<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------- ---------------
Commission File Number 0-26530
TRIATHLON BROADCASTING COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 33-0668235
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Symphony Towers
750 B Street, Suite 1920
San Diego, CA 92101
(Address of principal executive offices)
(619) 239-4242
(Registrant's telephone number)
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 [ ]
The number of shares of the registrant's Class A Common Stock, $.01
par value, Class B Common Stock, $.01 par value, Class C Common Stock, $.01 par
value, Class D Common Stock, $.01 par value, and Depositary Shares, each
representing a one-tenth interest in a share of 9% Mandatory Convertible
Preferred Stock, $.01 par value, outstanding as of November 10, 1998, was
3,175,645, 886,811, 31,000, 802,445, and 5,834,000, respectively.
<PAGE>
TRIATHLON BROADCASTING COMPANY
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed consolidated balance sheets - September 30, 1998 (unaudited)
and December 31, 1997 3
Condensed consolidated statements of operations - Three and nine months
ended September 30, 1998 and 1997 (unaudited) 4
Condensed consolidated statements of cash flows - Nine months
ended September 30, 1998 and 1997 (unaudited) 5
Condensed consolidated statement of stockholders' equity - Nine months
ended September 30, 1998 (unaudited) 6
Notes to condensed consolidated financial statements 7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 20
Item 6 - Exhibits and Reports on Form 8-K 20
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<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997(1)
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 366 $ 1,771
Accounts receivable, net of allowance
for doubtful accounts 7,199 7,510
Notes receivable from officer 200 75
Prepaid expenses 1,792 858
Other current assets 169 17
--------- ---------
Total current assets 9,726 10,231
Property and equipment - less accumulated
depreciation and amortization 10,314 10,280
Intangible assets, net of accumulated amortization 109,130 111,674
Notes receivable from officer 250 250
Long term note receivable 217 266
Other assets 40 40
--------- ---------
$ 129,677 $ 132,741
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 7,532 $ 6,056
Due to affiliates 352 40
Amended Credit Agreement 59,469 58,500
Current portion of long term debt 1,593 890
Non-compete payable - current portion 150 150
--------- ---------
Total current liabilities 69,096 65,636
Long term debt, less current portion -- 943
Non-compete payable, less current portion 369 481
Deferred compensation 151 155
Deferred taxes 7,630 7,630
Stockholders' equity
Preferred stock 12 12
Common stock 49 49
Paid-in-capital 57,105 61,236
Deferred compensation (261) (363)
Accumulated deficit (4,474) (3,038)
--------- ---------
Total stockholders' equity 52,431 57,896
--------- ---------
$ 129,677 $ 132,741
========= =========
</TABLE>
(1) The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited consolidated financial statements at that date
but does not include all of the information and footnotes required by
generally accepted accounting principles for complete financial
statements.
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 10,238 $ 9,382 $ 28,703 $ 22,996
Operating expenses
Station operating expenses 6,289 5,983 19,412 16,194
Depreciation and amortization 1,198 1,165 3,573 2,723
Corporate expenses 559 467 1,589 1,481
Deferred compensation 29 94 99 292
-------- -------- -------- --------
Total operating expenses 8,075 7,709 24,673 20,690
-------- -------- -------- --------
Operating income 2,163 1,673 4,030 2,306
Other expense (732) -- (934) --
Interest expense - net (1,474) (1,348) (4,532) (2,860)
-------- -------- -------- --------
(Loss)/income before extraordinary item (43) 325 (1,436) (554)
Extraordinary item - loss on early
extinguishment of debt -- -- -- (958)
-------- -------- -------- --------
Net (loss)/income (43) 325 (1,436) (1,512)
Preferred stock dividend requirement (1,377) (1,377) (4,131) (4,131)
-------- -------- -------- --------
Net loss applicable to common stock $ (1,420) $ (1,052) $ (5,567) $ (5,643)
======== ======== ======== ========
Loss per basic and fully diluted common share:
Loss before extraordinary item $ (0.29) $ (0.22) $ (1.14) $ (0.96)
Extraordinary item $ -- $ -- $ -- $ (0.20)
-------- -------- -------- --------
Net loss per basic and fully diluted
common share $ (0.29) $ (0.22) $ (1.14) $ (1.16)
======== ======== ======== ========
Weighted average basic and fully diluted
common shares outstanding 4,894 4,888 4,893 4,877
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities $ 3,147 $ 837
Cash flow from investing activities
Acquisition of net assets of radio stations -- (63,459)
Sale of property and equipment 140 --
Capital expenditures (1,290) (582)
Due to affiliate -- 11
Net cash used in investing activities (1,150) (64,030)
Cash flow from financing activities
Borrowings 1,650 108,279
Debt repayments (921) (40,072)
Financing costs -- (1,651)
Payment of preferred stock dividends (4,131) (4,131)
--------- ---------
Net cash (used in) provided by financing activities (3,402) 62,425
Decrease in cash and cash equivalents (1,405) (768)
Cash and cash equivalents at beginning of period 1,771 3,083
--------- ---------
Cash and cash equivalents at end of period $ 366 $ 2,315
========= =========
Supplemental cash flow information:
Interest paid $ 4,619 $ 3,351
Issuance of Class A Common Stock in connection
with acquisitions $ -- $ 487
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Series B Mandatory
Convertible Convertible Class A Class B Class C Class D
Preferred Preferred Common Common Common Common Paid-In
Stock Stock Stock Stock Stock Stock Capital
----- ----- ----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at January 1, 1998 $ 6 $ 6 $ 32 $ 2 $ 1 $ 14 $ 61,236
Conversion of 641,921 shares of
Class D Common Stock to
Class B Common Stock -- -- -- 6 -- (6) --
Exercise of Warrants for 3,112 shares
of Class A Common Stock -- -- * -- -- -- *
Deferred compensation -- -- -- -- -- -- --
Dividends on Mandatory Convertible
Preferred Stock ($0.708 per share) -- -- -- -- -- -- (4,131)
Net loss -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Balances at September 30, 1998 $ 6 $ 6 $ 32 $ 8 $ 1 $ 8 $ 57,105
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Total
Deferred Accumulated Stockholders'
Compensation Deficit Equity
------------ ------- ------
<S> <C> <C> <C>
Balances at January 1, 1998 $ (363) $ (3,038) $ 57,896
Conversion of 641,921 shares of
Class D Common Stock to
Class B Common Stock -- -- --
Exercise of Warrants for 3,112 shares
of Class A Common Stock -- -- --
Deferred compensation 102 -- 102
Dividends on Mandatory Convertible
Preferred Stock ($0.708 per share) -- -- (4,131)
Net loss -- (1,436) (1,436)
-------- -------- --------
Balances at September 30, 1998 $ (261) $ (4,474) $ 52,431
======== ======== ========
</TABLE>
*Amount rounds to less than $1.
See accompanying notes to condensed consolidated financial statements.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1998
(unaudited)
NOTE 1 - MERGER WITH CAPSTAR; STOCK CONVERSION
On July 23, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") with Capstar Radio Broadcasting Partners, Inc.
("Capstar") and TBC Radio Acquisition Corp., a wholly-owned subsidiary of
Capstar ("Sub"), pursuant to which Sub would merge with and into the Company
and the Company would become a wholly-owned subsidiary of Capstar (the
"Merger"). Pursuant to the Merger Agreement, upon the consummation of the
Merger, each outstanding share of each class of Common Stock of the Company
shall be converted into the right to receive $13.00, subject to adjustment,
each outstanding depositary share of the Company, representing one-tenth
interest in a share of 9% Mandatory Convertible Preferred Stock, par value $.01
per share, of the Company ("Depositary Shares") shall be converted into the
right to receive $10.83, subject to adjustment, and each outstanding share of
the Series B Convertible Preferred Stock, par value $.01 per share, of the
Company shall be converted into the right to receive $.01.
As a condition precedent to the execution of the Merger Agreement,
Capstar, Sub, the Company and certain stockholders of the Company have entered
into stockholder agreements (the "Stockholder Agreements"), whereby each of
such stockholders have agreed to vote all shares of the capital stock of the
Company beneficially owned by each in favor of the Merger and against any
competing transaction. In order to facilitate the Merger and pursuant to the
Stockholder Agreements, on August 5, 1998, such stockholders converted an
aggregate of 641,921 shares of Class D Common Stock into Class B Common Stock
based on the existence of certain covenant defaults under the Amended Credit
Agreement (as defined) at the time of the conversion. As a result of the
conversion of the Class D Common Stock into Class B Common Stock and the terms
of the Stockholder Agreements, such stockholders have agreed to vote the
majority of the voting power of the outstanding voting capital stock of the
Company in favor of the Merger and against any competing transaction.
Accordingly, passage of the proposal to approve the Merger Agreement and the
Merger is assured.
The consummation of the Merger is subject to the satisfaction of a
number of conditions set forth in the Merger Agreement, including, but not
limited to, the approval by the stockholders of the Company of the transactions
contemplated thereby, the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the receipt of all applicable consents to the Merger from the
Federal Communications Commission. The Merger is currently expected to be
consummated in the second quarter of 1999.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed 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
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes 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. Operating results for an interim period
are not necessarily indicative of the results that may be expected for a full
year. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
September 30, 1998
(unaudited)
Report on Form 10-K for the year ended December 31, 1997, filed with the
Securities and Exchange Commission on March 31, 1998.
The accompanying unaudited condensed consolidated financial statements
include the accounts and transactions of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated.
The Company's revenues vary throughout the year. As is typical in the
radio broadcasting industry, the Company's first quarter generally produces the
lowest revenues for the year and the fourth quarter generally produces the
highest revenues for the year. The Company's operating results in any period
may be affected by the incurrence of advertising and promotion expenses that do
not necessarily produce commensurate revenues until the impact of the
advertising and promotion is realized in future periods.
NOTE 3 - INDEBTEDNESS
On May 30, 1997, the Company entered into an Amended Credit Agreement
with AT&T Commercial Finance Corporation and Union Bank of California, N.A.
(collectively the "Lenders"), in an aggregate amount of $80 million. The
purpose of the Amended Credit Agreement was to refinance existing debt, finance
acquisitions and support working capital needs.
On May 28, 1998, the Company issued a secured promissory note to
Havelock Bank ("Havelock") in the amount of $1.725 million as security for an
irrevocable letter of credit, in the face amount of $1.725 million, issued by
Havelock to the University of Nebraska pursuant to the Broadcast Rights
Agreement (as defined) between the University of Nebraska and the Company. As
of September 30, 1998, there are no amounts outstanding to Havelock.
On June 30, 1998, the Company entered into the First Amendment to
Amended and Restated Loan Agreement ("First Amendment") with the Lenders. The
purpose of the First Amendment was to enable the Lenders to fund an acquisition
loan of $1.0 million which was used by the Company to refinance a portion of
the indebtedness related to the acquisition of Pinnacle Sports Productions, LLC
in 1997. The First Amendment also included modifications to certain financial
covenants. The Acquisition Loan is a term loan bearing interest at LIBOR +
3.50% (or the alternative base rate + 2.50%). The principal balance of the
Acquisition Loan must be reduced by $6,250 per year (paid on a quarterly basis)
until the final maturity of July 1, 2004.
On September 15, 1998, the Company borrowed $650,000 from Capstar for
the purpose of acquiring certain real property in Lincoln, Nebraska. The loan
is secured by the acquired real property. The Company occupied a substantial
portion of the property as a tenant prior to September 15, 1998 and continues
to occupy the property. The loan accrues interest at the rate of 12% per annum
which is payable, along with the principal, on the earlier of the consummation
of the Merger, which is expected during the second quarter of 1999, or the
termination of the Merger Agreement.
The Amended Credit Agreement and First Amendment contain covenants
relating to financial leverage and coverage ratios and restrictions on capital
expenditures and other payments. Additionally, the Merger Agreement places
certain restrictions on the conduct of business by the Company, including a
restriction on the incurrence of indebtedness and the
-8-
<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
September 30, 1998
(unaudited)
making of capital expenditures. As of September 30, 1998, the Company did not
meet certain financial covenants under the Amended Credit Agreement and First
Amendment and management believes that it may not comply with certain covenants
in its year end tests. Accordingly, the entire debt outstanding under the
Amended Credit Agreement and First Amendment have been reclassified as a
current liability on its condensed consolidated balance sheet as of September
30, 1998. Based on discussions with the Lenders, management believes that it
will be able to obtain the appropriate waivers in the future. However, in the
event that such waivers are not granted, management, after consultation with
its regular financing sources, believes that the Company would be able to
refinance the Amended Credit Agreement and First Amendment on acceptable terms.
However, there can be no assurance that the Company will be successful in
obtaining the appropriate waivers by the Lenders or that the Company will be
able to refinance the Amended Credit Agreement and First Amendment. The failure
by the Company to obtain such waivers or refinance the Amended Credit Agreement
and First Amendment would have a material adverse effect on the Company's
financial condition and results of operations. See "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations
- --Liquidity and Capital Resources."
NOTE 4 - DOJ INFORMATION REQUEST
Following the passage of the Telecommunications Act of 1996, the
Department of Justice, Antitrust Division ("DOJ") indicated its intention to
investigate certain existing industry practices that had not been previously
subject to antitrust review. The Company has received information requests from
the DOJ regarding the joint selling agreement ("JSA") the Company had from
September 1 to December 31, 1996 in the Wichita, Kansas market and the JSA the
Company has in the Colorado Springs, Colorado and Spokane, Washington markets
(the "Citadel JSA"). These information requests also cover another JSA which
the Company has in Spokane, Washington. The Citadel JSA provided approximately
15% of the Company's net revenues during the nine months ended September 30,
1998. In the event the DOJ requires the termination or modification of the
Citadel JSA, the Company believes that it will not have a long-term material
adverse effect on the Company because the Company believes that it can more
efficiently provide the services currently performed by Citadel given the fee
structure of the Citadel JSA. However, the Company may suffer a short term
disruption in sales efforts caused by the transition. The Company has begun
preparations for an orderly transition in the event that the DOJ requires the
termination of the Citadel JSA.
NOTE 5 - LOSS PER BASIC COMMON SHARE
Loss per basic common share is based upon the net loss applicable to
basic common shares, which is net of preferred stock dividends and upon the
weighted average number of common shares outstanding during the period. The
conversion of securities convertible into common stock and the exercise of
stock options were not assumed in the calculation of loss per basic common
share because the effect would be antidilutive.
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<PAGE>
TRIATHLON BROADCASTING COMPANY AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
September 30, 1998
(unaudited)
NOTE 6 - LEGAL PROCEEDING
On July 24, 1998, a lawsuit was commenced against the Company and its
directors in the Court of Chancery of the State of Delaware (New Castle
County). The plaintiff in the lawsuit purports to have filed the action on
behalf of a class consisting of all holders of Depositary Shares. The complaint
alleges that the consideration to be paid as a result of the Merger to the
holders of the Depositary Shares is unfair and that the individual defendants
have breached their fiduciary duties. The complaint seeks to have the action
certified as a class action and seeks to enjoin the Merger, or, in the
alternative, seeks monetary damages. The Company intends to defend the lawsuit
vigorously.
NOTE 7 - DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED
INFORMATION
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131, "Disclosures About
Segments of an Enterprise and Related Information" ("FAS 131"), which is
effective for years beginning after December 15, 1997. FAS 131 establishes
standards for the way that public business enterprises report selected
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also establishes standards for
related disclosure about products and services, geographic areas and major
customers. FAS 131 is effective for financial statements for fiscal years
beginning after December 15, 1997, and therefore, the Company will adopt the
new requirements in 1998. Management has not yet completed its review of the
effect of FAS 131 on its financial reporting.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the condensed
consolidated financial statements and related notes thereto. The following
discussion, as well as discussions elsewhere herein, contain certain forward
looking statements that involve risks and uncertainties that could cause actual
results to differ materially from those discussed in such forward looking
statements. Generally, forward-looking statements include words or phrases such
as "management anticipates," "management believes," "the Company anticipates,"
"the Company believes," "the Company expects" and words and phrases of similar
impact, and include, but are not limited to, statements regarding future
operations and business environment. The forward-looking statements are made
pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Factors that could cause or contribute to such differences
include, but are not limited to, risks and uncertainties relating to leverage,
the ability to obtain financing, the level and volatility of interest rates,
integration of the acquisitions completed during the year ended December 31,
1997, the ability of the Company to achieve certain cost savings, the
management of growth, the introduction of new technology, changes in the
regulatory environment, the popularity of radio as a broadcasting and
advertising medium, changing consumer tastes, the effect of economic and market
conditions, the impact of current or pending legislation and regulation and
other factors, including those discussed in this document and in prior SEC
filings, press releases and other public filings of the Company. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward looking statements that may be made to reflect any future events
or circumstances.
RECENT DEVELOPMENT; MERGER
On July 23, 1998, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement"), with Capstar Radio Broadcasting Partners, Inc.
("Capstar") and TBC Radio Acquisition Corp., a wholly-owned subsidiary of
Capstar ("Sub"), pursuant to which Sub would merge with and into the Company
and the Company would become a wholly-owned subsidiary of Capstar (the
"Merger"). Pursuant to the Merger Agreement, upon the consummation of the
Merger, each outstanding share of each class of Common Stock of the Company
shall be converted into the right to receive $13.00, subject to adjustment, and
each outstanding depositary share of the Company, representing one-tenth
interest in a share of 9% Mandatory Convertible Preferred Stock, par value $.01
per share, of the Company ("Depositary Shares"), shall be converted into the
right to receive $10.83, subject to adjustment, and each outstanding share of
the Series B Convertible Preferred Stock, par value $.01 per share, of the
Company shall be converted into the right to receive $.01.
As a condition precedent to the execution of the Merger Agreement,
Capstar, Sub, the Company and certain stockholders of the Company have entered
into stockholder agreements (the "Stockholder Agreements"), whereby each of
such stockholders have agreed to vote all shares of the capital stock of the
Company beneficially owned by each in favor of the Merger and against any
competing transaction. In order to facilitate the Merger and pursuant to the
Stockholder Agreements, on August 5, 1998, such stockholders converted an
aggregate of 641,921 shares of Class D Common Stock into Class B Common Stock
based on the existence of certain covenant defaults under the Amended Credit
Agreement at the time of the conversion. As a result of the conversion of the
Class D Common Stock into Class B Common Stock and the terms of the Stockholder
Agreements, such stockholders have agreed to vote the majority of the voting
power of the outstanding voting capital stock of the Company in favor of the
Merger and
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<PAGE>
against any competing transaction. Accordingly, passage of the proposal to
approve the Merger Agreement and the Merger is assured.
The consummation of the Merger is subject to the satisfaction of a
number of conditions set forth in the Merger Agreement, including, but not
limited to, the approval by the stockholders of the Company of the transactions
contemplated thereby, the expiration or termination of any applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the receipt of all applicable consents to the Merger from the
Federal Communications Commission. The Merger is currently expected to be
consummated in the second quarter of 1999. For additional information, see
"Item 5--Other Events," of the Company's Report on Form 8-K filed with the
Securities and Exchange Commission on July 31, 1998 and "General" below.
GENERAL
The Company owns and operates radio stations primarily in medium and
small markets in the Midwestern and Western United States. The Company
currently owns and operates, sells advertising on behalf of or provides
programming to 10 AM and 22 FM radio stations in six markets and owns Pinnacle
Sports Productions, LLC, a regional sports radio network (the "Sports Network")
as set forth in the following chart:
AM FM
---- ----
Omaha, Nebraska(1) 1 3
Spokane, Washington(2) 3 5
Wichita, Kansas 2 4
Colorado Springs, Colorado(3) 2 2
Lincoln, Nebraska(1) 0 4
Tri-Cities, Washington(4) 2 4
--- ---
Total 10 22
- ------------------
(1) The Company owns the Sports Network operating in Nebraska in addition
to the stations in Omaha and Lincoln, Nebraska.
(2) Includes four stations for which Citadel Broadcasting Company sells
advertising pursuant to a JSA and one station that is not owned by the
Company but on which the Company sells advertising pursuant to a JSA.
(3) Consists of four stations owned by the Company for which Citadel
Broadcasting Company sells advertising pursuant to a JSA.
(4) Includes two stations not owned by the Company on which the Company
provides programming services and sells advertising pursuant to local
marketing agreements. The Tri-Cities, Washington market consists of
the cities of Richland, Kennewick and Pasco in the State of
Washington.
The performance of a radio station group, such as the Company, is
customarily measured by its ability to generate Broadcast Cash Flow ("BCF")
which is net revenues less station operating expenses. Although BCF is not a
measure of performance calculated in accordance with generally accepted
accounting principles ("GAAP"), the Company believes that BCF is accepted by
the broadcasting industry as a generally recognized measure of performance and
is used by analysts who report publicly on the performance of broadcasting
companies. Nevertheless, this measure should not be considered in isolation or
as a substitute for operating income, net income, net cash provided by
operating activities or any other measure for determining the Company's
operating performance or liquidity that is calculated in accordance with GAAP.
-12-
<PAGE>
The primary source of the Company's revenues is the sale of
advertising time on its radio stations. The Company's most significant station
operating expenses are employee salaries and commissions, programming expenses
and advertising and promotional expenditures. The Company seeks to reduce
expenses at the stations by implementing cost controls, operating the stations
as groups in their respective markets and lowering overhead by combining and
centralizing administrative and financing functions of its stations.
The Company's revenues are primarily affected by the advertising rates
that its radio stations charge. The Company's advertising rates are in large
part based on a station's ability to attract audiences in the demographic
groups targeted by its advertisers, as measured principally by The Arbitron
Company (an independent rating service) on a quarterly basis. Because audience
ratings in local markets are crucial to a station's financial success, the
Company endeavors to develop strong listener loyalty. The Company seeks to
diversify the formats on its stations as a means to insulate it from the
effects of changes in the musical tastes of the public in any particular
format. The number of advertisements that can be broadcast without jeopardizing
audience levels (and the resulting ratings) is limited in part by the format of
a particular station.
The Company's stations strive to maximize revenue by constantly
managing the number of commercials available for sale and adjusting prices
based upon local market conditions. In the broadcasting industry, radio
stations often utilize trade (or barter) agreements which exchange advertising
time for goods or services (such as travel or lodging), instead of for cash.
The Company generates most of its revenue from local advertising, which is sold
primarily by a station's sales staff. To generate national advertising sales,
the Company engages independent advertising sales representatives that
specialize in national sales for each of its stations.
The Company's revenues vary throughout the year. As is typical in the
radio broadcasting industry, the Company's first calendar quarter generally
produces the lowest revenues for the year, and the fourth calendar quarter
generally produces the highest revenues for the year. The Company's operating
results in any period may be affected by the incurrence of advertising and
promotion expenses that do not necessarily produce commensurate revenues until
the impact of the advertising and promotion is realized in future periods.
The radio broadcasting industry is highly competitive. The financial
results of each of the Company's stations are dependent to a significant degree
upon its audience ratings and its share of the overall advertising revenue
within the station's geographic market.
Following the passage of the Telecommunications Act of 1996, the
Department of Justice, Antitrust Division ("DOJ") indicated its intention to
investigate certain existing industry practices that had not been previously
subject to antitrust review. The DOJ is investigating the Citadel JSA in
connection with the concentration of radio station ownership in the Colorado
Springs, Colorado and Spokane, Washington markets. The DOJ has, in the past,
requested the termination of a radio station JSA that, in the opinion of the
DOJ, would have given a radio station owner, together with its proposed
ownership of other radio stations in the area, control over the majority of
radio advertising revenue in the area. The Citadel JSA provided approximately
15% of the Company's net revenues during the nine months ended September 30,
1998. In the event the DOJ requires the termination or modification of the
Citadel JSA, the Company believes that it will not have a long-term material
adverse effect on the Company because the Company believes that it can more
efficiently provide the services currently performed by Citadel given the fee
structure of the Citadel JSA. The Company, however, may suffer a short term
disruption in sales efforts caused by the transition. The Company has begun
preparations for an orderly transition in the event that the DOJ requires the
termination of the Citadel JSA.
