<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 1995, or
[_] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition period from _______ to _______
Commission file number 1-10263
-------
T/SF COMMUNICATIONS CORPORATION
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 73-1341805
------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2407 East Skelly Drive, Tulsa, Oklahoma 74105
--------------------------------------- -----------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 747-2600
-----------------------------
N/A
------------------------------------------------------------------------------
(Former Name of Registrant)
Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.10
Par Value Per Share.
At August 11, 1995, there were 3,839,778 shares of the registrant's Common Stock
outstanding.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
-----
<PAGE>
T/SF COMMUNICATIONS CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No
--------
<S> <C> <C>
PART I Financial Information
Item 1
------
Consolidated Balance Sheets - June 30, 1995 (unaudited) and 4-5
December 31,1994
Consolidated Statements of Operations - Three Months and 6
Six Months Ended June 30, 1995 and 1994 (unaudited)
Consolidated Statements of Cash Flows 7-8
Six Months Ended June 30, 1995 and 1994 (unaudited)
Notes to Consolidated Financial Statements 9-10
Item 2
------
Management's Discussion and Analysis of Financial Condition 11-12
and Results of Operations
PART II Other Information
Item 4
------
Submission of Matters to a Vote of Security Holders 13
Item 6
------
Exhibits and Reports on Form 8-K 13
</TABLE>
2
<PAGE>
PART I
Item 1.Financial Information
3
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30 December 31
1995 1994
------- --------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,721 $ 4,585
Short-term investments - 2,000
Accounts receivable, less reserve for doubtful
accounts of $653 in 1995 and $506 in 1994 9,901 8,847
Inventories 437 596
Current contract receivable and other current
assets 5,175 7,481
Refundable income taxes - 167
Assets held for sale 7,703 8,529
------- --------
Total current assets 24,937 32,205
------- --------
INVESTMENTS 1,634 233
------- --------
CONTRACT AND NOTES RECEIVABLE 1,740 2,786
------- --------
PROPERTY, PLANT AND EQUIPMENT, AT COST
Exposition equipment 2,891 2,712
Other 5,653 4,707
------- --------
8,544 7,419
3,696 2,834
------- --------
Less - accumulated depreciation 4,848 4,585
------- --------
DEFERRED TAX ASSETS 919 732
------- --------
INTANGIBLES AND OTHER ASSETS, NET 13,109 13,040
------- --------
$ 47,187 $ 53,581
======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
--------- ------------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Note Payable $ 2,000 $ -
Accounts payable 6,070 5,905
Accrued liabilities 7,920 7,163
Deferred tax liabilities 197 823
Current portion of long-term debt 1,284 1,251
--------- ---------
Total current liabilities 17,471 15,142
--------- ---------
LONG-TERM DEBT, NET OF CURRENT PORTION 4,612 4,905
--------- ---------
DEFERRED CONTRACT LIABILITIES 2,209 2,456
--------- ---------
MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES - 6,698
--------- ---------
COMMON STOCK SUBJECT TO PUT 525 525
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, $10 par value, 1,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.10 par value, 10,000 shares authorized,
3,811 shares and 3,883 equivalent shares issued and
outstanding at June 30, 1995 and December 31,
1994, respectively 372 379
Additional paid-in capital 18,295 19,572
Retained earnings 3,703 3,904
--------- ---------
Total stockholders' equity 22,370 23,855
--------- ---------
$ 47,187 $ 53,581
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Publishing $ 4,028 $ 3,512 $ 7,728 $ 6,709
Exposition services 7,516 6,076 13,344 9,980
Information services 4,316 3,631 8,562 7,702
Other operating income and interest 562 468 802 1,125
-------- -------- -------- ---------
16,422 13,687 30,436 25,516
-------- -------- -------- ---------
Costs and Expenses:
Publishing 3,423 2,467 5,864 4,780
Exposition services 5,217 3,790 9,180 6,495
Information services 2,664 2,161 5,367 4,596
General and administrative 2,729 2,794 5,662 5,027
Interest 242 197 434 399
Depreciation and amortization 994 779 1,906 1,380
-------- -------- -------- ---------
15,269 12,188 28,413 22,677
-------- -------- -------- ---------
INCOME BEFORE INCOME TAXES 1,153 1,499 2,023 2,839
INCOME TAX PROVISION ( 475 ) ( 651 ) ( 895 ) ( 1,289 )
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES ( 134 ) ( 292 ) ( 266 ) ( 535 )
-------- -------- -------- ---------
INCOME FROM CONTINUING OPERATIONS 544 556 862 1,015
DISCONTINUED OPERATION, NET 7 ( 63 ) ( 15 ) 234
-------- -------- -------- ---------
NET INCOME 551 493 847 1,249
DIVIDENDS ON PREFERRED SHARES -- 40 -- 69
-------- -------- -------- ---------
INCOME APPLICABLE TO COMMON SHARES $ 551 $ 453 $ 847 $ 1,180
======== ======== ======== =========
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE
CONTINUING OPERATIONS $ 0.14 $ 0.14 $ 0.22 $ 0.25
DISCONTINUED OPERATIONS -- ( 0.02 ) -- 0.06
-------- -------- -------- ---------
$ 0.14 $ 0.12 $ 0.22 $ 0.31
======== ======== ======== =========
CASH DIVIDENDS PER COMMON SHARE $ 0.27 $ -- $ 0.27 $ --
======== ======== ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 847 $ 1,249
------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,906 1,399
Accretion of interest expense 31 21
(Gain) Loss on sale of property, plant
and equipment 19 ( 514 )
Changes in assets and liabilities:
Accounts receivable and refundable
income taxes ( 1,724 ) ( 1,741 )
Inventories 159 ( 3 )
Current contract receivable and
other current assets ( 535 ) ( 634 )
Intangibles and other assets ( 226 ) 178
Accounts payable and accrued liabilities 204 228
Minority interest 266 535
Deferred income taxes ( 36 ) -
------- -------
Total adjustments 64 ( 531 )
------- -------
Net cash provided by operating activities 911 718
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of short-term investments 2,000 ( 500 )
Capital expenditures ( 1,645 ) ( 937 )
Collections on contract and notes receivable 3,826 1,915
Payments on deferred contract liabilities ( 364 ) ( 286 )
Net additions to investments ( 344 ) -
Proceeds from the sale of property,
plant and equipment 143 6,125
Distributions from equity investments, net - 29
Payments for acquisitions, net of cash acquired - ( 1,114 )
------- -------
Net cash provided by investing activities 3,616 5,232
------ -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1995 1994
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under bank lines-of-credit 2,000 -
Principal payments of long-term debt ( 479 ) ( 3,872 )
Dividends on common and preferred stock ( 1,051 ) ( 69 )
Purchase of parent stock ( 7,861 ) -
Issuance of common stock - 347
------- -------
Net cash used in financing activities ( 7,391 ) ( 3,594 )
------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ( 2,864 ) 2,356
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,585 2,808
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,721 $ 5,164
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
T/SF COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
For the three months and six months ended June 30, 1995 and 1994
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
Regulation S-X of the Securities and Exchange Commission. Accordingly, the
financial statements do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Results of operations for the three months and six months ended June 30, 1995,
are not necessarily indicative of the results to be expected for the year ending
December 31, 1995. For further information, refer to the consolidated financial
statements and related notes thereto included in the Company's and Tribune/Swab-
Fox Companies, Inc.'s ("Tribune/Swab-Fox") annual report on Form 10-K for the
year ended December 31, 1994.
2. Merger of T/SF Communications Corporation and Tribune/Swab-Fox
Companies, Inc.
On May 25, 1995, Tribune/Swab-Fox was merged (the "Merger") with and into
the Company. In the Merger, each share of Tribune/Swab-Fox stock was converted
into 0.1255 of a share of the Company or, at the election of the holder, $0.88
in cash. For accounting purposes, the acquisition has been treated as a
recapitalization of Tribune/Swab-Fox with Tribune/Swab-Fox as the survivor
(downstream merger). While the Merger was structured for legal purposes as a
merger of Tribune/Swab-Fox with and into Communications, the Merger is accounted
for as a downstream merger. Thus, for accounting purposes, Tribune/Swab-Fox is
the acquiring entity even though, from a legal or structural standpoint,
Communications is the acquiring and surviving entity. Accordingly, the
historical financial statements of Communications, as the surviving entity, are
those historical financial statements of Tribune/Swab-Fox. Earnings per share
for the period prior to the Merger are restated to reflect the recapitalized
number of equivalent shares of the Company. The Company acquired 1,110,675
equivalent shares (8,850,000 Tribune/Swab-Fox shares) for cash in the Merger,
the effect of which is taken into account as of the date of the Merger. In
connection with the Merger, the Board of Directors of Tribune/Swab-Fox declared
a one-time dividend of $0.0344 per share ($.27 per equivalent share) which was
paid on May 24, 1995.
3. Common Stock and Earnings Per Share.
Weighted average shares of common stock issued and outstanding during the
three months and six months ended June 30, 1995 were 3,872,000 and
3,869,000,respectively, and the weighted average equivalent shares for the three
months and six months ended June 30, 1994, were 3,943,000 and 3,978,000,
respectively.
9
<PAGE>
4. Income Taxes
Income tax provision for the three months and six months ended June 30,
1995 and 1994, does not bear a normal relationship to the statutory federal
income tax rate of 34% as a result of mainly amortization of goodwill related to
acquisitions and state income taxes.
5. Assets Held for Sale
In 1994, the Company's Board of Directors approved three of BMT
Communications, Inc.'s ("BMT") trade journals for sale. Accordingly, the net
assets related to these trade journals are reflected as "assets held for sale",
along with certain discontinued real estate assets. An Asset Purchase Agreement
was signed by BMT, dated June 16, 1995, and the sale of these trade journals was
closed on August 2, 1995, for $21,000,000 cash.
6. Purchase of Company Stock
In March, 1995, upon exercise of an option, the Company acquired 384,000
shares of Tribune/Swab-Fox common stock (48,819 equivalent shares) from the
Profit Sharing Plan and Trust of Tribune/Swab-Fox for $291,750, with a cash
payment of $72,937 and a note payable for $218,813. The Company then owned
1,142,729 shares (143,412 equivalent shares) of Tribune/Swab-Fox common stock
which shares were canceled in the merger.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-----------------------------------
Results of Operations
---------------------
In May, 1995, the Merger of the Company and Tribune/Swab-Fox was completed.
For accounting and financial reporting purposes, the Merger is treated as a
downstream merger. Accordingly, the historical financial statements are those of
Tribune/Swab-Fox. Operations of Galaxy Registration, Inc. ("Galaxy") acquired
effective March 1, 1994, are included in exposition services for only four
months in 1994.
Revenues of $16,422,000 for the three months and $30,436,000 for the six
months ended June 30, 1995, were $2,735,000 and $4,920,000, respectively, higher
than for the same periods ended June 30, 1994. The revenue increase included
$1,440,000 and $3,364,000 for the three months and six month periods,
respectively, related to the exposition services, which consists of Galaxy and
Atwood Convention Publishing, Inc. ("Atwood"). The increase in the three
months ended June 30, 1995, is split between Galaxy and Atwood with both having
significant growth during the period. Publishing revenues (including the three
journals held for sale) increased as a result of an increase in advertising
pages and two new executive seminars (one in Europe) in 1995, relating to
International Gaming and Wagering Business ("GWB"). Information services revenue
increase was substantially all related to an increase in the number of
employment histories and criminal records sold during both the three months and
six months ended June 30, 1995. Long distance telephone resale revenue was
approximately $600,000 lower in 1995 as a result of the Company exiting this
business during the latter part of the first quarter of 1994 due to competitive
and regulatory considerations.
Other operating income for the three months ended June 30, 1995, is higher
since a co-sponsored trade show for the convenience store industry occurred in
April, 1995, whereas this trade show was held in March, 1994. Also, the new
European executive seminar for GWB was held in June, 1995. Interest income
related to the contract receivable from the World Publishing Company is
approximately $200,000 lower during the six months ended June 30, 1995.
Publishing costs and expenses were $956,000 higher for the three months and
$1,084,000 higher for the six months ended June 30, 1995, as compared with the
same periods in 1994. The increase in costs related to the executive seminars
and the co-sponsored trade show was approximately $450,000 for the three months
and $370,000 for the six months in 1995 as compared with 1994. Other trade
magazine cost increases in 1995 are related to the increase in pages noted
above, a significant increase in the cost of paper and a postal rate increase.
Exposition services costs and expenses were $1,427,000 and $2,685,000
higher for the three months and six months ended June 30, 1995, respectively.
Included is a $500,000 increase in printing costs for convention publishing
related to the growth in number of shows and the higher cost of paper. In 1995,
Galaxy has increased the number of personnel to provide for the increase in the
number of trade shows and to provide a high quality of service to its customers.
In addition, Galaxy is included for six months operations versus four months in
1994.
11
<PAGE>
Information services costs and expenses were $503,000 higher for the three
months and $771,000 higher for the six months ended June 30, 1995, as compared
with the same periods in 1994. The increase in costs related to the new
employment screening service of approximately $275,000 per quarter, which
services were commenced in mid-1994, the increase in criminal record volume and
other costs related to higher volumes, including additional personnel, represent
the primary increases. Netted against these increases is a decrease of
approximately $500,000 for the six months ended June 30, 1995, related to long
distance telephone resale costs because of exiting this business in the latter
part of the first quarter of 1994.
General and administrative expenses were $635,000 higher for the six
months in 1995, as compared with the same period in 1994. Substantially all of
this increase is related to Galaxy's general and administrative expenses for six
months as compared with four months in 1994.
Interest expense increased $45,000 for the three months and $35,000 for the
six months ended June 30, 1995, as compared with the same periods in 1994,
resulting from average interest rates on variable rate debt being 2% higher
(approximate 33% increase in rate) during the first six months of 1995,
partially reduced by principal payments on debt and reductions in deferred
contract liabilities during the past year. Also, in late May, 1995, the Company
borrowed $2,000,000 under its line of credit in connection with the Merger and
the related acquisition of equivalent shares for cash.
Depreciation and amortization increased $215,000 for the three months and
$526,000 for the six months ended June 30, 1995, as compared with the same
periods in 1994, substantially all related to the depreciable assets of Galaxy
(both the number of months Galaxy is included in each year and depreciation
related to Galaxy's 1994 and 1995 capital expenditures, which have a short
depreciable life, to handle Galaxy's growth in 1994 and 1995).
Provision/benefit for income taxes as a percent of income before income
taxes is higher than the statutory federal income tax rate since goodwill
amortization related to acquisitions is not deductible for income tax purposes.
Financial Condition
-------------------
The changes in the Company's financial condition during the six months
ended June 30, 1995, are mainly related to the use of cash and borrowings on a
line of credit in connection with the Merger and the related purchase of
equivalent shares. Subsequent to June 30, 1995, the Company's cash increased as
a result of the sale of the BMT trade journals and the outstanding balance on
the lines of credit were paid.
12
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At a special meeting of stockholders of the Company held May 24, 1995, the
following matter was voted upon and approved:
Agreement and Plan of Merger dated January 25, 1995, as amended,
whereby the Company and Tribune/Swab-Fox Companies, Inc, agreed to
merge, with the Company to be the surviving corporation. Total votes
For: 4,466,539 shares; Against: 250 shares ; Abstained 200 shares;
Broker non-votes: 0
There were present at the Special Meeting, in person or by proxy,
stockholders holding 4,466,989 shares of Common stock of the company or 92% of
the total stock outstanding and entitled to vote at the Special Meeting
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Revolving Credit Loan Agreement dated as of May 25, 1995,
between Tulsa Tribune Company and BancFirst establishing a
new $2,000,000 revolving line of credit to March 1,
1996.
10.2 Restated Revolving Credit Loan Agreement dated as of June
30, 1995, between T/SF Communications Corporation and
BancFirst extending an existing $2,000,000 revolving credit
facility to June 30, 1996.
10.3 Third Amendment to Revolving Credit Loan Agreement between
Transportation Information Services, Inc., and BancFirst
effective as of June 30, 1995, to extend and renew a
Revolving Credit Commitment of $1,750,000 to June 30, 1996.
10.4 Asset Purchase Agreement, dated June 16, 1995, between BMT
Communications, Inc., and Trade Publishing L.L.C.
10.5 Memorandum of Closing and Amendment to Agreement, dated
August 2, 1995, between BMT Communications, Inc., and Trade
Publishing L.L.C.
11 Computation of earnings per share for the three months
and six months ended June 30, 1995 and 1994.
27 Financial data schedule
(b) Reports on Form 8-K.
No report on Form 8-K was filed during the quarter ended June 30,
1995.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
T/SF COMMUNICATIONS CORPORATION
(Registrant)
Date: August 11, 1995 By: /s/ Howard G. Barnett, Jr.
--------------------------------
Howard G. Barnett, Jr.
Chairman, Chief Executive Officer
and President
Date: August 11, 1995 By:/s/ J. Gary Mourton
--------------------------------
J. Gary Mourton, Senior Vice
President-Finance and Chief
Financial Officer
14
<PAGE>
Exhibit 10.1
REVOLVING CREDIT LOAN AGREEMENT
THIS REVOLVING CREDIT LOAN AGREEMENT, dated as of May 25, 1995, is between
TULSA TRIBUNE COMPANY, a Delaware corporation (referred to as the "Borrower")
and BANCFIRST, a state banking association (the "Bank").
W I T N E S S E T H:
A. WHEREAS, the Borrower has applied to the Bank for a $2,000,000
reducing revolving line of credit to be evidenced by a revolving credit note
payable to the order of the Bank in the principal amount of $2,000,000; and
B. WHEREAS, the Bank is willing to extend a $2,000,000 reducing revolving
line of credit to the Borrower, subject to the terms, conditions, uses and
provisions hereinafter set forth, all of which are material to the Bank and
without which the Bank would not be willing to extend such credit.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, receipt of which is
acknowledged by the parties hereto, the parties agree as follows:
ARTICLE I
---------
CERTAIN DEFINITIONS
-------------------
When used herein, the following terms shall have the following meanings:
1.1 "Applicable Prime Rate" shall mean the annual rate of interest
-----------------------
announced by Chase Manhattan Bank, National Association, New York, New York
("Chase") from time to time as its prime or base rate, which rate shall be the
rate used by Chase as a base or standard for pricing purposes and which shall
not necessarily be its "best" or lowest rate. Should Chase cease to announce a
prime or base rate or should it be merged, consolidated, liquidated or dissolved
in such a manner that it loses its separate corporate identity, then the
Applicable Prime Rate shall be the Prime Rate published by the Wall Street
-----------
Journal in its "Money Rates" column as the base rate on corporate loans at large
-------
U.S. money center commercial banks, or a similar rate if such rate ceases to be
published. Any changes in the Applicable Prime Rate shall be effective as of
the date of the change.
1.2 "Business Day" shall mean a day other than a Saturday, Sunday or a day
--------------
upon which banks in the State of Oklahoma are closed to business generally.
1.3 "Closing Date" shall mean May 25, 1995.
--------------
1.4 "Commitment" shall mean the Revolving Credit Commitment.
------------
1.5 "Default Rate" shall mean the Applicable Prime Rate plus five and one-
--------------
half percentage points (5 1/2%).
1.6 "ERISA" shall mean the Federal Employee Retirement Income Security Act
-------
of 1974, as amended, together with all regulations and rulings promulgated with
respect thereto.
1
<PAGE>
1.7 "Event of Default" shall mean any of the events specified in Section
------------------
7.1 of this Agreement, and "Default" shall mean any event, which together with
-------
any lapse of time or giving of any notice, or both, would constitute an Event of
Default.
1.8 "GAAP" shall mean generally accepted accounting principles applied in
------
all material respects in general conformance with those applied in the
preceding period, unless the Borrower's outside accountants determine that there
should be a different application or required changes or changes based upon
relevant accepted Financial Accounting Standards. Unless otherwise indicated
herein, all accounting terms will be defined according to GAAP.
1.9 "Guaranties" shall mean the absolute and unconditional guarantees of
------------
the Indebtedness evidenced by the Note and incurred hereunder pursuant to the
Commitment, which guaranty instruments will be executed by T/SF Communications
Corporation ("TSFCC") and T/SF Investment Co. ("TSFIC") (collectively, the
"Guarantors") in the form annexed hereto as Exhibits B-1 and B-2, respectively,
and made a part hereof.
1.10 "Indebtedness" shall mean and include any and all: (i) indebtedness,
--------------
obligations and liabilities of the Borrower to the Bank incurred or which may be
incurred or purportedly incurred hereafter pursuant to the terms of this
Agreement or any of the other Loan Documents, and any extensions, renewals,
substitutions, amendments and increases in amount thereof, including such
amounts as may be evidenced by the Note and all lawful interest, loan closing
fees, service fees, facility fees, commitment fees, fees in lieu of balances and
other similar charges, and all reasonable costs and expenses incurred in
connection with the negotiation, preparation, closing, filing and recording of
the Loan Documents, including attorneys fees and legal expenses; (ii) all
reasonable costs and expenses paid or incurred by the Bank, including attorneys
fees, in enforcing or attempting to enforce collection of any Indebtedness and
in enforcing or realizing upon or attempting to enforce or realize upon any
collateral or security for any Indebtedness, including interest on all sums so
expended by the Bank accruing from the date upon which such expenditures are
made until paid, at an annual rate equal to the Default Rate; and (iii) all sums
expended by the Bank in curing any Event of Default or Default of the Borrower
under the terms of this Agreement, the other Loan Documents or any other writing
evidencing or securing the payment of the Note together with interest on all
sums so expended by the Bank accruing from the date upon which such expenditures
are made until paid, at an annual rate equal to the Default Rate.
1.11 "Laws" shall mean all statutes, laws, ordinances, regulations, orders,
------
writs, injunctions, or decrees of the United States, any state or commonwealth,
any municipality, any foreign country, any territory or possession, or any
Tribunal.
1.12 "Lien" shall mean any mortgage, pledge, security interest,
------
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement or other similar form of public notice under the Laws of any
jurisdiction).
1.13 "Loan Documents" shall mean this Agreement, the Note, the Security
----------------
Agreement and Assignment, the Guaranties, financing statements and all other
documents, instruments and certificates executed and delivered to the Bank by
the Borrower or the Guarantors, including the Pledge Agreement delivered by
TSFIC pursuant to the terms of this Agreement.
1.14 "Net Worth" shall mean, on any date as of which the amount thereof is
-----------
to be determined, the total stockholders' equity of the Borrower (calculated in
accordance with GAAP) and less any shares of capital stock subject to redemption
or repurchase prior to the stated maturity date of the Note (to the extent
included in such computation) in accordance with GAAP.
2
<PAGE>
1.15 "Note" shall mean the Revolving Credit Note and any extensions,
------
renewals, replacements, modifications, substitutions, rearrangements or changes
in form thereof.
1.16 "Person" shall mean and include an individual, a partnership, a joint
--------
venture, a corporation, a trust, an unincorporated organization, or a government
or any department, agency or political subdivision thereof.
1.17 "Revolving Credit Commitment" shall mean the agreement of the Bank to
-----------------------------
make Revolving Credit Loans under Article II of this Agreement, and pursuant to
the terms and conditions hereof, from the Closing Date until March 1, 1996, or
such later date as the Bank may extend the commitment by an extension in
writing, unless earlier terminated pursuant to the terms hereof. The maximum
available amount under the Revolving Credit Commitment shall automatically
reduce as follows:
<TABLE>
<CAPTION>
Maximum Availability Applicable Period
-------------------- -----------------
<C> <S>
$2,000,000 Closing Date through September 30, 1995
$1,600,000 October 1, 1995 through October 31, 1995
$1,200,000 November 1, 1995 through November 30, 1995
$ 900,000 December 1, 1995 through December 31, 1995
$ 600,000 January 1, 1996 through January 31, 1996
$ 300,000 February 1, 1996 through February 29, 1996
$ -0- Maturity date of March 1, 1996
</TABLE>
1.18 "Taxes" shall mean all taxes, assessments, fees, or other charges or
-------
levies from time to time or at any time imposed by any Laws or by any Tribunal.
1.19 "Tribunal" shall mean any municipal, state, commonwealth, Federal,
----------
foreign, territorial or other sovereign, governmental entity, governmental
department, court, commission, board, bureau, agency or instrumentality.
ARTICLE II
----------
REVOLVING CREDIT LOANS
----------------------
2.1 Revolving Credit Loans. The Bank agrees, upon the terms and subject
----------------------
to the conditions hereinafter set forth, to make loans ("Revolving Credit
Loans") to the Borrower from the Closing Date until March 1, 1996, or until such
later date as the Bank shall have extended its Revolving Credit Commitment in
writing unless its Commitment shall be sooner terminated pursuant to the
provisions of this Agreement, in such amounts as may from time to time be
requested by the Borrower so long as the aggregate principal amount of all
Revolving Credit Loans outstanding and unpaid at any time under the Revolving
Credit Note does not exceed the lesser of $2,000,000 or the then applicable
------
Revolving Credit Commitment as reduced in accordance with the provisions of
Section 1.17 hereof.
2.2 Revolving Credit Note/Commitment Fee. On the Closing Date, the
------------------------------------
Borrower shall execute and deliver to the order of the Bank the Borrower's
revolving credit note in the principal amount of $2,000,000, the form of which
is annexed hereto as Exhibit "A" and hereby made a part hereof (hereinafter
-----------
referred to as "Revolving Credit Note"). From the Closing Date until the
Revolving Credit Commitment is terminated, the Borrower shall pay to the Bank,
as a commitment fee for its Revolving Credit Commitment, an amount equal to one-
fourth (1/4) of one percentage point (0.250%) per annum of the amount by which
the Revolving Credit
3
<PAGE>
Commitment, as adjusted from time to time, exceeds the outstanding unpaid
principal balance of the Revolving Credit Note from time to time computed daily
on the basis of calendar year of 360 days but assessed for the actual number of
days elapsed during each accrual period. Such fee shall be payable quarterly in
arrears as the same accrues on the fifteenth (15th) day of each January, April,
July and October, commencing July 15, 1995 (for the initial loan period ending
June 30, 1995) and at the maturity of the Revolving Credit Note, whether by
acceleration or otherwise.
2.3 Revolving Credit Advances, Payments and Voluntary Prepayment. Each
------------------------------------------------------------
Revolving Credit Loan requested by the Borrower from the Bank shall (i) be
requested in writing or by telephone no later than 12:00 o'clock Noon
(applicable current time in Tulsa, Oklahoma) on the date upon which the advance
is to be made; (ii) be in the amount of $10,000 or an integral multiple thereof
(unless the amount then available to borrow is less than $10,000, in which event
an advance may be made in the amount available); (iii) not cause the aggregate
outstanding and unpaid principal amount of the Revolving Credit Note to exceed
the then applicable Revolving Credit Commitment and (iv) be advanced by the Bank
on the applicable date, provided the request is timely made in accordance with
Section 2.3(i) hereof and all other conditions of funding are met. In
consideration of Bank permitting telephonic requests for advances, Borrower
states that it fully understands the risk attendant thereto, agrees to accept
all such risk and hold Bank harmless from any loss which the Borrower may incur
by reason of an advance being made in response to a telephonic request whether
such is caused by mistake or negligence of the Bank or otherwise, unless it is
judicially established that such loss was due to the gross negligence and wanton
disregard of the Bank. Borrower will designate in writing to the Bank the names
of representatives of Borrower authorized to make telephone loan advance
requests from time to time hereunder. All advances made by the Bank shall, for
mutual convenience, be deposited to the Borrower's general deposit account with
the Bank, and the Bank shall have no responsibility to monitor the distribution
of such advances in any other respect. The Borrower may from time to time make
prepayments of principal without premium or penalty. The Borrower may reborrow
subject to the limitations and conditions for Revolving Credit Loans contained
herein. Any payments or prepayments on the Revolving Credit Note received by
the Bank after 12:00 o'clock Noon (applicable current time in Tulsa, Oklahoma)
shall be deemed to have been made on the next succeeding Business Day. All
outstanding principal of and accrued interest on the Revolving Credit Note not
previously paid hereunder shall be due and payable at maturity thereof, unless
such maturity shall be extended by the Bank in writing or accelerated pursuant
to the terms hereof.
