0000950109-95-003196.txt : 19950815 0000950109-95-003196.hdr.sgml : 19950815 ACCESSION NUMBER: 0000950109-95-003196 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: T SF COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000847841 STANDARD INDUSTRIAL CLASSIFICATION: NEWSPAPERS: PUBLISHING OR PUBLISHING & PRINTING [2711] IRS NUMBER: 731341805 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10263 FILM NUMBER: 95563418 BUSINESS ADDRESS: STREET 1: 2407 E SKELLY DR CITY: TULSA STATE: OK ZIP: 74105 BUSINESS PHONE: 9187472600 10-Q 1 FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 (Mark One) [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 1995, or [_] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the Transition period from _______ to _______ Commission file number 1-10263 ------- T/SF COMMUNICATIONS CORPORATION -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 73-1341805 ------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 2407 East Skelly Drive, Tulsa, Oklahoma 74105 --------------------------------------- ----------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (918) 747-2600 ----------------------------- N/A ------------------------------------------------------------------------------ (Former Name of Registrant) Securities registered pursuant to Section 12(b) of the Act: Common Stock, $0.10 Par Value Per Share. At August 11, 1995, there were 3,839,778 shares of the registrant's Common Stock outstanding. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ ----- T/SF COMMUNICATIONS CORPORATION INDEX
Page No -------- PART I Financial Information Item 1 ------ Consolidated Balance Sheets - June 30, 1995 (unaudited) and 4-5 December 31,1994 Consolidated Statements of Operations - Three Months and 6 Six Months Ended June 30, 1995 and 1994 (unaudited) Consolidated Statements of Cash Flows 7-8 Six Months Ended June 30, 1995 and 1994 (unaudited) Notes to Consolidated Financial Statements 9-10 Item 2 ------ Management's Discussion and Analysis of Financial Condition 11-12 and Results of Operations PART II Other Information Item 4 ------ Submission of Matters to a Vote of Security Holders 13 Item 6 ------ Exhibits and Reports on Form 8-K 13
2 PART I Item 1.Financial Information 3 T/SF COMMUNICATIONS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
June 30 December 31 1995 1994 ------- -------- (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 1,721 $ 4,585 Short-term investments - 2,000 Accounts receivable, less reserve for doubtful accounts of $653 in 1995 and $506 in 1994 9,901 8,847 Inventories 437 596 Current contract receivable and other current assets 5,175 7,481 Refundable income taxes - 167 Assets held for sale 7,703 8,529 ------- -------- Total current assets 24,937 32,205 ------- -------- INVESTMENTS 1,634 233 ------- -------- CONTRACT AND NOTES RECEIVABLE 1,740 2,786 ------- -------- PROPERTY, PLANT AND EQUIPMENT, AT COST Exposition equipment 2,891 2,712 Other 5,653 4,707 ------- -------- 8,544 7,419 3,696 2,834 ------- -------- Less - accumulated depreciation 4,848 4,585 ------- -------- DEFERRED TAX ASSETS 919 732 ------- -------- INTANGIBLES AND OTHER ASSETS, NET 13,109 13,040 ------- -------- $ 47,187 $ 53,581 ======= ========
The accompanying notes are an integral part of these consolidated financial statements. 4 T/SF COMMUNICATIONS CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except per share amounts)
June 30, December 31, 1995 1994 --------- ------------ (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Note Payable $ 2,000 $ - Accounts payable 6,070 5,905 Accrued liabilities 7,920 7,163 Deferred tax liabilities 197 823 Current portion of long-term debt 1,284 1,251 --------- --------- Total current liabilities 17,471 15,142 --------- --------- LONG-TERM DEBT, NET OF CURRENT PORTION 4,612 4,905 --------- --------- DEFERRED CONTRACT LIABILITIES 2,209 2,456 --------- --------- MINORITY INTERESTS IN CONSOLIDATED SUBSIDIARIES - 6,698 --------- --------- COMMON STOCK SUBJECT TO PUT 525 525 --------- --------- STOCKHOLDERS' EQUITY: Preferred stock, $10 par value, 1,000 shares authorized, no shares issued and outstanding - - Common stock, $.10 par value, 10,000 shares authorized, 3,811 shares and 3,883 equivalent shares issued and outstanding at June 30, 1995 and December 31, 1994, respectively 372 379 Additional paid-in capital 18,295 19,572 Retained earnings 3,703 3,904 --------- --------- Total stockholders' equity 22,370 23,855 --------- --------- $ 47,187 $ 53,581 ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 5 T/SF COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts)