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The FCC indicated in a public notice that it intends to analyze
ownership concentration in the Wichita market in connection with its review of
the transfer of control of the Company's Wichita stations to Capstar pursuant
to the Merger, and it invited responses specifically addressing the issue of
concentration and its effect on competition and diversity in the market. The
DOJ responded by filing a Comment and Petition to Hearing with the FCC claiming
that Capstar's proposed acquisition of the Wichita stations, together with the
stations Capstar currently owns in the market, raises serious issues as to
whether sufficient competition will exist after the acquisition and suggesting
that the FCC should hold a hearing to determine whether the transfers would
serve the public interest. The DOJ also indicated that it would continue its
investigation into the potential anti-competitive nature of the proposed
acquisition and may bring action in United States District Court irrespective
of any action the FCC may take. The Company cannot predict what action the FCC
of DOJ may take, if any, or what effect any action may have on the Company or
the Merger.
RESULTS OF OPERATIONS
The Company's condensed consolidated financial statements are not
directly comparable from period to period due to acquisition and disposition
activity for the nine months ended September 30, 1997. For more information
regarding dispositions and acquisitions, see "Item 1 -- Business" of the
Company's Annual Report on Form 10-K for the year ended December 31, 1997 filed
with the Securities and Exchange Commission on March 31, 1998.
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997
Net revenues increased approximately $856,000 or 9% to approximately
$10.2 million for the three months ended September 30, 1998 (the "1998
Quarter") from approximately $9.4 million for the three months ended September
30, 1997 (the "1997 Quarter") due to a higher volume of business despite being
negatively impacted by changes in direct competitive forces in certain markets
resulting from increased competition.
Station operating expenses increased by approximately $306,000 or 5%
to approximately $6.3 million for the 1998 Quarter from approximately $6.0
million for the 1997 Quarter primarily related to a larger volume of business
during the 1998 Quarter.
BCF increased by approximately $550,000 or 16% to approximately $3.9
million for the 1998 Quarter from approximately $3.4 million for the 1997
Quarter principally due to the factors described above. BCF as a percentage of
net revenues increased to 39% for the 1998 Quarter versus 36% for the 1997
Quarter.
Depreciation and amortization expense increased by 3% to approximately
$1.2 million for the 1998 Quarter versus approximately $1.1 million for the
1997 Quarter. The increase was principally attributable to fixed asset
additions.
Corporate expenses consisting primarily of officer's salary, financial
consulting and professional fees and expenses, and corporate office expenses
were approximately $559,000 for the 1998 Quarter as compared to approximately
$467,000 for the 1997 Quarter primarily due to increases in salaries and state
franchise taxes. Included in corporate expenses are fees of approximately
$133,000 and approximately $139,000 for the 1998 Quarter and the 1997 Quarter,
respectively, payable to SFX Entertainment, Inc. ("SFX Entertainment"), an
affiliate, for financial, legal and advisory services rendered by The Sillerman
Companies, an affiliate, under the Amended and Restated Financial Consulting
Agreement between the Company and SFX Entertainment. The interests of SFX
Broadcasting, Inc. ("SFX Broadcasting") under that
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agreement were assigned to SFX Entertainment in connection with the spin-off of
SFX Entertainment from SFX Broadcasting in April 1998.
The Company recorded deferred compensation expense of approximately
$29,000 for the 1998 Quarter and approximately $94,000 for the 1997 Quarter.
This recurring expense, not currently, and in some cases never affecting cash
flow, is related to stock, stock options and stock appreciation rights granted
to officers, directors and advisors in prior periods.
Operating income (net revenues less total operating expenses) for the
1998 Quarter was approximately $2.2 million and approximately $1.7 million for
the 1997 Quarter. This increase results principally from increased revenue and
other factors described above.
Other expenses for the 1998 Quarter consists of approximately $732,000
of costs related to the Merger.
Net interest expense for the 1998 quarter was approximately
$1.5 million as compared to approximately $1.3 million for the 1997 quarter.
The net increase in interest expense was principally attributable to the
increased borrowings as described under "Liquidity and Capital Resources" below
and reduced interest income.
Net loss for the 1998 Quarter was approximately $43,000 as compared to
income of approximately $325,000 for the 1997 Quarter. Net loss applicable to
common stock for the 1998 Quarter was approximately $1.4 million as compared to
approximately $1.1 million for the 1997 Quarter. The increased net loss and net
loss applicable to common stock resulted from the factors described above.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1997
Net revenues increased approximately $5.7 million or 25% to
approximately $28.7 million for the nine months ended September 30, 1998 (the
"1998 Period") from approximately $23.0 million for the nine months ended
September 30, 1997 (the "1997 Period") as a result of acquisitions consummated
during the 1997 Period as well as growth at continuously owned and operated
stations. On a same station basis for the radio stations owned and operated as
of September 30, 1998, net revenues increased by 8% to approximately $28.7
million for the 1998 Period from approximately $26.5 million for the 1997
Period. Despite the growth in net revenues, the Company experienced disruptions
in sales efforts as a result of restructuring of sales management and turnover
of sales staff of acquisitions consummated during the prior fiscal year as well
as changes in direct competitive forces in selected markets resulting in
increased competition.
Station operating expenses increased by approximately $3.2 million or
20% to approximately $19.4 million for the 1998 Period from approximately $16.2
million for the 1997 Period primarily due to the inclusion of expenses related
to the stations acquired during the 1997 Period. On a same station basis for
the radio stations owned and operated by the Company as of September 30, 1998,
operating expenses for the 1998 Period increased by 3% to approximately $19.4
million from approximately $18.8 million for the 1997 Period. The increase in
operating expenses related principally to a larger volume of business during
the 1998 Period reduced by the improved cost structure of stations acquired
during the 1997 Period and continuing implementation of the Company's cost
reduction programs and efficiencies of combined operations.
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BCF increased by approximately $2.5 million or 37% to approximately
$9.3 million for the 1998 Period from approximately $6.8 million for the 1997
Period. BCF as a percentage of net revenues increased to 32% for the 1998
Period versus 30% for the 1997 Period principally due to increases in net
revenues exceeding increases in operating expenses. On a same station basis for
radio stations owned and operated by the Company as of September 30, 1998, BCF
of approximately $9.3 million for the 1998 Period represented an increase of
approximately 21% as compared to the BCF of approximately $7.7 million for the
1997 Period principally as a result of increased net revenues, improved cost
structure of the newly acquired stations and the effects of the Company's cost
reduction programs.
Depreciation and amortization expense increased by 31% to
approximately $3.6 million for the 1998 Period versus approximately $2.7
million for the 1997 Period. The increase was principally attributable to the
amortization of intangible assets resulting from acquisitions consummated
during the 1997 Period.
Corporate expenses consisting primarily of officer's salary, financial
consulting and professional fees and expenses, and corporate office expenses
were approximately $1.6 million for both the 1998 Period as compared to
approximately $1.5 million for the 1997 Period. Included in corporate expenses
are fees of approximately $398,000 and approximately $421,000 for the 1998
Period and the 1997 Period, respectively, paid and or payable to SFX
Entertainment.
The Company recorded deferred compensation expense of approximately
$99,000 for the 1998 Period and approximately $292,000 for the 1997 Period.
This recurring expense, not currently, and in some cases never affecting cash
flow, is related to stock, stock options and stock appreciation rights granted
to officers, directors and advisors in prior periods.
Operating income (net revenues less total operating expenses) for the
1998 Period was approximately $4.0 million as compared to approximately $2.3
million for the 1997 Period. This increase results principally from the
inclusion of nine full months of operations in the 1998 Period for stations
acquired during the 1997 Period and the factors described above.
Other expenses for the 1998 Period include approximately $91,000 of
loss on the sale of property and equipment and approximately $843,000 of costs
related to the Merger.
Net interest expense for the 1998 Period was approximately $4.5
million as compared to approximately $2.9 million for the 1997 Period due to
factors described above. The net increase in interest expense was principally
attributable to the increased borrowings to complete the acquisitions of radio
stations acquired during the 1997 Period and a decrease in interest income.
Loss before extraordinary item for the 1998 Period was approximately
$1.4 million as compared to approximately $554,000 for the 1997 Period due to
factors described above. During the 1997 Period, the Company incurred an
extraordinary loss in connection with the write off of deferred financing costs
of $958,000 associated with the early extinguishment of debt.
Net loss for the 1998 Period was approximately $1.4 million as
compared to approximately $1.5 million for the 1997 Period. Net loss applicable
to common stock was approximately $5.6 million for both the 1998 Period and the
1997 Period.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's principal sources of funds have been
the proceeds from the Company's initial public offering on September 5, 1995
(the "Initial Public Offering") of approximately $12.9 million, net proceeds of
approximately $56.4 million from the sale of
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preferred stock (the "Preferred Stock Offering") and borrowings of $78.5
million under the Amended Credit Agreement, which borrowings were used to
refinance the Company's borrowings of $40 million under the Company's loan
agreement with AT&T Commercial Finance Corporation, finance acquisitions and
support working capital needs. The cost of the acquisitions completed were
financed with the proceeds from the Initial Public Offering, the Preferred
Stock Offering and the borrowings mentioned above. In October, 1997, the
Company reduced its outstanding indebtedness to the Lenders by $20.0 million
with the proceeds of the disposition of radio stations KOLL-FM, KSSN-FM and
KMVK-FM, each operating in the Little Rock, Arkansas market. In June 1998, the
Company refinanced a portion of the indebtedness relating to the 1997
acquisition of Pinnacle Sports Productions, LLC as described below.
Cash flow provided from operating activities for the 1998 Period was
approximately $3.1 million as compared to approximately $837,000 for the 1997
Period. The increase in cash flow from operating activities was principally due
to growth in net revenues as compared to the 1997 Period. Cash used in
investing activities was approximately $1.2 million during the 1998 Period and
approximately $64.0 million for the 1997 Period. The decrease is related to the
absence of radio station acquisition activity during the 1998 Period. Cash flow
used for financing activities of approximately $3.4 million during the 1998
Period related primarily to the payment of dividends to the preferred
stockholders while the cash flow provided from financing activities during the
1997 Period of approximately $62.0 million principally related to additional
borrowings related to acquisitions.
On September 15, 1998, the Company borrowed $650,000 from Capstar for
the purpose of acquiring certain real property in Lincoln, Nebraska. The loan
is secured by the acquired real property. The Company had occupied a
substantial portion of the property as a tenant prior to September 15, 1998 and
continues to occupy the property. The loan accrues interest at the rate of 12%
per annum which is payable, along with the principal, on the earlier of the
consummation of the Merger, which is expected during the second quarter of
1999, or the termination of the Merger Agreement.
On August 12, 1998, the Company entered into an agreement with Saga
Communications of Iowa, Inc. ("Saga"), as required by the Merger Agreement,
whereby, subject to FCC approval, Saga has agreed to decrease the broadcast
power of KIOA-FM which operates in the Des Moines, Iowa market, allowing the
Company to increase the broadcast power of KTNP-FM, which operates in the
Omaha, Nebraska market. In accordance with the agreement, the Company is
required to deposit $500,000 with an escrow agent ("Escrow Deposit") by
November 27, 1998. In the event the FCC approves the power changes, the Escrow
Deposit shall be remitted to Saga as compensation. In the event the FCC fails
to approve the power changes, the Escrow Deposit will be returned to the
Company.
On June 30, 1998, the Company entered into the First Amendment to
Amended and Restated Loan Agreement ("First Amendment") with the Lenders. The
purpose of the First Amendment was to, among other things, enable the Lenders
to fund an acquisition loan of $1.0 million (the "Acquisition Loan") under the
$20.0 million acquisition loan facility of the Amended Credit Agreement. The
Acquisition Loan was used by the Company to refinance a portion of the
indebtedness related to the acquisition of Pinnacle Sports Productions, LLC in
1997. The Acquisition Loan is a term loan bearing interest at LIBOR + 3.50% (or
the alternative base rate + 2.50%). The principal balance of the Acquisition
Loan must be reduced by $6,250 per year (paid on a quarterly basis) until the
final maturity of July 1, 2004.
The Amended Credit Agreement and First Amendment contain covenants
relating to financial leverage and coverage ratios, and restrictions on capital
expenditures and other
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<PAGE>
payments. Additionally, the Merger Agreement places certain restrictions on the
conduct of business by the Company, including a restriction on the incurrence
of indebtedness and the making of capital expenditures. As of September 30,
1998, the Company did not meet certain financial covenants under the Amended
Credit Agreement and First Amendment and management believes that it may not
comply with certain covenants in its year end tests. Accordingly, the entire
debt outstanding under the Amended Credit Agreement and First Amendment has
been reclassified as a current liability on its condensed consolidated balance
sheet as of September 30, 1998. Based on discussions with the Lenders,
management believes that it will be able to obtain the appropriate waivers in
the future. However, in the event that such waivers are not granted,
management, after consultation with its regular financing sources, believes
that the Company would be able to refinance the Amended Credit Agreement and
First Amendment on acceptable terms. However, there can be no assurance that
the Company will be successful in obtaining the appropriate waivers by the
Lenders or that the Company will be able to refinance the Amended Credit
Agreement and First Amendment. The failure by the Company to obtain such
waivers or refinance the Amended Credit Agreement and First Amendment would
have a material adverse affect on the Company's financial condition and results
of operations.
For the remainder of 1998, the Company expects its capital needs,
including interest expense, dividends, corporate expenses, capital expenditures
and other commitments, including the commitment to Saga, to be approximately
$4.0 million. It is anticipated the Company will be able to meet these
obligations for the remainder of 1998 from cash on hand and cash provided from
operations, which assumes an improvement in the operating results of the
Company's radio stations. The Company anticipates that future debt service,
dividends, and other commitments payable after 1998 will be met from cash on
hand and cash provided from operations, which assumes a substantial improvement
in the operating results of the Company's radio stations and borrowing which
may be available under the Amended Credit Agreement or other sources. There can
be no assurance that the Company will be able to make these improvements which
are subject to prevailing economic conditions and to legal, financial,
business, regulatory, industry and other factors, many of which are beyond the
Company's control, or that the Company will have availability under the Amended
Credit Agreement or access to other sources of financing sufficient to meet
such commitments. The failure by the Company to obtain such financing or make
sufficient improvements in its operating results could have a material adverse
effect on the Company.
YEAR 2000
The Year 2000 problem is the result of computer software and hardware,
as well as chips and processors embedded in various products, (collectively
referred to as "Computer Applications") using two digits rather than four
digits to define the applicable year. Any of the Company's Computer
Applications may recognize a date using "00" as the Year 1900 rather than the
Year 2000, which could result in miscalculations or system failures.
The Company's critical information technology ("IT") systems using
Computer Applications consist of sales, scheduling, accounting and broadcast
automation systems. These IT systems rely heavily on specialized software
provided by third parties. The Company is in the process of examining and
testing its IT systems and letters of compliance are being obtained from all
vendors of standard systems. The majority of these systems have been or are in
the process of being upgraded through routine scheduled software and hardware
upgrades. Based on internal assessments completed to date and upon third party
representations, the Company believes that its critical IT systems will be Year
2000 compliant by March 1999.
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<PAGE>
The Company's non-IT systems consist of telephone systems and any
other equipment which contain embedded computer chips or processors. The
Company has not begun an examination of its non-IT systems. The Company plans
to conduct and complete its assessment of its non-IT systems that operate at
its facilities by mid-year 1999.
In addition to its internal systems, the Company also relies, directly
and indirectly, on the systems of third parties, such as its banks, for the
accurate exchange of data and for financial processing capabilities. The
Company's primary financial institution has indicated that it is actively
working to resolve its Year 2000 compatibility issues.
The Company has not incurred any costs to date that are specifically
attributable to resolving Year 2000 compliance issues. The Company cannot
accurately estimate its future costs relating to readying its Computer
Applications until it has completed examinations of all systems containing
Computer Applications which will occur by June 1999.
Although the Company believes that it will be able to discover and
correct all its Year 2000 compatibility problems, there can be no guarantee
that the Company will not experience any adverse impact. Additionally, with
respect to third parties, there can be no assurance that their systems will be
rendered Year 2000 compliant on a timely basis or that any resulting Year 2000
issues would not have an adverse effect on the results of operations of the
Company. The most likely negative impact, if any, could include delays in
receipt of payments from customers and delays in future advertising commitments
from customers experiencing compatibility problems.
The Company believes that the Year 2000 compliance of its IT and
non-IT systems should minimize the business difficulties encountered as a
result of the Year 2000 issue. Consequently, the Company does not anticipate
the need to formulate contingency plans to deal with Year 2000 issues and has
not formulated such plans. If this assessment changes, the Company will develop
contingency plans as deemed necessary.
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<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 24, 1998, a lawsuit was commenced against the Company and its
directors in the Court of Chancery of the State of Delaware (New Castle
County). The plaintiff in the lawsuit purports to have filed the action on
behalf of a class consisting of all holders of Depositary Shares. The complaint
alleges that the consideration to be paid as a result of the Merger to the
holders of the Depositary Shares is unfair and that the individual defendants
have breached their fiduciary duties. The complaint seeks to have the action
certified as a class action and seeks to enjoin the Merger, or, in the
alternative, seeks monetary damages. The Company intends to defend the lawsuit
vigorously. To date, with respect to this litigation, no discovery has been
conducted and no hearing has either been held or scheduled.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
10.76 Termination Agreement, dated as of July 23, 1998, among
Norman Feuer, Capstar Radio Broadcast Partners, Inc. and
Triathlon Broadcasting Company.
10.77 Promissory Note dated September 15, 1998 executed by 4630
Realty, Inc., a wholly owned subsidiary of Triathlon
Broadcasting Company, and payable to the order of Capstar
Radio Broadcasting Partners, Inc.
10.78 Security Agreement dated September 15, 1998 between 4630
Realty, Inc., a wholly owned subsidiary of Triathlon
Broadcasting Company, and Capstar Radio Broadcasting
Partners, Inc.
10.79 Deed of Trust, Assignment, Security Agreement and Financing
Statement, dated as of September 15, 1998, executed by 4630
Realty, Inc., a wholly owned subsidiary of Triathlon
Broadcasting Company in favor of Capstar Radio Broadcasting
Partners, Inc.
10.80 Station Reimbursement and Compensation Agreement dated August
1998, between Saga Communications of Iowa, Inc. and Triathlon
Broadcasting of Omaha, Inc.
10.81 Escrow Agreement dated August 1998, among Saga Communications
of Iowa, Inc., Triathlon Broadcasting of Omaha, Inc. and
James K. Edmondson
27 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed with Securities and Exchange Commission on July 31,
1998 reporting under Item 5 the Merger Agreement entered into by the Company
and a lawsuit which was commenced against the Company and its directors
alleging that the consideration to be paid as a result of the Merger is unfair
to the holders of the Depositary Shares and that the individual defendants have
breached their fiduciary duties.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TRIATHLON BROADCASTING COMPANY
By: /s/ Norman Feuer
------------------------------
Chief Executive Officer
By: /s/ William G. Thompson
------------------------------
Chief Financial Officer
Dated: November 16, 1998
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<PAGE>
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (this "Agreement"), dated as of July
23, 1998, is made and entered into by and among Capstar Radio Broadcasting
Partners, Inc., a Delaware corporation ("Parent"), Triathlon Broadcasting
Company, a Delaware corporation (the "Company"), and Norman Feuer
("Executive").
RECITALS
WHEREAS, concurrently herewith, Parent, TBC Radio Acquisition Corp., a
Delaware corporation ("Sub"), and the Company are entering into an Agreement
and Plan of Merger (as such agreement may hereafter be amended from time to
time, the "Merger Agreement"; capitalized terms used and not otherwise defined
herein have the respective meanings ascribed to them in the Merger Agreement),
pursuant to which Sub will be merged with and into the Company (the "Merger");
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that Executive agree, and Executive has agreed,
to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, Covenants and agreements contained herein, the
parties hereto, intending to be legally bound, hereby agree as follows:
AGREEMENTS
1. EMPLOYMENT AGREEMENT. Executive hereby represents and warrants that
his employment relationship with the Company is pursuant to and governed by the
Employment Agreement dated as of August 8, 1995 between Executive and the
Company (the "Employment Agreement"), other than the making of advances on
bonuses by the Company to the Executive as set forth on Schedule A attached
hereto. A true and correct copy of the Employment Agreement is attached hereto
as Exhibit A.
2. TERMINATION OF EMPLOYMENT AGREEMENT. Effective as of the Effective
Time (a) Executive hereby tenders his resignation as an officer and director of
the Company and each of its subsidiaries, and (b) the Employment Agreement
other than Section 12 thereto, shall be terminated in full without any further
action on the part of the Company or Executive and, except as otherwise
specifically provided herein, shall be of no further force or effect. Except as
expressly provided for in this Agreement, from and after the date of
termination of the Employment Agreement as contemplated by this Agreement,
Executive shall not be entitled to receive any further wages, compensation,
bonuses or benefits arising pursuant to the Employment Agreement or his
employment relationship with the Company or any of its subsidiaries and
Executive shall not be entitled to any post-termination wages, compensation or
benefits (including, without limitation, severance pay, vacation pay or sick
pay), except as expressly provided in Section 3(a) hereof.
<PAGE>
3. RELEASE OF CLAIMS
(a) CURRENT RELEASE BY EXECUTIVE. Effective as of the Effective Time
or, if any consideration required to be paid to Executive pursuant to Section 5
hereto is not paid to Executive prior to or contemporaneously with the Effective
Time, as of the payment of such consideration to Executive (such date herein
referred to as the "Release Date"), Executive hereby releases and discharges the
Released Parties from all Claims and Damages based on any acts, omissions or
other matters occurring on or before the date Executive signs this Agreement,
including those related to, arising from, or attributed to (i) his employment
with, and membership on the Boards of Directors for, the Company and its
subsidiaries and resignations therefrom, and (ii) the Employment Agreement and
the termination of Executive's employment pursuant to the terms of this
Agreement; except that this release shall not include Executive's (A)
entitlement to continued group medical coverage in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), (B) vested
account balances in the Company employee benefit plans, (C) rights of Executive
arising under the Transaction Documents, (D) accrued and unpaid salary,
severance (if Executive's employment is terminated prior to the Effective Time
under Sections 14.3, 15 or 16 of the Employment Agreement) and expenses
incurred by Executive in respect of the period prior to the Effective Time or
(E) cash compensation payable to Executive and forgiveness of the Company's
loans to the Executive as provided in Section 5 hereof. Executive understands
and expressly agrees that, unless specifically excluded from this release, this
release extends to all Claims and Damages of every nature and kind, known or
unknown, suspected or unsuspected, past or present, whether or not these Claims
and Damages were set forth in any writing, and that all such Claims and Damages
are hereby expressly settled or waived. Notwithstanding the foregoing,
Executive does not release or discharge the Company and its subsidiaries from
(i) any Claims or Damages related to or arising from Executive's capacity as an
officer or director of the Company or its subsidiaries to which Executive is
entitled to be indemnified against or reimbursed by the Company or its
subsidiaries, whether by statute, contract or otherwise or (ii) if Executive's
employment with the Company is terminated by the Company between the date of
this Agreement and the Effective Time (any such date, the "Early Termination
Date") and as of the Effective Time the consideration provided for in Section 5
has not been paid to Executive notwithstanding such termination, any Claims
Executive may have against the Company related to such termination of
Executive's employment.
