Date: December 31, 1997
d. Renewal Options: Option to renew through December, 1999
e. Street Address: 970 West Broadway
Suite 204
Jackson, WY 83001
Transmitter/Antenna:
- --------------------
a. Record Owner: Crecelius-Lundquist Communications
b. Date of Lease: November 3, 1988
c. Expiration Date: November 2, 1993
d. Renewal Options: Lease continues until cancelled upon notice
of 1 year
e. Legal Description: Snow King Mountain
2.1 Kilometers Southeast of Jackson, Wyoming
<PAGE> 145
Loan Agreement - Schedule 4.20
Page 4
- --------------------------------
SIERRA RADIO COMPANY
Studio:
-------
a. Record Owner: Sierra Broadcasting Company
b. Street Address: 1790 Vassar Street
Reno,NV 89502
Transmitter/Antenna:
- --------------------
a. Record Owner: High Sierra Communications
b. Date of Lease: Unknown
c. Expiration Date: Unknown
d. Renewal Options: Unknown
e. Legal Description: Red Peak
4.1 miles North of Reno Post Office
Reno, Nevada
BEARTOOTH COMMUNICATIONS COMPANY
Studio:
-------
a. Record Owner: Beartooth Communications Company
b. Street Address: 2433 North Montana Avenue
Helena, Montana 59604
Transmitter/Antenna:
- --------------------
a. Record Owner: USDA Forest Service
b. Dateofleease: 02/11/94
c. Expiration Date: 12/31/03 (Application for New Permit is
Pending)
d. Renewal Options: Unknown at this Time
e. Legal Description: National Forest System land identified as a
portion of the Hogback Mountain
Communications Site, within Section 3, T.
12N., R. 1 W., PMM.
REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK
<PAGE> 146
Loan Agreement - Schedule 4.20
Page 5
- --------------------------------
RUBY MOUNTAIN BROADCASTING COMPANY
Studio;
-------
a. Record Owner: Great Basin College
b. Date of Lease: July 27, 1996
c. Expiration Date: July 27, 2046
d. Renewal Options: Option to renew once for period of 25 years
e. Street Address: 1025 Chiton Circle
Elko, Nevada 89801
Transmitter/Antenna:
a. Record Owner: Elko Television Translator District
b. Date of Lease: February 20, 1997
c. Expiration Date: February 19, 2007
d. Renewal Options: Options to renew for 4 successive 10 year
periods
e. Legal Description: Grindstone Mountain
Elko County, NV
<PAGE> 147
Loan Agreement- Schedule 4.20
Page -6-
- --------------------------------
VALLEY BROADCASTING COMPANY
Condo:
- ------
a. Record Owner: Valley Broadcasting Company
b. Address: 521 South Maryland Parkway - Unit# A-5
Las Vegas, NV 89101
Condo:
- ------
a. Record Owner: Valley Broadcasting Company
b. Address: Lot# 38 of Tanglewood Vistas
2121 White Tail Way
Flagstaff, AZ 86004
Condo:
- ------
a. Record Owner: James E. Rogers and Beverly Rogers,
Husband and Wife as joint tenants (1)
b. Address: 3118 South Kennewick Drive - Unit# 3
Las Vegas, NV 89121
(1) In process of being quitclaimed to Valley Broadcasting Company
<PAGE> 148
Loan Agreement- Schedule 4.20
Page -7-
- --------------------------------
OREGON TRAIL BROADCASTING COMPANY
Estate - 4.31 acres known as T.R. NE4NE4 Tax 207 Parcel 2 and structures:
- -------------------------------------------------------------------------
a. Record Owner: Oregon Trail Broadcasting Company
b. Address: 5688 Bannock Highway
Pocatello, ID 83204
Bank Parking Lot:
- -----------------
a. Record Owner: Sunbelt Broadcasting Company
b. Address: Lots 6,7,8,9, & 10 Block 324 Pocatello Townsite
Bannock County, Pocatello, ID 83204
<PAGE> 149
Loan Agreement- Schedule 4.20
Page -8-
- --------------------------------
RADIO NEWS COMPANY
Transmitter Site:
- -----------------
a. Record Owner: Radio News Company
b. Address description: Kyle Canyon Road Site, identified as
Government Lot 27 in the northeast quarter of the
northwest quarter of Section 3, Township 19 south,
Range 59 east, M.D.B. & M., excepting therefrom
the north thirty feet and the south 30 feet as
conveyed to the County of Clark for road purposes,
by Grant, Bargain, Sale Deed recorded April 14,
1992 in Book 920414 as Document No. 00684, in the
County of Clark, State of Nevada
<PAGE> 150
Loan Agreement- Schedule 4.20
Page -9-
- ------------------------------
SIERRA BROADCASTING COMPANY
House and Property:
- -------------------
a. Record Owner: Valley Broadcasting Company
b. Address: 6220 Fieldstone
Reno, NV 89523
<PAGE> 151
Loan Agreement- Schedule 4.20
Page -10-
- --------------------------------
BEARTOOTH COMMUNICATIONS COMPANY
House
- -----
a. Record Owner: James E. Rogers and Beverly Rogers,
husband and wife as joint tenants (1)
b. Address: 62 Park Drive
Clancy, MT 59634
(1) In process of being quitolaimed to Valley Broadcasting Company
<PAGE> 152
SCHEDULE 6.05
-------------
PERIODIC REPORTING-CERTIFICATE
------------------------------
,1998
AT&T Commercial Finance Corporation, as Agent
44 Whippany Road
Morristown, New Jersey 07962
Gentlemen:
As required by Section 6.05(c) of that certain Amended and Restated Loan
Agreement dated May 18,1998 (the "Loan Agreement") by and between AT&T
COMMERCIAL FINANCE CORPORATION and other financial institutions referred to
therein, as Lenders (the "Lenders"), you, as Agent (the "Agent") for the
Lenders, and SUNBELT COMMUNICATIONS COMPANY, VALLEY BROADCASTING COMPANY, YUMA
BROADCASTING COMPANY, SIERRA BROADCASTING COMPANY, OREGON TRAIL BROADCASTING
COMPANY, FALLS BROADCASTING COMPANY, TWO OCEAN BROADCASTING COMPANY, SIERRA
RADIO COMPANY, RADIO NEWS COMPANY, RUBY MOUNTAIN BROADCASTING COMPANY and
BEARTOOTH COMMUNICATIONS COMPANY [other New Subsidiaries to be added, as
necessary] (collectively, the "Borrowers"), a review of the activities of the
Borrowers for the fiscal year and/or fiscal period ending []. 19[] (the "Fiscal
Period") and the trailing twelve (12) month period ending [], 19[] (the
"Trailing Twelve Months") has been made under my supervision with a view to
determining whether the Companies (as such term is defined in the Loan
Agreement) have kept, observed, performed and fulfilled all of their respective
obligations under the Loan Agreement and all other agreements or undertakings
contemplated thereby, and to the best of my knowledge, neither an Event of
Default nor an Unmatured Event of Default (as such terms are defined in the
Loan Agreement) has occurred and is continuing.
I further certify that the amounts set forth below, with abbreviated
descriptions, to the best of my knowledge accurately present amounts required to
be calculated by various covenants of the Loan Agreement as of the last day of
the Fiscal Period. Unless expressly specified herein, all terms used herein have
the identical meanings as in the Loan Agreement.
1. SECTION 5.01 - CONSOLIDATED AFTER TAX CASH FLOW
------------- ---------------------------------
Consolidated Net Income of the Companies (after deduction of
all Corporate Overhead, management fees and other
compensation)
<TABLE>
<CAPTION>
Add Back:
<S> <C> <C>
Interest Expense $___________
Depreciation $___________
Amortization $___________
Non-Cash Expenses $___________
Interest Expense $___________
Taxes in Respect of Income and Profits $___________
</TABLE>
<PAGE> 153
<TABLE>
<CAPTION>
Minus:
<S> <C> <C>
Programming Payments $___________
Equals: Consolidated Net Operating Income $___________
Minus:
Cash Payments Made in Respect of Taxes $___________
Equals: Consolidated After Tax Cash Flow $___________
2. SECTION 5.02 - KVBC-TV NET OPERATING INCOME
------------- -----------------------------
Net Income (loss) of KVBC-TV, operated by $
Valley Broadcasting Company, for
Trailing Twelve Months (after deducting
Corporate Overhead):
Less: extraordinary income or non-cash gains $
Adjustment for Trade Income (Loss), if any $
Net Income (Loss) $
Add Back:
Depreciation $
Amortization $
Interest Expense $
Other Non-cash Expenses $
Income Taxes $
Less: Programming Payments $
Equals Net Operating Income of KVBC-TV for $
Trailing Twelve Months
Add Back: Corporate Overhead paid for period $
Total $
Minimum Required $
</TABLE>
<PAGE> 154
3. SECTION 5.03 - DEBT SERVICE COVERAGE
------------- ----------------------
<TABLE>
<S> <C>
Senior Debt Service for Trailing Twelve Months:
Principal required to be paid on Senior Debt of Companies $
Interest required to be paid on Senior Debt of Companies $
Total Senior Debt Service $
Ratio of Consolidated Net Operating Income (from ___________:1.00
paragraph 1) to Senior Debt Service for Trailing Twelve
Months
Minimum Required ___________:1.00
4. SECTION 5.04 - SENIOR DEBT TO AFTER TAX CASH FLOW
------------- -----------------------------------
Outstanding Balance of Senior Date as of last day of Fiscal $
Period:
Consolidated After Tax Cash Flow (from paragraph 1) $
Ratio of Senior Debt to After Tax Cash Flow ___________:1.00
Maximum Permitted ___________:1.00
</TABLE>
5. SECTION 5.05 - FIXED CHARGE COVERAGE RATIO: CURRENT RATIO
------------- --------------------------------------------
<TABLE>
<S> <C>
(a) Total Debt Service for Trailing Twelve Months $
PLUS Capital Expenditures $
PLUS Taxes paid $
EQUALS Fixed Charges $
Ratio of Combined Net Operating Income to Fixed Charges ___________:1.00
Minimum Required 1.10:1.00
(b) Current Assets (exclusive of accounts over 120 days $
from date of invoice)
Current Liabilities $
Ratio of Current Assets to Current Liabilities ___________:1.00
Minimum Re Required 1.50:1.00
</TABLE>
<PAGE> 155
6. SECTION 5.06 - CAPITAL EXPENDITURES
------------- ---------------------
<TABLE>
<S> <C>
Capital Expenditures (Sunbelt year-to-date) $
Capital Expenditures (Valley year-to-date) $
Capital Expenditures (Yuma year-to-date) $
Capital Expenditures (Sierra year-to-date) $
Capital-Expenditures (Oregon Trail year-to-date) $
Capital Expenditures (Falls year-to-date) $
Capital Expenditures (Two Ocean year-to-date) $
Capital Expenditures (Sierra Radio year-to-date) $
Capital Expenditures (Radio News year-to-date) $
Capital Expenditures (Ruby Mountain year-to-date) $
Capital Expenditures (Beartooth year-to-date) $
Capital Expenditures (other Companies, as needed) $
Consolidated Capital Expenditures (year-to-date) $
Maximum Permitted $_________
</TABLE>
7. SECTION 5.07 - OFFICER COMPENSATION AND CORPORATE OVERHEAD;
------------- ---------------------------------------------
CONSULTING FEE
--------------
Maximum Permitted [$4,600,000.00]
8. SECTION 5.08 - RESTRICTED PAYMENTS
------------- --------------------
The Companies have made the following Restricted Payments
during the current Fiscal Year: [ to be completed by Companies]
Very truly yours,
<PAGE> 156
SCHEDULE 6.15
CORRECTIVE ACTION TO BE TAKEN
None
<PAGE> 157
SCHEDULE 7.01 TO LOAN AGREEMENT
-------------------------------
Indebtedness
------------
<TABLE>
<CAPTION>
3/31/98
Promissory Note Holder Matures Purpose Balance
----------- ------ ------- ------- ------------
<S> <C> <C> <C> <C>
$4,500,000.00 Janet Frazier Rogers April-07 Redemption of Sunbelt Stock 4,500,000.00
$400,000.00 Gloria J. Tester Sep-00 Redemption of Sunbelt Stock 308,563.40
$400,000.00 American Federal Savings Bank Sep-12 Deed of Trust on Helena House 244,400.05
$117,600.00 Bank of America Sep-08 Deed of Trust on Reno House 93,863.60
$203,000.00 Norwest Feb-11 Deed of Trust on Pocatello House 185,027.12
$298,241.00 Hall, Phillips, Phillips Aug-99 Deed of Trust on Las Vegas Studio 144,254.56
$90,300.00 Colonial Mortgage Jan-28 Deed of Trust on Las Vegas Condo 90,102.68
$100,600.00 Colonial Mortgage Jan-28 Deed of Trust on Flagstaff Condo 100,380.15
$297,579.00 Bank of America Mar-00 Deed of Trust on Black Mountain Site 35,768.93
$600,000.00 Cessna Finance Corp. Aug-06 Note - Collateralized by Airplane 537,706.64
$1,021,905.26 Ford Motor Credit Various 49 Notes - Collateralized by Vehicles 634,018.55
$900,000.00 Community Bank of Nevada Mar-99 Unsecured Note - Equipment 651,029.74
No Security Interest Given
$162,900.00 Pioneer Citizens Bank Mar-99 Unsecured Notes - Vehicles 154,900.00
No Security Interest Given
Pioneer Citizens Bank Various Unsecured Notes - Various equipment 1,403,664.88
No Security Interest Given
Various Aug-01 Unsecured Notes 21,680.70
$1,500,000.00 Pioneer Citizens Bank Unsecured Note - To fund build out of -
Helena, MT studio
</TABLE>
<PAGE> 158
<TABLE>
<CAPTION>
SCHEDULE 7.02 TO LOAN AGREEMENT
-------------------------------
Liens
-----
3/31/98
Holder Matures Purpose Balance
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
American Federal Savings Bank Sep-12 Deed of Trust on Helena House 244,400.05
Bank of America Sep-08 Deed of Trust on Reno House 93,863.60
Norwest Feb-11 Deed of Trust on Pocatello House 185,027.12
Hall, Phillips, Phillips Aug-99 Deed of Trust on Las Vegas Studio 144,254.56
Colonial Mortgage Jan-28 Deed of Trust on Las Vegas Condo 90,102.68
Colonial Mortgage Jan-28 Deed of Trust on Flagstaff Condo 100,380.15
Bank of America Mar-00 Deed of Trust on Black Mountain Site 35,768.93
Cessna Finance Corp. Aug-06 Note - Collateralized by Airplane 537,706.64
Ford Motor Credit Various 49 Notes - Collateralized by Vehicles 634,018.55
</TABLE>
<PAGE> 159
SCHEDULE 12.01A
---------------
ASSIGNMENT AND ACCEPTANCE
-------------------------
THIS ASSIGNMENT AND ACCEPTANCE ("this AGREEMENT") is made this ____ day of
_____________, ____, by and between _______________________ ("ASSIGNOR"), and
_________________________ ("ASSIGNEE").
1. RECITALS. (a) Assignor is a party to the Amended and Restated Loan
Agreement dated as of May 18, 1998 (which, as the same has been and may from
time to time be amended, modified, renewed, extended or restated, is hereinafter
called the "LOAN AGREEMENT") among SUNBELT COMMUNICATIONS COMPANY, a Nevada
corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation
("VALLEY"); YUMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA
BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING
COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a
Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada
corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA
RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN
BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTH
COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH") (collectively, the
"BORROWERS"), certain persons named therein as "LENDERS" and AT&T COMMERCIAL
FINANCE CORPORATION, as Agent for the Lenders (the "AGENT").
(b) Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Loan Agreement.
(c) Immediately prior to the assignment and assumption provided herein,
Assignor's Commitments and its outstanding Loans are as specified in SCHEDULE A
attached hereto. Assignor desires to assign and delegate to Assignee, and
Assignee desires to acquire and assume from Assignor, a portion (the "PURCHASED
PERCENTAGE") of Assignor's Tranche A [or B] Commitment/outstanding Tranche A [or
B] Loans and all related claims for interest and fees after the Effective Date
(as defined below).
2. ASSIGNMENT. For and in consideration of the assumption of obligations
by Assignee set forth in SECTION 3 hereof and the other consideration set forth
herein, and effective as of __________, _____ which date is at least five (5)
Business Days following the execution hereof (the "EFFECTIVE DATE"), Assignor
does hereby sell, assign, transfer and convey all of its right, title and
interest in and to, and does hereby delegate its obligations in respect of, the
Purchased Percentage of the Tranche A Commitment/Tranche B Commitment of
Assignor (as in effect on the Effective Date) and all Tranche A [or B] Loans
made by Assignor and outstanding on the Effective Date and the Loan Agreement
and the other Loan Documents. Pursuant to ARTICLE XII of the Credit Agreement,
on and after the Effective Date, Assignee shall have the rights, benefits and
obligations of a Lender under the Loan Documents with respect to the Purchased
Percentage of the Loan Documents. After giving effect to the assignment and
delegation provided herein, the respective Commitments and outstanding Loans of
the parties hereto shall be as set forth on SCHEDULE A hereto, which Schedule
also contains certain additional information with respect to Assignee.
3. ASSUMPTION. For and in consideration of the assignment of rights by
Assignor set forth in Section 2 hereof and the other consideration set forth
herein, and effective as of the
<PAGE> 160
Effective Date, Assignee does hereby accept the foregoing assignment of rights
and delegation of obligations, and does hereby assume and covenant and agree
fully, completely and timely to perform, comply with and discharge, each and all
of the obligations, duties and liabilities of Assignor under the Loan Agreement,
which are assigned to Assignee hereunder, which assumption includes, without
limitation, the obligation to fund the unfunded portion of the Purchased
Percentage of the Assignor's Commitments in accordance with the provisions set
forth in the Loan Agreement. Assignee agrees to be bound by all provisions
relating to the Lenders under, and as defined in, the Loan Agreement, including,
without limitation, provisions relating to the dissemination of information and
the payment of indemnification. From and after the Effective Date, Assignee
shall be a party to the Loan Agreement and Assignor is released from Assignor's
obligations with respect to the Purchased Percentage.
4. FEES; ETC. Assignor and Assignee have made arrangements with respect to
(a) the portion, if any, to be paid, and the date or dates for payment, by
Assignor to Assignee of any fees heretofore received by Assignor pursuant to the
Loan Agreement prior to the Effective Date and (b) the portion, if any, to be
paid, and the date or dates for payment, by Assignee to Assignor of fees or
interest received by Assignee pursuant to the Loan Agreement from and after the
Effective Date.
5. PAYMENT OBLIGATIONS. On and after the Effective Date, Assignee shall be
entitled to receive all payments of principal, interest and fees with respect to
the Purchased Percentage of Assignor's Commitments and Loans. In consideration
for the sale and assignment of Loans hereunder, (i) on the date of execution
hereof, Assignee shall pay to the Agent any registration and processing fee
required to be paid pursuant to the Loan Agreement, and (ii) on the Effective
Date, Assignee shall pay Assignor an amount equal to the Purchased Percentage of
all Tranche A Loans made by Assignor outstanding on the Effective Date or such
other purchase price for the Purchased Percentage agreed to by Assignor and
Assignee. On and after the Effective Date, Assignee will also remit to Assignor
any amounts of interest on Loans and fees received by Assignee which relate to
the Purchased Percentage of Loans made by Assignor accrued for periods prior to
the Effective Date. In the event that either party hereto receives any payment
to which the other party hereto is entitled under this Agreement, then the party
receiving such amount shall promptly remit it to the other party hereto.
6. REPRESENTATIONS AND CERTAIN AGREEMENTS.
(a) ASSIGNEE'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Assignee
represents, warrants and agrees to and with Assignor as follows:
(i) Assignee ha full power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(ii) the making and performance by Assignee of this Agreement and all
documents required to be executed and delivered by it hereunder do not and
will not violate any law or regulation of the jurisdiction of its
organization or any other law or regulation applicable to it;
(iii) this Agreement ha been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of Assignee,
enforceable against it in accordance with its terms;
(iv) all approvals and authorizations of, all filings with and all
actions by any governmental or other administrative or judicial authority
necessary for the
<PAGE> 161
validity or enforceability of Assignee's obligations under this Agreement
have been obtained;
(v) Assignee has received a copy of the Loan Agreement and the other
Loan Documents, together with copies of the most recent financial
statements delivered pursuant to SECTIONS 6.05(a), (b) and (c) thereof and
such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this Agreement;
(vi) Assignee appoints and authorizes Agent to take such action as
agent on its behalf and to exercise such powers under the Loan Agreement
and the other Loan Documents as are delegated to Agent by the terms
thereof, together with such powers as are reasonably incidental thereto;
and
(vii) Assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of the Loan Agreement are
required to be performed by it as a Lender, including, without limitation,
obligations to make Loans to the full amount of the portion of the
Commitments acquired by Assignee.
(b) ASSIGNOR'S REPRESENTATIONS AND WARRANTIES. Assignor represents and
warrants to Assignee as follows:
(i) Assignor has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to fulfill its
obligations under, and consummate the transactions contemplated by, this
Agreement;
(ii) the making and performance by Assignor of this Agreement and all
documents required to be executed and delivered by it hereunder do not and
will not violate any law or regulation of the jurisdiction of its
organization or any other law or regulation applicable to it;
(iii) this Agreement has been duly executed and delivered by it and
constitutes the legal, valid and binding obligations of Assignor,
enforceable against it in accordance with its terms;
(iv) all approvals and authorizations of, all filings with and all
actions by any governmental or other administrative or judicial authority
necessary for the validity or enforceability of Assignor's obligations
under this Agreement have been obtained;
(v) the amounts of Assignor's respective Commitments and the aggregate
outstanding principal amount of the Loans held by the Assignor are, on and
as of the date of this Agreement (immediately prior to giving effect to the
sale, assignment and transfer contemplated by SECTION 2), correctly set
forth in SCHEDULE A hereto; and
(vi) immediately prior to giving effect to the sale, assignment and
transfer contemplated by SECTION 2, the Assignor has good title to, and is
the sole legal and beneficial owner of, the Purchased Percentage, free and
clear of all liens, security interests, participations and other
encumbrances.
7. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. It is
understood and agreed that Assignee has independently made its own credit
determinations and analysis
<PAGE> 162
based upon such information as Assignee deems sufficient to enter into the
transactions contemplated hereby and not based on any statements or
representations by Assignor or the Agent and that it will, independently and
without reliance upon Assignor, any other Lender or the Agent and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Agreement. It is understood and agreed that the assignment and assumption
hereunder are made WITHOUT RECOURSE to Assignor and that Assignor makes no
representation or warranty of any kind to Assignee (except as set forth in
SECTION 6(b) above) and shall not be responsible for (i) the due execution,
legality, validity, enforceability, genuineness, sufficiency, value or
collectibility of the Loan Agreement or any other Loan Document, including
without limitation, documents granting the Assignor and other Lenders a security
interest in assets of the Borrowers, (ii) any representation, warranty or
statement made in or in connection with any of the Loan Documents, (iii) the
financial condition or creditworthiness of the Borrowers, (iv) the performance
or compliance with any of the terms or provisions of any of the Loan Documents,
(v) inspecting any of the property, books or records of the Borrowers or (vi)
the validity, enforceability, perfection, priority, condition, value or
sufficiency of any collateral securing or purporting to secure the Loans.
Neither Assignor nor any of its officers, directors, employees, agents or
attorneys shall be liable for any mistake, error of judgment, or action taken or
omitted to be taken in connection with the Loans or the Loan Documents, except
for its or their own gross negligence or willful misconduct.
8. INDEMNITY. Assignee agrees to indemnify and to hold harmless Assignor
from and against any and all losses, costs, damages, expenses (including,
without limitation reasonable attorneys' fees) and liabilities incurred by
Assignor in connection with or arising in any manner from Assignee's performance
or nonperformance of obligations assumed under this Agreement.
9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, Assignee shall have
the right to assign the rights which are assigned to Assignee hereunder to any
entity or person, provided that (a) any such subsequent assignment does not
violate any of the terms and conditions of the Loan Documents or any law, rule,
regulation, order, writ, judgment, injunction or decree and that any consent
required under the terms of the Loan Documents has been obtained and (b)
Assignee is not thereby released from any of its obligations to Assignor
hereunder.
10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS,
AND NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW JERSEY.
11. NOTICES. Notices shall be given under this Agreement in the manner set
forth in the Loan Agreement. For the purpose hereof, the addresses of the
parties hereto (until notice of a change is delivered) shall be the addresses
set forth under the parties' respective name(s) on the signature pages hereto.
12. FURTHER ASSURANCES. Assignor and Assignee hereby agree to execute and
deliver such other instruments, and take such other actions, as either party may
reasonably request in connection with the transaction contemplated by this
Agreement.
13. EXPENSES. Each party hereto shall bear its own expenses in connection
with the execution, delivery and performance of this Agreement.
14. AMENDMENT, MODIFICATION OR WAIVER. No provision of this Agreement may
be amended, modified or waived except by an instrument in writing signed by
Assignor and Assignee.
<PAGE> 163
15. JURISDICTION; VENUE. Each of the parties hereto hereby submits to the
nonexclusive jurisdiction of the United States District Courts for the Districts
of New Jersey and of any New Jersey state courts for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, any objective which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be identical and all of which, taken together, shall constitute one
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first above written.
_______________________________________
By:____________________________________
Title:_________________________________
Address:
Telephone:
Telecopy:
_______________________________________
By:____________________________________
Title:_________________________________
Address:
Telephone:
Telecopy:
_______________________________________
ACKNOWLEDGED:
AT&T COMMERCIAL FINANCE
CORPORATION, AS AGENT
By:__________________________
<PAGE> 164
SCHEDULE A
TO ASSIGNMENT AND
ACCEPTANCE AGREEMENT
--------------------
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AND LOAN AMOUNTS
-------------------------------------------
ASSIGNOR:
[Insert Name of Assignor)
________________________________________________________________________________
Tranche A Tranche B
Loans Commitment Commitment
________________________________________________________________________________
Original Amount $__________ $__________ $__________
Original Percentage _____% _____% _____%
________________________________________________________________________________
Following assignment of the Purchased Percentage, Assignor's portions of the
Commitment and outstanding Term Loans will be as follows:
________________________________________________________________________________
Tranche A Tranche B
Loans Commitment Commitment
________________________________________________________________________________
Revised Amount $__________ $__________ $__________
Revised Percentage _____% _____% _____%
________________________________________________________________________________
ASSIGNEE:
[Insert Name of Assignee]
________________________________________________________________________________
Tranche A Tranche B
Loans Commitment Commitment
________________________________________________________________________________
Original Amount, if any $__________ $__________ $__________
Original Percentage, if any _____% _____% _____%
________________________________________________________________________________
<PAGE> 165
Following assignment of the Purchased Percentage, Assignee's portions of the
Commitments and outstanding Loans will be as follows:
________________________________________________________________________________
Tranche A Tranche B
Loans Commitment Commitment
______________________________________________________________________
New Amount $__________ $__________ $__________
New Percentage _____% _____% _____%
________________________________________________________________________________
Address for Notices:
- --------------------
[Address]
Attention: _______________________
Telephone:
Telecopy: _________________________
Telephone:
Confirmation: ________________________
<PAGE> 166
NOTICE OF ASSIGNMENT AND ACCEPTANCE
-----------------------------------
To: Sunbelt Communications Company,
Valley Broadcasting Company,
Yuma Broadcasting Company,
Sierra Broadcasting Company,
Oregon Trail Broadcasting Company,
Falls Broadcasting Company,
Two Ocean Broadcasting Company,
Sierra Radio Company,
Radio News Company,
Ruby Mountain Broadcasting Company, and
Beartooth Communications Company
1500 Foremaster Lane
Las Vegas, Nevada 89101
From: [Name of Assignor] ("ASSIGNOR")
[Name of Assignee] ("ASSIGNEE")
______________________,____________
1. We refer to the Amended and Restated Loan Agreement, dated as of May
_____, 1998 (as it may be amended, modified, renewed or extended from time to
time, the "LOAN AGREEMENT") among SUNBELT COMMUNICATIONS COMPANY, a Nevada
corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation
("VALLEY"); YUMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA
BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING
COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a
Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada
corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA
RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN
BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTH
COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH")(collectively, the
"BORROWERS"), certain lenders who are parties thereto (each a "LENDER" and
collectively the "LENDERS"), the above-referenced Assignor and AT&T COMMERCIAL
FINANCE CORPORATION, in its separate capacity as Agent for the Lenders.
Capitalized terms used herein without definition have the meanings assigned to
them in the Loan Agreement.
2. This Notice of Assignment and Acceptance (this "NOTICE") is given and
delivered to the Borrowers, the Lenders and the Agent pursuant to ARTICLE XII of
the Loan Agreement.
3. Assignor and the above-referenced Assignee have entered into an
Assignment and Acceptance, dated as of__________,____ (the "ASSIGNMENT
AGREEMENT"), pursuant to which, among other things, Assignor has sold, assigned,
delegated and transferred to Assignee, and Assignee has purchased, accepted and
assumed from Assignor, a portion of Assignor's rights and obligations under the
Loan Agreement and the other Loan Documents such that Assignee's percentage of
the aggregate Commitments and the outstanding Tranche A [or B] Loans shall be as
set forth in SCHEDULE A to the Assignment Agreement enclosed herewith (which
Schedule
<PAGE> 167
also sets forth Assignor's percentage of the Commitments and outstanding Loans
prior to such transfer), effective as of the Effective Date. The Effective Date
shall be ___________, ____, provided that the Effective Date shall not occur if
any condition precedent explicitly agreed to in writing by Assignor and Assignee
has not been satisfied.
4. Assignor and Assignee hereby give to the Borrowers, the other Lenders
and the Agent notice of the assignment and delegation referred to herein [must
be at least one (1) Business Day's notice] and enclose a fully executed
counterpart of the Assignment Agreement. Assignor will confer with the Agent
before __________, _____ to determine if the assignment will become effective on
such date pursuant to SECTION 3 hereof, and will confer with the Agent to
determine the Effective Date pursuant to SECTION 3 hereof if it occurs
thereafter. Assignor shall notify the Agent if the assignment does not become
effective on any proposed Effective Date as a result of the failure to satisfy
the conditions precedent explicitly agreed to in writing by Assignor and
Assignee. At the request of the Agent, Assignor will give the Agent written
confirmation of the occurrence of the Effective Date.
5. Assignee hereby confirms its acceptance and assumption of the assignment
and delegation referred to herein and agrees as of the Effective Date (a) to
perform fully all of the obligations under the Loan Agreement which it has
assumed pursuant to the Assignment Agreement and (b) to be bound by the terms
and conditions of the Loan Agreement as a "Lender".
6. Assignor and Assignee request and agree that any payments to be made to
Assignor on and after the Effective Date shall, to the extent of the assignment
referred to herein, be made entirely to Assignee, it being understood that
Assignor and Assignee shall make between themselves any desired allocations.
[ 7. Assignor hereby agrees to deliver to the Agent on or before the
Effective Date its original Note[s] subject to the assignment contemplated by
the Assignment Agreement. Assignor and Assignee hereby request that the
Borrowers deliver to the Agent on or before the Effective Date the following new
Notes payable in accordance with paragraph (b)(iv) of ARTICLE XII of the Credit
Agreement.
[Describe each new Note for Assignor and Assignee with principal amount and
payee.]]
Upon receipt of the new Note(s) the superseded Note(s) will be surrendered
for cancellation.
8. Assignee advises the Agent and the other Lenders that its address for
notice purposes, as well as certain other relevant information, is set forth in
SCHEDULE A to the Assignment Agreement.
[Assignor] [Assignee]
By:____________________________ By:____________________________
Title:_________________________ Title:_________________________
<PAGE> 168
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT is made as of
the ______ day of July, 1998, by and between
SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY
BROADCASTING COMPANY, a Nevada corporation ("VALLEY"); YMMA BROADCASTING
COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada
corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation
("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS");
TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO
COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada
corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada
corporation ("RUBY MOUNTAIN"); and BEARTOOTh COMMUNICATIONS COMPANY, a Nevada
corporation ("BEARTOOTH") (Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls,
Two Ocean, Sierra Radio, Radio News, Ruby Mountain and Beartooth are sometirnes
referred to herein individually as a "BORROWER" and collectively as the
"BORROWERS");
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation ("AT&T-CFC"),
and the various other financial institutions which are now, or in accordance
with ARTICLE XII hereof hereafter become, parties hereto and "Lenders" hereunder
by execution of the signature pages to this Agreement or otherwise
(collectively, the "LENDERS" and each individually, a "LENDER"); and
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as agent for
the Lenders (in such capacity, together with its successors and assigns in such
capacity, the "AGENT").
W I T N E S S E T H T H A T
- - - - - - - - - - - - - -
WHEREAS, the AT&T-CFC, the Agent and the Borrowers are parties to a certam
Amended and Restated Loan Agreement dated as of May 18, 1998 (the "LOAN
AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Loan Agreement as
hereinafter provided to set forth additional agreements and understandings with
respect to the subject matter thereof;
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
<PAGE> 169
1. DEFINITIONS.
Unless otherwise defined herein, all capitalized terms used herein shall
have the same meanings assigned to them in the Loan Agreement, as amended
hereby.
2. AMENDMENTS TO LOAN AGREEMENT.
A. SECTION 5.06 of the Loan Agreement is hereby amended to read in its
entirety as follows:
"SECTION 5.06. CAPITAL EXPENDITURES.
Without the prior written consent of the Majority Lenders, the
Companies shall not make or incur Capital Expenditures in excess of (a)
Five Million Dollars ($5,000,000) in the aggregate during Fiscal Year
ending December 31, 1998, or (b) one hundred five percent (105%) of the
maximum amount permitted to be made hereunder during the prior Fiscal Year,
in each Fiscal Year beginning with the Fiscal Year ending December 31,
1999; PROVIDED, HOWEVER, that (i) Capital Expenditures to the extent
financed with the proceeds of the Supplemental Line, and (ii) Capital
Expenditures up to Three Million Dollars ($3,000,000) made in connection
with leasehold and real estate improvements made during Fiscal Year 1998 at
the Helena, Montana and Pocatello, Idaho studio sites, and (iii) Capital
Expenditures made during Fiscal Year ending December 31, 1998, in
connection with the acquisition of new equipment associated with the
buildout of the Helena; Montana studio site, shall be excluded from the
calculation of Capital Expenditures for the purposes of this SECTION 5.06."
B. SECTION 5.07 of the Loan Agreement is hereby amended to read in
its entirety as follows:
"SECTION 5.07. CORPORATE OVERHEAD.
Subject to SECTION 9.03, the Companies shall not pay Corporate
Overhead which exceeds (a) Six Million Dollars ($6,000,000) in the
aggregate during Fiscal Year ending December 31, 1998, or (b) in each
subsequent Fiscal Year, an amount equal to one hundred and five percent
(105%) of the aggregate maximum amount permitted to be paid hereunder
during the preceding Fiscal Year."
-2-
<PAGE> 170
C. SECTIONS 7.01 and 7.02 of the Loan Agreement are hereby amended to
read in their entirety as follows:
"SECTION 7.01. INDEBTEDNESS.
Incur, create, assume, become or be liable in any manner with respect
to, or permit to exist, any Indebtedness or liability of a Company, whether
direct, indirect or contingent, except:
(a) Indebtedness to the Lender under this Agreement, the Notes, and
otherwise;
(b) Indebtedness with respect to trade obligations and other normal
accruals in the ordinary course of business;
(c) Indebtedness under Capital Leases and Purchase Money Security
Agreements relating to the purchase price of office and non-essential
broadcast equipment to be used in the business of the Companies to the
extent such Indebtedness was permitted by ARTICLE V hereof at the time
incurred;
(d) Indebtedness to any Affiliate, provided that such Indebtedness is
subject to the applicable Affiliate Subordination Agreement;
(e) Indebtedness existing on the date hereof and described in SCHEDULE
7.01 attached hereto; PROVIDED, HOWEVER, that the terms of such
Indebtedness shall not be modified or amended, nor shall payment thereof be
extended, without the prior written consent of the Lender;
(f) Indebtedness in respect of endorsements of negotiable instruments
for collection in the ordinary course of business;
(g) Subordinated Debt consented to by the Majority Lenders; and
(h) other Indebtedness not otherwise described in the foregoing
paragraphs (a) through (g) of this SECTION 7.01 conditional upon the
satisfaction of each of the following conditions:
(i) such other Indebtedness permitted by this paragraph (h) is not
secured by a lien, mortgage or security interest on any equipment or other
personal property (other than motor vehicles and office equipment) or real
property used by any of the Companies in the operation of their respective
radio and television broadcasting businesses;
-3-
<PAGE> 171
(ii) the Majority Lenders shall have first consented in writing to
any such Indebtedness which, when added to all other Indebtedness owed by
the Companies, or any of them, to the same creditor would result in the
aggregate principal amount of all Indebtedness owed by the Companies to
such creditor exceeding One Million Dollars ($1,000,000); and
(iii) the aggregate outstanding and unpaid principal balance of all
Indebtedness permitted under SECTION 7.01(c), SECTION 7.01(e) (EXCLUSIVE,
HOWEVER, of such Indebtedness owed to Janet Rogers, her heirs, successors
and assigns) and Section 7.01(h) shall not exceed Six Million Dollars
($6,000,000) at any time.
"SECTION 7.02. LIENS.
Create, incur, assume, suffer or permit to exist any mortgage, pledge,
lien, charge or other encumbrance of any nature whatsoever on any of the
assets or capital stock of a Company, now or hereafter owned, other than:
(a) liens securing the payment of taxes, either not yet due or the
validity of which is being contested in good faith by appropriate
proceedings, and as to which it shall have set aside on its books adequate
reserves;
(b) deposits under workmen's compensation, unemployment insurance and
social security laws, or to secure the performance of bids, tenders,
contracts (other than for the repayment of borrowed money) or Leases, or to
secure statutory obligations or surety or appeal bonds, or to secure
indemnity, performance or other similar bonds arising in the ordinary
course of business;
(c) liens imposed by law, such as carriers', warehousemen's or
mechanics' liens, incurred by it in good faith in the ordinary course of
business, and liens with respect to judgments but only to the extent that
(i) any such judgment does not otherwise constitute an Event of Default
pursuant to clause (m) of ARTICLE VIII, and (ii) either (A) such lien is
not prior or senior to any of the liens granted to the Lenders and the
Agent pursuant to the Security Documents, or (B) such lien attaches solely
to property of the Borrower, if any, with respect to which the Lenders and
the Agent do not assert a lien.
(d) security interests and liens in favor of the Lenders and the
Agent;
-4-
<PAGE> 172
(e) Capital Leases described in SECTION 7.01(c) and security interests
granted by Purchase Money Security Agreements to the extent permitted by
SECTION 7.01(c), provided that each such lien shall at all times be limited
solely to the item or items of property so acquired;
(f) restrictions, easements and minor irregularities in title which do
not and will not interfere with the occupation, use and enjoyment by the
Borrower of such properties and assets in the normal course of its business
as presently conducted or materially impair the value of such properties
and assets for the purpose of such business;
(g) security interests and liens securing the Indebtedness permitted
by SECTION 7.01(e) to the extent set forth in said SCHEDULE 7.01;
(h) security interests and liens securing the indebtedness permitted
by SECTION 7.01(h) provided that such security interests and liens are
limited to motor vehicles, office equipment and real property not used in
the operation of the Companies' radio and television broadcast businesses
to the extent permitted by said SECTION 7.01(h); and
(i) any other liens existing on the date hereof and described in
SCHEDULE 7.02 attached hereto."
D. SECTION 9.03 of the Loan Agreement is hereby amended to read in its
entirety as follows:
"SECTION 9.03. EFFECT ON PAYMENTS.
If an Event of Default shall have occurred and be continuing, the
Companies shall not (a) make payments in respect of Corporate Overhead in
excess of Four Million Dollars ($4,000,000) per Fiscal Year, or (b) make
any other Restricted Payments to the Stockholders or any Affiliates."
