<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, 1996, 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
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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
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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 13, 1996, there were 3,353,065 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
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T/SF COMMUNICATIONS CORPORATION
INDEX
Page No.
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PART I Financial Information
Item 1
------
Consolidated Balance Sheets - 4-5
June 30, 1996 (unaudited) and
December 31, 1995
Consolidated Statements of 6
Operations - Three Months and
Six Months Ended June 30, 1996
and 1995 (unaudited)
Consolidated Statements of Cash 7-8
Flows - Six Months Ended June
30, 1996 and 1995 (unaudited)
Notes to Consolidated Financial 9-10
Statements
Item 2
------
Management's Discussion and 10-11
Analysis of Financial Condition
and Results of Operations
PART II Other Information
Item 4
------
Submission of Matters to a Vote 12
of Security Holders
Item 6
------
Exhibits and Reports on Form 8-K 12
2
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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,
1996 1995
-------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 13,429 $ 13,383
Short-term investments 1,000 1,000
Accounts receivable, less reserve for doubtful accounts
of $625 in 1996 and $516 in 1995 9,512 8,209
Inventories 226 181
Deferred tax assets 706 494
Current contract receivable and other current assets 2,658 3,050
Refundable income taxes 2,644 3,239
------- -------
Total current assets 30,175 29,556
------- -------
Contract and Notes Receivable and Investments 2,099 2,721
------- -------
Property, Plant and Equipment, at cost:
Exposition equipment 3,028 2,987
Data processing and office furniture and equipment 7,511 6,653
------- -------
10,539 9,640
Less - accumulated depreciation 5,894 4,739
------- -------
4,645 4,901
------- -------
Deferred Tax Assets 806 1,456
------- -------
Intangibles and Other Assets, net 14,568 14,810
------- -------
$52,293 $53,444
======= =======
</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,
1996 1995
-------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,073 $ 4,200
Accrued liabilities 4,442 5,509
Deferred revenue 4,641 3,255
Current portion of long-term debt 663 1,266
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Total current liabilities 13,819 14,230
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Long-Term Debt 2,145 4,529
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Deferred Contract Liabilities and Credits 1,778 2,199
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Stockholders' Equity, per accompanying statement:
Preferred stock, $10 par value, 1,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.10 par value, 10,000 shares
authorized, 3,353 and 3,349 shares issued and
outstanding 332 332
Additional paid-in capital 13,532 13,475
Retained earnings 20,687 18,679
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Total stockholders' equity 34,551 32,486
------- -------
$52,293 $53,444
======== =======
</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,
------------------- -------------------
1996 1995 1996 1995
------- ------- ------- -------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues
Operating revenues $15,622 $15,860 $29,306 $29,634
Interest income and other 666 562 1,086 802
------- ------- ------- -------
16,288 16,422 30,392 30,436
------- ------- ------- -------
Costs and Expenses:
Operating costs 9,645 11,304 18,383 20,411
General and administrative 3,429 2,729 6,576 5,662
Interest 137 242 288 434
Depreciation and amortization 914 994 1,798 1,906
------- ------- ------- -------
14,125 15,269 27,045 28,413
------- ------- ------- -------
Income before income taxes 2,163 1,153 3,347 2,023
Provision for income taxes (861) (475) (1,339) (895)
Minority interest in consolidated
subsidiaries - (134) - (266)
------- ------- ------- -------
Income from continuing operations 1,302 544 2,008 862
Discontinued operation, net - 7 - (15)
------- ------- ------- -------
Net income $ 1,302 $ 551 $ 2,008 $ 847
======= ======= ======= =======
Earnings per common and
common equivalent share:
Continuing operations $ 0.37 $ 0.14 $ 0.57 $ 0.22
Discontinued operations - - - -
------- ------- ------- -------
$ 0.37 $ 0.14 $ 0.57 $ 0.22
======= ======= ======= =======
Cash dividends per common share $ - $ 0.27 $ - $ 0.27
======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1996 1995
-------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,008 $ 847
-------- -------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,798 1,906
Accretion of interest expense 114 31
Loss on sale of assets - 19
Changes in assets and liabilities:
Accounts receivable and refundable
income taxes (707) (1,724)
Inventories (45) 159
Current contract receivable and
other current assets 360 (535)
Intangibles and other assets (146) (226)
Accounts payable and accrued liabilities (1,130) (1,208)
Deferred revenue 1,386 1,412
Deferred income taxes 438 (36)
Minority interest - 266
-------- -------
Total adjustments 2,068 64
-------- -------
Net cash provided by operating activities 4,076 911
-------- -------
Cash flows from investing activities:
Net sales of short-term investments - 2,000
Capital expenditures (1,256) (1,645)
Collections on contract and notes receivable 740 3,826
Payments on deferred contract liabilities (275) (364)
Net additions to investments (227) (344)
Proceeds from the sale of assets - 143
-------- -------
Net cash provided by (used in) investing activities (1,018) 3,616
-------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
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T/SF COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1996 1995
-------- ----------
(Unaudited)
<S> <C> <C>
Cash flows from financing activities:
Borrowings under bank lines-of-credit - 2,000
Principal payments of long-term debt (3,069) (479)
Dividends on common and preferred stock - (1,051)
Purchase of parent stock - (7,861)
Issuance of common stock 57 -
-------- -------
Net cash used in financing activities (3,012) (7,391)
-------- -------
Net increase in cash and cash equivalents 46 (2,864)
Cash and cash equivalents at beginning of period 13,383 4,585
-------- -------
Cash and cash equivalents at end of period $ 13,429 $ 1,721
======== ========
</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, 1996 and 1995
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 of
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, 1996,
are not necessarily indicative of the results to be expected for the year ending
December 31, 1996. For further information, refer to the consolidated financial
statements and related notes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
On May 25, 1999, Tribune/Swab-Fox Companies, Inc. ("Tribune/Swab-Fox")
was merged (the "Merger") with and into the Company. While the Merger was
structured for legal purposes as a merger of Tribune/Swab-Fox with and into the
Company, for accounting purposes, the Merger has been treated as a
recapitalization of Tribune/Swab-Fox, with Tribune/Swab-Fox as the survivor
(downstream merger). Accordingly, the historical financial statements of the
Company, as the surviving entity, are the historical financial statements of
Tribune/Swab-Fox. Earnings per share for the period prior to the Merger have
been restated to reflect the number of equivalent shares giving effect to the
recapitalization.
2. Common Stock and Earnings Per Share
Weighted average common and common equivalent shares issued and
outstanding during the three months and six months ended June 30, 1996, were
3,546,000 and 3,526,000 and the weighted average equivalent shares for the three
months and six months ended June 30, 1995, were 3,872,000 and 3,869,000.
3. Income Taxes
The income tax provision for the three months and six months ended June
30, 1996 and 1995, does not bear a normal relationship to the statutory federal
income tax rate of 34%, mainly as a result of amortization of goodwill related
to acquisitions and state income taxes.
9
<PAGE>
4. Reclassification
Certain reclassifications have been made to the 1995 financial statements
to conform to the presentation in the 1996 financial statements. These
reclassifications have no effect on results of operations for 1995.
5. Bank Financing
Effective June 30, 1996, the Company replaced its bank lines of credit
(totaling $3,750,000) with a $16,000,000 line of credit, interest at New York
prime rate, which can be used for acquisitions and working capital. The line of
credit includes the option to convert outstanding balances to term loans,
payable in semi-annual installments over four years, and is secured by the
pledge of the common stock of the Company's operating subsidiaries. No balance
was outstanding on the line of credit at June 30, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Results of Operations
- ---------------------
Revenues of $16,288,000 and $30,392,000 for the three months and six
months ended June 30, 1996, were $134,000 and $44,000 lower, respectively, than
the three months and six months ended June 30, 1995. Exposition services revenue
increased $1,850,000 for the three months and $3,630,000 for the six months
ended June 30, 1996, related to an increase in registration services for 1996,
along with the effect in 1996 of higher rates effective mid-1995, for "reader
box" rental and an increase in convention publishing, both dailies and
directories. Information services revenue increased approximately $970,000 for
the three months and $1,970,000 for the six months ended June 30, 1996,
attributable to continued growth in employment histories volume, criminal record
volume, and pre-employment screening services. Revenues for the three trade
journals sold in August, 1995, were approximately $3,500,000 and $6,400,000 for
the three months and six months ended June 30, 1995, respectively, resulting in
a decrease in publishing revenues to $1,195,000 for the three months and
$2,140,000 for the six months ended June 30, 1996. An increase in advertising
revenue for the remaining trade publication (IGWB, also known as Gaming and
Wagering Business) reduced the effect of the decrease from the publications
sold.
Interest income and other for the three months and six months ended June
30, 1996, is higher than the same periods in 1995, substantially all related to
interest earned on cash and short-term investments.
Operating costs for the three months and six months ended June 30, 1996,
are $1,659,000 and $2,028,000, respectively, lower than the same periods in
1995. Exposition services costs increased approximately $35,000 and $840,000
during the three months and six months ended June 30, 1996, respectively, as
compared with the same periods in 1995, consisting of costs related to the
increase in registration services volume and the payroll costs of operating
personnel
10
<PAGE>
which had been hired mainly in the first quarter of 1995 at both exposition
services divisions. Information services costs increased approximately $330,000
and $745,000 for the three months and six months ended June 30, 1996,
respectively, as compared with 1995. These cost increases are a result of
criminal records volume increase and personnel for new products or expanded
markets reduced by lower costs related to non-trucking employment screening
services, which costs had been pared back in late 1995 in connection with a more
focused marketing of these services. Publishing costs attributable to the three
trade journals sold in mid-1995 were approximately $1,400,000 for the three
months and $3,200,000 for the six months ended June 30, 1995. Expansion into
Europe, a new seminar in Mexico and moving a conference to the second quarter of
1996 have resulted in additional personnel and publishing costs at IGWB, which
has partially offset the decrease in costs resulting from the sale of the three
trade journals.