ARTICLE III
-----------
SECURITY
--------
3.1 Collateral. The repayment of the Indebtedness shall be secured by the
----------
following (the collateral described herein and in the Security Instruments being
referred to as the "Collateral"):
(a) A continuing and continuous security interest of first priority
in, and/or assignment, as security, of:
(i) all accounts, accounts receivable, reimbursements, notes
receivable, contracts, contract rights, chattel paper, documents and
instruments arising out of the sale of goods or services rendered and
any and all agreements for the sale of goods or products or furnishing
of services by the Borrower, including without limitation, all right,
title and monies due and/or to become due to Borrower under that
certain Covenant for
4
<PAGE>
Continued Payments between World Publishing Company, an Oklahoma
corporation, and the Borrower dated September 30, 1992;
(ii) all general intangibles of the Borrower, whether now owned
or hereafter acquired, including without limitation:
(a) all sales contracts and purchase orders;
(b) all processes, formulae, scientific and/or technical
information, trade secrets, customer lists, plans, reports,
samples, prototypes, know-how, all items in application,
development or other pending status and all similar items which
are used in connection with the Borrower's conduct of its
business; and
(c) all of Borrower's right, title, interest, and benefit
under all leases of real and personal property (whether as lessor
or lessee); provided, however, that the Bank hereby assumes no
liabilities, obligations or responsibilities in connection
therewith;
(iii) all cash, money, certificates of deposit, time deposits and
demand deposits of the Borrower, at any time in the possession or
control of the Bank;
(iv) all ledgers, journals, books, records, vouchers, shipping
tickets, receipts, sales memoranda, contracts, partnership agreements,
joint venture agreements, correspondence and other writings, data or
papers evidencing or relating to the items or types of collateral
described above in subsections (i) through (iii), inclusive; and
(v) all products and proceeds of and all replacements, additions,
substitutions, accessories, appurtenances, and parts for, the items or
types of collateral described above in subsections (i) through (iv),
inclusive, whether now owned or hereafter acquired including, without
limitation insurance proceeds.
3.2 Security Agreement. The foregoing security interests shall be granted
------------------
to the Bank, as Secured Party, pursuant to the terms of the Security Agreement
and Assignment, in a form acceptable to the Bank, (the "Security Agreement");
and the Borrower shall execute such financing statements, assignments, notices
and other documents and instruments as shall be necessary or appropriate to
perfect the security interests thus created. The Borrower hereby acknowledges
that all of the Collateral is granted to the Bank as security for the repayment
of all of the Indebtedness. If any portion of the Indebtedness remains
unsatisfied, the Bank shall retain its security interest in all of the
Collateral until the remaining Indebtedness is paid in full, even if the value
of the Collateral far exceeds the amount of Indebtedness outstanding.
ARTICLE IV
----------
CONDITIONS PRECEDENT TO LOANS
-----------------------------
4.1 Conditions Precedent to Initial Revolving Credit Loan. The obligation
-----------------------------------------------------
of the Bank to make the Revolving Credit Loan is subject to the satisfaction of
all of the following
5
<PAGE>
conditions on or prior to the Closing Date (in addition to the other terms and
conditions set forth herein):
(a) No Default. There shall exist no Event of Default or Default on
----------
the Closing Date.
(b) Representations and Warranties. The representations, warranties
------------------------------
and covenants set forth in Article VI shall be true and correct on and as
of the Closing Date, with the same effect as though made on and as of the
Closing Date.
(c) Borrower's Certificate. The Borrower shall have delivered to the
----------------------
Bank a Certificate, dated as of the Closing Date, and signed by the
President and the Secretary or Assistant Secretary of the Borrower
certifying (i) to the matters covered by the conditions specified in
subsections (a) and (b) of this Section 4.1, (ii) that the Borrower has
performed and complied with all agreements and conditions required to be
performed or complied with by it prior to or on the Closing Date, (iii) to
the name and signature of each officer of the Borrower authorized to
execute and deliver the Loan Documents and any other documents,
certificates or writings and to borrow under this Agreement, and (iv) to
such other matters in connection with this Agreement which the Bank shall
determine to be advisable. The Bank may conclusively rely on such
Certificate until it receives notice in writing to the contrary.
(d) Proceedings. On or before the Closing Date, all corporate
-----------
proceedings of the Borrower shall be taken in connection with the
transactions contemplated by the Loan Documents and shall be satisfactory
in form and substance to the Bank and its counsel; and the Bank shall have
received certified copies, in form and substance satisfactory to the Bank
and its counsel, of the Articles or Certificate of Incorporation and By-
Laws of the Borrower and the Guarantors and the resolutions of the Board of
Directors of the Borrower and Guarantors, as adopted, authorizing the
execution and delivery of the Loan Documents pertaining thereto, the
borrowings under this Agreement and the granting of the security interests
in the Collateral pursuant to the Security Agreement, to secure the payment
of the Indebtedness.
(e) Note. The Borrower shall have delivered the Note to the order of
----
the Bank, appropriately executed.
(f) Security Agreement. The Borrower shall have delivered to the Bank
------------------
its Security Agreement in form and content acceptable to the Bank together
with applicable UCC financing statements pertaining thereto.
(g) Guaranties. The Guarantors shall have duly executed and delivered
----------
their respective Guaranties to the Bank. Guarantors shall have delivered
to the Bank appropriate corporate certificates and corporate resolutions
duly authorizing the execution, delivery and performance of its Guaranty.
The Bank may conclusively rely on such Certificate until it receives notice
in writing to the contrary. TSFIC shall have delivered its Pledge
Agreement to the Bank (with stock power in blank) pledging all of the
outstanding capital stock of Borrower as security and collateral for
TSFIC's guarantee obligations of the Indebtedness.
4.2 Conditions Precedent to All Additional Revolving Credit Loans. The
-------------------------------------------------------------
Bank shall not be obligated to make any Revolving Credit Loan (i) if at such
time any Event of Default shall have occurred or any Default shall have occurred
and be continuing; or (ii) if any of the
6
<PAGE>
representations, warranties and covenants contained in Article VI of this
Agreement shall be false or untrue in any material respect on the date of such
loan, as if made on such date. Each request by the Borrower for an additional
Revolving Credit Loan shall constitute a representation by the Borrower that
there is not at the time of such request an Event of Default or a Default, and
that all representations, warranties and covenants in Article V of this
Agreement are true and correct on and as of the date of each such request.
ARTICLE V
---------
COVENANTS
---------
The Borrower covenants and agrees with the Bank that from the date hereof
and so long as this Agreement is in effect (by extension, amendment or
otherwise) and until payment in full of all Indebtedness and the performance of
all other obligations of the Borrower under this Agreement, unless the Bank
shall otherwise consent in writing:
5.1 Payment of Taxes and Claims. The Borrower will pay and discharge or
---------------------------
cause to be paid and discharged all Taxes imposed upon the income or profits of
the Borrower or upon the property, real, personal or mixed, or upon any part
thereof, belonging to the Borrower before the same shall be in default, and all
lawful claims for labor, rentals, materials and supplies which, if unpaid, might
become a Lien upon its property or any part thereof; provided however, that the
-------- -------
Borrower shall not be required to pay and discharge or cause to be paid or
discharged any such Tax, assessment or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings, and appropriate
book reserves shall be established with respect thereto in accordance with GAAP,
and the Borrower shall pay such Tax, charge or claim before any property subject
thereto shall become subject to execution.
5.2 Maintenance of Corporate Existence. The Borrower will do or cause to
----------------------------------
be done all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises and will continue to conduct and
operate its business substantially as being conducted and operated presently
subject to changes in the ordinary course and appropriate changes advantageous
to the business interests of Borrower. The Borrower will become and remain
qualified to conduct business in each jurisdiction where the nature of the
business or ownership of property by such Borrower requires such qualification
and where the failure to do so would result in a material adverse effect on
Borrower or its financial condition.
5.3 Preservation of Property. The Borrower will at all times maintain,
------------------------
preserve and protect all franchises and trade names and keep all the remainder
of its properties which are used or useful in the conduct of its respective
businesses whether owned in fee or otherwise, or leased, in good repair and
operating condition; 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; and comply with all material leases to
which it is a party or under which it occupies property so as to prevent any
material loss or forfeiture thereunder.
5.4 Insurance. The Borrower will keep or cause to be kept adequately
---------
insured by financially sound and reputable insurers its plant, equipment, motor
vehicles, and all other property of a character usually insured by businesses
engaged in the same or similar businesses. Upon demand by the Bank any
insurance policies covering Borrower's equipment and/or inventory, if any, shall
be endorsed to provide that such policies may not be canceled, reduced or
affected in any manner for any reason without thirty (30) days prior notice to
the Bank, and to provide for any other matters which the Bank may reasonably
require; and such insurance shall be against fire, casualty and any other
hazards normally insured against and shall be in the amount of
7
<PAGE>
the substantial full value (less a reasonable deductible not to exceed amounts
customary in the industry for similarly situated businesses and properties) of
the property insured. The Borrower shall at all times maintain adequate
insurance against damage to persons or property, which insurance shall be by
financially sound and reputable insurers and shall, without limitation, provide
the following coverages: comprehensive general liability (including, without
limitation, coverage, where applicable, for damage caused by explosion, broad
form property damage coverage, and broad form coverage for contractually
independent contractors), worker's compensation, products liability and
automobile liability.
5.5 Compliance with Applicable Laws. The Borrower will comply with the
-------------------------------
requirements of all applicable Laws and orders of any Tribunal and obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its properties or to the conduct of its business, where non-
compliance therewith or failure to obtain would have a material adverse effect
on Borrower or its financial condition.
5.6 Financial Statements and Reports.
--------------------------------
(a) Quarterly Operating Statements. The Borrower shall maintain a
------------------------------
standard system of accounting and shall furnish to the Bank as soon as
practicable after the end of each of the first three quarters of each
fiscal year, commencing with the quarter ending March 31, 1995, and in any
event within forty-five (45) days after the end of each said fiscal
quarter, operating statements for the Borrower which shall be certified on
behalf of the Borrower by the chief financial officer of TSFCC, to have
been prepared in accordance with GAAP and to fairly present the financial
condition of the Borrower for such period, and shall include at least a
balance sheet as at the end of such period, and a statement of income, all
in reasonable detail.
(b) Annual Financial Statements. As soon as practicable after the end
---------------------------
of each fiscal year of the Borrower and in any event within one-hundred
twenty (120) days thereafter, the Borrower shall furnish to the Bank the
following financial statements (such statements to be certified by the
chief financial officer of TSFCC):
(i) A balance sheet of the Borrower at the end of such year,
(ii) A statement of income of the Borrower for such year, and
(iii) A statement of cash flows of the Borrower for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, if applicable, all in reasonable detail.
(c) Annual Covenant Certificate. Concurrently with the furnishing of
---------------------------
the financial statements pursuant to 5.6(b), there shall be furnished to
Bank a separate certificate signed by the chief financial officer of TSFCC
stating that: (a) the financial statements were prepared in conformity with
GAAP,and (b) no Event of Default or an event which with the passage of time
or notice, or both, could become an Event of Default has occurred, and is
continuing, and status of any such event(s) if existing. Such certificate
shall not be qualified or limited because of restricted or limited
examination of any material portion of Borrower's records
8
<PAGE>
by the party preparing such annual statements. All certificates of Borrower
submitted pursuant to this Agreement in connection with compliance with
certain financial or other covenants herein contained, shall fully
demonstrate the method of calculations therein contained.
(d) Special Auditing Reports. Promptly upon receipt thereof, the
------------------------
Borrower shall deliver to the Bank a copy of each report submitted to the
Borrower, by independent accountants, if any, in connection with any
annual, interim or special audit made by them of the books and records of
the Borrower, including, without limitation, any comment letter submitted
by such accountants to management in connection with their audit.
5.7 Notice of Default. Immediately upon the happening of any condition or
-----------------
event which constitutes an Event of Default or Default or any default or event
of default under any other loan, mortgage, financing or security agreement, the
Borrower will give the Bank a written notice thereof specifying the nature and
period of existence thereof and what actions, if any, the Borrower is taking and
proposes to take with respect thereto.
5.8 Notice of Litigation. Immediately upon becoming aware of the
--------------------
existence of any action, suit or proceeding at law or in equity before any
Tribunal, an adverse outcome in which would (i) materially impair the ability of
the Borrower to carry on its business substantially as now conducted, (ii)
materially and adversely affect the condition (financial or otherwise) of the
Borrower, or (iii) result in monetary damages in excess of $100,000, the
Borrower will give the Bank a written notice specifying the nature thereof and
what actions, if any, the Borrower is taking and proposes to take with respect
thereto.
5.9 Inspection. The Borrower will keep complete and accurate books and
----------
records with respect to its properties, businesses and operations and will
permit employees and representatives of the Bank to audit, inspect and examine
the same and to make copies thereof and extracts therefrom during normal
business hours. All such records shall be at all times kept and maintained at
the offices of the Borrower in Tulsa, Oklahoma.
5.10 Net Worth. The Borrower will not permit its Net Worth to be less than
---------
the following minimums for the time periods as hereinafter set forth:
<TABLE>
<CAPTION>
Time Period Minimum Net Worth
----------- -----------------
<S> <C>
Closing Date through September 30, 1995 $3,500,000
October 1, 1995 through December 31, 1995 $2,000,000
January 1, 1996 through maturity on March 1, 1996 positive
</TABLE>
5.11 Working Capital. The Borrower will not at any time permit its Working
---------------
Capital (current assets minus current liabilities) to be less than $1,000,000
except for the period from December 1, 1995 through March 1, 1996 for which
Borrower shall maintain positive Working Capital.
5.12 Positive Net Income. Borrower will as of the close of each fiscal
-------------------
quarter maintain positive net income as reflected on its quarterly and annual
financial statements.
5.13 Limitation on Other Indebtedness. The Borrower will not create,
--------------------------------
incur, assume, become or be liable in any manner in respect of, or suffer to
exist, any indebtedness whether evidenced by a note, bond, debenture, agreement,
letter of credit or similar or other obligation to any financial institution or
other institutional lender, or accept any deposits or advances of any kind with
or to any financial institution with which Borrower has a lockbox or similar
depository
9
<PAGE>
account arrangement except only for normal and ordinary accruals and other non-
institutional liabilities not in excess of $250,000 in the aggregate at any
time.
5.14 Limitation on Liens. The Borrower will not create or suffer to exist
-------------------
any Lien upon any of its accounts, contract rights, inventory, general
intangibles, instruments or documents of title, or proceeds and products thereof
(whether cash or otherwise) except for (i) Liens in favor of the Bank and (ii)
Liens incidental to the conduct of the business or ownership of property and
assets which were not incurred in connection with the borrowing of money or the
obtaining of advances or credit (including those arising under contracts with
federal, state or local governmental entities or agencies thereof and pledges as
deposits for the purpose of securing a stay or discharge of legal proceedings
not exceeding $50,000 in the aggregate) and which do not in the aggregate
materially detract from the value of its property or assets or materially impair
the use thereof in the operation of its business.
5.15 Contingent Liabilities; Advances. Other than short-term (12 months or
--------------------------------
less) intra-company advances/loans in the ordinary course of Borrower's business
operations to or with any of its corporate affiliates (including TSFIC and
TSFCC), the repayment of all of which shall be and are hereby expressly
subordinated to the prompt repayment of the Indebtedness) or short term
advances/loans by the Borrower to any of the Guarantors, the Borrower will not
either directly or indirectly, without the prior written consent of the Bank,
(i) guarantee, become surety for, discount, endorse, agree (contingently or
otherwise) to purchase, repurchase or otherwise acquire or supply or advance
funds in respect of, or otherwise become or be contingently liable upon the
indebtedness, obligation or liability of any Person, (ii) guarantee the payment
of any dividends or other distributions upon the stock of any corporation, (iii)
discount or sell with recourse or for less than the face value thereof, any of
its notes receivable, accounts receivable or chattel paper; (iv) loan, agree to
loan, or advance money to any Person; or (v) enter into any agreement for the
purchase or other acquisition of any goods, products, materials or supplies, or
for the making of any shipments or for the payment of services, if in any such
case payment therefor is to be made regardless of the non-delivery of such
goods, products, materials or supplies or the non-furnishing of the
transportation of services; provided, however that the foregoing shall not be
applicable to endorsement of negotiable instruments presented to or deposited
with a bank for collection or deposit in the ordinary course of business.
5.16 Disposition or Sale of Assets. The Borrower will not sell, lease,
-----------------------------
transfer or otherwise dispose of all or substantially all of its assets.
Borrower will not assign or discount with or without recourse, any intra-company
advances/loans made by or to Borrower and outstanding as of the Closing Date (as
the same are more particularly described on Schedule 1 annexed hereto), accounts
receivable, notes receivable or contract rights or sell, lease, transfer, scrap
or otherwise dispose of any of its properties or assets, whether for replacement
or not, except assets sold or disposed of in the ordinary course of business and
for a full and fair consideration, unless such sale, disposition or abandonment
has no material adverse effect on Borrower or its financial condition.
5.17 Merger, Consolidation. The Borrower will not merge or consolidate
---------------------
with or into any other Person or adopt or effect any plan of reorganization,
recapitalization, liquidation or dissolution or create or establish any
subsidiaries.
5.18 Dividends. The Borrower will not declare, pay or become obligated to
---------
declare or pay any dividend on any class of its capital stock now or hereafter
outstanding, make any distribution of cash or property to holders of any shares
of such stock, or redeem, retire, purchase or otherwise acquire, directly or
indirectly, any shares of any class of its capital stock now or hereafter
outstanding to the extent and for so long as any Event of Default exists
hereunder and remains uncured.
10
<PAGE>
5.19 No Prepayment of Covenant. Borrower will not permit or accept any
-------------------------
prepayment (in whole or in part) of the monthly payment obligations due from
World Publishing Company to Borrower pursuant to the terms and provisions of
that certain Covenant for Continued Payments dated September 30, 1992.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Bank to enter into this Agreement and to make the Revolving
Credit Loans to the Borrower under the provisions hereof, and in consideration
thereof, the Borrower represents, warrants and covenants as follows:
6.1 Organization and Qualification. The Borrower is duly organized,
------------------------------
validly existing, and in good standing under the Laws of the State of Delaware
and is duly licensed and in good standing as a foreign corporation in Oklahoma
and in other jurisdictions in which the nature of the business transacted or the
property owned thereof is such as to require licensing or qualification as such.
6.2 Litigation. There is no action, suit, investigation or proceeding
----------
threatened or pending before any Tribunal against or affecting the Borrower or
any properties or rights of the Borrower which, if adversely determined, would
result in a liability of greater than $100,000 or would otherwise result in any
material adverse change in the business or condition, financial or otherwise, of
the Borrower except as described on Exhibit C annexed hereto. The Borrower is
not in default with respect to any judgment, order, writ, injunction, decree,
rule or regulation of any Tribunal.
6.3 Financial Statements. The Borrower's most recent financial statements
--------------------
which have been furnished to the Bank have been prepared in conformity with
GAAP, show all material liabilities, direct and contingent, and fairly present
the financial condition of the Borrower as of the date of such statements and
the results of its operations for the period then ended, and since the date of
such statements there has been no material adverse change in the business,
financial condition or operations of the Borrower.
6.4 Corporate Authorization. The Board of Directors of the Borrower has
-----------------------
duly authorized the execution and delivery of each of the Loan Documents and the
performance of their respective terms. No other consent of any other Person,
except for the Bank, is required as a prerequisite to the binding effect,
validity and enforceability of the Loan Documents.
6.5 Possession of Franchises, Licenses. The Borrower possesses all
----------------------------------
franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities, free from
burdensome restrictions, that are necessary in any material respect for the
ownership, maintenance and operation of its respective properties and assets,
and the Borrower is not in violation of any thereof in any material respect.
6.6 Leases. The Borrower enjoys peaceful and undisturbed possession of
------
all leases necessary in any material respect for the operation of its properties
and assets, none of which contains any unusual or burdensome provisions which
might materially affect or impair the operation of such properties and assets.
All such leases are valid and subsisting and are in full force and effect.
6.7 Taxes. The Borrower has filed all Federal, state and other income tax
-----
returns which are required to be filed and has paid all Taxes, as shown on said
returns, and all Taxes due
11
<PAGE>
or payable without returns and all assessments received to the extent that such
Taxes or assessments have become due. Borrower shall not be required to pay and
discharge or cause to be paid or discharged any such Tax, assessment or claim so
long as the validity thereof shall be contested in good faith by appropriate
proceedings, such Tax liabilities are adequately provided for on the books of
the Borrower, including interest and penalties, and such Tax, charge or claim is
paid before any property subject thereto shall become subject to execution. No
income tax liability of a material nature has been asserted by taxing
authorities for Taxes in excess of those already paid except as shown on Exhibit
D annexed hereto.
6.8 Disclosure. Neither this Agreement nor any other Loan Document or
----------
writing furnished to the Bank by or on behalf of the Borrower in connection
herewith contains any untrue statement of a material fact nor do such Loan
Documents and writings, taken as a whole, omit to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. There is no fact known to the Borrower and not reflected in the
financial statements provided to the Bank which materially adversely affects or
in the future may materially adversely affect the business, property, or assets,
or financial condition of the Borrower which has not been set forth in this
Agreement, in the Loan Documents or in other documents furnished to the Bank by
or on behalf of the Borrower prior to the date hereof in connection with the
transactions contemplated hereby.
6.9 ERISA. Each plan subject to Title IV of ERISA and maintained for
-----
employees of the Borrower, established or maintained by the Borrower is in
material compliance with the applicable provisions of ERISA, and the Borrower
has filed all reports required by ERISA and the Internal Revenue Code of 1986,
as amended, to be filed with respect to each plan.
6.10 Environmental Laws. No hazardous or toxic substances have been
------------------
stored, treated, recycled or disposed of on property owned or leased by the
Borrower, no litigation or threatened litigation has been incurred regarding the
presence, disposal, release or threatened release of such substances on property
owned or leased by the Borrower and the Borrower has not received any
notification from any governmental authority with respect to any violation of
any environmental laws.
6.11 Subsidiaries. Borrower has no corporate subsidiaries.
------------
ARTICLE VII
-----------
EVENTS OF DEFAULT
-----------------
7.1 Events of Default. The following events shall constitute events of
-----------------
default (herein called "Events of Default"), whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of Law or
otherwise:
(a) The Borrower shall fail to make any payment or mandatory
prepayment of principal or interest upon the Note, or fail to pay any other
Indebtedness within five (5) days after the same shall become due and
payable (whether by extension, renewal, acceleration or otherwise); or
(b) Any representation or warranty of the Borrower made herein or in
any writing furnished in connection with or pursuant to any of the Loan
Documents shall have been false or misleading in any material respect on
the date when made; or
12
<PAGE>
(c) The Borrower shall fail to duly observe, perform or comply with
any covenant, agreement or term (other than payment provisions which are
governed by Section 7.1(a) hereof) contained in this Agreement or any of
the Loan Documents and such default or breach shall have not been cured or
remedied within thirty (30) days following receipt of notice thereof from
the Bank; or
(d) The Borrower or the Guarantors shall default in the payment of
principal or of interest on any other obligation for money borrowed or
received as an advance (or any obligation under any conditional sale or
other title retention agreement, or any obligation issued or assumed as
full or partial payment for property whether or not secured by purchase
money Lien, or any obligation under notes payable or drafts accepted
representing extensions of credit) beyond any grace period provided with
respect thereto, or shall default in the performance of any other
agreement, term or condition contained in any agreement under which such
obligation is created (or if any other default under any such agreement
shall occur and be continuing beyond any period of grace provided with
respect thereto) if the effect of such default is to cause, or to permit
the holder or holders of such obligation (or a trustee on behalf of such
holder or holders) to cause such obligation to become due prior to its date
of maturity; or
(e) Any of the following: (i) the Borrower or any of the Guarantors
shall become insolvent or unable to pay its debts as they mature, make an
assignment for the benefit of creditors or admit in writing its inability
to pay its debts generally as they become due or fail generally to pay its
debts as they mature; or (ii) an order for relief under the United States
Bankruptcy Code, as amended, shall be entered against the Borrower or any
of the Guarantors; or (iii) the Borrower or any of the Guarantors shall
petition or apply to any Tribunal for the appointment of a trustee,
receiver, custodian or liquidator of the Borrower or any of the Guarantors
or of any substantial part of the assets of the Borrower or any of the
Guarantors, or shall commence any proceedings relating to the Borrower or
any of the Guarantors under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debts, dissolution, or liquidation
Law of any jurisdiction, whether now or hereafter in effect; or (iv) any
such petition or application shall be filed, or any such proceedings shall
be commenced, of a type described in subsection (iii) above, against the
Borrower or any of the Guarantors and the Borrower or any of the Guarantors
by any act shall indicate its approval thereof, consent thereto or
acquiescence therein, or an order, judgment or decree shall be entered
appointing any such trustee, receiver, custodian or liquidator, or
approving the petition in any such proceedings, and such order, judgment or
decree shall remain unstayed and in effect, if being vigorously contested,
for more than sixty (60) days; or (v) any order, judgment or decree shall
be entered in any proceedings against the Borrower or any of the Guarantors
decreeing the dissolution of the Borrower or any of the Guarantors and such
order, judgment or decree shall remain unstayed and in effect for more than
thirty (30) days; or (vi) any order, judgment or decree shall be entered in
any proceedings against the Borrower decreeing a split-up of the Borrower
which requires the divestiture of a substantial part of the assets of the
Borrower, and such order, judgment or decree shall remain unstayed and in
effect for more than thirty (30) days; or (vii) the Borrower or the any of
Guarantors shall fail to make timely payment or deposit of any amount of
tax required to be withheld by the Borrower and paid to or deposited to or
to the credit of the United States of America pursuant to the provisions of
the Internal Revenue Code of 1986, as amended, in respect of any and all
wages and salaries paid to employees of the Borrower; or
13
<PAGE>
(f) Any final judgment on the merits for the payment of money in an
amount in excess of $50,000 shall be outstanding against the Borrower or
any of the Guarantors, and such judgment shall remain unstayed and in
effect and unpaid for more than thirty (30) days; or
(g) Any Event of Default shall occur and be continuing under or
pursuant to any of the credit facilities extended by the Bank to any of the
Guarantors or subsidiaries of any of the Guarantors (including
Transportation Information Services, Inc.), as such credit facilities are
more particularly described on Schedule 1 annexed hereto and concerning the
exercise of such foregoing cross-default provisions, the Bank shall provide
Borrower with five (5) days prior written notice thereof insofar as the
Bank's intention to exercise such provisions; or
(h) Any one or more of the Guarantors shall attempt to revoke or
renounce their applicable Guaranty; or
(i) Any default or event of default occurs under (x) any of the other
Loan Documents, including without limitation, the Guaranties or (y) that
certain Covenant for Continued Payments dated September 30, 1992 between
World Publishing Company and the Borrower; and such default or event of
default under either clause (x) or (y) hereof shall not have been cured or
remedied within thirty (30) days following receipt of notice thereof from
the Bank, excepting only monetary defaults in any payment obligation of any
applicable borrower, obligor or guarantor under the respective terms
thereof (including World Publishing Company), which such monetary defaults
must be cured within the grace or curative period, if any, therein
specified.