E. Effective August 10, 1998, the Notice provisions applicable to the
Agent set forth in SECTION 13.07 of the Loan Agreement are hereby amended to
provide for Notices to the Agent as follows:
-5-
<PAGE> 173
If to the Agent:
AT&T Commercial Finance Corporation, as Agent
c/o Newcourt Capital
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Michael V. Monahan, Vice President
with a copy (which shall not constitute notice) to:
AT&T Commercial Finance Corporation, as Agent
c/o Newcourt Capital
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Corporate Counsel
and with a copy (which shall not constitute notice) to:
Andrew J. Chlebus, Esq.
Edwards & Angell, LLP
One BankBoston Plaza
Providence, RI 02903
F. SCHEDULE 6.05 to the Loan Agreement is hereby amended to
correspond with EXHIBIT A attached hereto and made a part hereof.
3. The Lenders hereby consent to Beartooth's redemption of all 100 shares
of the Beartooth capital stock held by William Sanders during Fiscal Year ending
December 31, 1998, for the aggregate purchase price of $400,000, which sum shall
be borrowed from Pioneer Citizens Bank and repaid by Beartooth prior to
December 31, 1998.
4. NO FURTHER AMENDMENTS.
Except for the amendments set forth herein, the text of the Loan Agreement
and all other Loan Documents shall remain unchanged and in full force and
effect. No waiver by the Lenders or the Agent under the Loan Agreement or any
other Loan Document is granted or intended except as expressly set forth herein,
and the Lenders and the Agent expressly reserve the right to require strict
compliance with the terms of the Loan Agreement, as amended hereby, and the
other Loan Documents in all respects. The amendments agreed to herein shall not
constitute a modification of the Loan Agreement, as amended hereby, such as to
require further notice by the Lenders or the Agent to require strict compliance
with the terms of the Loan Agreement and the other Loan Documents in the future.
-6-
<PAGE> 174
5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.
The Borrowers hereby represent and warrant to the Lenders and the Agent
that:
A. Each representation and warranty set forth in Article IV of the Loan
Agreement, as amended hereby, is hereby restated and affirmed as true and
correct as of the date hereof,
B. The Borrowers have the power and authority to enter into this
Amendment and all other agreements contemplated hereby, and to do all acts and
things as are required or contemplated hereunder to be done, observed and
performed by the Borrowers;
C. Each of this Amendment and all other agreements to be executed by the
Companies and contemplated hereby has been duly authorized (by all necessary
corporate action and otherwise), validly executed and delivered by the Borrowers
and constitutes the legal, valid and binding obligation of the Borrowers
enforceable against them in accordance with its terms;
D. The execution and delivery of this Amendment and all other agreements
to be executed by the Borrowers and contemplated hereby and the Borrowers'
performance hereunder and thereunder do not and will not require the consent or
approval of any governmental authority, nor be in contravention of or in
conflict with the Borrowers' Articles of Incorporation, or the provisions of any
statute, or any judgment, order, or indenture, instrument, agreement, or
undertaking, to which any Borrower is a party or by which any Borrower or its
assets or properties are or may become bound.
E. No Event of Default or Unmatured Event of Default exists on or as of
the date hereof.
6. REFERENCES IN SECURITY DOCUMENTS.
All references to the "Loan Agreement" in all Security Documents, and in
any other documents or agreements by and between the Borrowers and their
Affiliates, and each of them, and the Lenders and/or the Agent shall from and
after the effective date hereof refer to, respectively, the Loan Agreement, as
amended hereby, and all obligations of the Borrowers under the Agreements, as
amended hereby, shall be secured by and be entitled to the benefits of said
Security Documents and such other documents and agreements. All Security
Documents heretofore executed by the Borrowers shall remain in full force and
effect to secure the Notes, and such Security Documents, as amended hereby, are
hereby ratified and affirmed.
7. COUNTERPARTS.
This Amendment may be executed in multiple counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same agreement.
-7-
<PAGE> 175
8. APPLICABLE LAW.
THIS AMENDMENT SHALL BE DEEMED TO BE MADE PURSUANT TO THE LAWS OF THE STATE
OF NEW JERSEY WITH RESPECT TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY IN THE
STATE OF NEW JERSEY AND SHALL BE CONSTRUED, INTERPRETED, PERFORMED AND ENFORCED
IN ACCORDANCE THEREWITH.
9. CAPTIONS.
The captions in this Amendment are for convenience of reference only and
shall not define or limit the provisions hereof.
10. LEGAL FEES.
The Borrowers shall pay all reasonable expenses incurred by the Agent in
the drafting, negotiation and closing of the documents and transactions
contemplated hereby, including the reasonable fees and disbursements of the
Agent's special counsel.
11. REAFFIRMATION.
Except as amended hereby, the Loan Agreement shall remain in full force and
effect and are in all respects hereby ratified and affirmed.
IN WITNESS WHEREOF, the Lenders, the Agent and the Borrowers have caused
this Amendment to be duly executed as a sealed instrument by their respective
duly authorized officers, as applicable, all as of the day and year first above
written.
AT&T COMMERCIAL FINANCE
CORPORATION, individually and as
Agent
By:
------------------------------
Title:
SUNBELT COMMUNICATIONS
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
-8-
<PAGE> 176
VALLEY BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
YUMA BROADCASTING COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
SIERRA BROADCASTING COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
OREGON TRAIL BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
FALLS BROADCASTING COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
TWO OCEAN BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
-9-
<PAGE> 177
SIERRA RADIO COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
RADIO NEWS COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
RADIO SALES COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
RUBY MOUNTAIN BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
BEARTOOTH COMMUNICATIONS
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
Consented to as of date first above
written.
/s/ James E. Rogers
-----------------------------------
[James E. Rogers]
-10-
<PAGE> 178
JAMES E. ROGERS, AS TRUSTEE OF
THE JAMES E. ROGERS TRUST
UNDER TRUST AGREEMENT DATED
OCTOBER 9, 1997
/s/ James E. Rogers
-----------------------------------
James E. Rogers, as Trustee
- 11 -
<PAGE> 179
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT is made as of
the 14th day of September, 1998, by and between
SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY
BROADCASTING COMPANY, a Nevada corporation ("VALLEY"): YUMA BROADCASTING
COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada
corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation
("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS");
TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO
COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada
corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada
corporation ("RUBY MOUNTAIN"); and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada
corporation ("BEARTOOTH") (Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls,
Two Ocean, Sierra Radio, Radio News, Ruby Mountain and Beartooth are sometimes
referred to herein individually as a "BORROWER" and collectively as the
"BORROWERS");
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation ("AT&T-CFC"),
and the various other financial institutions which, in accordance with ARTICLE
XII of the Loan Agreement hereinafter referred to, are parties to said Loan
Agreement and "Lenders" thereunder (collectively, with AT&T-CFC, the "LENDERS"
and each individually, a "LENDER"); and
AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as agent for
the Lenders (in such capacity, together with its successors and assigns in such
capacity, the "AGENT").
W I T N E S S E T H T H A T
- - - - - - - - - - - - - -
WHEREAS, the AT&T-CFC, the other Lenders, the Agent and the Borrowers are
parties to a certain Amended and Restated Loan Agreement dated as of May 18,
1998, as amended (the "LOAN AGREEMENT"); and
WHEREAS, the parties hereto desire to amend the Loan Agreement as
hereinafter provided to set forth additional agreements and understandings with
respect to the subject matter thereof,
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
<PAGE> 180
1. DEFINITIONS.
Unless otherwise defined herein, all capitalized terms used herein shall
have the same meanings assigned to them in the Loan Agreement. as amended
hereby.
2. AMENDMENTS TO LOAN AGREEMENT.
A. SECTION 7.07 of the Loan Agreement is hereby amended to read in its
entirety as follows:
"SECTION 7.07. INVESTMENTS.
Except for (a) Permitted Investments; (b) Sunbelt's existing
investment in 120,000 shares of$l .00 par value common stock of Nevada
First Bank, a Nevada banking corporation; (c) Valley's existing investment
in the capital stock of Microwave, Inc., and Alta Development Company, and
(d) Sunbelt's investment in the common stock of St. Andrews Golf
Corporation to be made by Sunbelt prior to November 1, 1998, for a total
cost to Sunbelt of not more than $1,250,000, permit any Company to
purchase, invest in or otherwise acquire or hold securities (including,
without limitation, capital stock and interests in general or limited
partnerships, either as a general or limited partner or otherwise) and
evidences of indebtedness of, or make loans or advances to, or enter into
any arrangement for the purpose of providing funds or credit to, any other
Person."
B. Effective November 1, 1998, the Notice provisions applicable to the
Agent set forth in SECTION 13.07 of the Loan Agreement are hereby amended to
provide for Notices to the Agent as follows:
If to the Agent:
AT&T Commercial Finance Corporation, as Agent
c/o Newcourt Capital
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Michael V. Monahan, Vice President
with a copy (which shall not constitute notice) to:
AT&T Commercial Finance Corporation, as Agent
c/o Newcourt Capital
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Corporate Counsel
-2-
<PAGE> 181
and with a copy (which shall not constitute notice) to:
Andrew J. Chlebus, Esq.
Edwards & Angell, LLP
One BankBoston Plaza
Providence, RI 02903
C. The portions of SCHEDULE 4.15 to the Loan Agreement which describe
the stock ownership of Sunbelt and Beartooth are hereby amended to read in their
entirety in the form of Exhibits A and B, respectively, attached hereto.
3. CONSENT TO STOCK PURCHASE.
Pursuant to Section 7.07 of the Loan Agreement, as amended hereby, the
Lenders and the Agent hereby consent to Sunbelt's purchase of common stock in
St. Andrews Gold Corporation ("ST. ANDREWS"), on or before November 1, 1998, in
consideration of a total purchase price to be paid by Sunbelt in an aggregate
amount not to exceed $1,250,000. Sunbelt hereby agrees (a) that said common
stock shall be subject to the security interests heretofore granted by Sunbelt
to the Agent and the Lenders pursuant to the Security Documents, and (b) to
execute and deliver to the Agent within sixty (60) days following consummation
of said purchase, such additional documents as the Agent shall reasonably
require to effect and evidence such security interests and to effect fully a
perfected pledge of said common stock. The Lenders and the Borrowers hereby
agree that AT&T-CFC may fund an Advance to the Borrowers in the principal
amount of up to $1,250,000 pursuant to the Supplemental Line for the purpose of
paying said purchase price for said common stock.
4. NO FURTHER AMENDMENTS.
Except for the amendments set forth herein, the text of the Loan Agreement
and all other Loan Documents shall remain unchanged and in full force and
effect. No waiver by the Lenders or the Agent under the Loan Agreement or any
other Loan Document is granted or intended except as expressly set forth herein,
and the Lenders and the Agent expressly reserve the right to require strict
compliance with the terms of the Loan Agreement, as amended hereby, and the
other Loan Documents in all respects. The amendments agreed to herein shall not
evidence or constitute a course of dealing at variance with the terms of the
Loan Documents, and shall not constitute a modification of the Loan Agreement,
as amended hereby, such as to require further notice by the Lenders or the Agent
to require strict compliance with the terms of the Loan Agreement and the other
Loan Documents in the future.
5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS.
The Borrowers hereby represent and warrant to the Lenders and the Agent
that:
- 3 -
<PAGE> 182
A. Each representation and warranty set forth in Article IV of the Loan
Agreement, as amended hereby, is hereby restated and affirmed as true and
correct as of the date hereof;
B. The Borrowers have the power and authority to enter into this
Amendment and all other agreements contemplated hereby, and to do all acts and
things as are required or contemplated hereunder to be done, observed and
performed by the Borrowers;
C. Each of this Amendment and all other agreements to be executed by the
Companies and contemplated hereby has been duly authorized (by all necessary
corporate action and otherwise), validly executed and delivered by the Borrowers
and constitutes the legal, valid and binding obligation of the Borrowers
enforceable against them in accordance with its terms;
D. The execution and delivery of this Amendment and all other agreements
to be executed by the Borrowers and contemplated hereby and the Borrowers'
performance hereunder and thereunder do not and will not require the consent or
approval of any governmental authority, nor be in contravention of or in
conflict with the Borrowers' Articles of Incorporation, or the provisions of any
statute, or any judgment, order, or indenture, instrument, agreement, or
undertaking, to which any Borrower is a party or by which any Borrower or its
assets or properties are or may become bound.
E. No Event of Default or Unmatured Event of Default exists on or as of
the date hereof.
6. REFERENCES IN SECURITY DOCUMENTS.
All references to the "Loan Agreement" in all Security Documents, and in
any other documents or agreements by and between the Borrowers and their
Affiliates, and each of them, and the Lenders and/or the Agent shall from and
after the effective date hereof refer to, respectively, the Loan Agreement, as
amended hereby, and all obligations of the Borrowers under the Agreements, as
amended hereby, shall be secured by and be entitled to the benefits of said
Security Documents and such other documents and agreements. All Security
Documents heretofore executed by the Borrowers shall remain in full force and
effect to secure the Notes, and such Security Documents, as amended hereby, are
hereby ratified and affirmed.
7. FURTHER AGREEMENTS. The Borrowers hereby acknowledge and confirm that
they do not have any grounds and hereby agree not to challenge (or to allege or
to pursue any matter, cause or claim arising under or with respect to, the
Notes, the Loan Agreement, the Security Documents or any of the other Loan
Documents, any document, instrument or agreement relating to any of the
foregoing, any of the Senior Debt, covenants, promises, agreements, obligations,
duties or liabilities thereunder, or the status of any thereof as legal, valid
and binding obligations enforceable in accordance with their respective terms;
and they do not possess (and hereby forever waive , remise, release, discharge
and hold harmless the Agent, the Lenders and their respective parents,
subsidiaries, Affiliates, stockholders, directors, officers, employees,
attorneys, agents and representatives and each of their respective heirs,
executors, administrators, successors and
- 4 -
<PAGE> 183
assigns [collectively, the "NOTEHOLDER PARTIES"] from and against, and agree not
to allege or pursue) any action, cause of action, suit, debt, claim,
counterclaim, cross-claim, demand, defense, offset, opposition, demand and other
right of action whatsoever, whether in law, equity or otherwise (which they, all
those claiming by, through or under them, or their successors or assigns, have
or may have) against the Noteholder Parties, or any of them, prior to or as of
the date of this Amendment for, upon, or by reason of, any matter, cause or
thing whatsoever, arising out of, or relating to, the Notes, the Loan Agreement,
the Security Documents, the Loan Documents or other any document, instrument or
agreement relating to any of the foregoing (including, without limitation, any
payment, performance, validity or enforceability of any or all of the
Indebtedness, covenants, promises, agreements, provisions, rights, remedies,
obligations, duties and liabilities thereunder) or any transaction relating to
any of the foregoing, or any or all actions, courses of conduct or other matters
in any manner whatsoever relating to or otherwise connected with any of the
foregoing.
8. COUNTERPARTS.
This Amendment may be executed in multiple counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same agreement.
9. APPLICABLE LAW.
THIS AMENDMENT SHALL BE DEEMED TO BE MADE PURSUANT TO THE LAWS OF THE STATE
OF NEW JERSEY WITH RESPECT TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY IN THE
STATE OF NEW JERSEY AND SHALL BE CONSTRUED, INTERPRETED, PERFORMED AND ENFORCED
IN ACCORDANCE THEREWITH.
10. CAPTIONS.
The captions in this Amendment are for convenience of reference only and
shall not define or limit the provisions hereof.
11. LEGAL FEES.
The Borrowers shall pay all reasonable expenses incurred by the Agent in
the drafting, negotiation and closing of the documents and transactions
contemplated hereby, including the reasonable fees and disbursements of the
Agent's special counsel.
12. REAFFIRMATION.
Except as amended hereby, the Loan Agreement shall remain in full force and
effect and is in all respects hereby ratified and affirmed.
IN WITNESS WHEREOF, the Lenders, the Agent and the Borrowers have caused
this
- 5 -
<PAGE> 184
Amendment to be duly executed as a sealed instrument by their respective duly
authorized officers, as applicable, all as of the day and year first above
written.
AT&T COMMERCIAL FINANCE
CORPORATION, individually and as
Agent
By:/s/ [ILLEGIBLE SIGNATURE]
------------------------------
Title: Vice President
SUNBELT COMMUNICATIONS
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
VALLEY BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
YUMA BROADCASTING COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
SIERRA BROADCASTING COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
- 6 -
<PAGE> 185
OREGON TRAIL BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
FALLS BROADCASTING COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
TWO OCEAN BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
SIERRA RADIO COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
RADIO NEWS COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
RADIO SALES COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
- 7 -
<PAGE> 186
RUBY MOUNTAIN BROADCASTING
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
BEARTOOTH COMMUNICATIONS
COMPANY
By: /s/ James E. Rogers
------------------------------
Title: President
Consented to as of date first above
written.
/s/ James E. Rogers
-----------------------------------
[James E. Rogers, individually]
JAMES E. ROGERS, AS TRUSTEE OF
THE JAMES E. ROGERS TRUST
UNDER TRUST AGREEMENT DATED
OCTOBER 9, 1997
/s/ James E. Rogers
-----------------------------------
James E. Rogers, as Trustee
- 8 -
<PAGE> 187
EXHIBIT A
SCHEDULE 4.15
-------------
OWNERSHIP OF BORROWERS
----------------------
SUNBELT COMMUNICATION COMPANY
- -----------------------------
Parent Capital Stock:
Number of Shares -
===============================================================================
Authorized Issued and Treasury Unissued
Outstanding
===============================================================================
25,000 1967.50 1782.50 21,250.00
===============================================================================
Stock Ownership -
===============================================================================
Shareholder No. of Shares Percentage
===============================================================================
James E. Rogers 1,750.00 88.94
(Trustee of the James E.
Rogers Trust)
Rolla Cleaver 56.25 2.86
Gene Greenberg 37.50 1.91
James E. Rogers 39.75 2.02
(Trustee for the Children
of Elizabeth Ruybalid)
Cheryl Purdue 34.00 1.73
Beverly Rogers 50.00 2.54
(Trustee)
================================================================================
Remainder of This Page Intentionally Left Blank
<PAGE> 188
EXHIBIT B
---------
Schedule 4.15
Ownership of Borrowers
Page 7
BEARTOOTH COMMUNICATIONS COMPANY
Subsidiary Capital Stock:
Number of Shares -
===============================================================================
Authorized Issued and Treasury Unissued
Outstanding
===============================================================================
25,000 1,000 -0- 24,000
===============================================================================
Stock Ownership -
===============================================================================
Shareholder No. of Shares Percentage
===============================================================================
Sunbelt Communications 900** 90.00%
Company
J.W. Radeck 100** 10.00%
================================================================================
**800 of those shares owned by Sunbelt (as evidenced by Stock Certificates No.
2 and 5), and all of those shares owned by Mrs. Radeck (as evidenced by Stock
Certificate No. 3) are subject to certain rights and/or restrictions as more
particularly described in the Stock Contribution, Put and Redemption Agreement
by and between Beartooth, Sunbelt, Mrs. Radeck and William Sanders dated as of
May 5, 1997, a true and correct copy of which has previously been delivered to
AT&T.
<PAGE> 1
EXHIBIT 4.1
INVESTMENT AND VOTING AGREEMENT
This Investment and Voting Agreement is made as of October 19, 1998,
between LAS VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation (the
"Company"), whose address is 5325 South Valley View Boulevard, Suite 4, Las
Vegas, Nevada 89118, and ASI GROUP, L.L.C., a Nevada limited liability company
(the "Purchaser"), whose address is c/o Agassi Enterprises, Inc., 3960 Howard
Hughes Parkway, Suite 750, Las Vegas, Nevada 89109.
SECTION 1
AUTHORIZATION AND SALE OF COMMON STOCK
1.1 AUTHORIZATION. The Company will authorize the sale and issuance of
Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares
(the "Shares") of its Common Stock ("Common Stock"), no par value.
1.2 SALE OF COMMON STOCK. Subject to the terms and conditions hereof,
and in reliance upon the representations, warranties and agreements of the
parties contained herein, the Company will issue and sell to the Purchaser, and
the Purchaser will buy from the Company, Two Million Three Hundred Three
Thousand Two Hundred Ninety (2,303,290) shares of Common Stock at a purchase
price of One Dollar and Eight and One-Half Cents ($1.085) per share, for an
aggregate purchase price of Two Million Five Hundred Thousand Dollars
($2,500,000.00).
1.3 ADJUSTMENT OF PRICE AND/OR TERMS. (a) If at any time and each time
within three (3) years after the Closing (as defined in Section 2.1 below), the
Company offers to sell or grants, sells or issues shares of its capital stock to
any persons or entity other than the Purchaser at a lower price per share than
the purchase price paid by the Purchaser for the Shares and/or on more favorable
terms and conditions than those afforded to the Purchaser in connection with the
purchase of the shares of Common Stock (taking into account any equitable
adjustment in accordance with the Anti-Dilution Provisions), the Company agrees
to retroactively apply such lower price and/or more favorable terms and
conditions to the Shares purchased by the Purchaser. At the Purchaser's request,
the Company shall either (i) issue the Purchaser additional shares of Common
Stock in the amount equal to (A) the amount of any such overpayment by the
Purchaser divided by (B) such lower price charged by the Company to any person
or entities or (ii) deliver to the Purchaser the amount of any such overpayment
in cash.
(b) If at any time after the Closing, while the Purchaser is an equity
holder of the Company or has options, warrants or other rights to acquire equity
of the Company, the Company offers to sell or grants, sells or issues shares of
its capital stock to any of Messrs. Vaso Boreta, Ronald Boreta and John Boreta
or Boreta Enterprises Ltd. or their respective
- 1 -
<PAGE> 2
affiliates (collectively, "Boreta") at any price or for any consideration
(including, but not limited to, provision of services) the Company shall issue
the Purchaser additional shares of Common Stock so as to maintain the relative
proportionate equity ownerships of the Purchaser, on the one hand, and Boreta,
on the other hand, in the Company as they were immediately prior to such offer,
grant, sale or issuance, assuming the consummation of such offer, grant, sale or
issuance.
SECTION 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the Common
Stock hereunder shall be held at the offices of the Company sixteen days from
the execution hereof (the "Closing"), or at such other time and place upon which
the Company and the Purchaser shall agree (the date of the Closing is
hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser
a certificate or certificates, registered in the Purchaser's name representing
Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) Shares
against payment of the purchase price therefor, by check payable to the Company
or wire transfer per the Company's instructions. The total purchase price shall
be paid by the Purchaser to the Company in one installment without interest
thereon.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B (which Schedule makes specific reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty to which such exception
shall apply), the Company represents and warrants to the Purchaser as follows:
3.1 DEFINITION OF MATERIAL. For purposes of this Section 3, material
shall mean anything having a value or effect of more than $50,000.
3.2 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Colorado and is in good standing under such laws. The
Company has requisite corporate power and authority to own and operate its
properties and assets, and to carry on its business as presently conducted and
as proposed to be conducted. The Company is not presently qualified to do
business as a foreign corporation in any jurisdiction, and the failure to be
qualified will not have a material adverse affect on the Company's business as
now conducted or as now proposed to be conducted. The Company has furnished the
Purchaser with copies of its Articles of Incorporation and By-Laws, as amended.
Said copies are true, correct and complete and contain all amendments through
the Closing Date.
- 2 -
<PAGE> 3
3.3 CORPORATE POWER. The Company has all requisite legal and corporate
power and authority to execute and deliver this Agreement, at the Closing will
have all requisite legal and corporate power and authority to sell and issue the
Shares hereunder, to issue the Option (as defined below), to issue the Option
Shares (as defined below) upon exercise of the Option and to carry out and
perform its obligations under the terms of this Agreement.
3.4 SUBSIDIARIES. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
3.5 CAPITALIZATION. The authorized capital stock of the Company
consists of 15,000,000 shares of Common Stock, of which 5,831,807 shares are
issued and outstanding, and 5,000,000 shares of Preferred Stock, of which no
shares are issued and outstanding. The outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. Options to
purchase 432,000 shares of Common Stock are issued and outstanding under the
Company's employee stock option plan. All outstanding securities of the Company
were issued in compliance with applicable federal and state securities laws.
Except as set forth above, there are no option, warrants or other rights to
purchase any of the Company's capital stock. Except as set forth in any
agreement entered into with the Purchaser, the Company is not a party or subject
to any agreement or understanding, and there is no agreement or understanding
between any persons that affects or related to the voting or giving of written
consents with respect to any security or the voting by a director of the
Company.
3.6 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement and the Option Agreement (as defined
below) by the Company, the authorization, sale, issuance and delivery of the
Shares, the Option, and the Option Shares and the performance of all of the
Company's obligations hereunder and under the Option Agreement has been taken or
will be taken prior to the Closing. This Agreement and the Option Agreement,
when executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms. The Shares, when issued in compliance with the provisions of
this Agreement, will be validly issued, fully paid and nonassessable the Option
Shares have been duly and validly reserved and, when issued in compliance with
the provisions of this Agreement, and the Option Agreement will be validly
issued, fully paid and nonassessable; and the Shares and Option Shares will be
free of any liens or encumbrances, other than any liens or encumbrances created
by or imposed upon the holders hereof through no action of the Company;
provided, however, that the Option Shares will be subject to restrictions on
transfer under state and/or federal securities laws as set forth herein. The
Shares are not subject to any preemptive rights or rights of first refusal.
3.7 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
its audited balance sheet and statements of operations and cash flow was of and
for the period ended December 31, 1997, and its combined unaudited balance sheet
and statements of operations
- 3 -
<PAGE> 4
and cash flows as of and for the period ended June 30, 1998 (collectively the
"Financial Statements"). The Financial Statements are complete and correct in
all material respects and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated, except that the unaudited financial statements do not contain
footnotes. The Financial Statements accurately set out and describe the
financial condition and operating results of the Company as of the dates, and
for the period, indicated therein. The financial statements for the year ended
December 31, 1997, were audited by Arthur Andersen LLP.
3.8 ABSENCE OF CHANGES. Since June 30, 1998: (a) the Company has not
entered into any transaction which was not in the ordinary course of business,
(b) there has been no materially adverse change in the condition (financial or
otherwise), business, property, assets or liabilities of the Company other than
changes in the ordinary course of business, none of which, individually or in
the aggregate, has been materially adverse, (c) there has been no damage to,
destruction of or loss of physical property (whether or not covered by
insurance) materially and adversely affecting the business or operations of the
Company, (d) the Company has not declared or paid any dividend or made any
distribution on its stock, or redeemed, purchased or otherwise acquired any of
its stock, (e) the Company has not increased the compensation of any of its
officers, or the rate of pay of its employees as a group, except as part of
regular compensation increases in the ordinary course of business, (f) there has
been no resignation or termination of employment of any key officer, consultant
or employee of the Company, and the Company does not know of the impending
resignation or termination of employment of any such officer, consultant or
employee that if consummated would have a material adverse effect on its
business, (g) there has been no labor dispute involving the Company or its
employees and none is pending or, to the best of the Company's knowledge,
threatened, (h) there has not been any change, except in the ordinary course of
business, in the contingent obligations of the Company, by way of guaranty,
endorsement, indemnity, warranty or otherwise, (i) there have not been any loans
made by the Company to any of its employees, officers or directors other than
travel advances and office advances made in the ordinary course of business and
(j) to the best of the Company's knowledge, there has been no other event or
condition of any character pertaining to and materially and adversely affecting
the assets or business of the Company.
3.9 MATERIAL LIABILITIES. The Company has no material liabilities or
obligations, absolute or contingent (individually or in the aggregate) except
(a) the liabilities and obligations set forth in the Financial Statements, (b)
liabilities and obligations which have been incurred subsequent to June 30,
1998, in the ordinary course of business which have not been in the aggregate
materially adverse, (c) liabilities and obligations under lease for its
principal offices and for equipment, and (d) liabilities and obligations under
sales, procurement and other contracts and arrangements entered into in the
normal course of business.
3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, and has good title to all of
its leasehold interests in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than the
- 4 -
<PAGE> 5
lien of current taxes not yet due and payable. Each of the Company's assets is
in good repair and good, marketable and operating condition and is suitable for
the purposes for which it presently is being used and is intended to be used by
the Company and is adequate and suitable to meet all present and reasonably
anticipated future requirements of the Company. The Company's assets conform to
all applicable laws, ordinances, codes, rules and regulations, and the Company
has not received any notice to the contrary. The Company does not own, of record
or beneficially, any real property. Exhibit C sets forth a list and description
of all property leased or subleased to or by the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS; NONE BURDENSOME, ETC. The
Company is not in violation of any term of its Articles or By-Laws, or, in any
material respect, of any term or provision of any mortgage, indebtedness,
indenture, contract, security agreement, agreement, instrument, judgment or
decree, and, to the best of its knowledge, is not in violation of any order,
statute, rule or regulation applicable to the Company where such violation would
materially and adversely affect the Company. The execution, delivery and
performance of and compliance with this Agreement and the Option Agreement, and
the issuance of the Common Stock, the Option and the Option Shares have not
resulted and will not result in any violation of, or conflict with, or
constitute a default (or an event that might, with the passage of time or the
giving of notice or either of them, constitute a default) any of the terms of,
result in the termination of, result in the loss of any right under, or give to
any other person the right to cause such a termination of or loss under and will
be in compliance with, the Company's Articles, By-Laws and all of its
agreements, permits and licenses or any provision of federal, state, local or
foreign statute rule ordinance or regulation applicable to the Company or result
in the creation of, any mortgage, pledge, lien, encumbrance or charge upon any
of the capital stock, properties or assets of the Company in the creation,
maturation or acceleration of any liability or obligation of the Company or the
creation, maturation or acceleration of any liability or obligation of the
Company (or give to any other person the right to cause such a creation,
maturation or acceleration) and there is no such violation or default which
adversely affects the business of the Company or any of its properties or
assets.
3.12 INTANGIBLE ASSETS.
(a) The Company (i) owns or has the right to use, free
and clear of all liens, claims and restrictions, all
Intellectual Property (as hereinafter defined) used
in the conduct of its business as now conducted or as
proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed
right of any person under or with respect to any of
the foregoing, and (ii) is not obligated or under any
liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, license
of, or other claimant to, any patent, trademark,
trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the
conduct of its business or otherwise. "Intellectual
Property" means (a) all inventions (whether
patentable or unpatentable) and whether or not
- 5 -
<PAGE> 6
reduced to practice, all improvements thereto, and
all patents, patent applications and patent
disclosures, together with all reissuance,
continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all
translations, adaptations, derivations and
combinations thereof and including all goodwill
associated therewith, and all applications,
registrations and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all
applications, registrations and renewals in
connection therewith, (d) all mask works and all
applications, registrations and renewals in
connection therewith, (e) all trade secrets and
confidential business information (including ideas,
research and development, know-how, formulas,
compositions, manufacturing and producing processes
and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing
and cost information, and business and marketing
plans and proposals), (f) all computer software and
information systems, programs, (including data and
related documentation), whether owned or leased by
the Company, (g) all other proprietary rights and (h)
all copies and tangible embodiments thereof (in
whatever form or medium). The Company has taken all
necessary action to maintain and protect each item of
Intellectual Property that it owns or uses and has
never granted any sublicense or similar right to any
third party with respect to such Intellectual
Property.
(b) The Company owns and has the unrestricted right to
use all Intellectual Property required for or
incidental to the development, construction and
operation of the SportPark segment of its business,
free and clear of any rights, liens or claims of
others, including without limitation, former
employers of all current and former employees,
consultants, officers, directors and shareholders of
the Company.
(c) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties,
and none of the stockholders and directors and
officers (and employees with responsibility for
Intellectual Property matters) of the Company has
ever received any charge, complaint, claim, demand or
notice alleging any such interference, infringement,
misappropriation or violation (including any claim
that the Company must license or refrain from using
any Intellectual Property rights of any third party).
No third party has interfered
- 6 -
<PAGE> 7
with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property
rights of the Company.
(d) Exhibit D identifies each patent or registration
which has been issued to the Company with respect to
any of its Intellectual Property, each pending patent
application or application for registration which the
Company has made with respect to any of its
Intellectual Property, and each license, agreement or
other permission which the Company has granted to any
third party with respect to any of its Intellectual
Property. The Company has delivered to the Purchaser
correct and complete copies of all such patents,
registrations, applications, licenses, agreements and
permissions (as amended to date). Exhibit D also
identifies each trade name or unregistered trademark
used by the Company in connection with any of its
businesses. With respect to each item of Intellectual
Property required to be identified in Exhibit D: (i)
the Company possesses all right, title and interest
in and to the item, free and clear of any Liens,
license or other restriction, (ii) the item is not
subject to any outstanding injunction, judgment,
order, decree, ruling or charge, (iii) no action,
suit proceeding hearing, investigation, charge,
complaint, claim or demand is pending or, to the
knowledge of each of the shareholders and the
directors and officers (and employees with
responsibility for Intellectual Property matters) of
the Company, is threatened which challenges the
legality, validity, enforceability, use or ownership
of the item and (iv) the Company has never agreed to
indemnify any person for or against any interference,
infringement, misappropriation, or other conflict
with respect to the item.
3.13 LITIGATION, ETC. There is no suit, action, hearing, investigation,
claim or litigation, or legal, administrative, arbitration or other proceeding
pending or, to the best knowledge of the Company after due inquiry, threatened
against or affecting the Company, its business or any of its property or assets,
before any court, arbitrator, or federal, state, municipal or other governmental
board, department, agency or instrumentality, and there is no basis for any such
action. There is no judgment, decree, injunction, ruling, award, charge, order
or writ of any court, governmental department, commission, agency,
instrumentality, arbitration or other person outstanding against, binding upon
or involving the Company, its business, any directors or officers of the
Company. None of the matters set forth on Exhibit B could result in any material
adverse effect. The Company owns policies of casualty, liability or other forms
of insurance which provide coverages in amount and scope sufficient to cover
every claim, action, cause of action, suit, proceeding, litigation, arbitration
or investigation arising out of, related to, or in connection with those matters
listed on the schedule of exception. Neither the Company nor any of its
directors, officers or employees is currently
- 7 -
<PAGE> 8
charged with, or is currently under investigation with respect to, any violation
of any provision of any foreign, federal, state or local law or administrative
regulation in respect of the business of the Company. The Company is not in
default with respect to any judgment, decree, injunction, ruling, award, order
or writ of any foreign, federal, state, municipal agency or other governmental
department, board, commission, bureau, agency or instrumentality.
3.14 EMPLOYEES. To the best of the Company's knowledge, no employee of
the Company is in violation of any term of any employment contract,
non-disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of the
nature of the business conducted or to be conducted by the Company. There are no
controversies pending nor, to the best knowledge of the Company any basis of any
such controversies, between the Company and any of its employees. To the
knowledge of the Company, and the directors and officers (and employees with
responsibility for employment matters) of the Company, no executive, key
employee, or group of employees has any plans to terminate employment with the
Company. The Company is not bound by any collective bargaining agreement, nor
has the Company experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes. The Company has not committed
any unfair labor practice. None of the shareholders or the directors or officers
(or employees with responsibility for employment matters) of the Company has any
knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of the Company.
3.15 EMPLOYEE AGREEMENTS. There are no pension, profit-sharing, bonus,
group insurance, death benefit, vacation pay, severance pay, sick leave, holiday
pay, welfare, or any other employee benefit or "fringe benefit" plans or
arrangements relating to the current or former employees or consultants of the
Company. In addition, there are no employment, deferred compensation, collective
bargaining, retainer, savings, consulting, non-competition, retirement or
incentive agreements, contracts, plans or arrangements relating to, with or for
the benefit of any officers or employees of the Company or other persons.
3.16 CERTAIN TRANSACTIONS. The Company is not indebted, directly or
indirectly, to any of its officers, directors or shareholders or to their
respective spouses or children, in any amount whatsoever; none of said officers,
directors or shareholders, or any members of their immediate families, are
indebted to the Company or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company, except that officers, directors and/or shareholders of the
Company may own less than 1% of the stock of publicly-traded companies which may
compete with the Company. No officer, director or shareholder, or any member of
their immediate families, is, directly or indirectly, interested in any contract
with the Company. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.17 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto as Exhibit E
is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is
- 8 -
<PAGE> 9
a party or by which it is bound that are material to the conduct and operations
of its business and properties, which provide for payments to or by the Company;
or which involve transactions or proposed transactions between the Company and
its officers, directors, affiliates or any affiliate thereof. Copies of certain
of such agreements and contracts and documentation evidencing such liabilities
and other obligations have been made available for inspection by the Purchaser
and its counsel. All of such agreements and contracts are valid, binding and in
full force and effect in all respects, assuming due execution by the other
parties to such agreements and contracts. To the best knowledge of the Company,
the Company and each other party to each such agreement and contract has
performed all obligations required to be performed by it thereunder and is not
in breach or default, and is not alleged to be in breach or default, in any
respect thereunder, and no event has occurred and no condition or state of facts
exists (or would exist upon the giving of notice or the lapse of time or any of
them) that would become or cause a breach, default or event of default
thereunder, would give to any person the right to cause such a termination or
would cause an acceleration of any obligation thereunder.
3.18 REGISTRATION RIGHTS. Except as set forth in this Agreement, the
Company is not under any contractual obligation to register (as defined in
Section 8.1 below) any of its presently outstanding securities or any of its
securities which may hereafter be issued.
3.19 GOVERNMENTAL CONSENT, ETC. No consent, approval, order or
authorization of (of designation, declaration or filing with) any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale or issuance of the
Common Stock, or the consummation of any other transaction contemplated hereby,
except qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) or the offer and sale of the Common
Stock under applicable estate securities laws, which filings and qualifications,
if required, will be accomplished in a timely manner.
3.20 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Common
Stock and the Option Shares (as defined in Section 7.6 below) to be issued in
conformity with the terms of this Agreement, and the issuance of the Option
Shares upon exercise of the Option, constitute transactions exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as amended
(the "Securities Act").
3.21 BROKERS OR FINDERS. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by the Company,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement.
3.22 TAX MATTERS. The Company (a) has timely filed all tax returns that
are required to have been filed by it with all appropriate federal, state,
county and local governmental agencies (and all such returns fairly reflect the
Company's operations for tax purposes), (b) has timely paid all taxes owed by it
for which it is obligated to withhold from amounts owing
- 9 -
<PAGE> 10
to any employee (including without limitation social security taxes), creditor
or third party (other than taxes the validity of which are being contested in
good faith by appropriate proceedings), and (c) has not waived any statute of
limitations with respect to taxes or agreed to any extension of time with
respect to a tax assessment or deficiency. The assessment of any additional
taxes for a period for which returns have been filed is not expected to exceed
the recorded liability therefor, and there are no material unresolved questions
or claims concerning the Company's tax liability. The Company's tax returns have
not been reviewed or audited by any federal, state, local or county taxing
authority. There is no pending dispute with any taxing authority relating to any
of said returns which, if determined adversely to the Company, would result in
the assertion by any taxing authority of any valid deficiency in any material
amount for taxes.
3.23 INSURANCE. With respect to each insurance policy maintained by the
Company: (a) the policy is legal, valid, binding, enforceable and in full force
and effect, (b) the policy will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following
consummation of the transactions contemplated hereby, (c) neither the Company
nor any other party to the policy is in breach of default (including with
respect to the payment of premiums or the giving of notices) and (d) no party to
the policy has repudiated any provision thereof. The Company has been covered
since its formation by insurance in type, scope and amount that (x) meet the
minimum requirements of any contract, lease or agreement to which the Company is
a party and (y) is customary and reasonable for the business in which it has
engaged during such period including, without limitation, fire, casualty,
liability and key-man life (on the lives of Ron and Vaso Boreta) insurance
polices. The Company has not failed to give any notice or present any claim
under any insurance policy in a due and timely fashion.
3.24 ENVIRONMENTAL AND SAFETY REGULATIONS. The Company is not in
violation of any environmental laws or regulations, including without limitation
any and all applicable federal, state and local laws, regulations and ordinances
relating to air and water pollution and handling and disposal of chemical and
hazardous materials (hereinafter the "Environmental Laws"). The Company
possesses all of the authorizations, permits and approvals required to be
obtained by applicable Environmental Laws; neither the Company nor any
stockholder has received any notice from any governmental authority or has
knowledge of any governmental inquiry or investigation or any other claim, suit
or proceeding against or involving the Company with respect to any actual or
alleged violation of any applicable Environmental Law and all hazardous waste
and chemical waste materials have been disposed of in accordance with all
applicable Environmental Laws. There have been no spills, dumping, discharge or
clean-up of hazardous waste or chemical materials in violation of any
Environmental Laws on or at any premises owned or any premises occupied by the
Company.