General and administrative expenses are $700,000 and $914,000 higher for
the three months and six months ended June 30, 1996, respectively, as compared
with the same periods in 1995. The 1996 reductions in expenses attributable to
the trade journals sold in 1995 were more than offset by increases in expenses
at the other divisions related to continued growth, a provision for possible
losses of prepaid production costs, which prepayments were made to a digital
information vendor during 1995 and early 1996. Also, in June, 1996, the Company
suffered a $450,000 loss on the remaining amounts due from the buyer of
Shopper's Guide assets and operations sold in 1994. The Company had retained a
right to future profits which right was lost when the buyer sold these
operations to a third party in July, 1996, at which date the Company received a
final payment of $200,000.
Interest expense is $105,000 and $146,000 lower during the three months
and six months ended June 30, 1996, respectively, as compared with the same
periods in 1995, mainly related to principal payments on debt during the past
year.
Depreciation and amortization is $80,000 and $108,000 lower for the three
months and six months ended June 30, 1996, respectively, as compared with the
same periods in 1995, attributable to the assets of the three publications sold
in August, 1995, mainly goodwill and advertising lists, reduced by increases in
depreciation at each of the remaining operations related to capital
expenditures.
Financial Condition
-------------------
The changes in the Company's financial condition during the three months
and six months ended June 30, 1996, are mainly seasonal changes related to the
Company's exposition services and trade publishing operations. A $16,000,000
line of credit has been obtained from a bank that can be used for acquisitions
and working capital and which replaced the Company's other bank lines of credit.
One of the long-term notes payable with a balance of approximately $2,500,000
was paid in the quarter ended June 30, 1996.
11
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were voted upon at the Annual Meeting of
Stockholders of the Company held on June 4, 1996.
(a) Creation of a Board of Directors composed of eleven members (11) and
the election of nine (9) members at the annual meeting.
For - 3,106,268 shares; Against - 4,299 shares; Abstain - 62 shares
(b) Election of the following nine (9) persons as directors, all of whom
were currently on the Board of Directors.
Director Nominee Number of Shares of Common Stock
---------------- --------------------------------
For Withheld Authority
--- ------------------
Howard G. Barnett, Jr. 3,110,309 320
Martin F. Beck 3,109,059 1,570
Robert E. Craine, Jr. 3,110,309 320
William N. Griggs 3,030,562 80,067
David Lloyd Jones 3,110,309 320
Jenkin Lloyd Jones Jr. 3,110,309 320
Mark A. Leavitt 3,109,059 1,570
Robert J. Swab 3,110,309 320
Martin A. Vaughan 3,110,309 320
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
10.1 Revolving Credit Agreement, dated as of June 30, 1996, between and
among T/SF Communications Corporation, a Delaware corporation, and
T/SF Investment Co., a wholly-owned subsidiary of T/SF Communications
Corporation, a Delaware corporation ("Borrowers") and BancFirst, a
state banking association ("Bank").
10.2 Pledge Agreement dated as of June 30, 1996, between T/SF
Communications Corporation ("Pledgor") and BancFirst.
10.3 Pledge Agreement dated as of June 30, 1996, between T/SF Investment
Co. ("Pledgor") and BancFirst.
27 Financial data schedule
(b) Reports on Form 8-K.
No report on Form 8-K was filed during the quarter ended June 30,
1996.
12
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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 13, 1996 By: /s/ Howard G. Barnett, Jr.
-------------------------------------
Howard G. Barnett, Jr.
Chairman, Chief Executive Officer
and President
Date: August 13, 1996 By: /s/ J. Gary Mourton
-------------------------------------
J. Gary Mourton, Senior Vice
President-Finance and Chief
Financial Officer
13
<PAGE>
EXHIBIT 10.1
REVOLVING CREDIT AGREEMENT
--------------------------
THIS REVOLVING CREDIT AGREEMENT, dated as of June 30, 1996, is between and
among T/SF COMMUNICATIONS CORPORATION, a Delaware corporation ("Communications")
and T/SF INVESTMENT CO., a Delaware corporation ("Investment") (collectively
referred to herein as the "Borrowers") and BANCFIRST, a state banking
association (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank is willing to extend a joint and several revolving line
of credit to the Borrowers in the maximum principal amount of $16,000,000 as a
restructure, modification and increase of those certain $2,000,000 and
$1,750,000 revolving lines of credit presently respectively governed and
evidenced by (i) that certain Restated Revolving Credit Loan Agreement dated as
of June 30, 1995 between Communications and the Bank and (ii) that certain
Revolving Credit Loan Agreement dated as of July 14, 1993, as amended February
1, 1994, June 30, 1994 and June 30, 1995 between Transportation Information
Services, Inc., an Oklahoma corporation ("TISI") and the Bank (collectively the
"Prior Agreements"), subject to the terms, conditions, limitations, 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
-----------------------
published by the Wall Street Journal (Southwest Addition) in the "Money Rates"
column from time to time as its prime rate, which such published prime quotation
shall not necessarily be the "best" or lowest rate applicable. Should the Wall
Street Journal (Southwest Addition) cease to publish a prime rate, then the
Applicable Prime Rate shall be a similar rate selected by the Bank. 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
-1-
<PAGE>
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, 1996.
--------------
1.5 "Commitments" shall mean the Revolving Credit Commitment and the Term
-------------
Conversion Commitment.
1.6 "Current Ratio" shall mean the ratio of Borrowers' consolidated
---------------
Current Assets to the aggregate amount of Borrowers' consolidated Current
Liabilities, as each term is computed and consolidated in accordance with GAAP.
1.7 "Default Rate" shall mean the Applicable Prime Rate plus six
--------------
percentage points (6%).
1.8 "ERISA" shall mean the Federal Employee Retirement Income Security
-------
Act of 1974, as amended, together with all regulations and rulings promulgated
with respect thereto.
1.9 "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.
1.10 "GAAP" shall mean generally accepted accounting principles applied in
------
all material respects in general conformance with those applied in the
preceding period, unless the Borrowers' outside accountants reasonably 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 and
further provided that references to the Borrowers' consolidated financial
statements or consolidated financial condition, results of operations or
compliance with the financial covenants hereof shall be deemed to include
Borrowers and all of their corporate subsidiaries.
1.11 "Indebtedness" shall mean and include any and all: (i) indebtedness,
--------------
obligations and liabilities of the Borrowers 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 Revolving Credit Note and/or any Term Notes
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 Borrowers under the terms of this
Agreement, the other Loan Documents or any other writing evidencing or securing
the payment of the Revolving Credit Note and any Term Notes 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.
-2-
<PAGE>
1.12 "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.
1.13 "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).
1.14 "Loan Documents" shall mean this Agreement, the Revolving Credit
----------------
Note, all Term Notes (if any), the Pledge Agreements as herein described and
defined, and all other documents or instruments (with stock powers in blank) and
certificates executed and delivered to the Bank by the Borrowers pursuant to the
terms of this Agreement.
1.15 "Net Worth" shall mean, on any date as of which the amount thereof is
-----------
to be determined, the total stockholders' equity of the Borrowers (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 Notes (to the extent
included in such computation) on a consolidated basis in accordance with GAAP.
1.16 "Notes" shall mean the Revolving Credit Note and any Term Notes and
-------
any extensions, renewals, replacements, modifications, substitutions,
rearrangements, conversions, consolidations or changes in form of any thereof.
1.17 "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.
1.18 "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, 1997, or
such later date as the Bank may extend the commitment for Revolving Credit Loans
by an extension in writing, unless earlier terminated pursuant to the terms
hereof.
1.19 "Revolving Credit Note" shall mean the Revolving Credit Note
-----------------------
described in Section 2.2 of this Agreement, together with each and every
extension, renewal, modification, replacement, substitution and change in form
thereof which may be from time to time and for any term or terms effected.
1.20 "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.
1.21 "Term Conversion Commitment" shall mean the agreement of the Bank
----------------------------
under Section 2.4 of this Agreement, and pursuant to the terms and conditions
hereof, until June 30, 1997, or such later date as the Bank may extend the
commitment to convert Revolving Credit Loans to Term Loans by an extension in
writing, unless earlier terminated pursuant to the terms hereof.
1.22 "Term Notes" shall mean the promissory note(s) evidencing that
------------
portion or portions of the Revolving Credit Loans converted to Term Loans in
accordance with the provisions of Sections 2.4 and 2.5 hereof.
-3-
<PAGE>
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 LOANS AND COLLATERAL
-------------------------------------
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 Borrowers from the Closing Date until June 30, 1997, or until
such later date as the Bank shall have extended its Revolving Credit Commitment
in writing unless its Revolving Credit 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 Borrowers 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 $16,000,000 and further subject to the
conversion feature of Sections 2.4 and 2.5 hereof as well as the (x) $350,000
maximum on outstanding and unexpired standby letters of credit issued by the
Bank for or on account of one of the Borrowers or any approved Subsidiary
thereof and (y) the $3,000,000 maximum on outstanding advances on Borrowers'
working capital needs. Revolving Credit Loan advance requests shall be limited
to the following purposes: (i) working capital needs of Borrowers limited to a
maximum outstanding principal amount of $3,000,000 at any time, (ii) issuance of
standby letters of credit for the account of one or both of the Borrowers or any
approved Subsidiary thereof as reviewed and approved by the Bank limited to an
aggregate original face amount of $350,000 at any time, (iii) funding the payoff
of Communication's secured obligation to Charles Dees in the approximate amount
of $2,480,000 as of the Closing Date, and (iv) acquisitions of other entities,
businesses or assets not owned by Borrowers or Subsidiaries thereof,
substantiated by documentation reasonably evidencing the same ("Acquisitions")
subject to (a) a means test requiring the Bank's prior written approval of such
Acquisitions for which the purchase price is $2,000,000 or more of an acquiree
company not profitable (on both a pre and after tax basis) in such acquiree's
---
company's most recently concluded fiscal year and (b) Borrower's having always
self funded (other than utilization of the Revolving Credit Commitment) in the
aggregate at least fifty percent (50%) of the total Acquisitions dollars
expended by Borrowers on a cumulative basis from and after the Closing Date
("Acquisition Purposes").