7.2 Remedies. Upon the occurrence of any Event of Default referred to in
--------
Section 7.1(e) the Commitment shall immediately terminate and the Note and all
other Indebtedness shall be immediately due and payable, without notice of any
kind. Upon the occurrence of any other Event of Default, and without prejudice
to any right or remedy of the Bank under this Agreement or the Loan Documents or
under applicable Law of under any other instrument or document delivered in
connection herewith, the Bank may (i) declare the Commitment terminated or (ii)
declare the Commitment terminated and declare the Note and the other
Indebtedness, or any part thereof, to be forthwith due and payable, whereupon
the Note and the other Indebtedness, or such portion as is designated by the
Bank shall forthwith become due and payable, without presentment, demand, notice
or protest of any kind, all of which are hereby expressly waived by the
Borrower. No delay or omission on the part of the Bank in exercising any power
or right hereunder or under the Note, the Loan Documents or under applicable law
shall impair such right or power or be construed to be a waiver of any default
or any acquiescence therein, nor shall any single or partial exercise by the
Bank of any such power or right preclude other or further exercise thereof or
the exercise of any other such power or right by the Bank. In the event that
all or part of the Indebtedness becomes or is declared to be forthwith due and
payable as herein provided, the Bank shall have the right to set off the amount
of all the Indebtedness of the Borrower owing to the Bank against, and shall
have, and is hereby granted by the Borrower, a lien upon and security interest
in, all property of the Borrower in the Bank's possession at or subsequent to
such default, regardless of the capacity in which the Bank possesses such
property, including but not limited to any balance or share of any deposit,
collection or agency account. After Default all proceeds received by the Bank
may be applied to the Indebtedness in such order of application and such
proportions as the Bank, in its discretion, shall choose. At any time after the
occurrence of any Event of Default, the Bank may, at its option, cause an audit
of any and/or all of the books, records and documents of the Borrower to be made
by auditors satisfactory to the Bank at the
14
<PAGE>
expense of the Borrower. The Bank also shall have, and may exercise, each and
every right and remedy granted to it for default under the terms of the other
Loan Documents.
ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Notices. Unless otherwise provided herein, all notices, requests,
-------
consents and demands shall be in writing and shall be mailed by certified mail,
postage prepaid, to the respective addresses specified below, or, as to any
party, to such other address as may be designated by it in written notice to the
other parties:
If to the Borrower, to:
Tulsa Tribune Company
2407 E. Skelly Drive
Tulsa, Oklahoma 74105
Attention: Chief Financial Officer
with a copy to:
T/SF Communications Corporation
2407 East Skelly Drive
Tulsa, Oklahoma 74105
Attention: Chief Financial Officer
If to the Bank, to:
BancFirst
P. O. Box 680
7625 East 51st Street
Tulsa, Oklahoma 74101-0680
Attn: Roy C. Ferguson, III
All notices, requests, consents and demands hereunder will be effective when
mailed by certified mail, postage prepaid, addressed as aforesaid.
8.2 Place of Payment. All sums payable hereunder shall be paid in
----------------
immediately available funds to the Bank, at its principal banking offices in
Tulsa, Oklahoma, or at such other place as the Bank shall notify the Borrower in
writing. If any interest, principal or other payment falls due on a date other
than a Business Day, then (unless otherwise provided herein) such due date shall
be extended to the next succeeding Business Day, and such extension of time will
in such case be included in computing interest, if any, in connection with such
payment.
8.3 Survival of Agreements. All covenants, agreements, representations
----------------------
and warranties made herein shall survive the execution and the delivery of Loan
Documents. All statements contained in any certificate or other instrument
delivered by the Borrower hereunder shall be deemed to constitute
representations and warranties by the Borrower.
8.4 Parties in Interest. All covenants, agreements and obligations
-------------------
contained in this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, except that the
Borrower may not assign its rights or obligations hereunder without the prior
written consent of the Bank.
15
<PAGE>
8.5 Governing Law and Jurisdiction. This Agreement and the Notes shall be
------------------------------
deemed to have been made or incurred under the Laws of the State of Oklahoma and
shall be construed and enforced in accordance with and governed by the Laws of
Oklahoma.
8.6 SUBMISSION TO JURISDICTION. THE BORROWER HEREBY CONSENTS TO THE
--------------------------
JURISDICTION OF ANY OF THE LOCAL, STATE, AND FEDERAL COURTS LOCATED WITHIN TULSA
COUNTY, OKLAHOMA AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED ON
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY
----- --- ----------
SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED
TO IT AT THE ADDRESS SET FORTH IN SUBSECTION 8.1 HEREOF AND THAT SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3)
BUSINESS DAYS AFTER MAILED OR DELIVERED BY MESSENGER.
8.7 No Waiver; Cumulative Remedies. No failure to exercise, and no delay
------------------------------
in exercising, on the part of the Bank, any right, power or privilege hereunder
or under any other Loan Document or applicable Law shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
of the Bank. The rights and remedies herein provided are cumulative and not
exclusive of any other rights or remedies provided by any other instrument or by
law. No amendment, modification or waiver of any provision of this Agreement or
any other Loan Document shall be effective unless the same shall be in writing
and signed by the Bank. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
8.8 Costs. The Borrower agrees to pay to the Bank on demand all costs,
-----
fees and expenses (including without limitation reasonable attorneys fees and
legal expenses) incurred or accrued by the Bank in connection with the
preparation, execution, delivery, filing and recording of this Agreement and the
other Loan Documents, or any amendment, waiver, consent or modification thereto
or thereof, or any enforcement thereof. The Borrower further agrees that all
such fees and expenses shall be paid regardless of whether or not the
transactions provided for in this Agreement are eventually closed and regardless
of whether or not any sums are advanced to the Borrower by the Bank.
8.9 Participation. The Borrower recognizes and acknowledges that the Bank
-------------
reserves the right to sell participating interests in the Note to one or more
financial institutions (the "Participants"). If there is only one Participant,
upon receipt of notice of the identity and address of such Participant, the
Borrower shall thereafter supply such Participant with the same information and
reports communicated to the Bank, whether written or oral. The Borrower hereby
acknowledge that each Participant shall be deemed a holder of the Note to the
extent of its participation, and the Borrower hereby waives its right, if any,
to offset amounts owing to the Borrower from the Bank against any Participant's
portion of the Note.
8.10 Assignment of Loan Documents by Bank. For so long as no Event of
------------------------------------
Default has occurred hereunder or, to the extent the only Event of Default
existing hereunder is World Publishing Company's failure to pay to Borrower the
monthly installment obligations due thereto pursuant to the Covenant for
Continued Payments dated September 30, 1992 for a period in excess of thirty
(30) days beyond the due date thereof (the "World Publishing Event of Default"),
the Bank represents to and covenants with Borrower that the Bank will not
assign, endorse or otherwise sell the Indebtedness and the Loan Documents
evidencing and securing the same to World Publishing Company or any affiliate
thereof which is known to be such by the Bank. Borrower stipulates and
acknowledges, however, that the foregoing limitation on assignability of the
Loan Documents by the Bank shall not limit the Bank's right of assignment upon
the occurrence of any Event of Default hereunder other than or in addition to
the World Publishing Event of Default.
16
<PAGE>
8.11 WAIVER OF JURY. BORROWER FULLY, VOLUNTARILY AND EXPRESSLY WAIVES ANY
--------------
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, THE NOTE OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY IN THE FUTURE BE DELIVERED) IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT. BORROWER AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
8.12 Full Agreement. This Agreement and the other Loan Documents contain
--------------
the full agreement of the parties and supersede all negotiations and agreements
prior to the date hereof.
8.13 Headings. The article and section headings of this Agreement are for
--------
convenience of reference only and shall not constitute a part of the text hereof
nor alter or otherwise affect the meaning hereof.
8.14 Severability The unenforceability or invalidity as determined by a
------------
Tribunal of competent jurisdiction, of any provision or provisions of this
Agreement shall not render unenforceable or invalid any other provision or
provisions hereof.
8.15 Exceptions to Covenants. The Borrower shall not be deemed to be
-----------------------
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
8.16 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed in Tulsa, Oklahoma, effective as of the day and year first above
written.
"Borrower"
TULSA TRIBUNE COMPANY
By: /s/ Howard G. Barnett, Jr.
-----------------------------------------------
Howard G. Barnett, Jr., President
"Bank"
BANCFIRST
By: Roy C. Ferguson, III
---------------------------------------------
Roy C. Ferguson, III, Regional Executive
17
<PAGE>
SCHEDULE 1
(OTHER BANCFIRST CREDIT FACILITIES)
1. That certain Revolving Credit Loan Agreement between Transportation
Information Services, Inc., as borrower, and BancFirst, as lender, dated as
of July 14, 1993, as amended as of February 1, 1994 and June 30, 1994,
respectively, providing for a $1,750,000 revolving line of credit facility.
2. That certain Revolving Credit Loan Agreement between T/SF Communications
Corporation, as borrower, and BancFirst, as lender, dated as of June 30,
1994, providing for a revolving credit facility in the amount of
$2,000,000.
<PAGE>
Exhibit 10.2
RESTATED REVOLVING
CREDIT LOAN AGREEMENT
---------------------
THIS RESTATED REVOLVING CREDIT LOAN AGREEMENT, dated as of June 30, 1995,
is between T/SF COMMUNICATIONS CORPORATION, a Delaware corporation (referred to
as the "Borrower") and BANCFIRST, a state banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank is willing to restate and extend its existing revolving
line of credit to the Borrower in the maximum amount of $2,000,000 as presently
evidenced by that certain Revolving Credit Loan Agreement dated as of June 30,
1994 (the "Prior Agreement"), subject to the terms, conditions, uses and
provisions hereinafter set forth, all of which are material to the Bank and
without which the Bank would not be willing to extend such credit.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, receipt of which is
acknowledged by the parties hereto, the parties agree as follows:
ARTICLE I
---------
CERTAIN DEFINITIONS
-------------------
When used herein, the following terms shall have the following meanings:
1.1 "Applicable Prime Rate" shall mean the annual rate of interest
-----------------------
announced by Chase Manhattan Bank, National Association, New York, New York
("Chase") from time to time as its prime or base rate, which rate shall be the
rate used by Chase as a base or standard for pricing purposes and which shall
not necessarily be its "best" or lowest rate. Should Chase cease to announce a
prime or base rate or should it be merged, consolidated, liquidated or dissolved
in such a manner that it loses its separate corporate identity, then the
Applicable Prime Rate shall be the Prime Rate published by the Wall Street
-----------
Journal in its "Money Rates" column or a similar rate if such rate ceases to be
-------
published. Any changes in the Applicable Prime Rate shall be effective as of
the date of the change.
1.2 "Business Day" shall mean a day other than a Saturday, Sunday or a day
--------------
upon which banks in the State of Oklahoma are closed to business generally.
1.3 "Cash Equivalents" shall mean: (a) securities with maturities of
------------------
ninety-one (91) days or less from the issue date, which are issued or fully
guaranteed or insured by the United States Government or any agency thereof; (b)
certificates of deposit, eurodollar time deposits, overnight bank deposits and
bankers acceptances with maturities of ninety (90) days or less; (c) commercial
paper with a maturity of ninety (90) days or less, of a domestic issuer and
rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors
Services, Inc. and (d) auction rate preferred stock with rate reset dates of
sixty (60) days or less of a domestic issuer and with a rating of "aaa" from
Moody's Investors Services, Inc. or AAA from Standard & Poor's Corporation.
1.4 "Closing Date" shall mean June 30, 1995.
--------------
1.5 "Commitment" shall mean the Revolving Credit Commitment.
------------
<PAGE>
1.6 "Consolidated Fixed Charges" shall mean for any period, the sum of all
----------------------------
of the following (determined with reference to Borrower's Consolidated Net
Income for such period):
(a) All amounts recorded in respect of interest charges and expense for
such period (whether paid or accrued or a cash or non-cash expense and
including the interest component of all capital leases), and
(b) All amounts recorded in respect of rental expense (whether paid or
accrued or a cash or non-cash expense, but excluding amounts in respect of
capital leases).
1.7 "Consolidated Net Income" for any period means the consolidated net
-------------------------
income (or net loss) of the Borrower for such period including an amount equal
to 60% of the actual amount of monthly cash payments received by the Borrower
during the applicable period pursuant to the Covenant for Continued Payments
described in that certain Amendment and Termination Agreement between Tulsa
Tribune Company ("Tribune"), World Publishing Company ("World") and Newspaper
Printing Corporation ("NPC") dated as of July 31, 1992, but not including any
earnings of any person acquired by the Borrower or any subsidiary thereof
through purchase, merger or consolidation or otherwise for any period prior to
the time of acquisition, or any deferred credit representing the excess of
equity in any subsidiary at the date of acquisition over the cost of the
investment in such subsidiary and, other than the monthly cash payments
described above and received and accounted for as described in the Tribune
Amendment (and the resulting September 30, 1992 termination of the Joint
Operating Agreement among Tribune, World and NPC dated June 28, 1941, as amended
(the "JOA")) the gain from such termination of the JOA and related transactions
shall not be included in the definition of "Consolidated Net Income" or the
---
definition of "Consolidated Operating Income" defined in Section 1.8 hereof
below; all determined in accordance with generally accepted accounting
principles.
1.8 "Consolidated Operating Income" for any period means the sum of (i)
-------------------------------
Consolidated Net Income for such period, plus (to the extent deducted in
determining such Consolidated Net Income) (ii) all provisions for income or
profits taxes made for such period, plus (iii) all provisions for depreciation,
depletion, amortization expense (including amortization of assets recorded under
capital leases) and other non-cash charges made for such period, plus (iv) all
Fixed Charges recorded for such period.
1.9 "Current Ratio" shall mean the ratio of Borrower's consolidated Current
---------------
Assets to the aggregate amount of Borrower's consolidated Current Liabilities,
as each term is computed and consolidated in accordance with GAAP.
1.10 "Default Rate" shall mean the Applicable Prime Rate plus six and one-
--------------
half percentage points (6-1/2%).
1.11 "ERISA" shall mean the Federal Employee Retirement Income Security
-------
Act of 1974, as amended, together with all regulations and rulings promulgated
with respect thereto.
1.12 "Event of Default" shall mean any of the events specified in Section
------------------
6.1 of this Agreement, and "Default" shall mean any event, which together with
-------
any lapse of time or giving of any notice, or both, would constitute an Event of
Default.
1.13 "GAAP" shall mean generally accepted accounting principles applied in
------
all material respects in general conformance with those applied in the
preceding period, unless the Borrower's outside accountants determine that there
should be a different application or required changes or changes based upon
relevant accepted Financial Accounting Standards. Unless otherwise indicated
2
<PAGE>
herein, all accounting terms will be defined according to GAAP and further
provided that references to the Borrower's consolidated financial statements or
consolidated financial condition, results of operations or compliance with the
financial covenants hereof shall be deemed to include Borrower and all of its
corporate subsidiaries.
1.14 "Indebtedness" shall mean and include any and all: (i)
--------------
indebtedness, obligations and liabilities of the Borrower to the Bank incurred
or which may be incurred or purportedly incurred hereafter pursuant to the terms
of this Agreement or any of the other Loan Documents, and any extensions,
renewals, substitutions, amendments and increases in amount thereof, including
such amounts as may be evidenced by the Note and all lawful interest, loan
closing fees, service fees, facility fees, commitment fees, fees in lieu of
balances and other similar charges, and all reasonable costs and expenses
incurred in connection with the negotiation, preparation, closing, filing and
recording of the Loan Documents, including attorneys fees and legal expenses;
(ii) all reasonable costs and expenses paid or incurred by the Bank, including
attorneys fees, in enforcing or attempting to enforce collection of any
Indebtedness and in enforcing or realizing upon or attempting to enforce or
realize upon any collateral or security for any Indebtedness, including interest
on all sums so expended by the Bank accruing from the date upon which such
expenditures are made until paid, at an annual rate equal to the Default Rate;
and (iii) all sums expended by the Bank in curing any Event of Default or
Default of the Borrower under the terms of this Agreement, the other Loan
Documents or any other writing evidencing or securing the payment of the Note
together with interest on all sums so expended by the Bank accruing from the
date upon which such expenditures are made until paid, at an annual rate equal
to the Default Rate.
1.15 "Laws" shall mean all statutes, laws, ordinances, regulations,
------
orders, writs, injunctions, or decrees of the United States, any state or
commonwealth, any municipality, any foreign country, any territory or
possession, or any Tribunal.
1.16 "Lien" shall mean any mortgage, pledge, security interest,
------
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement or other similar form of public notice under the Laws of any
jurisdiction).
1.17 "Loan Documents" shall mean this Agreement, the Note and all other
----------------
documents, instruments and certificates executed and delivered to the Bank by
the Borrower pursuant to the terms of this Agreement.
1.18 "Net Worth" shall mean, on any date as of which the amount thereof is
-----------
to be determined, the total stockholders' equity of the Borrower (calculated in
accordance with GAAP) and less any shares of capital stock subject to redemption
or repurchase prior to the stated maturity date of the Note (to the extent
included in such computation) on a consolidated basis in accordance with GAAP.
1.19 "Note" shall mean the Revolving Credit Note and any extensions,
------
renewals, replacements, modifications, substitutions, rearrangements or changes
in form thereof.
1.20 "Person" shall mean and include an individual, a partnership, a joint
--------
venture, a corporation, a trust, an unincorporated organization, or a government
or any department, agency or political subdivision thereof.
1.21 "Revolving Credit Commitment" shall mean the agreement of the Bank to
-----------------------------
make Revolving Credit Loans under Article II of this Agreement, and pursuant to
the terms and conditions hereof, from the Closing Date until June 30, 1996, or
3
<PAGE>
such later date as the Bank may extend the commitment by an extension in
writing, unless earlier terminated pursuant to the terms hereof.
1.22 "Taxes" shall mean all taxes, assessments, fees, or other charges or
-------
levies from time to time or at any time imposed by any Laws or by any Tribunal.
1.23 "Tribunal" shall mean any municipal, state, commonwealth, Federal,
----------
foreign, territorial or other sovereign, governmental entity, governmental
department, court, commission, board, bureau, agency or instrumentality.
ARTICLE II
----------
REVOLVING CREDIT LOAN
---------------------
2.1 Revolving Credit Loans. The Bank agrees, upon the terms and subject to
----------------------
the conditions hereinafter set forth, to make loans ("Revolving Credit Loans")
to the Borrower from the Closing Date until June 30, 1996, or until such later
date as the Bank shall have extended its Revolving Credit Commitment in writing
unless its Commitment shall be sooner terminated pursuant to the provisions of
this Agreement, in such amounts as may from time to time be requested by the
Borrower so long as the aggregate principal amount of all Revolving Credit Loans
outstanding and unpaid at any time under the Revolving Credit Note does not
exceed $2,000,000.
2.2 Revolving Credit Note/Commitment Fee. On the Closing Date, the
------------------------------------
Borrower shall execute and deliver to the order of the Bank the Borrower's
revolving credit note in the principal amount of $2,000,000, the form of which
is annexed hereto as Exhibit "A" and hereby made a part hereof (hereinafter
-----------
referred to as "Revolving Credit Note"). From the Closing Date until the
Revolving Credit Commitment is terminated, the Borrower shall pay to the Bank,
as a commitment fee for its Revolving Credit Commitment, an amount equal to one-
fourth of one percentage point (0.25%) per annum of the amount by which
$2,000,000 exceeds the outstanding unpaid principal balance of the Revolving
Credit Note from time to time computed daily on the basis of calendar year of
360 days but assessed for the actual number of days elapsed during each accrual
period. Such fee shall be payable quarterly as the same accrues on the
fifteenth (15th) day of each full or partial calendar quarter annual period,
commencing October 15, 1995 (for the calendar quarter ending September 30,
1995), and at the maturity of the Revolving Credit Note, whether by acceleration
or otherwise. In accordance with the provisions of the Prior Agreement the
commitment fee specified therein for the calendar quarter ending June 30, 1995,
is payable on July 15, 1995.
2.3 Revolving Credit Advances, Payments and Voluntary Prepayment. Each
------------------------------------------------------------
Revolving Credit Loan requested by the Borrower from the Bank shall (i) be
requested in writing or by telephone no later than 12:00 o'clock Noon
(applicable current time in Tulsa, Oklahoma) on the date upon which the advance
is to be made; (ii) be in the amount of $10,000 or an integral multiple thereof
(unless the amount then available to borrow is less than $10,000, in which event
an advance may be made in the amount available); (iii) not cause the aggregate
outstanding and unpaid principal amount of the Revolving Credit Note to exceed
$2,000,000; and (iv) be advanced by the Bank on the applicable date, provided
the request is timely made in accordance with Section 2.3(i) hereof and all
other conditions of funding are met. In consideration of Bank permitting
telephonic requests for advances, Borrower states that it fully understands the
risk attendant thereto, agrees to accept all such risk and hold Bank harmless
from any loss which the Borrower may incur by reason of an advance being made in
4
<PAGE>
response to a telephonic request whether such is caused by mistake or negligence
of the Bank or otherwise, unless it is judicially established that such loss was
due to the gross negligence and wanton disregard of the Bank. Borrower will
designate in writing to the Bank the names of representatives of Borrower
authorized to make telephone loan advance requests from time to time hereunder.
All advances made by the Bank shall, for mutual convenience, be deposited to the
Borrower's general deposit account with the Bank, and the Bank shall have no
responsibility to monitor the distribution of such advances in any other
respect. The Borrower may from time to time make prepayments of principal
without premium or penalty. The Borrower may reborrow subject to the
limitations and conditions for Revolving Credit Loans contained herein. Any
payments or prepayments on the Revolving Credit Note received by the Bank after
12:00 o'clock Noon (applicable current time in Tulsa, Oklahoma) shall be deemed
to have been made on the next succeeding Business Day. All outstanding
principal of and accrued interest on the Revolving Credit Note not previously
paid hereunder shall be due and payable at maturity thereof, unless such
maturity shall be extended by the Bank in writing or accelerated pursuant to the
terms hereof.
ARTICLE III
-----------
CONDITIONS PRECEDENT TO LOANS
-----------------------------
3.1 Conditions Precedent to Initial Revolving Credit Loan. The obligation
-----------------------------------------------------
of the Bank to make the Revolving Credit Loan is subject to the satisfaction of
all of the following conditions on or prior to the Closing Date (in addition to
the other terms and conditions set forth herein):
(a) No Default. There shall exist no Event of Default or Default on
----------
the Closing Date.
(b) Representations and Warranties. The representations, warranties
------------------------------
and covenants set forth in Article V shall be true and correct on and as of
the Closing Date, with the same effect as though made on and as of the
Closing Date.
(c) Borrower's Certificate. The Borrower shall have delivered to the
----------------------
Bank a Certificate, dated as of the Closing Date, and signed by the
Chairman/Chief Executive Officer, the President or Vice President and the
Secretary or Assistant Secretary of the Borrower certifying (i) to the
matters covered by the conditions specified in subsections (a) and (b) of
this Section 3.1, (ii) that the Borrower has performed and complied with
all agreements and conditions required to be performed or complied with by
it prior to or on the Closing Date, (iii) to the name and signature of each
officer of the Borrower authorized to execute and deliver the Loan
Documents and any other documents, certificates or writings and to borrow
under this Agreement, and (iv) to such other matters in connection with
this Agreement which the Bank shall determine to be advisable. The Bank
may conclusively rely on such Certificate until it receives notice in
writing to the contrary.
(d) Proceedings. On or before the Closing Date, all corporate
-----------
proceedings of the Borrower shall be taken in connection with the
transactions contemplated by the Loan Documents and shall be satisfactory
in form and substance to the Bank and its counsel; and the Bank shall have
received certified copies, in form and substance satisfactory to the Bank
and its counsel, of the Articles or Certificate of Incorporation and By-
Laws of the Borrower and the resolutions of the Board of Directors of the
Borrower, as adopted, authorizing the execution and delivery of the Loan
Documents pertaining thereto, the borrowings under this Agreement.
(e) Note. The Borrower shall have delivered the Note to the order of
----
the Bank, appropriately executed.
5
<PAGE>
(f) Other Information. The Bank shall have received such other
-----------------
information, documents and assurances as shall be reasonably requested by
the Bank.
3.2 Conditions Precedent to All Additional Revolving Credit Loans. The
-------------------------------------------------------------
Bank shall not be obligated to make any Revolving Credit Loan (i) if at such
time any Event of Default shall have occurred or any Default shall have occurred
and be continuing; or (ii) if any of the representations, warranties and
covenants contained in Article V of this Agreement shall be false or untrue in
any material respect on the date of such loan, as if made on such date. Each
request by the Borrower for an additional Revolving Credit Loan shall constitute
a representation by the Borrower that there is not at the time of such request
an Event of Default or a Default, and that all representations, warranties and
covenants in Article V of this Agreement are true and correct on and as of the
date of each such request.
ARTICLE IV
----------
COVENANTS
---------
The Borrower covenants and agrees with the Bank that from the date hereof
and so long as this Agreement is in effect (by extension, amendment or
otherwise) and until payment in full of all Indebtedness and the performance of
all other obligations of the Borrower under this Agreement, unless the Bank
shall otherwise consent in writing:
4.1 Payment of Taxes and Claims. The Borrower will pay and discharge or
---------------------------
cause to be paid and discharged all Taxes imposed upon the income or profits of
the Borrower or upon the property, real, personal or mixed, or upon any part
thereof, belonging to the Borrower before the same shall be in default, and all
lawful claims for labor, rentals, materials and supplies which, if unpaid, might
become a Lien upon its property or any part thereof; provided however, that the
-------- -------
Borrower shall not be required to pay and discharge or cause to be paid or
discharged any such Tax, assessment or claim so long as the validity thereof
shall be contested in good faith by appropriate proceedings, and appropriate
book reserves shall be established with respect thereto in accordance with GAAP,
and the Borrower shall pay such Tax, charge or claim before any property subject
thereto shall become subject to execution.
4.2 Maintenance of Corporate Existence. The Borrower will do or cause to
----------------------------------
be done all things necessary to preserve and keep in full force and effect its
corporate existence, rights and franchises and will continue to conduct and
operate its business substantially as being conducted and operated presently
subject to changes in the ordinary course and appropriate changes advantageous
to the business interests of Borrower. The Borrower will become and remain
qualified to conduct business in each jurisdiction where the nature of the
business or ownership of property by such Borrower requires such qualification
and where the failure to do so would result in a material adverse effect on
Borrower or its financial condition.
4.3 Preservation of Property. The Borrower will at all times maintain,
------------------------
preserve and protect all franchises and trade names and keep all the remainder
of its properties which are used or useful in the conduct of its respective
businesses whether owned in fee or otherwise, or leased, in good repair and
operating condition; 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; and comply with all material leases to
which it is a party or under which it occupies property so as to prevent any
material loss or forfeiture thereunder.
6
<PAGE>
4.4 Insurance. The Borrower will keep or cause to be kept adequately
---------
insured by financially sound and reputable insurers its plant, equipment, motor
vehicles, and all other property of a character usually insured by businesses
engaged in the same or similar businesses. Upon demand by the Bank any
insurance policies covering Borrower's equipment and/or inventory, if any, shall
be endorsed to provide that such policies may not be canceled, reduced or
affected in any manner for any reason without thirty (30) days prior notice to
the Bank, and to provide for any other matters which the Bank may reasonably
require; and such insurance shall be against fire, casualty and any other
hazards normally insured against and shall be in the amount of the substantial
full value (less a reasonable deductible not to exceed amounts customary in the
industry for similarly situated businesses and properties) of the property
insured. The Borrower shall at all times maintain adequate insurance against
damage to persons or property, which insurance shall be by financially sound and
reputable insurers and shall, without limitation, provide the following
coverages: comprehensive general liability (including, without limitation,
coverage, where applicable, damage caused by explosion, broad form property
damage coverage, broad form coverage for contractually independent contractors),
worker's compensation, products liability and automobile liability.
4.5 Compliance with Applicable Laws. The Borrower will comply with the
-------------------------------
requirements of all applicable Laws and orders of any Tribunal and obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its properties or to the conduct of its business, where non-
compliance therewith or failure to obtain would have a material adverse effect
on Borrower or its financial condition.
4.6 Financial Statements and Reports.
--------------------------------
(a) Quarterly Operating Statements. The Borrower shall maintain a
------------------------------
standard system of accounting and shall furnish to the Bank as soon as
practicable after the end of each of the first three quarters of each
fiscal year, commencing with the quarter ending June 30, 1995, and in any
event within forty-five (45) days after the end of each said fiscal
quarter, consolidated and consolidating operating statements for the
Borrower which shall be certified on behalf of the Borrower by the
President or chief financial officer of the Borrower, to have been prepared
in accordance with GAAP and to fairly present the consolidated and
consolidating financial condition of the Borrower for such period, and
shall include at least a consolidated and consolidating balance sheet as at
the end of such period, and a consolidated and consolidating statement of
income, all in reasonable detail.