(b) RELEASE DATE RELEASE BY EXECUTIVE. As of the Release Date, and as
a condition to the Company's obligation to deliver any consideration required to
be paid to Executive pursuant to Section 5 hereto, Executive will execute and
deliver to the Company a release substantially identical in substance to this
Section 3, execept that such release shall relate to acts, omissions or other
matters occurring on or before the Release Date, including without limitation,
all acts or omissions related to any matter at any time prior to and including
the date of termination of the Employment Agreement.
(c) DEFINITIONS. As used in this Section 3, the following terms shall
have meanings set forth below:
(i) "Claims" means all theories of recovery of whatever nature,
whether known or unknown, at law or equity of any jurisdiction. This
term includes, without limitation, lawsuits, petitions, complaints,
causes of action, charges, indebtedness, losses,
<PAGE>
claims, liabilities, and demands, whether arising in equity or under
the common law or under any contract (including, without limitation, the
Employment Agreement), statute, regulation or ordinance. This term also
includes, without limitation, any Claim of discrimination (based on age or any
other factor) under any statute or law (including, without limitation, the Age
Discrimination in Employment Act, 29 U.S.C. ss. 621, et seq.;
Title VII of the Civil Rights Act of 1964,42 U.S.C. ss. 2000e, et
seq.; and the Americans with Disabilities Act, 42 U.S.C. ss. 12101,
et seq.), and all Claims asserted by Executive, in writing or otherwise, or
which could be asserted, by Executive.
(ii) "Damages" means all elements of relief or recovery of whatever
nature, whether known or unknown, which are recognized by the law or equity of
any jurisdiction. This term includes, without limitation, actual, incidental,
indirect, consequential, compensatory, liquidated, exemplary and punitive
damages, rescission, attorneys' fees, interest, costs, equitable relief and
expenses.
(iii) "Released Parties" means and includes the Company and its
subsidiaries, and all of the foregoing entities' past and present stockholders,
directors, officers, employees, agents, insurance carriers, employee benefit
plans (and such plans' fiduciaries, trustees, administrators and
representatives), predecessors, successors, assigns, executors, administrators,
attorneys and representatives, in both their corporate and individual
capacities.
4. CONFIDENTIALITY
(a) PROTECTION OF CONFIDENTIAL INFORMATION AND TRADE SECRETS.
Executive acknowledges that the business of the Company and its subsidiaries is
highly competitive and that their contracts, books, records, and documents,
their technical information concerning their services, pricing techniques, and
computer system and software, and the names of and other information (such as
credit and financial data) concerning their customers and business affiliates,
all comprise confidential business information and trade secrets which are
valuable, special, and unique assets which the Company and its subsidiaries use
in their business to obtain a competitive advantage over their competitors. All
such information belonging to the Company and its subsidiaries is jointly
referred to herein as "Confidential Information and Trade Secrets"; provided,
however, that Confidential Information and Trade Secrets shall not include
information that is or becomes generally available in the public domain other
than as a result of disclosure by Executive in violation of this Agreement, is
generally known to the industry as a whole or is not specific to the operations
and business of the Company and its subsidiaries. Effective as of the Effective
Time, Executive agrees that all Confidential Information and Trade Secrets are
the exclusive, confidential and proprietary information and property of the
Company and will not be used by Executive for any other purpose or in any other
manner. Executive further acknowledges that protection of such Confidential
Information and Trade Secrets against unauthorized disclosure and use is of
critical importance to the Company and its subsidiaries in maintaining their
competitive position. Executive hereby agrees that he will not make any
unauthorized disclosure of any such Confidential Information and Trade Secrets,
or make any unauthorized use thereof prior to the fifth anniversary of the date
of the Effective Time. In the event that Executive is requested pursuant to, or
required by, applicable law or regulation or by legal process to disclose any
Confidential Information and
3
<PAGE>
Trade Secrets, Executive agrees to provide the Company with prompt
notice of such request(s) to enable the Company to seek an appropriate
protective order; provided, however, that Executive shall not be prohibited
from complying with any such request unless an appropriate protective order is
in place.
(b) SCOPE OF PROHIBITED ACTIVITIES; REMEDIES. Executive acknowledges
that the scope of prohibited activities are reasonable and are no broader than
are necessary to protect the goodwill and legitimate business interests of the
Company and its subsidiaries. Executive also acknowledges that the provisions
of this Section 4 do not and will not impose any unreasonable burden on
Executive. Executive further acknowledges that a violation of this Section 4
will cause irreparable damage to the Company and its subsidiaries, entitling
them to an injunction and other equitable relief, without the necessity of
posting bond or proving actual damages, in a court of competent jurisdiction
against Executive. In addition, the Company and its subsidiaries shall be
entitled to whatever other remedies they may have at law, including, without
limitation, reasonable attorneys fees and costs incurred by the Company and its
subsidiaries in enforcing the terms of this Section 4.
5. CONSIDERATION. Contemporaneously with the Effective Time, and
conditioned upon Executive having fulfilled his duties and obligations under
the Employment Agreement (including without limitation Section 4 thereof) up to
and until the Effective Time, the Company shall pay Executive consideration
consisting of (a) cash, by wire transfer of immediately available funds, in the
amount of Eight Hundred Fifty Thousand and No/100 Dollars ($850,000) (the
"Closing Payment"), together with (i) the amount of any accrued but unpaid
salary and expenses to the date thereof, (ii) a cash payment of
Twenty-Five Thousand and No/100 Dollars ($25,000) (the "Quarterly Payment") per
calendar quarter, payable in advance on the first day of each quarter from the
date of this Agreement to the first to occur of the Effective Time or the Early
Termination Date; provided, that the Quarterly Payment made on the first day of
the calendar quarter in which the Effective Time occurs shall be prorated for
such quarter as of the date of the Effective Time and the difference between
the Quarterly Payment and such prorated Quarterly Payment shall be deducted
from the Closing Payment, but excluding (iii) any other bonuses to which
Employee may be entitled under the Employment Agreement or otherwise except to
the extent payment thereof has been declared by the Board of Directors of the
Company but not made prior to the Effective Time and is permitted by Item 5 of
Section 4.01 (a)(xvii) of the Company Disclosure Schedule to the Merger
Agreement, and (b) forgiveness of the loans listed on Schedule A hereto
aggregating Four Hundred-Fifty Thousand and No/100 Dollars ($450,000). The
parties agree and acknowledge that the consideration provided under this
Section 5 is inclusive of any and all consideration that may become due and
payable to Executive upon his exercise of any options or any other rights that
Executive may have to purchase shares of capital stock of the Company (except
for amounts payable pursuant to Section 2.03 of the Merger Agreement), the
receipt of which consideration Executive hereby waives and relinquishes. If
Executive's employment is terminated by the Company prior to the Effective
Time, Executive shall, in lieu of the payments stated herein, receive such
compensation as would be required under the applicable terms of Section 14 of
the Employment Agreement.
6. RIGHT TO MATCH. In the event that the Company gives notice under
Section 7.01 (c) of the Merger Agreement of its election to terminate the
Merger Agreement, then, as requested by Parent, the Company and Executive
shall, in connection with any amendment to the Merger Agreement or other
proposal made by Parent in response to such notice and that is accepted by the
4
<PAGE>
Company, amend or terminate this Agreement or enter into such other
agreements or arrangements substantially similar to those as proposed to be
entered into with Executive in connection with the Superior Proposal described
in such notice; provided that such right or obligation shall only be liable to
a Second Transaction that the Stockholder would be obligated to vote for
pursuant to that certain Stockholder Agreement by and between Stockholder, the
Company, Parent and Sub.
7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
(b) CERTAIN EVENTS. Executive agrees that this Agreement and the
obligations hereunder shall be binding upon his heirs, guardians,
administrators or successors.
(c) AMENDMENTS, WAIVERS, ETC. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(d) NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing, and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered to
the respective parties at the following addresses:
If to Executive: Norman Feuer
835 La Jolla Corona Court
La Jolla, California 92037
Telecopy: (649) 459-7599
copies to: Hopkins & Sutter
Three First National Plaza, 41st Floor
Chicago, Illinois 60602
Telecopy: (312) 558-7776
Attn: Emily Neuberger
If to the Company: Triathlon Broadcasting Company
750 B Street, Suite 1920
San Diego, California 92101
Telecopy: (619) 239-4270
Attn: William G. Thompson
5
<PAGE>
copies to: Baker & McKenzie
Two Allen Center, Suite 1200
1200 Smith Street
Houston, Texas 77002
Telecopy: (713) 427-5014
Attn: Amar Budarapu
If to Parent or Sub: Capstar Broadcasting Corporation
600 Congress Avenue, Suite 1400
Austin, Texas 78701
Telecopy: (512) 340-7890
Attn: William S. Banowsky, Jr.
copies to: Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
Telecopy: (214) 999-7732
Attn: Michael D. Wortley
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(e) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Furthermore, in lieu of each such invalid, illegal or
unenforceable provision, there shall be added automatically as part of this
Agreement, a provision similar in terms to such invalid, illegal or
unenforceable provision as may be possible and valid, legal and enforceable
and, subject to the following sentence, the parties hereby request the court to
whom the disputes relating to this Agreement are submitted to reform any
otherwise unenforceable covenants contained in Section 4 hereof in accordance
with the preceding provision.
(f) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief, without the necessity of
posting bond or proving actual damages, in addition to any other remedy to
which it may be entitled, at law or in equity. For the purposes of this Section
6(f) and Section 4 hereof, Parent, Sub and each subsidiary of the corporation
surviving the Merger shall be deemed a third party beneficiary entitled to the
6
<PAGE>
benefits of such Sections and shall be entitled to enforce Section 4 of this
Agreement in accordance with this Section 6(f).
(g) REMEDIES CUMULATIVE. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(h) NO WAIVER. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by
such party of its right to exercise any such or other right, power or remedy or
to demand such compliance.
(i) NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to be
for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(j) GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of law thereof.
(k) JURISDICTION. Each party hereby irrevocably submits to the
exclusive jurisdiction of the Court of Chancery in the State of Delaware in any
action, suit or proceeding arising in connection with this Agreement, and
agrees that any such action, suit or proceeding shall be brought only in such
court (and waives any objection based on forum non conveniens or any other
objection to venue therein); provided, however, that such consent to
jurisdiction is solely for the purpose referred to in this paragraph (k) and
shall not be deemed to be a general submission to the jurisdiction of said
Court or in the State of Delaware other than for such purposes. Each party
hereto hereby waives any right to a trial by jury in connection with any such
action, suit or proceeding.
(1) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
(m) COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
(n) WITHHOLDINGS. As may be appropriate, the Company shall report the
payments made hereunder by (i) filing the appropriate W-2 forms and/or 1099
forms for this amount, and (ii) making any other reports required by law.
(o) TAXES. Executive agrees to comply, on a timely basis, with all tax
reporting requirements applicable to the receipt of the payments and other
compensation received hereunder and to timely pay all taxes due with respect to
such amounts.
7
<PAGE>
(p) ATTORNEY FEES. The prevailing party in any dispute or controversy
under or in connection with this Agreement shall be entitled to reimbursement
from the non-prevailing party costs and reasonable legal fees incurred by such
prevailing party.
(q) TIMING. Executive acknowledges that (a) he has 21 days to consider
this Termination Agreement before executing it, although he may execute this
Agreement before the 21 days expires, (b) he may revoke this Agreement within 7
days after he executes it, (c) this Agreement will not become effective or
enforceable until the expiration of this 7-day period, (d) the Company may
require, as a prerequisite for payment or providing of any consideration to
Executive pursuant to this Agreement, Executive to acknowledge in a signed and
dated writing that he did not revoke this Agreement during the 7-day period,
and (e) Executive's acceptance of the cash consideration payable to Executive
pursuant to Section 5 of this Agreement shall constitute his acknowledgment
that he did not revoke this Agreement during this 7-day period.
(r) LEGAL COUNSEL. Executive is advised to seek legal counsel to
review this Agreement prior to execution of this Agreement, and Executive
acknowledges that he has had adequate opportunity to seek legal counsel to
review this Agreement to the extent deemed necessary by Executive.
8. TERMINATION. This Agreement shall terminate upon the termination of
the Merger Agreement without any further action on the part of any party
hereto.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
/s/ Norman Feuer
--------------------------------
Norman Feuer
TRIATHLON BROADCASTING COMPANY
By: /s/ William G. Thompson
_____________________________
Name: William G. Thompson
___________________________
Title: Chief Financial Officer
__________________________
CAPSTAR RADIO BROADCASTING PARTNERS, INC.
By: /s/ William S. Banowsky, Jr.
-----------------------------
William S. Banowsky, Jr.
Vice President
<PAGE>
PROMISSORY NOTE
$650,000 Austin, Texas September 15, 1998
FOR VALUE RECEIVED, 4630 REALTY, INC., a Delaware corporation
("Maker"), promises to pay to the order of CAPSTAR RADIO BROADCASTING PARTNERS,
INC., a Delaware corporation ("Payee"), at such address in Austin, Texas as the
holder of this Note may designate from time to time in writing to Maker, the
principal sum of SIX HUNDRED FIFTY THOUSAND and NO/100 DOLLARS ($650,000)
together with interest thereon at the rate of twelve percent (12 %) per annum,
payable as hereinafter provided.
THIS NOTE is due and payable in full on the earlier to occur of the
Effective Time and the Termination Date (each as defined in that certain
Agreement and Plan of Merger dated as of July 23, 1998, among Payee, TBC Radio
Acquisition Corp. and Triathlon Broadcasting Company), including all accrued
interest thereon.
Maker shall have the right to prepay this Note in whole or in part at
any time without penalty or premium.
All amounts paid hereunder shall be applied first to all interest then
accrued and unpaid hereunder, and the balance, if any, to principal. All past
due principal and interest on this Note shall bear interest at the maximum rate
permitted by law from maturity until paid. All sums called for, payable or to
be paid hereunder shall be paid in lawful money of the United States of America
which at the time of payment is legal tender for the payment of public and
private debts therein.
Maker hereby waives presentment and demand for payment, notice of
intent to accelerate maturity, notice of acceleration of maturity, protest or
notice of protest and non-payment, bringing of suit and diligence in taking any
action to collect any sums owing hereunder and in proceeding against any of the
rights and properties securing payment hereof, and agrees that its liability on
this Note shall not be affected by any release of or change in any security for
the payment of this Note.
In the event of a default in the payment of any installment of either
principal or interest as provided for herein and such default continues for a
period of five days after notice to Maker thereof, or in the performance of any
agreement or covenant contained in any instrument securing payment hereof,
without the giving of any notice of any kind, the holder of this Note shall
have the right and option, to declare the unpaid balance of principal and
accrued interest on this Note at once due and payable and to foreclose or
require foreclosure of any and all liens securing payment hereof, and to
exercise any and all other rights and remedies it may have. Failure to exercise
this option upon any default shall not constitute a waiver of the right to
exercise it in the event of any subsequent default.
Payment of this Note is secured by a Deed of Trust, Assignment,
Security Agreement and Financing Statement ("Deed of Trust") of even date
herewith, executed by Maker in favor of Richard A. Johnson, Attorney at Law, as
trustee, for the benefit of Payee covering certain property in Lincoln,
<PAGE>
Lancaster County, Nebraska, as more particularly described therein and by a
Security Agreement ("Security Agreement") of even date herewith, executed by
Maker in favor of Payee covering all of Maker's personal property.
Subject to the last sentence of this paragraph, the liability of Maker
and any other party for failure to perform its obligations hereunder and under
the Deed of Trust, the Security Agreement and any other instrument securing
payment of this Note (herein together with the Deed of Trust and Security
Agreement called the "Security Instruments") is expressly limited to the
security for the payment of this Note, the same being all properties, rights,
and estates subject to the Security Instruments. Without limiting the
generality of the foregoing (a) Maker and any other party shall be liable upon
the indebtedness evidenced by this Note, all sums or amounts to accrue or to
become payable hereon, all amounts covenanted to be paid by Maker under the
Security Instruments and all covenants contained in the Security Instruments to
the full extent (but only to the extent) of the security for the payment of
this Note, the same being all properties, rights, and estates subject to the
Security Instruments; (b) if default occurs, and continues beyond applicable
grace periods, in the timely and proper payment of all or any part of such
indebtedness, sums or amounts, or in the timely and proper performance of such
covenants, any judicial proceedings brought by Payee or any other party against
Maker or any other party shall be limited to the preservation, enforcement and
foreclosure of the liens, mortgages, assignments, rights and security interests
now or at any time hereafter securing the payment of this Note, and no
attachment, execution or other writ or process shall be sought, issued or
levied upon any assets, properties, or funds of Maker or any other party, other
than the properties, rights, estates and interests described in the Security
Instruments; and (c) if there is a foreclosure of such liens, mortgages,
assignments, rights and security interests securing the payment of this Note by
private power of sale or otherwise, no judgment for any deficiency upon such
indebtedness, sums and amounts shall be sought or obtained by Payee, or any
other party against Maker or any other party. Notwithstanding the foregoing
provisions of this paragraph, Maker shall be fully liable to Payee to the same
extent that Maker would be liable absent the foregoing provisions of this
paragraph for: (1) fraud or willful material misrepresentations; (2) the
retention of any rental income or other income arising with respect to the
property covered by the Deed of Trust after sale under powers provided by the
Deed of Trust; (3) the fair market value of any personalty or fixtures located
on the property covered by the Deed of Trust that are removed or disposed of
(other than in accordance with the terms of the Deed of Trust); (4) any
security or other deposits held by Maker in respect of the property covered by
the Deed of Trust; and (5) the misapplication of any proceeds paid under any
insurance policies by reason of damage, loss or destruction to any portion of
the property covered by the Deed of Trust (to the full extent of such
proceeds), or the misapplication of any proceeds or awards resulting from the
condemnation of all or any part of the property covered by the Deed of Trust
(to the full extent of such proceeds or awards).
All notices permitted hereunder shall be given to the addressee at the
following address: if to Payee, 600 Congress Avenue, Suite 1400, Austin, Texas
78701; if to Maker, 750 B Street, Suite 1920, San Diego, California 92101
attention: Norman Feuer, with a copy to The Sillerman Companies, Inc., 650
Madison Avenue, New York, New York 10022, attention: Richard Liese. All notices
given hereunder shall be in writing and shall be considered properly given if
mailed by first-class United States mail, postage
(Page 2 of 3 Pages)
<PAGE>
prepaid, registered or certified with return receipt requested, or by
delivering same in person to the addressee, or by prepaid telegram. Any notice
given in accordance herewith shall be effective upon receipt at the address of
the addressee.
It is expressly stipulated and agreed to be the intent of Maker and
Payee to at all times comply with the usury and other laws applicable to this
Note and the Security Instruments and any subsequent revisions, repeals, or
judicial interpretations thereof, to the extent any of the same are applicable
hereto. If such laws are ever revised, repealed, or judicially interpreted so
as to render usurious any amount called for under this Note or under any of the
Security Instruments, or contracted for, charged, or received with respect to
the indebtedness evidenced by this Note, or if Payee's exercise of the option
herein contained to accelerate the maturity of this Note or if any prepayment
by Maker results in Maker having paid any interest in excess of that permitted
by law, then it is Maker's and Payee's express intent that all excess amounts
theretofore collected by Payee be credited on the principal balance of this
Note (or, if the Note has been paid in full, refunded to Maker), and the
provisions of this Note and the Security Instruments immediately be deemed
reformed and the amounts thereafter collectable hereunder and thereunder
reduced, without the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder and thereunder.
EXECUTED as of the date and year first above written.
4630 REALTY, INC.
By: /s/ Norman Feuer
------------------------------
Name: Norman Feuer
Title: President/CEO
(Page 3 of 3 Pages)
<PAGE>
SECURITY AGREEMENT
(Accounts, Inventory, Equipment, Chattel Paper, Documents,
Instruments, General Intangibles and Other Property)
Between
4630 REALTY, INC.
and
CAPSTAR RADIO BROADCASTING PARTNERS, INC.
September 15, 1998
<PAGE>
SECURITY AGREEMENT
Accounts, Inventory, Equipment, Chattel Paper, Documents,
Instruments, General Intangibles and Other Property
THIS SECURITY AGREEMENT (this "Agreement") is made as of September
15, 1998, by 4630 REALTY, INC., a Delaware corporation with principal offices
at 750 B Street, Suite 1920, San Diego, California 92101 ("Debtor"); for
CAPSTAR RADIO BROADCASTING PARTNERS, INC., a Delaware corporation with offices
at 600 Congress Avenue, Suite 1400, Austin, Texas 78701 ("Secured Party").
RECITALS
A. On even date herewith, Secured Party is loaning to Debtor and
Debtor is borrowing from Secured Party $650,000 for the purchase of real
property located at 4630 Antelope Creek, Lincoln, Lancaster County, Nebraska
and evidenced by a Promissory Note executed by Debtor dated the date hereof
(hereinafter called the "Promissory Note").
B. Secured Party has conditioned its loan to Debtor upon the
execution and delivery by Debtor of this Agreement, and Debtor has agreed to
enter into this Agreement.
C. Therefore, for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Debtor hereby agrees with
Secured Party as follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Grant of Security Interest. Debtor hereby assigns and
grants to Secured Party a security interest in and right of set-off against the
assets referred to in Section 1.02 (the "Collateral") to secure the prompt
payment and performance of the "Obligations" (as defined in Section 2.02) and
the performance by Debtor of this Agreement.
Section 1.02 Collateral. The Collateral consists of the following
types or items of property, but only to the extent owned by Debtor, (including
property hereafter acquired by Debtor as well as property which Debtor now owns
or in which Debtor has rights):
(a) All of Debtor's accounts, inventory, equipment, chattel
paper, documents, instruments and general intangibles, including,
without limitation, any of the foregoing which may be more
specifically indicated in the remainder of this Section.
(b) (i) Any related or additional property from time to
time delivered to or deposited with Secured Party by or for the
account of Debtor; (ii) all certificates of title or other documents
evidencing ownership or possession of or otherwise relating to any
property referred to in this Section; (iii) all property used or
usable in connection with any property
<PAGE>
referred to in this Section; (iv) all policies of insurance (whether
or not required by Secured Party) covering any property referred to
in this Section; (v) all goods which were at any time included in
the Collateral and which are returned to or for the account of
Debtor following their sale, lease or other disposition; (vi) all
proceeds, products, replacements, additions to, substitutions for,
accessions of, and property necessary for the operation of any of
the property referred to in this Section, including, without
limitation, insurance payable as a result of loss or damage to any
of the property referred to in this Section, refunds of unearned
premiums of any such insurance policy and claims against third
parties; and (vii) all books and records related to any of the
property referred to in this Section, including, without limitation,
any and all books of account, customer lists and other records
relating in any way to the accounts, chattel paper, instruments or
inventory referred to in this Section.
(c) All general intangibles related to any property
referred to in this Section, including, without limitation, all (i)
letters of credit, bonds, guaranties, purchase or sales agreements
and other contractual rights, rights to performance, and claims for
damages, refunds (including tax refunds) or other monies due or to
become due; (ii) orders, franchises, permits, certificates,
licenses, consents, exemptions, variances, authorizations or other
approvals by any governmental agency or court; (iii) consulting,
engineering and technological information and specifications, design
data, patent rights, trade secrets, literary rights, copyrights,
trademarks, labels, trade names and other intellectual property;
(iv) business records, computer tapes and computer software; (v)
goodwill; and (vi) other intangible personal property, whether
similar or dissimilar to the property referred to in this Section.
It is expressly contemplated that additional property may from time
to time be pledged, assigned or granted to Secured Party as additional security
for the Obligations, and the term "Collateral" as used herein shall be deemed
for all purposes hereof to include all such additional property, together with
all other property of the types described above related thereto.
Section 1.03 Location of Collateral. The Collateral is located or
(except as otherwise permitted by Section 4.01) shall be located only in the
following places (provided that the Collateral shall be subject to the security
interest created by this Agreement irrespective of whether or not the
Collateral is located in the following places): Lincoln, Nebraska.