2.2 Revolving Credit Note/Commitment Fee. On the Closing Date, the
------------------------------------
Borrowers shall execute and deliver to the order of the Bank the Borrowers'
joint and several revolving credit note in the principal amount of $16,000,000,
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 Borrowers 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 the lesser of the then applicable Revolving Credit Commitment or
------
$16,000,000 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, 1996 (for the calendar quarter ending September 30,
1996), and at the maturity of the Revolving Credit Note, whether by acceleration
or otherwise. In accordance with the provisions of the Prior Agreements
-4-
<PAGE>
the commitment fee specified therein for the calendar quarter ending June 30,
1996, is payable on July 15, 1996.
2.3 Revolving Credit Advances, Payments and Voluntary Prepayment. Each
------------------------------------------------------------
Revolving Credit Loan requested by the Borrowers from the Bank shall (i) be
requested in writing on the loan advance request form annexed hereto as Exhibit
"B" (the "Loan Request") 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 $25,000 or an integral multiple thereof
(unless the amount then available to borrow is less than $25,000, 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 lesser of the then applicable Revolving Credit Commitment or $16,000,000;
------
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, Borrowers state that they fully understand the risk attendant thereto,
agree to accept all such risk and hold Bank harmless from any loss which the
Borrowers 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. Borrowers will designate in
writing to the Bank the names of representatives of Borrowers 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 Borrowers' joint
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
Borrowers may from time to time make prepayments of principal without premium or
penalty. The Borrowers 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.
2.4 Conversion to Term Loans. Subject to no default or Event of Default
------------------------
having occurred and remaining uncured, at Borrowers' election(s) exercised prior
to the maturity date of June 30, 1997, an amount equal to the lesser of (i) the
------
outstanding principal balance of the Revolving Credit Note or (ii) fifty percent
(50%) of the Borrowers' Acquisitions made in accordance and compliance herewith
(but only to the extent such Acquisitions have not been utilized in the
calculation of one or more prior conversions to Term Loan elections hereunder)
may be converted to four (4) year term loans (collectively "Term Loans") payable
in semi-annual principal installments plus interest accrued on the outstanding
balance of such Term Loan in accordance with the following schedule, commencing
on the initial Payment Due Date more than three (3) months following the
effective date of term conversion:
<TABLE>
<CAPTION>
Original % of Original
Principal Principal
Annual Due Semi- Principal and Interest
Reduction Annually Payment Due Dates
---------- -------------- -----------------------
<S> <C> <C> <C>
First Year 20% 10% June 30 and December 31
Second Year 24% 12% June 30 and December 31
Third Year 28% 14% June 30 and December 31
Fourth Year 28% 14% June 30 and December 31
</TABLE>
-5-
<PAGE>
The maximum loan advance availability on the Revolving Credit Commitment shall
be automatically and correspondingly reduced by the original principal amount(s)
of each conversion to Term Loans hereunder.
2.5 Term Notes. Each conversion to Term Loan(s) pursuant to Section 2.4
----------
hereof shall be evidenced by a joint and several promissory note from Borrowers
payable to the order of the Bank in the form annexed hereto as Exhibit C
---------
(collectively the "Term Notes").
2.6 Collateral. The repayment of the Indebtedness shall be secured by the
----------
first and prior continuous pledge to the Bank from (i) Communications of all of
the capital stock of Investment and (ii) Investment of all of the capital stock
of its five (5) existing operating subsidiaries: TISI, G.E.M. Communications,
Inc., Atwood Convention Publishing, Inc., Galaxy Registration, Inc. and T/SF
Nevada, Inc. (collectively the "Collateral"). The foregoing pledges shall be
granted to the Bank, as secured party, pursuant to the terms of the Pledge
Agreement (T/SF Communications Corporation) (the "Communications Pledge") and
the Pledge Agreement (T/SF Investment Co.) (the "Investment Pledge"), each dated
as of even date herewith, and each in a form acceptable to the Bank
(collectively the "Pledge Agreements"), together with appropriate stock powers
in blank, Regulation U forms and such other documents and instruments as shall
be necessary or appropriate to perfect and continue the pledge and security
interests thus created.
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) Borrowers' Certificates. Each of the Borrowers 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 such Borrower
certifying (i) to the matters covered by the conditions specified in
subsections (a) and (b) of this Section 3.1, (ii) that such 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 such 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.
-6-
<PAGE>
(d) Proceedings. On or before the Closing Date, all corporate
-----------
proceedings of the respective Borrowers 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 respective Borrowers and the resolutions
of the Board of Directors of each of the Borrowers, as adopted, authorizing
the execution and delivery of the Loan Documents pertaining thereto, and
the borrowings under this Agreement.
(e) Revolving Credit Note/Loan Documents. The Borrowers shall have
------------------------------------
jointly and severally delivered the Revolving Credit Note to the order of
the Bank, appropriately executed, as well as all other Loan Documents,
including (without limitation) this Agreement, the Communications Pledge
and the Investment Pledge, all appropriately executed.
(f) Closing Opinion. The Bank shall have received from Conner &
---------------
Winters, Borrowers' counsel, a closing opinion addressed to the Bank in
form and content acceptable to the Bank.
(g) 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 Borrowers for an additional Revolving Credit Loan shall
constitute a representation by the Borrowers 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 Borrowers covenant and agree 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 Borrowers under this Agreement, unless the Bank
shall otherwise consent in writing:
4.1 Payment of Taxes and Claims. The Borrowers will pay and discharge or
---------------------------
cause to be paid and discharged all Taxes imposed upon the income or profits of
the Borrowers or upon the property, real, personal or mixed, or upon any part
thereof, belonging to the Borrowers 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
-------- -------
Borrowers 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
-7-
<PAGE>
in accordance with GAAP, and the Borrowers shall pay such Tax, charge or claim
before any property subject thereto shall become subject to execution.
4.2 Maintenance of Corporate Existence. The Borrowers will do or cause to
----------------------------------
be done all things necessary to preserve and keep in full force and effect their
corporate existence, rights and franchises and will continue to conduct and
operate their respective businesses substantially as being conducted and
operated presently subject to changes in the ordinary course and appropriate
changes advantageous to the business interests of Borrowers. The Borrowers 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 such Borrower or its financial condition.
4.3 Preservation of Property. The Borrowers will at all times maintain,
------------------------
preserve and protect all franchises and trade names and keep all the remainder
of their respective 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.
4.4 Insurance. The Borrowers will keep or cause to be kept adequately
---------
insured by financially sound and reputable insurers the equipment, motor
vehicles and all other property of Borrowers or Subsidiaries thereof of a
character usually insured by businesses engaged in the same or similar
businesses. The Borrowers shall at all times maintain and cause their
Subsidiaries to 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 Borrowers will comply and cause
-------------------------------
their Subsidiaries to comply with the requirements of all applicable Laws and
orders of any Tribunal and obtain and cause their Subsidiaries to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of their respective properties or to the conduct of their
businesses, where non-compliance therewith or failure to obtain would have a
material adverse effect on Borrowers, any of their Subsidiaries or their
financial conditions.
-8-
<PAGE>
4.6 Financial Statements and Reports.
--------------------------------
(a) Quarterly Operating Statements/Loan Request. The Borrowers 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, 1996, and in
any event within forty-five (45) days after the end of each said fiscal
quarter, consolidated and consolidating operating statements for the
Borrowers which shall be certified on behalf of the Borrowers by the
President or chief financial officer of the Borrower (pursuant to the
quarterly certificate required by paragraph 4.6(c) below), to have been
prepared in accordance with GAAP and to fairly present the consolidated and
consolidating financial condition of the Borrowers and their Subsidiaries
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 and, to the extent Borrowers have not submitted the Loan Request
with Revolving Credit Loan advance requests during the preceding fiscal
quarter, an executed Loan Request shall be delivered to the Bank with the
quarterly financial statements.
(b) Annual Financial Statements. As soon as practicable after the end
---------------------------
of each fiscal year of the Borrowers and in any event within one-hundred
twenty (120) days thereafter, the Borrowers 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
Communications) and an unqualified opinion, prepared in accordance with
GAAP of reputable independent certified public accountants of recognized
standing selected by the Borrowers and acceptable to the Bank:
(i) A consolidated and consolidating balance sheet of the
Borrowers at the end of such year,
(ii) A consolidated and consolidating statement of income of
the Borrowers for such year, and
(iii) A consolidated and consolidating statement of cash
flows of the Borrowers 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) Quarterly Covenant Certificate. Concurrently with the furnishing
------------------------------
of the financial statements pursuant to paragraph 4.6(a), there shall be
furnished to Bank a separate certificate signed by the chief financial
officer of
-9-
<PAGE>
Communications 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 Borrowers'
records by the party preparing such annual statements. All certificates of
Borrowers 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
------------------------
Borrowers shall deliver to the Bank a copy of each report submitted to the
Borrowers or any Subsidiaries thereof, 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 Borrowers to their respective stockholders and all registration
statements, periodic reports and other statements and schedules filed by
either of the Borrowers with any securities exchange, the Securities and
Exchange Commission or any similar state or federal governmental authority,
including without limitation, complete copies of Communications' reports on
form 10-K and 10-Q filings.