(b) Annual Financial Statements. As soon as practicable after the end
---------------------------
of each fiscal year of the Borrower and in any event within one-hundred
twenty (120) days thereafter, the Borrower shall furnish to the Bank the
following consolidated and consolidating financial statements, together
with an audit report on such consolidated financial statements (such
consolidating statements to be certified by the Chief Financial Officer of
Borrower) and an unqualified opinion, prepared in accordance with GAAP of
reputable independent certified public accountants of recognized standing
selected by the Borrower and acceptable to the Bank:
(i) A consolidated and consolidating balance sheet of the
Borrower at the end of such year,
(ii) A consolidated and consolidating statement of income of
the Borrower for such year, and
7
<PAGE>
(iii) A consolidated and consolidating statement of cash
flows of the Borrower for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, if applicable, all in reasonable detail. The report of the
independent certified public accountants shall contain a certification that
in the course of the audit necessary for the certification of such
financial statements, they have obtained no knowledge of any Event of
Default or Default as defined herein, or, if any Event of Default or
Default existed or exists, specifying the nature and period of existence
thereof; provided, however, that such accountants shall not be liable to
the Bank by reason of their failure to obtain knowledge of any such Event
of Default or Default which would not be disclosed in the course of an
audit conducted in accordance with generally accepted auditing standards.
(c) Annual Covenant Certificate. Concurrently with the furnishing of
---------------------------
the financial statements pursuant to 4.6(b), there shall be furnished to
Bank a separate certificate signed by the chief financial officer of
Borrower stating that: (a) the financial statements were prepared in
conformity with GAAP, and (b) no Event of Default or an event which with
the passage of time or notice, or both, could become an Event of Default
has occurred, and is continuing, and status of any such event(s) if
existing. Such certificate shall not be qualified or limited because of
restricted or limited examination of any material portion of Borrower's
records by the party preparing such annual statements. All certificates of
Borrower submitted pursuant to this Agreement in connection with compliance
with certain financial or other covenants herein contained, shall fully
demonstrate the method of calculations therein contained.
(d) Special Auditing Reports. Promptly upon receipt thereof, the
------------------------
Borrower shall deliver to the Bank a copy of each report submitted to the
Borrower, by independent accountants in connection with any annual, interim
or special audit made by them of the books and records of the Borrower,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their audit.
(e) Periodic Reports. Promptly upon their becoming available, copies
----------------
of all financial statements, reports, notices of proxy statements sent by
the Borrower to its stockholders and all registration statements, periodic
reports and other statements and schedules filed by the Borrower with any
securities exchange, the Securities and Exchange Commission or any similar
state or federal governmental authority.
4.7 Notice of Default. Immediately upon the happening of any condition or
-----------------
event which constitutes an Event of Default or Default or any default or event
of default under any other loan, mortgage, financing or security agreement, the
Borrower will give the Bank a written notice thereof specifying the nature and
period of existence thereof and what actions, if any, the Borrower is taking and
proposes to take with respect thereto.
4.8 Notice of Litigation. Immediately upon becoming aware of the existence
--------------------
of any action, suit or proceeding at law or in equity before any Tribunal, an
adverse outcome in which would (i) materially impair the ability of the Borrower
to carry on its business substantially as now conducted, (ii) materially and
adversely affect the condition (financial or otherwise) of the Borrower, or
(iii) result in monetary damages in excess of $50,000, the Borrower will give
the Bank a written notice specifying the nature thereof and what actions, if
any, the Borrower is taking and proposes to take with respect thereto.
8
<PAGE>
4.9 Inspection. The Borrower will keep complete and accurate books and
----------
records with respect to its properties, businesses and operations and will
permit employees and representatives of the Bank to audit, inspect and examine
the same and to make copies thereof and extracts therefrom during normal
business hours. All such records shall be at all times kept and maintained at
the offices of the Borrower in Tulsa, Oklahoma.
4.10 Consolidated Net Worth. The Borrower will not permit its
----------------------
consolidated Net Worth to be less than $24,000,000 at any time.
4.11 Debt to Net Worth. The Borrower will not at any time permit the
-----------------
ratio of its total liabilities, determined in accordance with GAAP, to its
consolidated Net Worth to exceed 1.3 to 1.0.
4.12 Consolidated Current Ratio. The Borrower will not at any time permit
--------------------------
the ratio of (a) Borrower's consolidated Current Assets to (b) consolidated
Current Liabilities to be less than 1.0 to 1.0.
4.13 Consolidated Cash. Borrower will at all times maintain consolidated
-----------------
cash plus consolidated Cash Equivalents of at least $500,000.
4.14 Consolidated Fixed Charges Coverage. Borrower will not permit its
-----------------------------------
Consolidated Fixed Charges for any period of twelve (12) consecutive calendar
months to exceed 66-2/3% of its Consolidated Operating Income for such period.
4.15 Limitation on Other Indebtedness. Neither the Borrower nor any of
--------------------------------
its subsidiaries will create, incur, assume, become or be liable in any manner
in respect of, or suffer to exist, any indebtedness whether evidenced by a note,
bond, debenture, agreement, letter of credit or similar or other obligation,
with or to any Person, including without limitation, any financial institution
with which Borrower or any of its subsidiaries (including Transportation
Information Services, Inc.) ("TISI") has a lockbox or similar depository account
arrangement except only (i) indebtedness of Borrower, TISI or Tulsa Tribune
Company ("Tribune") to the Bank, (ii) indebtedness evidenced by seller generated
purchase money or other non-financial institution borrowed funds and/or capital
leases not in excess of $500,000 and (iii) existing indebtedness as more
particularly described on Schedule 1 annexed hereto.
4.16 Prohibition on Liens. Neither the Borrower nor any direct or
--------------------
indirect subsidiary thereof will create or suffer to exist any Lien upon any of
its assets or properties, including without limitation, accounts, contract
rights, inventory, general intangibles, equipment, instruments or documents of
title, or proceeds and products thereof (whether cash or otherwise) except for
(i) Liens in favor of the Bank, (ii) Liens incidental to the conduct of the
business or ownership of property and assets which were not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(including those arising under contracts with federal, state or local
governmental entities or agencies thereof and pledges as deposits for the
purpose of securing a stay or discharge of legal proceedings not exceeding
$500,000 in the aggregate) and which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use thereof in
the operation of its business, (iii) existing capital leases of Galaxy
Registration, Inc. not in excess of $250,000 in the aggregate and (iv) existing
liens/stock pledges as more particularly described on Schedule 2 annexed hereto.
4.17 Contingent Liabilities; Advances. Other than inter-company
--------------------------------
advances/loans in the ordinary course of Borrower's business operations to or
with any of its direct or indirect subsidiaries (including TISI), the Borrower
will not either directly or indirectly, without the prior written consent of the
9
<PAGE>
Bank, (i) guarantee, become surety for, discount, endorse, agree (contingently
or otherwise) to purchase, repurchase or otherwise acquire or supply or advance
funds in respect of, or otherwise become or be contingently liable upon the
indebtedness, obligation or liability of any Person, (ii) guarantee the payment
of any dividends or other distributions upon the stock of any corporation, (iii)
discount or sell with recourse or for less than the face value thereof, any of
its notes receivable, accounts receivable or chattel paper; (iv) loan, agree to
loan, or advance money to any Person; or (v) enter into any agreement for the
purchase or other acquisition of any goods, products, materials or supplies, or
for the making of any shipments or for the payment of services, if in any such
case payment therefor is to be made regardless of the non-delivery of such
goods, products, materials or supplies or the non-furnishing of the
transportation of services; provided, however that the foregoing shall not be
applicable to endorsement of negotiable instruments presented to or deposited
with a bank for collection or deposit in the ordinary course of business.
4.18 Disposition or Sale of Assets. The Borrower will not sell, lease,
-----------------------------
transfer or otherwise dispose of all or substantially all of its assets.
Borrower will not assign or discount with or without recourse, any shares of
stock of T/SF Investments Co., accounts receivable, notes receivable or contract
rights or sell, lease, transfer, scrap or otherwise dispose of any of its
properties or assets, whether for replacement or not, except (i) assets sold or
disposed of in the ordinary course of business and for a full and fair
consideration, unless such sale, disposition or abandonment has no material
adverse effect on Borrower or its financial condition, and (ii) fixed assets
sold to an affiliate of Borrower, which assets will be leased by such entity to
the Borrower.
4.19 Merger, Consolidation. The Borrower will not merge or consolidate
---------------------
with or into any other Person; or permit TISI, Tribune or any other subsidiary
to consolidate with or merge into the Borrower; or adopt or effect or permit
TISI, Tribune or any other subsidiary to adopt or effect any plan of
reorganization, recapitalization, liquidation or dissolution.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Bank to enter into this Agreement and to make the Revolving
Credit Loans to the Borrower under the provisions hereof, and in consideration
thereof, the Borrower represents, warrants and covenants as follows:
5.1 Organization and Qualification. The Borrower is duly organized,
------------------------------
validly existing, and in good standing under the Laws of its jurisdiction of
incorporation, and is duly licensed and in good standing as a foreign
corporation in each jurisdiction in which the nature of the business transacted
or the property owned thereof is such as to require licensing or qualification
as such.
5.2 Litigation. There is no action, suit, investigation or proceeding
----------
threatened or pending before any Tribunal against or affecting the Borrower or
any properties or rights of the Borrower which, if adversely determined, would
result in a liability of greater than $500,000 or would otherwise result in any
material adverse change in the business or condition, financial or otherwise, of
the Borrower except as described on Exhibit B annexed hereto. The Borrower is
not in default with respect to any judgment, order, writ, injunction, decree,
rule or regulation of any Tribunal.
5.3 Financial Statements. The Borrower's most recent audited financial
--------------------
statements and unaudited quarterly financial statements which have been
furnished to the Bank have been prepared in conformity with GAAP, show all
material liabilities, direct and contingent, and fairly present the financial
condition of the Borrower as of the date of such statements and the results of
its operations for the period then ended, and since the date of such statements
there has been no material adverse change in the business, financial condition
or operations of the Borrower.
10
<PAGE>
5.4 Corporate Authorization. The Board of Directors of the Borrower has
-----------------------
duly authorized the execution and delivery of each of the Loan Documents and the
performance of their respective terms. No other consent of any other Person,
except for the Bank, is required as a prerequisite to the binding effect,
validity and enforceability of the Loan Documents.
5.5 Possession of Franchises, Licenses. The Borrower possesses all
----------------------------------
franchises, certificates, licenses, permits and other authorizations from
governmental political subdivisions or regulatory authorities, free from
burdensome restrictions, that are necessary in any material respect for the
ownership, maintenance and operation of its respective properties and assets,
and the Borrower is not in violation of any thereof in any material respect.
5.6 Leases. The Borrower enjoys peaceful and undisturbed possession of all
------
leases necessary in any material respect for the operation of its properties and
assets, none of which contains any unusual or burdensome provisions which might
materially affect or impair the operation of such properties and assets. All
such leases are valid and subsisting and are in full force and effect.
5.7 Taxes. The Borrower has filed all Federal, state and other income tax
-----
returns which are required to be filed and has paid all Taxes, as shown on said
returns, and all Taxes due or payable without returns and all assessments
received to the extent that such Taxes or assessments have become due. Borrower
shall not be required to pay and discharge or cause to be paid or discharged any
such Tax, assessment or claim so long as the validity thereof shall be contested
in good faith by appropriate proceedings, such Tax liabilities are adequately
provided for on the books of the Borrower, including interest and penalties, and
such Tax, charge or claim is paid before any property subject thereto shall
become subject to execution. No income tax liability of a material nature has
been asserted by taxing authorities for Taxes in excess of those already paid
except as shown on Exhibit B annexed hereto.
5.8 Disclosure. Neither this Agreement nor any other Loan Document or
----------
writing furnished to the Bank by or on behalf of the Borrower in connection
herewith contains any untrue statement of a material fact nor do such Loan
Documents and writings, taken as a whole, omit to state a material fact
necessary in order to make the statements contained herein and therein not
misleading. There is no fact known to the Borrower and not reflected in the
financial statements provided to the Bank which materially adversely affects or
in the future may materially adversely affect the business, property, or assets,
or financial condition of the Borrower which has not been set forth in this
Agreement, in the Loan Documents or in other documents furnished to the Bank by
or on behalf of the Borrower prior to the date hereof in connection with the
transactions contemplated hereby.
5.9 ERISA. Each plan subject to Title IV of ERISA and maintained for
-----
employees of the Borrower, established or maintained by the Borrower is in
material compliance with the applicable provisions of ERISA, and the Borrower
has filed all reports required by ERISA and the Internal Revenue Code of 1986,
as amended, to be filed with respect to each plan.
5.10 Environmental Laws. No hazardous or toxic substances have been
------------------
stored, treated, recycled or disposed of on property owned or leased by the
Borrower, no litigation or threatened litigation has been incurred regarding the
presence, disposal, release or threatened release of such substances on property
owned or leased by the Borrower and the Borrower has not received any
notification from any governmental authority with respect to any violation of
any environmental laws.
5.11 Subsidiaries. TISI and Tribune are wholly owned subsidiaries of T/SF
------------
Investment Co., a Delaware corporation. T/SF Investment Co. is a wholly owned
11
<PAGE>
subsidiary of the Borrower. All corporate subsidiaries of Borrower and T/SF
Investment Co. are listed on Schedule 3 annexed hereto.
ARTICLE VI
----------
EVENTS OF DEFAULT
-----------------
6.1 Events of Default. The following events shall constitute events of
-----------------
default (herein called "Events of Default"), whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of Law or
otherwise:
(a) The Borrower shall fail to make any payment or mandatory prepayment
of principal or interest upon the Note, or fail to pay any other
Indebtedness within five (5) days after the same shall become due and
payable (whether by extension, renewal, acceleration or otherwise); or
(b) Any representation or warranty of the Borrower made herein or in
any writing furnished in connection with or pursuant to any of the Loan
Documents shall have been false or misleading in any material respect on
the date when made; or
(c) The Borrower shall fail to duly observe, perform or comply with any
covenant, agreement or term (other than payment provisions which are
governed by Section 6.1(a) hereof) contained in this Agreement or any of
the Loan Documents and such default or breach shall have not been cured or
remedied within thirty (30) days following receipt of notice thereof from
the Bank; or
(d) The Borrower shall default in the payment of principal or of
interest on any other obligation for money borrowed or received as an
advance (or any obligation under any conditional sale or other title
retention agreement, or any obligation issued or assumed as full or partial
payment for property whether or not secured by purchase money Lien, or any
obligation under notes payable or drafts accepted representing extensions
of credit) beyond any grace period provided with respect thereto, or shall
default in the performance of any other agreement, term or condition
contained in any agreement or guaranty under which such obligation is
created including without limitation, Borrower's Guaranty and
Indemnification Agreement with John R. Laughlin ("Laughlin") dated March
17, 1994 in connection with the $900,000 promissory note of T/SF Investment
Co. to Laughlin of even date therewith (or if any other default under any
such agreement shall occur and be continuing beyond any period of grace
provided with respect thereto) if the effect of such default is to cause,
or to permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause such obligation to become due
prior to its date of maturity; or
(e) Any of the following: (i) the Borrower shall become insolvent or
unable to pay its debts as they mature, make an assignment for the benefit
of creditors or admit in writing its inability to pay its debts generally
as they become due or fail generally to pay its debts as they mature; or
(ii) an order for relief under the United States Bankruptcy Code, as
amended, shall be entered against the Borrower; or (iii) the Borrower shall
petition or apply to any Tribunal for the appointment of a trustee,
12
<PAGE>
receiver, custodian or liquidator of the Borrower or of any substantial
part of the assets of the Borrower, or shall commence any proceedings
relating to the Borrower under any bankruptcy, reorganization, compromise,
arrangement, insolvency, readjustment of debts, dissolution, or liquidation
Law of any jurisdiction, whether now or hereafter in effect; or (iv) any
such petition or application shall be filed, or any such proceedings shall
be commenced, of a type described in subsection (iii) above, against the
Borrower and the Borrower by any act shall indicate its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree
shall be entered appointing any such trustee, receiver, custodian or
liquidator, or approving the petition in any such proceedings, and such
order, judgment or decree shall remain unstayed and in effect, if being
vigorously contested, for more than sixty (60) days; or (v) any order,
judgment or decree shall be entered in any proceedings against the Borrower
decreeing the dissolution of the Borrower and such order, judgment or
decree shall remain unstayed and in effect for more than thirty (30) days;
or (vi) any order, judgment or decree shall be entered in any proceedings
against the Borrower decreeing a split-up of the Borrower which requires
the divestiture of a substantial part of the assets of the Borrower, and
such order, judgment or decree shall remain unstayed and in effect for more
than thirty (30) days; or (vii) the Borrower shall fail to make timely
payment or deposit of any amount of tax required to be withheld by the
Borrower and paid to or deposited to or to the credit of the United States
of America pursuant to the provisions of the Internal Revenue Code of 1986,
as amended, in respect of any and all wages and salaries paid to employees
of the Borrower; or
(f) Any final judgment on the merits for the payment of money in an
amount in excess of $100,000 shall be outstanding against the Borrower, and
such judgment shall remain unstayed and in effect and unpaid for more than
thirty (30) days; or
(g) Any Event of Default shall occur and be continuing under or
pursuant to any of the credit facilities extended by the Bank to
subsidiaries of the Borrower or T/SF Investment Co. (including TISI or
Tribune), as such credit facilities are more particularly described on
Schedule 4 annexed hereto and concerning the exercise of such foregoing
cross-default provisions, the Bank shall provide Borrower with five (5)
days prior written notice thereof insofar as the Bank's intention to
exercise such provisions; or
(h) Any default or event of default occurs under any of the other Loan
Documents and such default or event of default shall not have been cured or
remedied within thirty (30) days following receipt of notice thereof from
the Bank, expressly excepting default in any payment obligation, including
without limitation, the payment provisions of Section 6.1(a) hereof.
6.2 Remedies. Upon the occurrence of any Event of Default referred to in
--------
Section 6.1(e) the Commitment shall immediately terminate and the Note and all
other Indebtedness shall be immediately due and payable, without notice of any
kind. Upon the occurrence of any other Event of Default, and without prejudice
to any right or remedy of the Bank under this Agreement or the Loan Documents or
under applicable Law of under any other instrument or document delivered in
connection herewith, the Bank may (i) declare the Commitment terminated or (ii)
declare the Commitment terminated and declare the Note and the other
Indebtedness, or any part thereof, to be forthwith due and payable, whereupon
the Note and the other Indebtedness, or such portion as is designated by the
Bank shall forthwith become due and payable, without presentment, demand, notice
or protest of any kind, all of which are hereby expressly waived by the
Borrower. No delay or omission on the part of the Bank in exercising any power
or right hereunder or under the Note, the Loan Documents or under applicable law
13
<PAGE>
shall impair such right or power or be construed to be a waiver of any default
or any acquiescence therein, nor shall any single or partial exercise by the
Bank of any such power or right preclude other or further exercise thereof or
the exercise of any other such power or right by the Bank. In the event that
all or part of the Indebtedness becomes or is declared to be forthwith due and
payable as herein provided, the Bank shall have the right to set off the amount
of all the Indebtedness of the Borrower owing to the Bank against, and shall
have, and is hereby granted by the Borrower, a lien upon and security interest
in, all property of the Borrower in the Bank's possession at or subsequent to
such default, regardless of the capacity in which the Bank possesses such
property, including but not limited to any balance or share of any deposit,
collection or agency account. After Default all proceeds received by the Bank
may be applied to the Indebtedness in such order of application and such
proportions as the Bank, in its discretion, shall choose. At any time after the
occurrence of any Event of Default, the Bank may, at its option, cause an audit
of any and/or all of the books, records and documents of the Borrower to be made
by auditors satisfactory to the Bank at the expense of the Borrower. The Bank
also shall have, and may exercise, each and every right and remedy granted to it
for default under the terms of the other Loan Documents.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
7.1 Notices. Unless otherwise provided herein, all notices, requests,
-------
consents and demands shall be in writing and shall be mailed by certified mail,
postage prepaid, to the respective addresses specified below, or, as to any
party, to such other address as may be designated by it in written notice to the
other parties:
If to the Borrower, to:
T/SF Communications Corporation
2407 E. Skelly Drive
Tulsa, Oklahoma 74105
Attention: Chief Financial Officer
If to the Bank, to:
BancFirst
P.O. Box 680
7625 E. 51st Street
Tulsa, Oklahoma 74101
Attn: Roy C. Ferguson, III
All notices, requests, consents and demands hereunder will be effective when
mailed by certified mail, postage prepaid, addressed as aforesaid.
7.2 Place of Payment. All sums payable hereunder shall be paid in
----------------
immediately available funds to the Bank, at its principal banking offices in
Tulsa, Oklahoma, or at such other place as the Bank shall notify the Borrower in
writing. If any interest, principal or other payment falls due on a date other
than a Business Day, then (unless otherwise provided herein) such due date shall
be extended to the next succeeding Business Day, and such extension of time will
in such case be included in computing interest, if any, in connection with such
payment.
7.3 Survival of Agreements. All covenants, agreements, representations and
----------------------
warranties made herein shall survive the execution and the delivery of Loan
Documents. All statements contained in any certificate or other instrument
delivered by the Borrower hereunder shall be deemed to constitute
representations and warranties by the Borrower.
14
<PAGE>
7.4 Parties in Interest. All covenants, agreements and obligations
-------------------
contained in this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto, except that the
Borrower may not assign its rights or obligations hereunder without the prior
written consent of the Bank.
7.5 Governing Law and Jurisdiction. This Agreement and the Notes shall be
------------------------------
deemed to have been made or incurred under the Laws of the State of Oklahoma and
shall be construed and enforced in accordance with and governed by the Laws of
Oklahoma.
7.6 SUBMISSION TO JURISDICTION. THE BORROWER HEREBY CONSENTS TO THE
--------------------------
JURISDICTION OF ANY OF THE LOCAL, STATE, AND FEDERAL COURTS LOCATED WITHIN TULSA
COUNTY, OKLAHOMA AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED ON
IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY
----- --- ----------
SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED
TO IT AT THE ADDRESS SET FORTH IN SUBSECTION 7.1 HEREOF AND THAT SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3)
BUSINESS DAYS AFTER MAILED OR DELIVERED BY MESSENGER.
7.7 No Waiver; Cumulative Remedies. No failure to exercise, and no delay
------------------------------
in exercising, on the part of the Bank, any right, power or privilege hereunder
or under any other Loan Document or applicable Law shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
of the Bank. The rights and remedies herein provided are cumulative and not
exclusive of any other rights or remedies provided by any other instrument or by
law. No amendment, modification or waiver of any provision of this Agreement or
any other Loan Document shall be effective unless the same shall be in writing
and signed by the Bank. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances.
7.8 Costs. The Borrower agrees to pay to the Bank on demand all costs,
-----
fees and expenses (including without limitation reasonable attorneys fees and
legal expenses) incurred or accrued by the Bank in connection with the
preparation, execution, delivery, filing and recording of this Agreement and the
other Loan Documents, or any amendment, waiver, consent or modification thereto
or thereof, or any enforcement thereof. The Borrower further agrees that all
such fees and expenses shall be paid regardless of whether or not the
transactions provided for in this Agreement are eventually closed and regardless
of whether or not any sums are advanced to the Borrower by the Bank.
7.9 Participation. The Borrower recognizes and acknowledges that the Bank
-------------
reserves the right to sell participating interests in the Note to one or more
financial institutions (the "Participants"). Upon receipt of notice of the
identity and address of such Participant(s), the Borrower shall thereafter
supply such Participant(s) with the same information and reports communicated to
the Bank, whether written or oral. The Borrower hereby acknowledge that each
Participant shall be deemed a holder of the Note to the extent of its
participation, and the Borrower hereby waives its right, if any, to offset
amounts owing to the Borrower from the Bank against any Participant's portion of
the Note.
7.10 WAIVER OF JURY. BORROWER FULLY, VOLUNTARILY AND EXPRESSLY WAIVES ANY
--------------
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, THE NOTE OR UNDER ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY IN THE FUTURE BE DELIVERED) IN
CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT.
15
<PAGE>
BORROWER AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT BEFORE A JURY.
7.11 Full Agreement. This Agreement and the other Loan Documents contain
--------------
the full agreement of the parties and supersede all negotiations and agreements
prior to the date hereof.
7.12 Headings. The article and section headings of this Agreement are for
--------
convenience of reference only and shall not constitute a part of the text hereof
nor alter or otherwise affect the meaning hereof.
7.13 Severability. The unenforceability or invalidity as determined by a
------------
Tribunal of competent jurisdiction, of any provision or provisions of this
Agreement shall not render unenforceable or invalid any other provision or
provisions hereof.
7.14 Exceptions to Covenants. The Borrower shall not be deemed to be
-----------------------
permitted to take any action or fail to take any action which is permitted as an
exception to any of the covenants contained herein or which is within the
permissible limits of any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein.
7.15 Prior Agreement. This Agreement restates, continues and extends the
---------------
terms and provisions of the Prior Agreement except only as expressly modified or
amended hereby.
7.16 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"Borrower"
T/SF COMMUNICATIONS CORPORATION
By: /s/ Howard G. Barnett, Jr.
--------------------------------------------
Howard G. Barnett, Jr., President
"Bank"
BANCFIRST
By: /s/ Roy C.Ferguson, III
--------------------------------------------
Roy C. Ferguson, III, Regional Executive
17
<PAGE>
SCHEDULE 1
T/SF COMMUNICATIONS CORPORATION
INDEBTEDNESS
JUNE 30, 1995
<TABLE>
<S> <C>
TISI Notes $3,336,923
Stock Purchase Note - GDF 365,297
Stock Purchase Note - Tribune/Swab-Fox PSP 218,813
Promissory Note - John Laughlin 525,000
Capital Lease - Galaxy 29,195
Tulsa Tribune Foundation Debenture 831,000
Tinney Investment Debenture 600,000
---------
$5,906,228
==========
Charles Dees $ 2,880,542(1)
J.T. Potts 76,754
Tayloe Paper 96,504
Robert E. Craine 46,773
D-A-C Investments 117,993
C.W. Simcoe 102,938
Doris Lockwood 15,419
-----------
$ 3,336,923*
===========
</TABLE>
(1) Secured by security interest in the 46,203 shares of TISI common stock
acquired from Charles Dees.
<PAGE>
SCHEDULE 2
Pledge of 46,203 shares of common stock of TISI to Charles Dees to secure
$3,404,276 debt (part of TISI stock purchase notes described on Schedule 1)
<PAGE>
SCHEDULE 3
T/SF COMMUNICATIONS CORPORATION
-------------------------------
SUBSIDIARIES
<TABLE>
<CAPTION>
<S> <C> <C>
Atwood Convention 100% (1) Missouri - convention
Publishing, Inc. publications
BMT Communications, Inc. 100% (1) Oklahoma - trade
(formerly BMT publications
Publications, Inc.)
Convention News Source, 100% (2) Missouri - inactive
Inc.
DacNet, Inc. 100% (3) Oklahoma - inactive
Expo Magazine, Inc. 100% (4) Kansas - trade publications
Galaxy Design & Printing, 100% (5)* Maryland - commercial
Inc. printing
Galaxy Registration, Inc. 100% (1)* Maryland - convention
registration
M-R Creative, Inc. 100% (6)** New York - advertising
design
T/SF New York, Inc., 100% (1)** New York -
(formerly shopper-newspaper
Marks-Roiland publications
Communications, Inc.)
National Employment 100% (3) Oklahoma - employment
Screening Services, Inc. screening
New York Community 100% (4) New York - inactive
Newspapers, Inc. publications
Shopper's Guide, Inc. 100% (4)*** New Jersey -
shopper-newspaper
publications
South Jersey Shopper, Inc. 100% (7) New Jersey - inactive
Transportation 100% (3) Oklahoma - information
Communications Services, service
Inc.
(formerly TSF
Information Services
Corp.)
T/SF Investment Co. 100% (4) Delaware - investment
holding company
Transportation Information 100% (1) Oklahoma-motor vehicle
Services, Inc reports and truck
driver employment
information
Tulsa Tribune Company 100% (1) Delaware - newspaper
-------------------------- publication
until October 1, 1992
</TABLE>
<TABLE>
<S> <C>
(1) Owned by T/SF Investment Co.