3.25 EMPLOYEE BENEFIT PLANS.
(a) The Company has never maintained or contributed to,
and does not maintain or contribute to any Employee
Benefit Plan as defined in the Employee Retirement
Income Security Act of
- 10 -
<PAGE> 11
1974, as amended. The Company has not incurred any
liability under ERISA (including any withdrawal
liability) or under the Internal Revenue Code of
1986, as amended Code (the "Code"), with respect to
any Employee Benefit Plan.
(b) The Company does not contribute to, nor has ever had
contributed to and has never been required to
contribute to any multi-employer plan or has any
liability (including withdrawal liability) under any
multi-employer plan.
(c) The Company does not maintain or contribute to, nor
has it ever maintained or contributed to, nor has it
ever been required to contribute to any Employee
Welfare Benefit Plan providing medical, health, or
life insurance or other welfare-type benefits for
current or future retired or terminated employees,
their spouses, or their dependents (other than in
accordance with Code Section 4980B).
3.26 MINUTE BOOKS. The minute books of the Company contain a complete
summary of all meetings of directors and shareholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately.
3.27 LEGAL COMPLIANCE. The Company has complied with all applicable
laws, statutes, and ordinances (including without limitation all rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of federal, state, local and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice has been filed or commenced against
it alleging any failure to so comply. The Company has all permits, certificates,
licenses, approvals and other authorizations required in connection with the
operation of its business, all of which are valid and effective. No notice has
been issued and no investigation or review is pending or threatened by any
governmental entity with respect to (a) any alleged violation by the Company of
any law, statute or ordinance, rule, regulation, code, plan, injunction,
judgment, order, decree, ruling, charge, policy or guideline of any federal,
state, local or foreign governmental entity(or agency thereof), or (b) any
alleged failure to have all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of the business of the
Company.
3.28 LVDGT AGREEMENT. The Investment Agreement (the "LVDGT Agreement")
entered into as of the date hereof between LVDGT and SAGC and attached as Annex
3.28 hereto is valid, binding and in full force and effect.
3.29 SAGC. The Company's most significant asset is the Company's equity
holding in Saint Andrews Golf Corporation, a Nevada corporation ("SAGC"). The
Company owns 2 million shares of the Common Stock of SAGC (collectively, the
"SAGC Shares"). Each of the SAGC Shares has been duly authorized, validly
issued, fully paid and
- 11 -
<PAGE> 12
nonassessable. The Company has good, valid and marketable title to the SAGC
Shares, free and clear of any lien, charge, encumbrance, security interest,
claim or fight of others of whatever nature. No person or entity has any power
or right, whether or not shared with any other person or entity, to dispose of
or direct the disposition of any SAGC Shares or vote or direct the voting of any
SAGC Shares. The Company hereby makes the same representations and warranties as
contained in Section 3 of the LVDGT Agreement with respect to SAGC for the
benefit of the Purchaser, which representations and warranties are incorporated
herein by reference in their entirety.
3.30 DISCLOSURE. This Agreement with the Exhibits hereto and all
information provided by the Company to the Purchaser do not contain any untrue
statement of a fact or omit to state a fact necessary in order to make the
statements contained herein not misleading in light of the circumstances under
which they were made.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company with
respect to the purchase of the Shares as follows:
4.1 EXPERIENCE. It has experience in evaluating and investing in
private placement transactions of securities in companies so that it is capable
of evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests.
4.2 INVESTMENT. It is acquiring the Shares for investment for its own
account, not as a nominee or agent, and not with the view to, or for resale in
connection with, any distribution thereof. It understands that the Shares have
not been registered under the Securities Act by reason of a specific exemption
from the registration provisions of the Securities Act, the availability of
which depends upon, among other things, the bona fide nature of the investment
intent and the accuracy of the Purchaser's representations as expressed herein.
4.3 RULE 144. It acknowledges that the Shares must be held indefinitely
unless subsequently registered under the Securities Act or unless an exemption
from such registration is available. It is aware of the provisions of Rule 144
promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Company, the resale occurring not less than one year after a party has purchased
and paid for the security to be sold, the sale being effected through a "brokers
transaction" or in transactions directly with a "market maker" and the number of
shares being sold during any three month period not exceeding specified
limitations.
4.4 ACCESS TO DATA. It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and has
had the
- 12 -
<PAGE> 13
opportunity to review the Company's facilities. It has also had an opportunity
to ask questions of officers of the Company, which questions were answered to
its satisfaction. It understands that such discussions, as well as any written
information issued by the Company, were intended to describe certain aspects of
the Company's business and prospects but were not a thorough or exhaustive
description. However, no investigation by, or furnishing of information to, the
Purchaser shall affect or modify the representations, warranties and agreements
of the Company set forth herein or the right of the Purchaser to rely
exclusively thereon and to seek and obtain all damages and other remedies
available to the Purchaser in connection with the breach of any of the
representations, warranties and covenants contained herein.
4.5 AUTHORIZATION. This Agreement when executed and delivered by the
Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms subject to (a) the laws of
bankruptcy and the laws affecting creditor's rights generally and (b) the
availability of equitable remedies.
4.6 BROKERS OR FINDERS. The Company has not incurred and will not
incur, directly or indirectly, as a result of any action taken by the Purchaser,
any liability for brokerage or finder's fees or agents' commissions or any
similar charges in connection with this Agreement.
4.7 REQUIRED SEC FILINGS. The Purchaser acknowledges that within 10
days after the Closing, it will be required to file a Schedule 13D or Schedule
13G, as appropriate, or Schedule 13G, as appropriate, and a Form 3 with the
Securities and Exchange Commission.
SECTION 5
THE PURCHASER'S CONDITIONS TO CLOSING
The Purchaser's obligations to purchase the Shares at the Closing are
subject to the fulfillment of the below-listed conditions, the waiver of which
shall not be effective against the Purchaser unless it consents in writing
thereto. If at the Closing Date any of the conditions specified in this
Agreement shall not have been fulfilled, the Purchaser shall, at the Purchaser's
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights Investor may have by reason of such
nonfulfillment.
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true, complete and
correct when made, and shall be true, complete and correct on the Closing Date.
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all respects.
5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of the Company, executed by the President of the
Company, dated the Closing
- 13 -
<PAGE> 14
Date, and certifying, among other things, to the fulfillment of the conditions
specified in Sections 5.1 and 5.2 of this Agreement.
5.4 GOOD STANDING CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of good standing of the Company under the laws of the
State of Colorado.
5.5 LEGAL MATTERS. All matters of a legal nature which pertain to this
Agreement and the transactions contemplated hereby shall have been reasonably
approved by counsel to the Purchaser.
5.6 CO-SALE AGREEMENT. The Purchaser and John Boreta, the Company, Ron
Boreta and Vaso Boreta shall each have entered into a Co-Sale Agreement which
shall have a term of two years in the form attached hereto as Exhibit F.
5.7 LVDGT AGREEMENT. The transactions contemplated by the LVDGT
Agreement have been consummated or are being consummated simultaneously
herewith.
5.8 MERGER. The terms of the proposed merger between the Company and
SAGC shall be entirely satisfactory, in both form and substance, to the
Purchaser in its sole discretion. Without limiting the foregoing, the terms of
such merger shall provide that the Purchaser's economic interest in the Company
shall not be diluted by the consummation of such merger.
5.9 VOTING AGREEMENT. The voting agreement by and among the Purchaser
and the individuals listed therein (the "Voting Agreement"), in the form
attached hereto as Exhibit A, has been executed and is valid, binding and in
full force and effect.
5.10 OPINION OF THE COMPANY'S COUNSEL. The Purchaser shall have
received from Krys, Boyle, Freedman & Sawyer, P.C., counsel to the Company, an
opinion dated the Closing Date, in form and substance satisfactory to the
Purchaser, to the effect that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Colorado, and the Company has the requisite
corporate power and authority to own it properties
and to conduct its business.
(b) The Company is not presently required to be qualified
to do business as a foreign corporation in any state
or jurisdiction of the United States.
(c) The Company has the requisite corporate power and
authority to execute, deliver and perform this
Agreement and the Option Agreement. The Agreement and
the Option Agreement have been duly and validly
authorized by the Company, duly
- 14 -
<PAGE> 15
executed and delivered by an authorized officer of
the Company and constitutes legal, valid and binding
obligations of the Company, subject to bankruptcy and
other laws of general application affecting the
rights and remedies of creditors and except insofar
as the enforceability of the indemnification
provisions of Section 8.11 of the Agreement may be
limited by applicable laws and except that no opinion
need be given as to the availability of equitable
remedies.
(d) The capitalization of the Company is as follows:
(i) The authorized capital stock of the Company
consists of 15,000,000 shares of Common
Stock, of which 5,831,807 shares are issued
and outstanding, and 5,000,000 shares of
Preferred Stock, of which no shares are
issued and outstanding. The outstanding
shares have been duly authorized and validly
issued, and are fully paid and
nonassessable. Options to purchase 432,000
shares of Common Stock are issued and
outstanding under the Company's employee
stock option plan. All outstanding
securities of the Company were issued in
compliance with applicable federal and state
securities laws. Except as set forth above,
there are no option, warrants or other
rights to purchase any of the Company's
capital stock.
(ii) PREFERRED STOCK. 5,000,000 shares of Stock,
of which no shares are issued and
outstanding.
(iii) COMMON STOCK. 15,000,000 shares of Common
Stock, of which (A) 5,831,807 shares are
issued and outstanding and (B) 2,303,290
shares are being purchased pursuant to this
Agreement. All such shares of Common Stock
have been duly authorized, issued and
delivered and are validly outstanding, fully
paid and nonassessable and were issued in
compliance with all applicable federal and
state securities laws and approved by all
requisite shareholder action.
(iv) Except for (A) the rights of first refusal
contained in Section 9 hereof; (B) 347,975
shares of Common Stock reserved for issuance
upon the exercise of the stock option
granted herein, (C) 432,000 shares of Common
Stock reserved for issuance to employees and
consultants upon exercise of outstanding
stock options,
- 15 -
<PAGE> 16
there are no preemptive rights or, to the
best of counsel's knowledge, options,
warrants, conversion privileges or other
rights (or agreements of any such rights)
outstanding to purchase or otherwise obtain
any of the Company's securities.
(e) The certificates representing shares of Common Stock
are in due and proper form and have been duly and
validly executed by the officers of the Company named
thereon.
(f) The execution, delivery, performance and compliance
with the terms of this Agreement and the Option
Agreement do not violate any provision of any
federal, state or local law, rule or regulation or of
any judgment, writ, decree or order binding upon the
Company or any provision of the Company's amended
Articles of Incorporation ("Articles") or By-Laws.
(g) All consents, approvals, orders or authorizations of,
and all qualifications, registrations, designations,
declarations or filings with, any federal or state
governmental authority on the part of the Company
required in connection with the consummation of the
transactions contemplated by this Agreement and the
Option Agreement have been obtained and are effective
as of the Closing, and such counsel is not aware of
any proceedings, or threat thereof, which question
the validity thereof.
(h) Based in part upon the representations of the
Purchaser in this Agreement, the offer and sale of
the Common Stock pursuant to the terms of this
Agreement are exempt from the registration
requirements of Section 5 of the Securities Act by
virtue of Section 4(2) thereof, and from the
qualification requirements of the securities laws of
the State of Nevada, or all requisite permits,
qualifications and orders have been obtained.
(i) Except as set forth on the Schedule of Exceptions
attached to the Agreement as Exhibit B, such counsel
is not aware of any action, proceeding or
investigation pending against the Company or any of
its officers, directors or employees, or that any of
the foregoing has received any threat thereof, which
questions the validity of the Agreement or the right
of the Company or its officers, directors and
employees to enter into such agreement or which might
result, either individually or in the aggregate, in
any adverse change in the assets, condition, affairs
or prospects of the Company, nor is such counsel
aware of any litigation pending, against the Company
or any of its
- 16 -
<PAGE> 17
officers, directors or employees' or that any of the
foregoing has received any threat thereof, by reason
of the proposed activities of the Company, the past
employment relationships of its officers, directors
or employees, or negotiations by the Company or any
of its officers or directors with possible investors
in the Company.
(j) The Company is not in violation of any provisions of
its Articles or Bylaws, and neither of such documents
is in violation of any provision of the Corporation
Law of the State of Colorado.
5.11 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
Closing Date, there shall have been no material adverse change, regardless of
insurance coverage therefor, in the business or any of the assets, results of
operations, liabilities, prospects or conditions, financial or otherwise, of the
Company.
SECTION 6
THE COMPANY'S CONDITIONS TO CLOSING
The Company's obligation to sell and issue the Shares at the Closing
is, at the option of the Company, subject to the fulfillment as of the Closing
Date of the following conditions:
6.1 REPRESENTATIONS. The representations made by the Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
6.2 LEGAL MATTERS. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to the Company.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
7.1 FINANCIAL INFORMATION. The Company will mail the following reports
to the Purchaser for so long as the Purchaser is a holder of any of the shares
of Common Stock and the Option Shares:
(a) As soon as practicable after the end of each fiscal
year, and in any event within 90 days thereafter,
consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal
year, and consolidated statements of operations and
consolidated statements of cash flows of the Company
and its subsidiaries, if any, for such year, prepared
in accordance with
- 17 -
<PAGE> 18
generally accepted accounting principles and setting
forth in each case in comparative form similar
information of the previous fiscal year, all in
reasonable detail and audited by independent public
accountants of national standing selected by the
Company.
(b) As soon as practicable after the end of the first,
second and third quarterly accounting periods in each
fiscal year of the Company and in any event within 45
days thereafter, a consolidated balance sheet of the
Company and its subsidiaries, if any, as of the end
of each such quarterly period, and consolidated
statements of operations and consolidated statements
of cash flows of the Company and its subsidiaries, if
any, for such period and for the current fiscal year
to date, prepared in accordance with generally
accepted accounting principles (other than for
accompanying notes), all in reasonable detail and
signed, subject to changes resulting from year-end
audit adjustments, by the principal financial or
accounting officer of the Company.
(c) Within 15 days after the end of each fiscal month,
unaudited consolidated balance sheets of the Company
as of the end of such month, unaudited consolidated
statements of operations including income statements,
and unaudited consolidated rolling cash flow
projections for each month and for the current fiscal
year to date. Such financial statements shall be
prepared in accordance with generally accepted
accounting principles consistently applied (other
than accompanying notes), all in reasonable detail
subject to year-end audit adjustments.
(d) Promptly after each meeting or the execution of an
action by written consent, copies of the minutes of
proceedings or actions by written consent of the
Company's Board of Directors and shareholders.
(e) With reasonable promptness, such other information
and data with respect to the Company and its
subsidiaries, if any, as the Purchaser may from time
to time reasonably request.
(f) For so long as the Purchaser is eligible to receive
reports under this Section 7.1, it shall also have
the right, at its expense, to visit and inspect any
of the properties of the Company or any of its
subsidiaries, to examine its books of account and
records, and to discuss their affairs, finances and
accounts with their officers, all at such reasonable
times as often as may be
- 18 -
<PAGE> 19
reasonably requested, provided, however, that the
Company shall not be obligated to provide any
information, other than to the representatives of the
Purchaser on the Board of Directors, that it
reasonably considers to be a trade secret or to
contain confidential information.
7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 7.1 may not be assigned or otherwise conveyed by the
Purchaser or by any subsequent transferee of any such rights without the prior
written consent of the Company; provided, however, that the Purchaser may assign
such rights to a parent, subsidiary or affiliate of the Purchaser upon notice to
the Company thereof.
7.3 USE OF PROCEEDS. The Company shall completely segregate the
proceeds from the sale of the Shares from all other funds of the Company. These
funds shall be strictly and exclusively used for the purchase of equity
securities of SAGC and shall not be used for any other purposes. All such
purchases shall be on terms and conditions satisfactory to the Purchaser. The
Company shall maintain a separate accounting for the use of these proceeds and
provide a copy of such accounting to the Purchaser upon request.
7.4 RULE 144 REPORTING. With a view to making available to the
Purchaser the benefits of certain rules and regulations of the Securities and
Exchange Commission which may permit the sale the Option Shares to the public
without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under
the Securities Act, at all times;
(b) Use its best efforts to file with the Securities and
Exchange Commission in a timely manner all reports
and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) So long as the Purchaser owns any Restricted
Securities (as defined in Section 8.1 hereof) furnish
to the Purchaser forthwith upon request a written
statement by the Company as to its compliance with
the reporting requirements of Rule 144, and of the
Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company
filed with the Securities and Exchange Commission,
and such other reports and documents of the Company
and other information in the possession of or
reasonably obtained by the Company as the Purchaser
may reasonably request in availing itself of any due
or regulation of the Securities and Exchange
Commission
- 19 -
<PAGE> 20
allowing the Purchaser to sell any such securities
without registration.
7.5 PROTECTIVE PROVISIONS. For so long as the Purchaser or its
assignees is a holder of any shares of the Common Stock or Option Shares, the
Company shall not without the Purchaser's prior written consent:
(a) change any of the terms of Common Stock or any
amendment, addition, change, modification or deletion
of any portion of the By-Laws or Articles of the
Company;
(b) authorize or issue (i) any class or series of
Preferred Stock or other securities having rights
senior to the Common Stock, or (ii) any rights to
purchase or any securities or instruments convertible
or exchangeable into any such Preferred Stock and
other securities of the Company;
(c) sell, lease, convey or otherwise dispose of all or
substantially all of its assets, or effect any
merger, consolidation, reorganization or amalgamation
of the Company, with another corporation;
(d) adopt a statutory plan of share exchange;
(e) redeem or repurchase (or enter into any agreement to
become so obligated) any shares of Common Stock or
Common Stock (other than pursuant to employee stock
vesting or repurchase employee stock agreements;
(f) enter into any transaction with or increase the
compensation paid or issue any securities of the
Company or SAGC, rights or options to purchase any
securities of the Company or SAGC or any instrument
convertible or exchangeable into or payable or
satisfied with any securities of the Company or SAGC
or any other compensation derived from or based on
the profits or securities of the Company or SAGC to
any of Boreta or SAGC or any of their respective
affiliates or approve, allow or agree to any of the
foregoing;
(g) take or fail to take any action with respect to any
shares of capital stock of SAGC or rights to purchase
any such capital stock owned or under the control of
the Company (including, but not limited to, the sale,
transfer, assignment, disposition, exchange,
conversion, pledge or voting of such shares, the
granting of any proxies with respect to such shares,
or entering into any agreement or arrangement with
respect to any of the foregoing);
- 20 -
<PAGE> 21
(h) dissolve or liquidate the Company and/or its assets
or close the business of the Company; or
(i) file a petition to appoint a receiver for the Company
or file a voluntary petition for bankruptcy,
insolvency or to make any assignment for the benefit
of creditors of the Company
7.6 GRANT OF STOCK OPTIONS. Simultaneously with the execution hereof,
the Company and the Purchaser are entering into an option agreement (the "Option
Agreement") attached as annex A hereto pursuant to which the Company is granting
the Purchaser an option (the "Option") to purchase from the Company Three
Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of
Common Stock of the Company (the "Option Shares"), as such number may be
adjusted pursuant to the terms of the Option Agreement. The Option may be
exercised from time to time in full or in part by the Purchaser at any time
prior to the tenth year anniversary of the Closing. The Option shall be
exercisable at a purchase price of $1.8392 per share, subject to adjustment as
described therein. The Company agrees that the Option Shares issued upon the
exercise by Purchaser of the Option shall carry the same registration rights as
set forth in Section 8 of this Agreement and be considered "Registrable
Securities" under the terms of such Section 8.
7.7 PRINCIPAL BUSINESS. The Company shall ensure that all its principal
shareholders, officers and directors (a) direct or refer all opportunities
relating to, similar to or of the same nature as SAGC's Sports Park business
exclusively to SAGC, (b) not realize any profit or gain with respect to such
opportunities to the detriment or in lieu of the Company or SAGC and (c) not
otherwise misappropriate any corporate opportunity.
7.8 MERGER. The Company shall amend the merger agreement (the "Merger
Agreement") dated as of January 20, 1998 with SAGC such that upon consummation
of the merger, the Purchaser will receive equity interests in the surviving
company having terms, conditions, rights, designations, preferences and values
at least as favorable as those of the Shares. Notwithstanding the foregoing, no
amendment of or modification to the Merger Agreement shall be made without the
prior approval of the Purchaser.
SECTION 8
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT;
REGISTRATION RIGHTS; INDEMNIFICATION
8.1 CERTAIN DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
- 21 -
<PAGE> 22
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 as
amended or any similar federal statute and the rules and regulations of the
Commissions thereunder all as the same shall be in effect at the time.
"HOLDER" shall mean the Purchaser and any person holding Registrable
Securities or shares to whom the rights under this Section 8 have been
transferred in accordance with Section 8.2 hereof.
"REGISTRABLE SECURITIES" means (i) the Option Shares; and (ii) any
Common Stock of the Company issued or issuable in respect of the Option Shares
or other securities issued or issuable pursuant to the conversion of the shares
upon any Recapitalization or any Common Stock otherwise issued or issuable with
respect to the Shares provided however that shares of Common Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been (A) sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction or (B) sold or are
available for sale in the opinion of counsel to the Company in a single
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are or may be removed upon the consummation of such sale.
The term "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except Selling
Expenses as defined below, incurred by the Company in complying with Sections
8.5, 8.6 and 8.7, including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees and disbursements of counsel for
the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 8.3 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the notes and regulations of the Commission
thereunder all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the holders.
8.2 RESTRICTION ON TRANSFERABILITY. The Shares shall not be sold,
assigned, transferred or pledged except upon satisfaction of the conditions
specified in this Section 8, which conditions are intended to ensure compliance
with the provisions of the Securities Act.
- 22 -
<PAGE> 23
8.3 RESTRICTIVE LEGEND. Each certificate representing (i) the Shares,
and (ii) any other securities issued in respect of the Shares upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar
events, shall (unless otherwise permitted by the provisions of Section 8.4
below) be stamped or otherwise imprinted with a legend in the following form (in
addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF
THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
The Purchaser consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Shares in order to
implement the restrictions on transfer established in this Section 8.
8.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 8.4. Prior to any proposed
sale, assignment, transfer or pledge of any Restricted Securities (other than
(i) transfers not involving a change in beneficial ownership or (ii)
transactions involving the distribution of Restricted Securities by the
Purchaser to a parent, subsidiary or affiliate of the Purchaser), unless there
is in effect a registration statement under the Securities Act covering the
proposed transfer, the holder thereof shall give written notice to the Company
of such holder's intention to effect such transfer, sale, assignment or pledge.
Each such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities Transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144,
the
- 23 -
<PAGE> 24
appropriate restrictive legend set forth in Section 8.3 above, except that such
certificate shall not bear such restrictive legend if in the opinion of counsel
for such holder and the Company such legend is not required in order to
establish compliance with any provision of the Securities Act.
8.5 REQUEST FOR REGISTRATION.
(a) REQUEST FOR REGISTRATION. If the Company shall
receive from the Purchaser at any time a written
request that the Company effect any registration with
respect to all or a part of the Registrable
Securities, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its best efforts
to effect such registration (including,
without limitation, filing post-effective
amendments, appropriate qualifications under
applicable blue sky or other state
securities laws, and appropriate compliance
with the Securities Act) and as would permit
or facilitate the sale and distribution of
all or such portion of such Registrable
Securities as are specified in such request,
together with all or such portion of the
Registrable Securities of any Holder or
holders joining in such request as are
specified in a written request received by
the Company within twenty (20) days after
such written notice from the Company is
mailed or delivered.
The Company shall not be obligated to effect, or to
take any action to effect, any such registration
pursuant to this Section 8.5:
(A) After the Company has initiated one
such registration pursuant to this
Section 8.5(a);
(B) During the period starting with the
date sixty (60) days prior to the
Company's good faith estimate of
the date of filing of, and ending
on a date one hundred twenty (120)
days after the effective date of, a
Company-initiated registration;
provided that the Company is
actively employing in good faith
all reasonable efforts to cause
such registration statement to
become effective;
- 24 -
<PAGE> 25
(b) Subject to the foregoing clauses (A) and (B), the
Company shall file a registration statement covering
the Registrable Securities so requested to be
registered as soon as practicable after receipt of
the request or requests of the Purchaser.
The registration statement filed pursuant to the
request of the Purchaser may include other securities
of the Company, with respect to which registration
rights have been granted, and may include securities
of the Company being sold for the account of the
Company.
(c) UNDERWRITING. The right of any Holder to registration
pursuant to Section 8.5 shall be conditioned upon
such holder's participation in such underwriting and
the inclusion of such holder's Registrable Securities
in the underwriting (unless otherwise mutually agreed
by a majority in interest of the Purchaser and such
holder with respect to such participation and
inclusion) to the extent provided herein. A Holder
may elect to include in such underwriting all or a
part of the Registrable Securities he or she holds.
8.6 THE COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time
to time the Company shall determine to register of
its securities, either for its own account or the
account of a Holder or Holders, other than a
registration relating solely to employee benefit
plans or a post effective amendment to the
registration statement for the Company's initial
public offering, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any
related qualification under the sky laws or
other compliance), and in any underwriting
involved therein, all the Registrable
Securities specified in a written request or
requests, made within 20 days after receipt
of such written notice from the Company, by
any Holder.
(b) UNDERWRITING. If the registration of which the
Company gives notice is for a registered public
offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice
given pursuant to Section 8.6(a)(i). In such event
the right of any Holder to registration pursuant to
this Section 8.6 shall be conditioned upon such
Holder's
- 25 -
<PAGE> 26
participation in such underwriting and the inclusion
of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All
Holders proposing to distribute their securities
through such underwriting shall (together with the
Company and any other shareholders distributing their
securities through such underwriting) enter into an
underwriting agreement in customary form with the
managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision
of this Section 8.6, if the managing underwriter
determines that marketing factors require a
limitation of the number of shares to be
underwritten, the managing underwriter may limit the
Registrable Securities to be included in such
registration. The Company shall so advise all Holders
and the number of shares of Registrable Securities
that may be included in the registration and
underwriting shall be allocated among all Holders in
proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by
such holders at the time of filing the registration
statement. To facilitate the allocation of shares in
accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or
other shareholder to the nearest 100 shares. If any
Holder or other shareholder disapproves of the terms
of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn
from such registration, and shall not be transferred
in a public distribution prior to 90 days after the
effective date of the registration statement relating
thereto, or such other shorter period of time as the
underwriters may require. The Company may include
shares of Common Stock held by shareholders other
than Holders in a registration statement pursuant to
this Section 8.6, so long as the amount of
Registrable Securities otherwise includable in such
registration statement would not thereby be
diminished.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall
have the right to terminate or withdraw any
registration initiated by it under this Section 8.6
prior to the effectiveness of such registration
whether or not any Holder has elected to include
securities in such registration.
- 26 -
<PAGE> 27
8.7 REGISTRATION ON FORM S-3.
(a) The Company shall use its best efforts to qualify for
registration on Form S-3 or any comparable or
successor form or forms. After the Company has
qualified for the use of Form S-3, in addition to the
rights contained in the foregoing provisions of this
Section 8, the Holders of Registrable Securities
shall have the right to request registrations on Form
S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities
to be disposed of and the intended methods of
disposition of such shares by such Holder or
Holders).
(b) If a request complying with the requirements of
Section 8.7(a) hereof is delivered to the Company,
the provisions of Section 8.5(a)(i) and (ii) and
Section 8.5(b) hereof shall apply to such
registration. If the registration is for an
underwritten offering, the provisions of Section
8.5(c) hereof shall apply to such registration.
8.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with the registration pursuant to Section 8.5, 8.6 and 8.7 shall be
borne by the Company. Unless otherwise stated, all Selling Expenses relating to
securities registered on behalf of the Holders and all other Registration
Expenses shall be borne by the Holders of such securities pro rata on the basis
of the number of shares registered.
8.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its
best efforts to cause such registration statement to
become and remain effective for at least one hundred
twenty (120) days, and prepare and file with the
Commission such amendments to such registration
statement and supplements to the prospectus contained
therein as may be necessary to keep such registration
statement effective for at least one hundred twenty
(120) days, provided that no such registration shall
constitute a shelf registration under Rule 415
promulgated by the Commission under the Securities
Act;
(b) Enter into a written underwriting agreement in
customary form and substance reasonably satisfactory
to the Company, the
- 27 -
<PAGE> 28
Holders and the managing underwriting or underwriters
of the public offering of such securities, if the
offering is to be underwritten in whole or in part;
(c) Furnish to the Holders participating in such
registration and to the underwriters of the
securities being registered such reasonable number of
copies of the registration statement, preliminary
prospectus' final prospects and such other documents
as such underwriters may reasonably request in order
to facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the
securities covered by such registration statement
under such state securities or blue sky laws of such
jurisdictions as such participating Holders may
reasonably request within ten (10) days prior to the
original filing of such registration statement,
except that the Company shall not for any purpose be
required to execute a general consent to service of
process or to qualify to do business a foreign
corporation in any jurisdiction where it is not so
qualified;
(e) Notify the Holders (of if they have appointed an
attorney-in-fact, such attorney-in-fact)
participating in such registration, promptly after it
shall receive notice thereof, of the time when such
registration statement has become effective or a
supplement to any prospectus forming a part of such
registration statement has been filed;
(f) Notify such Holders or their attorney-in-fact
promptly of any request by the Commission for the
amending or supplementing of such registration
statement or prospectus or for additional
information;
(g) Prepare and file with the Commission promptly upon
the request of such registration statement or
prospectus which, in the reasonable opinion of
counsel for such Holders, is required under the
Securities Act or the rules and regulations
thereunder in connection with the distribution of the
Registration Securities by such Holders;
(h) Prepare and promptly file with the Commission, and
promptly notify such Holders or their
attorney-in-fact of the filing of, such amendment or
supplement to such registration statement or
prospectus as may be necessary to correct any
statements or omissions if, at the time when a
prospectus relating to such
- 28 -
<PAGE> 29
securities is required to be delivered under the
Securities Act, any event has occurred as the result
of which any such prospectus or any other prospectus
as then in effect would include an untrue statement
of a material fact or omit to state any material fact
necessary to make the statements therein not
misleading in light of the circumstances in which
they were made;
(i) In case any of such Holders or any underwriter for
any such Holders is required to deliver a prospectus
at a time when the prospectus then in effect may no
longer be used under the Securities Act, prepare
promptly upon request such amendment or amendments to
such registration statement and such prospectus as
may be necessary to permit compliance with the
requirements of the Securities Act;
(j) Advise such Holders or their attorney-in-fact,
promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order
by the Commission suspending the effectiveness of
such registration statement or the initiation or
threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance
of any stop order or to obtain its withdrawal if such
stop order should be issued; and
(k) At the request of any such holder, furnish on the
effective date of the registration statement and, if
such registration includes an underwritten public
offering, at the closing provided for in the
underwriting agreement, (i) an opinion, dated each
such date, of the counsel representing the Company
for the purpose of such registration, addressed to
the underwriters, if any, and to the Holder or
Holders making such request, covering such matters
with respect to the registration statement, the
prospectus and each amendment or supplement thereto,
proceedings under state and federal securities laws
other matters relating to the Company, the securities
being registered and the offer and sale of such
securities as are customarily the subject of opinions
of issuer's counsel provided to underwriters in
underwritten public offerings, and (ii) to the extent
the Company's accounting firm, is willing to do so, a
letter dated each such date, from the independent
public accountants of the Company, addressed to the
underwriters, if any, and to the Holder or Holders
making such request, stating that they are
independent public accountants within the meaning of
the Securities Act and that in the opinion of such
accountants the financial statements and other
financial data of the Company included in the
registration
- 29 -
<PAGE> 30
statement or the prospectus or any amendment or
supplement thereto comply in all material respects
with the applicable accounting requirements of the
Securities Act, and additionally covering such other
financial matter, including information as to the
period ending not more than five (5) business days
prior to the data of such letter with respect to the
registration statement and prospectus, as the
underwriters or such requesting Holder or Holders may
reasonably request.
8.10 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 8.
8.11 INDEMNIFICATION.
(a) The Company will defend, indemnify and hold the
Purchaser, each Holder, each of its officers,
directors and partners, and each person controlling
the Purchaser and each such Holder within the meaning
of Section 15 of the Securities Act, and each
underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses,
damages or liabilities (or actions in respect
thereof), including without limitation, any of the
foregoing incurred in settlement of any litigation,
commenced or threatened, arising out of or based on
(i) any breaches of the representations, warrants or
covenants contained herein, or (ii) any untrue
statement (or alleged untrue statement) of a material
fact contained in any registration statement,
prospectus, offering circular or other document or
any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or
based on any omission (or alleged omission) to state
therein a material fact required to be stated therein
or necessary to make the statements therein, light of
the circumstances in which they were made, not
misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated
under the Securities Act applicable to the Company in
connection with any such registration, qualification
or compliance, and the Company will reimburse
Purchaser, and each such holder, each of its officers
and directors, and each person controlling such
holder, each such underwriter and each person who
controls any such underwriter, for any legal and any
other expenses reasonably
- 30 -
<PAGE> 31
incurred in connection with investigating, preparing
or defending any such claim, loss, damage, liability
or action, provided that the Company will not be
liable in any such case to the extent that any such
claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission or
alleged untrue statement or omission, made in
reliance upon and in conformity with written
information furnished to the Company by an instrument
duly executed by such Holder, controlling person or
underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to
which such registration, qualification or compliance
is being effected, indemnify the Company each to its
directors and officers, each underwriter, if any, of
the Company's securities covered by such a
registration statement, each person who controls the
Company or such Holder, each of its officers and
directors and each person controlling such Holder
within the meaning of Section 15 of the Section 15 of
the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material
fact contained in any such registration statement
prospectus' offering circular or other document, or
any omission (or alleged omission) to state therein a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, and will reimburse the Company, such
Holders, such directors, officers, persons,
underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with
investigating or defending any such claim, loss,
damage, liability or action, in each case to the
extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission
(or alleged omission) is made in such registration
statement prospectus, offering circular or other
document in reliance upon and in conformity with
written information furnished to the Company by an
instrument duly executed by such Holder and stated to
be specifically for use therein. Notwithstanding the
foregoing, the liability of each Holder under this
subsection (b) shall be limited to an amount equal to
the initial public offering price of the shares sold
by such Holder, unless such liability arises out of
or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this
Section 8.11 (the "Indemnified Party") shall give
notice to the party required
- 31 -
<PAGE> 32
to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be
sought, and shall, when applicable, permit the
Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall
conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld), and the
Indemnified Party may participate in such defense at
such party's expense, and provided further that the
failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying
Party of its obligations under this Section 8 unless
the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the
Indemnifying Party shall not assume the defense for
matter as to which there is a conflict of interest or
separate and different defenses. No Indemnifying
Party, in the defense of any such claim or
litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment
or enter into any settlement which does not include
as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim
or litigation.
8.12 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted the Purchasers under Sections 8.5, 8.6 and 8.7
may be assigned to a transferee or assignee in connection with any transferor
assignment of Registrable Securities by the Purchaser provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities laws
and (ii) such assignee or transferee acquires at least 10,000 of the Shares
(appropriately adjusted for Recapitalization). Notwithstanding the foregoing,
the rights to cause the Company to register securities may be assigned to any
parent, subsidiary or affiliate of the Purchaser, without compliance with item
(ii) above, provided, written notice thereof is promptly given to the Company.
8.13 STANDOFF AGREEMENT. Each Holder agrees, so long as such Holder
holds at least five percent (5%) of the Company's outstanding voting equity
securities, that, upon request of the Company or the underwriters managing an
underwritten offering of the Company's securities, it will not sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Registrable Securities (other than those included in the registration)
without the prior written consent of the Company or such underwriters, a the
case may be, for such period of time (not to exceed one hundred and twenty (120)
days) from the effective date of such registration as may be requested by the
underwriters; provided that the officers and directors of the Company who own
stock of the Company also agree to such restrictions.
- 32 -
<PAGE> 33
SECTION 9
THE PURCHASER'S RIGHT OF FIRST REFUSAL
9.1 RIGHT OF FIRST REFUSAL. The Company hereby grants to the Purchaser
the right of first refusal to purchase its pro rata share of all or any part of
any New Securities (as defined in this Section 9.1) which the Company may, from
time to time, propose to sell and issue. The Purchaser's pro rata share, for
purposes of this right of first refusal, is the ratio that the sum of the number
of shares of Common Stock then held by the Purchaser bears to the sum of the
total number of shares of Common Stock then outstanding and the number of shares
of Common Stock issuable upon conversion of the then outstanding Preferred Stock
convertible into Common Stock.
(a) Except as set forth below, "New Securities" shall
mean any shares of capital stock of the Company
including Common Stock and Preferred Stock, whether
now authorized or not, and rights, options or
warrants to purchase said shares of Common Stock or
Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into
said shares of Common Stock or Preferred Stock.
Notwithstanding the foregoing, "New Securities" does
not include (i) the Shares and the Option Shares,
(ii) securities offered to the public generally
pursuant to a registration statement or pursuant to
Regulation A under the Securities Act, (iii)
securities issued in the acquisition of another
corporation by the Company by merger, purchase of
substantially all of the assets or other
reorganization whereby the Company or its
shareholders own not less than fifty-one percent
(51%) of the voting power of the surviving or
successor corporation, (iv) shares of the Company's
Common Stock or related options exercisable for such
Common Stock issued to employees, officers and
directors of the Company pursuant to any arrangement
approved by the Board of Directors of the Company,
(v) stock issued pursuant to any rights or
agreements, including without limitation convertible
securities, options, warrants, provided that the
rights of first refusal established by this Section
9.1 apply with respect to the initial sale or grant
by the Company of such rights or agreements, and (vi)
stock issued in connection with any stock split,
stock dividend or recapitalization by the Company.
(b) In the event the Company proposes to undertake an
issuance of New Securities, it shall give the
Purchaser written notice of its intention, describing
the type of New Securities, and the price and terms
upon which the Company proposes to issue the same.
The Purchaser shall have fifteen (15) days from the
date of receipt of any such notice to agree to
purchase up to the
- 33 -
<PAGE> 34
Purchaser's respective pro rata share of such New
Securities for the price and upon the terms specified
in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to
be purchased.
(c) In the event the Purchaser fails to exercise such
right of first refusal within said fifteen (15) day
period, the Company shall have ninety (90) days
thereafter to sell or enter into an agreement
(pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within sixty (60)
days from the date of said agreement) to sell the New
Securities not elected to be purchased by the
Purchaser at the price and upon the terms no more
favorable to the purchasers of such securities than
specified in the Company's notice. In the event the
Company has not sold the New Securities or entered
into an agreement to sell the New Securities within
said ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within
sixty (60) days from the date of said agreement), the
Company shall not thereafter issue or sell any of
such New Securities, without first offering such
securities in the manner provided above.
(d) The right of first refusal hereunder is not
assignable except to a parent, subsidiary or
affiliate of the Purchaser, without the prior written
consent of the Company, which consent will not be
unreasonably withheld.
SECTION 10
INDEMNIFICATION
10.01 SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under this Section 10. The
representations and warranties set forth herein are cumulative, and any
limitation or qualification set forth in any one representation and warranty
therein shall not limit or qualify any other representation and warranty
therein.