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
Borrowers will give the Bank a written notice thereof specifying the nature and
period of existence thereof and what actions, if any, the Borrowers are taking
and propose 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 either of
the Borrowers to carry on its business substantially as now conducted, (ii)
materially and adversely affect the condition (financial or otherwise) of such
Borrower, or (iii) result in monetary damages in excess of $100,000, the
Borrowers will give the Bank a written notice specifying the nature thereof and
what actions, if any, the Borrowers are taking and propose to take with respect
thereto.
4.9 Inspection. The Borrowers will keep complete and accurate books and
----------
records with respect to their 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 Borrowers in Tulsa, Oklahoma.
4.10 Consolidated Net Worth. The Borrowers will not permit their
----------------------
consolidated Net Worth to be less than $30,000,000 at any time; and further
provided, to the extent the Borrowers exercise the term conversion features of
Section 2.4 hereof the foregoing minimum consolidated Net Worth requirement
shall increase each fiscal year by $2,000,000.
-10-
<PAGE>
4.11 Debt to Net Worth. The Borrowers will not at any time permit the
-----------------
ratio of their total consolidated debt (interest bearing obligations) to their
consolidated Net Worth to exceed 1.0 to 1.
4.12 Consolidated Current Ratio. The Borrowers will not at any time
--------------------------
permit the ratio of (a) Borrowers' consolidated Current Assets to (b)
consolidated Current Liabilities to be less than .8 to 1.0. Borrowers' draws of
Revolving Credit Loans under the Revolving Credit Commitment shall not be
included as current liabilities for calculation of the Current Ratio for a
period not to exceed the lesser of (a) 180 days from the date of such Revolving
------
Credit Loan advance or (b) the end of the second calendar quarter following the
funding date thereof (including the calendar quarter during which such Revolving
Credit Loan is advanced).
4.13 Consolidated Cash. Borrowers will at all times maintain consolidated
-----------------
cash plus consolidated Cash Equivalents of at least $750,000.
4.14 Maximum Interest Bearing Debt. Borrowers' aggregate interest bearing
-----------------------------
debt shall not exceed 4 times Earnings Before Interest, Taxes, Depreciation and
Amortization ("EBITDA") at any time. EBITDA shall cover Current Maturities of
Long Term Debt ("CMLTD") plus interest by at least 1.3 times during each fiscal
year of the term payout if such term conversion is elected. The foregoing
EBITDA requirement shall be continuously in effect throughout that portion of
the Revolving Credit Commitment period during which time 20% of the Revolving
Credit Commitment (equal to the first (1st) year's scheduled principal payments
on the applicable Term Loans) shall be included for calculation purposes as
CMLTD. Communications may utilize the most recent fiscal year ended EBITDA of
the Acquisitions in the calculation of Borrowers' EBITDA coverage of CMLTD plus
interest.
4.15 Limitation on Other Borrowings/Indebtedness. Institutional (banking
-------------------------------------------
and other financial institutions, insurance companies, pension funds or like or
similar institutional lenders) debt by Borrowers or any of the Subsidiaries
other than with the Bank is prohibited. Neither the Borrowers nor any of the
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 Borrowers or any of their Subsidiaries has a lockbox or similar
depository account arrangement except only (i) indebtedness of Borrowers to the
Bank, (ii) indebtedness evidenced by seller generated purchase money and/or
capital leases and (iii) existing indebtedness as more particularly described on
Schedule 1 annexed hereto.
4.16 Prohibition on Liens/Pledges. Neither the Borrowers 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) additional liens not in excess of
$1,000,000 in the aggregate, (iv) existing liens/stock pledges as more
particularly described on Schedule 2 annexed hereto and (v) carryback pledges of
stock (only to sellers thereof) of companies acquired by one of the Borrowers or
a Subsidiary thereof but only to the extent the
-11-
<PAGE>
Bank has received satisfactory evidence that the acquiring Subsidiary or
Borrowers have paid at least one-third (1/3) downpayment on the applicable
purchase price thereof.
4.17 Contingent Liabilities; Advances. Other than inter-company
--------------------------------
advances/loans in the ordinary course of Borrowers' business operations to or
with any of their direct or indirect Subsidiaries, or Borrowers' or their
Subsidiaries aggregate equity investments in joint venture entities not in
excess of $1,000,000 in which the applicable Borrower (or Subsidiary thereof)
has an ownership interest less than 50%, the Borrowers 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 (excluding employee advances in an
aggregate amount not in excess of $100,000 at any time); 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 Borrowers will not sell, lease,
-----------------------------
transfer or otherwise dispose of all or substantially all of their respective
assets. Borrowers will not assign or discount with or without recourse, any
shares of stock of any Subsidiary thereof, 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 Borrowers or their financial condition, and (ii) fixed assets
sold to an affiliate of Borrowers, which assets will be leased by such entity to
the Borrowers.
4.19 Merger, Consolidation. The Borrowers will not merge or consolidate
---------------------
with or into any other Person; or permit any Subsidiary to consolidate with or
merge into either of the Borrowers; or adopt or effect or permit any Subsidiary
to adopt or effect any plan of reorganization, recapitalization, liquidation or
dissolution.
4.20 Dividends. Except for dividends paid to (i) Investments by its
---------
Subsidiaries and (ii) Communications by Investments, the Borrowers will not
declare, pay or become obligated to declare or pay dividends on any class of
their capital stock now or hereafter outstanding, make distributions 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 their
capital stock now or hereafter outstanding in excess of $2,000,000 (by
Communications in the aggregate per fiscal year) but only to the extent such
dividends paid by Communications do not cause or result in a violation or breach
of any of the financial covenants of this Article IV.
-12-
<PAGE>
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Bank to enter into this Agreement and to make the Revolving
Credit Loans to the Borrowers under the provisions hereof, and in consideration
thereof, the Borrowers represent, warrant and covenant as follows:
5.1 Organization and Qualification. Each of the Borrowers 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 Borrowers or
any properties or rights of the Borrowers 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 Borrowers except as described on Schedule 3 annexed hereto. Neither of the
----------
Borrowers is in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any Tribunal.
5.3 Financial Statements. The Borrowers' 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 consolidated
financial condition of the Borrowers 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 either of the Borrowers.
5.4 Corporate Authorization. The respective Boards of Directors of the
-----------------------
Borrowers have 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 Borrowers possess 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 their respective properties and assets,
and the Borrowers are not in violation of any thereof in any material respect.
5.6 Leases. The Borrowers enjoy peaceful and undisturbed possession of all
------
leases necessary in any material respect for the operation of their 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 Borrowers have 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.
Borrowers shall not be required to pay and discharge or cause to
-13-
<PAGE>
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 Borrowers, 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 Schedule 3 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 Borrowers 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 Borrowers 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 Borrowers 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 Borrowers 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 Borrowers, established or maintained by the Borrowers is in
material compliance with the applicable provisions of ERISA, and the Borrowers
have 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 either
of the Borrowers, 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 either of the Borrowers and the
Borrowers have not received any notification from any governmental authority
with respect to any violation of any environmental laws.
5.11 Subsidiaries. Investment is a wholly owned subsidiary of
------------
Communications. All other corporate subsidiaries of Communications and all
corporate subsidiaries of Investment (collectively the "Subsidiaries") are
listed on Schedule 4 annexed hereto and affiliates of either thereof or material
----------
equity investments thereof are listed on Schedule 5 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 Borrowers shall fail to make any payment or mandatory
prepayment of principal or interest upon any of the Notes, 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 either of the Borrowers made
herein or in any writing furnished in connection with or pursuant to any of
the
-14-
<PAGE>
Loan Documents shall have been false or misleading in any material respect
on the date when made; or
(c) The Borrowers 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) Either of the Borrowers 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 (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) either 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 either Borrower; or (iii) either
Borrower shall petition or apply to any Tribunal for the appointment of a
trustee, receiver, custodian or liquidator of either Borrower or of any
substantial part of the assets of either Borrower, or shall commence any
proceedings relating to either 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 either Borrower and either 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 either Borrower decreeing the dissolution of either
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 either Borrower
decreeing a split-up of either Borrower which requires the divestiture of a
substantial part of the assets of either Borrower, and such order, judgment
or decree shall remain unstayed and in effect for more than thirty (30)
days; or (vii) either Borrower shall fail to make timely payment or deposit
of any amount of tax required to be withheld by either Borrower and paid to
or deposited to or to the credit of the United States of America pursuant
to the
-15-
<PAGE>
provisions of the Internal Revenue Code of 1986, as amended, in
respect of any and all wages and salaries paid to employees of either
Borrower; or
(f) Any final judgment on the merits for the payment of money in an
amount in excess of $250,000 shall be outstanding against either Borrower,
and such judgment shall remain unstayed and in effect and unpaid for more
than thirty (30) days; or
(g) 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 Commitments shall immediately terminate and the Notes 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 Commitments terminated or (ii)
declare the Commitments terminated and declare the Notes and the other
Indebtedness, or any part thereof, to be forthwith due and payable, whereupon
the Notes 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
Borrowers. No delay or omission on the part of the Bank in exercising any power
or right hereunder or under the Notes, 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 Borrowers 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 Borrowers 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 Borrowers 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:
-16-
<PAGE>
If to the Borrowers, 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 Borrowers
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 Borrowers hereunder shall be deemed to constitute
representations and warranties by the Borrower.