(2) Owned by Atwood Convention Publishing, Inc.
(3) Owned by Transportation Information Services, Inc.
(4) Owned by T/SF Communications Corporation
(5) Owned by Galaxy Registration, Inc.
(6) Owned by Marks-Roiland Communications, Inc.
(7) Owned by Shopper's Guide, Inc.
* Acquired effective March 1, 1994.
** Sold assets effective November 1, 1993.
*** Sold assets effective April 30, 1994.
</TABLE>
<PAGE>
SCHEDULE 4
(OTHER BANCFIRST CREDIT FACILITIES)
1. That certain Revolving Credit Loan Agreement between Tulsa Tribune Company,
as borrower, and BancFirst, as lender, dated as of May 25, 1995, for the
aggregate amount of $2,000,000.
2. That certain Revolving Credit Loan Agreement between Transportation
Information Services, Inc., as borrower, and BancFirst, as lender, dated as
of July 14, 1993, as amended February 1, 1994, June 30, 1994 and June 30,
1995, respectively, and providing for a $1,750,000 revolving line of credit
facility.
<PAGE>
Exhibit 10.3
THIRD AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT
--------------------------------------------------
THIS Third Amendment to Revolving Credit Loan Agreement by and between
Transportation Information Services, Inc., an Oklahoma corporation (the
"Borrower") and BancFirst, a state banking association (the "Bank") is entered
into effective as of the 30th day of June, 1995.
W I T N E S S E T H:
WHEREAS, pursuant to that certain Revolving Credit Loan Agreement
dated as of July 14, 1993 (the "Original Credit Agreement") the Bank has
extended to the Borrower a $1,750,000 revolving line of credit upon the terms
and conditions therein set forth and under which Revolving Credit Loans will be
extended from time to time to Borrower by the Bank, all as secured by the
Collateral defined and described in Section 3.1 of the Original Credit Agreement
and in the Security Agreement described and defined in Section 3.2 of the
Original Credit Agreement;
WHEREAS, pursuant to that certain First Amendment to Revolving Credit
Loan Agreement dated as of February 1, 1994 (the "First Amendment"), the Bank
included a $250,000 standby letter of credit facility within the Revolving Loan
Commitment upon the terms, provisions and conditions therein set forth and
otherwise subject to the terms, provisions and conditions of the Original Credit
Agreement;
WHEREAS, pursuant to that certain Second Amendment to Revolving Credit
Loan Agreement dated as of June 30, 1994 (the "Second Amendment") (the Original
Credit Agreement as amended by the First Amendment and the Second Amendment are
collectively referred to herein as the "Credit Agreement"), the Bank increased
the standby letter of credit facility from $250,000 to $350,000 and extended the
Revolving Credit Commitment until June 30, 1995;
WHEREAS, Borrower has requested the Bank to extend and renew the
Revolving Credit Commitment for a period of one (1) year until June 30, 1996;
and
WHEREAS, subject to the terms, provisions and conditions hereinafter
set forth the Bank is willing to so extend and renew the Revolving Credit
Commitment.
NOW, THEREFORE, for good and valuable consideration and for the
extension and renewal of the Revolving Credit Commitment established pursuant to
the Credit Agreement, the Borrower and the Bank hereby agree as follows:
1. The maturity date of the Revolving Credit Commitment shall be
extended to June 30, 1996 and the Revolving Credit Loan shall be evidenced by
that certain replacement Revolving Credit Note of even date herewith in the
original principal amount of $1,750,000 payable to the order of the Bank. A true
and correct copy of the replacement Revolving Credit Note is annexed hereto as
Exhibit A and made a part hereof (the "Replacement Note").
---------
<PAGE>
2. Section 2.2 of the Credit Agreement is amended and modified to
provide that the commitment fee for the Revolving Credit Commitment shall be
equal to one-fourth of one percentage point (.25%) per annum of the amount by
which $1,750,000 exceeds the outstanding unpaid principal balance of the
Replacement Note from time to time computed daily on the basis of a calendar
year of 360 days but assessed for the actual number of days elapsed during each
accrual period. Such fee shall be payable quarterly, commencing October 15, 1995
(for the calendar quarter ending September 30, 1995). In accordance with the
Credit Agreement the commitment fee specified therein for the calendar quarter
ending June 30, 1995 is payable on July 15, 1995. The remaining terms and
provisions of Section 2.2 of the Credit Agreement shall remain in full force and
effect.
3. The remaining terms, provisions and conditions set forth in the
Credit Agreement shall remain in full force and effect. The Borrower restates,
confirms and ratifies the warranties, covenants and representations set forth
therein and further represents to the Bank that no default or Event of Default
exists under the Credit Agreement as of the date hereof. The Borrower further
confirms, grants and regrants and repledges to the Bank a continuing and
continuous first and prior security interest in and pledge of the items and
types of Collateral more particularly described in Section 3.1 of the Original
Credit Agreement and in the Security Agreement and Assignment from the Borrower
to the Bank dated as of July 14, 1993, as security for all indebtedness
described in the Credit Agreement. The indebtedness described in the Credit
Agreement shall include all advances, draws, letters of credit, application fees
and fundings on such letters of credit issued pursuant thereto and all such
Indebtedness shall be secured in all respects by the Collateral described in the
Credit Agreement and the aforesaid Security Agreement and Assignment and the
liens and priorities therein granted in favor of the Bank are hereby regranted,
restated, ratified, confirmed and continued in all respects.
4. Each of the Guarantors, T/SF Communications Corporation and T/SF
Investment Co., by virtue of its consent to this Third Amendment as indicated
below, ratifies, confirms and continues in all respects the effectiveness and
enforceability of its respective Guaranty of the TISI Note (as now evidenced by
the Replacement Note) therein described and defined, including, insofar as the
TISI Note (as now evidenced by the Replacement Note) is concerned, all draws
under and all contingent liabilities of the Bank on outstanding letters of
credit issued pursuant to the Credit Agreement.
5. The Borrower agrees to pay the Bank's legal fees incurred in
connection with the negotiation, preparation and closing of this Third
Amendment.
<PAGE>
IN WITNESS WHEREOF, this Third Amendment is executed and delivered to
the Bank in Tulsa, Oklahoma, by the undersigned duly authorized officer of the
Borrower, which officer has full power and authority to do so for, on behalf and
in the name of the Borrower by virtue of all necessary corporate action of the
Board of Directors of the Borrower, effective as of the 30th day of June, 1995.
TRANSPORTATION INFORMATION SERVICES,
INC., an Oklahoma corporation
By: /s/ Richard A. Wimbish
-------------------------------------
Richard A. Wimbish, President
"Borrower"
BANCFIRST, a state banking
association
By: /s/ Roy C. Ferguson, III
-------------------------------------
Roy C. Ferguson, III
Regional Executive
"Bank"
<PAGE>
ACCEPTANCE BY GUARANTORS
------------------------
The terms and provisions of the foregoing Third Amendment to Revolving
Credit Loan Agreement are accepted, agreed and consented to in all respects by
each Guarantor and each Guarantor hereby ratifies, confirms, restates and
continues its absolute and unconditional guarantee obligations set forth in the
respective Guaranty thereby dated as of July 14, 1993, insofar as the TISI Note
therein described and defined is concerned, and each Guarantor stipulates that
the indebtedness previously evidenced by such TISI Note is now evidenced by the
Replacement Note described and defined in paragraph 1 of the foregoing Third
Amendment and that the maturity thereof has been extended and renewed to June
30, 1996.
T/SF Communications Corporation
By: /s/ Howard G. Barnett, Jr.
----------------------------------
Howard G. Barnett, Jr., President
T/SF Investment Co.
By: /s/ J. Gary Mourton
----------------------------------
J. Gary Mourton, President
<PAGE>
Exhibit 10.4
ASSET PURCHASE AGREEMENT
SECTION 1. PARTIES, PRELIMINARY STATEMENTS
This Asset Purchase Agreement (the "Agreement") is entered into this
16th day of June, 1995, between BMT Communications, Inc., an Oklahoma
corporation ("Seller"), and Trade Publishing, L.L.C., a Delaware limited
liability company ("Buyer").
PRELIMINARY STATEMENTS
----------------------
A. Seller, wholly-owned by T/SF Investment Co., a Delaware corporation,
which is wholly-owned by T/SF Communications Corporation, a Delaware corporation
("T/SF"), is engaged in the business of publishing various trade magazines and
related activities, including publishing Convenience Store News ("CSN"), United
---------------------- ------
States Distribution Journal ("DJ"), The Journal of Petroleum Marketing ("JPM")
--------------------------- ----------------------------------
(CSN, DJ and JPM are referred to together as the "Transferred Magazines") and
International Gaming and Wagering Business ("Gaming").
------------------------------------------
B. Buyer is under common control with Macfadden Publishing, Inc., a
Delaware corporation ("Macfadden").
C. Buyer desires to acquire the ongoing business and substantially all of
the assets of Seller, other than the business and assets associated with Gaming,
its related trade shows and other related activities (the "Gaming Assets") and
certain other assets, and Seller desires to sell such business and assets to
Buyer, upon the terms and conditions stated herein.
In consideration of the mutual covenants and agreements set forth herein,
and other good and valuable consideration, the parties agree as follows:
SECTION 2. PURCHASE AND SALE OF ASSETS
2.01 PURCHASE AND SALE. At the Closing (as hereinafter defined), Seller
-----------------
agrees to sell, transfer, assign and deliver to Buyer, and Buyer agrees to
purchase and accept from Seller, the Transferred Assets (as defined below). The
"Transferred Assets" shall include all assets (including, without limitation,
personal and real property leasehold interests referred to on Exhibit "A"
hereto) owned by Seller as of the Effective Date (as hereinafter defined),
excluding only any cash or cash equivalents of Seller and the Gaming Assets, all
of which are listed on Exhibit "B" hereto (the "Excluded Assets").
2.02 CONSIDERATION. In exchange and in full consideration for the purchase
-------------
of the Transferred Assets, Buyer shall pay Seller as follows:
<PAGE>
a. At Closing, Buyer shall pay Seller by wire transfer of funds as
directed by Seller the aggregate sum of Twenty-one Million Dollars
($21,000,000) (the "Purchase Price"). The Purchase Price shall be
allocated among the Transferred Assets and the covenant-not-to-compete
described in Section 5.05 below, as specified on Exhibit "C" hereto.
b. Buyer agrees to assume, as part of the consideration for purchase
of the Transferred Assets, only the following liabilities:
(i) All liabilities, claims and obligations of Seller arising in
the ordinary course of business, including but not limited to the
obligations referred to in Exhibit "K" hereto, under all agreements
(written or, if referenced on Exhibit "K" hereto, or of a similar type
to those referenced if entered into subsequent to the date of this
Agreement, oral) in effect on the Effective Date: (a) which relate to
the Transferred Assets or the usual operation of Seller's business
relating to the Transferred Assets (including, without limitation, all
amounts due under those of Seller's real estate leases which are
assumed by Buyer as noted on Exhibit "K", customer contracts,
equipment maintenance and service agreements, contracts for newsprint,
ink and other inventory items and other "operating" leases and
agreements, to the extent and only to the extent each is specifically
included as part of the Transferred Assets); (b) the historical costs
of which have been fully charged and reflected in the financial
statements described on Exhibit "D" hereto; (c) which are not listed
on Exhibit "B" hereto as being part of the Excluded Assets; and (d)
which are not violative of any representation or warranty contained in
this Agreement; provided, that, except for unpaid amounts included in
Payables assumed by Buyer (as described below), Buyer's obligations
under such agreements shall apply only to payments accruing on and
after the Effective Date (as defined below); and provided further,
that Buyer shall not assume the obligations under contracts or
agreements listed and included as part of the Excluded Assets;
(ii) Accrued vacation and sick leave and other accruals as of the
Closing Date relating to "Buyer's Employees" (as defined and described
below) and those specific liabilities described on Exhibit "E" hereto,
including, without limitation, the deferred subscription revenues
related to the Transferred Magazines (collectively, the "Payables");
and
(iii) All obligations of Seller relating to the Transferred
Magazines and described as "free ads" and "make up ads" on Exhibit "L"
hereto, as of the Effective Date.
c. The Purchase Price has been agreed to by Buyer on the express
agreement and representation by T/SF and Seller that, on the Effective
Date, Transferred Current Assets (as defined below) of Seller will exceed
the Assumed Current Liabilities (as defined below) of Seller by $694,000
(the amount by which the Transferred Current Assets exceed
2
<PAGE>
the Assumed Current Liabilities as of the Effective Date is referred to
hereinafter as the "Working Capital").
(i) In order to determine the amount of the Working Capital,
promptly following the Closing, Seller shall cause to be prepared a
balance sheet of Seller as of the Effective Date (the "Effective Date
Balance Sheet"), along with an income statement reflecting the results
of Seller's operations for the period of January 1, 1995, through the
Effective Date (such income statement and the Effective Date Balance
Sheet being referred to as the "Closing Financial Statements"). In
preparing such financial information, Buyer shall make available to
Seller for its reasonable use, the personnel then employed by Buyer
who have heretofore been responsible for preparing Seller's financial
statements. Seller shall present the Closing Financial Statements to
Buyer not later than 45 days following the Closing. Included with the
Closing Financial Statements will be sufficient detail to enable Buyer
to identify the amount of and method of identifying Transferred
Current Assets and Assumed Current Liabilities and to review the
Working Capital calculation. Buyer shall have 15 days following
receipt of the Closing Financial Statements to review the Closing
Financial Statements and to either accept them or to dispute any
amount shown thereon. If Buyer disputes any aspect of the Closing
Financial Statements, it shall so notify Seller, specifying any such
dispute in reasonable detail, on or before the end of such 15-day
period. Buyer and Seller shall then, for a period of 15 days after
the end of Buyer's 15-day review period, attempt to resolve each such
dispute in good faith, and, if they are unable to do so, then the
unresolved disputes shall be finally resolved, as promptly as
practicable, by an independent accounting firm of national reputation
to be selected jointly by the independent accountants for Buyer and
Seller, with the cost thereof to be borne one-half by Buyer and one-
half by Seller. If Buyer does not notify Seller of any dispute by the
end of the initial 15-day period, then it shall be deemed to have
accepted the Closing Financial Statements and the calculation of
Working Capital included therewith.
(ii) For purposes of this Agreement, Transferred Current Assets
and Assumed Current Liabilities shall be based on those current assets
transferred to and current liabilities assumed by Buyer hereunder
(subject to adjustment as herein specifically provided) determined in
accordance with generally accepted accounting principles ("GAAP")
applied on a basis consistent with the past practices of Seller. In
determining Transferred Current Assets, there shall be excluded from
"current assets" (determined according to GAAP), those assets included
as part of the Excluded Assets. Similarly, in determining Assumed
Current Liabilities, there shall be excluded from "current
liabilities" (determined in accordance with GAAP), those liabilities
retained by Seller.
(iii) Upon the date when the Closing Financial Statements are
accepted or deemed accepted by Buyer or are finally determined by the
independent accounting firm as provided in clause (i) of this Section
2.02c, if the Working
3
<PAGE>
Capital is less than $694,000, the amount of such shortfall shall be
immediately paid by Seller to Buyer by wire transfer or as otherwise
directed by Buyer. Conversely, if the Working Capital is greater than
$694,000, the amount of such excess shall be immediately paid by Buyer
to Seller by wire transfer or as otherwise directed by Seller.
d. In connection with the transactions contemplated herein, Buyer
agrees to pay, in accordance with applicable laws and regulations, at or
immediately after the Closing, any and all liabilities, claims and
obligations for sales, use or other excise taxes (including penalties and
interest, if applicable), if any, payable to any state or local
jurisdiction in New York in connection with the sale of the Transferred
Assets from Seller to Buyer. If required by law or regulation, Buyer
agrees to pay the proper amounts due to Seller for remittance to the
appropriate taxing authorities, and in such event Seller agrees to remit
such payment to the authorities in accordance with applicable law.
e. Other than as specifically provided herein, including, without
limitation, as specified in Sections 2.02b. and c. above and Sections 5.04
and 8.06 below, Buyer shall not be liable for or assume any debts, claims
or liabilities of Seller, and Seller agrees, pursuant to Section 8 hereof,
to indemnify Buyer against and hold Buyer harmless from any and all
liabilities, debts, claims and obligations of Seller not specifically
assumed by Buyer.
f. Any amounts due from any party to another party hereunder which
are not timely paid shall bear interest at the rate of 15% per annum from
the due date until paid.
2.03 CLOSING AND EFFECTIVE DATE. The consummation of the transactions
--------------------------
contemplated hereby (the "Closing") shall be held on July 1, 1995, or such other
later date, as may be mutually agreed by Buyer and Seller, upon which all of the
conditions to closing described herein have been satisfied, but in no event
later than September 30, 1995. The date of closing shall be referred to herein
as the "Closing Date" and the "Effective Date," unless otherwise specified by
the parties, shall mean the opening of business on the Closing Date. Unless
otherwise agreed by the parties, the Closing shall not occur until each party
hereto has complied with all covenants, agreements and conditions contained
herein. The Closing shall be held at such place as the parties may mutually
agree.
2.04 NON-COMPETITION AGREEMENTS. Seller and T/SF have certain rights to
--------------------------
various covenants-not-to-compete, non-competition agreements and consulting and
employment agreements between T/SF and/or Seller, on the one hand, and each of
Irving Babson, Hedy Halpert, Samson Kowalski and Daniel Petrocelli, on the
other, all of which agreements are listed in Exhibit "G" hereto (the "Non-
Competition Agreements"). With respect to the Non-Competition Agreements, the
following provisions shall apply:
a. The benefits of the Non-Competition Agreements are intended to be
included in the Transferred Assets. However, the parties acknowledge
T/SF's and Seller's necessity to retain the benefits of those agreements
with respect to the businesses of Seller
4
<PAGE>
not being transferred to Buyer. T/SF and Seller agree to provide an
assignment (a form of which is set forth as Exhibit "H" hereto) of the Non-
Competition Agreements to Buyer which will provide that the benefits
thereof relating to T/SF's and Seller's businesses other than with respect
to the Transferred Assets shall be retained by T/SF and/or Seller.
b. Seller represents that all payments due to Irving Babson under his
covenant-not-to-compete have been made and that no breach has, to the
knowledge of Seller or T/SF, occurred with respect to the obligations under
such covenant-not-to-compete of Irving Babson. Seller shall remain liable
for and continue to make payments as they come due under the agreements
embodying the covenants-not-to-compete with each of Samson Kowalski and
Daniel Petrocelli. With respect to the obligations due Hedy Halpert under
the agreement giving rise to her covenant-not-to-compete, Seller agrees to
make all payments due thereunder through December 31, 1995. If and to the
extent that Buyer desires to continue the benefits of the covenant-not-to-
compete with Hedy Halpert in 1996, Buyer understands that it will be
required to make all payments due thereunder for 1996 with respect to the
Transferred Magazines; provided, that Seller shall be liable for the
portion of any payments in 1996 due with respect to the portion of the
covenant-not-to-compete with Hedy Halpert allocable to Gaming and its
related activities. None of the amounts which Buyer might so choose to pay
to Hedy Halpert shall be considered as an Assumed Current Liability for
purposes of calculating the Working Capital.
c. Buyer acknowledges that, as described in Exhibits "G" and "H"
hereto, the Noncompetition Agreement with Irving Babson purports to be
nonassignable and, therefore, it is understood that the purported
assignment of such agreement may not be effective.
SECTION 3. REPRESENTATIONS AND WARRANTIES
OF BUYER AND MACFADDEN
3. Buyer and Macfadden, jointly and severally, hereby make the following
representations, warranties and undertakings to Seller and T/SF, each of which
(a) is being relied upon by Seller and T/SF notwithstanding any review or
investigation of Buyer's or Macfadden's business or financial condition, (b)
shall be true and correct as of the date hereof and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of the Closing Date, and (c) shall survive the Closing Date to the extent
provided in Section 8.05 hereof:
3.01 AUTHORITY AND APPROVAL. Buyer and Macfadden have full power and
----------------------
authority, corporate and otherwise, to execute, deliver and perform this
Agreement and all other documents and agreements executed in connection
herewith, and all corporate and other actions of Buyer and Macfadden necessary
for such execution, delivery and performance have been duly taken, and such
execution, delivery and performance do not require any action or consent of, or
registration with, any governmental regulatory body or other agency,
instrumentality or authority, or of any other party under any contract or
agreement to which Buyer or Macfadden is a party or by which
5
<PAGE>
Buyer or Macfadden is bound. Neither Buyer nor Macfadden has any knowledge of
any legal impediment to the consummation of the transactions contemplated by
this Agreement.
3.02 VALIDITY. This Agreement and, when executed and delivered, the other
--------
documents executed in connection herewith constitute the legal, valid and
binding obligations of Buyer and Macfadden, enforceable against Buyer and
Macfadden in accordance with the terms hereof and thereof, except as such
enforceability may be limited by general principles of equity and subject to
bankruptcy or other laws relating to or affecting the rights of creditors
generally. The execution and performance of this Agreement by Buyer and
Macfadden will not: (i) conflict with the Articles of Organization, Operating
Agreement or other governing documents of Buyer or the Certificate (or Articles)
of Incorporation or Bylaws of Macfadden, (ii) result in any breach or
termination of, or constitute a default under, or constitute an event which,
with notice or lapse of time or both, will become a default under, or result in
the creation of any lien upon any of the assets of Buyer or Macfadden or create
any rights of termination, cancellation, or acceleration in any person, under
any agreement, arrangement or commitment of Buyer or Macfadden, or (iii) violate
in any respect any agreement or any provision of any law, rule or regulation or
any order, writ, injunction or decree to which Buyer or Macfadden is a party or
by which Buyer or Macfadden or any of their assets, businesses or operations may
be bound or affected.
3.03 BROKERAGE FEES. Except for fees which may be due from T/SF or Seller
--------------
to Oppenheimer & Co., Inc. (which fees are the sole responsibility of T/SF and
Seller), neither Buyer nor Macfadden nor any of their affiliates nor any
stockholder, director, officer, member, manager or employee of Buyer or
Macfadden has incurred or will incur any brokerage, finder's or similar
commission or fee in connection with the transactions contemplated by this
Agreement, and, to the extent any such fees, commissions or other compensation
are incurred by Seller or T/SF as a result of actions of Buyer or Macfadden,
such fees, commissions or compensation shall be the sole responsibility of Buyer
or Macfadden, except with respect to fees due to Oppenheimer & Co., Inc.
3.04 FINANCIAL CAPABILITY OF BUYER. The information Buyer or Macfadden has
-----------------------------
provided to Seller, T/SF or their agents concerning Buyer's and Macfadden's
financing of its obligations hereunder is true and correct, and Buyer and
Macfadden have available financial resources to meet all of their obligations
hereunder.
3.05 ORGANIZATION. Buyer is a limited liability company duly organized,
------------
validly existing and in good standing under the laws of the State of Delaware.
Macfadden is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Buyer has all requisite limited
liability company power and authority, and Macfadden has all requisite corporate
power and authority, to own and lease its properties and assets and to carry on
its businesses as, and in the places where, such properties are owned or leased
and such businesses are conducted. Each of Buyer and Macfadden is duly
qualified to do business and is in good standing in all jurisdictions in which
the nature of its respective businesses or the ownership of its respective
properties or both make such qualification necessary and where the failure to be
so qualified would have a material adverse effect on the financial condition,
business or operations of Buyer and Macfadden.
6
<PAGE>
3.06 OFFICERS AND DIRECTORS. Exhibit "I" hereto contains a true and
----------------------
correct list of the officers and directors of Buyer and Macfadden.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER AND T/SF
4. Seller and T/SF, jointly and severally, hereby make the following
representations, warranties and undertakings to Buyer and Macfadden, each of
which (a) is being relied upon by Buyer and Macfadden, (b) shall be true and
correct as of the date hereof and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of the
Closing Date, and (c) shall survive the Closing Date to the extent provided in
Section 8.05 hereof:
4.01 ORGANIZATION. Each of T/SF and T/SF Investment Co. ("Investment"),
------------
both of which are incorporated under the laws of the State of Delaware, and
Seller, incorporated under the laws of the State of Oklahoma, is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and each has all requisite corporate power and
authority to own or lease its properties and to carry on its businesses as, and
in the places where, such properties are owned or leased and such businesses are
conducted. Each of T/SF, Investment and Seller is duly qualified to do business
and is in good standing in all jurisdictions in which the nature of its
businesses or the ownership of its properties or both make such qualification
necessary and where the failure to be so qualified would have a material adverse
affect on its financial condition, business or operations.
4.02 SUBSIDIARIES. T/SF is the owner of 100% of the issued and outstanding
------------
capital stock of Investment which, in turn, owns 100% of the issued and
outstanding capital stock of Seller. Other than as may be set forth on Exhibit
"K" hereto and other than as may be related to the Excluded Assets, Seller has
no direct or indirect subsidiaries and owns no capital stock or other equity
securities in any person, corporation, association, partnership, joint venture,
trust or other entity.
4.03 TITLE TO ASSETS. Except as set forth herein (including Exhibits
---------------
hereto): (i) Seller has good and marketable title to the Transferred Assets and
such title shall be transferred to Buyer at the Closing; (ii) none of the
Transferred Assets are subject to any contract for sale, lease, claim, mortgage,
encumbrance, security interest, lien, charge or any other restriction on title
or transfer and, upon Closing, Buyer shall acquire the Transferred Assets free
and clear of any contract for sale, lease, claim, mortgage, encumbrance,
security interest, lien, charge or any other restriction on title or transfer
not specifically described herein; and (iii) except for the Excluded Assets, the
Transferred Assets constitute all of the assets used in the operation of
Seller's business.
4.04 LEASES. The real property lease described on Exhibit "K" hereto (the
------
"Lease") is valid, in full force and effect and assignable to Buyer with the
proper consent thereto of the lessor thereunder. To T/SF's knowledge, the
present use of Seller's offices occupied under said real property lease (the
"Leased Premises") is consistent with the present zoning classification of the
7
<PAGE>
property occupied by Seller's facilities. All payments of rent and other
amounts due under the Lease as of the date hereof have been paid by Seller.
4.05 EQUIPMENT CONDITION. Except as noted on Exhibit "A" hereto, the
-------------------
equipment which constitutes part of the Transferred Assets is adequate for the
operation of Seller's business relating to the Transferred Magazines and,
subject to ordinary wear and tear and to the expectation of reasonable repair
and replacement is, as a whole, in good condition and repair.
4.06 FINANCIAL STATEMENTS. Exhibit "D" hereto contains an unaudited
--------------------
balance sheet of Seller as of March 31, 1995 ("Seller's March Balance Sheet"),
and unaudited statements of income for Seller for each of the two years ended
December 31, 1993, and December 31, 1994, as well as an unaudited statement of
income for Seller for the three month period ended March 31, 1995. Exhibit "D"
also includes summary financial information on the results of operations of
Seller conducted with the Transferred Magazines, which include allocations of
overhead and shared services of Seller to such magazines for the two years ended
December 31, 1993 and 1994, and the three month period ended March 31, 1995, as
well as a balance sheet as of March 31, 1995, derived for such separate part of
Seller's business based on Seller's method of allocating certain shared assets
and liabilities. Such financial statements, with the notes thereto, were
prepared in accordance with GAAP (as to the interim statement of income, except
for the absence of footnotes and subject to normal year-end adjustments),
consistently applied throughout the periods covered, and such statements fairly
present the financial condition of Seller and the results of its operations as
of the dates and for the respective periods indicated; provided, that Buyer
acknowledges having been fully informed (including having had the opportunity to
ask questions of and receive answers from officers of Seller and T/SF) of the
manner in which certain costs, assets and liabilities which were historically
shared (and, therefore, allocated for financial statement purposes) between the
activities of Seller conducted with the Gaming Assets and the Transferred
Assets, including, without limitation, rent, executive compensation, and the
costs of shared support departments, such as production and circulation, and
neither Seller nor T/SF makes any representation or warranty with respect to the
appropriateness of any such allocations or with respect to the presentation
thereof in such financial information.