10.02 INDEMNIFICATION BY THE COMPANY. Notwithstanding any term in this
Agreement to the contrary, the Company, shall indemnify, defend, save and hold
the Purchaser and its officers, directors, employees, agents and Affiliates
(excluding Ron Boreta, Vaso Boreta, John Boreta and the Company; collectively,
"Purchaser Indemnitees") harmless from and against all demands, claims,
allegations assertions, actions or causes of action, assessments, losses,
damages, deficiencies, liabilities, costs and expenses (including reasonable
legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing, whether or not the
underlying demands, claims,
- 34 -
<PAGE> 35
allegations, etc., of third parties are meritorious (collectively, "Purchaser
Damages") asserted against, imposed upon, resulting to, required to be paid by
or incurred by any Purchaser Indemnitees, directly or indirectly, in connection
with, arising out of, which could result in, or which would not have occurred
but for, (a) a breach of any representation or warranty made by the Company in
this Agreement, in any certificate or document furnished pursuant hereto by the
Company or any other agreement to which the Company is or is to become a party,
or (b) a breach or nonfulfillment of any covenant or agreement made by the
Company in or pursuant to this Agreement or in any other agreement to which the
Company is or is to become a party.
10.03 INDEMNIFICATION BY PURCHASER. The Purchaser shall indemnify,
defend, save and hold the Company and its officers, directors, employees, agents
and Affiliates (excluding Ron Boreta, Vaso Boreta, John Boreta and the
Purchaser; (collectively, "Company Indemnitees") harmless from and against any
and all demands, claims, actions or causes of action, assessments, losses,
damages, deficiencies, liabilities, costs and expenses (including reasonable
legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing, whether or not the
underlying demands, claims, allegations, etc., of third parties are meritorious
(collectively, "Company Damages") asserted against, imposed upon, resulting to,
required to be paid by or incurred by any Company Indemnitees, directly or
indirectly, in connection with, arising out of, which would result in, or which
would not have occurred but for, (a) a breach of any representation or warranty
made by the Purchaser in this Agreement or in any certificate or document
furnished pursuant hereto by buyer or any other agreement to which the Purchaser
is a party and (b) a breach of nonfulfillment of any covenant of agreement made
by the Purchaser in or pursuant to this Agreement and in any other agreement to
which the Purchaser is a party.
10.04 NOTICE OF CLAIMS. If any Purchaser Indemnitee or Company
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Purchaser Damages or Company Damages, as the case may
be ("Damages"), for which it is entitled to indemnification under this Section
10, such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Section 10 or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
10.05 THIRD PARTY CLAIMS. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party,
- 35 -
<PAGE> 36
provided that the fees and expense of such counsel shall be borne by the
Indemnifying Party. If the Indemnified Party permits the Indemnifying Party to
undertake, conduct and control the conduct and settlement of such action or
suit, (a) the Indemnifying Party shall not thereby permit to exist any
encumbrance upon any asset of the Indemnified Party; (b) the Indemnifying Party
shall not consent to any settlement that does not include as an unconditional
term thereof the giving of a complete release from liability with respect to
such action or suit to the Indemnified Party; (c) the Indemnifying Party shall
permit the Indemnified Party to participate in such conduct or settlement
through counsel chosen by the Indemnified Party; and (d) the Indemnifying Party
shall agree promptly to reimburse the Indemnified Party for the full amount of
any Damages including fees and expenses of counsel for the Indemnified Party
incurred after giving the foregoing notice to the Indemnifying Party and prior
to the assumption of the conduct and control of such action or suit by the
Indemnifying Party.
10.6 GOOD FAITH EFFORTS TO SETTLE DISPUTES. The Purchaser and the
Company agree that, prior to commencing any litigation against the other
concerning any matter with respect to which such party intends to claim a right
of indemnification in such proceeding, the respective chief executive officers
(or officers holding such authority) of such parties shall meet in a timely
manner and attempt in good faith to negotiate a settlement of such dispute
during which time such officers shall disclose to the others all relevant
information relating to such dispute. In the event that the parties are unable
to amicably resolve the matter or matters in dispute, the parties shall submit
all matters still in dispute to arbitration in accordance with the arbitration
rules of the American Arbitration Association. The Purchaser shall select an
arbitrator and the Company shall select an arbitrator and the two arbitrators so
selected shall select a third arbitrator. The decision of the arbitrators shall
be final and binding on the parties. Such matter shall be submitted to
arbitration within thirty (30) days from the date that either the Company or the
Purchaser declares that any matter in dispute cannot be amicable resolved. All
costs and expenses of arbitration shall be paid equally by the Purchaser on one
hand and the Company on the other. Any cash or other monetary award shall be
paid within thirty (30) days of the arbitrators final decision. Arbitration
shall be held in Las Vegas, Nevada.
SECTION 11
MISCELLANEOUS
11.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of Colorado.
11.2 EVENTS OF DEFAULT AND REMEDIES. (a) For purpose of this Agreement,
the term "Event of Default" shall mean the occurrence or happening of any breach
or violation of or default in the observation or performance of any term,
agreement, covenant, representation, warranty, condition or stipulation
contained or referred to in this Agreement by any party to this Agreement.
- 36 -
<PAGE> 37
(b) (i) Upon the occurrence of an Event of Default, the
non-defaulting party shall have all rights and
remedies afforded by law or equity, including the
remedy of specific performance, it being recognized
that the Common Stock and Option Shares and the
rights and benefits to be derived therefrom are
unique and special. Any party awarded a money
judgment against the other shall be entitled to
recover in addition thereto interest thereon at the
rate of twelve percent (12%) per annum.
(ii) Each right, power and remedy provided for in this
Agreement, or now or hereafter existing at law or in
equity shall be cumulative and may be exercised
successively or concurrently and shall be in addition
to every other such right, power or remedy. The
exercise or beginning of the exercise by either party
of any one or more of such rights, powers or remedies
shall not preclude the simultaneous or later exercise
of all such other rights, powers or remedies. No
failure or delay on the party of any party to
exercise any such right, power or remedy shall
operate as a waiver thereof. No waiver by a party
will be effective unless and until it is in writing
and signed by an authorized representative of such
party.
(c) Each party will pay to the other, in addition to all other sums due
all costs and expenses (including, without limitation, attorneys' fees,
brokerage fees and accountants' fees) reasonably incurred by or on behalf of a
party in exercising and protecting their rights and remedies hereunder,
enforcing the obligations of the other party hereunder and defending any
unsuccessful counterclaim, cross-claim or other claim asserted by the other
party.
11.3 SET OFF. In addition to, and not in lieu of, any and all other
remedies which the Purchaser otherwise may have at law or in equity, or pursuant
to this Agreement, the Purchaser shall have the right to set off, counterclaim
and recoup any loss against any amounts to be paid to the Company under this
Agreement.
11.4 NONEXCLUSIVITY. The foregoing set off right and the
indemnification provision set forth in Section 8 are in addition to, and not in
lieu or derogation of, any statutory, equitable or common law remedy the
Purchaser may have arising out of or as a result of this Agreement or for breach
of representations, warranties or covenants herein. Neither the exercise of nor
the failure to exercise the set off right set forth in Section 10.3 shall
constitute an election of remedies.
11.5 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby.
- 37 -
<PAGE> 38
11.6 ANTI-DILUTION PROVISIONS. The "Anti-Dilution Provisions" shall
provide that in the event that any of the securities referenced herein as
presently constituted, shall be changed into or exchanged for a different number
or kind of securities or interests of the Company or of another entity (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares, sale of assets or otherwise), or if the number
of such securities shall be increased through the payment of a dividend, or if
the Company makes any other distribution of securities or other property
including cash in respect of such securities, then there shall be substituted
for and added to such securities, as the case may be, theretofore subject or
which may become subject to the terms of this Agreement, the number and kind of
securities, interests or property into which each outstanding security shall be
so changed, or for which each such security shall be exchanged, or to which each
such security shall be entitled, as the case may be, and the purchase price per
security appropriately adjusted.
11.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS. The rights and obligations of
the Company and the rights of the Purchaser to purchase the Shares shall not be
assignable without the written consent of the other; provided, however, the
Purchaser may assign its rights and obligations under this Agreement to a
parent, subsidiary or affiliate of the Purchaser upon notice to the Company
thereof. Except as otherwise provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
11.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
endorsement of any such amendment, waiver, discharge or termination is sought.
11.9 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to the Purchaser, at its address set forth on the cover page of
this Agreement, or at such other address as the Purchaser shall have furnished
to the Company in writing, or (b) if to any other holder of any Shares or Option
Shares, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder of such Shares or Option Shares who has
so furnished an address to the Company, or (c) if to the Company, one copy shall
be sent to its address set forth on the cover page of this Agreement and
addressed to the attention of the Corporate Secretary, or at such other address
as the Company shall have furnished to the Purchaser.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given or received, as the case
may be, when delivered if
- 38 -
<PAGE> 39
delivered personally, when sent by confirmed facsimile to the correct facsimile
number, or, if sent by mail, at the earlier of its receipt or 72 hours after the
same has been deposited in a regularly maintained receptacle for the deposit of
the United States mail, addressed and mailed as aforesaid.
11.10 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any Shares or Option Shares, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
Except as provided in Section 10.8 hereof, any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach of
default under this Agreement or any waiver on the part of any holder of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
11.11 EXPENSES. Except as otherwise provided herein, the Company and
the Purchaser shall each bear their own expenses incurred on their behalf with
respect to this Agreement and the transactions contemplated hereby.
11.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
11.13 CONFIDENTIALITY. Neither party shall make or issue, or cause to
be made or issued, any announcement or written statement concerning this
Agreement or the transactions contemplated hereby for dissemination to the
general public without the prior written consent of the other party. This
provision shall not apply, however, to any announcement or written statement
which in the opinion of counsel to such party is required to be made by law or
the regulations of any federal or state governmental agency or any stock
exchange.
11.14 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
11.15 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
11.16 THIRD PARTY BENEFICIARY. It is understood that the Purchaser is a
specific intended third party beneficiary of the LVDGT Agreement.
- 39 -
<PAGE> 40
The foregoing Agreement is hereby executed as of the date first above
written.
"PURCHASER" "COMPANY"
ASI GROUP, L.L.C., LAS VEGAS DISCOUNT GOLF & TENNIS,
a Nevada limited liability company INC., a Colorado corporation
By: Sunbelt Communications Company,
-------------------------------
a Member
By /s/ Vaso Boreta
-------------------------------
By /s/ James Earl Rogers Name: Vaso Boreta
--------------------------- Title: President
Name: James Earl Rogers
Title: President
The undersigned, Saint Andrews Golf Corporation, a Nevada corporation,
acknowledges that, by virtue of entering into this Agreement, the Purchaser is a
specific intended third party beneficiary of the LVDGT Agreement.
SAINT ANDREWS GOLF CORPORATION
By: /s/ Ron Boreta
-----------------------
Name: Ron Boreta
Title: President
- 40 -
<PAGE> 41
EXHIBIT A
VOTING AGREEMENT
VOTING AGREEMENT, dated as of October 19, 1998 by and among ASI Group, L.L.C., a
Nevada limited liability company ("ASI"), c/o Agassi Enterprises, Inc., 3960
Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109, and the individuals
and entities listed on the signature page hereto (collectively "Boreta").
WITNESSETH:
WHEREAS, ASI and Las Vegas Discount Golf & Tennis, Inc., a Colorado corporation
("LVDGT"), are entering into an investment and voting agreement (the "ASI
Agreement") pursuant to which, among other things, ASI is buying shares of
common stock of LVDGT; and
WHEREAS, LVDGT and Saint Andrews Golf Corporation, a Nevada corporation
("SAGC"), are entering into an investment agreement (the "LVDGT Agreement")
pursuant to which, among other things, LVDGT is buying shares of preferred stock
of SAGC; and
WHEREAS, in order to induce each other to enter into the ASI Agreement, ASI and
Boreta desire to enter into this Voting Agreement with respect to all the
capital stock of LVDGT and SAGC now owned or controlled by and/or hereafter
acquired or coming under the control of any of them respectively (collectively,
the "Shares). Exhibit A lists all Shares currently owned or controlled by Boreta
or ASI;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
Section 1. RESTRICTIONS ON AND VOTING OF SHARES.
(a) During the term of this Agreement, Boreta agrees that it
will not sell, assign, pledge or otherwise dispose of, or grant any proxies with
respect to, the Shares, or enter into any contract, option or other arrangement
or understanding with respect to the sale, assignment, pledge or other
disposition, directly or indirectly, of the Shares except as expressly
contemplated by the LVDGT Agreement or the ASI Agreement.
(b) Boreta and ASI agree that, during the term of this
Agreement, they will vote the Shares either of them is entitled to vote, in
person or by proxy, at any annual, special or other meeting of the holders of
capital stock of LVDGT or SAGC, as the case may be, and at any adjournments
thereof or pursuant to any consent in lieu of a meeting, or otherwise, as
mutually agreed by ASI and Boreta (provided that no party will be so required to
vote its shares if the subject action implemented in accordance with such mutual
agreement, would in any manner adversely effect the interests of Boreta in LVDGT
or SAGC or the interests of ASI in LVDGT and indirectly in SAGC, as the case may
be, or adversely affect the value of the Shares (or any securities into which
such shares might be exchanged)).
- 1 -
<PAGE> 42
Section 2. SUBSEQUENT ACQUISITIONS. If at any time after the first to
occur of the closing of the transactions contemplated by the LVDGT Agreement or
the ASI Agreement, while ASI is an equity holder of LVDGT or SAGC or has
options, warrants or other rights to acquire equity of either or both of LVDGT
and/or SAGC, either of LVDGT or SAGC offers to sell or grants, sells or issues
shares of its capital stock to any of Boreta or their respective affiliates at
any price or for any consideration (including, but not limited to, provision of
services), Boreta shall transfer or cause to be transferred to ASI Shares so as
to maintain the relative proportionate direct and indirect (by virtue of
ownership of LVDGT capital stock) equity ownerships of ASI, on the one hand, and
Boreta, on the other hand, in each of LVDGT and SAGC as they were immediately
prior to such offer, grant, sale or issuance, assuming the consummation of such
offer, grant, sale or issuance.
Section 3. TERM OF AGREEMENT. Except as otherwise specifically provided
herein, this Agreement will be effective as of the closing of the transactions
contemplated by the ASI Agreement (the "Effective Date"). The obligations of ASI
and Boreta under this Agreement will terminate as of the date ASI no longer
holds any equity interest, options, warrants or rights to purchase any equity
interest in or instruments convertible or exchangeable into equity interests of
SAGC or LVDGT or their respective successors.
Section 4. REPRESENTATIONS AND WARRANTIES OF BORETA. Boreta represents
and warrants to ASI as of the date and as of the Effective Date hereof that:
(a) Boreta is the record owner of the Shares and the
Shares represent all of the capital stock of SAGC or
LVDGT owned of record by Boreta, directly or
indirectly;
(b) Boreta has full legal power and authority to execute
and deliver this Agreement;
(c) the Shares are free and clear of all proxies; and
(d) Boreta has duly executed and delivered this
Agreement.
Section 5. REPRESENTATIONS AND WARRANTIES OF ASI. ASI represents and
warrants to Boreta as of the date and as of the Effective Date hereof that:
(a) ASI is the record owner of the Shares and the Shares
represent all of the capital stock of SAGC or LVDGT
owned of record by ASI, directly or indirectly;
(b) ASI has full legal power and authority to execute and
deliver this Agreement;
(c) the Shares are free and clear of all proxies; and
- 2 -
<PAGE> 43
(d) ASI has duly executed and delivered this Agreement.
Section 6. STOCK OPTIONS OWNED BY BORETA OR ASI. It is agreed that any
Shares obtained by Boreta or ASI after the date hereof upon exercise of any
option to purchase Shares or which otherwise become held of record by Boreta
shall in all events be deemed to be "Shares" or subject to this Agreement.
Section 7. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms of were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity without the
necessity of posting bond or other security or showing actual damages.
Section 8. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by confirmed facsimile to the correct
facsimile number or otherwise delivered by hand or by messenger, addressed (a)
if to ASI, at its address set forth on the cover page of this Agreement, or at
such other address as ASI shall have furnished to the Company in writing, or (b)
if to any of Boreta, at such address as listed on the signature page hereto.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or if sent by confirmed facsimile to the correct facsimile
number, upon the sending of such facsimile, or, if sent by mail, at the earlier
of its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
Section 9. BINDING EFFECT. Upon execution and delivery of this
Agreement by ASI, this Agreement shall become effective as to Boreta at the time
Boreta executes and delivers this Agreement. This Agreement shall inure to the
benefit of and, subject to applicable law, be binding upon the parties hereto
and their respective heirs, personal representatives, successors and assigns.
Section 10. ASSIGNMENT. This Agreement will be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns provided that neither this Agreement nor any rights hereunder may be
assigned by either party without first obtaining the prior written consent of
the other party.
Section 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without giving
effect to the principles of conflict of laws thereof.
- 3 -
<PAGE> 44
Section 12. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be an original, but which together shall
constitute one and the same agreement.
Section 13. EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction hereof.
Section 14. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 15. AMENDMENT; WAIVER. No amendment or waiver of any provision
of this Agreement or consent to departure therefrom shall be effective unless in
writing and signed by ASI and Boreta, in the case of an amendment, or by the
party which is the beneficiary of any such provision, in the case of a waiver or
a consent to departure therefrom.
Section 16. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, covenants, arrangements, communications,
representations and warranties, whether oral or written, by either party with
respect thereto.
Section 17. OBLIGATIONS. The obligations of Boreta hereunder are joint
and several.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
all as of the day and year first above written.
ASI GROUP, L.L.C. BORETA:
By:
------------------------------------- ------------------------------
James Earl Rogers VASO BORETA
Member
------------------------------
RONALD BORETA
------------------------------
JOHN BORETA
BORETA ENTERPRISES LTD
By:
---------------------------
Name:
Title:
- 4 -
<PAGE> 45
EXHIBIT A
<TABLE>
<CAPTION>
- ----------------------------------------------------- -------------------------------- ------------------------------
Company Shareholder Number of Shares Held
- ----------------------------------------------------- -------------------------------- ------------------------------
<S> <C> <C>
- ----------------------------------------------------- -------------------------------- ------------------------------
Saint Andrews Golf Corporation Vaso Boreta 110,000
- ----------------------------------------------------- -------------------------------- ------------------------------
Saint Andrews Golf Corporation Ronald Boreta 110,000
- ----------------------------------------------------- -------------------------------- ------------------------------
Las Vegas Discount Golf & Tennis, Inc.(1) Vaso Boreta 1,837,637
- ----------------------------------------------------- -------------------------------- ------------------------------
Las Vegas Discount Golf & Tennis, Inc.(2) Ronald Boreta 1,723,288
- ----------------------------------------------------- -------------------------------- ------------------------------
Las Vegas Discount Golf & Tennis, Inc.(3) John Boreta 1,059,374
- ----------------------------------------------------- -------------------------------- ------------------------------
Las Vegas Discount Golf & Tennis, Inc. Boreta Enterprises Ltd. 1,304,445
- ----------------------------------------------------- -------------------------------- ------------------------------
Las Vegas Discount Golf & Tennis, Inc.(4) ASI Group, L.L.C. 2,303,290
- ----------------------------------------------------- -------------------------------- ------------------------------
</TABLE>
- --------
(1) Includes 1,823,810 shares held directly and 13,827 shares which
represent Vaso Boreta's share of the Common Stock held by Boreta Enterprises
Ltd.
(2) Includes 544,699 shares held directly, 897,589 shares which represent Ronald
Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 281,000
shares underlying Stock Options held by Ronald Boreta.
(3) Includes 536,345 shares held directly, 393,029 shares which represent John
Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 130,000
shares underlying Stock Options held by John Boreta.
(4) ASI Group, L.L.C. also has options for the purchase of 347,975 shares of the
Common Stock of Las Vegas Discount Golf & Tennis, Inc.
<PAGE> 46
EXHIBIT B
SCHEDULE OF EXCEPTIONS
All disclosures on this Schedule provide exceptions to the corresponding
representations made in the Agreement.
Section 3.4 SUBSIDIARIES. The Company has the following subsidiaries:
1. Saint Andrews Golf Corporation
2. Las Vegas Discount Golf & Tennis Rainbow, Inc.
3. Las Vegas Discount Golf & Tennis Development Corp.
4. All-American SportPark, Inc.
5. All-American Golf, LLC
Section 3.13 LITIGATION. In 1995, Giant Ride, Inc. filed suit in the
District Court of Clark County, Nevada, against Saint Andrews Golf Corporation
("SAGC") claiming that SAGC has breached a contract to purchase a giant slide
for Saint Andrews' Las Vegas SportPark. Giant Ride, inc. is seeking an
unspecified amount of damages. SAGC denies that it had a contract to purchase
such a slide.
Section 3.15 EMPLOYEE AGREEMENTS. The Company and its subsidiaries have
employment and consulting agreements as follows:
1. Employment Agreement with Vaso Boreta
2. Employment Agreement with Ronald S. Boreta
3. Employment Agreement with Kevin Donovan
The Company also has employee benefit plans referred to below
concerning Section 3.25.
Section 3.16 CERTAIN TRANSACTIONS. The Company owns 66.7% of the
outstanding Common Stock of Saint Andrews Golf Corporation ("SAGC").
Effective August 1, 1994, the Company granted SAGC a license to use all
of its trademarks, trade names and other commercial names and symbols for so
long as such trademarks, trade names and other commercial names and symbols are
being used by SAGC.
Certain facilities used by the Company and SAGC are leased by the
Company from Vaso Boreta. The Company leases approximately 15,500 square feet of
warehouse space and 6,000 square feet of office space from Mr. Boreta at a base
monthly rent of approximately $13,700.
The Company owns a retail store in Las Vegas and LVDG and a store owned
by Vaso Boreta share advertising costs in the Las Vegas market and on an equal
basis.
<PAGE> 47
See the Company's Form 10-KSB for the year ended December 31, 1997, for
additional disclosures concerning transactions with affiliated persons.
During September 1997, SAGC agreed to sell its right to the St. Andrews
name to Boreta Enterprises, Ltd. for a $20,000 two-year promissory note since
SAGC no longer intends to engage in the business of selling golf equipment or
apparel.
See SAGC's Form 10-KSB for the year ended December 31, 1997 for
additional disclosures concerning transactions with affiliated persons.
Section 3.25 EMPLOYEE BENEFIT PLANS. The Company's employees are
included in the following plans:
1989 Stock Option Plan
1991 Stock Option Plan
Employee Retirement and Savings Program (401(k))
Supplemental Retirement Plan
1994 Stock Option Plan (SAGC)
Medical Insurance with Sierra Health
<PAGE> 48
EXHIBIT C
PROPERTY LEASES
The Company leases approximately 15,500 square feet of warehouse space
and approximately 6,000 square feet of office space at 5325 South Valley View
Boulevard, Suite 10, Las Vegas, Nevada, at an aggregate monthly rent of
approximately $13,700 from Vaso Boreta. The rent is adjustable annually based on
increases in the consumer price index and the lease expires January 31, 2005.
Beginning July 1, 1996, SAGC was allocated 67% of the rent and the Company was
allocated 33% of the rent. In February 1997, the Company subleased a majority of
the warehouse space and approximately one-half of the office space to the
purchaser in the asset sale.
The Company has a retail store at 2200 Rainbow Boulevard South in Las
Vegas, Nevada. The store is located in leased space in a small shopping center
in a growing area of Las Vegas. The space covers 5,600 square feet of space, and
is leased from an unaffiliated party for $7,000 per month plus cost of living
adjustments, real estate taxes and other expenses. The lease expires in August
2000.
On June 20, 1997 SAGC entered into a lease for approximately 24 acres
of land in Las Vegas on which SAGC is building the Sports Entertainment Complex
portion of its SportPark.
<PAGE> 49
EXHIBIT D
INTELLECTUAL PROPERTY
SAGC has filed an "intent to use" trademark application for
"All-American SportPark" and a related design and Slugger Stadium.
The Company has filed "intent to use" trademark applications with
regard to the "St. Andrews" name and related designs with respect to mens' and
womens' clothing and certain golf equipment and accessories.
The trademarks "Las Vegas Discount Golf & Tennis, Inc." and "St.
Andrews" on golf club bags, are registered on the principal register of the
United States Patent and Trademark Office as well as in Canada and in the State
of Nevada. These were owned by The Company.
The Company also has common law trademark and tradename rights in
"Saint Andrews" to the extent that it has used the mark as applied to goods or
as a corporate source identifier.
On August 1, 1994, the Company entered into a license agreement with
SAGC pursuant to which the Company granted a license to SAGC to use all
trademarks, tradenames and other commercial symbols that were owned by the
Company and licensed to franchisees of Saint Andrews. Included in this license
were the following:
(a) Las Vegas Discount Golf & Tennis - name (Reg. No. 1,482,753)
(b) Las Vegas Discount Golf & Tennis - logo ( Reg. No. 1,350,039)
(c) St. Andrews - name and design (Reg. No. 1,303,946) and related
applications
(d) Saint Andrews
(e) Birdie Golf
(f) Royal Scot
In February 1997, the rights to the trademarks "Las Vegas Discount Golf
& Tennis" and "Birdie Golf" were assigned to the purchaser in connection with
the sale of the franchise business. The purchaser of the assets granted back to
Boreta Enterprises, Ltd. a perpetual license to use the name Las Vegas Discount
Golf & Tennis for retail equipment stores in the State of Nevada, south of a
line between Pahrump, Nevada and Mesquite, Nevada, except for Summerlin, Nevada.
Boreta Enterprises, Ltd. has agreed to allow the Company's retail store on
Rainbow Boulevard in Las Vegas to continue to use the name Las Vegas Discount
Golf & Tennis.
<PAGE> 50
EXHIBIT E
MATERIAL CONTRACTS AND OBLIGATIONS
THE COMPANY
1. Lease Agreement with Vaso Boreta, as amended
2. Employment Agreement with Vaso Boreta, as amended
3. License Agreement with Vaso Boreta
4. License Agreement between the Company and Saint Andrews Golf
Corporation
5. Lease Agreement with A&R Management and Development Co., et al., and
Sublease to Las Vegas Discount Golf & Tennis, Inc.
6. Lease Agreement with Vaso Boreta, as amended, and Assignment to Las
Vegas Discount Golf & Tennis, Inc.
7. Agreement and Plan of Merger dated January 20, 1998 between Las Vegas
Discount Golf & Tennis, Inc. and Saint Andrews Golf Corporation
SAINT ANDREWS GOLF CORPORATION
1. Employment Agreement with Ronald S. Boreta.
2. Employment Agreement with Kevin Donovan.
3. Lease Agreement with A&R Management and Development Co., et al., and
Sublease to Las Vegas Discount Golf & Tennis, Inc.
4. Lease Agreement with Vaso Boreta, as amended, and Assignment to Las
Vegas Discount Golf & Tennis, Inc.
5. Letter Agreement with Oracle One Partners, Inc.
6. Agreement with Major League Baseball Properties, Inc.
7. License Agreement with National Association for Stock Car Auto Racing,
Inc., dated August 1, 1995
<PAGE> 51
8. Concept Development and Trademark Agreement with Callaway Golf Company
dated May 23, 1995
9. Investment Agreement with Three Oceans, Inc. and ancillary agreements
10. Indenture of Lease Agreement between Urban Land of Nevada and
All-American SportPark, Inc.
11. Indenture of Lease between Urban Land of Nevada and All-American Golf
Center, LLC
12. Operating Agreement for All-American Golf, LLC, a limited liability
company
13. Agreement dated September 30, 1997 with Boreta Enterprises, Ltd.
14. Sponsorship Agreement with Pepsi-Cola Company dated December 4, 1997.
15. Membership Interest Purchase Agreement dated May 5, 1998 between
Callaway Golf Company, a California corporation ("Callaway Golf"), CGV,
Inc., a California corporation ("CGV"), Saint Andrews Golf Corporation,
a Nevada corporation ("Saint Andrews"), All-American SportPark, Inc., a
Nevada corporation ("SportPark"), All-American Golf LLC, a California
limited liability company ("AAG") and Ron Boreta
16. Covenant Not to Compete dated May 5, 1998 between CGV, Ron Boreta and
Saint Andrews
17. Option Agreement dated May 5, 1998 between CGV and Saint Andrews
18. Amendment to Lease Agreement for Golf Retail Operations at Callaway
Golf Center, Las Vegas, Nevada dated May 5, 1998 between AAG and Saint
Andrews
19. Consulting Agreement dated May 5, 1998 between AAG and Saint Andrews
<PAGE> 52
EXHIBIT F
CO-SALE AGREEMENT
This Co-Sale Agreement is made as of the 19th day of October, 1998 by and among
LAS VEGAS DISCOUNT GOLF & TENNIS INC. (the "Company"), a Colorado corporation,
RON BORETA, VASO BORETA and JOHN BORETA (collectively the "Boretas") and BORETA
ENTERPRISES LTD. (the "Family Company"; the Family Company and the Boretas are
each a "Significant Shareholder," and collectively are the "Significant
Shareholders") and ASI GROUP, L.L.C., a Nevada limited liability company
("ASI").
In consideration of the mutual covenants set forth herein, the parties agree as
follows:
1. DEFINITIONS.
(a) "Stock" shall mean shares of the Company's Common and
Preferred Stock now owned beneficially or of record or
subsequently acquired beneficially or of record directly or
indirectly by the Significant Shareholders.
(b) "Preferred Stock" shall mean the Company's or LVDG&T's
outstanding Preferred Stock of any series or designation.
(c) "Common Stock" shall mean the Company's Common Stock and
shares of Common Stock issued or issuable upon conversion of
the Company's Preferred Stock.
2. SALE BY SIGNIFICANT SHAREHOLDERS.
(a) On each occasion that any Significant Shareholder proposes to
sell or transfer to any person any shares of Stock in one or
more related transactions, such Significant Shareholder shall
promptly give written notice (the "Notice") to ASI at least
twenty (20) days prior to the closing of such sale or
transfer. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the
number of shares of Stock to be sold or transferred, the
nature of such sale or transfer, the consideration to be paid,
and the name and address of each prospective purchaser or
transferee. In the event that the sale or transfer is being
made pursuant to the provisions of Section 3(a) or 3(b)
hereof, the Notice shall state under which Section the sale or
transfer is being made.
(b) ASI shall have the right, exercisable upon written notice to
such Significant Shareholder within fifteen (15) days after
receipt of the Notice, to participate in such sale of Stock on
the same terms and conditions. To the extent ASI exercises
such right of participation in accordance with the terms and
conditions set forth below, the number of shares of Stock that
the Significant Shareholder may sell in the transaction shall
be correspondingly reduced.
- 1 -
<PAGE> 53
(c) ASI may sell all or any part of that number of shares of
Common Stock equal to the product obtained by multiplying (i)
the aggregate number of shares of Stock covered by the Notice
by (ii) a fraction the a numerator of which is the number of
shares of Common Stock owned by ASI at the time of the sale or
transfer and the denominator of which is the total number of
shares of Common Stock owned by the Significant Shareholders
and ASI at the time of the sale or transfer.
(d) ASI shall effect its participation in the sale by promptly
delivering to the Significant Shareholders for transfer to the
prospective purchaser one or more certificates, properly
endorsed for transfer, which represent:
(i) the type and number of shares of Common Stock which
ASI elects to sell; or
(ii) that number of shares of Series B Convertible
Preferred Stock which is at such time convertible
into the number of shares of Common Stock which ASI
elects to sell; provided, however, that if the
prospective purchaser objects to the delivery of
Series B Convertible Preferred Stock in lieu of
Common Stock, ASI shall convert such Preferred Stock
into Common Stock and deliver Common Stock as
provided in Section 2(d)(i) above. The Company agrees
to make any such conversion concurrent with the
actual transfer of such shares to the purchaser.
(e) The Stock certificate or certificates that ASI delivers to the
Significant Shareholders pursuant to Section 2(d) shall be
transferred to the prospective purchaser in consummation of
the sale of the Common Stock pursuant to the terms and
conditions specified in the Notice, and the Significant
Shareholders shall concurrently therewith remit to ASI that
portion of the sale proceeds to which ASI is entitled by
reason of its participation in such sale. To the extent that
any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase shares or other
securities from ASI, the Significant Shareholders shall not
sell to such prospective purchaser or purchasers any Stock
unless and until, simultaneously with such sale, the
Significant Shareholders shall purchase such shares or other
securities from ASI.
(f) The exercise or non-exercise of the rights of ASI hereunder to
participate in one or more sales of Stock made by the
Significant Shareholders shall to adversely affect its rights
to participate in subsequent sales of Stock subject to Section
2(a).
3. EXEMPT TRANSFERS.
Notwithstanding the foregoing, the co-sale rights of ASI shall not apply to (a)
any pledge of Stock made pursuant to a bona fide third party loan transaction
with a party not affiliated with or
- 2 -
<PAGE> 54
a stockholder of any significant shareholder that creates a mere security
interest; (b) any transfer to the ancestors, descendants or spouse or to trusts
for the benefit of such persons or a Significant Shareholder; (c) any bona fide
gift; or (d) any sale or sales of not more than 25,000 shares of Common Stock
individually or in the aggregate during the term hereof (as adjusted for stock
splits, reverse stock splits and the like effected after the date of this
Agreement); provided that (i) the transferring Shareholder shall inform ASI of
such pledge, transfer or gift prior to effecting it and (ii) the pledgee,
transferee or donee shall furnish ASI with a written agreement to be bound by
and comply with all provisions of Section 2. Such transferred Stock shall remain
"Stock: hereunder, and such pledge, transferee or donee shall be treated as a
"Shareholder" for purposes of this Agreement.
4. PROHIBITED TRANSFERS.
(a) In the event a Significant Shareholder should sell any Stock
in contravention of the co-sale rights of ASI under this
Agreement (a "Prohibited Transfer"), ASI, in addition to such
other remedies as may be available at law, in equity or
hereunder, shall have the put option provided below, and the
Significant Shareholders shall be bound by the applicable
provisions of such option.
(b) In the event of a Prohibited Transfer, ASI shall have the
right to sell to the Significant Shareholders the type and
number of shares of Common Stock equal to the number of shares
ASI would have been entitled to transfer to the purchaser had
the Prohibited Transfer under Section 2(c) hereof been
effected pursuant to and in compliance with the terms hereof.
Such sale shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be
sold to the Significant Shareholders shall be equal
to the price per share paid by the purchaser to
Significant Shareholders in this Prohibited Transfer.
Significant Shareholders shall also reimburse ASI for
any and all fees and expenses, including legal fees
and expenses, incurred pursuant to the exercise or
the attempted exercise of ASI's rights under Section
2.
(ii) Within ninety (90) days after the later of the dates
on which ASI (A) received notice of the Prohibited
Transfer or (B) otherwise became aware of the
Prohibited Transfer, ASI shall, if exercising the
option created hereby, deliver to Significant
Shareholders the certificate or certificates
representing shares to be sold, each certificate to
be properly endorsed for transfer.
(iii) Significant Shareholders shall, upon receipt of the
certificate or certificates for the shares to be sold
by ASI, pursuant to this Section 4(b), pay the
aggregate purchase price therefor and the
- 3 -
<PAGE> 55
amount of reimbursable fees and expenses, as
specified in Section 5(b)(i), in cash or by other
means acceptable to ASI.
(iv) Notwithstanding the foregoing, any attempt by a
Significant Shareholder to transfer Stock in
violation of Section 2 hereof shall be void and the
Company agrees it will not effect such a transfer nor
will it treat any alleged transferee as the holder of
such shares without the written consent of ASI.
5. LEGEND.
(a) Each certificate representing shares of Stock now or hereafter
owned by the Significant Shareholder or issue to any person in
connection with a transfer pursuant to Sections(a) and 3(b)
hereof shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE
AGREEMENT AMONG THE INITIAL HOLDER OF THE SECURITIES,
THE COMPANY AND CERTAIN STOCKHOLDER(S) OF THE
COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY."
(b) Each Significant Shareholder agrees that the Company may
instruct its transfer agent to impose transfer restrictions on
the shares represented by certificates bearing the legend
referred to in Section 5(a) above to enforce the provisions of
this Agreement and the Company agrees to promptly do so. The
legend shall be removed upon termination of this Agreement.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Nevada.
6.2 AMENDMENT. Any provision may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of the party or
parties affected thereby. Any amendment or waiver effected in accordance with
clauses (a), (b) and (c) of this Section shall be binding upon ASI, its
successors and assigns, the Company and Significant Shareholders in question.
6.3 ASSIGNMENT OF RIGHTS. This Agreement and the rights and obligations
of the parties hereunder shall inure to the benefit of, and be binding upon,
their respective successors, assigns and legal representatives.
- 4 -
<PAGE> 56
6.4 TERM. This Agreement shall terminate on the fifth anniversary
hereof.
6.5 OWNERSHIP. Each Significant Shareholder represents and warrants
that it/he is the sole legal and beneficial owner of the shares of stock subject
to this Agreement and that no other person has any interest (other than a
community property interest) in such shares.
6.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or five (5) days after deposit in the United States mail,
by registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth on the signature page hereof or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties hereto.
6.7 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.8 ATTORNEY FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.9 COUNTERPARTS. 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.
The foregoing agreement is hereby executed as of the date first above written.
SAINT ANDREWS GOLF ASI GROUP, L.L.C., a Nevada
CORPORATION, a Nevada corporation ASI limited liability company
By ______________________________ By ______________________________
Name: Name:
Title: Title:
LAS VEGAS DISCOUNT GOLF
& TENNIS INC.,
a Nevada corporation
- 5 -
<PAGE> 57
By ______________________________
Name:
Title:
- ------------------------------
Vaso Boreta
- ------------------------------
Ron Boreta
- ------------------------------
John Boreta
BORETA ENTERPRISES LTD.
By________________________________
Name:
Title:
- 6 -
<PAGE> 58
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of the company held of record by either or both of us,
including my community property interest in such shares, if any, co-sale rights
(as described in the Agreement) must be granted to ASI by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operations of, or violate, the Agreement.
--------------------------------
(Signature)
- 7 -
<PAGE> 59
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of the company held of record by either or both of us,
including my community property interest in such shares, if any, co-sale rights
(as described in the Agreement) must be granted to ASI by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operations of, or violate, the Agreement.
--------------------------------
(Signature)
- 8 -
<PAGE> 60
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of the company held of record by either or both of us,
including my community property interest in such shares, if any, co-sale rights
(as described in the Agreement) must be granted to ASI by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operations of, or violate, the Agreement.
--------------------------------
(Signature)
- 9 -
<PAGE> 61
ANNEX A
OPTION AGREEMENT
OPTION AGREEMENT, effective as of October 19, 1998, by and between LAS
VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation with offices at 5325
South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118 ("LVDGT"), and
ASI GROUP, L.L.C., a Nevada limited liability company, c/o Agassi Enterprises,
Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109 ("ASIG"):
W I T N E S S E T H :
WHEREAS, ASIG and LVDGT are entering into an investment agreement (the
"Investment Agreement") simultaneously herewith which Investment Agreement
provides for the purchase by ASIG of certain capital stock of LVDGT. All terms
used but not defined herein shall have the meanings ascribed to them in the
Investment Agreement.
WHEREAS, to induce ASIG to enter into the Investment Agreement, ASIG is
hereby granted options to purchase Shares (as defined herein) on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, ASIG and LVDGT hereby agree as
follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, the following capitalized terms shall
have the respective meanings indicated below.
"ACT" shall mean the Securities Act of 1933, as it may be amended.
"ADDITIONAL SHARES" shall mean all Shares (including treasury Shares)
issued or sold (or, deemed to be issued) by LVDGT after the date hereof, whether
or not subsequently reacquired or retired by LVDGT.
"AFFILIATE" shall mean any Person which, directly or indirectly,
controls, is controlled by or is under common control with the relevant Person
and, if such Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual, or one or more members of such
immediate family or any Person who is controlled by any such member or trust.
For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean a member
- 1 -
<PAGE> 62
of the board of directors, a partner or an officer of such Person, or any other
Person having, directly or indirectly, the power to direct or cause the
direction of the management and policies of such Person, through the ownership
(of record, as trustee, by voting agreement or by proxy) of voting securities or
similar equity interests, by contract or otherwise. Any Person owning or
controlling directly or indirectly 10% or more of the voting securities or
similar equity interests of another Person shall be deemed to be an Affiliate of
such person.
"BUSINESS DAY" shall mean any other than a Saturday or a Sunday or a
day on which commercial banking institutions in the City of New York are
authorized by law or other governmental action to be closed. Any reference to
"days" (unless Business Days are specified) shall mean calendar days.
"CONVERTIBLE SECURITIES" shall mean any evidence of indebtedness,
shares of stock (other than Shares) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares.