Three Months Ended Six Months Ended June 30, June 30, --------------------- -------------------- 1995 1994 1995 1994 ---- ---- ---- ---- (Unaudited) REVENUES: Publishing $ 4,028 $ 3,512 $ 7,728 $ 6,709 Exposition services 7,516 6,076 13,344 9,980 Information services 4,316 3,631 8,562 7,702 Other operating income and interest 562 468 802 1,125 -------- -------- -------- --------- 16,422 13,687 30,436 25,516 -------- -------- -------- --------- Costs and Expenses: Publishing 3,423 2,467 5,864 4,780 Exposition services 5,217 3,790 9,180 6,495 Information services 2,664 2,161 5,367 4,596 General and administrative 2,729 2,794 5,662 5,027 Interest 242 197 434 399 Depreciation and amortization 994 779 1,906 1,380 -------- -------- -------- --------- 15,269 12,188 28,413 22,677 -------- -------- -------- --------- INCOME BEFORE INCOME TAXES 1,153 1,499 2,023 2,839 INCOME TAX PROVISION ( 475 ) ( 651 ) ( 895 ) ( 1,289 ) MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES ( 134 ) ( 292 ) ( 266 ) ( 535 ) -------- -------- -------- --------- INCOME FROM CONTINUING OPERATIONS 544 556 862 1,015 DISCONTINUED OPERATION, NET 7 ( 63 ) ( 15 ) 234 -------- -------- -------- --------- NET INCOME 551 493 847 1,249 DIVIDENDS ON PREFERRED SHARES -- 40 -- 69 -------- -------- -------- --------- INCOME APPLICABLE TO COMMON SHARES $ 551 $ 453 $ 847 $ 1,180 ======== ======== ======== ========= EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE CONTINUING OPERATIONS $ 0.14 $ 0.14 $ 0.22 $ 0.25 DISCONTINUED OPERATIONS -- ( 0.02 ) -- 0.06 -------- -------- -------- --------- $ 0.14 $ 0.12 $ 0.22 $ 0.31 ======== ======== ======== ========= CASH DIVIDENDS PER COMMON SHARE $ 0.27 $ -- $ 0.27 $ -- ======== ======== ======== =========
The accompanying notes are an integral part of these consolidated financial statements. 6 T/SF COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
Six Months Ended June 30, ---------------- 1995 1994 ---- ---- (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 847 $ 1,249 ------- ------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,906 1,399 Accretion of interest expense 31 21 (Gain) Loss on sale of property, plant and equipment 19 ( 514 ) Changes in assets and liabilities: Accounts receivable and refundable income taxes ( 1,724 ) ( 1,741 ) Inventories 159 ( 3 ) Current contract receivable and other current assets ( 535 ) ( 634 ) Intangibles and other assets ( 226 ) 178 Accounts payable and accrued liabilities 204 228 Minority interest 266 535 Deferred income taxes ( 36 ) - ------- ------- Total adjustments 64 ( 531 ) ------- ------- Net cash provided by operating activities 911 718 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Sale of short-term investments 2,000 ( 500 ) Capital expenditures ( 1,645 ) ( 937 ) Collections on contract and notes receivable 3,826 1,915 Payments on deferred contract liabilities ( 364 ) ( 286 ) Net additions to investments ( 344 ) - Proceeds from the sale of property, plant and equipment 143 6,125 Distributions from equity investments, net - 29 Payments for acquisitions, net of cash acquired - ( 1,114 ) ------- ------- Net cash provided by investing activities 3,616 5,232 ------ -------
The accompanying notes are an integral part of these consolidated financial statements. 7 T/SF COMMUNICATIONS CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued (In thousands)
Six Months Ended June 30, -------------------- 1995 1994 ---- ---- (Unaudited) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under bank lines-of-credit 2,000 - Principal payments of long-term debt ( 479 ) ( 3,872 ) Dividends on common and preferred stock ( 1,051 ) ( 69 ) Purchase of parent stock ( 7,861 ) - Issuance of common stock - 347 ------- ------- Net cash used in financing activities ( 7,391 ) ( 3,594 ) ------- ------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 2,864 ) 2,356 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,585 2,808 ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 1,721 $ 5,164 ======= =======