4.07 OFFICERS AND DIRECTORS. Exhibit "J" hereto contains a true and
----------------------
correct list of the officers and directors of Seller and the officers of T/SF.
4.08 ABSENCE OF MATERIAL ADVERSE CHANGE. Since March 31, 1995, other than
----------------------------------
as set forth in this Agreement or the Exhibits hereto, there has not been:
(i) any material change in the assets, liabilities or businesses
conducted with the Transferred Assets, other than changes in the
ordinary course of business, none of which has been materially
adverse;
(ii) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting any of the Transferred
Assets;
8
<PAGE>
(iii) any material change in the method of conducting any of the
businesses of Seller relating to the Transferred Assets;
(iv) any mortgage, sale, encumbrance or other transfer or
assignment by Seller of a material portion of the Transferred Assets;
or
(v) any material change in the rate of compensation or other
terms of employment of any employee of Seller.
4.09 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as described on Exhibit
-------------------------------------
"K" or "N" hereto, Seller is not a party to (i) any lease (as lessor or lessee),
note, bond or indenture which involves a liability of more than $20,000 in any
one instance or $50,000 in the aggregate, or any agreement, guarantee or
indemnification to any person or entity which involves a liability of more than
$20,000 in any one instance or $50,000 in the aggregate, (ii) any agreement
containing any covenant limiting the freedom of Seller (or which would limit the
freedom of Buyer) to engage in any line of business or compete with any person,
(iii) any agreement or commitment relating to capital expenditures and involving
future payments which exceed $20,000 in any one instance or $50,000 in the
aggregate, (iv) any agreement or commitment relating to the disposition or
acquisition of assets or any interest in any business enterprise or for the
purchase of materials, supplies or equipment which expires more than one year
from the date hereof or which involves an amount in excess of $20,000 in any one
instance or $50,000 in the aggregate, (v) any distributor, sales, agency,
manufacturers representative or similar contract which is not cancelable without
a penalty by not more than 90 days notice, or (vi) any material agreement with
advertisers for the placement of advertising in any publication of Seller for a
period of more than 15 issues of any one magazine on terms or rates which are
materially different from the standard and usual practices of Seller; provided,
that none of the matters described in this Section 4.09 shall apply to any of
the Excluded Assets.
4.10 NO BREACH. Seller has not breached, or received notice of any claim
---------
or allegation that it has breached, any of the terms or conditions of any lease,
agreement, contract or commitment to which it is a party, or by which it is
bound. Each lease, agreement, contract and commitment set forth on Exhibit "K"
hereto is in full force and effect, has not been modified since the last date
referenced and is not subject to any default thereunder by Seller or any other
party thereto, and, subject to receipt of required consents, no such default
will arise as a result of the assignment thereof to Buyer. Except as set forth
on Exhibit "K" hereto, since March 31, 1995, Seller has not entered into any
lease, agreement, contract or commitment other than in the ordinary course of
business.
4.11 UNDISCLOSED LIABILITIES. Except as disclosed on Exhibit "L" hereto,
-----------------------
in Seller's March Balance Sheet or in this Agreement or the other Exhibits
hereto, and other than as may be incurred in the ordinary course of business,
Seller has no liabilities, claims or obligations which have not been disclosed
to Buyer and there is no pending or, to Seller's or T/SF's knowledge,
threatened, litigation, claim or cause of action to which Seller is a party or
to which the Transferred Assets may be subject.
9
<PAGE>
4.12 COMPLIANCE WITH LAW. Seller is in substantial compliance with all
-------------------
applicable federal, state and local laws, regulations and other governmental
requirements (including, without limitation, all environmental laws and
regulations) for the operation of its businesses and the ownership of the
Transferred Assets.
4.13 ENVIRONMENTAL MATTERS. Except as may be set forth herein or in the
---------------------
Exhibits hereto:
a. Seller has obtained all permits, licenses and other authorizations
which are required in connection with the conduct of its businesses under
regulations relating to pollution or protection of the environment,
including regulations relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment (including
without limitation ambient air, surface water, ground water, or land), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or
wastes.
b. Seller is in full compliance in the conduct of its businesses with
all terms and conditions of the required permits, licenses and
authorizations, and is also in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in those laws or contained
in any regulation, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder.
c. Seller has received no notice of any past, present or future
events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent compliance or
continued compliance with those laws or any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any common
law or legal liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation, based on or
related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling, or the emission, discharge,
release or threatened release into the environment, of any pollutant,
contaminant, chemical, or industrial, toxic or hazardous substance or
waste.
d. There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice or demand letter, notice of violation,
investigation or proceeding pending or threatened against Seller in
connection with the conduct of its businesses relating in any way to those
laws or any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder.
4.14 LICENSES AND PERMITS. Except as noted on Exhibit "M" hereto, Seller
--------------------
has all governmental licenses and permits (Federal, state and local), if any,
which may be required to conduct the businesses which it presently conducts.
Except as noted on Exhibit "M" hereto,
10
<PAGE>
neither Seller nor T/SF has any knowledge of any pending or threatened
proceeding to revoke or limit any such license or permit and such licenses and
permits are transferable to Buyer.
4.15 EMPLOYEE AND LABOR RELATIONS.
----------------------------
a. Exhibit "N" hereto contains, as of June 1, 1995: (i) a list of
Seller's employees engaged in Seller's business relating to the Transferred
Assets; (ii) a summary description of all of Seller's employee benefit
plans and arrangements; and (iii) a complete list of all of Seller's
employment and consulting agreements, executive compensation, incentive
(but excluding normal commission arrangements with sales personnel), stock
option, bonus, deferred compensation, profit sharing, pension and other
employee benefit plans for Seller's employees engaged in Seller's business
relating to the Transferred Assets, including without limitation medical
and other insurance plans. The plans and arrangements described on Exhibit
"N" hereto are referred to herein as the "Benefit Plans." In connection
with the Closing and pursuant to such notices as Seller may deem
appropriate, Seller has the right to amend and/or terminate the Benefit
Plans in accordance with the provisions of each such Plan and applicable
laws.
b. Except as indicated on Exhibit "N" hereto, none of the employees
of Seller engaged in Seller's business relating to the Transferred Assets
are employed pursuant to any written employment agreement or an employment
arrangement which is not terminable at will, except as may be limited by
law or government regulation.
c. The only severance pay practices or related arrangements or
practices between Seller and its employees are described on Exhibit "N"
hereto.
d. Seller is in substantial compliance with all Federal, state and
local laws and regulations respecting employment and employment practices,
terms and conditions of employment, wages and hours and work places.
Except as listed on Exhibit "N" hereto, (i) there is no unfair labor
practice complaint against Seller pending before the National Labor
Relations Board or strike, lockout, dispute, or work stoppage pending or
threatened against or involving Seller and none has occurred since at least
January 1, 1993; (ii) no union organization campaign has occurred at any
time in the past two years nor is any in progress or threatened; (iii) no
charges, audits, investigations or complaint proceedings are pending before
the Equal Employment Opportunity Commission or any state, local or Federal
agency responsible for the prevention of unlawful employment practices with
respect to Seller; (iv) Seller has not received notice of the intent of any
Federal, state or local agency to conduct an audit or an investigation of
or relating to or including such employees or employment practices and no
such investigation is in progress; and (v) Seller is not a party to any
union contract or similar organized labor agreement.
11
<PAGE>
4.16 EMPLOYEE BENEFIT PLANS AND ERISA.
--------------------------------
a. Except as indicated on Exhibits "D" or "N" hereto (i) Seller has
no present or future obligation or liability with respect to any employees
or former employees under the Benefit Plans; and (ii) Seller has no present
or future liability to any former employees or to their dependents,
survivors or beneficiaries in connection with or arising out of any Benefit
Plan or any compensation arrangement or practice maintained or adopted by
Seller or to which Seller contributed prior to the Closing.
b. The 401(k) Plan referred to in Exhibit "N" hereto as the T/SF
Communications Savings and Retirement Plan (the "Plan"), meets the
requirements of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the trust forming part of the Plan is exempt from
Federal income tax under Section 501(a) of the Code, except as indicated on
Exhibit "N" hereto. After the Closing, but prior to the final distribution
of amounts due under the Plan to the then ex-employees of Seller who
participated therein, T/SF shall have performed an ADP-ACP test on the Plan
deferrals and will have made any required adjustments as to any such ex-
employees on their account as may be required by applicable law to comply
with permissible contributions under such test.
c. Seller has not maintained or contributed to any "multiemployer
plan", within the meaning of Section 3(37) of ERISA. Since January 1,
1991, no liability under Title IV of ERISA has been incurred by Seller,
and no event has occurred and there exists no condition which presents a
risk of the imposition of any liability under Title IV or ERISA with
respect to a Benefit Plan. No Benefit Plan which is subject to Title IV of
ERISA has been completely or partially terminated by Seller, and no
proceedings by the PBGC to terminate any such Benefit Plan have been
instituted or threatened. Seller is not a party to and has no liability
under any agreement imposing secondary liability on it as a seller of the
assets of a business under Title IV of ERISA, or under any other agreement,
and no contingent liability exists under Title IV of ERISA to the PBGC or
to any plan, and none of the assets of Seller is subject to a lien under
Title IV of ERISA.
d. None of the Benefit Plans of Seller has been subject to a
"reportable event" within the meaning of Section 4043 of ERISA nor have
there been any "prohibited transactions" within the meaning of Section 4975
of the Code or Part 4 of Subtitle B of Title I of ERISA. All reports and
information required to be filed with the United States Department of
Labor, the IRS, the PBGC, or plan participants and their beneficiaries with
respect to the Benefit Plans have been timely filed.
e. Full payment has been made, or will be made prior to the Closing,
of all amounts which Seller is required to pay under the terms of each of
the Benefit Plans as a contribution as of the last day of the most recent
fiscal year of each of such Plans ended prior to the date of this
Agreement. Seller's March Balance Sheet includes, in accordance with GAAP,
an accrual for all amounts, if any, due Seller's employees under the
Benefit Plans.
12
<PAGE>
f. In connection with the medical benefits plan maintained by Seller
("Seller's Medical Plan"), or by T/SF on behalf of Seller, the liability to
pay for all covered claims incurred on or before the Effective Date shall
be retained by Seller (through Seller's Medical Plan), and such claims
shall be processed and paid by Seller and its plan administrator pursuant
to the terms of Seller's Medical Plan in accordance with current practices.
4.17 REPORTS AND TAXES. T/SF, on behalf of Seller and with respect to the
-----------------
business operations of Seller, has duly prepared and filed with all appropriate
United States, state and local governmental agencies all corporate and other tax
returns and reports required by law within the time or extended time required or
permitted and has paid all taxes and related payments required to be made, when
due as shown on such returns. All such reports and returns were accurate and
complete as filed and prepared in accordance with all applicable government
regulations. Seller, or T/SF on behalf of Seller, has made timely payments of
the taxes and related payments and charges required to be deducted and withheld
from the wages paid to its employees. The Federal, state and local income tax
liability, if any, of Seller due as of the Effective Date has been or will be
paid in full by T/SF for or on behalf of Seller. The charges, accruals and
reserves, if any, which have been made on Seller's financial statements with
respect to Federal, state and local taxes for all periods to date are adequate
as to Seller and no deficiencies for any tax, assessment or governmental charge
have been asserted or assessed against Seller.
4.18 INSURANCE AND DAMAGE. Seller has previously provided Buyer with a
--------------------
summary listing of Seller's property, casualty and/or liability insurance. Each
such policy shall remain in effect through the Closing Date, but not later, and
all premiums for same due to and including the Closing Date have been or will be
paid by Seller or T/SF. Except for medical insurance, Seller has not received
any notice from any insurance company with which it maintains insurance that
coverage or premium rates will be changed materially in the future or that it
may not qualify for continued coverage with respect to any such insurance.
Seller is in compliance in all material respects with all such insurance
contracts. Except for medical insurance and property damage claims made in the
ordinary course of business and which are covered by existing insurance
maintained with reputable and responsible carriers with respect to which all
premiums have been duly paid, there is not now pending with any insurance
carrier any material claim by Seller or T/SF for payment pursuant to any
insurance policy relating to the Transferred Assets. Seller has not suffered
damage to its assets, however caused, of such nature as to necessitate
interruption or curtailment of any of its businesses in any material respect.
4.19 ACCOUNTS RECEIVABLE. All accounts receivable of Seller at the date
-------------------
hereof and as of the Effective Date arose or will have arisen in the ordinary
course of business, and are or will be accurately and fairly reflected in the
financial statements and the books and records of Seller, subject to all
applicable reserves. The reserves established by Seller for bad debts or
uncollectible receivables on its balance sheet have been established and will,
on the Effective Date Balance Sheet, be established in accordance with GAAP,
consistently applied.
13
<PAGE>
4.20 INVENTORIES. The inventory described on Seller's March Balance Sheet
-----------
is valued on a basis (cost) consistent with that adopted in prior years. Except
as set forth in Exhibit "A" hereto, the inventory of Seller included in the
Transferred Assets, net of applicable reserves, is of merchantable quality, in
good condition and usable in the ordinary course of business.
4.21 TRADENAMES, TRADEMARKS, SERVICE MARKS, SOFTWARE LICENSES AND
------------------------------------------------------------
COPYRIGHTS. Exhibit "O" hereto lists all of the patents, trademarks, service
----------
marks, trademark registrations and applications therefor, trade names,
copyrights, and copyright registrations and applications therefor owned by or
registered in the name of Seller in the United States or any other country, or
in which Seller has any rights by license or otherwise. Except as set forth on
Exhibit "L" or Exhibit "O" hereto, Seller owns, is validly licensed under or has
the non-exclusive right to use (with Exhibit "O" specifically noting those for
which Seller claims the exclusive or protected right to use), such patents,
trademarks, service marks, trade names and copyrights necessary for the conduct
of its businesses as now operated, without conflict with the rights of others.
Except as described herein or on Exhibit "O" hereto, no patent, trademark or
other property right used by Seller in connection with its businesses is owned
exclusively by any other party. Seller has the right to use all processes,
systems, computer software, business plans, publications and products used by it
in its businesses or necessary for its businesses, subject only to the
restrictions or agreements listed on Exhibit "O" hereto, which Exhibit includes
a list, complete to Seller's and T/SF's knowledge, of all software licenses
under which Seller is licensee. Seller shall deliver to Buyer at Closing
suitable evidence of the right of Buyer to so use such software, subject, in
certain cases, to the payment of a fee, the payment of which shall, upon Buyer's
applying for transfer thereof, be the obligation of Buyer. Without limiting the
generality of the foregoing, Seller has the unrestricted right to use all of its
customer lists, distribution and circulation lists and lists of advertisers,
free of any rights of third parties, but with the acknowledgment that Seller's
customer, advertiser, circulation or distribution lists may be similar in whole
or in part to those used by other parties; provided that, with respect to JPM,
certain of such lists are provided by the Petroleum Marketers Association of
America ("PMAA") and may be subject to the provisions of the agreement with PMAA
which is listed on Exhibit "K." No such lists have at any time been transferred
or furnished to any third party and Seller has taken reasonable actions to
protect sensitive or confidential information concerning its lists. Except as
described on Exhibit "L" or "O" hereto or on any other Exhibit hereto, T/SF
knows of no other person or entity who or which is presently using or claiming
the right to use any of the trade names listed on Exhibit "O" hereto in the
areas in which such publications are now distributed.
4.22 AUTHORITY AND APPROVAL. Seller and T/SF have full power and
----------------------
authority, corporate and otherwise, to execute, deliver and perform this
Agreement and all other documents and agreements executed in connection
herewith, and all corporate and other actions of Seller, T/SF and Investment
necessary for such execution, delivery and performance have been duly taken, and
such execution, delivery and performance do not require any action or consent
of, or registration with, any governmental regulatory body or other agency,
instrumentality or authority, or of any other party under any contract or
agreement to which Seller or T/SF is a party or is bound. T/SF has no knowledge
of any legal impediment to the consummation of the transactions contemplated by
this Agreement.
14
<PAGE>
4.23 VALIDITY. This Agreement and, when executed and delivered, the other
--------
documents executed in connection herewith constitute the legal, valid and
binding obligations of Seller and T/SF, enforceable against Seller and T/SF in
accordance with the terms hereof and thereof, except as such enforceability may
be limited by general principles of equity and subject to bankruptcy or other
laws relating to or affecting the rights of creditors generally. The execution
and performance of this Agreement by Seller and T/SF will not: (i) conflict
with the Certificate of Incorporation or Bylaws of Seller, T/SF or Investment,
(ii) result in any breach or termination of, or constitute a default under, or
constitute an event which, with notice or lapse of time or both, will become a
default under, or result in the creation of any lien upon, any of the assets of
Seller or T/SF or create any rights of termination, cancellation, or
acceleration of any person, under any agreement, arrangement or commitment of
Seller or T/SF, or (iii) violate in any respect any agreement or any provision
of any law, rule or regulation or any order, writ, injunction or decree to which
T/SF or, to T/SF's knowledge, Seller is a party or by which Seller or T/SF or
any of its assets, businesses or operations may be bound or affected.
4.24 BROKERAGE AND FINDERS' FEES. Except for fees which may be due to
----------------------------
Oppenheimer & Co., Inc. (which fees are the sole responsibility of T/SF and
Seller), neither T/SF nor Seller, nor any of their respective stockholders,
directors, officers or employees, has incurred or will incur any brokerage,
finders' or similar commission or fee in connection with the transactions
contemplated by this Agreement, and, to the extent any such fees, commissions or
other compensation are incurred by Buyer as a result of actions of T/SF or
Seller, such fees, commissions or compensation shall be the sole responsibility
of Seller or T/SF.
SECTION 5. COVENANTS
5.01 INTERIM COVENANTS.
------------------
a. Access and Information. Buyer and Macfadden have conducted
----------------------
interviews with personnel of T/SF and Seller and conducted investigations
of Seller and its respective markets, businesses and affairs. Seller and
T/SF have given or will give to Buyer and Macfadden and their accountants,
counsel and other representatives throughout the period prior to the
Closing Date full access to all employees, properties, books, contracts and
records of or relating to Seller and have furnished and will furnish to
Buyer and Macfadden all information reasonably requested by Buyer or
Macfadden. Each of the parties hereto acknowledges that, pursuant to the
right of access set forth above, Buyer and Macfadden have or may become
privy to confidential information of Seller (excluded from the meaning of
confidential information is any information generally available to the
public), and the use of such confidential information or the disclosure of
such confidential information to third parties could injure the business
operations of Seller if the transactions contemplated by this Agreement are
not completed. Accordingly, Buyer and Macfadden shall take reasonable
steps to ensure that such information about Seller obtained by it or any of
its employees, officers, agents, lenders, attorneys or representatives
shall remain confidential and shall not be used or disclosed or revealed to
outside parties, except in connection with and as reasonably needed for
Buyer and Macfadden to meet their obligations under this Agreement. If the
transactions contemplated by this Agreement are
15
<PAGE>
not consummated, upon written request, Buyer and Macfadden shall return to
Seller all written information provided hereunder concerning Seller and its
business and all analyses thereof prepared by or for Buyer or Macfadden,
including all copies thereof. In addition, the terms of the Confidentiality
Agreement, dated March 17, 1995, by and between T/SF and Macfadden, a copy
of which is attached hereto as Exhibit "P," shall remain in full force and
effect in accordance with its terms, and Buyer shall be bound by all of the
terms thereof in the same manner and to the same extent as Macfadden.
b. Public Announcements. T/SF and Buyer shall consult in advance
---------------------
and cooperate with one another in connection with the preparation and
publication of any press release or other public announcement with respect
to this Agreement. Until the Closing, each party shall limit its public
announcements and press releases to those required by applicable securities
laws, it being recognized that T/SF is a public company and, as such, is
subject to certain public disclosure obligations.
c. Maintenance of Properties and Business. Seller shall conduct its
---------------------------------------
business in the ordinary and usual course and shall maintain its properties
and business and preserve its business organization and the goodwill of
advertisers, subscribers, employees and suppliers. Additionally, without
the prior written consent of Buyer or Macfadden, Seller shall not (other
than with respect to the Excluded Assets and the business relating
thereto):
(i) engage in any activity or enter into any transaction that would
cause any of the representations and warranties set forth in
Section 4 hereof to be inaccurate if made as of a date
subsequent to such activity or transactions, other than
contracts entered into in the ordinary course of business;
(ii) make any material change in the business or operations of
Seller;
(iii) make any type of investment in or loan to any other person or
enterprise;
(iv) merge with or into any other company or business or engage in
any transaction which would have the same effect, e.g., a sale
of substantially all of the assets or business of Seller;
(v) enter into any material contractual arrangements, or materially
altering any existing arrangements, other than in the ordinary
and usual course of business; or
(vi) agree to any of the foregoing.
d. Interim Financial Statements. T/SF will furnish to Buyer interim
-----------------------------
financial statements of Seller prepared for any period subsequent to March
31, 1995, when the same become available.
16
<PAGE>
e. Notice of Breach. T/SF will immediately give notice to Buyer of
-----------------
the occurrence of any event or the failure of any event to occur the result
of which is a breach of a representation and warranty of T/SF or Seller or
the failure by Seller or T/SF to comply with any covenant, condition or
agreement contained herein.
5.02 CONSENTS, WAIVERS AND APPROVALS. As soon as practicable after
-------------------------------
the date hereof, the parties shall use their best efforts to obtain in writing
all consents, waivers, approvals and authorizations required to allow the
consummation of the transactions contemplated hereby, it being understood that
it is Seller's obligation to obtain any necessary consents to the transfer of
the Transferred Assets to Buyer as herein contemplated.
5.03 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. In addition to the
-------------------------------------------
Exhibits and other items specifically required to be furnished hereunder, the
parties hereby agree that each will promptly furnish to the other such further
schedules, certificates and other instruments and take such other action as may
reasonably be requested in order to effectuate the purposes of this Agreement.
5.04 EMPLOYEES AND BUYER'S BENEFIT PLANS. (a) Buyer covenants and
-----------------------------------
agrees that, at the Closing and as of the Effective Date, immediately upon the
termination by Seller of the employment of the employees listed on Exhibit "F"
hereto ("Buyer's Employees"), Buyer shall offer employment to all of Buyer's
Employees on substantially the same economic terms as they are then employed by
Seller, including time-in-service credit for accrued employment related benefits
such as sick leave, vacation, severance and retirement and medical plans, and
shall not apply any pre-existing condition rules under Buyer's medical plan to
such employees. Provided, however, that Buyer reserves the right, which may
only be exercised after four months following the Closing Date, to modify the
terms upon which Buyer's Employees are employed with Buyer so as to achieve
consistency with Buyer's policies, practices and procedures. As used herein,
"Buyer's Employees" shall include any employee hired to replace any employee
listed on Exhibit "F," subject to the right of Buyer to consent to any such
hire, with such consent not to be unreasonably withheld. (b) Without limiting
the generality of the foregoing, unless the matter or agreement giving rise to
the claim or liability is a breach of any representation or warranty of Seller
or T/SF under Section 4.15 hereof, Buyer shall be liable for, and shall
indemnify and hold Seller and T/SF harmless from, any liability, including
severance or other obligations, which may come due to any of Buyer's Employees,
from and after the Effective Date. Provided, however, that Seller shall pay and
reimburse Buyer, up to a maximum amount of $75,000, for and with respect to all
Excess Benefit Amounts (as hereinafter defined) which Buyer may be required to
pay to Buyer's Employees as a result of Buyer's obligations under this Section
5.04. "Excess Benefit Amounts" shall be defined as all amounts which Buyer may
be required to pay to Buyer's Employees, on and after the Effective Date, for
the following employee benefits, to the extent the amount paid pursuant to this
Section 5.04 exceeds the amounts which Buyer would have paid to such employees
under Buyer's existing employment policies and employee benefit plans: sick
leave, vacation, severance, 401(k) and the amounts paid by Buyer for employee
health insurance coverage. Any claim for reimbursement under this Section 5.04
shall be in writing and shall be paid within ten days after Seller's receipt of
same, and any such claim, to be valid, must be
17
<PAGE>
presented to Seller on or before one year after the Closing Date. For purposes
of this Section 5.04, references to Buyer shall be deemed to include Macfadden.
5.05 COVENANTS-NOT-TO-COMPETE. It is acknowledged and agreed that
------------------------
some of Buyer's Employees have been involved with the activities of Seller
related to the Excluded Assets and that the employees of Seller who are not
Buyer's Employees, similarly, have experience and information relating to the
business to be conducted by Buyer with the Transferred Assets. Accordingly, and
as part of the consideration for the transaction described in this Agreement, at
Closing, Seller and T/SF shall enter into a Covenant-Not-to-Compete with Buyer
for a period of two years from the Effective Date, substantially in the form of
Exhibit "Q" hereto and, similarly, Buyer and Macfadden shall enter into a
Covenant-Not-to-Compete with Seller for a period of two years from the Effective
Date, substantially in the form of Exhibit "R" hereto.
5.06 BOOKS AND RECORDS AND PERSONNEL.
-------------------------------
a. It is understood and agreed that, on the Closing Date, Seller and
T/SF shall deliver to Buyer all books, accounts, records, files, agreements
and reports relating to the Transferred Assets and Buyer's Employees;
provided, however, that, with respect to any personnel records relating to
Buyer's Employees, Seller and T/SF shall only be obligated to deliver to
Buyer the following records regarding each employee and any other records
required by law to be transferred (collectively, the "Permitted Personnel
Records"):
(i) date of hire;
(ii) reprimands and disciplinary action taken against such
employee during the last five years;
(iii) attendance records during the last five years; and
(iv) pay records.
In addition, Seller shall not be obligated to provide Buyer with any
medical records regarding its employees. Notwithstanding the foregoing, in
consideration of the indemnity provided by Buyer to Seller and T/SF as set
forth at Section 8.02(ii) hereof, if Buyer requests any medical records or
personnel records other than the Permitted Personnel Records, then Seller
and T/SF shall provide same to Buyer promptly upon Buyer's request.
b. It is understood and agreed that T/SF and Seller may, at its
option, retain copies of any or all records transferred to Buyer pursuant
to Section 5.06(a) above. It is also understood that Seller may have
retained records which are useful to Buyer in the business to be conducted
by it with the Transferred Assets. Accordingly, for a period of six years
following the Effective Date,
18
<PAGE>
(i) Neither Seller nor Buyer shall dispose of or destroy any of the
existing business records and files of Seller (whether
transferred in connection herewith or not) without first
offering to turn over possession thereof to the other party by
written notice to the other party at least 30 days prior to the
proposed date of such disposition or destruction;
(ii) Each of Buyer and Seller shall allow the other party access to
all the business records and files of the other party which
relate to assets transferred in connection herewith or assets of
Seller which exist on the Effective Date, during normal working
hours at any location where such records are stored, and the
other party shall have the right, at its own expense, to make
copies of any such records and files; provided, however, that
any such access or copying shall be accomplished in such a
manner so as not to interfere unreasonably with the normal
conduct of the business of the party granting such access; and
(iii) T/SF and Seller agree to allow Buyer reasonable access to files,
records and information remaining in Seller's possession
concerning Seller's operations and financial matters during the
period up to the Effective Date.
It is recognized that the effect of the transactions described in this
Agreement is to split the businesses of Seller and, accordingly, it is probable
that a perfect transfer of complete records with respect to only the Transferred
Assets cannot or will not occur despite the best efforts of the parties.
Accordingly, the intent of this Section 5.06 is to afford each party the
opportunity to review records that relate to the business of Seller prior to and
through the Closing Date to the extent reasonably necessary for the on-going
business of each party, regardless of in whose possession such records are kept.
It is also recognized that the covenants-not-to-compete to be entered into by
each party pursuant to Section 5.05 above restrict each party's use of any such
information.
5.07 USE OF NAME. Included within the Transferred Assets to be
-----------
transferred to Buyer hereunder is the right to continue the use of the name "BMT
Communications" or any derivative or similar name. T/SF and Seller agree that
they will not use the name "BMT Communications" or any derivative thereof in any
business operation after the Closing, except in connection with the transition
of Seller to a new corporate name. Within 30 days after the Closing Date,
Seller shall change its corporate name to a name which does not use and is not
similar to "BMT Communications."