Section 1.04 Filing Information Regarding Certain Collateral. The
Collateral includes property that is or may be or become fixtures on the real
property described in Exhibit A attached hereto and made a part hereof. Debtor
is a record owner of such real property (as shown in the real estate records of
the jurisdiction where such real estate is located).
<PAGE>
ARTICLE 2
DEFINITIONS
Section 2.01 Terms Defined Above. As used in this Agreement, the
terms defined above shall have the meanings respectively assigned to them.
Section 2.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Accounts" means all accounts, chattel paper and
instruments (as such terms are defined in the Code) at any time
included in the Collateral.
"Account Debtor" means any person or entity liable
(whether directly or indirectly, primarily or secondarily) for the
payment or performance of any obligations included in the
Collateral, whether as an account debtor (as defined in the Code),
obligor on an instrument, issuer of documents or securities,
guarantor or otherwise.
"Agreement" means this Security Agreement, as the same
may from time to time be amended or supplemented.
"Code" means the Uniform Commercial Code as presently in
effect in the State of Texas, Business and Commerce Code, Chapters 1
through 9. Unless otherwise indicated by the context herein, all
uncapitalized terms which are defined in the Code shall have their
respective meanings as used in Chapter 9 of the Code.
"Event of Default" means any event specified in Section
6.01.
"Highest Lawful Rate" means the maximum rate of
nonusurious interest allowed from time to time by applicable law.
"Inventory" means all inventory (as defined in the Code)
at any time included in the Collateral.
"Obligations" means the Promissory Note and any and all
renewals, extensions for any period, rearrangements or enlargements
thereof, whether evidenced by any note or other instrument or
agreement, whether arising by an extension of credit, letter of
credit, overdraft, endorsement, loan, guaranty, indemnification or
otherwise, whether direct or indirect.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement, Debtor
represents and warrants to Secured Party (which representations and warranties
will survive the creation and payment of the Obligations) that:
Section 3.01 Ownership of Collateral Encumbrances; Valid and Binding
Agreement. Debtor is the legal and beneficial owner of the Collateral free and
clear of any adverse claim, lien, security interest, option or other charge or
encumbrance except for the security interest created by this Agreement, and
Debtor has full right, power and authority to assign and grant a security
interest in the Collateral to Secured Party. This Agreement constitutes a
legal, valid and binding obligation of Debtor enforceable against Debtor in
accordance with its terms. The execution, delivery and performance of this
Agreement will not violate the terms of any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to which Debtor is
subject and does not require the consent or approval of any other person or
entity.
Section 3.02 No Required Consent. Subject to the terms of the
Amended and Restated Credit Agreement dated as of May 30, 1997, among Triathlon
Broadcasting Company, Triathlon Broadcasting of Wichita, Inc., Triathlon
Broadcasting of Lincoln, Inc., Triathlon Broadcasting of Omaha, Inc., Triathlon
Broadcasting of Spokane, Inc., Triathlon Broadcasting of Tri-Cities, Inc.,
Triathlon Broadcasting of Colorado Springs, Inc., Triathlon Broadcasting of
Little Rock, Inc., the lenders party thereto from time to time and AT&T
Commercial Finance Corporation, individually and as Administrative Agent, as
amended (together with the documents and instruments executed and delivered in
connection therewith, the "Triathlon Credit Agreement"), no authorization,
consent, approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body (other than the filing of financing
statements) is required for (i) the due execution, delivery and performance by
Debtor of this Agreement, (ii) the grant by Debtor of the security interest
granted by this Agreement, (iii) the perfection of such security interest or
(iv) the exercise by Secured Party of its rights and remedies under this
Agreement.
Section 3.03 First Priority Security Interest. The grant of the
security interest in the Collateral pursuant to this Agreement creates a valid
and perfected first priority security interest in the Collateral, enforceable
against Debtor and all third parties and securing payment of the Obligations.
Section 3.04 No Filings By Third Parties. No financing statement or
other public notice or recording covering the Collateral is on file in any
public office (other than any financing statement or other public notice or
recording naming Secured Party as the secured party therein), and Debtor will
not execute any such financing statement or other public notice or recording so
long as any of the Obligations are outstanding.
<PAGE>
Section 3.05 No Name Changes. Debtor has not, during the preceding
five years, entered into any contract, agreement, security instrument or other
document using a name other than, or been known by or otherwise used any name
other than, the name used by Debtor herein.
Section 3.06 Location of Debtor and Collateral. Debtor's chief
executive office and Debtor's records concerning the Collateral are located at
the address or location set forth in the opening paragraph hereof. The
Collateral is located at Debtor's address set forth in the opening paragraph
hereof or at the location(s), if any, specified in Section 1.02 or 1.03. Any
Collateral not at such location(s) nevertheless remains subject to Secured
Party's security interest.
Section 3.07 Collateral. All statements or other information
provided by Debtor to Secured Party describing or with respect to the
Collateral is or (in the case of subsequently furnished information) will be
when provided correct and complete in all material respects. The delivery at
any time by Debtor to Secured Party of additional Collateral or of additional
descriptions of Collateral shall constitute a representation and warranty by
Debtor to Secured Party hereunder that the representations and warranties of
this Article 3 are correct insofar as they would pertain to such Collateral or
the descriptions thereof.
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor will at all times comply with the covenants and agreements
contained in this Article 4, from the date hereof and for so long as any part
of the Obligations are outstanding.
Section 4.01 Change in Location of Collateral or Debtor. Debtor will
notify Secured Party on or before the date of any change in location of the
Collateral. Debtor will not, without Secured Party's prior written consent,
change the location of the Collateral to any state, county or other
jurisdiction in which Secured Party has not already filed a financing statement
or taken other necessary steps to perfect its security interests in the
Collateral or to maintain such perfection. Debtor will give Secured Party 30
days' prior written notice of (i) the opening or closing of any place of
Debtor's business or (ii) any change in the location of Debtor's chief
executive office or address.
Section 4.02 Change in Debtor's Name or Corporate Structure. Debtor
will not change its name, identity or corporate structure (including, without
limitation, any merger, consolidation or sale of substantially all of its
assets) without notifying Secured Party of such change in writing at least 30
days prior to the effective date of such change. Without the express written
consent of Secured Party, however, Debtor will not engage in any other business
or transaction under any name other than Debtor's name hereunder.
Section 4.03 Documents; Collateral in Possession of Third Parties.
If certificates of title or other documents evidencing ownership or possession
of the Collateral are issued or outstanding, Debtor will cause the interest of
Secured Party to be properly noted thereon and will, forthwith upon receipt,
deliver same to Secured Party. If any Collateral is at any time in the
possession or control
<PAGE>
of any warehouseman, bailee, agent or independent contractor, Debtor shall
notify such person or entity of Secured Party's security interest in such
Collateral. Upon Secured Party's request, Debtor shall instruct any such person
or entity to hold all such Collateral for Secured Party's account subject to
Debtor's instructions, or, if an Event of Default shall have occurred, subject
to Secured Party's instructions.
Section 4.04 Delivery of Letters of Credit and Instruments. Debtor
will deliver each letter of credit, if any, included in the Collateral to
Secured Party, in each case forthwith upon receipt by or for the account of
Debtor. If any Account becomes evidenced by a promissory note, trade acceptance
or any other instrument for the payment of money (other than checks or drafts
in payment of Accounts collected by Debtor in the ordinary course of business
prior to notification by Secured Party under Section 5.10), Debtor will
immediately deliver such instrument to Secured Party appropriately endorsed
and, regardless of the form of presentment, demand, notice of dishonor, protest
and notice of protest with respect thereto, Debtor will remain liable thereon
until such instrument is paid in full.
Section 4.05 Maintenance of Existence. Debtor will maintain Debtor's
corporate existence and remain in good standing and qualified to do business in
all jurisdictions pursuant to the laws of which it is so required.
Section 4.06 Sale, Disposition or Encumbrance of Collateral. Except
as permitted by Section 4.14 or with Secured Party's prior written consent,
Debtor will not in any way encumber any of the Collateral (or permit or suffer
any of the Collateral to be encumbered) or sell, assign, lend, rent, lease or
otherwise dispose of or transfer any of the Collateral to or in favor of any
person or entity other than Secured Party.
Section 4.07 Proceeds of Collateral. Debtor will deliver to Secured
Party promptly upon receipt all proceeds delivered to Debtor from the sale or
disposition of any Collateral. If chattel paper, documents or instruments are
received as proceeds, which are required to be delivered to Secured Party, they
will be, immediately upon receipt, properly endorsed or assigned and delivered
to Secured Party as Collateral. This Section 4.07 shall not be construed to
permit sales or dispositions of Collateral except as may be elsewhere expressly
permitted by this Agreement.
Section 4.08 Payment of Taxes and Liens. Debtor will pay prior to
delinquency all taxes, charges, liens and assessments against the Collateral.
Section 4.09 Records and Information. Debtor shall keep accurate and
complete records of the Collateral (including proceeds). These records shall
reflect complete and accurate stock records of the Inventory and all facts
concerning each Account. Debtor shall conduct a physical count of the Inventory
at such intervals as Secured Party requests and promptly supply Secured Party
with a copy of such count accompanied by a report of the value (valued at the
lower of cost or market value) of the Inventory. Secured Party may at any time
have access to, examine, audit, make extracts from and inspect without
hindrance or delay Debtor's records, files and the Collateral. Debtor will
promptly provide written notice to Secured Party of all information which in
any way relates to or affects the filing of any financing statement or other
public notices or recordings, or the delivery and
<PAGE>
possession of items of Collateral for the purpose of perfecting a security
interest in the Collateral. Debtor will also promptly furnish such information
as Secured Party may from time to time reasonably request regarding (i) the
business, affairs or financial condition of Debtor or (ii) the Collateral or
Secured Party's rights or remedies with respect thereto. Any balance sheets or
financial statements requested by Secured Party pursuant to this Section 4.09
shall conform to generally accepted accounting principles.
Section 4.10 Performance of Obligations. Debtor will promptly and
properly perform all of its obligations under this Agreement and any other
agreement or contract of any kind now or hereafter existing as security for or
in connection with the payment of the Obligations.
Section 4.11 Further Assurances. Upon the request of Secured Party,
Debtor shall (at Debtor's expense) execute and deliver all such assignments,
certificates, financing statements or other documents and give further
assurances and do all other acts and things as Secured Party may reasonably
request to perfect Secured Party's interest in the Collateral or to protect,
enforce or otherwise effect Secured Party's rights and remedies hereunder.
Section 4.12 Insurance. Debtor shall maintain, with financially
sound and reputable insurers, insurance satisfactory in all respects to Secured
Party covering all insurable risks with respect to the Collateral, including
standard extended coverage, in an amount at least equal to the value of the
Collateral. Policies evidencing any such insurance shall contain a standard
mortgagee's endorsement providing for payment of any loss to Secured Party, and
such policies shall further provide for 30 days' minimum written cancellation
notice to Secured Party. Debtor shall furnish evidence satisfactory to Secured
Party of compliance with these insurance provisions.
Section 4.13 Condition of Collateral. Debtor will maintain all the
Collateral in good condition, repair and working order, and in accordance with
any manufacturer's manual. Debtor will not misuse, abuse, waste, destroy or
endanger the Collateral or allow it to deteriorate, except for ordinary wear
and tear from its intended use. Debtor will repair, replace or otherwise
improve the Collateral as may be necessary. Debtor will not use any Collateral
in violation of any law, statute, ordinance, regulation or administrative
order, or suffer it to be so used.
Section 4.14 Collateral Attached to Other Property. In the event
that the Collateral is to be attached or affixed to any real property (as
described in Section 1.04 or otherwise), Debtor hereby agrees that this
Agreement may be filed for record in any appropriate real estate records as a
financing statement which is a fixture filing. If Debtor is not the record
owner of such real property, Debtor will provide Secured Party with any
additional security agreements or financing statements necessary for the
perfection of Secured Party's security interest in the Collateral. If the
Collateral is wholly or partly affixed to real estate or installed in or
affixed to other goods, Debtor will, on demand of Secured Party, furnish
Secured Party with a disclaimer (including landlord's or other lien waivers or
releases, if applicable), signed by all persons or entities having an interest
in the real estate or other goods to which the Collateral may have become
affixed, of any prior interest to Secured Party's interest in the Collateral.
<PAGE>
Section 4.15 Collateral Separate and Distinct. Debtor shall at all
times keep the Collateral, including proceeds, or cause it to be kept (when in
the possession of warehousemen, bailees, agents, independent contractors or
other third parties), separate and distinct from other property (except as to
any property which is to become attached or affixed as described in Section
1.04).
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are
applicable irrespective of whether an Event of Default occurs and is
continuing:
Section 5.01 Non-judicial Enforcement. Secured Party may enforce its
rights hereunder without prior judicial process or judicial hearing, and to the
extent permitted by law Debtor expressly waives any and all legal rights which
might otherwise require Secured Party to enforce its rights by judicial
process.
Section 5.02 Discharge Encumbrances. Secured Party may, at its
option, discharge any taxes, liens, security interests or other encumbrances at
any time levied or placed on the Collateral, may pay for insurance on the
Collateral and may pay for the maintenance and preservation of the Collateral.
Debtor agrees to reimburse Secured Party upon demand for any payment so made,
plus interest thereon from the date of Secured Party's demand at the Highest
Lawful Rate.
Section 5.03 Attorney-in-Fact. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, from time to time
in Secured Party's discretion, but at Debtor's cost and expense and without
notice to Debtor to:
(a) obtain, adjust, sell and cancel any insurance with
respect to the Collateral and endorse any draft drawn by insurers of
the Collateral, and Secured Party may apply any proceeds or unearned
premiums of such insurance to the Obligations (whether or not due);
(b) take any action and to execute any assignment,
certificate, financing statement, notification, document or
instrument which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including, without
limitation, to receive, endorse and collect all instruments made
payable to Debtor representing any payment or other distribution in
respect of the Collateral or any part thereof and to give full
discharge for the same; and
(c) receive, change the address for delivery, open and
dispose of mail addressed to Debtor, and to execute, assign and
endorse negotiable and other instruments for the payment of money,
documents of title or other evidences of payment, shipment or
storage for any form of Collateral on behalf of and in the name of
Debtor.
<PAGE>
Section 5.04 Transfer of Collateral. Secured Party may transfer any
or all of the Obligations, and upon any such transfer Secured Party may
transfer its interest in any or all of the Collateral and shall be fully
discharged thereafter from all liability therefor. Any transferee of the
Collateral shall be vested with all rights, powers and remedies of Secured
Party hereunder.
Section 5.05 Licenses and Rights to Use Collateral. In connection
with any transfer or sale (to Secured Party or any other person or entity) of
the Collateral, Secured Party is hereby granted a transferable license or other
right to use, without any charge, any of Debtor's labels, patents, copyrights,
trade names, trade secrets, trademarks or other similar property in completing
production, advertising or selling such Collateral. Debtor's rights under all
licenses and franchise agreements shall inure to the benefit of Secured Party
and any transferee of all or any part of the Collateral.
Section 5.06 Cumulative and Other Rights. The rights, powers and
remedies of Secured Party hereunder are in addition to all rights, powers and
remedies given by law or in equity. The exercise by Secured Party of any one or
more of the rights, powers and remedies herein shall not be construed as a
waiver of any other rights, powers and remedies, including, without limitation,
any other rights of set-off. If any of the Obligations are given in renewal,
extension for any period or rearrangement, or applied toward the payment of
debt secured by any lien, Secured Party shall be, and is hereby, subrogated to
all the rights, titles, interests and liens securing the debt so renewed,
extended, rearranged or paid.
Section 5.07 Disclaimer of Certain Duties. The powers conferred upon
Secured Party by this Agreement are to protect its interest in the Collateral
and shall not impose any duty upon Secured Party to exercise any such powers.
Debtor hereby agrees that Secured Party shall not be liable for, nor shall the
indebtedness evidenced by the Obligations be diminished by, Secured Party's
delay or failure to collect upon, foreclose, sell, take possession of or
otherwise obtain value for the Collateral.
Section 5.08 Waiver of Notice; Demand and Presentment. Debtor hereby
waives any demand, notice of default, notice of acceleration of the maturity of
the Obligations, notice of intention to accelerate the maturity of the
Obligations, presentment, protest and notice of dishonor as to any action taken
by Secured Party in connection with this Agreement, or any instrument or
document.
Section 5.09 Proceeds. If so requested by Debtor, any payments
received by Secured Party on the Accounts or as proceeds of other Collateral
shall upon final collection by Secured Party be credited towards payment of the
Obligations. In the absence of such request from Debtor, and until so
requested, Secured Party may at Secured Party's option either (i) hold such
collected payments as cash Collateral (and Secured Party may at any time place
a hold or freeze on all or a part of any deposit account of Debtor containing
deposits of such payments up to the amount of such deposits) or (ii) credit
such collected payments towards payment of the Obligations whether such
Obligations are due or not.
ARTICLE 6
<PAGE>
EVENTS OF DEFAULT
Section 6.01 Events. Any of the following events shall constitute an
Event of Default under this Agreement:
(a) Payments - Debtor defaults in any payment due and owing
pursuant to the Obligations which shall continue for a period of 5
days after notice;
(b) Representations and Warranties - any representation or
warranty made by Debtor to Secured Party proves to have been
incorrect in any material respect as of the date thereof;
(c) Covenants - default is made by Debtor in the
performance of any covenant or agreement contained in this Agreement
or in any other document now or hereafter executed in connection
with or as security for the Obligations which shall continue for 20
days after notice, except if it would require more than 20 days to
cure provided Grantor begins to diligently prosecute a cure within
such 20 day period, in which case shall continue after Grantor
ceases prosecution of a cure;
(d) Legal Compliance - the violation by Debtor of, or the
failure of the Collateral to comply with, any applicable law,
statute, ordinance, regulation or administrative order if, as a
result of such violation or noncompliance, the value of the
Collateral or the perfection or priority of Secured Party's security
interests therein may be, in the sole opinion of Secured Party,
materially impaired, which shall continue for 20 days after notice,
except if it would require more than 20 days to cure provided
Grantor begins to diligently prosecute a cure within such 20 day
period, in which case shall continue after Grantor ceases
prosecution of a cure;
(e) Loss, Damage or Destruction of Collateral - the loss,
theft, substantial damage to or destruction of the Collateral or of
any material portion thereof (whether or not covered by insurance);
(f) Judgments, etc. - the entry of a judgment, issuance of
an injunction, order of attachment, or any other process against
Debtor or the Collateral which in the sole opinion of Secured Party
impairs Debtor's ability to pay or perform the Obligations;
(g) Termination, Insolvency, etc. - Debtor shall
respectively: (i) dissolve or otherwise terminate its existence in
its form as of the date hereof, (ii) become insolvent or suffer a
business failure, (iii) have a custodian, receiver or agent
appointed or authorized to take charge of its properties, (iv) make
an assignment for the benefit of creditors or call a meeting of
creditors for the composition of debts, or (v) be subject to the
commencement of any proceeding in bankruptcy or under other
insolvency laws.
<PAGE>
Section 6.02 Remedies. Upon the occurrence and during the
continuance of any Event of Default, Secured Party may take any or all of the
following actions after reasonable notice to Debtor:
(a) Declare all or part of the indebtedness pursuant to the
Obligations immediately due and payable and enforce payment of the
same by Debtor; provided that in the event of an Event of Default
under clause (g) of Section 6.01, the Obligations shall immediately
become due and payable without requirement of notice to Debtor.
(b) Take possession of the Collateral, or at Secured
Party's request Debtor shall, at Debtor's cost, assemble the
Collateral and make it available at a location to be specified by
Secured Party which is reasonably convenient to Debtor and Secured
Party. Secured Party may, at its option, render any equipment
unusable that may be included in the Collateral, or, at Secured
Party's request, Debtor will render it unusable. In any event,
Debtor shall bear the risk of accidental loss or damage to or
diminution in value of the Collateral, and Secured Party will not
have any liability whatsoever for failure to obtain or maintain
insurance, nor to determine whether any insurance ever in force is
adequate as to amount or as to risk insured.
(c) Sell or lease, in one or more sales or leases and in
one or more parcels, or otherwise dispose of any or all of the
Collateral in its then condition or in any other commercially
reasonable manner as Secured Party may elect, upon reasonable notice
to Debtor, in a public or private transaction, at any location as
deemed reasonable by Secured Party (including, without limitation,
Debtor's premises), either for cash or credit or for future delivery
at such price as Secured Party may deem fair, and (unless prohibited
by the Code, as adopted in any applicable jurisdiction) Secured
Party may be the purchaser of any or all Collateral so sold and may
apply upon the purchase price therefor any Obligations secured
hereby. Any such sale or transfer by Secured Party either to itself
or to any other person or entity shall be absolutely free from any
claim or right by Debtor, including any equity or right of
redemption, stay or appraisal which Debtor has or may have under any
rule of law, regulation or statute now existing or hereafter
adopted. Upon any such sale or transfer, Secured Party shall have
the right to deliver, assign and transfer to the purchaser or
transferee thereof the Collateral so sold or transferred. It shall
not be necessary that the Collateral or any part thereof be present
at the location of any such sale or transfer. Secured Party may, at
its discretion and upon reasonable notice to Debtor, provide for a
public sale, and any such public sale shall be held at such time or
times within ordinary business hours and at such place or places as
Secured Party may fix in the notice of such sale. Secured Party
shall not be obligated to make any sale pursuant to any such notice.
Except as required by law, Secured Party may, without publication,
adjourn any public or private sale by announcement at any time and
place fixed for such sale, and such sale may be made at any time or
place to which the same may be so adjourned. In the event any sale
or transfer hereunder is not completed or is defective in the
opinion of Secured Party, such sale or transfer shall not exhaust
the rights of Secured Party hereunder, and Secured Party shall have
the right, upon reasonable notice to Debtor, to cause one or more
subsequent sales or transfers to be made hereunder. In the event
that any of the Collateral is sold or transferred
<PAGE>
on credit, or to be held by Secured Party for future delivery to a
purchaser or transferee, the Collateral so sold or transferred may
be retained by Secured Party until the purchase price or other
consideration is paid by the purchaser or transferee thereof, but in
the event that such purchaser or transferee fails to pay for the
Collateral so sold or transferred or to take delivery thereof,
Secured Party shall not incur any liability in connection therewith.
If only part of the Collateral is sold or transferred such that the
Obligations remain outstanding (in whole or in part), Secured
Party's rights and remedies hereunder shall not be exhausted, waived
or modified, and Secured Party is specifically empowered to make one
or more successive sales or transfers until all the Collateral shall
be sold or transferred and all the Obligations are paid. In the
event that Secured Party elects not to sell the Collateral, Secured
Party retains its rights to lease or otherwise dispose of or utilize
the Collateral or any part or parts thereof in any manner authorized
or permitted by law or in equity, and to apply the proceeds of the
same towards payment of the Obligations. Each and every method of
disposition of the Collateral described in this subsection or in
subsection (f) shall constitute disposition in a commercially
reasonable manner.
(d) Take possession of all books and records of Debtor
pertaining to the Collateral. Secured Party shall have the authority
to enter upon any real property or improvements thereon in order to
obtain any such books or records, or any Collateral located thereon,
and remove the same therefrom without liability.
(e) Apply proceeds of the disposition of the Collateral to
the Obligations in any manner elected by Secured Party and permitted
by the Code or otherwise permitted by law or in equity. Such
application may include, without limitation, the reasonable expenses
of retaking, holding, preparing for sale or other disposition, and
the reasonable attorneys' fees and legal expenses incurred by
Secured Party.
(f) Appoint any person or entity as agent to perform any
act or acts necessary or incident to any sale or transfer by Secured
Party of the Collateral. Additionally, any sale or transfer
hereunder may be conducted by an auctioneer or any officer or agent
of Secured Party.