"CURRENT MARKET PRICE" shall mean on any date specified herein, the
average daily Market Price during the period of the most recent 20 days, ending
on such date, on which the national securities exchanges were open for trading,
except that if no Shares are then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current Market
Price shall be the Market Price on such date.
"EMPLOYEE OPTIONS" shall mean options (other than the Option) to
subscribe for, purchase or otherwise acquire Additional Shares at an exercise
price equal to no less than the Current Market Price on the date of issuance of
such options, which options are issued to bona-fide employees of or consultants
to LVDGT (other than members of the Boreta family) pursuant to a stock option
plan adopted by the Board of Directors of LVDGT.
"EMPLOYEE SHARES" shall mean Additional Shares issued upon exercise of
an Employee Option.
"MARKET PRICE" shall mean on any date specified herein, the amount per
share of the Shares, equal to (a) the last sale price of such Shares, regular
way, on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which such
Shares is then listed or admitted to trading, or (b) if such Shares are not then
listed or admitted to trading on any national securities exchange but it
designated as a national market system security by the NASD, the last trading
price of the Shares on such date, or (c) if there shall have been not trading on
such date or if the Shares are not so designated, the average of the closing bid
and asked prices of the Shares on such date as shown by the NASD automated
quotation system, or (d) if such Shares are not then listed or admitted to
trading on any national exchange or quoted in the over-the-counter market, the
higher of (x) the book value thereof as determined by any firm of independent
public accountants of recognized standing selected by the Board of Directors of
LVDGT as of the last day of any month ending with 60 days preceding the date as
of which the determination is to be made or (y) the fair value thereof
determined in good faith by the Board of
- 3 -
<PAGE> 63
Directors of LVDGT as of a date which is within 180 days of the date as of which
the determination is to be made.
"NASD" shall mean The National Association of Securities Dealers, Inc.
"OPTION" shall mean the right of ASIG to purchase, at ASIG's election,
in accordance with the terms of this Agreement, a number of Shares up to the
Option Number, upon payment of the aggregate Option Price for the number of
Shares so purchased, subject to adjustment as provided herein.
"OPTION NUMBER" shall mean 347,975 Shares, as such number may be
adjusted as provided herein.
"OPTION PRICE" shall be, on a per Share basis, $1.8392. The Option
Price shall be adjusted and readjusted from time to time as provided herein and,
as so adjusted or readjusted, shall remain in effect until a further adjustment
or readjustment thereof is required hereby. In the event of a Shares dividend,
Shares split, or combination of Shares which results in a proportionate increase
or decrease in the number of Shares, the Option Price then in effect shall be
decreased (in the case of a proportionate increase in Shares outstanding) or
increased (in the case of a proportionate decrease in Shares outstanding) in the
same proportion. In the event of a recapitalization, reorganization,
consolidation, merger or similar transaction where Shares are changed into or
exchanged for a different number of Shares or different capital stock or other
securities, the Option Price then in effect shall apply to so much of the
different shares of capital stock or other securities as are received with
respect to each Share so changed or exchanged. ASIG shall be given prompt
written notice of any such event, which notice shall include in reasonable
detail the calculation of any adjustments to the Option Price.
"OTHER OPTIONS" shall mean rights or options (other than the Option) to
subscribe for, purchase or otherwise acquire either Additional Shares or
Convertible Securities.
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"SHARES" shall mean the shares of the common stock of LVDGT, no par
value, outstanding at any time.
SECTION 2. OPTIONS.
2.1 GRANT OF OPTION. LVDGT hereby grants to ASIG the Option, which is
immediately exercisable. The Option may be exercised in full or in any number of
partial exercises at any time or times at or prior to the tenth anniversary
hereof.
2.2 EXERCISE OF OPTION. An Option may be exercised in whole or in part
by ASIG by serving written notice (the "Option Notice") upon LVDGT specifying
the number of Shares then
- 3 -
<PAGE> 64
to be purchased. An Option shall be exercisable at a purchase price equal to the
product of the number of Shares to be purchased multiplied by the Option Price
then in effect. The closing for each such purchase shall be held at the offices
of LVDGT on a day not later than 30 Business Days after the date of the Option
Notice. At the closing, LVDGT shall deliver to ASIG, against payment of the
purchase price specified in this Section 2.2, certificates for the Shares
purchased, free and clear of all pledges, options, claims, liens, security
interests and encumbrances of any kind, other than the requirements of federal
and state securities laws respecting limitations on the subsequent transfer
thereof, which certificates shall be duly endorsed in blank or with appropriate
duly executed blank stock transfer powers attached, with signatures guaranteed
by a commercial bank or trust company or a member firm of a national securities
exchange and with all requisite stock transfer tax stamps attached or provided
for.
SECTION 3. ADJUSTMENT OF SHARES ISSUABLE UPON EXERCISE.
3.1 GENERAL; OPTION PRICE. The number of Shares which ASIG shall be
entitled to receive upon each exercise of the Option shall be determined by
multiplying the number of Shares which would otherwise (but for the provisions
of this Section) be issuable upon such exercise, as designated by ASIG, by the
fraction of which (a) the numerator is the Option Price in effect on the date
hereof and (b) the denominator is the Option Price in effect on the date of such
exercise.
3.2 ADJUSTMENT OF OPTION PRICE.
3.2.1 ISSUANCE OF ADDITIONAL SHARES. In case LVDGT at any time
or from time to time after the date hereof shall issue or sell Additional Shares
(including Additional Shares deemed to be issued pursuant hereto) without
consideration or for a consideration per Share less than the greater of the
Current Market Price and the Option Price in effect immediately prior to such
issue or sale, then, and in each such case, subject to Section 3.7, such Option
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such Option
Price by a fraction
(a) the numerator of which shall be (i) the number of
Shares outstanding immediately prior to such issue or
sale plus (ii) the number of Shares which the
aggregate consideration received by LVDGT for the
total number of such Additional Shares so issued or
sold would purchase at the greater of such Current
Market Price and such Option Price, and
(b) the denominator of which shall be the number of
Shares outstanding immediately after such issue or
sale,
PROVIDED that, for the purposes of this subsection, (x) immediately after any
Additional Shares are deemed to have been issued pursuant to Section 3.3 or 3.4,
such Additional Shares shall be deemed to be outstanding and (y) treasury shares
shall not be deemed to be outstanding.
- 4 -
<PAGE> 65
3.2.2 EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case LVDGT
at any time or from time to time after the date hereof shall declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Other Options by way of dividend or spin-off, reclassification, recapitalization
or similar corporate rearrangement) on the Shares, other than (a) a dividend
payable in Additional Shares or (b) a regular periodic cash dividend at a rate
not in excess of 110% of the rate of the last regular periodic cash dividend
theretofore paid, then, and in each such case, subject to Section 3.7, the
Option Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Option Price by a fraction
(x) the numerator of which shall be the Current Market
Price in effect on such record date or, in the Shares
trade on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading, less the
amount of such dividend or distribution (as
determined in good faith by the Board of Directors of
LVDGT) applicable to one Share, and
(y) the denominator of which shall be such Current Market
Price,
PROVIDED that, in the event that the amount of such dividend as so determined is
equal to or greater than 50% of such Current Market Price or in the event that
such fraction is less than 1/2, in lieu of the foregoing adjustment, adequate
provision shall be made so that ASIG shall receive a pro rata share of such
dividend based upon the maximum number of shares at the time issuable to ASIG
(determined without regard to whether the Option is exercisable at such time).
3.3 TREATMENT OF OTHER OPTIONS AND CONVERTIBLE SECURITIES. In case
LVDGT at any time or from time to time after the date hereof shall issue, sell,
grant or assume, or shall fix a record date for the determination of holders of
any class of securities entitled to received, any Other Options or Convertible
Securities, then, and in each such case, the maximum number of Additional Shares
(as set forth in the instrument relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Other Options or, in the case of Convertible
Securities and Other Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares issued as of the
time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if
the Shares trade on an ex-dividend basis, on the date prior to the commencement
of ex-dividend trading), PROVIDED that such Additional Shares shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 3.5) of such Shares would be less than the greater of the
Current Market Price and the Option Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, in the Shares trade on an
ex-dividend basis, on the date prior to the commencement of ex-
- 5 -
<PAGE> 66
dividend trading), as the case may be, and PROVIDED, FURTHER, that in any such
case in which Additional Shares are deemed to be issued
(a) no further adjustment of the Option Price shall be
made upon the subsequent issue or sale of Convertible
Securities or Shares upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities, except in the case of any
such Other Options or Convertible Securities which
contain provisions requiring an adjustment,
subsequent to the date of the issue or sale thereof,
of the number of Additional Shares issuable upon the
exercise of such Other Options or the conversion or
exchange of such Convertible Securities by reason of
(x) a change of control of LVDGT, (y) the acquisition
by any Person or group of Persons of any specified
number of percentage of the voting securities of
LVDGT or (z) any similar event or occurrence, each
such case to be deemed hereunder to involve a
separate issuance of Additional Shares, Other Options
or Convertible Securities, as the case may be;
(b) if such Other Options or Convertible Securities by
their terms provide, with the passage of time or
otherwise, for any increase in the consideration
payable to LVDGT, or decrease in the number of
Additional Shares issuable, upon the exercise,
conversion or exchange thereof (by change of rate or
otherwise), the Option Price computed upon the
original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior
to the commencement of ex-dividend trading, as the
case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible
Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by LVDGT and
cancellation or retirement) of any such Other Options
which shall not have been exercised or the expiration
of any rights of conversion or exchange under any
such Convertible Securities which (or purchase by
LVDGT and cancellation or retirement of any such
Convertible Securities the rights of conversion or
exchange under which) shall not have been exercised,
the Option Price computed upon the original issue,
sale, grant or assumption thereof (or upon the
occurrence of the records date, or date prior to the
commencement of ex-dividend trading, as the case may
be, with respect thereto), and any subsequent
adjustments based thereon, shall, upon such
- 6 -
<PAGE> 67
expiration (or such cancellation or retirement, as
the case may be), be recomputed as if:
(i) in the case of Other Options for Shares or
Convertible Securities, the only Additional
Shares issued or sold were the Additional
Shares, if any, actually issued or sold upon
the exercise of such Other Options or the
conversion or exchange of such Convertible
Securities and the consideration received
therefor was the consideration actually
received by LVDGT for the issue, sale, grant
or assumption of all such Other Options,
whether or not exercised, plus the
consideration actually received by LVDGT
upon such exercise, or the issue or sale of
all such Convertible Securities which were
actually converted or exchanged, plus the
additional consideration, if any, actually
received by LVDGT upon such conversion or
exchange (less the consideration, if any,
actually paid by LVDGT to purchase all such
Other Options), and
(ii) in the case of Other Options for Convertible
Securities, only the Convertible Securities,
if any, actually issued or sold upon the
exercise of such Other Options were issued
at the time of the issue, sale, grant or
assumption of such Other Options, and the
consideration received by LVDGT for the
Additional Shares deemed to have then been
issued was the consideration actually
received by LVDGT for the issue, sale, grant
or assumption of all such Other Options,
whether or not exercised, plus the
consideration deemed to have been received
by LVDGT (pursuant to Section 3.5) upon the
issue or sale of such Convertible Securities
with respect to which such Other Options
were actually exercised (less the
consideration, if any, actually paid by
LVDGT to purchase all such Other Options);
(d) no readjustment pursuant to subdivision (b) or (c)
above shall have the effect of increasing the Option
Price by an amount in excess of the amount of the
adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Other
Options or Convertible Securities; and
(e) in the case of any such Other Options which expire by
their terms not more than 30 days after the date of
issue, sale, grant or assumption thereof, no
adjustment of the Option Price shall be made until
the expiration or exercise of all such Other Options,
- 7 -
<PAGE> 68
whereupon such adjustment shall be made in the manner
provided in subdivision (c) above.
3.4 TREATMENT OF SHARE DIVIDENDS, SHARE SPLITS, ETC. In case LVDGT at
any time or from time to time after the date hereof shall declare or pay any
dividend on the Shares payable in Shares, or shall effect a subdivision of the
outstanding Shares into a greater number of Shares (by reclassification or
otherwise than by payment of a dividend in Shares), then, and in each such case,
Additional Shares shall be deemed to have been issued (a) in the case of any
such dividend, immediately after the close of business on the record date for
the determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
3.5 COMPUTATION OF CONSIDERATION. For the purposes of this
Section,
(a) the consideration for the issue or sale of any
Additional Shares shall, irrespective of the
accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed
at the net amount of cash received by LVDGT,
without deducting any expenses paid or
incurred by LVDGT or any commissions or
compensations paid or concessions or
discounts allowed to underwriters, dealers
or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property
(including securities) other than cash, be
computed at the fair value thereof at the
time of such issue or sale, as determined in
good faith by the Board of Directors of
LVDGT, and
(iii) in case Additional Shares are issued or sold
together with other stock or securities or
other assets of LVDGT for a consideration
which covers both, be the portion of such
consideration so received, computed as
provided in clauses (i) and (ii) above,
allocable to such Additional Shares, all as
determined in good faith by the Board of
Directors of LVDGT;
(b) Additional Shares deemed to have been issued pursuant
to Section 3.3, relating to Other Options and
Convertible Securities, shall be deemed to have been
issued for a consideration per share determined by
dividing
- 8 -
<PAGE> 69
(i) the total amount, if any, received and
receivable by LVDGT as consideration for the
issue, sale, grant or assumption of the
Other Options or Convertible Securities in
question, plus the minimum aggregate amount
of additional consideration (as set forth in
the instruments relating thereto, without
regard to any provision contained therein
for a subsequent adjustment of such
consideration to protect against dilution)
payable to LVDGT upon the exercise in full
of such Other Options or the conversion or
exchange of such Convertible Securities or,
in the case of Other Options for Convertible
Securities, the exercise of such Other
Options for Convertible Securities and the
conversion or exchange of such Convertible
Securities, in each case computing such
consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of Shares (as set forth
in the instruments relating thereto, without
regard to any provision contained therein
for a subsequent adjustment of such number
to protect against dilution) issuable upon
the exercise of such Other Options or the
conversion or exchange of such Convertible
Securities; and
(c) Additional Shares deemed to have been issued pursuant
to Section 3.4, relating to stock dividends, stock
splits, etc., shall be deemed to have been issue for
no consideration.
3.6 ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding Shares
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of Shares, the Option Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
3.7 MINIMUM ADJUSTMENT OF OPTION PRICE. If the amount of any adjustment
of the Option Price required pursuant to this Section would be less than one
percent (1%) of the Option Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent (1%) of such
Option Price.
3.8 EMPLOYEE OPTIONS; EMPLOYEE SHARES. Notwithstanding anything to the
contrary contained herein, no adjustment to the Option Price shall be required
to be made hereunder with respect to the grant or exercise of Employee Options
or the issuance of Employee Shares.
- 9 -
<PAGE> 70
4. CONSOLIDATION, MERGER, ETC.
4.1 ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case LVDGT after the date hereof (a) shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) shall permit any other
Person to consolidate with or merge into LVDGT and LVDGT shall be the continuing
or surviving Person but, in connection with such consolidation or merger, the
Shares shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (c) shall transfer all or
substantially all of its properties or assets to any other Person, or (d) shall
effect a capital reorganization or reclassification of the Shares (other than a
capital reorganization or reclassification resulting in the issue of Additional
Shares for which adjustment in the Option Price is provided herein), then, and
in the case of each such transaction, proper provision shall be made so that,
upon the basis and the terms and in the manner provided in this Option, ASIG,
upon the exercise hereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Option Price in effect at the
time of such consummation for all Shares issuable upon such exercise immediately
prior to such consummation), in lieu of the Shares issuable upon such exercise
prior to such consummation, the highest amount of securities, cash or other
property to which such holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised the rights represented by
this Option immediately prior thereto (determined without regard to whether the
Option is exercisable at such time).
4.2 ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained in
this Option to the contrary, LVDGT will not effect any of the transactions
described in subdivision (a) through (d) of Section 4.1 unless, prior to the
consummation thereof, each Person (other than LVDGT) which may be required to
deliver any stock, securities, cash or property upon the exercise of this Option
as provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the holder of this Option, (a) the obligations of
LVDGT under this Option (and if LVDGT shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release
LVDGT from, any continuing obligations of LVDGT under this Option), and (b) the
obligation to deliver to such holder such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions of this Section 4, such
holder may be entitled to receive, and such Person shall have similarly
delivered to such holder an opinion of counsel for such Person, which counsel
shall be reasonably satisfactory to such holder, stating that this Option shall
thereafter continue in full force and effect and the terms hereof (including,
without limitation, all of the provisions of this Section 4) shall be applicable
to the stock, securities, cash or property which such Person may be required to
deliver upon any exercise of this Option or the exercise of any rights pursuant
hereto.
- 10 -
<PAGE> 71
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LVDGT.
LVDGT jointly and severally represents, warrants and covenants to ASIG
as follows:
(a) ORGANIZATION AND QUALIFICATION. LVDGT is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Colorado.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. LVDGT has the requisite
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate actions and no
other proceedings on the part of LVDGT or its respective
stockholders are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by LVDGT, and (assuming
this Agreement is the valid and binding obligation of ASIG)
constitutes a valid and binding agreement of LVDGT,
enforceable against LVDGT in accordance with its terms, except
that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) NO VIOLATION. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby and thereby will not (i) constitute a
breach or violation of or default under the Certificate of
Incorporation or the By-laws of LVDGT or (ii) violate,
conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration under,
or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of LVDGT under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which LVDGT is a party or to which LVDGT or any
of its properties or assets may be subject, other than, in the
case of clause (ii), such events that would not, either
individually or in the aggregate, prevent or delay the
consummation of the transactions contemplated hereby. The (i)
execution, delivery and performance of this Agreement by LVDGT
will not require the consent or approval of any other party,
and (ii) the execution, delivery and performance by LVDGT
- 11 -
<PAGE> 72
of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a breach or violation
of or default under any law, rule or regulation or any
judgment, decree, order, governmental permit or license to
which LVDGT is subject. To the knowledge of LVDGT, no
challenges to the validity or effectiveness of this Agreement,
or any other agreement or instrument necessary to consummate
the transactions contemplated hereby, have been made by any
governmental authority or other person.
(d) OWNERSHIP OF SHARES. Upon payment of the Option Price, ASIG
will acquire, good and valid title to the Shares received,
free and clear of any lien, charge, encumbrance, security
interest, claim or right of others of whatever nature other
than the requirements of the federal and state securities laws
respecting limitations on the subsequent transfer thereof, and
shall be free or preemptive rights.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASIG.
ASIG hereby represents, warrants and covenants:
(a) That ASIG, either individually or together with ASIG's
advisers, has knowledge and experience in financial and
business matters; is familiar with all of the financial and
other features of LVDGT; is capable of evaluating the merits
and risks of an investment in LVDGT; and is able to bear the
economic risk of an investment in the Option and, upon
exercise of the Option, the Shares.
(b) That AEI's acquisition of the Option and in the event of the
exercise thereof, the Shares is based upon and will be based
upon ASIG's independent evaluation of the long-term prospects
of LVDGT, and that ASIG has been furnished with such financial
and other information as it has requested concerning LVDGT.
(c) That ASIG is acquiring the Option and will acquire the Shares
which may be transferred to ASIG upon the exercise of the
Option for ASIG's own account, for investment purposes only,
and not with a view to the resale, transfer or other
disposition thereof.
(d) That ASIG will not offer, sell, hypothecate, transfer or
otherwise dispose of the Option or any of the Shares, as the
case may be, unless:
(i) A registration statement covering such of the Shares
which are to be so transferred has been filed with
the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"),
and such sale, transfer or other disposition is
- 12 -
<PAGE> 73
accompanied by a prospectus relating to a
registration statement which is in effect under the
Act covering such of the Shares which are to be sold,
transferred or otherwise disposed of and meeting the
requirements of Section 10 of the Act; or
(ii) Counsel satisfactory to LVDGT renders an opinion in
writing and addressed to LVDGT, reasonably
satisfactory in form and substance to LVDGT, that in
the opinion of such counsel, registration under the
Act or the Exchange Act is not required in order to
effect such proposed transaction
SECTION 7. RESERVATION OF SHARES, ETC.
LVDGT will at all times reserve and keep available, solely for issuance
and delivery upon exercise of the Option the number of Shares from time to time
issuable upon full exercise of the Option. All Shares issuable upon exercise of
the Option at any time shall be duly authorized and, when issued upon such
exercise, shall be validly issued and fully paid and nonassessable with no
liability on the part of ASIG.
SECTION 8. NO DILUTION OR IMPAIRMENT.
LVDGT will not by amendment of its organizational documents or through
any consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Option, but will
at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Option against dilution or other
impairment. Without limiting the generality of the foregoing, LVDGT (a) will not
permit the par value of any Shares receivable upon the exercise of this Option
to exceed the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that LVDGT may validly and
legally issue fully paid and non-assessable Shares on the exercise of the Option
from time to time, (c) will not take any action which results in any adjustment
of the Option Price if the total number of Shares issuable after the action upon
full exercise of the Option would exceed the total number of Shares then
authorized by LVDGT's certificate of incorporation and available for the purpose
of issue upon such exercise, and (d) will not issue any capital stock of any
class which is preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding-up, unless the
rights of the holders thereof shall be limited to a fixed sum or percentage of
par value or a sum determined by reference to a formula based on a published
index of interest rates, an interest rate publicly announced by a financial
institution or a similar indicator of interest rates in respect of participation
in dividends and to a fixed sum or percentage of par value in any such
distribution of assets. In case any event shall occur as to which any of the
provisions of this Option are not strictly applicable but the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Option in accordance with the essential intent and principles contained herein,
then, in each such case, LVDGT shall, at its sole cost and expense, appoint a
firm of independent certified public accountants of
- 13 -
<PAGE> 74
recognized national standing (which may be the regular auditors of LVDGT), which
shall give their opinion upon the adjustment, if any, on a basis consistent with
the essential intent and principles established herein, necessary to preserve,
without dilution, the purchase rights represented by this Option. Upon receipt
of such opinion, LVDGT will promptly mail a copy thereof to the holder of this
Option and shall make the adjustments described therein.
SECTION 9. REGISTRATION.
9.1 ISSUANCE OF SHARES. If any Shares required to be reserved for
purposes of exercise of this Option require registration with or approval of any
governmental authority under any federal or state law (other than the Act)
before such Shares may be issued upon exercise, LVDGT will, at its expense and
as expeditiously as possible, cause such Shares to be duly registered or
approved, as the case may be. At any such time as Shares are listed on any
national securities exchange, LVDGT will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange, upon official notice of
issuance, the Shares issuable upon exercise of the then outstanding portion of
the Option and maintain the listing of such Shares after their issuance; and
LVDGT will also list on such national securities exchange, will register under
the Securities Exchange Act of 1934 and will maintain such listing of, any other
securities that at any time are issuable upon exercise of the Option, if and at
the time that any securities of the same class shall be listed on such national
securities exchange by LVDGT.
9.2 REGISTRABLE SECURITIES. The Shares issued upon exercise of the
Option shall be considered "Registrable Securities" pursuant to and under the
Investment Agreement and the holders of such Shares shall have all the rights
and privileges of holders of Registrable Securities as set forth in the
Investment Agreement, which is incorporated herein by reference.
SECTION 10. SPECIFIC PERFORMANCE; REMEDIES.
The parties acknowledge and agree that irreparable damage will result
to ASIG in the event that this Agreement is not specifically enforced.
Therefore, the rights to, or obligations of, purchase and sale of the Shares
hereunder shall be enforceable in a court of equity, or other tribunal with
jurisdiction, by a decree of specific performance and appropriate injunctive
relief may be applied for and granted in connection therewith. Such remedies and
all other remedies provided for in this Agreement or available at law or in
equity shall, however, be cumulative and not exclusive and shall be in addition
to any other remedies which either party may have under this Agreement or
otherwise.
SECTION 11. SEVERABILITY.
If any provisions of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this Agreement
but shall be confined in its operation to the provision of this Agreement
directly involved in the controversy in which such judgment shall have been
rendered.
- 14 -
<PAGE> 75
SECTION 12. NOTICES.
All notices, requests, demands and other communications hereunder must
be in writing and shall be deemed to have been duly given if mailed by first
class, registered mail, return receipt required, postage and registry fees
prepaid, and addressed as follows:
If to LVDGT: 5325 South Valley View Boulevard
Suite 10
Las Vegas, Nevada 89118
If to ASIG: c/o Agassi Enterprises, Inc.
3960 Howard Hughes Parkway, Suite 750
Las Vegas, Nevada 89109
with a copy to: International Merchandising Corporation
IMG Center, Suite 100
1360 East 9th Street
Cleveland, Ohio 44114
Attention: Tony Decello
Either party by notice in writing mailed to the other party may change the name
and address to which notices, requests, demands and other communications shall
be mailed.
SECTION 13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to any conflict of law
principles that might require the application of the laws of another
jurisdiction.
SECTION 14. ARBITRATION.
The parties agree to submit to arbitration any dispute related to this
Agreement and agree that the arbitration process shall be the exclusive means
for resolving disputes which the parties cannot resolve. Any arbitration
hereunder shall be conducted under the Dispute Resolution Rules of the American
Arbitration Association ("AAA") as modified herein. Arbitration proceedings
shall take place in Las Vegas, Nevada, before a single arbitrator who shall be a
lawyer. All arbitration proceedings shall be confidential. Neither party shall
disclose any information about the evidence produced by the other party in the
arbitration proceedings, except in the course of judicial, regulatory, or
arbitration proceeding, or as may be demanded by government authority. Before
making any disclosure permitted by the preceding sentence, a party shall give
the other party reasonable advance written notice of the intended disclosure and
an opportunity to prevent disclosure. Each party shall have the right to take
the deposition of one individual and any expert witness designated by the other
party. Additional discovery may be had only where the arbitrator so orders, upon
a showing of substantial need. Only evidence that is directly relevant to the
issues may be obtained in discovery. Each party bears the burden of
- 15 -
<PAGE> 76
persuasion of any claim or counterclaim raised by that party. The arbitration
provisions of this Agreement shall not prevent any party from obtaining
injunctive relief from a court of competent jurisdiction to enforce the
obligations for which such party may obtain provisional relief pending a
decision on the merits by the arbitrator. Each of the parties hereby consents to
the jurisdiction of Nevada courts for such purpose. The arbitrator shall have
authority to award any remedy or relief that a court of the State of Nevada
could grant in conformity to applicable law, except that the arbitrator shall
have no authority to award attorneys' fees or punitive damages. Any arbitration
award shall be accompanied by a written statement containing a summary of the
issues in controversy, a description of the award, and an explanation of the
reasons for the award. The arbitrator's award shall be final and judgment may be
entered upon such award by any court.
SECTION 15. AMENDMENTS, ETC.
This Agreement may not be modified or amended, and no provision hereof
may be waived, except by an instrument in writing signed by the parties hereto.
SECTION 16. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, and permitted
assigns and transferees. No party hereto may assign their rights and obligations
hereunder without the prior written consent of the other party hereto; except
that ASIG may, after providing LVDGT with written notice, transfer and assign
its rights under this Agreement to any member of ASIG, any other entity wholly
owned by any such member or to one or more trusts for such member's estate
planning purposes.
SECTION 17. 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 have executed this Agreement as of the
date first above written.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. ASI GROUP, L.L.C.
By ______________________________ By ______________________________
Name: Name:
Title: Title:
- 16 -
<PAGE> 77
Annex 3.28
----------
INVESTMENT AGREEMENT
--------------------
This Investment Agreement is made as of October _____, 1998, between
SAINT ANDREWS GOLF CORPORATION, a Nevada corporation (the "Company"), whose
address is 5325 South Valley View Boulevard, Suite 4, Las Vegas, Nevada 89118,
and LAS VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation (the
"Purchaser"), whose address is 5325 South Valley View Boulevard, Suite 4, Las
Vegas, Nevada 89118.
SECTION 1
AUTHORIZATION AND SALE OF SERIES B PREFERRED
1.1 AUTHORIZATION. The Company will authorize the sale and issuance of
Two Hundred Fifty Thousand (250,000) shares (the "Shares") of its Series B
Convertible Preferred Stock ("Series B Preferred"), having the rights,
privileges and preferences as set forth in the Certificate of Designation (the
"Certificate") in the form attached to this Agreement as Exhibit A. The Shares
of Common Stock into which the Shares will be convertible are referred to herein
as the "Conversion Stock."
1.2 SALE OF SERIES B PREFERRED. Subject to the terms and conditions
hereof, and in reliance upon the representations, warranties and agreements of
the parties contained herein, the Company will issue and sell to the Purchaser,
and the Purchaser will buy from the Company, Two Hundred Fifty Thousand
(250,000) shares of Series B Preferred at a purchase price of Ten Dollars
($10.00) per share, for an aggregate purchase price of Two Million Five Hundred
Thousand Dollars ($2,500,000.00). The parties hereto understand that the number
of shares of Series B Preferred to be purchased hereunder may be reduced, and
the aggregate purchase price reduced accordingly, to the extent Three Oceans,
Inc. ("Three Oceans") exercises its rights of first refusal pursuant to that
certain Investment Agreement between Three Oceans and the Company (the "Sanyo
Agreement").
1.3 SUMMARY OF TERMS OF SERIES B PREFERRED. The following summary of
the Series B Preferred is provided for information purposes only and is subject
to the description set forth in Exhibit A:
Each share of Series B Preferred is convertible, at the option of the
Purchaser, into one share of the Company's Common Stock, subject to the
Anti-Dilution Provisions set forth herein. In the event of liquidation or
dissolution of the Company, each share of Series B Preferred will have a $10.00
liquidation preference to be paid pari passu on a prorata basis with liquidation
preference of the Series A Convertible Preferred Stock of the Company (the
"Series A Preferred") and over all other shareholders. After the distribution
described above has been paid, the remaining assets of the Company available for
distribution to shareholders shall be distributed among the holders of Series B
Preferred, the Series A Preferred (together with the Series B Preferred and any
other series of preferred stock of the Company which may hereafter be issued,
the "Preferred") and Common Stock pro rata based on the number of shares of
Common Stock held by each (assuming conversion of all such Series B Preferred
and Series A
-1-
<PAGE> 78
Preferred). In addition, holders of Series B Preferred shall be entitled to
receive dividends at a rate equal to the rate per share payable to Common Stock
or Series A Preferred holders, assuming conversion of Series B Preferred and
Series A Preferred, payable out of funds legally available therefor. Such
dividends shall be payable only when, as, and if declared payable to holders of
Common Stock or Series A Preferred by the board of directors of the Company and
shall be non-cumulative. In the event the Company shall declare a distribution
payable in securities of other persons, evidences of indebtedness issued by the
Company or other persons, assets (excluding cash dividends) or options or rights
to purchase any such securities or evidences of indebtedness, then, in each such
case the holders of the Series B Preferred shall be entitled to a proportionate
share of any such distribution as though the holders of the Series B Preferred
were the holders of the number of shares of Common Stock of the Company into
which their respective shares of Series B Preferred are convertible as of the
record date fixed for the determination of the holders of Common Stock of the
Company entitled to receive such distribution. Each share of Series B Preferred
will have one vote and will vote along with the holders of the Common Stock and
the Series A Preferred except as otherwise specified herein. The Series B
Preferred can be redeemed by the Company if there is an effective registration
statement filed with the Securities and Exchange Commission covering the
issuance of the Common Stock upon conversion of the Series B Preferred and the
following two conditions are satisfied: (a) the Company earns $1,000,000 of
pre-tax income for a fiscal year according to the year-end audited financial
statements; and (b) the closing bid price of the Company's Common Stock is a
least $15.00 for 20 consecutive trading days. If the Company notifies the
Purchaser of its intent to redeem the Series B Preferred, the Purchaser will
have at least 30 days to elect to convert its Series B Preferred or accept the
redemption price of $12.50 per Share. The Series B Preferred shall be pari passu
with the Series A Preferred and the Company shall not authorize or issue any
class or series of securities having rights or preferences senior to or pari
passu with those of Series B Preferred without a vote of the holders of a
majority of the Series B Preferred outstanding, voting separately as a class.
1.4 ADJUSTMENT OF PRICE AND/OR TERMS. If at any time and each time
within three (3) years after the Closing (as defined in Section 2.1 below), the
Company offers to sell or grants, sells or issues shares of its capital stock to
any persons or entity other than the Purchaser at a lower price per share than
the purchase price paid by the Purchaser for the Shares and/or on more favorable
terms and conditions than those afforded to the Purchaser in connection with the
purchase of the shares of Series B Preferred (taking into account any equitable
adjustment in accordance with the Anti-Dilution Provisions), the Company agrees
to retroactively apply such lower price and/or more favorable terms and
conditions to the Shares purchased by the Purchaser or to the Conversion Stock
acquired by the Purchaser. At the Purchaser's request, the Company shall either
(a) issue the Purchaser additional shares of Series B Preferred in the amount
equal to (i) the amount of any such overpayment by the Purchaser divided by (ii)
such lower price charged by the Company to any person or entities or (b) deliver
to the Purchaser the amount of any such overpayment in cash.
-2-
<PAGE> 79
SECTION 2
CLOSING DATE; DELIVERY
2.1 CLOSING DATE. The closing of the purchase and sale of the Series B
Preferred hereunder shall be held at the offices of the Company sixteen days
from the execution hereof (the "Closing"), or at such other time and place upon
which the Company and the Purchaser shall agree (the date of the Closing is
hereinafter referred to as the "Closing Date").
2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser
a certificate or certificates, registered in the Purchaser's name representing
Two Hundred Fifty Thousand (250,000) Shares against payment of the purchase
price therefor, by check payable to the Company or wire transfer per the
Company's instructions. The total purchase price shall be paid by the Purchaser
to the Company in one installment without interest thereon.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the Schedule of Exceptions attached hereto as
Exhibit B (which Schedule makes specific reference to the particular
representation or warranty as to which exception is taken, which in each case
shall constitute the sole representation and warranty to which such exception
shall apply), the Company represents and warrants to the Purchaser as follows:
3.1 DEFINITION OF MATERIAL. For purposes of this Section 3, material
shall mean anything having a value or effect of more than $50,000.
3.2 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company is a
corporation duly organized and validly existing under, and by virtue of, the
laws of the State of Nevada and is in good standing under such laws. The Company
has requisite corporate power and authority to own and operate its properties
and assets, and to carry on its business as presently conducted and as proposed
to be conducted. The Company is not presently qualified to do business as a
foreign corporation in any jurisdiction, and the failure to be qualified will
not have a material adverse affect on the Company's business as now conducted or
as now proposed to be conducted. The Company has furnished the Purchaser with
copies of its Articles of Incorporation (the "Articles") and By-Laws, as
amended. Said copies are true, correct and complete and contain all amendments
through the Closing Date.
3.3 CORPORATE POWER. The Company has all requisite legal and corporate
power and authority to execute and deliver this Agreement, at the Closing will
have all requisite legal and corporate power and authority to sell and issue the
Shares hereunder, to issue the Conversion Stock upon conversion of the Shares,
and to carry out and perform its obligations under the terms of this Agreement.
3.4 SUBSIDIARIES. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity.
-3-
<PAGE> 80
3.5 CAPITALIZATION. The authorized capital stock of the Company
consists, or upon the filing of the Certificate will consist, of 10,000,000
shares of Common Stock, of which 3,000,000 shares are issued and outstanding,
and 5,000,000 shares of Preferred Stock, of which (a) 500,000 shares have been
designated "Series A Preferred" and are issued and outstanding and (b) 250,000
shares have been designated "Series B Preferred," of which none is issued and
outstanding prior to the Closing. The outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable. The Company
has reserved shares of Series B Preferred for issuance hereunder, 250,000 shares
of Common Stock upon conversion of the Series B Preferred, 500,000 shares of
Common Stock upon conversion of Series A Preferred, 500,000 shares for issuance
upon exercise of outstanding Class A Warrants (exercise price of $6.50), 100,000
shares of Common Stock for issuance upon exercise of outstanding Underwriter's
Warrants (exercise price of $5.40), 250,000 shares of Common Stock for issuance
upon exercise of the option under the Sanyo Agreement and 50,000 shares of
Common Stock for issuance upon exercise of the Underwriter's Class A Warrants
(exercise price of $7.80). Options to purchase 657,000 shares of Common Stock
are issued and outstanding under the Company's employee stock option plan. All
outstanding securities of the Company were issued in compliance with applicable
federal and state securities laws. The Series B Preferred shall have the rights,
preferences, privileges and restrictions set forth in the Certificate. Except as
set forth above, there are no options, warrants or other rights to purchase any
of the Company's capital stock. Except as set forth in any agreement entered
into with the Purchaser, the Company is not a party or subject to any agreement
or understanding, and there is no agreement or understanding between any persons
that affects or related to the voting or giving of written consents with respect
to any security or the voting by a director of the Company.
3.6 AUTHORIZATION. All corporate action on the part of the Company, its
officers, directors and shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Company, the authorization,
sale, issuance and delivery of the Shares and the Conversion Stock and the
performance of all of the Company's obligations hereunder has been taken or will
be taken prior to the Closing. 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 respective terms. The Shares, when
issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable and will have the rights, preferences and
privileges described in the Certificate; the Conversion Stock has been duly and
validly reserved and, when issued in compliance with the provisions of this
Agreement and the Certificate, will be validly issued, fully paid and
nonassessable; and the Shares and Conversion Stock will be free of any liens or
encumbrances, other than any liens or encumbrances created by or imposed upon
the holders hereof through no action of the Company; provided, however, that the
shares of the Conversion Stock will be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein. Except as set forth in
the Sanyo Agreement, the Shares are not subject to any preemptive rights or
rights of first refusal.
3.7 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser
its audited balance sheet and statements of operations and cash flow was of and
for the period ended December 31, 1997, and its combined unaudited balance sheet
and statements of operations and cash flows as of and for the period ended June
30, 1998 (collectively the "Financial
-4-
<PAGE> 81
Statements"). The Financial Statements are complete and correct in all material
respects and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods indicated,
except that the unaudited financial statements do not contain footnotes. The
Financial Statements accurately set out and describe the financial condition and
operating results of the Company as of the dates, and for the period, indicated
therein. The financial statements for the year ended December 31, 1997, were
audited by Arthur Andersen LLP.
3.8 ABSENCE OF CHANGES. Since June 30, 1998: (a) the Company has not
entered into any transaction which was not in the ordinary course of business,
(b) there has been no materially adverse change in the condition (financial or
otherwise), business, property, assets or liabilities of the Company other than
changes in the ordinary course of business, none of which, individually or in
the aggregate, has been materially adverse, (c) there has been no damage to,
destruction of or loss of physical property (whether or not covered by
insurance) materially and adversely affecting the business or operations of the
Company, (d) the Company has not declared or paid any dividend or made any
distribution on its stock, or redeemed, purchased or otherwise acquired any of
its stock, (e) the Company has not increased the compensation of any of its
officers, or the rate of pay of its employees as a group, except as part of
regular compensation increases in the ordinary course of business, (f) there has
been no resignation or termination of employment of any key officer, consultant
or employee of the Company, and the Company does not know of the impending
resignation or termination of employment of any such officer, consultant or
employee that if consummated would have a material adverse effect on its
business, (g) there has been no labor dispute involving the Company or its
employees and none is pending or, to the best of the Company's knowledge,
threatened, (h) there has not been any change, except in the ordinary course of
business, in the contingent obligations of the Company, by way of guaranty,
endorsement, indemnity, warranty or otherwise, (i) there have not been any loans
made by the Company to any of its employees, officers or directors other than
travel advances and office advances made in the ordinary course of business and
(j) to the best of the Company's knowledge, there has been no other event or
condition of any character pertaining to and materially and adversely affecting
the assets or business of the Company.
3.9 MATERIAL LIABILITIES. The Company has no material liabilities or
obligations, absolute or contingent (individually or in the aggregate) except
(a) the liabilities and obligations set forth in the Financial Statements, (b)
liabilities and obligations which have been incurred subsequent to June 30,
1998, in the ordinary course of business which have not been in the aggregate
materially adverse, (c) liabilities and obligations under lease for its
principal offices and for equipment, and (d) liabilities and obligations under
sales, procurement and other contracts and arrangements entered into in the
normal course of business.