5.08 BULK SALES. Buyer hereby waives any necessary compliance by
----------
Seller with the bulk sales or any similar law in New York. T/SF and Seller
hereby agree to indemnify, defend and hold Buyer harmless from and against any
loss, claim, liability, cost or expense which Buyer may suffer or incur because
of Seller's non-compliance with the New York bulk sales or similar laws;
19
<PAGE>
provided, however, that this Section 5.08 shall have no effect on the
liabilities agreed to be assumed by Buyer under Section 2 of this Agreement.
5.09 PRINTING CONTRACT; SUPPORT SERVICES. Exhibit "K" hereto
------------------------------------
includes a description of the printing contract (the "Printing Contract")
currently held by Seller with Quebecor Printing [USA] Corp. ("Quebecor"). The
Printing Contract provides for the printing by Quebecor of CSN, DJ, JPM and
Gaming through the October 1996 issues. Subject to the condition that Quebecor
consents prior to Closing, it is the intent of the parties that Seller assign
all of its rights under the Printing Contract to Buyer, and that Buyer assume
all of Seller's obligations thereunder, subject to Seller's continuing to
utilize Quebecor and receive the benefits of the Printing Contract for Gaming
through the term of the Printing Contract. Accordingly, Buyer and Seller shall
cooperate fully to receive the consent of Quebecor to this arrangement and shall
agree to all reasonable changes in the Printing Contract which Quebecor may
request to effect this arrangement. Upon the consent of Quebecor to this
arrangement, Buyer and Seller agree to cooperate to maintain the effectiveness
of the Printing Contract and to fully comply with their respective separate
obligations under the Printing Contract to ensure the continued effectiveness of
the same for the benefit of both parties. If requested by Quebecor, Seller
shall be treated as a subcontracting party to Buyer and, in such event, Buyer
shall assume primary liability for all charges under the Printing Contract and
will bill Seller for its costs of printing Gaming. In such event, Seller shall
remit payment within 10 days of invoice therefor.
5.10 LEASE; USE OF EQUIPMENT. It is recognized that Buyer is
------------------------
assuming Seller's real estate leases in Chicago, Illinois, and Tampa, Florida,
but not Seller's lease at Seven Penn Plaza, New York, New York (the "New York
Lease"). It is also recognized that Seller may move its remaining business (the
"Gaming Business") and its remaining employees ("Seller's Retained Employees")
and the Excluded Assets out of the premises covered by the New York Lease (the
"Leased Premises") if and when it decides to do so (if Seller moves the exact
date of Seller's move out is referred to herein as "Seller's Departure Date").
Buyer desires to occupy the Leased Premises through January 31, 1996, and Seller
desires to be able to continue to occupy the Leased Premises and utilize certain
of the Transferred Assets and have the use of certain of Buyer's then employees
until Seller's Departure Date (and possibly thereafter, as provided below).
Accordingly, effective on the Effective Date, the parties agree as follows:
(a) Buyer shall have the right to continue to occupy the Leased
Premises through January 31, 1996, and, with respect to such
occupation, shall be considered a subtenant of Seller. As of
February 1, 1996, Buyer shall have vacated the Leased Premises and
removed all of its property. Such subtenancy, in addition to the
payments described herein, shall provide for the following:
(i) Buyer shall be bound by and shall comply with all of the
provisions of the New York Lease binding on Seller, including,
without limitation, the provisions relating to the removal of
property upon move out. Any failure of Buyer to comply with
the provisions of this Section 5.10 shall entitle Seller, upon
10 days written notice specifying such failure (and during
which time Buyer may cure the same) to require Buyer to vacate
the
20
<PAGE>
Leased Premises in which case Seller shall be entitled to (A) a
payment of the maximum amount due it pursuant to this Section 5.10,
due on demand, and (B) the free use of the Transferred Assets
through September 30, 1995, and all of Seller's obligations and
Buyer's rights under this Section 5.10 shall cease.
(ii) Each of Seller and Buyer shall indemnify and hold harmless the
other from and against any loss, liability, cost or claim to which
the other may become subject by reason of any action or nonaction on
the part of any agent or employee of the indemnifying party (whether
such liability is contractual or by tort) or the failure of the
indemnifying party to comply with any of the provisions of this
Section 5.10 or the New York Lease.
(iii) The parties shall endeavor to maintain separate phone systems,
mailing equipment (including postage and postage meters), fax
lines and supplies, but the parties shall act reasonably and in
good faith in fairly reimbursing each other for any incidental
use of the telephone, postage, fax or supplies of the other, it
being recognized that the contemplated joint occupancy of the
Leased Premises will be awkward and will require the good faith
cooperation of both parties.
(iv) Seller agrees to assist Buyer with any requests of Buyer of the
landlord and to otherwise take all actions, including timely
rental payments, to ensure the New York Lease stays in effect;
provided, that nothing herein shall prevent Seller from
appropriately contesting any alleged breach of the New York Lease
by the landlord.
(v) Buyer's then employees shall be entitled to occupy the areas
currently occupied and the parties shall share all common areas.
In addition, the former office of Hedy Halpert, former President
of Seller, shall be available exclusively to Buyer and the small
conference room in the northwest corner of the Leased Premises
shall be available exclusively to Seller.
(b) Until Seller's Departure Date (if Seller vacates the Leased Premises),
Seller and Seller's Retained Employees and agents shall have the right
to use any equipment or assets of Buyer in the Leased Premises. It is
specifically contemplated that copiers and certain production
equipment will be necessary for Seller to profitably conduct its
business, and Buyer agrees to make available to Seller reasonable
access to such equipment, in a manner consistent with the use thereof
by the employees producing Gaming and the Transferred Magazines.
Similarly, Buyer will be utilizing the System 36 computer system and
related software and Seller agrees to make such assets available for
Buyer's use through January 31, 1996 (it being recognized that the
employees who have heretofore operated such system will then be
employed by Buyer, and Seller shall not be required to supply any
personnel to assist Buyer in its use of such assets). The parties
shall cooperate in good faith on
21
<PAGE>
the use of the Transferred Assets and the System 36 and related
software to accommodate the legitimate needs of both parties.
(c) Certain of Buyer's then employees, specifically the formerly shared
employees, such as mail room and accounting employees, receptionist
and the employees who operate Seller's System 36, will be made
available to Seller for its reasonable needs consistent with past
practices until the earlier of Seller's Departure Date or January 31,
1996. Similarly, Seller's circulation director (Zory Gojaniuk) and an
accounting employee (Cord Brody) who are included in Seller's Retained
Employees, shall be made available for Buyer's reasonable needs on a
transitional basis through the earlier of Seller's Departure Date or
January 31, 1996.
(d) The parties recognize that Seller should pay Buyer for the use of the
Transferred Assets and the use of the employees of Buyer and Buyer
should pay Seller for the use of the Leased Premises and the use of
Seller's Retained Employees. However, the parties have agreed that
the value of what each is providing to the other is approximately the
same and, therefore, the parties shall make no payments to each other
through Seller's Departure Date. Thereafter, Buyer shall pay to
Seller the sum of $6,800 per month (prorated for any partial month)
due on the last day of each month beginning with the month of Seller's
Departure Date.
(e) At the election of Seller, to be made on or before Seller's Departure
Date, Seller may continue to use the Transferred Assets for a period
of 30 days after Seller's Departure Date, in which case the amount due
from Buyer under subsection (c) above shall be zero for such 30 day
period.
5.11 NAG/CSN EXPO. Exhibit "K" hereto includes a listing of that certain
-------------
letter agreement, dated June 23, 1989, as amended (the "NAG Agreement"), by and
between Seller and National Advisor Group ("NAG"), pursuant to which NAG and
Seller jointly sponsor and operate a trade show known as the "NAG/CSN Expo"
("Expo"). The NAG Agreement is, by its terms, not assignable without the
consent of NAG. Buyer and Seller agree to cooperate and use all reasonable
efforts to obtain NAG's consent to the transfer of the NAG Agreement to Buyer.
However, if such consent is not obtained by the Closing Date, Seller shall
retain the NAG Agreement (unless NAG subsequently consents to the assignment of
the NAG Agreement to Buyer), and shall subcontract all of Seller's rights and
obligations thereunder to Buyer under the following terms:
(a) The subcontract shall be co-terminus with the NAG Agreement.
(b) Buyer shall assume and indemnify and hold Seller harmless from and
against all obligations of Seller and all costs, liabilities, or
claims arising under the NAG Agreement or in connection with the
operation of EXPO, whether brought or claimed by NAG or any third
party.
22
<PAGE>
(c) Buyer shall retain all profits and revenues from EXPO or otherwise
arising under the NAG Agreement.
(d) Seller shall take no action under the NAG Agreement (such as notices
to NAG or other ministerial matters) unless directed in writing by
Buyer and Seller shall be reimbursed for its reasonable out-of-pocket
expenses in taking any such action; provided, that it is not the
intention of this subsection (d) to impose any affirmative obligations
for EXPO on Seller.
5.12 MISCELLANEOUS CLOSING MATTERS.
------------------------------
a. The bank and credit card accounts maintained by Seller shall
remain the property of Seller, and Buyer agrees to open and maintain new
bank and, if desired by Buyer, credit card accounts from and after the
Closing Date.
b. It is recognized that Seller is retaining certain accounts
receivable attributable to the business activities conducted by Seller with
the Excluded Assets and that it is probable that certain payments with
respect to such accounts receivable may be received by Buyer after the date
hereof. In such event, Buyer agrees to promptly forward such payments to
Seller and Seller shall have the right to endorse any such payments made
out in the name of "BMT Communications" with such name for deposit and
collection. Conversely, should Seller receive any payments on accounts
receivable hereby sold to Buyer, Seller shall properly remit the same to
Buyer.
5.13 BUYER'S ACTIVITIES. Neither Buyer nor Macfadden nor any of their
-------------------
affiliates, officers, directors or employees will take any action (or omit to
take any action) which would cause any representation or warranty contained in
this Agreement to be untrue at any time prior to the Closing Date as if such
representation or warranty were made at and as of such time. Buyer and
Macfadden and their officers, directors and employees shall use their best
efforts to cause the conditions to Closing specified herein to be satisfied so
that a Closing may be effected hereunder.
5.14 HART, SCOTT, RODINO. Buyer and Seller shall each prepare and file
-------------------
with the appropriate governmental authorities, as soon as practical after the
date hereof, a premerger notification and report form and all other required
documents pursuant to the Hart, Scott, Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and take such other actions as may reasonably
be required to obtain early termination of the waiting period under the HSR Act.
5.15 ENVIRONMENTAL PERMITS. Seller agrees to cooperate with Buyer in
----------------------
connection with Buyer's application for the transfer, renewal or issuance of any
permits, licenses, approvals or other authorizations or to satisfy any
environmental regulatory requirements involving Seller's businesses or the
Transferred Assets.
5.16 ACCOUNTS RECEIVABLE. After Closing, Buyer shall take no actions,
-------------------
other than in the ordinary course of business consistent with past practices of
Seller, which would adversely
23
<PAGE>
affect the amount of net accounts receivable which would be included as
Transferred Current Assets in the Effective Date Balance Sheet.
SECTION 6. CONDITIONS TO OBLIGATIONS OF
BUYER AND MACFADDEN
6. The obligations of Buyer to acquire the Transferred Assets and the
respective obligations of Buyer and Macfadden to consummate the transactions
contemplated hereby are subject to the satisfaction or waiver by Buyer and
Macfadden of each of the following conditions at or prior to the Closing:
6.01 SELLER'S AND T/SF'S PERFORMANCE. Seller and T/SF shall have (i)
-------------------------------
performed and complied in all material respects with all of their agreements,
obligations and covenants under this Agreement, and the representations and
warranties of each of them which are contained herein shall be true and correct
in all material respects as of the Closing Date as though such representations
and warranties were made at and as of the Closing Date, and (ii) delivered to
Buyer a certificate to the foregoing effect.
6.02 NO ADVERSE CHANGE. Since the date of this Agreement, Seller shall not
-----------------
have suffered any material adverse change to its business, prospects,
operations, assets or financial condition relating to the Transferred Assets for
which offsetting operational gains do not exist.
6.03 NO RESTRICTIONS. Neither Buyer nor Macfadden shall not have received
---------------
any notice of (i) any order, ruling or regulation (general or specific) of any
governmental, regulatory agency or authority having been issued or promulgated,
(ii) any judicial or administrative action having been taken and which shall not
have been rescinded, canceled or reversed, or (iii) any litigation having been
instigated, which, in any such event, has the effect or purpose of prohibiting
the transactions contemplated hereby or interfering with or materially affecting
the right or ability of any party to this Agreement to consummate any of the
transactions contemplated hereby, or which, if such litigation were determined
adverse to Seller, would result in a material adverse effect on business,
prospects, operations, assets or financial condition of the business conducted
or to be conducted by Buyer with the Transferred Assets.
6.04 CONSENTS. All consents and approvals described on Exhibit "S" hereto
--------
necessary to the acquisition of the Transferred Assets by Buyer and the
consummation of the transactions contemplated hereby shall have been duly and
validly obtained and shall remain effective as of the Closing.
6.05 DOCUMENT DELIVERY. Seller and T/SF shall have delivered the following
-----------------
documents, appropriately executed, to Buyer and Macfadden:
a. Bill of Sale and other assignment documents, substantially in the
form of Exhibit "T" hereto, required to transfer ownership of the
Transferred Assets to Buyer, with a separate assignment in such form being
executed with respect to each assigned contract for which third party
consent is required;
24
<PAGE>
b. The Covenant-Not-To-Compete substantially in the form of Exhibit
"Q";
c. Certified copies of the resolutions of the Board of Directors and
shareholder of Seller and the Board of Directors of T/SF authorizing the
execution and delivery of this Agreement and consummation of the
transactions contemplated hereby;
d. (i) Certificates of good standing from their respective states of
incorporation issued with respect to Seller, Investment and T/SF as of a
date not more than 30 days prior to the Closing Date; (ii) all such other
documents as may be reasonably requested by Buyer or Macfadden, including
secretaries' certificates relating to incumbency and corporate proceedings;
and (iii) possession of all books, accounts, records, documents, files,
agreements and reports relating to the Transferred Assets;
e. The consents necessary under Section 7.05 hereof, which are to be
obtained by T/SF and Seller; and
f. Such other and further releases or other documents as may be
reasonably necessary, in the opinion of counsel to Buyer, to effectuate the
transactions contemplated by this Agreement.
6.06 COUNSEL'S OPINION. Buyer and Macfadden shall have received an
-----------------
opinion, dated the Closing Date, of Conner & Winters, A Professional
Corporation, counsel to Seller and T/SF, in substantially the form of Exhibit
"U" hereto.
6.07 HART, SCOTT, RODINO. All applicable waiting periods under the HSR Act
-------------------
relating to the transactions contemplated herein shall have expired or been
terminated.
SECTION 7. CONDITIONS TO OBLIGATIONS OF SELLER AND T/SF
7. The respective obligations of Seller and T/SF to consummate the sale of
Transferred Assets to Buyer and the other transactions contemplated hereby are
subject to the satisfaction or waiver by Seller and T/SF of each of the
following conditions at or prior to the Closing:
7.01 BUYER'S AND MACFADDEN'S PERFORMANCE. Buyer and Macfadden shall have
-----------------------------------
(i) performed and complied in all material respects with all of its agreements,
obligations and covenants under this Agreement, and the representations and
warranties of Buyer and Macfadden contained herein shall be true and correct in
all material respects as of the Closing Date as though such representations and
warranties were made at and as of the Closing Date, and (ii) delivered to T/SF
and Seller a certificate to the foregoing effect.
7.02 NO RESTRICTIONS. Neither Seller nor T/SF shall have received any
---------------
notice of (i) any order, ruling or regulation (general or specific) of any
governmental, regulatory agency or authority having issued or promulgated, or
(ii) any judicial or administrative action having been taken and which shall not
have been rescinded, canceled or reversed, which, in any such event, has
25
<PAGE>
the effect or purpose or would have the effect of prohibiting the transactions
contemplated hereby or of interfering with or materially affecting the right or
ability of any party to this Agreement to consummate any of the transactions
contemplated hereby. No suit, litigation, action or other proceeding shall be
pending or directly threatened in which it is sought (a) to restrain or prohibit
consummation of the transactions contemplated by this Agreement, (b) to obtain a
divestiture of a material part of the assets or properties of Seller or T/SF, or
(c) to subject T/SF or Seller to a material liability.
7.03 DOCUMENT DELIVERY. Buyer and Macfadden shall have delivered the
--------
following to T/SF and Seller, and where documents are involved, the documents
shall be appropriately executed:
a. The cash payments due (by wire transfer of funds as directed by
Seller) at the Closing;
b. The Covenant-Not-To-Compete substantially in the form of Exhibit
"R" hereto;
c. Certified copies of the resolutions of the members of Buyer and
the Board of Directors of Macfadden authorizing the execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby;
d. (i) Certificates of good standing from their respective states of
organization issued with respect to Buyer and Macfadden as of a date not
more than 30 days prior to the Closing Date; (ii) all such other documents
as may be reasonably requested by Seller, including secretaries'
certificates relating to incumbency and corporate proceedings;
e. the consents necessary under Section 6.04 hereof; and
f. Such other and further releases or other documents as may be
reasonably necessary, in the opinion of counsel to Seller, to effectuate
the transactions contemplated by this Agreement.
7.04 COUNSEL OPINION. T/SF and Seller shall have received an opinion,
---------------
dated the Closing Date, of Arnelle, Hastie, McGee, Willis & Greene, counsel to
Buyer and Macfadden, in substantially the form of Exhibit "V" hereto.
7.05 CONSENTS. T/SF and Seller shall have secured all consents and
--------
approvals necessary to the sale of the Transferred Assets by Seller and the
consummation of the transactions contemplated hereby, including but not limited
to the consent and approval by each of T/SF's and Seller's lenders, Quebecor and
the landlord pursuant to which Seller occupies its leased facilities, and such
consents and approvals shall remain effective as of the Closing.
7.06 HART, SCOTT, RODINO. All applicable waiting periods under the HSR Act
--------------------
relating to the transactions contemplated herein shall have expired or been
terminated.
26
<PAGE>
SECTION 8. INDEMNITY
8.01 SCOPE OF T/SF AND SELLER INDEMNITY. T/SF and Seller, jointly and
----------------------------------
severally, shall indemnify, defend and hold harmless Buyer and Macfadden and
their shareholders, officers and directors after the Effective Date against and
in respect of any damage or deficiency sustained by Buyer or Macfadden as a
result of any assessment of taxes, judgments or as the result of any other
liabilities of, or claims made against, Buyer and Macfadden of any nature with
respect to Seller or its business or assets, whether accrued, absolute,
contingent or otherwise, known or unknown (excluding any such damage or
deficiency arising out of matters as to which Seller and T/SF are entitled to be
indemnified by Buyer or Macfadden pursuant to Section 8.02 below), which (i)
existed at, or arise out of transactions entered into or events occurring prior
to, the Effective Date, to the extent that such tax, liability or claim is
attributable for accounting purposes to the period prior to the Effective Date
and is not otherwise assumed by Buyer herein, (ii) arise out of or the existence
of which is a breach of any representation or warranty or the non-fulfillment of
any covenant or undertaking of T/SF or Seller contained in this Agreement, or
(iii) are required to be indemnified by Seller pursuant to Section 5.10 hereof.
8.02 SCOPE OF INDEMNITY OF BUYER. Buyer and Macfadden, jointly and
---------------------------
severally, shall indemnify, defend and hold harmless T/SF and Seller and their
shareholders, officers and directors after the Effective Date against and in
respect of any damage or deficiency sustained by T/SF or Seller as a result of
any assessment of taxes, judgments or as the result of any other liabilities of,
or claims made against, T/SF or Seller of any nature, whether accrued, absolute,
contingent or otherwise, known or unknown (excluding any such damage or
deficiency arising out of matters as to which Buyer and Macfadden are entitled
to be indemnified by Seller or T/SF pursuant to Section 8.01 above), which (i)
arise out of or the existence of which is a breach of any representation or
warranty or the non-fulfillment of any covenant or undertaking of Buyer or
Macfadden contained in this Agreement; (ii) relate in any way to the Transferred
Assets and arise or result from a transaction entered into, events occurring or
liabilities incurred after, or attributable to the period following, the
Effective Date; (iii) relate to any liability, obligation or agreement assumed
by Buyer hereunder; (iv) relate to any claim, action, suit or proceeding brought
by, or in the name of, any employee of Seller which Buyer has agreed to hire
pursuant to Section 5.04 above against Seller and/or T/SF, including, without
limitation, as a result of personnel records (other than the Permitted Personnel
Records) and medical records provided by Seller to Buyer pursuant to Section
5.06 of this Agreement and Buyer's use thereof with respect to such employee;
(v) are required to be indemnified by Buyer pursuant to Section 5.10 hereof, or
(vi) arise under Section 5.11 hereof.
8.03 MAKING OF CLAIMS. A claim for indemnity pursuant to this Section 8
----------------
may only be made by an indemnified party by written notice to the indemnifying
party which notice shall be given within 30 days after the indemnified party
becomes aware of the claim or matter giving rise to an indemnification right.
Such written notice shall set forth in reasonable detail the basis upon which
such claim for indemnity or right to indemnification is made.
27
<PAGE>
8.04 LIMITATIONS. Except as herein specifically provided, no party hereto
-----------
shall have a right of indemnity against any other party hereto until the
aggregate value of the claim(s) for which indemnity is sought by such party
exceeds $75,000. Neither T/SF and Seller in the aggregate, on the one hand, nor
Buyer and Macfadden in the aggregate, on the other, shall in any event have a
right to seek or impose any liability to pay any amount in excess of $5,000,000
in the aggregate pursuant to this Section 8. Any liability, claim or obligation
which Buyer assumes under Section 2 hereof shall not be included in the
determination of the $75,000 de minimis provision or the $5,000,000 aggregate
limitation of this Section 8.04. These limitations shall not apply to any claim
under Sections 5.04, 5.10 or 5.11 hereof.
8.05 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------------------
warranties of the parties and the indemnities contained in Sections 8.01 and
8.02 hereof shall, despite any investigation by or on behalf of an indemnified
party, survive the Closing for a period of 16 months from and after the
Effective Date; provided, that claims arising under Section 5.10 hereof shall
survive until April 30, 1997; and provided further, that claims arising under
Section 5.11 hereof shall survive for 16 months following the termination of the
NAG Agreement.
8.06 CLAIMS AND LITIGATION. If any person or entity not a party to this
---------------------
Agreement shall make any demand or claim or pursue or file or threaten to file
any lawsuit, which demand, claim or lawsuit may result in any liability, damage
or loss to an indemnified party for which the indemnified party may seek
indemnity from an indemnifying party hereunder, after notice by an indemnified
party to an indemnifying party of such demand, claim or lawsuit, the
indemnifying party shall have the option, at the cost and expense of the
indemnifying party, to retain counsel to defend any such demand, claim or
lawsuit. Thereafter, the indemnified party shall be permitted to participate in
such defense at its or their own expense. If the indemnifying party shall fail
to respond within 30 days after receipt of such notice of any such demand, claim
or lawsuit, or shall notify the indemnified party that it does not intend to
defend such demand, claim or lawsuit, the indemnified party shall conduct the
defense of such demand, claim or lawsuit as it or they may in their discretion
deem proper, at the cost and expense of the indemnifying party. If the
indemnifying party elects to assume the defense of a third party claim, the
indemnified party will cooperate in all reasonable respects with the
indemnifying party in connection with such defense including retaining and
delivering to the indemnifying party records and information which are
reasonably relevant to such third party claim. Whether or not the indemnifying
party shall have assumed the defense of a third party claim, no party shall
admit any liability with respect to, or settle, compromise or discharge, such
third party claim without the prior written consent of the other parties, which
consent shall not be withheld if the proposed settlement is in fact reasonable
under the prevailing facts and circumstances. Nothing in this Section 8.06
shall prevent an indemnified party from taking such action as may be necessary
prior to the end of the 30 day period provided for above to prevent a default
judgment from being entered.
8.07 ATTORNEYS' FEES AND EXPENSES. The rights of an indemnified party
----------------------------
shall extend, subject to the limitations set forth in Section 8.04 above, to all
interest, penalties, costs and expenses, including, without limitation,
reasonable attorneys' fees, incident to any of the matters covered by Section
8.01 or 8.02 above, as the case may be.
28
<PAGE>
SECTION 9. MISCELLANEOUS
9.01 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
----------------
shall,except as specifically set forth herein,supersede all prior agreements and
understandings, both written and oral, between the parties hereto with respect
to the subject matter hereof, and no party shall be liable or bound to the other
in any manner by any warranties or representations not set forth herein or
contemplated hereby.
9.02 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties hereto. This Agreement may not be assigned by any party
without the prior written consent of the other parties hereto and any purported
assignment in violation of this Section 9.02 shall be void. Nothing expressed
or implied in this Agreement is intended to or shall be construed to give any
person other than Buyer, Seller, Macfadden, T/SF and their respective successors
and permitted assigns any legal or equitable right, remedy or claim under or in
respect of this Agreement, it being the intention of the parties hereto that
this Agreement shall be for the sole and exclusive benefit of such parties and
their successors and assigns and for the benefit of no other person.
9.03 HEADINGS. The headings of the sections and subsections of this
--------
Agreement are inserted for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
9.04 MODIFICATION AND WAIVER. Any of the terms or conditions of this
-----------------------
Agreement may be waived in writing at any time by the party which is entitled to
the benefits thereof, and this Agreement may be modified or amended at any time
by agreement of the parties. No supplement, modification or amendment of this
Agreement shall be binding unless executed in writing by all of the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
9.05 TERMINATION. This Agreement may be terminated at any time prior to
------------
the Closing Date as follows:
a. by the mutual written consent of Buyer, Macfadden, T/SF and Seller;
b. by Buyer and Macfadden, if any of the conditions to its obligations
specified in Section 6 has not been satisfied on or prior to the Closing
Date or shall have become impossible to fulfill for reasons beyond the
control of Buyer and Macfadden and shall not have been waived by Buyer and
Macfadden;
c. by T/SF and Seller if any of the conditions to their obligations
specified in Section 7 has not been satisfied on or prior to the Effective
Date or shall have become impossible to fulfill for reasons beyond the
control of T/SF and Seller and shall not have been waived by T/SF and
Seller; or
29
<PAGE>
d. by Buyer and Macfadden or T/SF and Seller if it is determined in
good faith that the consummation of this Agreement has become inadvisable
or impracticable by reason of a threat or initiation of any litigation or
proceedings or the institution of a formal investigation, in either case to
restrain or prohibit the consummation of this Agreement or any part hereof
or to obtain any other relief in connection with the transactions
contemplated hereby.
In the event of the termination and abandonment of this Agreement as
provided in this Section 9.05, this Agreement shall forthwith be void and have
no effect, without any liability on the part of any party (except as provided in
Sections 3.03 and 5.01a) or on the part of any of their respective directors,
officers or stockholders. Nothing contained in this Section 9.05 shall relieve
any party from liability for any breach of this Agreement.
9.06 EXHIBITS. All Exhibits annexed hereto and the documents, certificates
--------
and instruments required to be delivered simultaneously herewith or at or prior
to the Closing are expressly made a part of this Agreement as fully as though
completely set forth herein, and all references to this Agreement herein or in
any such Exhibits, documents, certificates or other instruments shall be deemed
to refer to and include all such Exhibits, documents, certificates and
instruments.
9.07 NOTICES. Any notice, request, instruction or other document required
-------
or permitted to be given hereunder by any party hereto to any other party shall
be in writing and delivered personally, sent by registered or certified mail, or
by facsimile transmission:
If to T/SF or Seller to:
Howard G. Barnett, Jr., President
T/SF Communications Corporation
2407 East Skelly Drive
Tulsa, Oklahoma 74105
Fax: 918-743-1291
with a copy, which shall not constitute notice, to:
Robert A. Curry, Esq.
Conner & Winters
2400 First Place Tower
15 East Fifth Street
Tulsa, Oklahoma 74103
Fax: 918-586-8548
30
<PAGE>
and if to Macfadden or Buyer, to such party at the following address:
Maynard Rabinowitz
Vice Chairman, Macfadden Holdings, Inc.