The accompanying notes are an integral part of these consolidated financial statements. 8 T/SF COMMUNICATIONS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -------------------------------------------------------------------------------- For the three months and six months ended June 30, 1995 and 1994 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 Regulation S-X of the Securities and Exchange Commission. Accordingly, the financial statements do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for the three months and six months ended June 30, 1995, are not necessarily indicative of the results to be expected for the year ending December 31, 1995. For further information, refer to the consolidated financial statements and related notes thereto included in the Company's and Tribune/Swab- Fox Companies, Inc.'s ("Tribune/Swab-Fox") annual report on Form 10-K for the year ended December 31, 1994. 2. Merger of T/SF Communications Corporation and Tribune/Swab-Fox Companies, Inc. On May 25, 1995, Tribune/Swab-Fox was merged (the "Merger") with and into the Company. In the Merger, each share of Tribune/Swab-Fox stock was converted into 0.1255 of a share of the Company or, at the election of the holder, $0.88 in cash. For accounting purposes, the acquisition has been treated as a recapitalization of Tribune/Swab-Fox with Tribune/Swab-Fox as the survivor (downstream merger). While the Merger was structured for legal purposes as a merger of Tribune/Swab-Fox with and into Communications, the Merger is accounted for as a downstream merger. Thus, for accounting purposes, Tribune/Swab-Fox is the acquiring entity even though, from a legal or structural standpoint, Communications is the acquiring and surviving entity. Accordingly, the historical financial statements of Communications, as the surviving entity, are those historical financial statements of Tribune/Swab-Fox. Earnings per share for the period prior to the Merger are restated to reflect the recapitalized number of equivalent shares of the Company. The Company acquired 1,110,675 equivalent shares (8,850,000 Tribune/Swab-Fox shares) for cash in the Merger, the effect of which is taken into account as of the date of the Merger. In connection with the Merger, the Board of Directors of Tribune/Swab-Fox declared a one-time dividend of $0.0344 per share ($.27 per equivalent share) which was paid on May 24, 1995. 3. Common Stock and Earnings Per Share. Weighted average shares of common stock issued and outstanding during the three months and six months ended June 30, 1995 were 3,872,000 and 3,869,000,respectively, and the weighted average equivalent shares for the three months and six months ended June 30, 1994, were 3,943,000 and 3,978,000, respectively. 9 4. Income Taxes Income tax provision for the three months and six months ended June 30, 1995 and 1994, does not bear a normal relationship to the statutory federal income tax rate of 34% as a result of mainly amortization of goodwill related to acquisitions and state income taxes. 5. Assets Held for Sale In 1994, the Company's Board of Directors approved three of BMT Communications, Inc.'s ("BMT") trade journals for sale. Accordingly, the net assets related to these trade journals are reflected as "assets held for sale", along with certain discontinued real estate assets. An Asset Purchase Agreement was signed by BMT, dated June 16, 1995, and the sale of these trade journals was closed on August 2, 1995, for $21,000,000 cash. 6. Purchase of Company Stock In March, 1995, upon exercise of an option, the Company acquired 384,000 shares of Tribune/Swab-Fox common stock (48,819 equivalent shares) from the Profit Sharing Plan and Trust of Tribune/Swab-Fox for $291,750, with a cash payment of $72,937 and a note payable for $218,813. The Company then owned 1,142,729 shares (143,412 equivalent shares) of Tribune/Swab-Fox common stock which shares were canceled in the merger. 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ----------------------------------- Results of Operations --------------------- In May, 1995, the Merger of the Company and Tribune/Swab-Fox was completed. For accounting and financial reporting purposes, the Merger is treated as a downstream merger. Accordingly, the historical financial statements are those of Tribune/Swab-Fox. Operations of Galaxy Registration, Inc. ("Galaxy") acquired effective March 1, 1994, are included in exposition services for only four months in 1994. Revenues of $16,422,000 for the three months and $30,436,000 for the six months ended June 30, 1995, were $2,735,000 and $4,920,000, respectively, higher than for the same periods