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
Borrowers may not assign their 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 BORROWERS HEREBY CONSENT TO THE
--------------------------
JURISDICTION OF ANY OF THE LOCAL, STATE, AND FEDERAL COURTS LOCATED WITHIN TULSA
COUNTY, OKLAHOMA AND WAIVES ANY OBJECTION WHICH BORROWERS 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
-17-
<PAGE>
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 Borrowers in any case shall entitle the Borrowers to any
other or further notice or demand in similar or other circumstances.
7.8 Costs. The Borrowers agree 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 Borrowers further agree 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 Borrowers by the Bank.
7.9 Participation. The Borrowers recognize and acknowledge that the Bank
-------------
reserves the right to sell participating interests in the Notes to one or more
financial institutions (the "Participants"). Upon receipt of notice of the
identity and address of such Participant(s), the Borrowers shall thereafter
supply such Participant(s) with the same information and reports communicated to
the Bank, whether written or oral. The Borrowers hereby acknowledge that each
Participant shall be deemed a holder of the Note to the extent of its
participation, and the Borrowers hereby waive their right, if any, to offset
amounts owing to the Borrowers from the Bank against any Participant's portion
of the Note.
7.10 WAIVER OF JURY. BORROWERS FULLY, VOLUNTARILY AND EXPRESSLY WAIVE ANY
--------------
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS AGREEMENT, THE NOTES 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. BORROWERS AGREE 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 Borrowers 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.
-18-
<PAGE>
7.15 Prior Agreements. This Agreement restates, continues and extends the
----------------
terms and provisions of the Prior Agreements 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
"Borrowers"
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
"Bank"
BANCFIRST
By: /s/ Roy C. Ferguseon, III
----------------------------------------
Roy C. Ferguson, III, Regional Executive
-19-
<PAGE>
SCHEDULES/EXHIBITS
------------------
Schedule 1* Other Indebtedness
Schedule 2* Existing Liens/Pledges
Schedule 3* Pending Litigation
Schedule 4* Subsidiaries
Schedule 5* Affiliates/Equity Investments
Exhibit A Revolving Credit Note
Exhibit B* Loan Advance Request and Certification
Exhibit C* Promissory Note (Term Note)
* Note:
Registrant has omitted the above schedules and exhibits to the Revolving Credit
Agreement except for Exhibit A, Revolving Credit Note. Registrant will provide
any of the omitted schedules and exhibits to the Securities and Exchange
Commission upon request.
<PAGE>
REVOLVING CREDIT NOTE
JUNE 30, 1996
PAGE 1
EXHIBIT A
---------
REVOLVING CREDIT NOTE
---------------------
$16,000,000 Tulsa, Oklahoma
June 30, 1996
FOR VALUE RECEIVED, T/SF COMMUNICATIONS CORPORATION, a Delaware corporation
and T/SF INVESTMENT CO., a Delaware corporation (collectively the "Borrowers"),
hereby jointly and severally promise to pay to the order of BANCFIRST, a state
banking association (the "Bank"), at the Bank's banking offices in Tulsa,
Oklahoma, in lawful money of the United States of America, the principal sum of
SIXTEEN MILLION and NO/100 DOLLARS ($16,000,000), or so much thereof as shall
have been advanced hereunder and remains unpaid, on or before June 30, 1997,
together with interest thereon from the date hereof on the unpaid balance of
principal from time to time outstanding, at the variable annual rate of interest
hereinafter specified, which interest is due and payable as it accrues on the
last day of each calendar month, commencing July 31, 1996, and at maturity on
June 30, 1997.
The rate of interest payable upon the indebtedness evidenced by this Note
shall be a variable annual rate of interest equal from day to day to the
Applicable Prime Rate, as hereinafter defined. Any change in the Applicable
Prime Rate shall be effective with respect to this Note as of the date upon
which any change in such rate of interest shall occur. Interest shall be
computed on the basis of a year of 360 days but assessed for the actual number
of days elapsed.
For the purposes of this Note, "Applicable Prime Rate" shall mean the
annual rate of interest quoted in the Wall Street Journal (Southwest Edition)
-------------------
"Money Rates" column from time to time as its prime rate. Should the Wall
----
Street Journal cease publication or cease publishing in its "Money Rates" column
- --------------
a prime rate, then the Applicable Prime Rate shall be a similar rate selected by
the Bank. Any change in the Applicable Prime Rate shall be effective as of the
date of the change.
After default in the payment of any amount of principal or interest owing
hereunder (whether on maturity, acceleration or otherwise) or upon the
occurrence of any Event of Default as described in the Revolving Credit
Agreement, dated as of even date herewith, between and among Borrowers and the
Bank (said Revolving Credit Agreement as the same may at any time be amended,
supplemented or modified and in effect being herein called the "Credit
Agreement"), the unpaid principal amount hereof shall bear interest computed at
a variable annual rate equal to the Applicable Prime Rate plus six percentage
points (6%) per annum, but in no event at a rate which is greater than permitted
by law. Upon default in the payment of any amount of interest payable
hereunder, such interest shall, to the full extent permitted by law, bear
interest at the same rate as principal.
<PAGE>
REVOLVING CREDIT NOTE
JUNE 30, 1996
PAGE 2
This Note is made pursuant to the Credit Agreement and is the Revolving
Credit Note therein described. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the events,
terms and conditions therein specified. All prepayments of principal shall be
without premium or penalty.
Should the indebtedness represented by this Note or any part thereof be
collected at law or in equity or in bankruptcy, receivership or other court
proceedings or this Note be placed in the hands of attorneys for collection
after an Event of Default, the Borrowers hereof agree to pay hereunder, in
addition to the principal and interest due and payable hereon, reasonable
attorneys' fees, court costs and other collection expenses incurred by the
holder hereof.
The Borrowers hereof hereby waive presentment for payment, demand, notice
of nonpayment, protest and notice of protest with respect to any payment
hereunder and agree to any extension of time with respect to any payment due
hereunder and to the addition or release of any party liable hereunder. No
delay on the part of the holder hereof in exercising any rights hereunder shall
operate as a waiver of such rights.
Upon the occurrence of any Event of Default hereunder, Bank shall have the
right, immediately and without further action by it, to set off against this
Note all money owed by Bank in any capacity to each or any maker or other person
who is or might be liable for payment hereof, whether or not due, and also to
set off against all other liabilities of each maker to Bank all money owed by
Bank in any capacity to each or any maker; and Bank shall be deemed to have
exercised such right of setoff and to have made a charge against such money
immediately upon the occurrence of such default even though such charge is made
or entered into the books of Bank subsequently thereto.
This Note and the indebtedness evidenced hereby shall be construed and
enforced in accordance with and governed by the laws of the State of Oklahoma.
T/SF COMMUNICATIONS CORPORATION,
a Delaware corporation
By______________________________________
Howard G. Barnett, Jr., President
T/SF INVESTMENT CO.,
a Delaware corporation
By______________________________________
J. Gary Mourton, President
"Borrowers"
DUE: June 30, 1997
<PAGE>
EXHIBIT 10.2
PLEDGE AGREEMENT
----------------
(T/SF Communications Corporation)
THIS PLEDGE AGREEMENT dated as of June 30, 1996, is entered into between
T/SF COMMUNICATIONS CORPORATION, a Delaware corporation (referred to herein as
"Pledgor") and BANCFIRST, a state banking association (the "Bank").
For value received and other good and valuable consideration, and in
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
1. Pledge. The Bank has extended a joint revolving credit facility and
------
other financial accommodations to T/SF Investment Co. ("Investment") and Pledgor
(collectively the "Borrowers"), as evidenced by that certain joint and several
promissory note from Borrowers payable to the order of the Bank in the original
principal amount of $16,000,000 dated as of even date herewith (the "Revolving
Credit Note"). The Pledgor, as an inducement for the Bank to extend the
revolving credit loans and other financial accommodations to the Borrower, and
for good and valuable consideration, the receipt and sufficiency of which are
acknowledged by Pledgor, hereby pledges, grants a security interest in,
mortgages, assigns, transfers, delivers, sets over and confirms unto the Bank,
its successors and assigns, the securities more particularly described on
Exhibit A annexed hereto and made a part hereof (such securities, together with
- ---------
any additional securities or other instruments hereafter pledged to the Bank,
being collectively referred to as the "Pledged Securities") as collateral
security for the payment in full when due of any and all obligations,
liabilities and indebtedness of Borrowers pursuant to that certain Revolving
Credit Agreement among Pledgor and Investment, as borrowers, and the Bank, as
lender, of even date herewith, including all of the Indebtedness (as that term
is defined and described in Section 1.11 of the Revolving Credit Agreement)
including the liabilities evidenced by the $16,000,000 Revolving Credit Note and
any Term Note(s) issued pursuant to the conversion features of the Revolving
Credit Agreement (collectively the "Notes") (hereinafter sometimes collectively
called the "Obligation"). Each reference herein to the Notes shall refer also
to each and every extension, renewal, modification, substitution, change in form
or replacement of the Notes, which may be from time to time and for any term or
terms effected by agreement between the holder and maker thereof. The Pledgor
warrants and represents that it is the true and lawful owner of the Pledged
Securities, that there are no restrictions upon the transfer of any of the
foregoing securities, except those restrictions imposed by or because of
applicable federal or state securities laws, and that the Pledgor has the right
to pledge, assign and transfer the Pledged Securities free of any encumbrance or
security interest.
The Pledgor expressly covenants and agrees that the Bank shall continue to
maintain the Pledged Securities of Pledgor as security for payment of the
Obligation until such Obligation shall be paid in full. The Pledgor
acknowledges and stipulates that its execution, delivery and performance of this
Pledge Agreement constitutes a valid business and corporate purpose of Pledgor
and further that Pledgor will receive substantial corporate benefit from the
Bank's financial accommodations evidenced by the Notes.