(g) Apply and set-off (i) any deposits of Debtor now or
hereafter held by Secured Party; (ii) all claims of Debtor against
Secured Party, now or hereafter existing; (iii) any other property,
rights or interests of Debtor which come into the possession or
custody or under the control of Secured Party; and (iv) the proceeds
of any of the foregoing as if the same were included in the
Collateral. Secured Party agrees to notify Debtor promptly after any
such set-off or application; provided, however, the failure of
Secured Party to give any notice shall not affect the validity of
such set-off or application.
Section 6.03 Reasonable Notice. If any applicable provision of any
law requires Secured Party to give reasonable notice of any sale or disposition
or other action, Debtor hereby agrees that ten days' prior written notice shall
constitute reasonable notice thereof. Such notice, in the case of public sale,
shall state the time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
<PAGE>
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted to be given
under or in connection with this Agreement shall be in writing and shall be
mailed by first class or express mail, postage prepaid, or sent by telex,
telegram, telecopy or other similar form of rapid written transmission or
personally delivered to the receiving party. All such communications shall be
mailed, sent or delivered at the address respectively indicated in the opening
paragraph hereof or at such other address as either party may have furnished
the other party in writing. Any communication so addressed and mailed shall be
deemed to be given when so mailed, any notice so sent by rapid written
transmission shall be deemed to be given when receipt of such transmission is
acknowledged by the receiving operator or equipment, and any communication so
delivered in person shall be deemed to be given when receipted for or actually
received by Debtor or Secured Party, as the case may be.
Section 7.02 Amendments and Waivers. Secured Party's acceptance of
partial or delinquent payments or any forbearance, failure or delay by Secured
Party in exercising any right, power or remedy hereunder shall not be deemed a
waiver of any obligation of Debtor, or of any right, power or remedy of Secured
Party; and no partial exercise of any right, power or remedy shall preclude any
other or further exercise thereof. Secured Party may remedy any Event of
Default hereunder or in connection with the Obligations without waiving the
Event of Default so remedied. Debtor hereby agrees that if Secured Party agrees
to a waiver of any provision hereunder, or an exchange of or release of the
Collateral, or the addition or release of any person or entity, any such action
shall not constitute a waiver of any of Secured Party's other rights or of
Debtor's obligations hereunder. This Agreement may be amended only by an
instrument in writing executed jointly by Debtor and Secured Party and may be
supplemented only by documents delivered or to be delivered in accordance with
the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or other
reproduction of this Agreement or any financing statement covering the
Collateral is sufficient as a financing statement, and the same may be filed
with any appropriate filing authority for the purpose of perfecting Secured
Party's security interest in the Collateral.
Section 7.04 Possession of Collateral. Secured Party shall be deemed
to have possession of any Collateral in transit to it or set apart for it (or,
in either case, any of its agents, affiliates or correspondents).
Section 7.05 Redelivery of Collateral. If any sale or transfer of
Collateral by Secured Party results in full satisfaction of the Obligations,
and after such sale or transfer and discharge there remains a surplus of
proceeds, Secured Party will deliver to Debtor such excess proceeds in a
commercially reasonable time; provided, however, that neither Secured Party
shall have any liability for any interest, cost or expense in connection with
any delay in delivering such proceeds to Debtor.
<PAGE>
Section 7.06 Interest. It is the intention of the parties hereto to
conform strictly to usury laws applicable to Secured Party. Accordingly, if the
transactions contemplated hereby would be usurious under applicable state or
federal law, then, notwithstanding anything to the contrary in this Agreement
or in any other agreement entered into in connection with or as security for
the Obligations, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under law applicable to Secured Party
that is contracted for, taken, reserved, charged or received under the
Obligations, this Agreement or under any of such other agreements or otherwise
in connection with the Obligations shall under no circumstances exceed the
maximum amount allowed by such applicable law, (ii) in the event that the
maturity of the Obligations is accelerated for any reason, or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest under law applicable to Secured Party may never include more than such
maximum amount, and (iii) excess interest, if any, provided for in this
Agreement or otherwise shall be cancelled automatically and, if theretofore
paid, shall be credited by Secured Party on the principal amount of the
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by Secured Party to
Debtor). The right to accelerate the maturity of the Obligations does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Secured Party does not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Secured Party for the use, forbearance or detention of sums included in
the initial Obligations shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of the
Obligations until payment in full so that the rate or amount of interest on
account of the initial Obligations does not exceed the applicable usury
ceiling, if any. To the extent that Article 5069-1.04 of the Texas Revised
Civil Statutes is relevant to Secured Party for the purpose of determining the
Highest Lawful Rate, Secured Party hereby elects to determine the applicable
rate ceiling under such Article by the indicated (weekly) rate ceiling from
time to time in effect, subject to Secured Party's right subsequently to change
such method in accordance with applicable law.
Section 7.07 Governing Law; Jurisdiction. This Agreement and the
security interest granted hereby shall be construed in accordance with and
governed by the laws of the State of Texas (except to the extent that the laws
of any other jurisdiction govern the perfection and priority of the security
interests granted hereby). Debtor consents to and submits to in personam
jurisdiction and venue in the state district and county courts of the county
wherein Secured Party's offices are located at the address specified in the
opening paragraph hereof, and in the Federal District Courts of the district
wherein such offices of Secured Party are located. This submission to
jurisdiction is nonexclusive and does not preclude Secured Party from obtaining
jurisdiction over Debtor or the Collateral in any court otherwise having
jurisdiction.
Section 7.08 Subrogation. Until all indebtedness in connection with
the Obligations shall have been paid in full, Debtor shall have no right to
subrogation or to enforce any remedy or participate in any Collateral or
security whatsoever now or hereafter held by Secured Party.
Section 7.09 Continuing Security Agreement.
(a) This Agreement shall constitute a continuing security agreement,
and all representations and warranties, covenants and agreements shall, as
applicable, apply to all future as
<PAGE>
well as existing transactions. Provisions of this Agreement, unless by their
terms exclusive, shall be in addition to other agreements between the parties.
(b) Except as may be expressly applicable pursuant to Section 9.505
of the Code, no action taken or omission to act by Secured Party hereunder,
including, without limitation, any action taken or inaction pursuant to Section
6.02, shall be deemed to constitute a retention of the Collateral in
satisfaction of the Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and effect, until
Secured Party shall have applied payments (including, without limitation,
collections from Collateral) towards the Obligations in the full amount then
outstanding or until such subsequent time as is hereinafter provided in
subsection (c) below.
(c) To the extent that any payments on the Obligations or proceeds
of the Collateral are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver or other person or entity under any bankruptcy law, common
law or equitable cause, then to such extent the Obligations so satisfied shall
be revived and continue as if such payment or proceeds had not been received by
Secured Party, and Secured Partys' security interests, rights, powers and
remedies hereunder shall continue in full force and effect. In such event, this
Agreement shall be automatically reinstated if it shall theretofore have been
terminated pursuant to Section 7.10.
(d) In the event that the Obligations are structured such that there
are times when no Indebtedness is owing thereunder, this Agreement shall remain
valid and in full force and effect as to all subsequent indebtedness included
in the Obligations, provided Secured Party has not in the interim period
executed a written release or termination statement or returned possession of
or reassigned the Collateral to Debtor.
Section 7.10 Termination. The grant of a security interest hereunder
and all of Secured Party's rights, powers and remedies in connection therewith
shall remain in full force and effect until Secured Party has retransferred and
delivered all Collateral in its possession to Debtor, and executed a written
release or termination statement and reassigned to Debtor without recourse or
warranty any remaining Collateral and all rights conveyed hereby. Upon the
complete payment or satisfaction of the Obligations and the compliance by
Debtor with all covenants and agreements hereof, Secured Party, at the written
request and expense of Debtor, will release, reassign and transfer the
Collateral to Debtor and declare this Agreement to be of no further force or
effect. Notwithstanding the foregoing, the provisions of subsection 7.09(c)
shall survive the termination of this Agreement; provided, however, that
Agreement shall terminate upon the Effective Time as defined in that certain
Agreement and Plan of Merger dated as of July 23, 1998, by and among Secured
Party, TBC Radio Acquisition Corp., and Triathlon Broadcasting Company.
Section 7.11 Counterparts, Effectiveness. This Agreement may be
executed in two or more counterparts, and it shall not be necessary that the
signatures of all parties hereto be contained on any one counterpart hereof.
Each counterpart is deemed an original, but all such counterparts
<PAGE>
taken together constitute one and the same instrument. This Agreement becomes
effective upon the execution hereof by Debtor and delivery of the same to
Secured Party, and it is not necessary for Secured Party to execute any
acceptance hereof or otherwise signify or express its acceptance hereof.
DEBTOR: 4630 REALTY, INC.
By: /s/ Norman Feuer
---------------------------------
Name: Norman Feuer
Title: President/CEO
SECURED PARTY: CAPSTAR RADIO BROADCASTING
PARTNERS, INC.
By: /s/ Kathy Archer
---------------------------------
Name: Kathy Archer
Title: Vice President
<PAGE>
Lincoln, Nebraska
(Lancaster County)
DEED OF TRUST, ASSIGNMENT,
SECURITY AGREEMENT AND FINANCING STATEMENT
FROM
4630 REALTY, INC.
as Grantor
TO
Richard A. Johnson, Attorney-at-Law
as Trustee
AND
CAPSTAR RADIO BROADCASTING PARTNERS, INC.
as Grantee
September 15, 1998
THIS INSTRUMENT COVERS, AMONG OTHER PROPERTY, GOODS WHICH ARE OR MAY BECOME
FIXTURES ON REAL PROPERTY DESCRIBED ON EXHIBIT A HERETO, AND IS TO BE FILED FOR
RECORD IN THE REAL ESTATE RECORDS AS BOTH A MORTGAGE OF REAL PROPERTY AND AS A
FIXTURES FINANCING STATEMENT UNDER THE UNIFORM COMMERCIAL CODE.
A CARBON, PHOTOGRAPHIC, FACSIMILE OR OTHER REPRODUCTION OF THIS INSTRUMENT IS
SUFFICIENT AS A FINANCING STATEMENT.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS AND COVERS PROCEEDS
OF COLLATERAL.
WHEN RECORDED OR FILED RETURN TO:
Vinson & Elkins L.L.P., 2300 First City Tower, 1001 Fannin,
Houston, TX 77002-6760
Attention: Vincent S. Moreland
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1
Certain Definitions; Granting Clauses; Secured Indebtedness
Section 1.1. Certain Definitions and Reference Terms..................... 1
Section 1.2. Mortgaged Property.......................................... 2
Section 1.3. Security Interest........................................... 3
Section 1.4. Financing Documents and Other Obligations................... 4
Section 1.5. Maturity.................................................... 4
ARTICLE 2
Representations, Warranties and Covenants
Section 2.1............................................................... 4
Section 2.2. Performance by Grantee on Grantor's Behalf.................. 8
Section 2.3. Absence of Obligations of Grantee with Respect to
Mortgaged Property.......................................... 8
ARTICLE 3
Absolute Assignment of Leases and Rents
Section 3.1. Assignment.................................................. 9
Section 3.2. Covenants, Representations and Warranties Concerning Leases
and Rents................................................... 9
Section 3.3. Collection of Rents......................................... 10
Section 3.4. Default..................................................... 10
Section 3.5. Payment by Tenants or Subtenants............................ 11
Section 3.6. Exculpation................................................. 11
Section 3.7. Rents Following Foreclosure................................. 12
ARTICLE 4
Default
Section 4.1. Events of Default........................................... 12
ARTICLE 5
Remedies
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Section 5.1. Certain Remedies............................................ 12
Section 5.2. Effective as Mortgage....................................... 15
Section 5.3. Proceeds of Foreclosure..................................... 15
Section 5.4. Grantee as Purchaser........................................ 15
Section 5.5. Foreclosure as to Matured Debt.............................. 15
Section 5.6. Remedies Cumulative......................................... 16
Section 5.7. Grantee's Discretion as to Security......................... 16
Section 5.8. Grantor's Waiver of Certain Rights.......................... 16
Section 5.9. Delivery of Possession After Foreclosure.................... 17
ARTICLE 6
Miscellaneous
Section 6.1. Scope of Deed of Trust...................................... 17
Section 6.2. Effective as a Financing Statement.......................... 17
Section 6.3. Waiver...................................................... 18
Section 6.4. No Impairment of Security................................... 18
Section 6.5. Acts Not Constituting Waiver by Grantee..................... 18
Section 6.6. Subrogation to Existing Liens............................... 18
Section 6.7. Application of Payments to Certain Indebtedness............. 19
Section 6.8. Substitute Trustee.......................................... 19
Section 6.9. No Liability of Trustee..................................... 19
Section 6.10. Release of Deed of Trust.................................... 20
Section 6.11. Notices..................................................... 20
Section 6.12. Invalidity of Certain Provisions............................ 20
Section 6.13. Gender; Titles; Construction................................ 20
Section 6.14. Demand Obligations.......................................... 21
Section 6.15. Grantor..................................................... 21
Section 6.16. Execution; Recording........................................ 21
Section 6.17. Successors and Assigns...................................... 21
Section 6.18. Modification................................................ 21
Section 6.19. No Partnership, etc......................................... 21
Section 6.20. applicable law; submission to jurisdiction.................. 22
Section 6.21. Agent for Service of Process................................ 22
Section 6.22. Entire Agreement............................................ 22
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<PAGE>
STATE OF NEBRASKA ss.
ss. KNOW ALL MEN BY THESE PRESENTS
COUNTY OF LANCASTER ss.
THIS DEED OF TRUST, ASSIGNMENT, SECURITY AGREEMENT AND FINANCING
STATEMENT (this "Deed of Trust") dated as of September 15, 1998 is executed and
delivered by 4630 Realty, Inc., a Delaware corporation, with an office located
at 750 B Street, Suite 1920, San Diego, California 92101 ("Grantor") for good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged by Grantor, in favor of Richard A. Johnson, Attorney-at-Law, as
Trustee, for the benefit of Capstar Radio Broadcasting Partners, Inc., a
Delaware corporation, with an office located at 600 Congress Avenue, Suite
1400, Austin, Texas 78701, its successors and assigns, ("Grantee").
RECITALS:
1. Grantor has borrowed $650,000 from Grantee as evidenced by that
certain promissory note dated of evendate herewith (the "Promissory Note"),
executed by Grantor and payable to the order of Grantee for the principal
amount of $650,000, for the purpose of acquiring that certain real estate
located at 4630 Antelope Creek, Lincoln, Lancaster County, Nebraska.
2. It is a condition precedent to the obligation of Grantee to make
its extension of credit to Grantor under the Promissory Note that Grantor shall
have executed and delivered this Deed of Trust to Grantee.
3. Grantor has secured payment of its obligations under the Promissory
Note pursuant to that certain Collateral Agreement dated as of the date hereof
in favor of Grantee.
NOW THEREFORE, in consideration of the promises and to induce Grantee
to make its extension of credit to Grantor under the Promissory Note, Grantor
hereby agrees as follows:
ARTICLE 1
Certain Definitions; Granting Clauses; Secured Indebtedness
Section 1.1. Certain Definitions and Reference Terms. In addition to
other terms defined herein, each of the following terms shall have the meaning
assigned to it. The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
"Default Rate": A rate per annum of fifteen percent (15%).
<PAGE>
"Event of Default": An Event of Default as defined in Section 4.1
"Financing Document(s)": Collectively, the Promissory Note, this Deed
of Trust, and that certain Security Agreement dated as of the date hereof
between Grantor, as debtor and Grantee, as secured party.
"Legal Requirement": Any federal, state or local law, statute,
ordinance, code, rule, regulation, license, permit, authorization, decision,
order, injunction or decree, domestic or foreign, agreement, covenant,
restriction, use and/or condition (including, without limitation of the
foregoing, any condition or requirement imposed by any insurance or surety
company), as any of the same now exist or may be changed or amended or come
into effect in the future.
"Material Adverse Effect": Any material adverse interference with the
occupancy, use, enjoyment, or value of the Mortgaged Property.
"Merger Agreement": That certain Agreement and Plan of Merger dated as
of July 23, 1998, among Capstar Radio Broadcasting Partners, Inc., TBC Radio
Acquisition Corp. and Triathlon Broadcasting Company.
"Secured Indebtedness": The Secured Indebtedness as defined in Section
1.4 hereof.
"State Uniform Commercial Code": The Uniform Commercial Code for the
state in which the Land (as hereinafter defined) is located and this Deed of
Trust is recorded.
"TRUSTEE": Richard A. Johnson, Attorney-at-Law, WITH HIS ADDRESS AT
633 S. 9TH STREET, LINCOLN, NEBRASKA 68508, OR ANY SUCCESSOR OR SUBSTITUTE
APPOINTED AND DESIGNATED AS HEREIN PROVIDED FROM TIME TO TIME ACTING HEREUNDER.
Section 1.2. Mortgaged Property. Grantor does hereby GRANT, BARGAIN,
SELL, CONVEY, TRANSFER, ASSIGN and SET OVER to Trustee ,IN TRUST WITH POWER OF
SALE, for the benefit of Grantee the following: (a)(i) the land (not designated
as a leasehold estate) described in Exhibit A which is attached hereto and
incorporated herein by reference (the "Land"); (ii) all other of Grantor's
right, title and interest in and to the Land; (iii) all improvements now or
hereafter situated or to be situated on the Land (herein collectively called
the "Improvements"); and (iv) all right, title and interest of Grantor in and
to (1) all streets, roads, alleys, easements, rights-of-way, licenses, rights
of ingress and egress, vehicle parking rights and public places, existing or
proposed, abutting, adjacent, used in connection with or pertaining to the Land
or the Improvements; (2) any strips or gores between the Land and abutting or
adjacent properties; and (3) all water and water rights, timber, crops and
mineral interests on or pertaining to the Land (the Land, Improvements and
other rights, titles and interests referred to in this clause (a) being herein
sometimes collectively called the "Premises"); (b) all fixtures, equipment,
systems, machinery, furniture, furnishings, appliances, inventory, goods,
building and construction materials, supplies, and articles of personal
property, of every kind and character, now owned or hereafter acquired by
Grantor, which are now or hereafter attached to, used in connection with, or
situated in, on or about, the Land or the Improvements, or used in or necessary
to the complete and
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<PAGE>
proper planning, development, use, occupancy or operation thereof, or acquired
(whether delivered to the Land or stored elsewhere) for use or installation in
or on the Land or the Improvements, and all renewals and replacements of,
substitutions for and additions to the foregoing (the properties referred to in
this clause (b) being herein sometimes collectively called the "Accessories");
(c) (i) all right, title and interest of Grantor in the plans and
specifications for the Improvements; (ii) Grantor's rights, but not liability
for any breach by Grantor, under all insurance policies and other contracts and
general intangibles (including but not limited to trademarks, trade names and
symbols) related to the Premises or the Accessories or the operation thereof;
(iii) all right, title and interest of Grantor in the deposits (including but
not limited to Grantor's rights in tenants' or subtenants' security deposits,
deposits with respect to utility services to the Premises, and any deposits or
reserves hereunder for taxes, insurance or otherwise), money, accounts,
instruments, documents, notes and chattel paper arising from or by virtue of
any transactions related to the Premises or the Accessories; (iv) all right,
title and interest of Grantor in the permits, licenses, franchises,
certificates, development rights, commitments and rights for utilities, and
other rights and privileges obtained in connection with the Premises or the
Accessories; (v) all right, title and interest of Grantor in the leases, rents,
royalties, bonuses, issues, profits, revenues and other benefits of the
Premises and the Accessories (without derogation of Article 3 hereof); (vi) all
oil, gas and other hydrocarbons and other minerals produced from or allocated
to the Land owned or hereafter acquired by Grantor and all products processed
or obtained therefrom, and the proceeds thereof; and (vii) engineering,
accounting, title, legal, and other technical or business data concerning the
Mortgaged Property (as hereinafter defined) which are in the possession of
Grantor or in which Grantor can otherwise grant a security interest; and (d)
all (i) proceeds of or arising from the properties, rights, titles and
interests referred to above in this Section 1.2, including but not limited to
proceeds of any sale, lease or other disposition thereof, proceeds of each
policy of insurance relating thereto (including premium refunds), proceeds of
the taking thereof or of any rights appurtenant thereto, including change of
grade of streets, curb cuts or other rights of access, by eminent domain or
transfer in lieu thereof for public or quasi-public use under any law, and
proceeds arising out of any damage thereto; and (ii) other interests of every
kind and character which Grantor now has or hereafter acquires in, to or for
the benefit of the properties, rights, titles and interests referred to above
in this Section 1.2 and all property used or useful in connection therewith,
including but not limited to rights of ingress and egress and remainders,
reversions and reversionary rights or interests; TO HAVE AND TO HOLD the
foregoing rights, interests and properties, and all rights, estates, powers and
privileges appurtenant thereto (herein collectively called the "Mortgaged
Property"), unto TRUSTEE, AND HIS SUCCESSORS OR SUBSTITUTES IN THIS TRUST, AND
TO HIS SUCCESSORS AND ASSIGNS, IN TRUST, HOWEVER, UPON THE TERMS, PROVISIONS
AND CONDITIONS HEREIN SET FORTH.
Section 1.3. Security Interest. Grantor hereby grants, bargains,
assigns, transfers and conveys to Grantee a security interest in all of the
Mortgaged Property which constitutes personal property or fixtures (herein
sometimes collectively called the "Collateral"). In addition to its rights
hereunder or otherwise, Grantee shall have all of the rights of a secured party
under the State Uniform Commercial Code, or under the Uniform Commercial Code
in force in any other state to the extent the same is applicable law.
Section 1.4. Financing Documents and Other Obligations. This Deed of
Trust is made to secure and enforce the payment and performance of the
following obligations, indebtedness and liabilities
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<PAGE>
(whether for principal, interest, prepayment premium, fees, costs, expenses,
taxes, losses, compensation, reimbursements or any other amount payable under
the agreements described below) and all renewals, extensions, supplements,
increases, and modifications thereof in whole or in part from time to time: the
Promissory Note (including, without limitation, interest accruing at the
applicable rate provided therein after the maturity of the Promissory Note and
interest accruing at the applicable rate provided in therein after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like-proceeding, relating to Grantor whether or not a claim
for post-filing or post-petition interest is allowed in such proceeding). The
indebtedness referred to in this Section 1.4 is hereinafter referred to as the
"Indebtedness" or the "Secured Indebtedness."
Section 1.5. Maturity. The MATURITY DATE of the Indebtedness described
as the Promissory Note is the earlier to occur of the Effective Time and the
Termination Date (each such term having the meaning ascribed thereto in the
Merger Agreement).
ARTICLE 2
Representations, Warranties and Covenants
Section 2.1. Grantor represents, warrants, and covenants as follows:
(a) Payment and Performance. Grantor will make due and
punctual payment of the Secured Indebtedness. Grantor will timely and properly
perform and comply with all of the covenants, agreements, and conditions
imposed upon it by this Deed of Trust and will not permit an Event of Default
to occur hereunder. Time shall be of the essence in this Deed of Trust.
(b) Title and Permitted Encumbrances. Grantor has, in
Grantor's own right, and Grantor covenants to maintain (i) good and
indefeasible title to the Land and Improvements on the Land; and (ii) lawful
and good title in and to the other Mortgaged Property, all of the foregoing
free and clear of all liens, charges, claims, security interests, and
encumbrances except for (x) the matters, if any, set forth under the heading
"Permitted Encumbrances" in Exhibit B attached hereto, which are Permitted
Encumbrances only to the extent the same are valid and subsisting and affect
the Mortgaged Property, (y) the liens and security interests evidenced by this
Deed of Trust, and (z) other liens and security interests (if any) in favor of
Grantee (the matters described in the foregoing clauses (x), (y), and (z),
being herein called the "Permitted Encumbrances"). Grantor and Grantor's
successors and assigns will warrant and forever defend title to the Mortgaged
Property, subject to the Permitted Encumbrances, to Trustee and his successors
or substitutes and assigns, for the benefit of Grantee, against the claims and
demands of all persons claiming or to claim the same or any part thereof.