ended June 30, 1994. The revenue increase included $1,440,000 and $3,364,000 for the three months and six month periods, respectively, related to the exposition services, which consists of Galaxy and Atwood Convention Publishing, Inc. ("Atwood"). The increase in the three months ended June 30, 1995, is split between Galaxy and Atwood with both having significant growth during the period. Publishing revenues (including the three journals held for sale) increased as a result of an increase in advertising pages and two new executive seminars (one in Europe) in 1995, relating to International Gaming and Wagering Business ("GWB"). Information services revenue increase was substantially all related to an increase in the number of employment histories and criminal records sold during both the three months and six months ended June 30, 1995. Long distance telephone resale revenue was approximately $600,000 lower in 1995 as a result of the Company exiting this business during the latter part of the first quarter of 1994 due to competitive and regulatory considerations. Other operating income for the three months ended June 30, 1995, is higher since a co-sponsored trade show for the convenience store industry occurred in April, 1995, whereas this trade show was held in March, 1994. Also, the new European executive seminar for GWB was held in June, 1995. Interest income related to the contract receivable from the World Publishing Company is approximately $200,000 lower during the six months ended June 30, 1995. Publishing costs and expenses were $956,000 higher for the three months and $1,084,000 higher for the six months ended June 30, 1995, as compared with the same periods in 1994. The increase in costs related to the executive seminars and the co-sponsored trade show was approximately $450,000 for the three months and $370,000 for the six months in 1995 as compared with 1994. Other trade magazine cost increases in 1995 are related to the increase in pages noted above, a significant increase in the cost of paper and a postal rate increase. Exposition services costs and expenses were $1,427,000 and $2,685,000 higher for the three months and six months ended June 30, 1995, respectively. Included is a $500,000 increase in printing costs for convention publishing related to the growth in number of shows and the higher cost of paper. In 1995, Galaxy has increased the number of personnel to provide for the increase in the number of trade shows and to provide a high quality of service to its customers. In addition, Galaxy is included for six months operations versus four months in 1994. 11 Information services costs and expenses were $503,000 higher for the three months and $771,000 higher for the six months ended June 30, 1995, as compared with the same periods in 1994. The increase in costs related to the new employment screening service of approximately $275,000 per quarter, which services were commenced in mid-1994, the increase in criminal record volume and other costs related to higher volumes, including additional personnel, represent the primary increases. Netted against these increases is a decrease of approximately $500,000 for the six months ended June 30, 1995, related to long distance telephone resale costs because of exiting this business in the latter part of the first quarter of 1994. General and administrative expenses were $635,000 higher for the six months in 1995, as compared with the same period in 1994. Substantially all of this increase is related to Galaxy's general and administrative expenses for six months as compared with four months in 1994. Interest expense increased $45,000 for the three months and $35,000 for the six months ended June 30, 1995, as compared with the same periods in 1994, resulting from average interest rates on variable rate debt being 2% higher (approximate 33% increase in rate) during the first six months of 1995, partially reduced by principal payments on debt and reductions in deferred contract liabilities during the past year. Also, in late May, 1995, the Company borrowed $2,000,000 under its line of credit in connection with the Merger and the related acquisition of equivalent shares for cash. Depreciation and amortization increased $215,000 for the three months and $526,000 for the six months ended June 30, 1995, as compared with the same periods in 1994, substantially all related to the depreciable assets of Galaxy (both the number of months Galaxy is included in each year and depreciation related to Galaxy's 1994 and 1995 capital expenditures, which have a short depreciable life, to handle Galaxy's growth in 1994 and 1995). Provision/benefit for income taxes as a percent of income before income taxes is higher than the statutory federal income tax rate since goodwill amortization related to acquisitions is not deductible for income tax purposes. Financial Condition ------------------- The changes in the Company's financial condition during the six months ended June 30, 1995, are mainly related to the use of cash and borrowings on a line of credit in connection with the Merger and the related purchase of equivalent shares. Subsequent to June 30, 1995, the Company's cash increased as a result of the sale of the BMT trade journals and the outstanding balance on the lines of credit were paid. 12 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At a special meeting of stockholders of the Company held May 24, 1995, the following matter was voted upon and approved: Agreement and Plan of Merger dated January 25, 1995, as amended, whereby the Company and Tribune/Swab-Fox Companies, Inc, agreed to merge, with the Company to be the surviving corporation. Total votes For: 4,466,539 shares; Against: 250 shares ; Abstained 200 shares; Broker non-votes: 0 There were present at the Special Meeting, in person or by proxy, stockholders holding 4,466,989 shares of Common stock of the company or 92% of the total stock outstanding and entitled to vote at the Special Meeting Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 10.1 Revolving Credit Loan Agreement dated as of May 25, 1995, between Tulsa Tribune Company and BancFirst establishing a new $2,000,000 revolving line of credit to March 1, 1996. 10.2 Restated Revolving Credit Loan Agreement dated as of June 30, 1995, between T/SF Communications Corporation and BancFirst extending an existing $2,000,000 revolving credit facility to June 30, 1996. 10.3 Third Amendment to Revolving Credit Loan Agreement between Transportation Information Services, Inc., and BancFirst effective as of June 30, 1995, to extend and renew a Revolving Credit Commitment of $1,750,000 to June 30, 1996. 10.4 Asset Purchase Agreement, dated June 16, 1995, between BMT Communications, Inc., and Trade Publishing L.L.C. 10.5 Memorandum of Closing and Amendment to Agreement, dated August 2, 1995, between BMT Communications, Inc., and Trade Publishing L.L.C. 11 Computation of earnings per share for the three months and six months ended June 30, 1995 and 1994. 27 Financial data schedule (b) Reports on Form 8-K. No report on Form 8-K was filed during the quarter ended June 30, 1995. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. T/SF COMMUNICATIONS CORPORATION (Registrant) Date: August 11, 1995 By: /s/ Howard G. Barnett, Jr. -------------------------------- Howard G. Barnett, Jr. Chairman, Chief Executive Officer and President Date: August 11, 1995 By:/s/ J. Gary Mourton -------------------------------- J. Gary Mourton, Senior Vice President-Finance and Chief Financial Officer 14 EX-10.1 2 REV. CREDIT LOAN AGREEMENT Exhibit 10.1 REVOLVING CREDIT LOAN AGREEMENT THIS REVOLVING CREDIT LOAN AGREEMENT, dated as of May 25, 1995, is between TULSA TRIBUNE COMPANY, a Delaware corporation (referred to as the "Borrower") and BANCFIRST, a state banking association (the "Bank"). W I T N E S S E T H: A. WHEREAS, the Borrower has applied to the Bank for a $2,000,000 reducing revolving line of credit to be evidenced by a revolving credit note payable to the order of the Bank in the principal amount of $2,000,000; and B. WHEREAS, the Bank is willing to extend a $2,000,000 reducing revolving line of credit to the Borrower, subject to the terms, conditions, uses and provisions hereinafter set forth, all of which are material to the Bank and without which the Bank would not be willing to extend such credit. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, receipt of which is acknowledged by the parties hereto, the parties agree as follows: ARTICLE I --------- CERTAIN DEFINITIONS ------------------- When used herein, the following terms shall have the following meanings: 1.1 "Applicable Prime Rate" shall mean the annual rate of interest ----------------------- announced by Chase Manhattan Bank, National Association, New York, New York ("Chase") from time to time as its prime or base rate, which rate shall be the rate used by Chase as a base or standard for pricing purposes and which shall not necessarily be its "best" or lowest rate. Should Chase cease to announce a prime or base rate or should it be merged, consolidated, liquidated or dissolved in such a manner that it loses its separate corporate identity, then the Applicable Prime Rate shall be the Prime Rate published by the Wall Street ----------- Journal in its "Money Rates" column as the base rate on corporate loans at large ------- U.S. money center commercial banks, or a similar rate if such rate ceases to be published. Any changes in the Applicable Prime Rate shall be effective as of the date of the change. 1.2 "Business Day" shall mean a day other than a Saturday, Sunday or a day -------------- upon which banks in the State of Oklahoma are closed to business generally. 1.3 "Closing Date" shall mean May 25, 1995. -------------- 1.4 "Commitment" shall mean the Revolving Credit Commitment. ------------ 1.5 "Default Rate" shall mean the Applicable Prime Rate plus five and one- -------------- half percentage points (5 1/2%). 1.6 "ERISA" shall mean the Federal Employee Retirement Income Security Act ------- of 1974, as amended, together with all regulations and rulings promulgated with respect thereto. 1 1.7 "Event of Default" shall mean any of the events specified in Section ------------------ 7.1 of this Agreement, and "Default" shall mean any event, which together with ------- any lapse of time or giving of any notice, or both, would constitute an Event of Default. 1.8 "GAAP" shall mean generally accepted accounting principles applied in ------ all material respects in general conformance with those applied in the preceding period, unless the Borrower's outside accountants determine that there should be a different application or required changes or changes based upon relevant accepted Financial Accounting Standards. Unless otherwise indicated herein, all accounting terms will be defined according to GAAP. 1.9 "Guaranties" shall mean the absolute and unconditional guarantees of ------------ the Indebtedness evidenced by the Note and incurred hereunder pursuant to the Commitment, which guaranty instruments will be executed by T/SF Communications Corporation ("TSFCC") and T/SF Investment Co. ("TSFIC") (collectively, the "Guarantors") in the form annexed hereto as Exhibits B-1 and B-2, respectively, and made a part hereof. 1.10 "Indebtedness" shall mean and include any and all: (i) indebtedness, -------------- obligations and liabilities of the Borrower to the Bank incurred or which may be incurred or purportedly incurred hereafter pursuant to the terms of this Agreement or any of the other Loan Documents, and any extensions, renewals, substitutions, amendments and increases in amount thereof, including such amounts as may be evidenced by the Note and all lawful interest, loan closing fees, service fees, facility fees, commitment fees, fees in lieu of balances and other similar charges, and all reasonable costs and expenses incurred in connection with the negotiation, preparation, closing, filing and recording of the Loan Documents, including attorneys fees and legal expenses; (ii) all reasonable costs and expenses paid or incurred by the Bank, including attorneys fees, in enforcing or attempting to enforce collection of any Indebtedness and in enforcing or realizing upon or attempting to enforce or realize upon any collateral or security for any Indebtedness, including interest on all sums so expended by the Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate; and (iii) all sums expended by the Bank in curing any Event of Default or Default of the Borrower under the terms of this Agreement, the other Loan Documents or any other writing evidencing or securing the payment of the Note together with interest on all sums so expended by the Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate. 1.11 "Laws" shall mean all statutes, laws, ordinances, regulations, orders, ------ writs, injunctions, or decrees of the United States, any state or commonwealth, any municipality, any foreign country, any territory or possession, or any Tribunal. 1.12 "Lien" shall mean any mortgage, pledge, security interest, ------ encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement or other similar form of public notice under the Laws of any jurisdiction). 