3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good
and marketable title to its properties and assets, and has good title to all of
its leasehold interests in each case subject to no mortgage, pledge, lien,
lease, encumbrance or charge, other than the lien of current taxes not yet due
and payable. Each of the Company's assets is in good repair and good, marketable
and operating condition and is suitable for the purposes for which it presently
is being used and is intended to be used by the Company and is adequate and
suitable to meet all present and reasonably anticipated future requirements of
the Company. The Company's assets conform to
-5-
<PAGE> 82
all applicable laws, ordinances, codes, rules and regulations, and the Company
has not received any notice to the contrary. The Company does not own, of record
or beneficially, any real property. Exhibit C sets forth a list and description
of all property leased or subleased to or by the Company.
3.11 COMPLIANCE WITH OTHER INSTRUMENTS; NONE BURDENSOME, ETC. The
Company is not in violation of any term of its Articles or By-Laws, or, in any
material respect, of any term or provision of any mortgage, indebtedness,
indenture, contract, security agreement, agreement, instrument, judgment or
decree, and, to the best of its knowledge, is not in violation of any order,
statute, rule or regulation applicable to the Company where such violation would
materially and adversely affect the Company. The execution, delivery and
performance of and compliance with this Agreement, and the issuance of the
Series B Preferred and the Conversion Stock has not resulted and will not result
in any violation of, or conflict with, or constitute a default (or an event that
might, with the passage of time or the giving of notice or either of them,
constitute a default) under any of the terms of, result in the termination of,
result in the loss of any right under, or give to any other person the right to
cause such a termination of or loss under, and will be in compliance with, the
Company's Articles, By-Laws and all of its agreements, permits and licenses or
any provision of federal, state, local or foreign statute rule ordinance or
regulation applicable to the Company or result in the creation of, any mortgage,
pledge, lien, encumbrance or charge upon any of the capital stock, properties or
assets of the Company or the creation, maturation or acceleration of any
liability or obligation of the Company (or give to any other person the right to
cause such a creation, maturation or acceleration); and there is no such
violation or default which adversely affects the business of the Company or any
of its properties or assets.
3.12 INTANGIBLE ASSETS.
(a) The Company (i) owns or has the right to use, free
and clear of all liens, claims and restrictions, all
Intellectual Property (as hereinafter defined) used
in the conduct of its business as now conducted or as
proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed
right of any person under or with respect to any of
the foregoing, and (ii) is not obligated or under any
liability whatsoever to make any payments by way of
royalties, fees or otherwise to any owner of, license
of, or other claimant to, any patent, trademark,
trade name, copyright or other intangible asset, with
respect to the use thereof or in connection with the
conduct of its business or otherwise. "Intellectual
Property" means (a) all inventions (whether
patentable or unpatentable) and whether or not
reduced to practice, all improvements thereto, and
all patents, patent applications and patent
disclosures, together with all reissuance,
continuations, continuations-in-part, revisions,
extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade
names and corporate names, together with all
translations, adaptations, derivations and
combinations thereof and including all
-6-
<PAGE> 83
goodwill associated therewith, and all applications,
registrations and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all
applications, registrations and renewals in
connection therewith, (d) all mask works and all
applications, registrations and renewals in
connection therewith, (e) all trade secrets and
confidential business information (including ideas,
research and development, know-how, formulas,
compositions, manufacturing and producing processes
and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing
and cost information, and business and marketing
plans and proposals), (f) all computer software and
information systems, programs, (including data and
related documentation), whether owned or leased by
the Company, (g) all other proprietary rights and (h)
all copies and tangible embodiments thereof (in
whatever form or medium). The Company has taken all
necessary action to maintain and protect each item of
Intellectual Property that it owns or uses and has
never granted any sublicense or similar right to any
third party with respect to such Intellectual
Property.
(b) The Company owns and has the unrestricted right to
use all Intellectual Property required for or
incidental to the development, construction and
operation of the SportPark segment of its business,
free and clear of any rights, liens or claims of
others, including without limitation, former
employers of all current and former employees,
consultants, officers, directors and shareholders of
the Company.
(c) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties,
and none of the stockholders and directors and
officers (and employees with responsibility for
Intellectual Property matters) of the Company has
ever received any charge, complaint, claim, demand or
notice alleging any such interference, infringement,
misappropriation or violation (including any claim
that the Company must license or refrain from using
any Intellectual Property rights of any third party).
No third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with
any Intellectual Property rights of the Company.
(d) Exhibit D identifies each patent or registration
which has been issued to the Company with respect to
any of its Intellectual Property, each pending patent
application or application for registration which the
Company has made with respect to any of its
Intellectual Property, and each license, agreement or
other permission which the Company has granted to any
third party with respect to any of its Intellectual
Property. The Company has
-7-
<PAGE> 84
delivered to the Purchaser correct and complete
copies of all such patents, registrations,
applications, licenses, agreements and permissions
(as amended to date). Exhibit D also identifies each
trade name or unregistered trademark used by the
Company in connection with any of its businesses.
With respect to each item of Intellectual Property
required to be identified in Exhibit D: (i) the
Company possesses all right, title and interest in
and to the item, free and clear of any Liens, license
or other restriction, (ii) the item is not subject to
any outstanding injunction, judgment, order, decree,
ruling or charge, (iii) no action, suit proceeding
hearing, investigation, charge, complaint, claim or
demand is pending or, to the knowledge of each of the
shareholders and the directors and officers (and
employees with responsibility for Intellectual
Property matters) of the Company, is threatened which
challenges the legality, validity, enforceability,
use or ownership of the item and (iv) the Company has
never agreed to indemnify any person for or against
any interference, infringement, misappropriation, or
other conflict with respect to the item.
3.13 LITIGATION, ETC. There is no suit, action, hearing, investigation,
claim or litigation, or legal, administrative, arbitration or other proceeding
pending or, to the best knowledge of the Company after due inquiry, threatened
against or affecting the Company, its business or any of its property or assets,
before any court, arbitrator, or federal, state, municipal or other governmental
board, department, agency or instrumentality, and there is no basis for any such
action. There is no judgment, decree, injunction, ruling, award, charge, order
or writ of any court, governmental department, commission, agency,
instrumentality, arbitration or other person outstanding against, binding upon
or involving the Company, its business, any directors or officers of the
Company. None of the matters set forth on Exhibit B could result in any material
adverse effect. The Company owns policies of casualty, liability or other forms
of insurance which provide coverages in amount and scope sufficient to cover
every claim, action, cause of action, suit, proceeding, litigation, arbitration
or investigation arising out of, related to, or in connection with those matters
listed on the schedule of exception. Neither the Company nor any of its
directors, officers or employees is currently charged with, or is currently
under investigation with respect to, any violation of any provision of any
foreign, federal, state or local law or administrative regulation in respect of
the business of the Company. The Company is not in default with respect to any
judgment, decree, injunction, ruling, award, order or writ of any foreign,
federal, state, municipal agency or other governmental department, board,
commission, bureau, agency or instrumentality.
3.14 EMPLOYEES. To the best of the Company's knowledge, no employee of
the Company is in violation of any term of any employment contract,
non-disclosure agreement or any other contract or agreement relating to the
relationship of such employee with the Company or any other party because of the
nature of the business conducted or to be conducted by the Company. There are no
controversies pending nor, to the best knowledge of the Company any basis of any
such controversies, between the Company and any of its employees. To the
knowledge of the Company, and the directors and officers (and employees with
responsibility for
-8-
<PAGE> 85
employment matters) of the Company, no executive, key employee, or group of
employees has any plans to terminate employment with the Company. The Company is
not bound by any collective bargaining agreement, nor has the Company
experienced any strikes, grievances, claims of unfair labor practices or other
collective bargaining disputes. The Company has not committed any unfair labor
practice. None of the shareholders or the directors or officers (or employees
with responsibility for employment matters) of the Company has any knowledge of
any organizational effort presently being made or threatened by or on behalf of
any labor union with respect to employees of the Company.
3.15 EMPLOYEE AGREEMENTS. There are no pension, profit-sharing, bonus,
group insurance, death benefit, vacation pay, severance pay, sick leave, holiday
pay, welfare, or any other employee benefit or "fringe benefit" plans or
arrangements relating to the current or former employees or consultants of the
Company. In addition, there are no employment, deferred compensation, collective
bargaining, retainer, savings, consulting, non-competition, retirement or
incentive agreements, contracts, plans or arrangements relating to, with or for
the benefit of any officers or employees of the Company or other persons.
3.16 CERTAIN TRANSACTIONS. The Company is not indebted, directly or
indirectly, to any of its officers, directors or shareholders or to their
respective spouses or children, in any amount whatsoever; none of said officers,
directors or shareholders, or any members of their immediate families, are
indebted to the Company or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company, except that officers, directors and/or shareholders of the
Company may own less than 1% of the stock of publicly-traded companies which may
compete with the Company. No officer, director or shareholder, or any member of
their immediate families, is, directly or indirectly, interested in any contract
with the Company. The Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation.
3.17 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto as Exhibit E
is a list of all agreements, contracts, indebtedness, liabilities and other
obligations to which the Company is a party or by which it is bound that are
material to the conduct and operations of its business and properties, which
provide for payments to or by the Company; or which involve transactions or
proposed transactions between the Company and its officers, directors,
affiliates or any affiliate thereof. Copies of certain of such agreements and
contracts and documentation evidencing such liabilities and other obligations
have been made available for inspection by the Purchaser and its counsel. All of
such agreements and contracts are valid, binding and in full force and effect in
all respects, assuming due execution by the other parties to such agreements and
contracts. To the best knowledge of the Company, the Company and each other
party to each such agreement and contract has performed all obligations required
to be performed by it thereunder and is not in breach or default, and is not
alleged to be in breach or default, in any respect thereunder, and no event has
occurred and no condition or state of facts exists (or would exist upon the
giving of notice or the lapse of time or any of them) that would become or cause
a breach, default or event of default thereunder, would give to any person the
right to cause such a termination or would cause an acceleration of any
obligation thereunder.
-9-
<PAGE> 86
3.18 REGISTRATION RIGHTS. Except as set forth in this Agreement or as
set forth in the Sanyo Agreement, the Company is not under any contractual
obligation to register (as defined in Section 8.1 below) any of its presently
outstanding securities or any of its securities which may hereafter be issued.
3.19 GOVERNMENTAL CONSENT, ETC. No consent, approval, order or
authorization of (of designation, declaration or filing with) any governmental
authority on the part of the Company is required in connection with the valid
execution and delivery of this Agreement, or the offer, sale or issuance of the
Series B Preferred and the Conversion Stock, or the consummation of any other
transaction contemplated hereby, except (a) filing of the Certificate in the
office of the Secretary of the State of Nevada, and (b) qualification (or taking
such action as may be necessary to secure an exemption from qualification, if
available) or the offer and sale of the Series B Preferred and the Conversion
Stock under applicable estate securities laws, which filings and qualifications,
if required, will be accomplished in a timely manner.
3.20 OFFERING. Subject to the accuracy of the Purchaser's
representations in Section 4 hereof, the offer, sale and issuance of the Series
B Preferred to be issued in conformity with the terms of this Agreement, and the
issuance of the Conversion Stock upon conversion of the Series B Preferred,
constitute transactions exempt from the registration requirements of Section 5
of the Securities Act of 1933, as amended (the "Securities Act").
3.21 BROKERS OR FINDERS. The Company has not incurred, and will not
incur, directly or indirectly, as a result of any action taken by the Company,
any liability for brokerage or finders' fees or agents' commissions or any
similar charges in connection with this Agreement.
3.22 TAX MATTERS. The Company (a) has timely filed all tax returns that
are required to have been filed by it with all appropriate federal, state,
county and local governmental agencies (and all such returns fairly reflect the
Company's operations for tax purposes), (b) has timely paid all taxes owed by it
for which it is obligated to withhold from amounts owing to any employee
(including without limitation social security taxes), creditor or third party
(other than taxes the validity of which are being contested in good faith by
appropriate proceedings), and (c) has not waived any statute of limitations with
respect to taxes or agreed to any extension of time with respect to a tax
assessment or deficiency. The assessment of any additional taxes for a period
for which returns have been filed is not expected to exceed the recorded
liability therefor, and there are no material unresolved questions or claims
concerning the Company's tax liability. The Company's tax returns have not been
reviewed or audited by any federal, state, local or county taxing authority.
There is no pending dispute with any taxing authority relating to any of said
returns which, if determined adversely to the Company, would result in the
assertion by any taxing authority of any valid deficiency in any material amount
for taxes.
3.23 INSURANCE. With respect to each insurance policy maintained by the
Company: (a) the policy is legal, valid, binding, enforceable and in full force
and effect, (b) the policy will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following
consummation of the transactions contemplated hereby, (c) neither the Company
nor any other party to the policy is in breach of default (including with
respect to the payment of premiums or the giving of notices) and (d) no party to
the policy has repudiated any provision
-10-
<PAGE> 87
thereof. The Company has been covered since its formation by insurance in type,
scope and amount that (x) meet the minimum requirements of any contract, lease
or agreement to which the Company is a party and (y) is customary and reasonable
for the business in which it has engaged during such period including, without
limitation, fire, casualty, liability and key-man life (on the lives of Ron and
Vaso Boreta) insurance polices. The Company has not failed to give any notice or
present any claim under any insurance policy in a due and timely fashion.
3.24 ENVIRONMENTAL AND SAFETY REGULATIONS. The Company is not in
violation of any environmental laws or regulations, including without limitation
any and all applicable federal, state and local laws, regulations and ordinances
relating to air and water pollution and handling and disposal of chemical and
hazardous materials (hereinafter the "Environmental Laws"). The Company
possesses all of the authorizations, permits and approvals required to be
obtained by applicable Environmental Laws; neither the Company nor any
stockholder has received any notice from any governmental authority or has
knowledge of any governmental inquiry or investigation or any other claim, suit
or proceeding against or involving the Company with respect to any actual or
alleged violation of any applicable Environmental Law and all hazardous waste
and chemical waste materials have been disposed of in accordance with all
applicable Environmental Laws. There have been no spills, dumping, discharge or
clean-up of hazardous waste or chemical materials in violation of any
Environmental Laws on or at any premises owned or any premises occupied by the
Company.
3.25 EMPLOYEE BENEFIT PLANS.
(a) The Company has never maintained or contributed to, and
does not maintain or contribute to any Employee Benefit
Plan as defined in the Employee Retirement Income
Security Act of 1974, as amended. The Company has not
incurred any liability under ERISA (including any
withdrawal liability) or under the Internal Revenue Code
of 1986, as amended Code (the "Code"), with respect to
any Employee Benefit Plan.
(b) The Company does not contribute to, nor has ever had
contributed to and has never been required to contribute
to any multi-employer plan or has any liability
(including withdrawal liability) under any
multi-employer plan.
(c) The Company does not maintain or contribute to, nor has
it ever maintained or contributed to, nor has it ever
been required to contribute to any Employee Welfare
Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or
future retired or terminated employees, their spouses,
or their dependents (other than in accordance with Code
Section 4980B).
-11-
<PAGE> 88
3.26 MINUTE BOOKS. The minute books of the Company contain a complete
summary of all meetings of directors and shareholders since the time of
incorporation and reflect all transactions referred to in such minutes
accurately.
3.27 LEGAL COMPLIANCE. The Company has complied with all applicable
laws, statutes, and ordinances (including without limitation all rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of federal, state, local and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice has been filed or commenced against
it alleging any failure to so comply. The Company has all permits, certificates,
licenses, approvals and other authorizations required in connection with the
operation of its business, all of which are valid and effective. No notice has
been issued and no investigation or review is pending or threatened by any
governmental entity with respect to (a) any alleged violation by the Company of
any law, statute or ordinance, rule, regulation, code, plan, injunction,
judgment, order, decree, ruling, charge, policy or guideline of any federal,
state, local or foreign governmental entity(or agency thereof), or (b) any
alleged failure to have all permits, certificates, licenses, approvals and other
authorizations required in connection with the operation of the business of the
Company.
3.28 DISCLOSURE. This Agreement with the Exhibits hereto and all
information provided by the Company to the Purchaser do not contain any untrue
statement of a fact or omit to state a fact necessary in order to make the
statements contained herein not misleading in light of the circumstances under
which they were made.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company with
respect to the purchase of the Shares as follows:
4.1 EXPERIENCE. It has experience in evaluating and investing in
private placement transactions of securities in companies so that it is capable
of evaluating the merits and risks of its investment in the Company and has the
capacity to protect its own interests.
4.2 INVESTMENT. It is acquiring the Shares and the Conversion Stock for
investment for its own account, not as a nominee or agent, and not with the view
to, or for resale in connection with, any distribution thereof. It understands
that the Shares and the Conversion Stock have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act, the availability of which depends upon, among
other things, the bona fide nature of the investment intent and the accuracy of
the Purchaser's representations as expressed herein.
4.3 RULE 144. It acknowledges that the Shares and the Conversion Stock
must be held indefinitely unless subsequently registered under the Securities
Act or unless an exemption from such registration is available. It is aware of
the provisions of Rule 144 promulgated under the Securities Act which permit
limited resale of shares purchased in a private placement subject to the
satisfaction of certain conditions, including, among other things, the existence
of a public
-12-
<PAGE> 89
market for the shares, the availability of certain current public information
about the Company, the resale occurring not less than one year after a party has
purchased and paid for the security to be sold, the sale being effected through
a "brokers transaction" or in transactions directly with a "market maker" and
the number of shares being sold during any three month period not exceeding
specified limitations.
4.4 ACCESS TO DATA. It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and has
had the opportunity to review the Company's facilities. It has also had an
opportunity to ask questions of officers of the Company, which questions were
answered to its satisfaction. It understands that such discussions, as well as
any written information issued by the Company, were intended to describe certain
aspects of the Company's business and prospects but were not a thorough or
exhaustive description. However, no investigation by, or furnishing of
information to, the Purchaser shall affect or modify the representations,
warranties and agreements of the Company set forth herein or the right of the
Purchaser to rely exclusively thereon and to seek and obtain all damages and
other remedies available to the Purchaser in connection with the breach of any
of the representations, warranties and covenants contained herein.
4.5 AUTHORIZATION. This Agreement when executed and delivered by the
Purchaser will constitute a valid and legally binding obligation of the
Purchaser, enforceable in accordance with its terms subject to (a) the laws of
bankruptcy and the laws affecting creditor's rights generally and (b) the
availability of equitable remedies.
4.6 BROKERS OR FINDERS. The Company has not incurred and will not
incur, directly or indirectly, as a result of any action taken by the Purchaser,
any liability for brokerage or finder's fees or agents' commissions or any
similar charges in connection with this Agreement.
4.7 REQUIRED SEC FILINGS. The Purchaser acknowledges that within 10
days after the Closing, it will be required to file an amended Schedule 13D or
Schedule 13G, as appropriate, and a Form 4 with the Securities and Exchange
Commission.
SECTION 5
THE PURCHASER'S CONDITIONS TO CLOSING
The Purchaser's obligations to purchase the Shares at the Closing are
subject to the fulfillment of the below-listed conditions, the waiver of which
shall not be effective against the Purchaser unless it consents in writing
thereto. If at the Closing Date any of the conditions specified in this
Agreement shall not have been fulfilled, the Purchaser shall, at the Purchaser's
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights Investor may have by reason of such
nonfulfillment.
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true, complete and
correct when made, and shall be true, complete and correct on the Closing Date.
-13-
<PAGE> 90
5.2 COVENANTS. All covenants, agreements and conditions contained in
this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all respects.
5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of the Company, executed by the President of the
Company, dated the Closing Date, and certifying, among other things, to the
fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement.
5.4 GOOD STANDING CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of good standing of the Company under the laws of the
State of Nevada.
5.5 CERTIFICATE OF AMENDMENT. The Certificate shall have been filed
with the Secretary of State of the State of Nevada.
5.6 LEGAL MATTERS. All matters of a legal nature which pertain to this
Agreement and the transactions contemplated hereby shall have been reasonably
approved by counsel to the Purchaser.
5.7 CO-SALE AGREEMENT. The Purchaser and each of Messrs. John Boreta,
Ron Boreta or Vaso Boreta or Boreta Enterprises Ltd. or any of their respective
affiliates shall each have entered into a Co-Sale Agreement which shall have a
term of two years in the form attached hereto as Exhibit F.
5.8 RIGHT OF FIRST REFUSAL. The Company shall have complied with all
provisions of the Sanyo Agreement as such provisions relate to, or are applied
to, this Agreement or consummation of the transactions contemplated hereby.
5.9 OPINION OF THE COMPANY'S COUNSEL. The Purchaser shall have received
from Krys, Boyle, Freedman & Sawyer, P.C., counsel to the Company, an opinion
dated the Closing Date, in form and substance satisfactory to the Purchaser, to
the effect that:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State
of Nevada, and the Company has the requisite corporate
power and authority to own it properties and to conduct
its business.
(b) The Company is not presently required to be qualified to
do business as a foreign corporation in any state or
jurisdiction of the United States.
(c) The Company has the requisite corporate power and
authority to execute, deliver and perform this Agreement.
The Agreement has been duly and validly authorized by the
Company, duly executed and delivered by an authorized
officer of the Company and constitutes legal, valid and
binding obligations of the Company,
-14-
<PAGE> 91
subject to bankruptcy and other laws of general
application affecting the rights and remedies of creditors
and except insofar as the enforceability of the
indemnification provisions of Section 8.11 of the
Agreement may be limited by applicable laws and except
that no opinion need be given as to the availability of
equitable remedies.
(d) The capitalization of the Company is as follows:
(i) PREFERRED STOCK. 5,000,000 shares of Stock, of
which (A) 500,000 shares have been designated
Series A Preferred Stock and are issued and
outstanding and (B) 250,000 shares have been
designated as Series B Preferred and purchased
pursuant to this Agreement. Such shares of Series
B Preferred Stock have been duly authorized,
issued and delivered, are validly outstanding,
fully paid and nonassessable, and have been
approved by all requisite shareholder action. The
respective rights, privileges and preferences of
the Preferred Series B are as stated in the
Certificate attached as Exhibit A to the
Agreement. The Conversion Stock has been duly and
validly reserved for issuance and, when issued in
accordance with the Certificate, will be validly
issued, fully paid and nonassessable.
(ii) COMMON STOCK. 10,000,000 shares of Common Stock,
of which 3,000,000 shares have been duly
authorized, issued and delivered and are validly
outstanding, fully paid and nonassessable and
were issued in compliance with all applicable
federal and state securities laws.
(iii) Except for (A) the conversion privileges of the
Series A Preferred Stock, (B) the conversion
privileges of the Series B Preferred, (C) the
rights of first refusal contained in Section 9
hereof, (D) the rights of first refusal contained
in the Sanyo Agreement, (E) 250,000 shares of
Common Stock reserved for issuance upon the
exercise of the stock option granted in the Sanyo
Agreement, (F) 500,000 shares of Common Stock
reserved for issuance upon exercise of
outstanding Class A Warrants, (G) 150,000 shares
of Common Stock reserved for issuance upon
exercise of outstanding Underwriter's Warrants
and (H) 657,000 shares of Common Stock reserved
for issuance to employees and consultants upon
exercise of outstanding stock options, there are
no preemptive rights or, to the best of counsel's
knowledge, options, warrants, conversion
privileges or
-15-
<PAGE> 92
other rights (or agreements of any such rights)
outstanding to purchase or otherwise obtain any
of the Company's securities.
(e) The certificates representing shares of the Preferred
Stock and shares of Common Stock are in due and proper
form and have been duly and validly executed by the
officers of the Company named thereon.
(f) The execution, delivery, performance and compliance with
the terms of this Agreement do not violate any provision
of any federal, state or local law, rule or regulation or
of any judgment, writ, decree or order binding upon the
Company or any provision of the Company's amended Articles
or By-Laws.
(g) All consents, approvals, orders or authorizations of, and
all qualifications, registrations, designations,
declarations or filings with, any federal or state
governmental authority on the part of the Company required
in connection with the consummation of the transactions
contemplated by this Agreement have been obtained and are
effective as of the Closing, and such counsel is not aware
of any proceedings, or threat thereof, which question the
validity thereof.
(h) Based in part upon the representations of the Purchaser in
this Agreement, the offer and sale of the Series B
Preferred pursuant to the terms of this Agreement are
exempt from the registration requirements of Section 5 of
the Securities Act by virtue of Section 4(2) thereof, and
from the qualification requirements of the securities laws
of the State of Nevada, or all requisite permits,
qualifications and orders have been obtained.
(i) Except as set forth on the Schedule of Exceptions attached
to the Agreement as Exhibit B, such counsel is not aware
of any action, proceeding or investigation pending against
the Company or any of its officers, directors or
employees, or that any of the foregoing has received any
threat thereof, which questions the validity of the
Agreement or the right of the Company or its officers,
directors and employees to enter into such agreement or
which might result, either individually or in the
aggregate, in any adverse change in the assets, condition,
affairs or prospects of the Company, nor is such counsel
aware of any litigation pending, against the Company or
any of its officers, directors or employees' or that any
of the foregoing has received any threat thereof, by
reason of the proposed activities of the Company, the past
employment relationships of its officers, directors or
employees, or negotiations by the Company
-16-
<PAGE> 93
or any of its officers or directors with possible
investors in the Company.
(j) The Company is not in violation of any provisions of its
Articles or Bylaws, and neither of such documents is in
violation of any provision of the Corporation Law of the
State of Nevada.
5.10 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
Closing Date, there shall have been no material adverse change, regardless of
insurance coverage therefor, in the business or any of the assets, results of
operations, liabilities, prospects or conditions, financial or otherwise, of the
Company.
SECTION 6
THE COMPANY'S CONDITIONS TO CLOSING
The Company's obligation to sell and issue the Shares at the Closing
is, at the option of the Company, subject to the fulfillment as of the Closing
Date of the following conditions:
6.1 REPRESENTATIONS. The representations made by the Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
6.2 LEGAL MATTERS. All material matters of a legal nature which pertain
to this Agreement, and the transactions contemplated hereby, shall have been
reasonably approved by counsel to the Company.
SECTION 7
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
7.1 FINANCIAL INFORMATION. The Company will mail the following reports
to the Purchaser for so long as the Purchaser is a holder of any of the shares
of Series B Preferred or shares of Conversion Stock:
(a) As soon as practicable after the end of each fiscal year,
and in any event within 90 days thereafter, consolidated
balance sheets of the Company and its subsidiaries, if
any, as of the end of such fiscal year, and consolidated
statements of operations and consolidated statements of
cash flows of the Company and its subsidiaries, if any,
for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each
case in comparative form similar information of the
previous fiscal year, all in reasonable detail and audited
by independent public accountants of national standing
selected by the Company.
-17-
<PAGE> 94
(b) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year
of the Company and in any event within 45 days thereafter,
a consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of each such quarterly
period, and consolidated statements of operations and
consolidated statements of cash flows of the Company and
its subsidiaries, if any, for such period and for the
current fiscal year to date, prepared in accordance with
generally accepted accounting principles (other than for
accompanying notes), all in reasonable detail and signed,
subject to changes resulting from year-end audit
adjustments, by the principal financial or accounting
officer of the Company.
(c) Within 15 days after the end of each fiscal month,
unaudited consolidated balance sheets of the Company as of
the end of such month, unaudited consolidated statements
of operations including income statements, and unaudited
consolidated rolling cash flow projections for each month
and for the current fiscal year to date. Such financial
statements shall be prepared in accordance with generally
accepted accounting principles consistently applied (other
than accompanying notes), all in reasonable detail subject
to year-end audit adjustments.
(d) Promptly after each meeting or the execution of an action
by written consent, copies of the minutes of proceedings
or actions by written consent of the Company's Board of
Directors and shareholders.
(e) With reasonable promptness, such other information and
data with respect to the Company and its subsidiaries, if
any, as the Purchaser may from time to time reasonably
request.
(f) For so long as the Purchaser is eligible to receive
reports under this Section 7.1, it shall also have the
right, at its expense, to visit and inspect any of the
properties of the Company or any of its subsidiaries, to
examine its books of account and records, and to discuss
their affairs, finances and accounts with their officers,
all at such reasonable times as often as may be reasonably
requested, provided, however, that the Company shall not
be obligated to provide any information, other than to the
representatives of the Purchaser on the Board of
Directors, that it reasonably considers to be a trade
secret or to contain confidential information.
7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 7.1 may not be assigned or otherwise conveyed by the
Purchaser or by any subsequent transferee of any such rights without the prior
written consent of the Company; provided,
-18-
<PAGE> 95
however, that the Purchaser may assign such rights to a parent, subsidiary or
affiliate of the Purchaser upon notice to the Company thereof.
7.3 USE OF PROCEEDS. The Company shall completely segregate the
proceeds from the sale of the Shares from all other funds of the Company. These
funds shall be strictly and exclusively used for activities directly related to
the SportPark segment of the Company's business and shall not be used for the
Company's franchise business or for any other purposes. The Company shall
maintain a separate accounting for the use of these proceeds and provide a copy
of such accounting to the Purchaser upon request.
7.4 RULE 144 REPORTING. With a view to making available to the
Purchaser the benefits of certain rules and regulations of the Securities and
Exchange Commission which may permit the sale of the Conversion Stock to the
public without registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the
Securities Act, at all times;
(b) Use its best efforts to file with the Securities and
Exchange Commission in a timely manner all reports and
other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) So long as the Purchaser owns any Restricted Securities
(as defined in Section 8.1 hereof) furnish to the
Purchaser forthwith upon request a written statement by
the Company as to its compliance with the reporting
requirements of Rule 144, and of the Securities Act and
the Exchange Act, a copy of the most recent annual or
quarterly report of the Company filed with the Securities
and Exchange Commission, and such other reports and
documents of the Company and other information in the
possession of or reasonably obtained by the Company as the
Purchaser may reasonably request in availing itself of any
due or regulation of the Securities and Exchange
Commission allowing the Purchaser to sell any such
securities without registration.
7.5 PROTECTIVE PROVISIONS. For so long as the Purchaser or its
assignees is a holder of any shares of the Series B Preferred or Conversion
Stock, the Company shall not without the Purchaser's prior written consent:
(a) change any of the terms of Series B Preferred as stated in
the Certificate or any amendment, addition, change,
modification or deletion of any portion of the By-Laws or
Articles of the Company;
-19-
<PAGE> 96
(b) authorize or issue (i) any class or series of securities
having rights senior to or pari passu with those of the
Series B Preferred or (ii) any rights to purchase or any
securities or instruments convertible or exchangeable into
any such securities;
(c) sell, lease, convey or otherwise dispose of all or
substantially all of its assets, or effect any merger,
consolidation, reorganization or amalgamation of the
Company, with another corporation;
(d) adopt a statutory plan of share exchange;
(e) redeem or repurchase (or enter into any agreement to
become so obligated) any shares of Common Stock or Series
B Preferred (other than pursuant to employee stock vesting
or employee stock repurchase agreements or pursuant to the
Certificate);
(f) enter into any transaction with or increase the
compensation paid or issue any securities of the Company,
rights or options to purchase any securities of the
Company or any instrument convertible or exchangeable or
payable or satisfied with any securities of the Company or
any other compensation derived from or based on the
profits or securities of the Company to any of Messrs.
John Boreta, Ron Boreta or Vaso Boreta or Boreta
Enterprises Ltd. or any of their respective affiliates;
(g) subject to the Sanyo Agreement and to the Agreement, dated
as of July 29, 1996, by and between Three Oceans and the
Company regarding the granting of certain rights to Three
Oceans by the Company, including the right to participate
in the ownership, development, management, and/or
operation of a SportPark in Asia, Anaheim, California or
Las Vegas, Nevada, the right to invest in or finance
certain transactions, the right to supply certain products
to the Company and certain signage rights, purchase, sell
or lease any material parcel of real property for any
SportPark, any single sport interactive entertainment or
training complex ("Single Sport Complex") or similar
facility or enter into any single transaction or series of
related transactions in excess of $100,000 with respect to
or relating to or in connection with any Single Sport
Complex or similar facility without first providing the
Purchaser an opportunity to approve the transactions(s)
and to review and provide comments on the relevant
documents prior to closing the transaction;
(h) dissolve or liquidate the Company and/or its assets or
close the business of the Company; or
-20-
<PAGE> 97
(i) file a petition to appoint a receiver for the Company or
file a voluntary petition for bankruptcy, insolvency or to
make any assignment for the benefit of creditors of the
Company.
7.6 PRINCIPAL BUSINESS. The Company shall ensure that all its principal
shareholders officers and directors (a) direct or refer all opportunities
relating to, similar to or of the same nature as the Company's Sports Park
business exclusively to the Company, (b) not realize any profit or gain with
respect to such opportunities to the detriment or in lieu of the Company and (c)
not otherwise misappropriate any corporate opportunity.
SECTION 8
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT;
REGISTRATION RIGHTS; INDEMNIFICATION
8.1 CERTAIN DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"CONVERSION STOCK" means the Common Stock issued or issuable pursuant
to conversion of the Shares.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 as
amended or any similar federal statute and the rules and regulations of the
Commissions thereunder all as the same shall be in effect at the time.
"HOLDER" shall mean the Purchaser and any person holding Registrable
Securities or shares to whom the rights under this Section 8 have been
transferred in accordance with Section 8.2 hereof.
"REGISTRABLE SECURITIES" means (i) the Conversion Stock, and (ii) any
Common Stock of the Company issued or issuable in respect of the Conversion
Stock or other securities issued or issuable pursuant to the conversion of the
shares upon any Recapitalization or any Common Stock otherwise issued or
issuable with respect to the Shares provided however that shares of Common Stock
or other securities shall only be treated as Registrable Securities if and so
long as they have not been (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction or (B)
sold or are available for sale in the opinion of counsel to the Company in a
single transaction exempt from the registration and prospectus delivery
requirements of the Securities Act so that all transfer restrictions and
restrictive legends with respect thereto are or may be removed upon the
consummation of such sale.
The term "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.
-21-
<PAGE> 98
"REGISTRATION EXPENSES" shall mean all expenses, except Selling
Expenses as defined below, incurred by the Company in complying with Sections
8.5, 8.6 and 8.7, including, without limitation, all registration, qualification
and filing fees, printing expenses, escrow fees and disbursements of counsel for
the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 8.3 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the notes and regulations of the Commission
thereunder all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the holders.
8.2 RESTRICTION ON TRANSFERABILITY. The Shares and the Conversion Stock
shall not be sold, assigned, transferred or pledged except upon satisfaction of
the conditions specified in this Section 8, which conditions are intended to
ensure compliance with the provisions of the Securities Act. The Purchaser will
cause any proposed assignee, transferee, or pledge of the shares of Conversion
Stock held by the Purchaser to agree to take and hold such securities subject to
the provisions and conditions of this Section 8.
8.3 RESTRICTIVE LEGEND. Each certificate representing (i) the Shares,
(ii) the Conversion Stock and (iii) any other securities issued in respect of
the Shares or the Conversion Stock upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar events, shall (unless
otherwise permitted by the provisions of Section 8.4 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF
THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT
NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
-22-
<PAGE> 99
The Purchaser consents to the Company making a notation on its records
and giving instructions to any transfer agent of the Shares or the Conversion
Stock in order to implement the restrictions on transfer established in this
Section 8.
8.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 8.4. Prior to any proposed
sale, assignment, transfer or pledge of any Restricted Securities (other than
(i) transfers not involving a change in beneficial ownership or (ii)
transactions involving the distribution of Restricted Securities by the
Purchaser to a parent, subsidiary or affiliate of the Purchaser), unless there
is in effect a registration statement under the Securities Act covering the
proposed transfer, the holder thereof shall give written notice to the Company
of such holder's intention to effect such transfer, sale, assignment or pledge.
Each such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities Transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144,
the appropriate restrictive legend set forth in Section 8.3 above, except that
such certificate shall not bear such restrictive legend if in the opinion of
counsel for such holder and the Company such legend is not required in order to
establish compliance with any provision of the Securities Act.
8.5 REQUEST FOR REGISTRATION.
(a) REQUEST FOR REGISTRATION. If the Company shall receive
from the Purchaser at any time a written request that the
Company effect any registration with respect to all or a
part of the Registrable Securities, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration (including, without
limitation, filing post-effective amendments,
appropriate qualifications under applicable blue
sky or other state securities laws, and
appropriate compliance with the Securities Act)
and as would permit or facilitate the sale and
distribution of all or such portion of such
Registrable Securities as are specified in such
request, together with all or such portion of the
-23-
<PAGE> 100
Registrable Securities of any Holder or holders
joining in such request as are specified in a
written request received by the Company within
twenty (20) days after such written notice from
the Company is mailed or delivered.
The Company shall not be obligated to effect, or to take
any action to effect, any such registration pursuant to
this Section 8.5:
(A) After the Company has initiated one such
registration pursuant to this Section
8.5(a);
(B) During the period starting with the date
sixty (60) days prior to the Company's
good faith estimate of the date of
filing of, and ending on a date one
hundred twenty (120) days after the
effective date of, a Company-initiated
registration; provided that the Company
is actively employing in good faith all
reasonable efforts to cause such
registration statement to become
effective;
(b) Subject to the foregoing clauses (A) and (B), the Company
shall file a registration statement covering the
Registrable Securities so requested to be registered as
soon as practicable after receipt of the request or
requests of the Purchaser.
The registration statement filed pursuant to the request
of the Purchaser may include other securities of the
Company, with respect to which registration rights have
been granted, and may include securities of the Company
being sold for the account of the Company.
(c) UNDERWRITING. The right of any Holder to registration
pursuant to Section 8.5 shall be conditioned upon such
holder's participation in such underwriting and the
inclusion of such holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a
majority in interest of the Purchaser and such holder with
respect to such participation and inclusion) to the extent
provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities
he or she holds.
8.6 THE COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to
time the Company shall determine to register of its
securities, either for its own account or the account of a
Holder or Holders, other than a registration relating
solely to employee benefit plans or a post
-24-
<PAGE> 101
effective amendment to the registration statement for the
Company's initial public offering, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under the sky laws or other
compliance), and in any underwriting involved
therein, all the Registrable Securities specified
in a written request or requests, made within 20
days after receipt of such written notice from
the Company, by any Holder.
(b) UNDERWRITING. If the registration of which the Company
gives notice is for a registered public offering involving
an underwriting, the Company shall so advise the Holders
as a part of the written notice given pursuant to Section
8.6(a)(i). In such event the right of any Holder to
registration pursuant to this Section 8.6 shall be
conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with
the Company and any other shareholders distributing their
securities through such underwriting) enter into an
underwriting agreement in customary form with the managing
underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 8.6,
if the managing underwriter determines that marketing
factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the
Registrable Securities to be included in such
registration. The Company shall so advise all Holders and
the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be
allocated among all Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable
Securities held by such holders at the time of filing the
registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the
Company may round the number of shares allocated to any
Holder or other shareholder to the nearest 100 shares. If
any Holder or other shareholder disapproves of the terms
of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public
distribution prior to 90 days after the effective date of
the registration statement relating thereto, or such other
shorter period
-25-
<PAGE> 102
of time as the underwriters may require. The Company may
include shares of Common Stock held by shareholders other
than Holders in a registration statement pursuant to this
Section 8.6, so long as the amount of Registrable
Securities otherwise includable in such registration
statement would not thereby be diminished.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration
initiated by it under this Section 8.6 prior to the
effectiveness of such registration whether or not any
Holder has elected to include securities in such
registration.
8.7 REGISTRATION ON FORM S-3.
(a) The Company shall use its best efforts to qualify for
registration on Form S-3 or any comparable or successor
form or forms. After the Company has qualified for the use
of Form S-3, in addition to the rights contained in the
foregoing provisions of this Section 8, the Holders of
Registrable Securities shall have the right to request
registrations on Form S-3 (such requests shall be in
writing and shall state the number of shares of
Registrable Securities to be disposed of and the intended
methods of disposition of such shares by such Holder or
Holders).
(b) If a request complying with the requirements of Section
8.7(a) hereof is delivered to the Company, the provisions
of Section 8.5(a)(i) and (ii) and Section 8.5(b) hereof
shall apply to such registration. If the registration is
for an underwritten offering, the provisions of Section
8.5(c) hereof shall apply to such registration.