Grantor will punctually pay, perform, observe and keep all covenants,
obligations and conditions in or pursuant to any Permitted Encumbrance, unless
the failure to pay, perform, observe or keep any of the foregoing (i) would not
result in a lien upon the Mortgaged Property or (ii) could not reasonably be
expected to have a Material Adverse Effect. Grantor shall not modify or
otherwise amend any Permitted Encumbrance if such modification or amendment
could reasonably be expected to have a Material Adverse Effect. Inclusion of
any matter as a Permitted Encumbrance does not constitute approval or waiver by
Grantee of any existing or future violation or other breach thereof by Grantor,
by the Mortgaged Property or otherwise. No part of the Mortgaged Property
constitutes all or any part of the homestead of Grantor. If any right
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<PAGE>
or interest of Grantee in the Mortgaged Property or any part thereof shall be
endangered or challenged or shall be attacked directly or indirectly, Trustee
and Grantee, or either of them (whether or not named parties to legal
proceedings with respect thereto) are hereby authorized and empowered to take
such steps as in their discretion may be proper for the defense of any such
legal proceedings or the protection of such right or interest of Grantee,
including, but not limited to, the employment of independent counsel, the
prosecution or defense of litigation, and the compromise or discharge of
adverse claims. All expenditures so made of every kind and character shall be a
demand obligation (which obligation Grantor hereby promises to pay) owing by
Grantor to Grantee or Trustee (as the case may be) and shall be secured hereby,
and the party (Grantee or Trustee, as the case may be) making such expenditures
shall be subrogated to all rights of the person receiving such payment.
(c) Insurance. Grantor shall obtain and maintain at Grantor's
sole expense the insurance as is required to be obtained and maintained by
Triathlon Broadcasting Company and its subsidiaries with respect to their
respective real property under that certain Amended and Restated Credit
Agreement dated as of May 30, 1997, among Triathlon Broadcasting Company,
Triathlon Broadcasting of Wichita, Inc., Triathlon Broadcasting of Lincoln,
Inc., Triathlon Broadcasting of Omaha, Inc., Triathlon Broadcasting of Spokane,
Inc., Triathlon Broadcasting of Tri-Cities, Inc., Triathlon Broadcasting of
Colorado Springs, Inc., Triathlon Broadcasting of Little Rock, Inc., the
lenders party thereto from time to time and AT&T Commercial Finance
Corporation, individually and as Administrative Agent, as amended (together
with the documents and instruments executed and delivered in connection
therewith, the "Triathlon Credit Agreement"). Subject to the terms of the
Triathlon Credit Agreement, upon any foreclosure hereof or transfer of title to
the Mortgaged Property in extinguishment of the whole or any part of the
Secured Indebtedness, all of Grantor's right, title and interest in and to the
insurance policies referred to in this Section (including unearned premiums)
and all proceeds payable thereunder shall thereupon vest in the purchaser at
foreclosure or other such transferee, to the extent permissible under such
policies. Grantee shall not be, under any circumstances, liable or responsible
for failure to collect or exercise diligence in the collection of any of such
proceeds or for the obtaining, maintaining or adequacy of any insurance or for
failure to see to the proper application of any amount paid over to Grantor.
Any such proceeds received by Grantee shall, after deduction therefrom of all
reasonable expenses actually incurred including attorneys' fees, be applied as
a prepayment of the Secured Indebtedness. In any event, the unpaid portion of
the Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused.
(d) Condemnation. Grantor shall notify Grantee promptly of
any threatened or pending proceeding for condemnation affecting the Mortgaged
Property or arising out of damage to the Mortgaged Property, and Grantor shall,
at Grantor's expense, diligently prosecute any such proceedings. Grantee shall
have the right (but not the obligation) to participate in any such proceeding
and to be represented by counsel of its own choice. All sums which may be
awarded or become payable to Grantor for the condemnation of the Mortgaged
Property, or any part thereof, for public or quasi-public use, or by virtue of
private sale in lieu thereof, and any sums which may be awarded or become
payable to Grantor for injury or damage to the Mortgaged Property, shall be
applied to the Secured Indebtedness. In any event the unpaid portion of the
Secured Indebtedness shall remain in full force and effect and the payment
thereof shall not be excused. Grantee shall not be, under any circumstances,
liable or responsible for failure to collect or to exercise diligence in the
collection of any such sum or for failure
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<PAGE>
to see to the proper application of any amount paid over to Grantor. If an
Event of Default has occurred and is continuing or Grantor is not diligently
prosecuting the defense of any action, then, subject to the terms of the
Triathlon Credit Agreement, in either case Grantee is hereby authorized, in the
name of Grantor, to execute and deliver valid acquittance for, and to appeal
from, any such award, judgment or decree. All costs and expenses (including but
not limited to reasonable attorneys' fees) incurred by Grantee in connection
with any condemnation shall be a demand obligation owing by Grantor (which
Grantor hereby promises to pay) to Grantee pursuant to this Deed of Trust.
(e) No Other Liens. Grantor will not, without the prior
written consent of Grantee, create, place or permit to be created or placed, or
through any act or failure to act, acquiesce in the placing of, or allow to
remain, any deed of trust, mortgage, voluntary or involuntary lien, whether
statutory, constitutional or contractual, security interest, encumbrance or
charge, or conditional sale or other title retention document, against or
covering the Mortgaged Property, or any part thereof, other than the Permitted
Encumbrances, regardless of whether the same are expressly or otherwise
subordinate to the lien or security interest created in this Deed of Trust, and
should any of the foregoing become attached hereafter in any manner to any part
of the Mortgaged Property without the prior written consent of Grantee, Grantor
will cause the same to be promptly discharged and released.
(f) Transfer of the Mortgaged Property. Grantor shall not
sell, lease, convey, assign, encumber, pledge, hypothecate or transfer all or
any part of the Mortgaged Property or any interest therein, voluntarily or
involuntarily, whether by operation of law or otherwise, except as a result of
the merger of Triathlon Broadcasting Company into TBC Radio Acquisition Corp,
an affiliate of Grantee, pursuant to the terms of the Merger Agreement.
(g) Not a Foreign Person. Grantor is not a "foreign person"
within the meaning of the Internal Revenue Code of 1986, as amended, Sections
1445 and 7701 (i.e. Grantor is not a non-resident alien, foreign corporation,
foreign partnership, foreign trust or foreign estate as those terms are defined
therein and in any regulations promulgated thereunder).
(h) Change of Location. Grantor's principal place of business
and chief executive office, and the place where Grantor keeps its books and
records concerning the Mortgaged Property, has for the preceding four months
been and will continue to be (unless Grantor notifies Grantee of any change in
writing prior to the date of such change) the address of Grantor set forth at
the end of this Deed of Trust.
(i) Fees and Expenses. Without limitation of any other
provision of this Deed of Trust or of any other Financing Document and to the
extent not prohibited by applicable law, Grantor will pay, and will reimburse
to Grantee as applicable on demand, the fees, costs and expenses set forth in
Section 5.05 of the Merger Agreement.
(j) Indemnification.
(i) Grantor will indemnify and hold harmless Trustee from and
against, and reimburse Trustee on demand for, any and all Indemnified Matters
(defined below). For purposes of this
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<PAGE>
paragraph 2.1(j), the term "Trustee" shall include the directors, officers,
partners, employees and agents of Trustee. Without limitation, the foregoing
indemnities shall apply to each indemnified person with respect to matters
which in whole or in part are caused by or arise out of the negligence of such
(and/or any other) indemnified person, it being the intention of Grantor to
indemnify each indemnified person against the consequences of his or her own
negligence. However, such indemnities shall not apply to a particular
indemnified person to the extent that the subject of the indemnification is
caused by or arises out of the gross negligence or willful misconduct of that
indemnified person. Any amount to be paid under this paragraph 2.1(j) by
Grantor to Trustee shall be a demand obligation owing by Grantor (which Grantor
hereby promises to pay) to Trustee pursuant to this Deed of Trust. Nothing in
this paragraph, elsewhere in this Deed of Trust or in any other Financing
Document shall limit or impair any rights or remedies of Trustee (including
without limitation any rights of contribution or indemnification) against
Grantor or any other person under any other provision of this Deed of Trust,
any other agreement or any applicable Legal Requirement.
(ii) As used herein, the term "Indemnified Matters" means any
and all claims, demands, liabilities (including strict liability), losses,
damages (including consequential damages), causes of action, judgments,
penalties, costs and expenses (including without limitation, reasonable fees
and expenses of attorneys and other professional consultants and experts, and
of the investigation and defense of any claim, whether or not such claim is
ultimately defeated, and the settlement of any claim or judgment including all
value paid or given in settlement) of every kind, known or unknown, foreseeable
or unforeseeable, which may be imposed upon, asserted against or incurred or
paid by Trustee at any time and from time to time, whenever imposed, asserted
or incurred, because of, resulting from, in connection with, or arising out of
any transaction, act, omission, event or circumstance in any way connected with
the Mortgaged Property or with this Deed of Trust, including but not limited to
any bodily injury or death or property damage occurring in or upon or in the
vicinity of the Mortgaged Property through any cause whatsoever at any time on
or before the Release Date, any act performed or omitted to be performed
hereunder, any breach by Grantor of any representation, warranty, covenant,
agreement or condition contained in this Deed of Trust. The term "Release Date"
as used herein means the earlier of the following two dates: (i) the date on
which the Secured Indebtedness and obligations have been paid and performed in
full and this Deed of Trust has been released, or (ii) the date on which the
lien of this Deed of Trust is fully and finally foreclosed or a conveyance by
deed in lieu of such foreclosure is fully and finally effective, and possession
of the Mortgaged Property has been given to the purchaser or grantee free of
occupancy and claims to occupancy by Grantor and Grantor's heirs, devisees,
representatives, successors and assigns; provided, that if such payment,
performance, release, foreclosure or conveyance is challenged, in bankruptcy
proceedings or otherwise, the Release Date shall be deemed not to have occurred
until such challenge is rejected, dismissed or withdrawn with prejudice. The
indemnities in this paragraph 2.1(j) shall not terminate upon the Release Date
or upon the release, foreclosure or other termination of this Deed of Trust but
will survive the Release Date, foreclosure of this Deed of Trust or conveyance
in lieu of foreclosure, the repayment of the Secured Indebtedness, the
discharge and release of this Mortgage and the other Financing Documents, any
bankruptcy or other debtor relief proceeding, and any other event whatsoever.
Section 2.2. Performance by Grantee on Grantor's Behalf. Grantor
agrees that, if Grantor fails, after notice, to perform any act or to take any
action which under this Deed of Trust Grantor is
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<PAGE>
required to perform or take, or to pay any money which under this Deed of Trust
Grantor is required to pay, and provided that an Event of Default has occurred
and is continuing, Grantee may, but shall not be obligated to, perform or cause
to be performed such act or take such action or pay such money, and any
expenses so incurred by Grantee and any money so paid by Grantee shall be a
demand obligation owing by Grantor to Grantee (which obligation Grantor hereby
promises to pay), shall be a part of the Secured Indebtedness, and Grantee,
upon making such payment, shall be subrogated to all of the rights of the
person, entity or body politic receiving such payment. Grantee and its
designees shall have the right to enter upon the Mortgaged Property at any time
and from time to time for any such purposes. No such payment or performance by
Grantee shall waive or cure any default or waive any right, remedy or recourse
of Grantee. Any such payment may be made by Grantee in reliance on any
statement, invoice or claim without inquiry into the validity or accuracy
thereof. Each amount due and owing by Grantor to Grantee incurred pursuant to
the provisions of this Deed of Trust (and not the Loans) shall bear interest,
from the date such amount becomes due until paid, at the Default Rate, which
interest shall be payable to Grantee on demand; and all such amounts, together
with such interest thereon, shall automatically and without notice be a part of
the indebtedness secured hereby. The amount and nature of any expense by
Grantee hereunder and the time when paid shall be fully established by the
certificate of Grantee or any of Grantee's officers or agents.
Section 2.3. Absence of Obligations of Grantee with Respect to
Mortgaged Property. Notwithstanding anything in this Deed of Trust to the
contrary, including, without limitation, the definition of "Mortgaged Property"
and/or the provisions of Article 3 hereof, (i) to the extent permitted by
applicable law, the Mortgaged Property is composed of Grantor's rights, title
and interests therein but not Grantor's obligations, duties or liabilities
pertaining thereto, (ii) to the extent permitted by applicable law, Grantee
neither assumes nor shall have any obligations, duties or liabilities in
connection with matters that encumber or burden any portion of the items
described in the definition of "Mortgaged Property" herein, either prior to or
after obtaining title to such Mortgaged Property, whether by foreclosure sale,
the granting of a deed in lieu of foreclosure or otherwise, and (iii) Grantee
may, at any time prior to or after the acquisition of title to any portion of
the Mortgaged Property as above described, advise any party in writing as to
the extent of Grantee's interest therein and/or expressly disaffirm in writing
any rights, interests, obligations, duties and/or liabilities with respect to
such Mortgaged Property or matters related thereto. Without limiting the
generality of the foregoing, it is understood and agreed that Grantee shall
have no obligations, duties or liabilities (y) prior to acquisition of title to
any portion of the Mortgaged Property, as lessee under any lease or purchaser
or seller under any contract or option unless Grantee elects otherwise by
written notification; or (z) after acquisition of title to any purchaser or
seller under any contract or option unless Grantee elects otherwise by written
notification.
ARTICLE 3
Absolute Assignment of Leases and Rents
Section 3.1. Assignment. Grantor hereby absolutely and unconditionally
GRANTS, BARGAINS, ASSIGNS, TRANSFERS AND CONVEYS to Grantee (a) each existing
or future lease, sublease (to the extent of Grantor's rights thereunder) or
other agreement under the terms of which any person has or acquires any right
to occupy or use the Mortgaged Property, or any part thereof, or interest
therein, and each
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existing or future guaranty of payment or performance thereunder, and all
extensions, renewals, modifications and replacements of each such lease,
sublease, agreement or guaranty (individually, a "Lease" and collectively, the
"Leases" (and to be distinguished from the Lease Agreement under which Grantor
is lessee not lessor)); and (b) all of the rents, revenue, income, profits and
proceeds derived and to be derived from the Mortgaged Property or arising from
the use or enjoyment of any portion thereof or from any Lease, including but
not limited to liquidated damages following default under any such Lease, all
proceeds payable to Grantor under any policy of insurance covering loss of
rents resulting from untenantability caused by damage to any part of the
Mortgaged Property, all of Grantor's rights to recover monetary amounts from
any tenant or subtenant in bankruptcy including, without limitation, rights of
recovery for use and occupancy and damage claims arising out of Lease defaults,
including rejections, under any applicable law together with any sums of money
that may now or at any time hereafter be or become due and payable to Grantor
by virtue of any and all royalties, overriding royalties, bonuses, delay
rentals and any other amount of any kind or character arising under any and all
present and all future oil, gas, mineral and mining leases covering the
Mortgaged Property or any part thereof, and all proceeds and other amounts paid
or owing to Grantor under or pursuant to any and all contracts and bonds
relating to the construction or renovation of the Mortgaged Property
(collectively, the "Rents"). The assignment contained in this Section 3.1 shall
become null and void upon the release of this Deed of Trust.
Section 3.2. Covenants, Representations and Warranties Concerning
Leases and Rents. Grantor covenants, represents and warrants that: (i) Grantor
has good title to, and is the owner of the entire landlord's interest in, the
Leases and Rents hereby assigned and has the authority to assign them; (ii) to
the best of Grantor's knowledge, all Leases are valid and enforceable, and in
full force and effect, and are unmodified except as stated therein; (iii)
unless otherwise stated in a Permitted Encumbrance, no Rents or Leases have
been or will be assigned, mortgaged, pledged or otherwise encumbered and no
other person has or will acquire any right, title or interest in such Rents or
Leases; (iv) except as stated in the Leases, Grantor has not received any
funds, deposits or Rents from any tenant or subtenant more than one (1) month
in advance or for which credit has not already been made on account of accrued
Rents; (v) Grantor will not, without the prior written consent of Grantee,
which consent shall not be unreasonably withheld, enter into any Lease after
the date hereof except for Leases covering an insubstantial portion of the
unimproved Land, or receive or collect Rents more than one (1) month in
advance; (vi) Grantor shall give prompt notice to Grantee, as soon as Grantor
first obtains notice, of any claim, or the commencement of any action, by any
tenant or subtenant under or with respect to a Lease regarding any claimed
damage, default, diminution of or offset against Rent, cancellation of the
Lease, or constructive eviction, and Grantor shall defend, at Grantor's
expense, any proceeding pertaining to any Lease, including, if Grantee so
requests, any such proceeding to which Grantee is a party; (vii) Grantor shall
as often as requested by Grantee, within ten (10) days of each request, deliver
to such of the tenants, subtenants and others obligated under the Leases
specified by Grantee written notice of the absolute assignment in Section 3.1
hereof in form and content satisfactory to Grantee; (viii) there shall be no
merger of the leasehold estates, created by the Leases, with the fee estate of
the Land without the prior written consent of Grantee; (ix) with respect to any
Lease between Charles F. Scanlon and Linda E. Scanlon, husband and wife,
Lessor, and Triathlon Broadcasting of Lincoln, Inc., Lessee by assignment or
otherwise, which has been assigned to Grantor as Lessor, Grantor shall not make
any amendments or modifications thereto with the prior written consent of
Grantee, which consent shall not be
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unreasonably withheld; and (x) Grantee may at any time and from time to time by
specific written instrument intended for the purpose, unilaterally subordinate
the lien of this Deed of Trust to any Lease, without joinder or consent of, or
notice to, Grantor, any tenant, subtenant or any other person, and notice is
hereby given to each tenant or subtenant under a Lease of such right to
subordinate. No such subordination shall constitute a subordination to any lien
or other encumbrance, whenever arising, or improve the right of any junior
lienholder; and nothing herein shall be construed as subordinating this Deed of
Trust to any Lease.
Section 3.3. Collection of Rents. Until receipt from Grantee of notice
of the occurrence of an Event of Default hereunder, each lessee or sublessee
may pay Rents directly to Grantor, and Grantor shall have the right to receive
such Rents. In any event, no Rents shall be collected more than one (1) month
prior to the date such Rents become due. At any time during which Grantor is
receiving Rents directly from lessees or sublessees under the Leases, Grantor
shall make demand and/or sue for all Rents then due and payable under one or
more Leases, as Rents become due and payable, including Rents which are past
due and unpaid. In the event Grantor fails to take such action, or at any time
during which Grantor is not receiving Rents directly from lessees or sublessees
under the Leases, Grantee shall have the right (but shall be under no duty) to
demand, collect and sue for, in its own name or in the name of Grantor, all
Rents due and payable under the Leases, as they become due and payable,
including Rents which are past due and unpaid.
Section 3.4. Default. Upon receipt from Grantee of notice of the
occurrence of an Event of Default hereunder, each lessee or sublessee under the
Leases is hereby authorized and directed to pay directly to Grantee all Rents
thereafter accruing and the receipt of Rents by Grantee shall be a release of
such lessee or sublessee to the extent of all amounts so paid. The receipt by a
lessee or sublessee under the Leases of a notice of the occurrence of an Event
of Default hereunder shall be sufficient authorization for such lessee or
sublessee to make all future payments of Rents directly to Grantee. Rents so
received by Grantee for any period prior to sale of the Mortgaged Property
pursuant to the Financing Documents whether by foreclosure or otherwise, shall
be applied by Grantee FIRST, to the payment of all necessary reasonable costs
and expenses incident to such collection of Rents, including but not limited to
all reasonable attorneys' fees and legal expenses, all court costs and charges
of every character and to the payment of the Secured Indebtedness in such
manner as is provided in clause FIRST of Section 5.3 hereof and SECOND, as
provided in clause SECOND of Section 5.3 hereof. Without impairing its rights
hereunder, Grantee may, at its option, at any time and from time to time,
release to Grantor Rents so received by Grantee or any part thereof. As between
Grantor and Grantee, and any person claiming through or under Grantor, other
than any lessee or sublessee under the Leases who has not received notice of an
Event of Default pursuant to this Section 3.4, the assignment of Leases and
Rents set forth in this Article 3 is intended to be absolute, unconditional and
immediately operative and effective and the provisions of this Section 3.4 for
notification of lessees or sublessees under the Leases upon the occurrence of
an Event of Default hereunder are intended solely for the benefit of each such
lessee or sublessee and shall never inure to the benefit of Grantor or any
person claiming through or under Grantor, other than a lessee or sublessee who
has not received such notice. It shall never be necessary for Grantee to
institute legal proceedings of any kind whatsoever to enforce the provisions of
this Article 3 unless required by applicable law. No collection, receipt, or
application of Rents shall operate as an affirmance of the tenant or subtenant
or Lease in the event Grantor's title to the
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Mortgaged Property should be acquired by Grantee. Grantor hereby appoints
Grantee as Grantor's lawful attorney-in-fact to exercise the foregoing rights
which power of attorney is coupled with an interest and is irrevocable.
Section 3.5. Payment by Tenants or Subtenants. A demand on any tenant,
subtenant, licensee, user or occupant by Grantee for the payment of Rent on any
default by Grantor claimed by Grantee shall be sufficient warrant to said
tenant or subtenant, licensee, occupant or user to make future payments of Rent
to Grantee without the necessity for further consent by Grantor and regardless
of whether Grantee has taken possession of the Mortgaged Property. Any such
payment to Grantee shall constitute payment to Grantor.
Section 3.6. Exculpation. To the extent permitted by applicable law,
Grantee's acceptance of the assignment covered by this Article 3, taking any
action hereunder, or collection or receipt of Rents shall not, for any reason,
be deemed to constitute Grantee a "mortgagee in possession," nor obligate
Grantee to appear in or defend any action or proceeding relating to any Lease,
the Rents, or to the Mortgaged Property, take any action hereunder, expend any
money, incur any expenses, or perform or discharge any obligation, duty, or
liability under any Lease, or assume any obligation or responsibility for any
deposit delivered to Grantor by any tenant, subtenant, licensee, user, or
occupant and not delivered to and accepted by Grantee. Grantee shall not be
liable for any injury or damage to person or property in or about the Mortgaged
Property or their failure to collect or exercise diligence in collecting Rents,
but shall be accountable only for Rents that Grantee shall actually receive. In
no event shall the right set forth in the assignment covered by this Article 3
effect or be construed to effect a pro tanto reduction of the Secured
Indebtedness except to the extent, if at all, that Grantee actually receives,
after the occurrence of a default and Grantee's election to pursue its rights
under this Article 3, Rents and other sums directly from any tenant or
subtenant and applies the same in its discretion to the Secured Indebtedness.
The rights of Grantee under this Article 3 shall be cumulative of all other
rights of Grantee under the Financing Documents or otherwise.
Section 3.7. Rents Following Foreclosure. Rents shall be deemed earned
over the entire period to which they relate, without regard to when the Rents
are paid or collected. Upon sale of the Mortgaged Property pursuant to the
Financing Documents, by foreclosure or otherwise, any of the Rents allocable to
the period of time following such sale shall be conveyed to the purchaser at
such sale, and Grantor shall pay the amount thereof immediately upon demand
therefor.
ARTICLE 4
Default
Section 4.1. Events of Default. The occurrence of any one of the
following shall be an event of default under this Deed of Trust ("Event of
Default"):
(a) Payment default under the Promissory Note. A default in
the payment of principal or interest when due and payable under the Promissory
Note, which shall continue for a period of five days after notice.