-1-
<PAGE>
2. Acceleration of Payment of the Notes. The Pledgor covenants and
------------------------------------
agrees that upon the occurrence of any Event of Default (as defined below), the
Bank shall be entitled to declare all indebtedness evidenced by the Notes to be
immediately due and payable.
3. Voting Power, Dividends.
-----------------------
(a) Unless and until an Event of Default (as defined below) or an
event which with the passage of time or giving of notice, or both, would
constitute an Event of Default has occurred and is continuing, Pledgor
shall have the right to exercise all voting, consensual and other powers of
ownership pertaining to the Pledged Securities and Pledgor shall be
entitled to receive and retain any dividends on the Pledged Securities paid
in cash by the issuer; provided, however, that Pledgor shall not exercise
such powers in any way that would be inconsistent with the terms of the
Notes or this Pledge Agreement and the security provided hereby. In no
event shall Pledgor exercise such powers in an attempt to hypothecate,
encumber or restrict the transfer of the Pledged Securities without first
obtaining the Bank's written consent thereto.
(b) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not any holder of the Notes
or the Obligation exercises any available option to declare the Notes or
the Obligation immediately due and payable or seeks to pursue any other
relief or remedy available to such holder under this Pledge Agreement, the
Notes or the Obligation,
(i) The Bank, or its nominee or nominees, shall forthwith,
without further act on the part of any person, have the sole and
exclusive right to exercise all voting, consensual and other powers of
ownership pertaining to the Pledged Securities and shall exercise such
powers in such manner as the Bank, in its sole discretion, shall
determine to be necessary, appropriate or advisable, and, if the Bank
shall so request in writing, the Pledgor agrees to execute and deliver
to the Bank such other and additional powers, authorizations, proxies,
dividends and such other documents as the Bank may reasonably request
to secure to the Bank the rights, powers and authorities intended to
be conferred upon the Bank by this Subsection (b); and
(ii) All dividends, interest and other distributions on the
Pledged Securities shall be paid directly to the Bank and retained by
it as part of the Pledged Securities, subject to the terms of this
Pledge Agreement, and if the Bank shall so request in writing, the
Pledgor agrees to execute and deliver to the Bank appropriate
additional dividend, interest, distribution and other orders and
documents to that end.
-2-
<PAGE>
4. Sale of Pledged Securities After an Event of Default. If any Event of
----------------------------------------------------
Default shall have occurred and be continuing, and the principal amount of the
Notes or the Obligation shall have been declared immediately due and payable,
then, unless all of the Notes and Obligation shall have been paid in full at the
time the notice provided for in Subsection (a) of this Section 4 shall be given
on or at the time the suit provided for in Subsection (b) of this Section 4
shall be instituted, the Bank may, in its sole discretion, without further
demand, advertisement or notice, except as expressly provided for in Subsection
(a) of this Section 4, (i) apply the cash, if any, then held by it as collateral
hereunder, for the purposes and in the manner provided for in Section 5 hereof,
and (ii) if there shall be no such cash or the cash so applied shall be
insufficient to make in full all payments provided in Subsections (a) and (b) of
Section 5 hereof,
(a) Sell the Pledged Securities, or any part thereof, in one or more
sales, on the open market to the extent reasonably possible, or
alternatively, at public or private sale, conducted by an officer or agent
of, or auctioneer or attorney for, the Bank at the Bank's place of business
or elsewhere, for cash, upon credit or future delivery, and at such price
or prices as the Bank shall, in its sole discretion, determine, and the
Bank may be the purchaser of any or all of the Pledged Securities so sold.
The Bank may, in its discretion, at any such sale restrict the prospective
bidders or purchasers as to their number, nature of business and investment
intention, including, without limitation, a requirement that the persons
making such purchases represent and agree to the satisfaction of the Bank
that they are purchasing the Pledged Securities for their account, for
investment, and not with a view to the distribution or resale of any
thereof. Upon any such sale the Bank shall have the right to deliver,
assign and transfer to the purchaser thereof the Pledged Securities so
sold. Each purchaser (including the Bank) at any such sale shall hold the
Pledged Securities so sold, absolutely free from any claim or right of
whatsoever kind, including, without limitation, any equity or right of
redemption, of the Pledgor which the Pledgor hereby specifically waives to
the extent it may lawfully do so, all rights of redemption, stay or
appraisal which it has or may have under any rule of law or statute now
existing or hereafter adopted. The Bank shall give the Pledgor at least
ten (10) days' written notice of any such public or private sale. Such
notice, in case of public sale, shall state the time and place fixed for
such sale. Any such public sale shall be held at such time or times within
ordinary business hours as the Bank shall fix in the notice of such sale.
At any such sale the Pledged Securities may be sold in one lot, as an
entirety or in separate parcels. The Bank shall not be obligated to make
any sale pursuant to any such notice. The Bank may, without notice or
publication, adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, or any adjournment
thereof, and any such sale may be made at any time or place to which the
same be so adjourned without further notice or publication. In case of any
sale of all or any part of the Pledged Securities on credit or for future
delivery, the Pledged Securities so sold may be retained by the Bank until
the selling price is paid by the purchaser thereof, but the Bank shall not
incur any liability in case of the failure of such purchaser to take up and
pay for the Pledged
-3-
<PAGE>
Securities so sold, and in case of any such failure, such Pledged
Securities may again be sold under and pursuant to the provisions hereof;
or
(b) Proceed by a suit or suits at law or in equity to foreclosure upon
this Pledge Agreement and sell the Pledged Securities, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
The Bank as attorney-in-fact pursuant to Section 6 hereof may, in the name
and stead of the Pledgor, make and execute all conveyances, assignments and
transfers of the Pledged Securities sold pursuant to Subsection (a) or (b) of
this Section 4. The Pledgor shall, if so requested by the Bank, ratify and
confirm any sale or sales by executing and delivering to the Bank, or to such
purchaser or purchasers, all such instruments as may, in the judgment of the
Bank, be advisable for such purpose.
The receipt of the Bank for the purchase money paid at any such sale made
by it shall be a sufficient discharge therefor to any purchaser of the Pledged
Securities, or any portion thereof, sold as aforesaid; and no such purchaser (or
the representatives or assigns thereof), after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money or any part thereof or in any manner whatsoever be answerable for
any loss, misapplication or non-application of any such purchase money, or any
part thereof, or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
PLEDGOR WAIVES AND RELINQUISHES ANY RIGHT OF REIMBURSEMENT, SUBROGATION,
INDEMNIFICATION OR OTHER RECOURSE OR CLAIM, WHETHER CONTINGENT OR MATURED, WHICH
PLEDGOR MAY HAVE AGAINST THE OTHER BORROWER IN CONNECTION HEREWITH OR THE NOTES.
IT IS THE EXPRESS INTENT OF PLEDGOR AND THE BANK TO ELIMINATE ANY
DEBTOR/CREDITOR RELATIONSHIP BETWEEN THE OTHER BORROWER AND PLEDGOR ARISING FROM
PLEDGOR'S SUBROGATION RIGHTS PERTAINING TO THE NOTES. PLEDGOR HEREBY EXPRESSLY
RELEASES AND WAIVES ANY AND ALL PRESENT AND FUTURE RIGHTS AS A CREDITOR OF THE
OTHER BORROWER IN ALL RESPECTS PERTAINING TO THE NOTES.
5. Application of Proceeds. The proceeds of any sale, or of collection
-----------------------
of all or any part of the Pledged Securities shall be applied by the Bank,
without any marshalling of assets in the following order:
(a) First, to the payment of all of the costs and expenses of such
sale, including, without limitation, reasonable compensation to the Bank
and its agents, attorneys and counsel, and all other expenses, liabilities
and advances made or incurred by the Bank in connection therewith;
(b) Second, to the payment in full of the principal and interest on
the Notes and all obligations of the Pledgor under the Notes and this
Pledge Agreement; and
-4-
<PAGE>
(c) Third, to the payment to the Pledgor, its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus remaining from such
proceeds after payments of the character referred to in Subsections (a) and
(b) of this Section 5 shall have been made.
6. Bank Appointed Attorney-in-Fact; Indemnity. The Bank, its successors
------------------------------------------
and assigns, is hereby appointed the attorney-in-fact, with full power of
substitution, of Pledgor for the purpose of carrying out the provisions of this
Pledge Agreement and taking any action and executing any instruments which such
attorney-in-fact may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. The Pledgor agrees to indemnify and save harmless the Bank from and
against any liability or damage which it may incur, in good faith and without
gross negligence or willful misconduct, in the exercise and performance of any
of the Bank's powers and duties specifically set forth herein.
7. No Waiver. No failure on the part of the Bank to exercise, and no
---------
delay on the part of the Bank in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Bank of any right, power or remedy hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or remedy.
The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law or in equity.
8. Termination of Pledge. This Pledge Agreement shall terminate upon
---------------------
payment in full of all of the Obligation, including, without limitation, the
Notes, and the performance in full of all of the terms and covenants hereof and
agreements of the Pledgor hereunder, in which event the Bank shall forthwith
assign, transfer and deliver to Pledgor or the successors or assigns thereof,
without representation, warranty or recourse, against appropriate receipts, all
of the Pledged Securities, if any, then held by it in pledge hereunder.
9. Governing Law. This Pledge Agreement has been executed and delivered
-------------
in Tulsa, Oklahoma, and shall in all respects be construed and interpreted in
accordance with and governed by the laws of the State of Oklahoma.
10. Successors and Assigns. This Pledge Agreement shall be binding upon
----------------------
and inure to the benefit of the successors and assigns of the Pledgor and the
Bank and any subsequent holder hereof or of the Notes or the Obligation.