8.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with the registration pursuant to Section 8.5, 8.6 and 8.7 shall be
borne by the Company. Unless otherwise stated, all Selling Expenses relating to
securities registered on behalf of the Holders and all other Registration
Expenses shall be borne by the Holders of such securities pro rata on the basis
of the number of shares registered.
8.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 8,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best
efforts to cause such registration statement to become and
remain effective for at least one hundred twenty (120)
days, and prepare and file with the Commission such
amendments to such registration statement and
-26-
<PAGE> 103
supplements to the prospectus contained therein as may be
necessary to keep such registration statement effective
for at least one hundred twenty (120) days, provided that
no such registration shall constitute a shelf registration
under Rule 415 promulgated by the Commission under the
Securities Act;
(b) Enter into a written underwriting agreement in customary
form and substance reasonably satisfactory to the Company,
the Holders and the managing underwriting or underwriters
of the public offering of such securities, if the offering
is to be underwritten in whole or in part;
(c) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered
such reasonable number of copies of the registration
statement, preliminary prospectus' final prospects and
such other documents as such underwriters may reasonably
request in order to facilitate the public offering of such
securities;
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such
participating Holders may reasonably request within ten
(10) days prior to the original filing of such
registration statement, except that the Company shall not
for any purpose be required to execute a general consent
to service of process or to qualify to do business a
foreign corporation in any jurisdiction where it is not so
qualified;
(e) Notify the Holders (of if they have appointed an
attorney-in-fact, such attorney-in-fact) participating in
such registration, promptly after it shall receive notice
thereof, of the time when such registration statement has
become effective or a supplement to any prospectus forming
a part of such registration statement has been filed;
(f) Notify such Holders or their attorney-in-fact promptly of
any request by the Commission for the amending or
supplementing of such registration statement or prospectus
or for additional information;
(g) Prepare and file with the Commission promptly upon the
request of such registration statement or prospectus
which, in the reasonable opinion of counsel for such
Holders, is required under the Securities Act or the rules
and regulations thereunder in connection with the
distribution of the Registration Securities by such
Holders;
-27-
<PAGE> 104
(h) Prepare and promptly file with the Commission, and
promptly notify such Holders or their attorney-in-fact of
the filing of, such amendment or supplement to such
registration statement or prospectus as may be necessary
to correct any statements or omissions if, at the time
when a prospectus relating to such securities is required
to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any
other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material
fact necessary to make the statements therein not
misleading in light of the circumstances in which they
were made;
(i) In case any of such Holders or any underwriter for any
such Holders is required to deliver a prospectus at a time
when the prospectus then in effect may no longer be used
under the Securities Act, prepare promptly upon request
such amendment or amendments to such registration
statement and such prospectus as may be necessary to
permit compliance with the requirements of the Securities
Act;
(j) Advise such Holders or their attorney-in-fact, promptly
after it shall receive notice or obtain knowledge thereof,
of the issuance of any stop order by the Commission
suspending the effectiveness of such registration
statement or the initiation or threatening of any
proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued;
and
(k) At the request of any such holder, furnish on the
effective date of the registration statement and, if such
registration includes an underwritten public offering, at
the closing provided for in the underwriting agreement,
(i) an opinion, dated each such date, of the counsel
representing the Company for the purpose of such
registration, addressed to the underwriters, if any, and
to the Holder or Holders making such request, covering
such matters with respect to the registration statement,
the prospectus and each amendment or supplement thereto,
proceedings under state and federal securities laws other
matters relating to the Company, the securities being
registered and the offer and sale of such securities as
are customarily the subject of opinions of issuer's
counsel provided to underwriters in underwritten public
offerings, and (ii) to the extent the Company's accounting
firm, is willing to do so, a letter dated each such date,
from the independent public accountants of the Company,
addressed to the underwriters, if any, and to the Holder
or Holders making such request, stating that they
-28-
<PAGE> 105
are independent public accountants within the meaning of
the Securities Act and that in the opinion of such
accountants the financial statements and other financial
data of the Company included in the registration statement
or the prospectus or any amendment or supplement thereto
comply in all material respects with the applicable
accounting requirements of the Securities Act, and
additionally covering such other financial matter,
including information as to the period ending not more
than five (5) business days prior to the data of such
letter with respect to the registration statement and
prospectus, as the underwriters or such requesting Holder
or Holders may reasonably request.
8.10 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 8.
8.11 INDEMNIFICATION.
(a) The Company will defend, indemnify and hold the
Purchaser, each Holder, each of its officers, directors
and partners, and each person controlling the Purchaser
and each such Holder within the meaning of Section 15 of
the Securities Act, and each underwriter, if any, and
each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including without
limitation, any of the foregoing incurred in settlement
of any litigation, commenced or threatened, arising out
of or based on (i) any breaches of the representations,
warrants or covenants contained herein, or (ii) any
untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement,
prospectus, offering circular or other document or any
amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on
any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary
to make the statements therein, light of the
circumstances in which they were made, not misleading, or
any violation by the Company of the Securities Act or any
rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such
registration, qualification or compliance, and the
Company will reimburse Purchaser, and each such holder,
each of its officers and directors, and each person
controlling such holder, each such underwriter and each
person who controls any such underwriter, for any legal
and any other
-29-
<PAGE> 106
expenses reasonably incurred in connection with
investigating, preparing or defending any such claim,
loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in
reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed
by such Holder, controlling person or underwriter and
stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such
registration, qualification or compliance is being
effected, indemnify the Company each to its directors and
officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each
person who controls the Company or such Holder, each of
its officers and directors and each person controlling
such Holder within the meaning of Section 15 of the
Section 15 of the Securities Act, against all claims,
losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact
contained in any such registration statement prospectus'
offering circular or other document, or any omission (or
alleged omission) to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any
other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only
to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is
made in such registration statement prospectus, offering
circular or other document in reliance upon and in
conformity with written information furnished to the
Company by an instrument duly executed by such Holder and
stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each
Holder under this subsection (b) shall be limited to an
amount equal to the initial public offering price of the
shares sold by such Holder, unless such liability arises
out of or is based on willful conduct by such Holder.
(c) Each party entitled to indemnification under this Section
8.11 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to
-30-
<PAGE> 107
which indemnity may be sought, and shall, when
applicable, permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and
the Indemnified Party may participate in such defense at
such party's expense, and provided further that the
failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party
of its obligations under this Section 8 unless the
failure to give such notice is materially prejudicial to
an Indemnifying Party's ability to defend such action and
provided further, that the Indemnifying Party shall not
assume the defense for matter as to which there is a
conflict of interest or separate and different defenses.
No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
8.12 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted the Purchasers under Sections 8.5, 8.6 and 8.7
may be assigned to a transferee or assignee in connection with any transferor
assignment of Registrable Securities by the Purchaser provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities laws
and (ii) such assignee or transferee acquires at least 10,000 of the Shares and
/or Conversion Stock (appropriately adjusted for Recapitalization).
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned to any parent, subsidiary or affiliate of the
Purchaser, without compliance with item (ii) above, provided, written notice
thereof is promptly given to the Company.
8.13 STANDOFF AGREEMENT. Each Holder agrees, so long as such Holder
holds at least five percent (5%) of the Company's outstanding voting equity
securities, that, upon request of the Company or the underwriters managing an
underwritten offering of the Company's securities, it will not sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Registrable Securities (other than those included in the registration)
without the prior written consent of the Company or such underwriters, a the
case may be, for such period of time (not to exceed one hundred and twenty (120)
days) from the effective date of such registration as may be requested by the
underwriters; provided that the officers and directors of the Company who own
stock of the Company also agree to such restrictions.
-31-
<PAGE> 108
SECTION 9
THE PURCHASER'S RIGHT OF FIRST REFUSAL
9.1 RIGHT OF FIRST REFUSAL. The Company hereby grants to the Purchaser
the right of first refusal to purchase its pro rata share of all or any part of
any New Securities (as defined in this Section 9.1) which the Company may, from
time to time, propose to sell and issue. The Purchaser's pro rata share, for
purposes of this right of first refusal, is the ratio that the sum of the number
of shares of Common Stock issuable upon conversion of the shares held by the
Purchaser and the number of shares of Conversion Stock then held by the
Purchaser bears to the sum of the total number of shares of Common Stock then
outstanding and the number of shares of Common Stock issuable upon conversion of
the then outstanding Preferred Stock convertible into Common Stock.
(a) Except as set forth below, "New Securities" shall mean
any shares of capital stock of the Company including
Common Stock and Preferred Stock, whether now authorized
or not, and rights, options or warrants to purchase said
shares of Common Stock or Preferred Stock, and securities
of any type whatsoever that are, or may become,
convertible into said shares of Common Stock or Preferred
Stock. Notwithstanding the foregoing, "New Securities"
does not include (i) the Shares and the Conversion Stock,
(ii) securities offered to the public generally pursuant
to a registration statement or pursuant to Regulation A
under the Securities Act, (iii) securities issued in the
acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets or
other reorganization whereby the Company or its
shareholders own not less than fifty-one percent (51%) of
the voting power of the surviving or successor
corporation, (iv) shares of the Company's Common Stock or
related options exercisable for such Common Stock issued
to employees, officers and directors of the Company
pursuant to any arrangement approved by the Board of
Directors of the Company, (v) stock issued pursuant to
any rights or agreements, including without limitation
convertible securities, options, warrants, provided that
the rights of first refusal established by this Section
9.1 apply with respect to the initial sale or grant by
the Company of such rights or agreements, and (vi) stock
issued in connection with any stock split, stock dividend
or recapitalization by the Company.
(b) In the event the Company proposes to undertake an
issuance of New Securities, it shall give the Purchaser
written notice of its intention, describing the type of
New Securities, and the price and terms upon which the
Company proposes to issue the same. The Purchaser shall
have fifteen (15) days from the date of receipt of any
such notice to agree to purchase up to the Purchaser's
respective pro rata share of such New Securities for the
price and
-32-
<PAGE> 109
upon the terms specified in the notice by giving written
notice to the Company and stating therein the quantity of
New Securities to be purchased.
(c) In the event the Purchaser fails to exercise such right
of first refusal within said fifteen (15) day period, the
Company shall have ninety (90) days thereafter to sell or
enter into an agreement (pursuant to which the sale of
New Securities covered thereby shall be closed, if at
all, within sixty (60) days from the date of said
agreement) to sell the New Securities not elected to be
purchased by the Purchaser at the price and upon the
terms no more favorable to the purchasers of such
securities than specified in the Company's notice. In the
event the Company has not sold the New Securities or
entered into an agreement to sell the New Securities
within said ninety (90) day period (or sold and issued
New Securities in accordance with the foregoing within
sixty (60) days from the date of said agreement), the
Company shall not thereafter issue or sell any of such
New Securities, without first offering such securities in
the manner provided above.
(d) The right of first refusal hereunder is not assignable
except to a parent, subsidiary or affiliate of the
Purchaser, without the prior written consent of the
Company, which consent will not be unreasonably withheld.
SECTION 10
INDEMNIFICATION
10.01 SURVIVAL OF REPRESENTATIONS. All representations, warranties and
agreements made by any party in this Agreement or pursuant hereto shall survive
the Closing, but all claims for damages made by virtue of such representations,
warranties and agreements shall be made under this Section 10. The
representations and warranties set forth herein are cumulative, and any
limitation or qualification set forth in any one representation and warranty
therein shall not limit or qualify any other representation and warranty
therein.
10.02 INDEMNIFICATION BY THE COMPANY. Notwithstanding any term in this
Agreement to the contrary, the Company, shall indemnify, defend, save and hold
the Purchaser and its officers, directors, employees, agents and Affiliates
(excluding Ron Boreta, Vaso Boreta, John Boreta and the Company; collectively,
"Purchaser Indemnitees") harmless from and against all demands, claims,
allegations assertions, actions or causes of action, assessments, losses,
damages, deficiencies, liabilities, costs and expenses (including reasonable
legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing, whether or not the
underlying demands, claims, allegations, etc., of third parties are meritorious;
collectively, "Purchaser Damages") asserted against, imposed upon, resulting to,
required to be paid by or incurred by any Purchaser Indemnitees, directly or
indirectly, in connection with, arising out of, which could result in, or which
would not have occurred but for, (a) a breach of
-33-
<PAGE> 110
any representation or warranty made by the Company in this Agreement, in any
certificate or document furnished pursuant hereto by the Company or any other
agreement to which the Company is or is to become a party, or (b) a breach or
nonfulfillment of any covenant or agreement made by the Company in or pursuant
to this Agreement or in any other agreement to which the Company is or is to
become a party.
10.03 INDEMNIFICATION BY THE PURCHASER. The Purchaser shall indemnify,
defend, save and hold the Company and its officers, directors, employees, agents
and Affiliates (excluding Ron Boreta, Vaso Boreta, John Boreta and the
Purchaser; collectively, "Company Indemnitees") harmless from and against any
and all demands, claims, actions or causes of action, assessments, losses,
damages, deficiencies, liabilities, costs and expenses (including reasonable
legal fees, interest, penalties, and all reasonable amounts paid in
investigation, defense or settlement of any of the foregoing, whether or not the
underlying demands, claims, allegations, etc., of third parties are meritorious
(collectively, "Company Damages") asserted against, imposed upon, resulting to,
required to be paid by or incurred by any Company Indemnitees, directly or
indirectly, in connection with, arising out of, which would result in, or which
would not have occurred but for, (a) a breach of any representation or warranty
made by the Purchaser in this Agreement or in any certificate or document
furnished pursuant hereto by buyer or any other agreement to which the Purchaser
is a party and (b) a breach of nonfulfillment of any covenant of agreement made
by the Purchaser in or pursuant to this Agreement and in any other agreement to
which the Purchaser is a party.
10.04 NOTICE OF CLAIMS. If any Purchaser Indemnitee or Company
Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or
will suffer or incur any Purchaser Damages or Company Damages, as the case may
be ("Damages"), for which it is entitled to indemnification under this Section
10, such Indemnified Party shall so notify the party or parties from whom
indemnification is being claimed (the "Indemnifying Party") with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any action at law or suit in equity is instituted by or against a
third party with respect to which any Indemnified Party intends to claim any
Damages, such Indemnified Party shall promptly notify the Indemnifying Party of
such action or suit. The failure of an Indemnified Party to give any notice
required by this Section shall not affect any of such party's rights under this
Section 10 or otherwise except and to the extent that such failure is actually
prejudicial to the rights or obligations of the Indemnified Party.
10.05 THIRD PARTY CLAIMS. The Indemnified Party shall have the right to
conduct and control, through counsel of its choosing, the defense of any third
party claim, action or suit, and the Indemnified Party may compromise or settle
the same, provided that the Indemnified Party shall give the Indemnifying Party
advance notice of any proposed compromise or settlement. The Indemnified Party
shall permit the Indemnifying Party to participate in the defense of any such
action or suit through counsel chosen by the Indemnifying Party, provided that
the fees and expense of such counsel shall be borne by the Indemnifying Party.
If the Indemnified Party permits the Indemnifying Party to undertake, conduct
and control the conduct and settlement of such action or suit, (a) the
Indemnifying Party shall not thereby permit to exist any encumbrance upon any
asset of the Indemnified Party; (b) the Indemnifying Party shall not consent to
any settlement that does not include as an unconditional term thereof the giving
of a complete release
-34-
<PAGE> 111
from liability with respect to such action or suit to the Indemnified Party; (c)
the Indemnifying Party shall permit the Indemnified Party to participate in such
conduct or settlement through counsel chosen by the Indemnified Party; and (d)
the Indemnifying Party shall agree promptly to reimburse the Indemnified Party
for the full amount of any Damages including fees and expenses of counsel for
the Indemnified Party incurred after giving the foregoing notice to the
Indemnifying Party and prior to the assumption of the conduct and control of
such action or suit by the Indemnifying Party.
10.6 GOOD FAITH EFFORTS TO SETTLE DISPUTES. The Purchaser and the
Company agree that, prior to commencing any litigation against the other
concerning any matter with respect to which such party intends to claim a right
of indemnification in such proceeding, the respective chief executive officers
(or officers holding such authority) of such parties shall meet in a timely
manner and attempt in good faith to negotiate a settlement of such dispute
during which time such officers shall disclose to the others all relevant
information relating to such dispute. In the event that the parties are unable
to amicably resolve the matter or matters in dispute, the parties shall submit
all matters still in dispute to arbitration in accordance with the arbitration
rules of the American Arbitration Association. The Purchaser shall select an
arbitrator and the Company shall select an arbitrator and the two arbitrators so
selected shall select a third arbitrator. The decision of the arbitrators shall
be final and binding on the parties. Such matter shall be submitted to
arbitration within thirty (30) days from the date that either the Company or the
Purchaser declares that any matter in dispute cannot be amicable resolved. All
costs and expenses of arbitration shall be paid equally by the Purchaser on one
hand and the Company on the other. Any cash or other monetary award shall be
paid within thirty (30) days of the arbitrators final decision. Arbitration
shall be held in Las Vegas, Nevada.
SECTION 11
MISCELLANEOUS
11.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of Nevada.
11.2 EVENTS OF DEFAULT AND REMEDIES. (a) For purpose of this Agreement,
the term "Event of Default" shall mean the occurrence or happening of any breach
or violation of or default in the observation or performance of any term,
agreement, covenant, representation, warranty, condition or stipulation
contained or referred to in this Agreement by any party to this Agreement.
(b) (i) Upon the occurrence of an Event of Default, the
non-defaulting party shall have all rights and
remedies afforded by law or equity, including the
remedy of specific performance, it being recognized
that the Series B Preferred and Conversion Stock and
the rights and benefits to be derived therefrom are
unique and special. Any party awarded a money
judgment against the other shall be entitled to
recover in addition thereto interest thereon at the
rate of twelve percent (12%) per annum.
-35-
<PAGE> 112
(ii) Each right, power and remedy provided for in this
Agreement, or now or hereafter existing at law or in
equity shall be cumulative and may be exercised
successively or concurrently and shall be in addition
to every other such right, power or remedy. The
exercise or beginning of the exercise by either party
of any one or more of such rights, powers or remedies
shall not preclude the simultaneous or later exercise
of all such other rights, powers or remedies. No
failure or delay on the party of any party to
exercise any such right, power or remedy shall
operate as a waiver thereof. No waiver by a party
will be effective unless and until it is in writing
and signed by an authorized representative of such
party.
(c) Each party will pay to the other, in addition to all other sums due
all costs and expenses (including, without limitation, attorneys' fees,
brokerage fees and accountants' fees) reasonably incurred by or on behalf of a
party in exercising and protecting their rights and remedies hereunder,
enforcing the obligations of the other party hereunder and defending any
unsuccessful counterclaim, cross-claim or other claim asserted by the other
party.
11.3 SET OFF. In addition to, and not in lieu of, any and all other
remedies which the Purchaser otherwise may have at law or in equity, or pursuant
to this Agreement, the Purchaser shall have the right to set off, counterclaim
and recoup any loss against any amounts to be paid to the Company under this
Agreement.
11.4 NONEXCLUSIVITY. The foregoing set off right and the
indemnification provision set forth in Section 8 are in addition to, and not in
lieu or derogation of, any statutory, equitable or common law remedy the
Purchaser may have arising out of or as a result of this Agreement or for breach
of representations, warranties or covenants herein. Neither the exercise of nor
the failure to exercise the set off right set forth in Section 10.3 shall
constitute an election of remedies.
11.5 SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by the Purchaser and
the closing of the transactions contemplated hereby.
11.6 ANTI-DILUTION PROVISIONS. The "Anti-Dilution Provisions" shall
provide that in the event that any of the securities referenced herein as
presently constituted, shall be changed into or exchanged for a different number
or kind of securities or interests of the Company or of another entity (whether
by reason of merger, consolidation, recapitalization, reclassification,
split-up, combination of shares, sale of assets or otherwise), or if the number
of such securities shall be increased through the payment of a dividend, or if
the Company makes any other distribution of securities or other property
including cash in respect of such securities, then there shall be substituted
for and added to such securities, as the case may be, theretofore subject or
which may become subject to the terms of this Agreement, the number and kind of
securities, interests or property into which each outstanding security shall be
so changed, or for which each such security shall be exchanged, or to which each
such security shall be entitled, as the case may be, and the purchase price per
security appropriately adjusted.
-36-
<PAGE> 113
11.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS. The rights and obligations of
the Company and the rights of the Purchaser to purchase the Shares shall not be
assignable without the written consent of the other; provided, however, the
Purchaser may assign its rights and obligations under this Agreement to a
parent, subsidiary or affiliate of the Purchaser upon notice to the Company
thereof. Except as otherwise provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
11.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
documents delivered pursuant hereto at the Closing constitute the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any warranties, representations or covenants except as
specifically set forth herein or therein. Except as expressly provided herein,
neither this Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against whom
endorsement of any such amendment, waiver, discharge or termination is sought.
11.9 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by confirmed facsimile to the correct
facsimile number or otherwise delivered by hand or by messenger, addressed (a)
if to the Purchaser, at its address set forth on the cover page of this
Agreement, or at such other address as the Purchaser shall have furnished to the
Company in writing, or (b) if to any other holder of any Shares or Conversion
Stock, at such address as such holder shall have furnished the Company in
writing, or, until any such holder so furnishes an address to the Company, then
to and at the address of the last holder of such Shares or Conversion Stock who
has so furnished an address to the Company, or (c) if to the Company, one copy
shall be sent to its address set forth on the cover page of this Agreement and
addressed to the attention of the Corporate Secretary, or at such other address
as the Company shall have furnished to the Purchaser.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
11.10 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any Shares or Conversion Shares upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such
holder nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring.
Except as provided in Section 11.8 hereof, any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach of
default under this Agreement or any waiver on the part of any holder of any
provisions
-37-
<PAGE> 114
or conditions of this Agreement, must be in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
11.11 EXPENSES. Except as otherwise provided herein, the Company and
the Purchaser shall each bear their own expenses incurred on their behalf with
respect to this Agreement and the transactions contemplated hereby.
11.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
11.13 CONFIDENTIALITY. Neither party shall make or issue, or cause to
be made or issued, any announcement or written statement concerning this
Agreement or the transactions contemplated hereby for dissemination to the
general public without the prior written consent of the other party. This
provision shall not apply, however, to any announcement or written statement
which in the opinion of counsel to such party is required to be made by law or
the regulations of any federal or state governmental agency or any stock
exchange.
11.14 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
11.15 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
The foregoing Agreement is hereby executed as of the date first above
written.
"PURCHASER" "COMPANY"
LAS VEGAS DISCOUNT GOLF & TENNIS, INC., SAINT ANDREWS GOLF CORPORATION, a
a Colorado corporation Nevada corporation
By By
----------------------------------- -------------------------------
Name: Name: Ronald S. Boreta
Title: Title: President
-38-
<PAGE> 1
PGS-10/12/98 - Option Agreement
EXHIBIT 4.2
-----------
OPTION AGREEMENT
----------------
OPTION AGREEMENT, effective as of October 19, 1998, by and between LAS
VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation with offices at 5325
South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118 ("LVDGT"), and
ASI GROUP, L.L.C., a Nevada limited liability company, c/o Agassi Enterprises,
Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109 ("ASIG"):
W I T N E S S E T H :
---------------------
WHEREAS, ASIG and LVDGT are entering into an investment agreement (the
"Investment Agreement") simultaneously herewith which Investment Agreement
provides for the purchase by ASIG of certain capital stock of LVDGT. All terms
used but not defined herein shall have the meanings ascribed to them in the
Investment Agreement.
WHEREAS, to induce ASIG to enter into the Investment Agreement, ASIG is
hereby granted options to purchase Shares (as defined herein) on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound, ASIG and LVDGT hereby agree as
follows:
SECTION 1. DEFINITIONS.
For purposes of this Agreement, the following capitalized terms shall
have the respective meanings indicated below.
"ACT" shall mean the Securities Act of 1933, as it may be amended.
"ADDITIONAL SHARES" shall mean all Shares (including treasury Shares)
issued or sold (or, deemed to be issued) by LVDGT after the date hereof, whether
or not subsequently reacquired or retired by LVDGT.
"AFFILIATE" shall mean any Person which, directly or indirectly,
controls, is controlled by or is under common control with the relevant Person
and, if such Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and any trust whose
principal beneficiary is such individual, or one or more members of such
immediate family or any Person who is controlled by any such member or trust.
For the purposes of this definition, "control" (including, with correlative
meanings, the terms "controlled
-1-
<PAGE> 2
PGS-10/12/98 - Option Agreement
by" and "under common control with"), as used with respect to any Person, shall
mean a member of the board of directors, a partner or an officer of such Person,
or any other Person having, directly or indirectly, the power to direct or cause
the direction of the management and policies of such Person, through the
ownership (of record, as trustee, by voting agreement or by proxy) of voting
securities or similar equity interests, by contract or otherwise. Any Person
owning or controlling directly or indirectly 10% or more of the voting
securities or similar equity interests of another Person shall be deemed to be
an Affiliate of such person.
"BUSINESS DAY" shall mean any other than a Saturday or a Sunday or a
day on which commercial banking institutions in the City of New York are
authorized by law or other governmental action to be closed. Any reference to
"days" (unless Business Days are specified) shall mean calendar days.
"CONVERTIBLE SECURITIES" shall mean any evidence of indebtedness,
shares of stock (other than Shares) or other securities directly or indirectly
convertible into or exchangeable for Additional Shares.
"CURRENT MARKET PRICE" shall mean on any date specified herein, the
average daily Market Price during the period of the most recent 20 days, ending
on such date, on which the national securities exchanges were open for trading,
except that if no Shares are then listed or admitted to trading on any national
securities exchange or quoted in the over-the-counter market, the Current Market
Price shall be the Market Price on such date.
"EMPLOYEE OPTIONS" shall mean options (other than the Option) to
subscribe for, purchase or otherwise acquire Additional Shares at an exercise
price equal to no less than the Current Market Price on the date of issuance of
such options, which options are issued to bona-fide employees of or consultants
to LVDGT (other than members of the Boreta family) pursuant to a stock option
plan adopted by the Board of Directors of LVDGT.
"EMPLOYEE SHARES" shall mean Additional Shares issued upon exercise of
an Employee Option.
"MARKET PRICE" shall mean on any date specified herein, the amount per
share of the Shares, equal to (a) the last sale price of such Shares, regular
way, on such date or, if no such sale takes place on such date, the average of
the closing bid and asked prices thereof on such date, in each case as
officially reported on the principal national securities exchange on which such
Shares is then listed or admitted to trading, or (b) if such Shares are not then
listed or admitted to trading on any national securities exchange but it
designated as a national market system security by the NASD, the last trading
price of the Shares on such date, or (c) if there shall have been not trading on
such date or if the Shares are not so designated, the average of the closing bid
and asked prices of the Shares on such date as shown by the NASD automated
quotation system, or (d) if such Shares are not then listed or admitted to
trading on any national exchange or quoted in the over-the-counter market, the
higher of (x) the book value thereof as determined by any firm of independent
public accountants of recognized standing selected by the Board of Directors of
LVDGT as of the last day of any month ending with 60 days preceding the date as
of which the
-2-
<PAGE> 3
PGS-10/12/98 - Option Agreement
determination is to be made or (y) the fair value thereof determined in good
faith by the Board of Directors of LVDGT as of a date which is within 180 days
of the date as of which the determination is to be made.
"NASD" shall mean The National Association of Securities Dealers, Inc.
"OPTION" shall mean the right of ASIG to purchase, at ASIG's election,
in accordance with the terms of this Agreement, a number of Shares up to the
Option Number, upon payment of the aggregate Option Price for the number of
Shares so purchased, subject to adjustment as provided herein.
"OPTION NUMBER" shall mean 347,975 Shares, as such number may be
adjusted as provided herein.
"OPTION PRICE" shall be, on a per Share basis, $1.8392. The Option
Price shall be adjusted and readjusted from time to time as provided herein and,
as so adjusted or readjusted, shall remain in effect until a further adjustment
or readjustment thereof is required hereby. In the event of a Shares dividend,
Shares split, or combination of Shares which results in a proportionate increase
or decrease in the number of Shares, the Option Price then in effect shall be
decreased (in the case of a proportionate increase in Shares outstanding) or
increased (in the case of a proportionate decrease in Shares outstanding) in the
same proportion. In the event of a recapitalization, reorganization,
consolidation, merger or similar transaction where Shares are changed into or
exchanged for a different number of Shares or different capital stock or other
securities, the Option Price then in effect shall apply to so much of the
different shares of capital stock or other securities as are received with
respect to each Share so changed or exchanged. ASIG shall be given prompt
written notice of any such event, which notice shall include in reasonable
detail the calculation of any adjustments to the Option Price.
"OTHER OPTIONS" shall mean rights or options (other than the Option) to
subscribe for, purchase or otherwise acquire either Additional Shares or
Convertible Securities.
"PERSON" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government (or any agency, instrumentality or political subdivision thereof).
"SHARES" shall mean the shares of the common stock of LVDGT, no par
value, outstanding at any time.
SECTION 2. OPTIONS.
2.1 GRANT OF OPTION. LVDGT hereby grants to ASIG the Option, which is
immediately exercisable. The Option may be exercised in full or in any number of
partial exercises at any time or times at or prior to the tenth anniversary
hereof.
-3-
<PAGE> 4
PGS-10/12/98 - Option Agreement
2.2 EXERCISE OF OPTION. An Option may be exercised in whole or in part
by ASIG by serving written notice (the "Option Notice") upon LVDGT specifying
the number of Shares then to be purchased. An Option shall be exercisable at a
purchase price equal to the product of the number of Shares to be purchased
multiplied by the Option Price then in effect. The closing for each such
purchase shall be held at the offices of LVDGT on a day not later than 30
Business Days after the date of the Option Notice. At the closing, LVDGT shall
deliver to ASIG, against payment of the purchase price specified in this Section
2.2, certificates for the Shares purchased, free and clear of all pledges,
options, claims, liens, security interests and encumbrances of any kind, other
than the requirements of federal and state securities laws respecting
limitations on the subsequent transfer thereof, which certificates shall be duly
endorsed in blank or with appropriate duly executed blank stock transfer powers
attached, with signatures guaranteed by a commercial bank or trust company or a
member firm of a national securities exchange and with all requisite stock
transfer tax stamps attached or provided for.
SECTION 3. ADJUSTMENT OF SHARES ISSUABLE UPON EXERCISE.
3.1 GENERAL; OPTION PRICE. The number of Shares which ASIG shall be
entitled to receive upon each exercise of the Option shall be determined by
multiplying the number of Shares which would otherwise (but for the provisions
of this Section) be issuable upon such exercise, as designated by ASIG, by the
fraction of which (a) the numerator is the Option Price in effect on the date
hereof and (b) the denominator is the Option Price in effect on the date of such
exercise.
3.2 ADJUSTMENT OF OPTION PRICE.
3.2.1 ISSUANCE OF ADDITIONAL SHARES. In case LVDGT at any time
or from time to time after the date hereof shall issue or sell Additional Shares
(including Additional Shares deemed to be issued pursuant hereto) without
consideration or for a consideration per Share less than the greater of the
Current Market Price and the Option Price in effect immediately prior to such
issue or sale, then, and in each such case, subject to Section 3.7, such Option
Price shall be reduced, concurrently with such issue or sale, to a price
(calculated to the nearest .001 of a cent) determined by multiplying such Option
Price by a fraction
(a) the numerator of which shall be (i) the number of
Shares outstanding immediately prior to such issue or
sale plus (ii) the number of Shares which the
aggregate consideration received by LVDGT for the
total number of such Additional Shares so issued or
sold would purchase at the greater of such Current
Market Price and such Option Price, and
(b) the denominator of which shall be the number of
Shares outstanding immediately after such issue or
sale,
-4-
<PAGE> 5
PGS-10/12/98 - Option Agreement
PROVIDED that, for the purposes of this subsection, (x) immediately after any
Additional Shares are deemed to have been issued pursuant to Section 3.3 or 3.4,
such Additional Shares shall be deemed to be outstanding and (y) treasury shares
shall not be deemed to be outstanding.
3.2.2 EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case LVDGT
at any time or from time to time after the date hereof shall declare, order, pay
or make a dividend or other distribution (including, without limitation, any
distribution of other or additional stock or other securities or property or
Other Options by way of dividend or spin-off, reclassification, recapitalization
or similar corporate rearrangement) on the Shares, other than (a) a dividend
payable in Additional Shares or (b) a regular periodic cash dividend at a rate
not in excess of 110% of the rate of the last regular periodic cash dividend
theretofore paid, then, and in each such case, subject to Section 3.7, the
Option Price in effect immediately prior to the close of business on the record
date fixed for the determination of holders of any class of securities entitled
to receive such dividend or distribution shall be reduced, effective as of the
close of business on such record date, to a price (calculated to the nearest
.001 of a cent) determined by multiplying such Option Price by a fraction
(x) the numerator of which shall be the Current Market
Price in effect on such record date or, in the Shares
trade on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading, less the
amount of such dividend or distribution (as
determined in good faith by the Board of Directors of
LVDGT) applicable to one Share, and
(y) the denominator of which shall be such Current Market
Price,
PROVIDED that, in the event that the amount of such dividend as so determined is
equal to or greater than 50% of such Current Market Price or in the event that
such fraction is less than 1/2, in lieu of the foregoing adjustment, adequate
provision shall be made so that ASIG shall receive a pro rata share of such
dividend based upon the maximum number of shares at the time issuable to ASIG
(determined without regard to whether the Option is exercisable at such time).
3.3 TREATMENT OF OTHER OPTIONS AND CONVERTIBLE SECURITIES. In case
LVDGT at any time or from time to time after the date hereof shall issue, sell,
grant or assume, or shall fix a record date for the determination of holders of
any class of securities entitled to received, any Other Options or Convertible
Securities, then, and in each such case, the maximum number of Additional Shares
(as set forth in the instrument relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Other Options or, in the case of Convertible
Securities and Other Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares issued as of the
time of such issue, sale, grant or assumption or, in case such a record date
shall have been fixed, as of the close of business on such record date (or, if
the Shares trade on an ex-dividend basis, on the date prior to the commencement
of ex-dividend trading), PROVIDED that such Additional Shares shall not be
deemed to have been issued unless the consideration per share (determined
pursuant to Section 3.5) of such Shares would be less than the greater of the
-5-
<PAGE> 6
PGS-10/12/98 - Option Agreement
Current Market Price and the Option Price in effect on the date of and
immediately prior to such issue, sale, grant or assumption or immediately prior
to the close of business on such record date (or, in the Shares trade on an
ex-dividend basis, on the date prior to the commencement of ex-dividend
trading), as the case may be, and PROVIDED, FURTHER, that in any such case in
which Additional Shares are deemed to be issued
(a) no further adjustment of the Option Price shall be
made upon the subsequent issue or sale of Convertible
Securities or Shares upon the exercise of such
Options or the conversion or exchange of such
Convertible Securities, except in the case of any
such Other Options or Convertible Securities which
contain provisions requiring an adjustment,
subsequent to the date of the issue or sale thereof,
of the number of Additional Shares issuable upon the
exercise of such Other Options or the conversion or
exchange of such Convertible Securities by reason of
(x) a change of control of LVDGT, (y) the acquisition
by any Person or group of Persons of any specified
number of percentage of the voting securities of
LVDGT or (z) any similar event or occurrence, each
such case to be deemed hereunder to involve a
separate issuance of Additional Shares, Other Options
or Convertible Securities, as the case may be;
(b) if such Other Options or Convertible Securities by
their terms provide, with the passage of time or
otherwise, for any increase in the consideration
payable to LVDGT, or decrease in the number of
Additional Shares issuable, upon the exercise,
conversion or exchange thereof (by change of rate or
otherwise), the Option Price computed upon the
original issue, sale, grant or assumption thereof (or
upon the occurrence of the record date, or date prior
to the commencement of ex-dividend trading, as the
case may be, with respect thereto), and any
subsequent adjustments based thereon, shall, upon any
such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease
insofar as it affects such Options, or the rights of
conversion or exchange under such Convertible
Securities, which are outstanding at such time;
(c) upon the expiration (or purchase by LVDGT and
cancellation or retirement) of any such Other Options
which shall not have been exercised or the expiration
of any rights of conversion or exchange under any
such Convertible Securities which (or purchase by
LVDGT and cancellation or retirement of any such
Convertible Securities the rights of conversion or
exchange under which) shall not have been exercised,
the Option Price computed upon the original issue,
sale, grant or assumption thereof (or upon the
occurrence of the records date, or date prior to the
commencement
-6-
<PAGE> 7
PGS-10/12/98 - Option Agreement
of ex-dividend trading, as the case may be, with
respect thereto), and any subsequent adjustments
based thereon, shall, upon such expiration (or such
cancellation or retirement, as the case may be), be
recomputed as if:
(i) in the case of Other Options for Shares or
Convertible Securities, the only Additional
Shares issued or sold were the Additional
Shares, if any, actually issued or sold upon
the exercise of such Other Options or the
conversion or exchange of such Convertible
Securities and the consideration received
therefor was the consideration actually
received by LVDGT for the issue, sale, grant
or assumption of all such Other Options,
whether or not exercised, plus the
consideration actually received by LVDGT
upon such exercise, or the issue or sale of
all such Convertible Securities which were
actually converted or exchanged, plus the
additional consideration, if any, actually
received by LVDGT upon such conversion or
exchange (less the consideration, if any,
actually paid by LVDGT to purchase all such
Other Options), and
(ii) in the case of Other Options for Convertible
Securities, only the Convertible Securities,
if any, actually issued or sold upon the
exercise of such Other Options were issued
at the time of the issue, sale, grant or
assumption of such Other Options, and the
consideration received by LVDGT for the
Additional Shares deemed to have then been
issued was the consideration actually
received by LVDGT for the issue, sale, grant
or assumption of all such Other Options,
whether or not exercised, plus the
consideration deemed to have been received
by LVDGT (pursuant to Section 3.5) upon the
issue or sale of such Convertible Securities
with respect to which such Other Options
were actually exercised (less the
consideration, if any, actually paid by
LVDGT to purchase all such Other Options);
(d) no readjustment pursuant to subdivision (b) or (c)
above shall have the effect of increasing the Option
Price by an amount in excess of the amount of the
adjustment thereof originally made in respect of the
issue, sale, grant or assumption of such Other
Options or Convertible Securities; and
(e) in the case of any such Other Options which expire by
their terms not more than 30 days after the date of
issue, sale, grant or assumption thereof, no
adjustment of the Option Price shall be
-7-
<PAGE> 8
PGS-10/12/98 - Option Agreement
made until the expiration or exercise of all such
Other Options, whereupon such adjustment shall be
made in the manner provided in subdivision (c) above.
3.4 TREATMENT OF SHARE DIVIDENDS, SHARE SPLITS, ETC. In case LVDGT at
any time or from time to time after the date hereof shall declare or pay any
dividend on the Shares payable in Shares, or shall effect a subdivision of the
outstanding Shares into a greater number of Shares (by reclassification or
otherwise than by payment of a dividend in Shares), then, and in each such case,
Additional Shares shall be deemed to have been issued (a) in the case of any
such dividend, immediately after the close of business on the record date for
the determination of holders of any class of securities entitled to receive such
dividend, or (b) in the case of any such subdivision, at the close of business
on the day immediately prior to the day upon which such corporate action becomes
effective.