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(b) Default Under Merger Agreement. Any action or failure to
act by Grantor that causes a termination of the Merger Agreement or creates a
right of termination of the Merger Agreement by Grantee pursuant to the terms
of Section 7.01 of the Merger Agreement.
(c) Default under Financing Documents. An Event of Default
under the Security Agreement and the breach of any covenant contained in this
Deed of Trust which shall continue for 20 days after notice, except if it would
require more than 20 days to cure provided Grantor begins to diligently
prosecute a cure within such 20 day period, in which case shall continue after
Grantor ceases prosecution of a cure.
ARTICLE 5
Remedies
Section 5.1. Certain Remedies. If an Event of Default shall occur and
be continuing, Grantee may (but shall have no obligation to) exercise any and
all remedies available to Grantee at law or in equity including, but not
limited to, any one or more of the following remedies, without notice (unless
notice is required by applicable statute):
(a) Power of Sale. If Grantee elects to sell Grantor's
interest in the Premises by exercise of the power of sale herein contained,
Grantee shall notify Trustee in the manner then required by law.
Upon receipt of such notice from Grantee and at the
direction of Grantee, Trustee shall cause to be recorded, published and
delivered such notices of default and notices of sale as may then be required
by law and by this Deed of Trust. Trustee shall, only at the direction of
Grantee and without demand on Grantor, after such time as may then be required
by law and after recordation of such notice of default and after notice of sale
having been given as required by law, sell the Premises at the time and place
of sale fixed by it in such notice of sale, either as a whole or in separate
lots or parcels or items as Grantee shall deem commercially and reasonably
expedient, and in such order as it may commercially and reasonably determine,
at public auction to the highest bidder for cash in lawful money of the United
States payable at the time of sale, or as otherwise may then be required by
law. Trustee shall deliver to such purchaser or purchasers thereof its good and
sufficient deed or deeds conveying the property so sold, but without any
covenant or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness thereof. Any
person, including, without limitation, Grantor, Trustee, or Grantee may
purchase at such sale. Trustee may in the manner provided by law postpone sale
of all or any portion of the Premises.
(b) Uniform Commercial Code. Without limitation of Grantee's
rights of enforcement with respect to the Collateral or any part thereof in
accordance with the procedures for foreclosure of real estate, Grantee may
exercise its rights of enforcement with respect to the Collateral or any part
thereof under the State Uniform Commercial Code as amended (or under the
Uniform Commercial Code in force in any other state to the extent the same is
applicable law) and in conjunction with, in addition to or in substitution for
those rights and remedies: (1) Grantee may enter upon Grantor's premises to
take possession of, assemble and collect the Collateral or, to the extent and
for those items of the
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Collateral permitted under applicable law, to render it unusable; (2) Grantee
may require Grantor to assemble the Collateral and make it available at a place
Grantee designates which is mutually convenient to allow Grantee to take
possession or dispose of the Collateral; (3) written notice mailed to Grantor
as provided herein at least ten (10) days prior to the date of public sale of
the Collateral or prior to the date after which private sale of the Collateral
will be made shall constitute reasonable notice; (4) any sale made pursuant to
the provisions of this paragraph shall be deemed to have been a public sale
conducted in a commercially reasonable manner if held contemporaneously with
and upon the same notice as required for the sale of the Mortgaged Property
under power of sale as provided in paragraph (a) above in this Section 5.1; (5)
in the event of a foreclosure sale, whether made by Grantee under the terms
hereof, or under judgment of a court, the Collateral and the other Mortgaged
Property may, at the option of Grantee, be sold as a whole; (6) it shall not be
necessary that Grantee take possession of the Collateral or any part thereof
prior to the time that any sale pursuant to the provisions of this Section is
conducted and it shall not be necessary that the Collateral or any part thereof
be present at the location of such sale; (7) with respect to application of
proceeds of disposition of the Collateral under Section 5.3 hereof, the costs
and expenses incident to disposition shall include the reasonable expenses of
retaking, holding, preparing for sale or lease, selling, leasing and the like
and the reasonable attorneys' fees and legal expenses incurred by Grantee; (8)
any and all statements of fact or other recitals made in any bill of sale or
assignment or other instrument evidencing any foreclosure sale hereunder as to
nonpayment of the Secured Indebtedness or as to the occurrence of any default,
or as to Grantee having declared all of the Secured Indebtedness to be due and
payable, or as to notice of time, place and terms of sale and of the properties
to be sold having been duly given, or as to any other act or thing having been
duly done by Grantee, shall be taken as prima facie evidence of the truth of
the facts so stated and recited; and (9) Grantee may appoint or delegate any
one or more persons as agent to perform any act or acts necessary or incident
to any sale held by Grantee, including the sending of notices and the conduct
of the sale, but in the name and on behalf of Grantee.
(c) Lawsuits. Grantee may proceed by a suit or suits in
equity or at law, whether for collection of the Secured Indebtedness, the
specific performance of any covenant or agreement herein contained or in aid of
the execution of any power herein granted, or for any foreclosure hereunder or
for the sale of the Mortgaged Property under the judgment or decree of any
court or courts of competent jurisdiction.
(d) Entry on Mortgaged Property. Grantee is authorized, prior
or subsequent to the institution of any foreclosure proceedings, to the fullest
extent permitted by applicable law, to enter upon the Mortgaged Property, or
any part thereof, and to take possession of the Mortgaged Property and all
books and records relating thereto, and to exercise without interference from
Grantor any and all rights which Grantor has with respect to the management,
possession, operation, protection or preservation of the Mortgaged Property.
Grantee shall not be deemed to have taken possession of the Mortgaged Property
or any part thereof except upon the exercise of its right to do so, and then
only to the extent evidenced by its demand and overt act specifically for such
purpose. All costs, expenses and liabilities of every character incurred by
Grantee in managing, operating, maintaining, protecting or preserving the
Mortgaged Property shall constitute a demand obligation of Grantor (which
obligation Grantor hereby promises to pay) to Grantee pursuant to this Deed of
Trust. If necessary to obtain the possession provided for above, Grantee may
invoke any and all legal remedies to dispossess Grantor. In connection
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with any action taken by Grantee pursuant to this Section, Grantee shall not be
liable for any loss sustained by Grantor resulting from any failure to let the
Mortgaged Property or any part thereof, or from any act or omission of Grantee
in managing the Mortgaged Property unless such loss is caused by the willful
misconduct and bad faith of Grantee (provided that Grantee shall be liable only
for loss caused by its own willful misconduct and bad faith), nor shall Grantee
be obligated to perform or discharge any obligation, duty or liability of
Grantor arising under any lease or other agreement relating to the Mortgaged
Property or arising under any of the Permitted Encumbrances or otherwise
arising. Grantor hereby assents to, ratifies and confirms any and all actions
of Grantee with respect to the Mortgaged Property taken under this Section.
(e) Receiver. Grantee shall as a matter of right be entitled
to the appointment of a receiver or receivers for all or any part of the
Mortgaged Property, whether such receivership be incident to a proposed sale
(or sales) of such property or otherwise, and without regard to the value of
the Mortgaged Property or the solvency of any person or persons liable for the
payment of the Secured Indebtedness, and Grantor does hereby irrevocably
consent to the appointment of such receiver or receivers, waives any and all
defenses to such appointment, agrees not to oppose any application therefor by
Grantee, and agrees that such appointment shall in no manner impair, prejudice
or otherwise affect the rights of Grantee to application of Rents as provided
in this Deed of Trust. Nothing herein is to be construed to deprive Grantee of
any other right, remedy or privilege it may have under the law to have a
receiver appointed. Any money advanced by Grantee in connection with any such
receivership shall be a demand obligation (which obligation Grantor hereby
promises to pay) owing by Grantor to Grantee pursuant to this Deed of Trust.
(f) Other Rights and Remedies. Grantee may exercise any and
all other rights and remedies which Grantee may have under the Financing
Documents, or at law or in equity or otherwise.
Section 5.2. Effective as Mortgage. This instrument shall be effective
as a mortgage as well as a deed of trust and, upon the occurrence of an Event
of Default and during the continuance thereof, may be foreclosed as to any of
the Mortgaged Property in any manner and any foreclosure suit may be brought by
Trustee or Grantee; and to the extent, if any, required to cause this
instrument to be so effective as a mortgage as well as a deed of trust, Grantor
hereby mortgages the Mortgaged Property to Grantee. In the event a foreclosure
hereunder shall be commenced by Trustee, or his substitute or successor,
Grantee may at any time before the sale of the Mortgaged Property direct the
Trustee to abandon the sale, and Grantee may then institute suit for the
collection of the Secured Indebtedness, and for the foreclosure of this Deed of
Trust. It is agreed that if Grantee should institute a suit for the collection
of the Secured Indebtedness and for the foreclosure of this Deed of Trust,
Grantee may, at any time before the entry of a final judgment in said suit,
dismiss the same and require Trustee, his substitute or successor, to sell the
Mortgaged Property in accordance with the provisions of this Deed of Trust.
Section 5.3. Proceeds of Foreclosure. The proceeds of any sale held by
Trustee or Grantee or any receiver or public officer in foreclosure of the
liens and security interests evidenced hereby shall be applied: FIRST, to the
payment of all necessary costs and expenses incident to such foreclosure sale,
including but not limited to all reasonable attorneys' fees and legal expenses,
all court costs and charges
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of every character, and a reasonable fee (not exceeding five percent (5%) of
the gross proceeds of such sale) to Trustee acting under the provisions of
paragraph (a) of Section 5.1 hereof if foreclosed by power of sale as provided
in said paragraph, and to the payment of the other Secured Indebtedness,
including specifically without limitation, the principal, accrued interest and
attorneys' fees due and unpaid on the Loans and the amounts due and unpaid and
owed to Grantee under this Deed of Trust, the order and manner of application
to the items in this clause FIRST to be in Grantee's sole discretion; and
SECOND, the remainder, if any there shall be, shall be paid to Grantor, or to
Grantor's successors or assigns, or such other persons (including the holder or
beneficiary of any inferior lien) as may be entitled thereto by law; provided,
however, that if Grantee is uncertain which person or persons are so entitled,
Grantee may interplead such remainder in any court of competent jurisdiction,
and the amount of any attorneys' fees, court costs and expenses incurred in
such action shall be a part of the Secured Indebtedness and shall be
reimbursable (without limitation) from such remainder.
Section 5.4. Grantee as Purchaser. Grantee, as the highest bidder,
shall have the right to become the purchaser at any sale held by Trustee or
substitute or successor or by any receiver or public officer or at any public
sale, and Grantee shall have the right to a credit in the amount of Grantee's
successful bid, upon all or any part of the Secured Indebtedness owed to
Grantee, in such manner and order as Grantee.
Section 5.5. Foreclosure as to Matured Debt. If an Event of Default
occurs and is continuing, Grantee shall have the right to proceed with
nonjudicial foreclosure and judicial foreclosure of the liens and security
interests hereunder without declaring the entire Secured Indebtedness due, and
in such event any such foreclosure sale may be made subject to the unmatured
part of the Secured Indebtedness; and any such sale shall not in any manner
affect the unmatured part of the Secured Indebtedness, but as to such unmatured
part this Deed of Trust shall remain in full force and effect just as though no
sale had been made. The proceeds of such sale shall be applied as provided in
Section 5.3 hereof except that the amount paid under clause FIRST thereof shall
be only the matured portion of the Secured Indebtedness and any proceeds of
such sale in excess of those provided for in clause FIRST (modified as provided
above) shall be applied to the prepayment (without penalty) of any other
Secured Indebtedness in such manner and order and to such extent as Grantee
deems reasonably advisable, and the remainder, if any, shall be applied as
provided in clause SECOND of Section 5.3 hereof. Several sales may be made
hereunder without exhausting the right of sale for any unmatured part of the
Secured Indebtedness.
Section 5.6. Remedies Cumulative. All rights and remedies provided for
herein and in any other Financing Document are cumulative of each other and of
any and all other rights and remedies existing at law or in equity, Grantee and
Trustee shall, in addition to the rights and remedies provided herein or in any
other Financing Document, be entitled to avail themselves of all such other
rights and remedies as may now or hereafter exist at law or in equity for the
collection of the Secured Indebtedness and the enforcement of the covenants
herein and the foreclosure of the liens and security interests evidenced
hereby, and the resort to any right or remedy provided for hereunder or under
any such other Financing Document or provided for by law or in equity shall not
prevent the concurrent or subsequent employment of any other appropriate right
or rights or remedy or remedies.
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Section 5.7. Grantee's Discretion as to Security. Grantee may resort
to any security given by this Deed of Trust or to any other security now
existing or hereafter given to secure the payment of the Secured Indebtedness,
in whole or in part, and in such portions and in such order as may seem best to
Grantee in its sole and uncontrolled discretion, and any such action shall not
in anywise be considered as a waiver of any of the rights, benefits, liens or
security interests evidenced by this Deed of Trust.
Section 5.8. Grantor's Waiver of Certain Rights. To the full extent
Grantor may do so, Grantor agrees that Grantor will not at any time insist
upon, plead, claim or take the benefit or advantage of any law now or hereafter
in force providing for any appraisement, valuation, stay, moratorium, extension
or redemption, and Grantor, for Grantor, Grantor's representatives, successors
and assigns, and for any and all persons ever claiming any interest in the
Mortgaged Property, to the extent permitted by applicable law, hereby waives
and releases (i) all rights of redemption, valuation, appraisement, stay of
execution, moratorium or extension; (ii) except as otherwise provided in any
Financing Document, notice of intention to mature, accelerate, or declare due
the whole of the Secured Indebtedness, and notice of election to mature,
accelerate, or declare due the whole of the Secured Indebtedness; and (iii) all
rights to a marshaling of assets of Grantor, including the Mortgaged Property,
or to a sale in inverse order of alienation in the event of foreclosure of the
liens and/or security interests hereby created. Grantor shall not have or
assert any right under any statute or rule of law pertaining to the marshaling
of assets, sale in inverse order of alienation, the exemption of homestead, the
administration of estates of decedents, or other matters whatever to defeat,
reduce or affect the right of Grantee under the terms of this Deed of Trust to
a sale of the Mortgaged Property for the collection of the Secured Indebtedness
without any prior or different resort for collection, or the right of Grantee
under the terms of this Deed of Trust to the payment of the Secured
Indebtedness out of the proceeds of sale of the Mortgaged Property in
preference to every other claimant whatever. If any law referred to in this
Section and now in force, of which Grantor or Grantor's representatives,
successors or assigns or any other persons claiming any interest in the
Mortgaged Property might take advantage despite this Section, shall hereafter
be repealed or cease to be in force, such law shall not thereafter be deemed to
preclude the application of this Section.
Section 5.9. Delivery of Possession After Foreclosure. In the event
there is a foreclosure sale hereunder and at the time of such sale, Grantor or
Grantor's representatives, successors or assigns are occupying or using the
Mortgaged Property, or any part thereof, each and all shall immediately become
the tenant or subtenant, as the case may be, of the purchaser at such sale,
which tenancy or subtenancy, as the case may be, shall be a tenancy or
subtenancy, as the case may be, from day to day, terminable at the will of
either landlord or tenant, at a reasonable rental per day based upon the value
of the property occupied, such rental to be due daily to the purchaser; and to
the extent permitted by applicable law, the purchaser at such sale shall,
notwithstanding any language herein apparently to the contrary, have the sole
option to demand immediate possession following the sale or to permit the
occupants to remain as tenants or subtenants at will. In the event the tenant
or subtenant fails to surrender possession of said property upon demand, the
purchaser shall be entitled to institute and maintain a summary action for
possession of the property (such as an action for forcible detainer) in any
court having jurisdiction.
ARTICLE 6
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Miscellaneous
Section 6.1. Scope of Deed of Trust. This Deed of Trust is a deed of
trust and mortgage of both real and personal property, a security agreement, a
financing statement and a collateral assignment, and also covers proceeds and
fixtures.
Section 6.2. Effective as a Financing Statement. This Deed of Trust
shall be effective as a financing statement filed as a fixture filing with
respect to all fixtures included within the Mortgaged Property and is to be
filed for record in the real estate records of each county where any part of
the Mortgaged Property (including said fixtures) is situated. This Deed of
Trust shall also be effective as a financing statement covering minerals or the
like (including oil and gas) and accounts subject to Nebraska law, which will
be financed at the wellhead or minehead of the wells or mines located on the
Mortgaged Property and is to be filed for record in the real estate records of
each county where any part of the Mortgaged Property is situated. This Deed of
Trust shall also be effective as a financing statement covering any other
Mortgaged Property and may be filed in any other appropriate filing or
recording office. The mailing address of the debtor is the address of Grantor
set forth at the end of this Deed of Trust and the address of the secured party
from which information concerning the security interests hereunder may be
obtained is the address of Grantee set forth at the end of this Deed of Trust.
A carbon, photographic or other reproduction of this Deed of Trust or of any
financing statement relating to this Deed of Trust shall be sufficient as a
financing statement for any of the purposes referred to in this Section. The
record owner of the fee simple estate of the Fee Land is Grantor.
Section 6.3. Waiver. No waiver of any provision of this Deed of Trust
nor consent to any departure by Grantor here from shall in any event be
effective unless the same shall be in writing and signed in by Grantor and
Grantee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 6.4. No Impairment of Security. The lien, security interest
and other security rights of Grantee hereunder or of Grantee under any other
Financing Document shall not be impaired by any indulgence, moratorium or
release granted by Grantee including, but not limited to, any renewal,
extension or modification which any of the foregoing parties may grant with
respect to any Secured Indebtedness, or any surrender, compromise, release,
renewal, extension, exchange or substitution which any of the foregoing parties
may grant in respect of the Mortgaged Property, or any part thereof or any
interest therein, or any release or indulgence granted to any endorser,
guarantor or surety of any Secured Indebtedness. The taking of additional
security by Grantee shall not release or impair the lien, security interest or
other security rights of Grantee hereunder or affect the liability of Grantor
or of any endorser, guarantor or surety, or improve the right of any junior
lienholder in the Mortgaged Property (without implying hereby any of the
foregoing parties' consent to any junior lien).
Section 6.5. Acts Not Constituting Waiver by Grantee. Grantee may
waive any default without waiving any other prior or subsequent default.
Grantee may remedy any default without waiving the default remedied. Neither
failure by Grantee to exercise, nor delay by Grantee in exercising, nor
discontinuance of the exercise of any right, power or remedy (including but not
limited to the right to accelerate the maturity of the Secured Indebtedness or
any part thereof) upon or after any default shall
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<PAGE>
be construed as a waiver of such default or as a waiver of the right to
exercise any such right, power or remedy at a later date. No single or partial
exercise by Grantee of any right, power or remedy hereunder shall exhaust the
same or shall preclude any other or further exercise thereof, and every such
right, power or remedy hereunder may be exercised at any time and from time to
time. No modification or waiver of any provision hereof nor consent to any
departure by Grantor therefrom shall in any event be effective unless the same
shall be in writing and signed by Grantee and then such waiver or consent shall
be effective only in the specific instance, for the purpose for which given and
to the extent therein specified. No notice to nor demand on Grantor in any case
shall of itself entitle Grantor to any other or further notice or demand in
similar or other circumstances. Acceptance by Grantee of any payment in an
amount less than the amount then due on any Secured Indebtedness shall be
deemed an acceptance on account only and shall not in any way excuse the
existence of an Event of Default hereunder.
Section 6.6. Subrogation to Existing Liens. To the extent that
proceeds of the Loans are used to pay indebtedness secured by any outstanding
lien, security interest, charge or prior encumbrance against the Mortgaged
Property, such proceeds have been advanced by Grantee at Grantor's request, and
Grantee shall be subrogated to any and all rights, security interests and liens
owned by any owner or holder of such outstanding liens, security interests,
charges or encumbrances, however remote, irrespective of whether said liens,
security interests, charges or encumbrances are released, and to the extent of,
but only to the extent of Grantee's rights therein, all of the same are
recognized as valid and subsisting and are renewed and continued and merged
herein to secure the Secured Indebtedness, but the terms and provisions of this
Deed of Trust shall govern and control the manner and terms of enforcement of
the liens, security interests, charges and encumbrances to which Grantee is
subrogated hereunder. It is expressly understood that, in consideration of the
payment of such indebtedness by Grantee, Grantor hereby waives and releases all
demands and causes of action against the Grantee for offsets and payments in
connection with the said indebtedness.
Section 6.7. Application of Payments to Certain Indebtedness. If any
part of the Secured Indebtedness cannot be lawfully secured by this Deed of
Trust to the full extent of such indebtedness, or if any part of the Mortgaged
Property cannot be lawfully subject to the lien and security interest hereof,
then all payments made shall be applied on said indebtedness first in discharge
of that portion thereof which is not secured by this Deed of Trust.
Section 6.8. Substitute Trustee. Trustee may resign by an instrument
in writing addressed to Grantee, or Trustee may be removed at any time with or
without cause by an instrument in writing executed and acknowledged by Grantee,
mailed to the Grantor and recorded in the county in which the Premises are
located and by otherwise complying with the provisions of the applicable laws
of the State of Nebraska. Nebraska law stipulates the formality for
substitution of a trustee. If Grantee is a corporation or association and such
appointment is executed on its behalf by an officer of such corporation or
association, such appointment shall be conclusively presumed to be executed
with authority and shall be valid and sufficient without proof of any action by
the board of directors or any superior officer of the corporation or
association. Upon the making of any such appointment and designation, all of
the estate and title of Trustee in the Mortgaged Property shall vest in the
named successor or substitute Trustee and he shall thereupon succeed to, and
shall hold, possess and execute,
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all the rights, powers, privileges, immunities and duties herein conferred upon
Trustee. All references herein to "Trustee" shall be deemed to refer to Trustee
(including any successor or substitute appointed and designated as herein
provide) from time to time acting hereunder.
Section 6.9. No Liability of Trustee. Trustee shall not be liable for
any error of judgment or act done by Trustee in good faith, or be otherwise
responsible or accountable under any circumstances whatsoever (including
Trustee's negligence), except for Trustee's gross negligence or willful
misconduct. Trustee shall have the right to rely on any instrument, document or
signature authorizing or supporting any action taken or proposed to be taken by
him hereunder, believed by him in good faith to be genuine. All moneys received
by Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be segregated in
any manner from any other moneys (except to the extent required by law), and
Trustee shall be under no liability for interest on any moneys received by him
hereunder. Grantor hereby ratifies and confirms any and all acts which the
herein named Trustee or his successor or successors, substitute or substitutes,
in this trust, shall do lawfully by virtue hereof. Grantor will reimburse and
indemnify Trustee, his agents, employees, and attorneys, for, and save him
harmless against, any and all liability and reasonable expenses which may be
incurred by him in the performance of his duties, except any liability or
expense caused by Trustee's gross negligence or willful misconduct, it being
the intention of Grantor to indemnify the indemnified parties against the
consequences of their own negligence. The foregoing indemnity shall not
terminate upon discharge of the Secured Indebtedness or foreclosure, or release
or other termination, of this Deed of Trust.
Section 6.10. Release of Deed of Trust. If all of the Secured
Indebtedness is paid as the same becomes due and payable and all obligations,
if any, of Grantee for further advances have been terminated, then, and in that
event only, all rights under this Deed of Trust shall terminate (except to the
extent expressly provided herein with respect to indemnifications,
representations and warranties and other rights which are to continue following
the release hereof) and the Mortgaged Property shall become wholly clear of the
liens, security interests, conveyances and assignments evidenced hereby, and
such liens and security interests shall be timely released by Grantee in due
form at Grantor's cost. Without limitation, all provisions herein for indemnity
of Trustee or any other person or entity shall survive discharge of the Secured
Indebtedness and any foreclosure, release or termination of this Deed of Trust.