11. Additional Instruments and Assurances. The Pledgor hereby agrees, at
-------------------------------------
its own and sole expense, to execute and deliver, from time to time, any and all
further, or other, instruments, and to perform such acts, as the Bank may
reasonably request to effect the purposes of this Pledge Agreement and to secure
to the Bank, and to all persons who may from time to time be the holder of the
Notes or the Obligation, the benefits of all rights, authorities and remedies
conferred upon the Bank by the terms of this Pledge Agreement.
-5-
<PAGE>
12. Future Holders of Notes. This Pledge Agreement is for the benefit of
-----------------------
any and all future holders of the Notes or the Obligation in addition to the
Bank, each of whom shall, without further act, become a party hereto by becoming
a holder of the Notes or the Obligation.
13. Notices. All notices, requests, demands, consents or other
-------
communications given hereunder or in connection herewith shall be in writing and
sent by certified mail, return receipt requested, postage prepaid, addressed to
the Pledgor at 2407 E. Skelly Drive, Tulsa, Oklahoma 74105, Attention: Chief
Financial Officer, and if to the Bank, addressed to the Bank at 7625 East 51st
Street, P.O. Box 680, Tulsa, Oklahoma 74101-0680, Attention: Roy C. Ferguson,
III. Pledgor or the Bank may, by notice given as aforesaid, change their
applicable address for all subsequent notices. Notice shall be deemed given
when mailed as aforesaid.
14. Severability. In case any one or more of the provisions of this
------------
Pledge Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but this Pledge Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
included as a part hereof.
15. Events of Default. The Pledgor shall be in default under this Pledge
-----------------
Agreement upon the occurrence of any one of the following events (each of which
is herein referred to as an "Event of Default"):
(a) Default by Pledgor in the due observance or performance of any
covenant or agreement contained herein or breach by the Pledgor of any
representation or warranty herein contained; or
(b) The occurrence of an Event of Default (as therein defined) under
or pursuant to the Revolving Credit Agreement between the Borrowers and the
Bank dated as of even date herewith, the other Loan Documents described and
defined therein or any other instrument, document or agreement securing the
Notes, including the Pledge Agreements described and defined in the
Revolving Credit Agreement.
16. Headings. The headings of the Sections of this Pledge Agreement have
--------
been inserted for convenience of reference only and shall in no way affect the
construction or interpretation of this Pledge Agreement.
-6-
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Bank have caused this Pledge
Agreement to be duly executed and delivered in Tulsa, Oklahoma, effective as of
the day and year first above written.
T/SF COMMUNICATIONS CORPORATION,
a Delaware corporation
By: /s/ Howard G. Barnett, Jr.
------------------------------------------
Howard G. Barnett, Jr., President
"Pledgor"
BANCFIRST, a state banking association
By: /s/ Roy C. Ferguson, III
------------------------------------------
Roy C. Ferguson, III, Regional Executive
"Bank"
-7-
<PAGE>
EXHIBIT A
---------
No. Shares Issuer
---------- ------
3,000 T/SF Investment Co., a Delaware corporation
<PAGE>
EXHIBIT 10.3
PLEDGE AGREEMENT
----------------
(T/SF Investment Co.)
THIS PLEDGE AGREEMENT dated as of June 30, 1996, is entered into between
T/SF INVESTMENT CO., a Delaware corporation (referred to herein as "Pledgor")
and BANCFIRST, a state banking association (the "Bank").
For value received and other good and valuable consideration, and in
consideration of the mutual agreements herein contained, the parties hereto
agree as follows:
1. Pledge. The Bank has extended a joint revolving credit facility and
------
other financial accommodations to Pledgor's parent, T/SF Communications
Corporation ("Parent") and Pledgor (collectively the "Borrowers"), as evidenced
by that certain joint and several promissory note from Borrowers payable to the
order of the Bank in the original principal amount of $16,000,000 dated as of
even date herewith (the "Revolving Credit Note"). The Pledgor, as an inducement
for the Bank to extend the revolving credit loans and other financial
accommodations to the Borrower, and for good and valuable consideration, the
receipt and sufficiency of which are acknowledged by Pledgor, hereby pledges,
grants a security interest in, mortgages, assigns, transfers, delivers, sets
over and confirms unto the Bank, its successors and assigns, the securities more
particularly described on Exhibit A annexed hereto and made a part hereof (such
---------
securities, together with any additional securities or other instruments
hereafter pledged to the Bank, being collectively referred to as the "Pledged
Securities") as collateral security for the payment in full when due of any and
all obligations, liabilities and indebtedness of Borrowers pursuant to that
certain Revolving Credit Agreement among Pledgor and Parent, as borrowers, and
the Bank, as lender, of even date herewith, including all of the Indebtedness
(as that term is defined and described in Section 1.11 of the Revolving Credit
Agreement) including the liabilities evidenced by the $16,000,000 Revolving
Credit Note and any Term Note(s) issued pursuant to the conversion features of
the Revolving Credit Agreement (collectively the "Notes") (hereinafter sometimes
collectively called the "Obligation"). Each reference herein to the Notes shall
refer also to each and every extension, renewal, modification, substitution,
change in form or replacement of the Notes, which may be from time to time and
for any term or terms effected by agreement between the holder and maker
thereof. The Pledgor warrants and represents that it is the true and lawful
owner of the Pledged Securities, that there are no restrictions upon the
transfer of any of the foregoing securities, except those restrictions imposed
by or because of applicable federal or state securities laws, and that the
Pledgor has the right to pledge, assign and transfer the Pledged Securities free
of any encumbrance or security interest.
The Pledgor expressly covenants and agrees that the Bank shall continue to
maintain the Pledged Securities of Pledgor as security for payment of the
Obligation until such Obligation shall be paid in full. The Pledgor
acknowledges and stipulates that its execution, delivery and performance of this
Pledge Agreement constitutes a valid business and corporate purpose of Pledgor
and further that Pledgor will receive substantial corporate benefit from the
Bank's financial accommodations evidenced by the Notes.
-1-
<PAGE>
2. Acceleration of Payment of the Notes. The Pledgor covenants and
------------------------------------
agrees that upon the occurrence of any Event of Default (as defined below), the
Bank shall be entitled to declare all indebtedness evidenced by the Notes to be
immediately due and payable.
3. Voting Power, Dividends.
-----------------------
(a) Unless and until an Event of Default (as defined below) or an
event which with the passage of time or giving of notice, or both, would
constitute an Event of Default has occurred and is continuing, Pledgor
shall have the right to exercise all voting, consensual and other powers of
ownership pertaining to the Pledged Securities and Pledgor shall be
entitled to receive and retain any dividends on the Pledged Securities paid
in cash by the issuer; provided, however, that Pledgor shall not exercise
such powers in any way that would be inconsistent with the terms of the
Notes or this Pledge Agreement and the security provided hereby. In no
event shall Pledgor exercise such powers in an attempt to hypothecate,
encumber or restrict the transfer of the Pledged Securities without first
obtaining the Bank's written consent thereto.
(b) If any Event of Default shall have occurred, then so long as such
Event of Default shall continue, and whether or not any holder of the Notes
or the Obligation exercises any available option to declare the Notes or
the Obligation immediately due and payable or seeks to pursue any other
relief or remedy available to such holder under this Pledge Agreement, the
Notes or the Obligation,
(i) The Bank, or its nominee or nominees, shall forthwith,
without further act on the part of any person, have the sole and
exclusive right to exercise all voting, consensual and other powers of
ownership pertaining to the Pledged Securities and shall exercise such
powers in such manner as the Bank, in its sole discretion, shall
determine to be necessary, appropriate or advisable, and, if the Bank
shall so request in writing, the Pledgor agrees to execute and deliver
to the Bank such other and additional powers, authorizations, proxies,
dividends and such other documents as the Bank may reasonably request
to secure to the Bank the rights, powers and authorities intended to
be conferred upon the Bank by this Subsection (b); and
(ii) All dividends, interest and other distributions on the
Pledged Securities shall be paid directly to the Bank and retained by
it as part of the Pledged Securities, subject to the terms of this
Pledge Agreement, and if the Bank shall so request in writing, the
Pledgor agrees to execute and deliver to the Bank appropriate
additional dividend, interest, distribution and other orders and
documents to that end.
-2-
<PAGE>
4. Sale of Pledged Securities After an Event of Default. If any Event of
----------------------------------------------------
Default shall have occurred and be continuing, and the principal amount of the
Notes or the Obligation shall have been declared immediately due and payable,
then, unless all of the Notes and Obligation shall have been paid in full at the
time the notice provided for in Subsection (a) of this Section 4 shall be given
on or at the time the suit provided for in Subsection (b) of this Section 4
shall be instituted, the Bank may, in its sole discretion, without further
demand, advertisement or notice, except as expressly provided for in Subsection
(a) of this Section 4, (i) apply the cash, if any, then held by it as collateral
hereunder, for the purposes and in the manner provided for in Section 5 hereof,
and (ii) if there shall be no such cash or the cash so applied shall be
insufficient to make in full all payments provided in Subsections (a) and (b) of
Section 5 hereof,
(a) Sell the Pledged Securities, or any part thereof, in one or more
sales, on the open market to the extent reasonably possible, or
alternatively, at public or private sale, conducted by an officer or agent
of, or auctioneer or attorney for, the Bank at the Bank's place of business
or elsewhere, for cash, upon credit or future delivery, and at such price
or prices as the Bank shall, in its sole discretion, determine, and the
Bank may be the purchaser of any or all of the Pledged Securities so sold.