235 Park Avenue South
New York, NY 10003
Fax: 212-979-7344
with a copy, which shall not constitute notice, to:
Sol V. Slotnik, Esq.
Arnelle, Hastie, McGee, Willis & Greene
One Battery Park Plaza, 12th Floor
New York, NY 10004-1482
Fax: 212-742-9506
or at such other address or facsimile transmission number for a party as shall
be specified by like notice. Any notice which is delivered personally or by
facsimile transmission in the manner provided herein shall be deemed to have
been duly given to the party to whom it is directed upon actual receipt by such
party. Any notice which is addressed and mailed in the manner herein provided
shall be conclusively presumed to have been given to the party to whom it is
addressed at the close of business, local time of the recipient, on the third
day after the day it is so placed in the mail.
9.08 GOVERNING LAW. The parties hereby agree that this Agreement shall be
-------------
construed, enforced and governed by the laws of the State of New York.
9.09 EXTENSION OR WAIVER. At any time prior to the Closing, T/SF or Seller,
-------------------
on the one hand, or Buyer or Macfadden, on the other, may (a) extend the time
for the performance of any of the obligations or other acts of the other, (b)
waive any inaccuracies in the representations and warranties of the other
contained herein or in any document, certificate or writing delivered pursuant
hereto, or (c) waive compliance by the other with any of the agreements,
covenants or conditions contained herein. Any agreement on the part of any party
to any such extension or waiver shall be valid only if set forth in a written
instrument signed by such party.
9.10 INVALID PROVISIONS. If any provision of this Agreement is held to be
------------------
illegal, invalid or unenforceable under present or future laws, such provision
shall be fully severable, this Agreement shall be construed and enforced as if
such illegal, invalid or unenforceable provision had never comprised a part of
this Agreement and the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance from this Agreement.
9.11 EXPENSES. Except as otherwise specifically provided herein, whether or
--------
not the transactions contemplated by this Agreement are consummated, all legal,
accounting and other costs and expenses in connection with this Agreement and
the transactions contemplated hereby incurred by T/SF or Seller shall be paid by
them, and such expenses incurred by Buyer or Macfadden shall be paid by them.
31
<PAGE>
9.12 COUNTERPARTS. This Agreement may be executed in multiple
-------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
9.13 FURTHER ASSURANCES. For no additional consideration, each party
-------------------
hereto agrees that it shall provide to any other party, as from time to time
requested, such additional documents, instruments or agreements as any such
other party shall reasonably request to further evidence or put into effect the
agreements set forth herein.
Each of the parties hereto has executed this Agreement the date and year
first-above written.
"Buyer"
TRADE PUBLISHING L.L.C.
By: /s/ Anna Blanco
------------------------
Name: Anna Blanco
-----------------
Title: Manager
-----------------
"Seller"
BMT COMMUNICATIONS, INC.
By: /s/ Stuart P. Honeybone
------------------------------
Name: Stuart P. Honeybone
-----------------------
Title: President
-----------------------
32
<PAGE>
The above is acknowledged and agreed to by T/SF Communications Corporation
to the extent it has agreed to certain matters pursuant to the foregoing
Agreement.
Dated this 16th day of June, 1995.
"T/SF"
T/SF COMMUNICATIONS CORPORATION
By: /s/ Robert E. Craine, Jr.
--------------------------------
Name: Robert E. Craine, Jr.
-------------------------
Title: Executive Vice President
-------------------------
The above is acknowledged and agreed to by Macfadden Publishing, Inc., to
the extent it has agreed to certain matters pursuant to the foregoing Agreement.
In addition, Macfadden Publishing, Inc., hereby absolutely and unconditionally
guarantees the performance by Trade Publishing, L.L.C. of its obligations under
the foregoing Agreement.
Dated this 16th day of June, 1995.
"Macfadden"
MACFADDEN PUBLISHING, INC.
By: /s/ Anna Blanco
-------------------------
Name: Anna Blanco
------------------
Title: Vice President
------------------
33
<PAGE>
The following exhibits to the Asset Purchase Agreement have been omitted, but
will be furnished supplementally to the Commission upon request.
INDEX
<TABLE>
<CAPTION>
DESCRIPTION EXHIBIT
----------- -------
<S> <C>
Transferred Assets A
Excluded Assets B
Allocation of Purchase Price C
Financial Statements of Seller D
Payables Assumed by Buyer E
Buyer's Employees F
Non-Competition Agreements G
Assignment of Employment and Non-Competition
Agreements H
Officers and Directors of Buyer I
Officers and Directors of Seller and
Officers of T/SF J
Material Contracts K
Claims and Litigation L
Licenses and Permits M
Employees, Employment Agreements, Benefit
Plans, Labor Matters N
Tradenames, Trademarks, Service Marks and Copyrights O
Confidentiality Agreement P
Form of Covenant-Not-To-Compete of Seller and T/SF Q
Form of Covenant-Not-To-Compete of Buyer R
Consents S
Form of Bill of Sale, Transfer and Assignment T
Form of Opinion of Counsel for Seller and T/SF U
Form of Opinion of Counsel for Buyer V
</TABLE>
34
<PAGE>
Exhibit 10.5
MEMORANDUM OF CLOSING
AND
AMENDMENT TO AGREEMENT
SALE BY BMT COMMUNICATIONS INC., A WHOLLY-OWNED SUBSIDIARY OF
T/SF COMMUNICATIONS CORPORATION, OF
CONVENIENCE STORE NEWS, UNITED STATES DISTRIBUTION JOURNAL
----------------------------------------------------------
AND THE JOURNAL OF PETROLEUM MARKETING
----------------------------------
TO TRADE PUBLISHING L.L.C., AN AFFILIATE OF MACFADDEN PUBLISHING, INC.
----------------------------------------------------------------------
I. THE CLOSING; TIME AND PLACE. On Wednesday, August 2, 1995, at 11:00
----------------------------
a.m., EDT, at the offices of Arnelle, Hastie, McGee, Willis and Greene,
counsel to Trade Publishing L.L.C., a Delaware limited liability
company ("Buyer"), there took place the closing (the "Closing"),
pursuant to that certain Asset Purchase Agreement (the "Agreement"),
dated June 16, 1995, by and between Buyer, an affiliate of Macfadden
Publishing, Inc., a Delaware corporation ("Macfadden"), and BMT
Communications Inc., an Oklahoma corporation ("Seller"), a subsidiary
of T/SF Communications Corporation, a Delaware corporation ("T/SF"), of
the sale of the business (and related assets and certain liabilities)
related to the publishing of various trade magazines and associated
activities, including the publishing of Convenience Store News, United
------------------------------
States Distribution Journal and The Journal of Petroleum Marketing, as
--------------------------- ----------------------------------
described in the Agreement (the assets transferred are referred to in
the Agreement as the "Transferred Assets"), all on the terms and
conditions specified in the Agreement as herein amended, and certain
transactions incidental to the foregoing.
II. PERSONS PRESENT AT CLOSING. At Closing, the following persons were
---------------------------
present:
For Seller and T/SF:
-------------------
Howard G. Barnett, Jr., Chairman, President and Chief Executive
Officer of T/SF and Chairman and Chief Executive Officer of Seller
Robert E. Craine, Jr., Executive Vice President of T/SF and Vice
President of Seller
J. Gary Mourton, Senior Vice President, Chief Financial Officer and
Treasurer of T/SF and Secretary-Treasurer of Seller
Stuart P. Honeybone, Vice President and Assistant Secretary of T/SF
and President of Seller
<PAGE>
For Buyer and Macfadden:
-------------------------
Michael Boylan, Vice Chairman of Macfadden and Manager of Buyer
Maynard Robinowitz, Vice Chairman of Macfadden and Manager of Buyer
Anna Blanco, Vice President of Macfadden and Manager of Buyer
Sol V. Slotnik, Esq., of Arnelle, Hastie, McGee, Willis & Greene, counsel
to Macfadden and Buyer
For Oppenheimer & Co., Inc.:
----------------------------
Robert Poupolo, Managing Director
John E. Stuart, Vice President
III. ACTION TAKEN PRIOR TO CLOSING.
------------------------------
On June 16, 1995, Buyer and Seller entered into the Agreement, which
previously had been approved by the respective boards of directors of
the parties.
On June 21, 1995, Seller and T/SF filed their information for
compliance with the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended ("HSR").
On June 30, 1995, Buyer and Macfadden filed their information for
compliance with HSR.
On July 20, 1995, counsel to the parties received a telephone call
(confirmed by letter of the same date) from the United States Federal
Trade Commission informing the parties that early termination of the
waiting period had been granted under HSR.
IV. ACTION TAKEN AT CLOSING.
------------------------
All transactions occurring at Closing were deemed to have taken place
simultaneously, unless specifically noted otherwise, and were
conditioned upon completion of all contemplated transactions, none of
which, except as specifically stated, were effective until all were
completed. Unless otherwise indicated, all documents and instruments
were dated August 2, 1995 (the "Closing Date"), with the effective
date, for financial purposes, being the close of business on June 30,
1995 (the "Effective Date"). One executed copy of each document was
delivered to each of Buyer, Seller and their respective counsel.
2
<PAGE>
A. Documents delivered by Seller or T/SF:
--------------------------------------
1. The following consents relating to the assignment of
contracts or licenses were delivered:
a. Petroleum Marketing Association of America
b. Global Turnkey Systems, Inc.
c. Quebecor Printing (USA) Corp.
d. 370 Seventh Avenue Associates L.L.C.
Hedy Halpert, Samuel Kowalski and Daniel Petrocelli declined
to consent to the transfer of the employment portion of their
respective employment agreements. Irving Babson did not
consent nor did he refuse consent to the transfer of the non-
competition agreement with him.
2. The opinion of Conners & Winters, counsel to Seller and T/SF,
in substantially the form of Exhibit "U" of the Agreement.
3. Certificate of Secretary of Seller regarding resolutions by
the Board of Directors of Seller authorizing the execution
and delivery of the Agreement and the consummation of the
transactions contemplated thereby.
4. Certificate of Assistant Secretary of T/SF regarding
resolutions by the Board of Directors of T/SF authorizing
the execution and delivery of the Agreement and the
consummation of the transactions contemplated thereby.
5. Certificate of Seller regarding approval of the Agreement
and the consummation of the transactions contemplated
thereby by T/SF Investment Co., sole stockholder of Seller.
6. Certificate of officers of Seller and T/SF complying with
Section 6.01(ii) of the Agreement.
7. Certificates of good standing from their respective states
of incorporation for Seller, T/SF and T/SF Investment Co., a
Delaware corporation.
8. Bill of Sale in the form of Exhibit "T" to the Agreement.
9. Three separate Assignment of Registration of a Mark
assigning the names "Convenience Store News," "United States
Distribution Journal," and "The Journal of Petroleum
Marketing" to Buyer.
3
<PAGE>
10. Assignment of Non-Competition Agreements in the form of
Exhibit "H" to the Agreement.
11. Covenant-Not-to-Compete in the form of Exhibit "Q" to the
Agreement.
B. Documents delivered by Buyer or Macfadden:
-----------------------------------------
1. Opinion of Arnelle, Hastie, McGee, Willis & Greene, counsel
to Buyer and Macfadden, in substantially the form of Exhibit
"V" to the Agreement.
2. Certificates of resolutions of the members of Buyer and the
Board of Directors of Macfadden authorizing the execution
and delivery of the Agreement and the consummation of the
transactions contemplated thereby.
3. Certificates of good standing from the Secretary of State of
the State of Delaware for Buyer and Macfadden.
4. Certificates of officers of Buyer and Macfadden complying
with Section 7.01(ii) of the Agreement.
5. Assumption of liabilities complying with Section 2.02(b) of
the Agreement.
6. Covenant-Not-to-Compete in the form of Exhibit "R" to the
Agreement.
7. Wire transfer of $21,000,000, the purchase price, pursuant
to wire instructions delivered by T/SF.
C. Additional Actions Taken at Closing. The parties executed and
-----------------------------------
delivered this Memorandum of Closing and Amendment to Agreement
to acknowledge the matters set forth herein and to effect the
amendment of the Agreement contemplated by Section VII below.
V. CONDITIONS PRECEDENT. The parties reviewed the evidence of the
--------------------
satisfaction of the various conditions precedent to their respective
obligations, as outlined in the Agreement, as herein amended,
including, without limitation, Sections 6 and 7 of the Agreement, such
evidence including minutes or certificates of resolutions of the
various entities involved, evidence regarding the approval of
necessary third parties, and early termination under HSR. It was
determined that all conditions precedent to a closing of the
transactions under the Agreement had been satisfied.
4
<PAGE>
VI. ACTIONS TO BE TAKEN AFTER CLOSING.
---------------------------------
A. A press release concerning the Closing in the form attached
hereto as Exhibit "A" shall be issued jointly by the parties.
B. Form 8-K promulgated by the Securities and Exchange Commission
shall be filed by T/SF.
C. Within thirty days of the date hereof, Seller shall change its
name and shall no longer use "BMT" in any form of its name.
D. The Working Capital adjustment contemplated by Section 2.02c of
the Agreement and Interim Operations adjustments contemplated by
Section IV.D below will be made.
VII. AMENDMENTS TO AGREEMENT. By execution hereof, the parties agree
-----------------------
to the following amendments of the Agreement, effective as of the
Effective Date:
A. Transferred Software. The software for the System 36 which is
--------------------
licensed by Seller from Global Turnkey Systems, Inc., known as
"imps Publishing System" shall be included as a Transferred
Asset and shall be transferred at Closing to Buyer. Section 5.10
of the Agreement is hereby amended by replacing the third
sentence in subsection (d) thereof with the following sentence:
"Similarly, Seller will be utilizing the System 36 computer
system owned by Seller to run certain software included in the
Transferred Assets and Buyer will be utilizing such software for
its separate activities, and Seller agrees to make the System 36
computer system available for Buyer's use and Buyer agrees to
make the related software available for Seller's use through
January 31, 1996 (it being recognized that the employees who
have heretofore operated such system and software will then be
employed by Buyer, and Seller shall not be required to supply
any personnel to assist Buyer in the use of the System 36
computer system or such software)."
B. Extension of Benefits. Section 5.04 of the Agreement is amended
---------------------
to provide that the reference to "four months" in the second
sentence of subsection (a) thereof shall become "six months."
C. Effective Date. The second sentence of Section 2.03 of the
--------------
Agreement is amended in its entirety to read as follows:
"The date of closing shall be referred to herein as the "Closing
Date" and the "Effective Date" shall be the close of business on
June 30, 1995."
5
<PAGE>
D. Interim Operations. Because the business conducted with the
-------------------
Transferred Assets has been operated by Seller from the
Effective Date to the Closing Date, it shall be necessary for
the parties to account for the activities during such interim
period. It is hereby agreed that, in addition to providing
financial statements through the Effective Date as required
above, Seller shall also provide, within the time provided in
Section 2.02c(i) above, a statement of operations for the period
from the Effective Date through the Closing Date (the "Interim
Period Financials") which shall track the Transferred Assets,
the liabilities assumed pursuant to Section 2.02b., the
collection of receivables and the payment of expenses such that,
in addition to the Working Capital adjustment provided in said
Section 2.02c, the parties can further adjust for the net effect
of such activities since the Effective Date. The payment of the
net amount due shall be made with (or netted against) the
payment for the Working Capital adjustment under Section 2.02c.
Buyer shall have a right to review and object to the Interim
Period Financials, and disputes shall be resolved, as provided
in Section 2.02c. for the Closing Financial Statements. The
intent of this paragraph is for each party to account to the
other for benefits which it has received or expenses which it
has incurred which would have been attributable to the other
party if the Closing had occurred as of the Effective Date,
including, as to expenses incurred by Seller since such date, an
allocable portion of those general expenses of Seller which, in
accordance with and to the same extent as with past accounting
practices of Seller, have been allocated to the business
conducted with the Transferred Assets. For example, the accounts
receivable for purposes of the Working Capital adjustment in
Section 2.02c will be determined as of June 30, 1995; since such
date, Seller has collected certain of such receivables and,
pursuant to this paragraph, would account to Buyer for such
collections. Similarly, Seller would have incurred various
expenses since the Effective Date, such as for employees'
salaries and publication costs, which would be subject to
accounting and reimbursement by Buyer. The Agreement provides
that included in the Transferred Assets are to be 561,500 pounds
of 38-pound newsprint. For purposes of determining Working
Capital, 561,500 pounds of the 38-pound newsprint owned by
Seller at June 30, 1995, shall be deemed owned by Buyer on the
Effective Date. In addition, the Bill of Sale to be delivered by
Seller to Buyer shall transfer an amount of such paper equal to
the difference of 561,500 pounds of such paper less the amount
consumed in printing the Transferred Magazines after the
Effective Date through the Closing Date.
E. NAG Agreement. The parties acknowledge that they have used
-------------
their best efforts to acquire the consent of National Advisory
Group ("NAG") to the assignment of the NAG Agreement (as defined
in the Agreement) as contemplated by Section 5.11 of the
Agreement. However, such consent has not been received.
Accordingly, the Bill of Sale to be delivered at Closing by
Seller shall exclude the NAG Agreement and the same shall never
be assigned to Buyer unless NAG should later consent thereto. In
lieu of any assignment thereof, as between Seller and NAG,
Seller shall remain fully responsible for meeting Seller's
obligations
6
<PAGE>
under the NAG Agreement. As between Seller and Buyer, by closing
under the Agreement, Seller shall be deemed to have
subcontracted its obligations and responsibilities to Buyer on
the terms of Section 5.11 of the Agreement. In addition to
Buyer's obligation under said Section 5.11, Buyer hereby agrees
to use all reasonable efforts, consistent with good business
practices, to ensure that all of Seller's responsibilities under
the NAG Agreement are faithfully met. Subject to Buyer's
compliance with the foregoing obligations and its compliance
with the NAG Agreement, if NAG should claim that the subcontract
under Section 5.11 of the Agreement is a violation of the NAG
Agreement, then Seller agrees as follows:
(i) Seller, at its sole expense, shall undertake and vigorously
conduct the legal defense of the parties' actions hereunder
as not being a breach of a material portion of the NAG
Agreement and defend any counterclaim or similar action by
NAG as a result of the parties actions hereunder; and
(ii) Should NAG prevail in such an action and have the
subcontracting of the NAG Agreement declared a breach of a
material provision of the NAG Agreement, Seller, at its
sole expense, shall undertake any legal action reasonably
necessary to enforce the provisions of paragraph 9(c) of
the NAG Agreement. subcontracting
Buyer shall cooperate reasonably with Seller, at Seller's
expense, in any of the above actions. Seller shall be entitled
to rely on the advise of counsel regarding the likelihood of
success of any appeal of any adverse ruling in any action
described in (i) or ii) above and shall not be obligated to
pursue an appeal which Seller is advised by counsel does not
have a reasonable chance of success. Buyer, at its sole expense,
may prosecute an appeal if Seller, in compliance with the
preceding sentence, elects not to do so. In such event, Seller
shall cooperate reasonably with Buyer, at Buyer's expense, in
such appeal. The parties recognize that the arbitration clause
of the NAG Agreement may require that the issues described
herein be settled by arbitration and that the ability to appeal
from a ruling in arbitration may be limited.
F. First Payroll; Medical. Buyer's next payroll is August 4, 1995.
----------------------
On such date, Buyer shall deliver to Seller payroll checks for
all Buyer's Employees (as defined in the Agreement) for the
period July 28, 1995 (Seller's last pay period having ended July
27, 1995), through August 2, 1995, and Buyer shall deliver such
checks to such employees with its payroll check for the period
August 3-4, 1995. Buyer has requested Seller to continue to
cover Buyer's Employees under Seller's medical insurance plan
until August 31, 1995. Seller hereby agrees to maintain such
coverage and, as part of the interim period adjustments
contemplated by Section VII.D. above, Seller shall be reimbursed
its $12,400 costs for such continued coverage as well as the
cost of such payroll.
7
<PAGE>
G. No Other Changes. Except as specifically provided above in this
----------------
Section VII of this Memorandum of Closing and Amendment to Agreement,
the parties hereby ratify and confirm the terms and provisions of the
Agreement. Capitalized terms used in this Section VII and not defined
shall have the meaning ascribed to them in the Agreement.
IN WITNESS WHEREOF, the parties have executed this Memorandum of Closing
and Amendment to Agreement this 2nd day of August, 1995.
BMT COMMUNICATIONS INC.
By: /s/ Stuart Honeybone
-----------------------------------
T/SF COMMUNICATIONS CORPORATION
By: /s/ Howard G. Barnett, Jr.
------------------------------------
TRADE PUBLISHING L.L.C.
By: /s/ Anna Blanco
------------------------------------
MACFADDEN PUBLISHING, INC.
By: /s/ Anna Blanco
-----------------------------------
8
<PAGE>
Exhibit A"
PRESS RELEASE
For More Information, Call:
<TABLE>
<CAPTION>
<S> <C>
Howard G. Barnett, Jr., Chairman, Chief Executive For Immediate Release
Officer and President August 2, 1995
Robert E. Craine, Jr., Executive Vice President
J. Gary Mourton, Senior Vice President-Finance
Telephone: 918-747-2600
</TABLE>
T/SF COMMUNICATIONS COMPLETES SALE OF TRADE
PUBLICATIONS TO MACFADDEN PUBLISHING
New York, NY. T/SF Communications Corporation (AMEX - TCM) today announced
that it has closed its previously announced sale of three trade magazines and
their related activities to an affiliate of Macfadden Publishing, Inc. The
magazines, Convenience Store News, United States Distribution Journal and The
---------------------------------------------------------- ---
Journal of Petroleum Marketing, were sold to the Macfadden affiliate for the
------------------------------
payment of $21,000,000 in cash at closing.
Howard G. Barnett, Jr., Chairman, President and Chief Executive Officer of
T/SF Communications, stated: "With this sale and completion of our merger in May
of this year with our then parent company, Tribune/Swab-Fox Companies, Inc., we
have completed the restructuring program which we embarked on two years ago.
T/SF is now well positioned for future profitability and growth, both from
internal activities and through acquisitions.
In addition to its non-trade publishing activities, including its pre-
employment screening/information and its exposition services divisions, T/SF is
retaining its International Gaming and Wagering Business and EXPO magazines, and
------------------------------------------ ----
their associates activities, including the World Gaming Congress.
9
<PAGE>
Exhibit 11
T/SF COMMUNICATIONS
CORPORATION
Computation of Earnings per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1995 1994
----------- ------------
(Unaudited)
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Income from continuing operations $ 544 $ 556
Add:
After tax interest expense applicable
to 11% Convertible Debentures due 1997 -- 10
Deduct:
Dividends on New Senior Preferred Stock -- (26)
Dividends on Class A Preferred Stock -- (3)
----------- ------------
Income before discontinued operations
applicable to common and
common equivalent shares 544 537
Discontinued operations, net of income tax 7 (63)
----------- ------------
Net income applicable to common
and common equivalent shares $ 551 $ 474
=========== ============
Weighted average number of common
and common equivalent shares outstanding
Common shares 3,872 3,735
Common equivalent shares:
From 6 1/2% Preferred Stock -- 173
From 11% Convertible Debentures due in 1997 -- 35
----------- ------------
3,872 3,943
Income per common =========== ============
and common equivalent share:
Continuing operations $ 0.14 $ 0.14
Discontinued operations - (0.02)
----------- ------------
Net income per common share $ 0.14 $ 0.12
=========== ============
FULLY DILUTED EARNINGS PER SHARE:
Income before discontinued operations $ 544 556
Add:
After tax interest expense applicable to:
11% Convertible Debentures due in 1997 -- 10
11% Convertible Debentures due in 1998 14 14
Deduct:
Dividends on Class A Preferred Stock -- (3)
----------- ------------
Income before discontinued operations
applicable to common and
common equivalent shares 558 577
Discontinued operations, net of income tax 7 (63)
----------- ------------
Net income applicable to common
and common equivalent shares $ 565 $ 514
=========== ============
</TABLE>
<PAGE>
T/SF COMMUNICATIONS CORPORATION
Computation of Earnings per Share - Continued-
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1995 1994
---------- ----------
(Unaudited)
<S> <C> <C>
FULLY DILUTED EARNINGS PER SHARE -
Continued:
Weighted average number of common
and common equivalent shares outstanding
Common shares and common equivalent shares 3,872 3,943
Assumed conversion of 11% Debentures due in 1998 44 44
Assumed conversion of New Senior Preferred Stock -- 122
---------- ----------
3,916 4,109
========== ==========
Income per common
and common equivalent share: $ 0.14 $ 0.14
Continuing operations -- (0.01)
Discontinued operations ---------- ----------
Net income per common share $ 0.14 $ 0.13
========== ==========
</TABLE>
<PAGE>
Exhibit 11
T/SF COMMUNICATIONS CORPORATION
Computation of Earnings per Share
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1994
---------- -----------
(Unaudited)
<S> <C> <C>
PRIMARY EARNINGS PER SHARE:
Income from continuing operations $ 862 $ 1,015
Add:
After tax interest expense applicable
to 11% Convertible Debentures due 1997 - 34
Deduct:
Dividends on New Senior Preferred Stock - (51)
Dividends on Class A Preferred Stock - (8)
---------- -----------
Income before discontinued operations
applicable to common and
common equivalent shares 862 990
Discontinued operations, net of income tax (15) 234
---------- -----------
Net income applicable to common
and common equivalent shares $ 847 $ 1,224
========== ===========
Weighted average number of common
and common equivalent shares outstanding
Common shares 3,869 3,735
Common equivalent shares:
From 6 1/2% Preferred Stock - 173
From 11% Convertible Debentures due in 1997 - 71
---------- -----------
3,869 3,979
========== ===========
Income per common
and common equivalent share:
Continuing operations $ 0.22 $ 0.25
Discontinued operations - 0.06
---------- -----------
Net income per common share $ 0.22 $ 0.31
========== ===========
FULLY DILUTED EARNINGS PER SHARE:
Income before discontinued operations $ 862 $ 1,015
Add:
After tax interest expense applicable to:
11% Convertible Debentures due in 1997 - 34
11% Convertible Debentures due in 1998 28 28
Deduct:
Dividends on Class A Preferred Stock - (8)
Income before discontinued operations ---------- -----------
applicable to common and
common equivalent shares 890 1,069
Discontinued operations, net of income tax (15) 234
---------- -----------
Net income applicable to common
and common equivalent shares $ 875 $ 1,303
========== ===========
</TABLE>
<PAGE>
T/SF COMMUNICATIONS CORPORATION
Computation of Earnings per Share - Continued -
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Six months ended
June 30,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
FULLY DILUTED EARNINGS PER SHARE -
Continued:
Weighted average number of common
and common equivalent shares outstanding
Common shares and common equivalent shares 3,869 3,978
Assumed con version of 11% Debentures due in 1998 44 44
Assumed conversion of New Senior Preferred Stock - 122
------------ ------------
3,913 4,144
============ ============
Income per common
and common equivalent share:
Continuing operations $ 0.23 $ 0.26
Discontinued operations - 0.06
------------ ------------
Net income per common share $ 0.23 $ 0.32
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
for the six months ended June 30, 1995 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,721
<SECURITIES> 0
<RECEIVABLES> 10,554
<ALLOWANCES> 653
<INVENTORY> 437
<CURRENT-ASSETS> 24,937
<PP&E> 8,544
<DEPRECIATION> 3,696
<TOTAL-ASSETS> 47,187
<CURRENT-LIABILITIES> 17,471
<BONDS> 4,612
<COMMON> 372
0
0
<OTHER-SE> 21,998
<TOTAL-LIABILITY-AND-EQUITY> 47,187
<SALES> 29,634
<TOTAL-REVENUES> 30,436
<CGS> 20,411
<TOTAL-COSTS> 20,411
<OTHER-EXPENSES> 7,568
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 434
<INCOME-PRETAX> 2,023
<INCOME-TAX> 895
<INCOME-CONTINUING> 862
<DISCONTINUED> (15)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 847
<EPS-PRIMARY> .22
<EPS-DILUTED> 0
</TABLE>