Section 6.11. Notices. Except as otherwise expressly provided herein,
all notices, requests, consents, demands and other communications required or
which any party desires to give hereunder shall be in writing and shall be
given in the manner described in Section 8.02 of the Merger Agreement, with the
address for notice of Grantor being the same as provided for in the Merger
Agreement for Triathlon Broadcasting Company. This Section shall not be
construed in any way to affect or impair any waiver of notice or demand
provided in any Financing Document or to require giving of notice or demand to
or upon any person in any situation or for any reason.
Section 6.12. Invalidity of Certain Provisions. A determination that
any provision of this Deed of Trust is unenforceable or invalid shall not
affect the enforceability or validity of any other provision and the
determination that the application of any provision of this Deed of Trust to
any person or
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<PAGE>
circumstance is illegal or unenforceable shall not affect the enforceability or
validity of such provision as it may apply to other persons or circumstances.
Section 6.13. Gender; Titles; Construction. Within this Deed of Trust,
words of any gender shall be held and construed to mean and include any other
gender, and words in the singular number shall be held and construed to include
the plural, unless the context otherwise requires. Titles appearing at the
beginning of any subdivisions hereof are for convenience only, do not
constitute any part of such subdivisions, and shall be disregarded in
construing the language contained in such subdivisions. The use of the words
"herein," "hereof," "hereunder" and other similar compounds of the word "here"
shall refer to this entire Deed of Trust and not to any particular Article,
Section, paragraph or provision. The term "person" and words importing persons
as used in this Deed of Trust shall include firms, associations, partnerships
(including limited partnerships), joint ventures, trusts, corporations and
other legal entities, including public or governmental bodies, agencies or
instrumentalities, as well as natural persons.
Section 6.14. Demand Obligations. Unless otherwise provided herein,
all demand obligations arising pursuant to the terms and provisions of this
Deed of Trust shall bear interest from the time incurred at the Default Rate
(but never in excess of the Highest Lawful Rate).
Section 6.15. Grantor. Unless the context clearly indicates otherwise,
as used in this Deed of Trust, "Grantor" means any party named as Grantor in
the opening paragraph hereof or any of them. The obligations of Grantor
hereunder shall be joint and several. If any Grantor, or any signatory who
signs on behalf of any Grantor, is a corporation, partnership or other legal
entity, Grantor and any such signatory, and the person or persons signing for
Grantor and any such signatory, represent and warrant to Grantee that this
instrument is executed, acknowledged and delivered by Grantor's duly authorized
representatives. If Grantor is an individual, no power of attorney granted by
Grantor herein shall terminate on Grantor's disability.
Section 6.16. Execution; Recording. This Deed of Trust has been
executed in several counterparts, all of which are identical, and all of which
counterparts together shall constitute one and the same instrument. The date or
dates reflected in the acknowledgments hereto indicate the date or dates of
actual execution of this Deed of Trust, but such execution is as of the date
shown on the first page hereof, and for purposes of identification and
reference the date of this Deed of Trust shall be deemed to be the date
reflected on the first page hereof. Grantor will cause this Deed of Trust and
all amendments and supplements thereto and substitutions therefor and all
financing statements and continuation statements relating thereto to be
recorded, filed, re-recorded and refiled in such manner and in such places as
Trustee or Grantee shall reasonably request and will pay all such recording,
filing, re-recording and refiling taxes, fees and other charges.
Section 6.17. Successors and Assigns. The terms, provisions, covenants
and conditions hereof shall be binding upon Grantor, and the heirs, devisees,
representatives, successors and assigns of Grantor (without hereby implying
that Grantor has the right to assign or transfer this Deed of Trust), and shall
inure to the benefit of Grantee and shall constitute covenants running with the
Land. All references
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<PAGE>
in this Deed of Trust to Grantor shall be deemed to include all such heirs,
devisees, representatives, successors and assigns of Grantor.
Section 6.18. Modification. This Deed of Trust may only be modified in
writing signed by both Grantor and Grantee.
Section 6.19. No Partnership, etc. The relationship between Grantee
and Grantor is solely that of lender and borrower. Grantee does not have any
fiduciary or other special relationship with Grantor. Nothing contained in the
Financing Documents is intended to create any partnership, joint venture,
association or special relationship between Grantor and Grantee or in any way
make Grantee a co-principal with Grantor with reference to the Mortgaged
Property. All agreed contractual duties between or among Grantee and Grantor
are set forth herein and in the other Financing Documents and any additional
implied covenants or duties are hereby disclaimed. Any inferences to the
contrary of any of the foregoing are hereby expressly negated.
Section 6.20. applicable law; submission to jurisdiction. (a) The
Provision of this Deed of Trust with respect to the creation, perfection,
priority, enforceability of Liens and security interests of this Deed of Trust
shall be governed by and construed in accordance with the laws of the state of
Nebraska. all other provisions of this Deed of Trust shall be governed by, and
construed in accordance with, the laws of the State of Texas without giving
effect to its laws relating to conflicts of laws, provided that any remedies
herein provided which shall be valid under the laws of the jurisdiction where
proceedings for the enforcement hereof shall be taken shall not be affected by
any invalidity under the laws of the State of Texas.
(b) To the extent permitted by applicable law, Grantor hereby
submits to the nonexclusive jurisdiction of the courts of the State of Texas or
the United States of America for the Western District of Texas, for purposes of
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Grantor irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to
the laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
Section 6.21. Agent for Service of Process. Grantor's agent for
service of process is Triathlon Broadcasting Company located at 750 B Street,
Suite 1920, San Diego, California 92101.
Section 6.22. Entire Agreement. Grantor hereby acknowledges that,
except as incorporated in writing in the Financing Documents to which Grantor
is a party, there are not, and were not, and no persons are or were authorized
by Grantee to make, any representations, understandings, stipulations,
agreements or promises, oral or written, with respect to the matters addressed
in such Financing Documents.
The written Financing Documents, including this Deed of Trust,
represent the final Agreement between the parties and may not be contradicted
by evidence of prior, contemporaneous or subsequent oral agreements of the
parties.
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There are no unwritten oral agreements between the parties.
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<PAGE>
IN WITNESS WHEREOF, this instrument is executed by Grantor on the date
set forth below to be effective as of the date first written on page 1 hereof.
The address and federal tax Grantor:
identification number of
Grantor are: 4630 REALTY, INC.
a Delaware corporation
750 B Street, Suite 1920
San Diego, California 92101 By: /s/ Norman Feuer
San Diego County -----------------------
Federal Tax I.D. No. 06-152-5444 Name: Norman Feuer
Title: President/CEO
Date: September 14, 1998
[CORPORATE SEAL]
The address of Grantee is (including county):
Capstar Radio Broadcasting Partners, Inc.
600 Congress Street, Suite 1400
Austin, Texas 78701
Travis County
Attention: William S. Banowsky
ADDRESSES OF THE PREMISES:
4630 Antelope Creek Drive, Lincoln, Lancaster County, Nebraska
Exhibits
Exhibit A: Land
Exhibit B: Permitted Encumbrances
[Signature Page - Deed of Trust Nebraska]
<PAGE>
STATION REIMBURSEMENT AND COMPENSATION AGREEMENT
This Agreement made this 12th day of August, 1998, by and among Saga
Communications of Iowa, Inc. ("Saga"); Triathlon Broadcasting of Omaha, Inc.
("Triathlon");
WITNESSETH:
WHEREAS, Saga is licensee of KIOA(FM), which operates on FM Channel
227C (93.3 MHz) at Des Moines, Iowa;
WHEREAS, Triathlon is licensee of KTNP(FM), which operates on FM 227A
at Bennington, Nebraska;
WHEREAS, Triathlon desires to make certain changes in the facilities
of KTNP by filing with the Federal Communications Commission ("FCC") a petition
for rule making; the cooperation of Saga is desired in order to make those
changes, and Saga is willing to cooperate with Triathlon on the basis set out
in this Agreement.
WHEREAS, Saga has agreed to make a change of channels from FM Channel
227C to a lower grade FM channel but not to a channel of a lower class than
Channel 227C1 (hereinafter "Channel Downgrade") to accommodate Triathlon's
proposed upgrade of KTNP to Channel 227C3;
WHEREAS, Triathlon has agreed to compensate Saga for making said
Channel Downgrade;
WHEREAS, to secure the faithful performance of its obligations under
this Agreement, Triathlon has agreed to deposit as set forth herein the sum of
FIVE HUNDRED THOUSAND ($500,000.00) DOLLARS with the Escrow Agent to be held
and released pursuant to the Escrow Agreement attached as Appendix 1; and
NOW THEREFORE, the parties intending to be legally bound, agree as
follows:
<PAGE>
1. Petition for Rule Making. Within 30 days after execution of this
Agreement, Saga and Triathlon agree to file with the FCC a joint petition to
amend Title 47 C.F.R. ss.73.202(b) [Table of Allotments] seeking (a) the
substitution of FM Channel 227C at Des Moines, Iowa, with Channel 227C1, and
the concurrent modification of the license of KIOA(FM) to operate on Channel
227C1, and (b) the simultaneous substitution of FM Channel 227A at Bennington,
Nebraska, with FM Channel 227C3 and the concurrent modification of the license
of KTNP(FM) to operate on Channel 227C3. Upon the effective date of the FCC's
Report and Order amending Title 47 C.F.R. ss.202(b) making the channel
substitutions and modifications of licenses, Saga will file an application
("Downgrade Application") on FCC Form 301 for a construction permit to operate
on Channel 227C1, and upon grant thereof Saga will file FCC Form 302-FM for a
license to cover the construction permit within 10 days of initiation of
program tests by KIOA(FM) on Channel 227C1.
2. Escrow Fund. Beginning on the date of issuance by the FCC of a
Notice of Proposed Rule Making ("NPRM") proposing to modify the license of
KIOA(FM) to operate on Channel 227C1, and no later than ten days prior to the
date established in the NPRM for the filing of comments on the NPRM ("Comment
Date"), Triathlon shall deposit the sum of FIVE HUNDRED THOUSAND ($500,000.00)
DOLLARS (the "Escrow Fund") with Escrow Agent. Failure of Triathlon to timely
deposit the Escrow Fund with the Escrow Agent shall result in Saga on the
Comment Date filing comments in opposition to the proposal set out in the NPRM.
3. Disbursement of Escrow Funds. In exchange for Saga's cooperation,
upon the Effective Date set forth in the FCC's Report and Order, and the FCC's
action having become a "final" order, that is, no longer subject to, or the
subject of, reconsideration or review by the FCC
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<PAGE>
or any Court, and without any further instructions from Triathlon, the Escrow
Agent shall pay to Saga from the Escrow Fund the sum of FIVE HUNDRED THOUSAND
($500,000.00) DOLLARS in immediately available funds and shall pay to Triathlon
any interest that has accrued in the Escrow Fund.
4. FCC Refusal to Act-Result. In the event the FCC refuses to
substitute Channel 227Cl for Channel 227C at Des Moines and to substitute
Channel 227C3 for Channel 227A at Bennington, and the FCC's Report and Order
refusing to make the substitutions shall become a final order, the Escrow Agent
shall deduct his fee and promptly return the balance of the Escrow Fund to
Triathlon.
5. Assignment. This Agreement may not be assigned, except to
successors in interest of Saga and Triathlon. This Agreement must be assigned
to and the obligations hereunder assumed by such successors and assigns.
6. Notices. All necessary notices, demands and requests shall be
deemed duly given, if mailed by registered mail, postage prepaid, and addressed
to the following:
If to Triathlon: Mr. Norman Feuer
Symphony Towers
750 "B" Street - Suite 1920
San Diego, CA 92101
with copy to: Martin R. Leader, Esquire
Fisher Wayland Cooper Leader & Zaragoza L.L.P.
2001 Pennsylvania Avenue, N.W., Suite 400
Washington, D.C. 20006-1851
If to Saga: Mr. Philip Hoover
President/General Manager
Saga Communications of Iowa, Inc.
1416 Locust Street
Des Moines, Iowa 50309
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<PAGE>
with copy to: Gary S. Smithwick, Esquire
Smithwick & Belendiuk, P.C.
1990 M Street, N.W.
Suite 510
Washington, D.C. 20036
7. Entire Agreement. This Agreement and Appendix 1 contain the entire
agreement of the parties with respect to the transaction contemplated and
supersedes all prior negotiations between the parties concerning the subject
matter contained herein. No change, modification or waive of any provision
hereof will be valid unless in writing and signed by the party to be bound.
8. Waiver. No delay or failure on the part of either party in
exercising any rights hereunder, and no partial or single exercise thereof,
will constitute a waiver of such rights or of any other rights hereunder.
9. Binding Effect. This Agreement is binding upon, and inures to the
benefit of and is enforceable by the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
10. Third Party Beneficiaries. Nothing in this Agreement will be
construed as giving any person, firm, corporation or other entity, other than
the parties hereto, their respective heirs, executors, administrators,
successors and assigns any right, remedy or claim under or in respect of this
Agreement or any provision hereof.
11. Construction. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Iowa.
12. Counterparts, This Agreement may be executed in counterpart, each
of which shall be deemed an original.
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<PAGE>
13. Effect of New FCC Rules on Rule Making Proceeding. In the event
the FCC adopts the proposal described in Notice of Proposed Rule Making and
Order, FCC 98-117, released June 15, 1998 ("New Rules"), to create a new class
of FM Station, i.e. "Class C-zero," and it is possible for Triathlon to upgrade
KTNP to Class C3 while permitting Saga to downgrade KIOA(FM) to Class C-zero,
then the parties agree to cooperate with each other to file a joint
counterproposal by the Comment Date (if the New Rules are in effect at that
time) proposing to downgrade KIOA(FM) to Class C-zero instead of Class Cl. If
the New Rules go into effect after the Comment Date, and the Commission has
acted on the NPRM, Triathlon agrees not to oppose any application filed by Saga
to upgrade KIOA(FM) to Class "C-zero" so long as the upgrade does not preclude
Triathlon from obtaining a construction permit for Class C3 facilities for
KTNP.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
WHEREFORE, the parties hereto have agreed as herein stated, on the
date first above written.
TRIATHLON BROADCASTING,
OF OMAHA, INC.
By: /s/ Norman Feuer
-------------------------
Norman Feuer
President
SAGA COMMUNICATIONS
OF IOWA, INC.
By: /s/ Philip Hoover
-------------------------
Philip Hoover
President
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<PAGE>
ESCROW AGREEMENT
This Escrow Agreement is made in and entered into this ____ day of
August, 1998, by and among Saga Communications of Iowa, Inc. ("Saga"),
Triathlon Broadcasting Company of Omaha, Inc. ("Triathlon"), and James K.
Edmundson, Esquire ("Escrow Agent").
WITNESSETH:
WHEREAS, Saga has executed a Station Reimbursement and Compensation
Agreement ("Reimbursement Agreement") of even date wherein Saga and Triathlon
have agreed to file with the Federal Communications Commission ("FCC") a joint
petition for rule making requesting amendment of Title 47 C.F.R. ss.73.202(b)
to allot a lesser-class channel, but no lower than Channel 227C1 to Des Moines,
Iowa, and reduce the class of radio station KIOA(FM), Des Moines, from Channel
227C to a channel (but no lower than Channel 227C1) that will permit
Triathlon's station at Bennington, Nebraska, KTNP, to operate on Channel 227C3;
WHEREAS, the capitalized terms herein shall have the same meaning
ascribed to them in the Reimbursement Agreement; and
WHEREAS, Triathlon has agreed to reimburse and compensate Saga in
connection with Saga's Channel Downgrade; and
WHEREAS, the Reimbursement Agreement provides for the simultaneous
execution and delivery of this Escrow Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties intending to be legally bound, hereby agree as
follows:
<PAGE>
1. Pursuant to wire transfer instructions provided by the Escrow
Agent, Triathlon shall deposit Five Hundred Thousand ($500,000.00) Dollars
("Escrow Fund") with the Escrow Agent on the dates and in the manner required
under Section 2 of the Reimbursement Agreement, which Escrow Agent shall hold
in an insured interest-bearing account or accounts.
2. The Escrow Agent shall hold the Escrow Fund, and dispose of it as
follows:
a. The Escrow Agent, without further authorization from any
party, shall deliver to Saga the Escrow Fund, including all interest accrued
thereon, upon the Effective Date ("Payment Date") of Saga's Channel Downgrade
as described in Section 3 of the Reimbursement Agreement.
b. Should Saga default under the terms of the Reimbursement
Agreement, upon written notice of such default, the Escrow Agent shall deliver
the Escrow Fund, and all interest accrued thereon, to Triathlon, unless Saga
objects in writing to the delivery of the Escrow Fund to Triathlon, in which
case the Escrow Agent shall proceed under Section 10 hereof.
3. If the FCC shall refuse to approve the Channel Downgrade, Escrow
Agent shall deliver the Escrow Fund to Triathlon within 5 days after (i) the
FCC's order refusing to downgrade KIOA(FM) shall become a final order, or (ii)
receipt of written notice from Saga that it will not contest such FCC refusal.
If Saga contests such FCC refusal and such refusal is upheld on appeal, Escrow
Agent shall deliver the Escrow Fund to Triathlon within 5 days after the
issuance of the order denying Saga's appeal.
4. The Escrow Agent may act relative hereto upon advice of counsel in
reference to any matter connected herewith, and shall not be liable for any
mistake of fact or error of judgment,
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<PAGE>
or for any acts or omissions of any kind unless caused by his willful
misconduct or gross negligence.
5. This Escrow Agreement sets forth exclusively the duties of the
Escrow Agent with respect to any and all matters pertinent hereto and no
implied duties or obligations shall be read into this Escrow Agreement against
the Escrow Agent.
6. The Escrow Agent makes no representations as to the validity,
value, genuineness or the collectability of any security or document, or
instrument or property held or delivered to them.
7. Saga and Triathlon agree to divide the costs of the reasonable
charges of the Escrow Agent who shall charge $200.00 per hour for his services.
In the event of a dispute regarding disposition of the Escrow Fund, Saga and
Triathlon each agree to pay the Escrow Agent all of the charges for his
services hereunder and agree to reimburse the Escrow Agent for all reasonable
expenses, disbursements and advances incurred or made by the Escrow Agent in
performance of such duties hereunder, including reasonable fees, expenses and
disbursements of his counsel. The prevailing party's share of the Escrow
Agent's expenses incurred in connection with resolution of any such dispute,
and the prevailing party's own reasonable legal fees and expenses, shall be
reimbursed by the non-prevailing party immediately upon the conclusion of any
litigation to determine the disposition of the Escrow Fund. This section
survives despite any termination of this Escrow Agreement.
8. The Escrow Agent does not have and will not have any interest in
the Escrow Fund, but is serving only as escrow holder and having only
possession thereof.
-3-
<PAGE>
9. Any cash received by the Escrow Agent shall be invested and
reinvested by the Escrow Agent in an interest-bearing federally insured money
market account under the exclusive control of the Escrow Agent. Saga and
Triathlon acknowledge that the Federal Deposit Insurance Corporation ("FDIC")
insurance may not apply to accounts to the extend they exceed One Hundred
Thousand ($100,000. 00) Dollars and agree that Escrow Agent is not required or
expected to keep or invest the escrowed funds which exceed this amount in
accounts or instruments that insured by the FDIC.
10. In the event the Escrow Agent receives or becomes aware of
conflicting demands or claims with respect to this escrow or the rights of any
of the parties hereto, or any funds, securities, property or documents
deposited herein or affected hereby, the Escrow Agent shall have the right to
discontinue any or all further acts on his part until such conflict is resolved
to his satisfaction. The Escrow Agent shall have the further right, but not the
obligation, to commence or defend any action or proceedings for the
determination of such conflict including, but without limiting the generality
of the foregoing, a suit in interpleader brought by the Escrow Agent. In the
event the Escrow Agent files a suit in interpleader, and delivers to the court
all funds, securities, property or documents then in deposit hereunder, he
shall thereupon be fully released and discharged from all further obligations
to perform any and all duties or obligations imposed upon him by this Escrow
Agreement.
11. The Escrow Agent shall not be liable for any error of judgment or
for any act done or omitted by him in good faith, or for anything which he may
in good faith do or refrain from doing in connection herewith; nor for any
negligence other than gross negligence; nor shall the Escrow Agent be liable
if, in the event of any dispute or question as to his duties or obligations
-4-
<PAGE>
hereunder, he acts in accordance with written opinion of legal counsel. The
Escrow Agent is authorized to act upon any document believed by him to be
genuine and to be signed by the proper party or parties, and will incur no
liability in so acting.
12. All notices, demands and requests required or permitted to be
given under the provisions of this Agreement shall be in writing and shall be
deemed duly given on the date they are received by hand delivery or delivery by
overnight courier service, or delivery by registered mail, postage prepaid, and
addressed to the party as follows:
TO SAGA: Mr. Philip Hoover
Saga Communications of Iowa, Inc,.
1416 Locust Street
Des Moines, IA 50309
with a copy (which shall
not constitute notice) to: Gary S. Smithwick, Esq.
Smithwick & Belendiuk, P.C.
1990 M Street, N.W.
Suite 510
Washington, D.C. 20036
TO TRIATHLON: Mr. Norman Feuer
Symphony Towers
750 "B" Street - Suite 1920
San Diego, CA 92101
with a copy (which shall
not constitute notice) to: Martin R. Leader, Esq.
Fisher Wayland Cooper Leader &
Zaragoza, L.L.P.
2001 Pennsylvania Ave., N.W., Suite 400
Washington, D.C. 20006-1851
TO ESCROW AGENT: James K. Edmundson, Esq.
1990 M Street, N.W.
Suite 510
Washington, DC 20036
-5-
<PAGE>
13. This Escrow Agreement shall terminate on the date the Escrow Agent
no longer holds any property or funds hereunder.
14. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Upon payment to
Saga of all sums due under the Reimbursement agreement, neither Saga nor
Triathlon shall have any further rights or claims under this Agreement. In the
event of the incapacity the Escrow Agent, Saga and Triathlon may designate a
substitute Escrow Agent or Escrow Agents. If Saga and Triathlon cannot agree on
the selection of an Escrow Agent or Escrow Agents, the matter shall be
submitted to arbitration with the costs being divided equally between the
parties.
15. This Agreement shall be construed and interpreted in accordance
with the laws of the State of Iowa.
16. This Agreement may be executed in counterparts, each of which
shall be deemed an original.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
ESCROW AGENT SAGA COMMUNICATIONS OF IOWA, INC.
By: /s/ James K. Edmundson By: /s/ Philip Hoover
--------------------------- --------------------------------
James K. Edmundson Philip Hoover
President
TRIATHLON BROADCASTING
COMPANY OF OMAHA, INC.
By: /s/ Norman Feuer
--------------------------------
Norman Feuer
President
-7-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS IN TRIATHLON BROADCASTING COMPANY'S FORM 10-Q FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 366,000
<SECURITIES> 0
<RECEIVABLES> 7,896,000
<ALLOWANCES> 697,000
<INVENTORY> 0
<CURRENT-ASSETS> 9,726,000
<PP&E> 13,063,000
<DEPRECIATION> 2,749,000
<TOTAL-ASSETS> 129,677,000
<CURRENT-LIABILITIES> 69,096,000
<BONDS> 0
6,000
6,000
<COMMON> 49,000
<OTHER-SE> 52,370,000
<TOTAL-LIABILITY-AND-EQUITY> 129,677,000
<SALES> 0
<TOTAL-REVENUES> 28,703,000
<CGS> 0
<TOTAL-COSTS> 19,412,000
<OTHER-EXPENSES> 6,194,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,532,000
<INCOME-PRETAX> (1,435,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,435,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,566,000)
<EPS-PRIMARY> (1.14)
<EPS-DILUTED> (1.14)
</TABLE>