The Bank may, in its discretion, at any such sale restrict the prospective
bidders or purchasers as to their number, nature of business and investment
intention, including, without limitation, a requirement that the persons
making such purchases represent and agree to the satisfaction of the Bank
that they are purchasing the Pledged Securities for their account, for
investment, and not with a view to the distribution or resale of any
thereof. Upon any such sale the Bank shall have the right to deliver,
assign and transfer to the purchaser thereof the Pledged Securities so
sold. Each purchaser (including the Bank) at any such sale shall hold the
Pledged Securities so sold, absolutely free from any claim or right of
whatsoever kind, including, without limitation, any equity or right of
redemption, of the Pledgor which the Pledgor hereby specifically waives to
the extent it may lawfully do so, all rights of redemption, stay or
appraisal which it has or may have under any rule of law or statute now
existing or hereafter adopted. The Bank shall give the Pledgor at least
ten (10) days' written notice of any such public or private sale. Such
notice, in case of public sale, shall state the time and place fixed for
such sale. Any such public sale shall be held at such time or times within
ordinary business hours as the Bank shall fix in the notice of such sale.
At any such sale the Pledged Securities may be sold in one lot, as an
entirety or in separate parcels. The Bank shall not be obligated to make
any sale pursuant to any such notice. The Bank may, without notice or
publication, adjourn any public or private sale from time to time by
announcement at the time and place fixed for such sale, or any adjournment
thereof, and any such sale may be made at any time or place to which the
same be so adjourned without further notice or publication. In case of any
sale of all or any part of the Pledged Securities on credit or for future
delivery, the Pledged Securities so sold may be retained by the Bank until
the selling price is paid by the purchaser thereof, but the Bank shall not
incur any liability in case of the failure of such purchaser to take up and
pay for the Pledged
-3-
<PAGE>
Securities so sold, and in case of any such failure, such Pledged
Securities may again be sold under and pursuant to the provisions hereof;
or
(b) Proceed by a suit or suits at law or in equity to foreclosure upon
this Pledge Agreement and sell the Pledged Securities, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
The Bank as attorney-in-fact pursuant to Section 6 hereof may, in the name
and stead of the Pledgor, make and execute all conveyances, assignments and
transfers of the Pledged Securities sold pursuant to Subsection (a) or (b) of
this Section 4. The Pledgor shall, if so requested by the Bank, ratify and
confirm any sale or sales by executing and delivering to the Bank, or to such
purchaser or purchasers, all such instruments as may, in the judgment of the
Bank, be advisable for such purpose.
The receipt of the Bank for the purchase money paid at any such sale made
by it shall be a sufficient discharge therefor to any purchaser of the Pledged
Securities, or any portion thereof, sold as aforesaid; and no such purchaser (or
the representatives or assigns thereof), after paying such purchase money and
receiving such receipt, shall be bound to see to the application of such
purchase money or any part thereof or in any manner whatsoever be answerable for
any loss, misapplication or non-application of any such purchase money, or any
part thereof, or be bound to inquire as to the authorization, necessity,
expediency or regularity of any such sale.
PLEDGOR WAIVES AND RELINQUISHES ANY RIGHT OF REIMBURSEMENT, SUBROGATION,
INDEMNIFICATION OR OTHER RECOURSE OR CLAIM, WHETHER CONTINGENT OR MATURED, WHICH
PLEDGOR MAY HAVE AGAINST THE OTHER BORROWER IN CONNECTION HEREWITH OR THE NOTES.
IT IS THE EXPRESS INTENT OF PLEDGOR AND THE BANK TO ELIMINATE ANY
DEBTOR/CREDITOR RELATIONSHIP BETWEEN THE OTHER BORROWER AND PLEDGOR ARISING FROM
PLEDGOR'S SUBROGATION RIGHTS PERTAINING TO THE NOTES. PLEDGOR HEREBY EXPRESSLY
RELEASES AND WAIVES ANY AND ALL PRESENT AND FUTURE RIGHTS AS A CREDITOR OF THE
OTHER BORROWER IN ALL RESPECTS PERTAINING TO THE NOTES.
5. Application of Proceeds. The proceeds of any sale, or of collection
-----------------------
of all or any part of the Pledged Securities shall be applied by the Bank,
without any marshalling of assets in the following order:
(a) First, to the payment of all of the costs and expenses of such
sale, including, without limitation, reasonable compensation to the Bank
and its agents, attorneys and counsel, and all other expenses, liabilities
and advances made or incurred by the Bank in connection therewith;
(b) Second, to the payment in full of the principal and interest on
the Notes and all obligations of the Pledgor under the Notes and this
Pledge Agreement; and
-4-
<PAGE>
(c) Third, to the payment to the Pledgor, its successors or assigns,
or to whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus remaining from such
proceeds after payments of the character referred to in Subsections (a) and
(b) of this Section 5 shall have been made.
6. Bank Appointed Attorney-in-Fact; Indemnity. The Bank, its successors
------------------------------------------
and assigns, is hereby appointed the attorney-in-fact, with full power of
substitution, of Pledgor for the purpose of carrying out the provisions of this
Pledge Agreement and taking any action and executing any instruments which such
attorney-in-fact may deem necessary or advisable to accomplish the purposes
hereof, which appointment as attorney-in-fact is irrevocable and coupled with an
interest. The Pledgor agrees to indemnify and save harmless the Bank from and
against any liability or damage which it may incur, in good faith and without
gross negligence or willful misconduct, in the exercise and performance of any
of the Bank's powers and duties specifically set forth herein.
7. No Waiver. No failure on the part of the Bank to exercise, and no
---------
delay on the part of the Bank in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Bank of any right, power or remedy hereunder preclude any other
or future exercise thereof or the exercise of any other right, power or remedy.
The remedies herein provided are cumulative and are not exclusive of any
remedies provided by law or in equity.
8. Termination of Pledge. This Pledge Agreement shall terminate upon
---------------------
payment in full of all of the Obligation, including, without limitation, the
Notes, and the performance in full of all of the terms and covenants hereof and
agreements of the Pledgor hereunder, in which event the Bank shall forthwith
assign, transfer and deliver to Pledgor or the successors or assigns thereof,
without representation, warranty or recourse, against appropriate receipts, all
of the Pledged Securities, if any, then held by it in pledge hereunder.
9. Governing Law. This Pledge Agreement has been executed and delivered
-------------
in Tulsa, Oklahoma, and shall in all respects be construed and interpreted in
accordance with and governed by the laws of the State of Oklahoma.
10. Successors and Assigns. This Pledge Agreement shall be binding upon
----------------------
and inure to the benefit of the successors and assigns of the Pledgor and the
Bank and any subsequent holder hereof or of the Notes or the Obligation.
11. Additional Instruments and Assurances. The Pledgor hereby agrees, at
-------------------------------------
its own and sole expense, to execute and deliver, from time to time, any and all
further, or other, instruments, and to perform such acts, as the Bank may
reasonably request to effect the purposes of this Pledge Agreement and to secure
to the Bank, and to all persons who may from time to time be the holder of the
Notes or the Obligation, the benefits of all rights, authorities and remedies
conferred upon the Bank by the terms of this Pledge Agreement.
-5-
<PAGE>
12. Future Holders of Notes. This Pledge Agreement is for the benefit of
-----------------------
any and all future holders of the Notes or the Obligation in addition to the
Bank, each of whom shall, without further act, become a party hereto by becoming
a holder of the Notes or the Obligation.
13. Notices. All notices, requests, demands, consents or other
-------
communications given hereunder or in connection herewith shall be in writing and
sent by certified mail, return receipt requested, postage prepaid, addressed to
the Pledgor at 2407 E. Skelly Drive, Tulsa, Oklahoma 74105, Attention: Chief
Financial Officer, and if to the Bank, addressed to the Bank at 7625 East 51st
Street, P.O. Box 680, Tulsa, Oklahoma 74101-0680, Attention: Roy C. Ferguson,
III. Pledgor or the Bank may, by notice given as aforesaid, change their
applicable address for all subsequent notices. Notice shall be deemed given
when mailed as aforesaid.
14. Severability. In case any one or more of the provisions of this
------------
Pledge Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision hereof, but this Pledge Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
included as a part hereof.
15. Events of Default. The Pledgor shall be in default under this Pledge
-----------------
Agreement upon the occurrence of any one of the following events (each of which
is herein referred to as an "Event of Default"):
(a) Default by Pledgor in the due observance or performance of any
covenant or agreement contained herein or breach by the Pledgor of any
representation or warranty herein contained; or
(b) The occurrence of an Event of Default (as therein defined) under
or pursuant to the Revolving Credit Agreement between the Borrowers and the
Bank dated as of even date herewith, the other Loan Documents described and
defined therein or any other instrument, document or agreement securing the
Notes, including the Pledge Agreements described and defined in the
Revolving Credit Agreement.
16. Headings. The headings of the Sections of this Pledge Agreement have
--------
been inserted for convenience of reference only and shall in no way affect the
construction or interpretation of this Pledge Agreement.
-6-
<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Bank have caused this Pledge
Agreement to be duly executed and delivered in Tulsa, Oklahoma, effective as of
the day and year first above written.
T/SF INVESTMENT CO.,
a Delaware corporation
By J. Gary Mourton
-----------------------------------------
J. Gary Mourton, President
"Pledgor"
BANCFIRST, a state banking association
By Roy C. Ferguson, III
-----------------------------------------
Roy C. Ferguson, III, Regional Executive
"Bank"
-7-
<PAGE>
EXHIBIT A
---------
No. Shares Issuer
---------- ------
75,378 Transportation Information Services, Inc.
500 G.E.M. Communications, Inc.
(formerly BMT Publications, Inc.,
formerly BMT of Oklahoma, Inc.)
300 Atwood Convention Publishing, Inc.
370,392 Galaxy Registration, Inc.
1,000 T/SF of Nevada, Inc.
-8-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,429
<SECURITIES> 1,000
<RECEIVABLES> 10,137
<ALLOWANCES> 625
<INVENTORY> 226
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0
0
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</TABLE>