3.5 COMPUTATION OF CONSIDERATION. For the purposes of this Section,
(a) the consideration for the issue or sale of any
Additional Shares shall, irrespective of the
accounting treatment of such consideration,
(i) insofar as it consists of cash, be computed
at the net amount of cash received by LVDGT,
without deducting any expenses paid or
incurred by LVDGT or any commissions or
compensations paid or concessions or
discounts allowed to underwriters, dealers
or others performing similar services in
connection with such issue or sale,
(ii) insofar as it consists of property
(including securities) other than cash, be
computed at the fair value thereof at the
time of such issue or sale, as determined in
good faith by the Board of Directors of
LVDGT, and
(iii) in case Additional Shares are issued or sold
together with other stock or securities or
other assets of LVDGT for a consideration
which covers both, be the portion of such
consideration so received, computed as
provided in clauses (i) and (ii) above,
allocable to such Additional Shares, all as
determined in good faith by the Board of
Directors of LVDGT;
(b) Additional Shares deemed to have been issued pursuant
to Section 3.3, relating to Other Options and
Convertible Securities, shall be deemed to have been
issued for a consideration per share determined by
dividing
-8-
<PAGE> 9
PGS-10/12/98 - Option Agreement
(i) the total amount, if any, received and
receivable by LVDGT as consideration for the
issue, sale, grant or assumption of the
Other Options or Convertible Securities in
question, plus the minimum aggregate amount
of additional consideration (as set forth in
the instruments relating thereto, without
regard to any provision contained therein
for a subsequent adjustment of such
consideration to protect against dilution)
payable to LVDGT upon the exercise in full
of such Other Options or the conversion or
exchange of such Convertible Securities or,
in the case of Other Options for Convertible
Securities, the exercise of such Other
Options for Convertible Securities and the
conversion or exchange of such Convertible
Securities, in each case computing such
consideration as provided in the foregoing
subdivision (a),
by
(ii) the maximum number of Shares (as set forth
in the instruments relating thereto, without
regard to any provision contained therein
for a subsequent adjustment of such number
to protect against dilution) issuable upon
the exercise of such Other Options or the
conversion or exchange of such Convertible
Securities; and
(c) Additional Shares deemed to have been issued pursuant
to Section 3.4, relating to stock dividends, stock
splits, etc., shall be deemed to have been issue for
no consideration.
3.6 ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding Shares
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of Shares, the Option Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
3.7 MINIMUM ADJUSTMENT OF OPTION PRICE. If the amount of any adjustment
of the Option Price required pursuant to this Section would be less than one
percent (1%) of the Option Price in effect at the time such adjustment is
otherwise so required to be made, such amount shall be carried forward and
adjustment with respect thereto made at the time of and together with any
subsequent adjustment which, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least one percent (1%) of such
Option Price.
3.8 EMPLOYEE OPTIONS; EMPLOYEE SHARES. Notwithstanding anything to the
contrary contained herein, no adjustment to the Option Price shall be required
to be made hereunder with respect to the grant or exercise of Employee Options
or the issuance of Employee Shares.
-9-
<PAGE> 10
PGS-10/12/98 - Option Agreement
4. CONSOLIDATION, MERGER, ETC.
4.1 ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS,
REORGANIZATION, ETC. In case LVDGT after the date hereof (a) shall consolidate
with or merge into any other Person and shall not be the continuing or surviving
corporation of such consolidation or merger, or (b) shall permit any other
Person to consolidate with or merge into LVDGT and LVDGT shall be the continuing
or surviving Person but, in connection with such consolidation or merger, the
Shares shall be changed into or exchanged for stock or other securities of any
other Person or cash or any other property, or (c) shall transfer all or
substantially all of its properties or assets to any other Person, or (d) shall
effect a capital reorganization or reclassification of the Shares (other than a
capital reorganization or reclassification resulting in the issue of Additional
Shares for which adjustment in the Option Price is provided herein), then, and
in the case of each such transaction, proper provision shall be made so that,
upon the basis and the terms and in the manner provided in this Option, ASIG,
upon the exercise hereof at any time after the consummation of such transaction,
shall be entitled to receive (at the aggregate Option Price in effect at the
time of such consummation for all Shares issuable upon such exercise immediately
prior to such consummation), in lieu of the Shares issuable upon such exercise
prior to such consummation, the highest amount of securities, cash or other
property to which such holder would actually have been entitled as a shareholder
upon such consummation if such holder had exercised the rights represented by
this Option immediately prior thereto (determined without regard to whether the
Option is exercisable at such time).
4.2 ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained in
this Option to the contrary, LVDGT will not effect any of the transactions
described in subdivision (a) through (d) of Section 4.1 unless, prior to the
consummation thereof, each Person (other than LVDGT) which may be required to
deliver any stock, securities, cash or property upon the exercise of this Option
as provided herein shall assume, by written instrument delivered to, and
reasonably satisfactory to, the holder of this Option, (a) the obligations of
LVDGT under this Option (and if LVDGT shall survive the consummation of such
transaction, such assumption shall be in addition to, and shall not release
LVDGT from, any continuing obligations of LVDGT under this Option), and (b) the
obligation to deliver to such holder such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions of this Section 4, such
holder may be entitled to receive, and such Person shall have similarly
delivered to such holder an opinion of counsel for such Person, which counsel
shall be reasonably satisfactory to such holder, stating that this Option shall
thereafter continue in full force and effect and the terms hereof (including,
without limitation, all of the provisions of this Section 4) shall be applicable
to the stock, securities, cash or property which such Person may be required to
deliver upon any exercise of this Option or the exercise of any rights pursuant
hereto.
-10-
<PAGE> 11
PGS-10/12/98 - Option Agreement
SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LVDGT.
LVDGT jointly and severally represents, warrants and covenants to ASIG
as follows:
(a) ORGANIZATION AND QUALIFICATION. LVDGT is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Colorado.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. LVDGT has the requisite
corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate actions and no
other proceedings on the part of LVDGT or its respective
stockholders are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by LVDGT, and (assuming
this Agreement is the valid and binding obligation of ASIG)
constitutes a valid and binding agreement of LVDGT,
enforceable against LVDGT in accordance with its terms, except
that (i) such enforcement may be subject to bankruptcy,
insolvency, reorganization, moratorium and other similar laws
now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) NO VIOLATION. The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby and thereby will not (i) constitute a
breach or violation of or default under the Certificate of
Incorporation or the By-laws of LVDGT or (ii) violate,
conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result
in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration under,
or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of LVDGT under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or
obligation to which LVDGT is a party or to which LVDGT or any
of its properties or assets may be subject, other than, in the
case of clause (ii), such events that would not, either
individually or in the aggregate, prevent or delay the
consummation of the transactions contemplated hereby. The (i)
execution, delivery and performance of this Agreement by LVDGT
will not require the consent or approval of any other party,
and (ii) the execution, delivery and performance by LVDGT
-11-
<PAGE> 12
PGS-10/12/98 - Option Agreement
of this Agreement and the consummation of the transactions
contemplated hereby will not constitute a breach or violation
of or default under any law, rule or regulation or any
judgment, decree, order, governmental permit or license to
which LVDGT is subject. To the knowledge of LVDGT, no
challenges to the validity or effectiveness of this Agreement,
or any other agreement or instrument necessary to consummate
the transactions contemplated hereby, have been made by any
governmental authority or other person.
(d) OWNERSHIP OF SHARES. Upon payment of the Option Price, ASIG
will acquire, good and valid title to the Shares received,
free and clear of any lien, charge, encumbrance, security
interest, claim or right of others of whatever nature other
than the requirements of the federal and state securities laws
respecting limitations on the subsequent transfer thereof, and
shall be free or preemptive rights.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASIG.
ASIG hereby represents, warrants and covenants:
(a) That ASIG, either individually or together with ASIG's
advisers, has knowledge and experience in financial and
business matters; is familiar with all of the financial and
other features of LVDGT; is capable of evaluating the merits
and risks of an investment in LVDGT; and is able to bear the
economic risk of an investment in the Option and, upon
exercise of the Option, the Shares.
(b) That AEI's acquisition of the Option and in the event of the
exercise thereof, the Shares is based upon and will be based
upon ASIG's independent evaluation of the long-term prospects
of LVDGT, and that ASIG has been furnished with such financial
and other information as it has requested concerning LVDGT.
(c) That ASIG is acquiring the Option and will acquire the Shares
which may be transferred to ASIG upon the exercise of the
Option for ASIG's own account, for investment purposes only,
and not with a view to the resale, transfer or other
disposition thereof.
(d) That ASIG will not offer, sell, hypothecate, transfer or
otherwise dispose of the Option or any of the Shares, as the
case may be, unless:
(i) A registration statement covering such of the Shares
which are to be so transferred has been filed with
the Securities and Exchange Commission pursuant to
the Securities Act of 1933, as amended (the "Act"),
and such sale, transfer or other disposition is
-12-
<PAGE> 13
PGS-10/12/98 - Option Agreement
accompanied by a prospectus relating to a
registration statement which is in effect under the
Act covering such of the Shares which are to be sold,
transferred or otherwise disposed of and meeting the
requirements of Section 10 of the Act; or
(ii) Counsel satisfactory to LVDGT renders an opinion in
writing and addressed to LVDGT, reasonably
satisfactory in form and substance to LVDGT, that in
the opinion of such counsel, registration under the
Act or the Exchange Act is not required in order to
effect such proposed transaction
SECTION 7. RESERVATION OF SHARES, ETC.
LVDGT will at all times reserve and keep available, solely for issuance
and delivery upon exercise of the Option the number of Shares from time to time
issuable upon full exercise of the Option. All Shares issuable upon exercise of
the Option at any time shall be duly authorized and, when issued upon such
exercise, shall be validly issued and fully paid and nonassessable with no
liability on the part of ASIG.
SECTION 8. NO DILUTION OR IMPAIRMENT.
LVDGT will not by amendment of its organizational documents or through
any consolidation, merger, reorganization, transfer of assets, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Option, but will
at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the holder of this Option against dilution or other
impairment. Without limiting the generality of the foregoing, LVDGT (a) will not
permit the par value of any Shares receivable upon the exercise of this Option
to exceed the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that LVDGT may validly and
legally issue fully paid and non-assessable Shares on the exercise of the Option
from time to time, (c) will not take any action which results in any adjustment
of the Option Price if the total number of Shares issuable after the action upon
full exercise of the Option would exceed the total number of Shares then
authorized by LVDGT's certificate of incorporation and available for the purpose
of issue upon such exercise, and (d) will not issue any capital stock of any
class which is preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding-up, unless the
rights of the holders thereof shall be limited to a fixed sum or percentage of
par value or a sum determined by reference to a formula based on a published
index of interest rates, an interest rate publicly announced by a financial
institution or a similar indicator of interest rates in respect of participation
in dividends and to a fixed sum or percentage of par value in any such
distribution of assets. In case any event shall occur as to which any of the
provisions of this Option are not strictly applicable but the failure to make
any adjustment would not fairly protect the purchase rights represented by this
Option in accordance with the essential intent and principles contained herein,
then, in each such case, LVDGT shall, at its sole cost and expense, appoint a
firm of independent certified public accountants of
-13-
<PAGE> 14
PGS-10/12/98 - Option Agreement
recognized national standing (which may be the regular auditors of LVDGT), which
shall give their opinion upon the adjustment, if any, on a basis consistent with
the essential intent and principles established herein, necessary to preserve,
without dilution, the purchase rights represented by this Option. Upon receipt
of such opinion, LVDGT will promptly mail a copy thereof to the holder of this
Option and shall make the adjustments described therein.
SECTION 9. REGISTRATION.
9.1 ISSUANCE OF SHARES. If any Shares required to be reserved for
purposes of exercise of this Option require registration with or approval of any
governmental authority under any federal or state law (other than the Act)
before such Shares may be issued upon exercise, LVDGT will, at its expense and
as expeditiously as possible, cause such Shares to be duly registered or
approved, as the case may be. At any such time as Shares are listed on any
national securities exchange, LVDGT will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange, upon official notice of
issuance, the Shares issuable upon exercise of the then outstanding portion of
the Option and maintain the listing of such Shares after their issuance; and
LVDGT will also list on such national securities exchange, will register under
the Securities Exchange Act of 1934 and will maintain such listing of, any other
securities that at any time are issuable upon exercise of the Option, if and at
the time that any securities of the same class shall be listed on such national
securities exchange by LVDGT.
9.2 REGISTRABLE SECURITIES. The Shares issued upon exercise of the
Option shall be considered "Registrable Securities" pursuant to and under the
Investment Agreement and the holders of such Shares shall have all the rights
and privileges of holders of Registrable Securities as set forth in the
Investment Agreement, which is incorporated herein by reference.
SECTION 10. SPECIFIC PERFORMANCE; REMEDIES.
The parties acknowledge and agree that irreparable damage will result
to ASIG in the event that this Agreement is not specifically enforced.
Therefore, the rights to, or obligations of, purchase and sale of the Shares
hereunder shall be enforceable in a court of equity, or other tribunal with
jurisdiction, by a decree of specific performance and appropriate injunctive
relief may be applied for and granted in connection therewith. Such remedies and
all other remedies provided for in this Agreement or available at law or in
equity shall, however, be cumulative and not exclusive and shall be in addition
to any other remedies which either party may have under this Agreement or
otherwise.
SECTION 11. SEVERABILITY.
If any provisions of this Agreement shall, for any reason, be adjudged
by any court of competent jurisdiction to be invalid or unenforceable, such
judgment shall not affect, impair or invalidate the remainder of this Agreement
but shall be confined in its operation to the provision of this Agreement
directly involved in the controversy in which such judgment shall have been
rendered.
-14-
<PAGE> 15
PGS-10/12/98 - Option Agreement
SECTION 12. NOTICES.
All notices, requests, demands and other communications hereunder must
be in writing and shall be deemed to have been duly given if mailed by first
class, registered mail, return receipt required, postage and registry fees
prepaid, and addressed as follows:
If to LVDGT: 5325 South Valley View Boulevard
Suite 10
Las Vegas, Nevada 89118
If to ASIG: c/o Agassi Enterprises, Inc.
3960 Howard Hughes Parkway, Suite 750
Las Vegas, Nevada 89109
with a copy to: International Merchandising Corporation
IMG Center, Suite 100
1360 East 9th Street
Cleveland, Ohio 44114
Attention: Tony Decello
Either party by notice in writing mailed to the other party may change the name
and address to which notices, requests, demands and other communications shall
be mailed.
SECTION 13. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to any conflict of law
principles that might require the application of the laws of another
jurisdiction.
SECTION 14. ARBITRATION.
The parties agree to submit to arbitration any dispute related to this
Agreement and agree that the arbitration process shall be the exclusive means
for resolving disputes which the parties cannot resolve. Any arbitration
hereunder shall be conducted under the Dispute Resolution Rules of the American
Arbitration Association ("AAA") as modified herein. Arbitration proceedings
shall take place in Las Vegas, Nevada, before a single arbitrator who shall be a
lawyer. All arbitration proceedings shall be confidential. Neither party shall
disclose any information about the evidence produced by the other party in the
arbitration proceedings, except in the course of judicial, regulatory, or
arbitration proceeding, or as may be demanded by government authority. Before
making any disclosure permitted by the preceding sentence, a party shall give
the other party reasonable advance written notice of the intended disclosure and
an opportunity to prevent disclosure. Each party shall have the right to take
the deposition of one individual and any expert witness designated by the other
party. Additional discovery may be had only where the arbitrator so orders, upon
a showing of substantial need. Only evidence that is directly relevant to the
issues may be obtained in discovery. Each party bears the burden of
-15-
<PAGE> 16
PGS-10/12/98 - Option Agreement
persuasion of any claim or counterclaim raised by that party. The arbitration
provisions of this Agreement shall not prevent any party from obtaining
injunctive relief from a court of competent jurisdiction to enforce the
obligations for which such party may obtain provisional relief pending a
decision on the merits by the arbitrator. Each of the parties hereby consents to
the jurisdiction of Nevada courts for such purpose. The arbitrator shall have
authority to award any remedy or relief that a court of the State of Nevada
could grant in conformity to applicable law, except that the arbitrator shall
have no authority to award attorneys' fees or punitive damages. Any arbitration
award shall be accompanied by a written statement containing a summary of the
issues in controversy, a description of the award, and an explanation of the
reasons for the award. The arbitrator's award shall be final and judgment may be
entered upon such award by any court.
SECTION 15. AMENDMENTS, ETC.
This Agreement may not be modified or amended, and no provision hereof
may be waived, except by an instrument in writing signed by the parties hereto.
SECTION 16. SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors, and permitted
assigns and transferees. No party hereto may assign their rights and obligations
hereunder without the prior written consent of the other party hereto; except
that ASIG may, after providing LVDGT with written notice, transfer and assign
its rights under this Agreement to any member of ASIG, any other entity wholly
owned by any such member or to one or more trusts for such member's estate
planning purposes.
SECTION 17. 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 have executed this Agreement as of the
date first above written.
LAS VEGAS DISCOUNT GOLF & TENNIS, INC. ASI GROUP, L.L.C.
By: Sunbelt Communications Company,
------------------------------
a Member
By /s/ Vaso Boreta By /s/ James Earl Rogers
-------------------------------- --------------------------------
Name: Vaso Boreta Name: James Earl Rogers
Title: President Title: President
-16-
<PAGE> 1
EXHIBIT 5.1
Transactions by the Reporting Person in the Company stock during past sixty (60)
days:
<TABLE>
<CAPTION>
NUMBER OF
DATE SHARES PURCHASED PRICE PER SHARE COST
- ---- ---------------- --------------- ----
<S> <C> <C> <C>
October 19, 1998 2,303,290 shares of $1.0854039 $2,500,000
Common Stock
October 19, 1998 347,975(1) $1.8392(2) $639,995.62(3)
<FN>
(1) Grant of options to purchase shares of Common Stock
(2) Option exercise price
(3) Assumes all options exercised; no cost allocated to purchase of options
</TABLE>
<PAGE> 1
EXHIBIT 6.1
-----------
VOTING AGREEMENT
----------------
VOTING AGREEMENT, dated as of October 19, 1998 by and among ASI Group, L.L.C., a
Nevada limited liability company ("ASI"), c/o Agassi Enterprises, Inc., 3960
Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109, and the individuals
and entities listed on the signature page hereto (collectively "Boreta").
WITNESSETH:
WHEREAS, ASI and Las Vegas Discount Golf & Tennis, Inc., a Colorado corporation
("LVDGT"), are entering into an investment and voting agreement (the "ASI
Agreement") pursuant to which, among other things, ASI is buying shares of
common stock of LVDGT; and
WHEREAS, LVDGT and Saint Andrews Golf Corporation, a Nevada corporation
("SAGC"), are entering into an investment agreement (the "LVDGT Agreement")
pursuant to which, among other things, LVDGT is buying shares of preferred stock
of SAGC; and
WHEREAS, in order to induce each other to enter into the ASI Agreement, ASI and
Boreta desire to enter into this Voting Agreement with respect to all the
capital stock of LVDGT and SAGC now owned or controlled by and/or hereafter
acquired or coming under the control of any of them respectively (collectively,
the "Shares). Exhibit A lists all Shares currently owned or controlled by Boreta
or ASI;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
Section 1. RESTRICTIONS ON AND VOTING OF SHARES.
(a) During the term of this Agreement, Boreta agrees that it
will not sell, assign, pledge or otherwise dispose of, or grant any proxies with
respect to, the Shares, or enter into any contract, option or other arrangement
or understanding with respect to the sale, assignment, pledge or other
disposition, directly or indirectly, of the Shares except as expressly
contemplated by the LVDGT Agreement or the ASI Agreement.
(b) Boreta and ASI agree that, during the term of this
Agreement, they will vote the Shares either of them is entitled to vote, in
person or by proxy, at any annual, special or other meeting of the holders of
capital stock of LVDGT or SAGC, as the case may be, and at any adjournments
thereof or pursuant to any consent in lieu of a meeting, or otherwise, as
mutually agreed by ASI and Boreta (provided that no party will be so required to
vote its shares if the subject action implemented in accordance with such mutual
agreement, would in any manner adversely effect the interests of Boreta in LVDGT
or SAGC or the interests of ASI in LVDGT and indirectly in SAGC, as the case may
be, or adversely affect the value of the Shares (or any securities into which
such shares might be exchanged)).
<PAGE> 2
Section 2. SUBSEQUENT ACQUISITIONS. If at any time after the first to
occur of the closing of the transactions contemplated by the LVDGT Agreement or
the ASI Agreement, while ASI is an equity holder of LVDGT or SAGC or has
options, warrants or other rights to acquire equity of either or both of LVDGT
and/or SAGC, either of LVDGT or SAGC offers to sell or grants, sells or issues
shares of its capital stock to any of Boreta or their respective affiliates at
any price or for any consideration (including, but not limited to, provision of
services), Boreta shall transfer or cause to be transferred to ASI Shares so as
to maintain the relative proportionate direct and indirect (by virtue of
ownership of LVDGT capital stock) equity ownerships of ASI, on the one hand, and
Boreta, on the other hand, in each of LVDGT and SAGC as they were immediately
prior to such offer, grant, sale or issuance, assuming the consummation of such
offer, grant, sale or issuance.
Section 3. TERM OF AGREEMENT. Except as otherwise specifically provided
herein, this Agreement will be effective as of the closing of the transactions
contemplated by the ASI Agreement (the "Effective Date"). The obligations of ASI
and Boreta under this Agreement will terminate as of the date ASI no longer
holds any equity interest, options, warrants or rights to purchase any equity
interest in or instruments convertible or exchangeable into equity interests of
SAGC or LVDGT or their respective successors.
Section 4. REPRESENTATIONS AND WARRANTIES OF BORETA. Boreta represents
and warrants to ASI as of the date and as of the Effective Date hereof that:
(a) Boreta is the record owner of the Shares and the
Shares represent all of the capital stock of SAGC or
LVDGT owned of record by Boreta, directly or
indirectly;
(b) Boreta has full legal power and authority to execute
and deliver this Agreement;
(c) the Shares are free and clear of all proxies; and
(d) Boreta has duly executed and delivered this
Agreement.
Section 5. REPRESENTATIONS AND WARRANTIES OF ASI. ASI represents and
warrants to Boreta as of the date and as of the Effective Date hereof that:
(a) ASI is the record owner of the Shares and the Shares
represent all of the capital stock of SAGC or LVDGT
owned of record by ASI, directly or indirectly;
(b) ASI has full legal power and authority to execute and
deliver this Agreement;
(c) the Shares are free and clear of all proxies; and
-2-
<PAGE> 3
(d) ASI has duly executed and delivered this Agreement.
Section 6. STOCK OPTIONS OWNED BY BORETA OR ASI. It is agreed that any
Shares obtained by Boreta or ASI after the date hereof upon exercise of any
option to purchase Shares or which otherwise become held of record by Boreta
shall in all events be deemed to be "Shares" or subject to this Agreement.
Section 7. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms of were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state thereof having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity without the
necessity of posting bond or other security or showing actual damages.
Section 8. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by confirmed facsimile to the correct
facsimile number or otherwise delivered by hand or by messenger, addressed (a)
if to ASI, at its address set forth on the cover page of this Agreement, or at
such other address as ASI shall have furnished to the Company in writing, or (b)
if to any of Boreta, at such address as listed on the signature page hereto.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or if sent by confirmed facsimile to the correct facsimile
number, upon the sending of such facsimile, or, if sent by mail, at the earlier
of its receipt or 72 hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
Section 9. BINDING EFFECT. Upon execution and delivery of this
Agreement by ASI, this Agreement shall become effective as to Boreta at the time
Boreta executes and delivers this Agreement. This Agreement shall inure to the
benefit of and, subject to applicable law, be binding upon the parties hereto
and their respective heirs, personal representatives, successors and assigns.
Section 10. ASSIGNMENT. This Agreement will be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns provided that neither this Agreement nor any rights hereunder may be
assigned by either party without first obtaining the prior written consent of
the other party.
Section 11. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nevada, without giving
effect to the principles of conflict of laws thereof.
-3-
<PAGE> 4
Section 12. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be an original, but which together shall
constitute one and the same agreement.
Section 13. EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction hereof.
Section 14. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 15. AMENDMENT; WAIVER. No amendment or waiver of any provision
of this Agreement or consent to departure therefrom shall be effective unless in
writing and signed by ASI and Boreta, in the case of an amendment, or by the
party which is the beneficiary of any such provision, in the case of a waiver or
a consent to departure therefrom.
Section 16. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, covenants, arrangements, communications,
representations and warranties, whether oral or written, by either party with
respect thereto.
Section 17. OBLIGATIONS. The obligations of Boreta hereunder are joint
and several.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
all as of the day and year first above written.
ASI GROUP, L.L.C. BORETA:
By: SUNBELT COMMUNICATIONS COMPANY,
a Member
By: /s/ James Earl Rogers /s/ Vaso Boreta
------------------------------- --------------------------------
James Earl Rogers VASO BORETA
President
/s/ Ronald Boreta
--------------------------------
RONALD BORETA
/s/ John Boreta
--------------------------------
JOHN BORETA
BORETA ENTERPRISES LTD
By: /s/ Ron Boreta
--------------------------------
Name: Ron Boreta
Title: General Partner
-4-
<PAGE> 5
EXHIBIT A
<TABLE>
<CAPTION>
Company Shareholder Number of Shares Held
- ------- ----------- ---------------------
<S> <C> <C>
Saint Andrews Golf Corporation Vaso Boreta 110,000
Saint Andrews Golf Corporation Ronald Boreta 110,000
Las Vegas Discount Golf & Tennis, Inc.(1) Vaso Boreta 1,837,637
Las Vegas Discount Golf & Tennis, Inc.(2) Ronald Boreta 1,723,288
Las Vegas Discount Golf & Tennis, Inc.(3) John Boreta 1,059,374
Las Vegas Discount Golf & Tennis, Inc. Boreta Enterprises Ltd. 1,304,445
Las Vegas Discount Golf & Tennis, Inc.(4) ASI Group, L.L.C. 2,303,290
</TABLE>
- ----------------
(1) Includes 1,823,810 shares held directly and 13,827 shares which represent
Vaso Boreta's share of the Common Stock held by Boreta Enterprises Ltd.
(2) Includes 544,699 shares held directly, 897,589 shares which represent
Ronald Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and
281,000 shares underlying Stock Options held by Ronald Boreta.
(3) Includes 536,345 shares held directly, 393,029 shares which represent John
Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 130,000
shares underlying Stock Options held by John Boreta.
(4) ASI Group, L.L.C. also has options for the purchase of 347,975 shares of
the Common Stock of Las Vegas Discount Golf & Tennis, Inc.
<PAGE> 1
EXHIBIT 6.2
-----------
CO-SALE AGREEMENT
-----------------
This Co-Sale Agreement is made as of the 19th day of October, 1998 by and among
LAS VEGAS DISCOUNT GOLF & TENNIS INC. (the "Company"), a Colorado corporation,
RON BORETA, VASO BORETA and JOHN BORETA (collectively the "Boretas") and BORETA
ENTERPRISES LTD. (the "Family Company"; the Family Company and the Boretas are
each a "Significant Shareholder," and collectively are the "Significant
Shareholders") and ASI GROUP, L.L.C., a Nevada limited liability company
("ASI").
In consideration of the mutual covenants set forth herein, the parties agree as
follows:
1. DEFINITIONS.
(a) "Stock" shall mean shares of the Company's Common and
Preferred Stock now owned beneficially or of record or
subsequently acquired beneficially or of record directly or
indirectly by the Significant Shareholders.
(b) "Preferred Stock" shall mean the Company's or LVDG&T's
outstanding Preferred Stock of any series or designation.
(c) "Common Stock" shall mean the Company's Common Stock and
shares of Common Stock issued or issuable upon conversion of
the Company's Preferred Stock.
2. SALE BY SIGNIFICANT SHAREHOLDERS.
(a) On each occasion that any Significant Shareholder proposes to
sell or transfer to any person any shares of Stock in one or
more related transactions, such Significant Shareholder shall
promptly give written notice (the "Notice") to ASI at least
twenty (20) days prior to the closing of such sale or
transfer. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the
number of shares of Stock to be sold or transferred, the
nature of such sale or transfer, the consideration to be paid,
and the name and address of each prospective purchaser or
transferee. In the event that the sale or transfer is being
made pursuant to the provisions of Section 3(a) or 3(b)
hereof, the Notice shall state under which Section the sale or
transfer is being made.
(b) ASI shall have the right, exercisable upon written notice to
such Significant Shareholder within fifteen (15) days after
receipt of the Notice, to participate in such sale of Stock on
the same terms and conditions. To the extent ASI exercises
such right of participation in accordance with the terms and
conditions set forth
-1-
<PAGE> 2
below, the number of shares of Stock that the Significant
Shareholder may sell in the transaction shall be
correspondingly reduced.
(c) ASI may sell all or any part of that number of shares of
Common Stock equal to the product obtained by multiplying (i)
the aggregate number of shares of Stock covered by the Notice
by (ii) a fraction the a numerator of which is the number of
shares of Common Stock owned by ASI at the time of the sale or
transfer and the denominator of which is the total number of
shares of Common Stock owned by the Significant Shareholders
and ASI at the time of the sale or transfer.
(d) ASI shall effect its participation in the sale by promptly
delivering to the Significant Shareholders for transfer to the
prospective purchaser one or more certificates, properly
endorsed for transfer, which represent:
(i) the type and number of shares of Common Stock which
ASI elects to sell; or
(ii) that number of shares of Series B Convertible
Preferred Stock which is at such time convertible
into the number of shares of Common Stock which ASI
elects to sell; provided, however, that if the
prospective purchaser objects to the delivery of
Series B Convertible Preferred Stock in lieu of
Common Stock, ASI shall convert such Preferred Stock
into Common Stock and deliver Common Stock as
provided in Section 2(d)(i) above. The Company agrees
to make any such conversion concurrent with the
actual transfer of such shares to the purchaser.
(e) The Stock certificate or certificates that ASI delivers to the
Significant Shareholders pursuant to Section 2(d) shall be
transferred to the prospective purchaser in consummation of
the sale of the Common Stock pursuant to the terms and
conditions specified in the Notice, and the Significant
Shareholders shall concurrently therewith remit to ASI that
portion of the sale proceeds to which ASI is entitled by
reason of its participation in such sale. To the extent that
any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase shares or other
securities from ASI, the Significant Shareholders shall not
sell to such prospective purchaser or purchasers any Stock
unless and until, simultaneously with such sale, the
Significant Shareholders shall purchase such shares or other
securities from ASI.
(f) The exercise or non-exercise of the rights of ASI hereunder to
participate in one or more sales of Stock made by the
Significant Shareholders shall to adversely affect its rights
to participate in subsequent sales of Stock subject to Section
2(a).
-2-
<PAGE> 3
3. EXEMPT TRANSFERS.
Notwithstanding the foregoing, the co-sale rights of ASI shall not apply to (a)
any pledge of Stock made pursuant to a bona fide third party loan transaction
with a party not affiliated with or a stockholder of any significant shareholder
that creates a mere security interest; (b) any transfer to the ancestors,
descendants or spouse or to trusts for the benefit of such persons or a
Significant Shareholder; (c) any bona fide gift; or (d) any sale or sales of not
more than 25,000 shares of Common Stock individually or in the aggregate during
the term hereof (as adjusted for stock splits, reverse stock splits and the like
effected after the date of this Agreement); provided that (i) the transferring
Shareholder shall inform ASI of such pledge, transfer or gift prior to effecting
it and (ii) the pledgee, transferee or donee shall furnish ASI with a written
agreement to be bound by and comply with all provisions of Section 2. Such
transferred Stock shall remain "Stock: hereunder, and such pledge, transferee or
donee shall be treated as a "Shareholder" for purposes of this Agreement.
4. PROHIBITED TRANSFERS.
(a) In the event a Significant Shareholder should sell any Stock
in contravention of the co-sale rights of ASI under this
Agreement (a "Prohibited Transfer"), ASI, in addition to such
other remedies as may be available at law, in equity or
hereunder, shall have the put option provided below, and the
Significant Shareholders shall be bound by the applicable
provisions of such option.
(b) In the event of a Prohibited Transfer, ASI shall have the
right to sell to the Significant Shareholders the type and
number of shares of Common Stock equal to the number of shares
ASI would have been entitled to transfer to the purchaser had
the Prohibited Transfer under Section 2(c) hereof been
effected pursuant to and in compliance with the terms hereof.
Such sale shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be
sold to the Significant Shareholders shall be equal
to the price per share paid by the purchaser to
Significant Shareholders in this Prohibited Transfer.
Significant Shareholders shall also reimburse ASI for
any and all fees and expenses, including legal fees
and expenses, incurred pursuant to the exercise or
the attempted exercise of ASI's rights under Section
2.
(ii) Within ninety (90) days after the later of the dates
on which ASI (A) received notice of the Prohibited
Transfer or (B) otherwise became aware of the
Prohibited Transfer, ASI shall, if exercising the
option created hereby, deliver to Significant
Shareholders the certificate or certificates
representing shares to be sold, each certificate to
be properly endorsed for transfer.
-3-
<PAGE> 4
(iii) Significant Shareholders shall, upon receipt of the
certificate or certificates for the shares to be sold
by ASI, pursuant to this Section 4(b), pay the
aggregate purchase price therefor and the amount of
reimbursable fees and expenses, as specified in
Section 5(b)(i), in cash or by other means acceptable
to ASI.
(iv) Notwithstanding the foregoing, any attempt by a
Significant Shareholder to transfer Stock in
violation of Section 2 hereof shall be void and the
Company agrees it will not effect such a transfer nor
will it treat any alleged transferee as the holder of
such shares without the written consent of ASI.
5. LEGEND.
(a) Each certificate representing shares of Stock now or hereafter
owned by the Significant Shareholder or issue to any person in
connection with a transfer pursuant to Sections(a) and 3(b)
hereof shall be endorsed with the following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT
TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE
AGREEMENT AMONG THE INITIAL HOLDER OF THE SECURITIES,
THE COMPANY AND CERTAIN STOCKHOLDER(S) OF THE
COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE
COMPANY."
(b) Each Significant Shareholder agrees that the Company may
instruct its transfer agent to impose transfer restrictions on
the shares represented by certificates bearing the legend
referred to in Section 5(a) above to enforce the provisions of
this Agreement and the Company agrees to promptly do so. The
legend shall be removed upon termination of this Agreement.
6. MISCELLANEOUS.
6.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Nevada.
6.2 AMENDMENT. Any provision may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only by the written consent of the party or
parties affected thereby. Any amendment or waiver effected in accordance with
clauses (a), (b) and (c) of this Section shall be binding upon ASI, its
successors and assigns, the Company and Significant Shareholders in question.
-4-
<PAGE> 5
6.3 ASSIGNMENT OF RIGHTS. This Agreement and the rights and obligations
of the parties hereunder shall inure to the benefit of, and be binding upon,
their respective successors, assigns and legal representatives.
6.4 TERM. This Agreement shall terminate on the fifth anniversary
hereof.
6.5 OWNERSHIP. Each Significant Shareholder represents and warrants
that it/he is the sole legal and beneficial owner of the shares of stock subject
to this Agreement and that no other person has any interest (other than a
community property interest) in such shares.
6.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified or five (5) days after deposit in the United States mail,
by registered or certified mail, postage prepaid and properly addressed to the
party to be notified as set forth on the signature page hereof or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties hereto.
6.7 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
6.8 ATTORNEY FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.9 COUNTERPARTS. 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.
The foregoing agreement is hereby executed as of the date first above written.
SAINT ANDREWS GOLF
CORPORATION, a Nevada corporation ASI GROUP, L.L.C., a Nevada
limited liability company
By /s/ Ron Boreta By: Sunbelt Communications Company,
--------------------------- --------------------------------
Name: Ron Boreta a Member
Title: President
By /s/ James Earl Rogers
--------------------------------
Name: James Earl Rogers
Title: President
-5-
<PAGE> 6
LAS VEGAS DISCOUNT GOLF
& TENNIS INC.,
a Nevada corporation
By /s/ Vaso Boreta
----------------------------------
Name: Vaso Boreta
Title: President
/s/ Vaso Boreta
- -------------------------------------
Vaso Boreta
/s/ Ron Boreta
- -------------------------------------
Ron Boreta
/s/ John Boreta
- -------------------------------------
John Boreta
BORETA ENTERPRISES LTD.
By /s/ Ron Boreta
- -------------------------------------
Name: Ron Boreta
Title: General Partner
-6-
<PAGE> 7
CONSENT OF SPOUSE
-----------------
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of the company held of record by either or both of us,
including my community property interest in such shares, if any, co-sale rights
(as described in the Agreement) must be granted to ASI by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operations of, or violate, the Agreement.
/s/ Keri Boreta
---------------------------
(Signature) Keri Boreta
-7-
<PAGE> 8
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of the company held of record by either or both of us,
including my community property interest in such shares, if any, co-sale rights
(as described in the Agreement) must be granted to ASI by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operations of, or violate, the Agreement.
/s/ Stacey Boreta
---------------------------
(Signature) Stacey Boreta
-8-
<PAGE> 9
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions if I and/or my spouse agree to sell
all or part of the shares of the company held of record by either or both of us,
including my community property interest in such shares, if any, co-sale rights
(as described in the Agreement) must be granted to ASI by the seller. I hereby
agree that those shares and my interest in them, if any, are subject to the
provisions of the Agreement and that I will take no action at any time to hinder
operations of, or violate, the Agreement.
---------------------------
(Signature)
<PAGE> 1
EXHIBIT 7.1
-----------
AGREEMENT
---------
AGREEMENT, dated as of October 19, 1998, by and among ASI GROUP,
L.L.C., a Nevada limited liability company ("ASI"), ANDRE K. AGASSI, an
individual ("AGASSI"), JAMES EARL ROGERS, an individual ("JROGERS") and PERRY
CRAIG ROGERS, individual ("PROGERS"), and SUNBELT COMMUNICATIONS COMPANY, a
Nevada corporation ("SUNBELT").
RECITALS
A. AGASSI, SUNBELT and PROGERS are the sole members of ASI.
B. JROGERS is the controlling shareholder of SUNBELT.
C. ASI has acquired (the "Acquisition") in excess of 20% of the common
stock, no par value ("Common Stock"), of Las Vegas Discount Golf &
Tennis, Inc., a Colorado corporation ("LVDG&T").
D. As a result of the Acquisition, ASI, AGASSI, JROGERS, PROGERS and
SUNBLET are required under federal securities laws to file a Schedule
13D with respect to the Common Stock acquired by ASI in the
Acquisition.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree that a single
Schedule 13D will be filed on behalf of each of ASI, AGASSI, JROGERS, PROGERS
and SUNBELT with respect to the Acquisition.
This Agreement may be executed in two or more counterparts, each of
which shall be an original, but which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
ASI GROUP, L.L.C. a Nevada limited SUNBELT COMMUNICATIONS
liability company COMPANY
By /s/ Perry Craig Rogers By /s/ James Earl Rogers, By Perry Craig
------------------------------ ---------------------------------------
Perry Craig Rogers, member Rogers, attorney-in-fact
------------------------
James Earl Rogers, President
by Perry Craig Rogers, attorney-in-fact
/s/ Andre K. Agassi
- ---------------------------------
ANDRE K. AGASSI
/s/ James Earl Rogers, By Perry Craig
-------------------------------------
Rogers, attorney-in-fact
------------------------
/s/ Perry Craig Rogers James Earl Rogers, By
- --------------------------------- Perry Craig Rogers, Attorney-in-fact
Perry Craig Rogers
<PAGE> 1
Exhibit 7.2
LIMITED POWER OF ATTORNEY
Dated: October 19, 1998
The undersigned, James Earl Rogers, hereby constitutes and appoints Perry Craig
Rogers with full power to act, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities (until revoked in writing) (i)
to sign the Schedule 13D and Form 3 to be filed by each of James Earl Rogers
and Sunbelt Communications Company in connection with the acquisition by ASI
Group, L.L.C. of common stock of Las Vegas Discount Golf & Tennis, Inc. on
October 19, 1998, and all related, amended or corrective documents, instruments
or filings with the Securities and Exchange Commission and any other federal or
state regulatory agency, and (ii) to file the same, with all exhibits thereto,
and other documents in connection therewith with the Securities and Exchange
Commission and any other federal or state regulatory agency, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite, proper or necessary as fully to all intents and
purposes as he might or could do in person thereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
/s/ James Earl Rogers
- --------------------------------
James Earl Rogers
Notary: /s/ Kristine Sims-Roethel
State of Nevada, County of Clark
On this 19th day of October, personally appeared before me, a Notary Public,
James Earl Rogers, personally known to me, who acknowledged that he executed the
attached instrument.
- --------------------------------------------
Notary Public-State of Nevada
[State County of Clark
Seal] KRISTINE SIMS-ROETHEL
My Appointment Expires
July 9, 2001
No: 97-4448-1
- --------------------------------------------