1.13 "Loan Documents" shall mean this Agreement, the Note, the Security ---------------- Agreement and Assignment, the Guaranties, financing statements and all other documents, instruments and certificates executed and delivered to the Bank by the Borrower or the Guarantors, including the Pledge Agreement delivered by TSFIC pursuant to the terms of this Agreement. 1.14 "Net Worth" shall mean, on any date as of which the amount thereof is ----------- to be determined, the total stockholders' equity of the Borrower (calculated in accordance with GAAP) and less any shares of capital stock subject to redemption or repurchase prior to the stated maturity date of the Note (to the extent included in such computation) in accordance with GAAP. 2 1.15 "Note" shall mean the Revolving Credit Note and any extensions, ------ renewals, replacements, modifications, substitutions, rearrangements or changes in form thereof. 1.16 "Person" shall mean and include an individual, a partnership, a joint -------- venture, a corporation, a trust, an unincorporated organization, or a government or any department, agency or political subdivision thereof. 1.17 "Revolving Credit Commitment" shall mean the agreement of the Bank to ----------------------------- make Revolving Credit Loans under Article II of this Agreement, and pursuant to the terms and conditions hereof, from the Closing Date until March 1, 1996, or such later date as the Bank may extend the commitment by an extension in writing, unless earlier terminated pursuant to the terms hereof. The maximum available amount under the Revolving Credit Commitment shall automatically reduce as follows:
Maximum Availability Applicable Period -------------------- ----------------- $2,000,000 Closing Date through September 30, 1995 $1,600,000 October 1, 1995 through October 31, 1995 $1,200,000 November 1, 1995 through November 30, 1995 $ 900,000 December 1, 1995 through December 31, 1995 $ 600,000 January 1, 1996 through January 31, 1996 $ 300,000 February 1, 1996 through February 29, 1996 $ -0- Maturity date of March 1, 1996
1.18 "Taxes" shall mean all taxes, assessments, fees, or other charges or ------- levies from time to time or at any time imposed by any Laws or by any Tribunal. 1.19 "Tribunal" shall mean any municipal, state, commonwealth, Federal, ---------- foreign, territorial or other sovereign, governmental entity, governmental department, court, commission, board, bureau, agency or instrumentality. ARTICLE II ---------- REVOLVING CREDIT LOANS ---------------------- 2.1 Revolving Credit Loans. The Bank agrees, upon the terms and subject ---------------------- to the conditions hereinafter set forth, to make loans ("Revolving Credit Loans") to the Borrower from the Closing Date until March 1, 1996, or until such later date as the Bank shall have extended its Revolving Credit Commitment in writing unless its Commitment shall be sooner terminated pursuant to the provisions of this Agreement, in such amounts as may from time to time be requested by the Borrower so long as the aggregate principal amount of all Revolving Credit Loans outstanding and unpaid at any time under the Revolving Credit Note does not exceed the lesser of $2,000,000 or the then applicable ------ Revolving Credit Commitment as reduced in accordance with the provisions of Section 1.17 hereof. 2.2 Revolving Credit Note/Commitment Fee. On the Closing Date, the ------------------------------------ Borrower shall execute and deliver to the order of the Bank the Borrower's revolving credit note in the principal amount of $2,000,000, the form of which is annexed hereto as Exhibit "A" and hereby made a part hereof (hereinafter ----------- referred to as "Revolving Credit Note"). From the Closing Date until the Revolving Credit Commitment is terminated, the Borrower shall pay to the Bank, as a commitment fee for its Revolving Credit Commitment, an amount equal to one- fourth (1/4) of one percentage point (0.250%) per annum of the amount by which the Revolving Credit 3 Commitment, as adjusted from time to time, exceeds the outstanding unpaid principal balance of the Revolving Credit Note from time to time computed daily on the basis of calendar year of 360 days but assessed for the actual number of days elapsed during each accrual period. Such fee shall be payable quarterly in arrears as the same accrues on the fifteenth (15th) day of each January, April, July and October, commencing July 15, 1995 (for the initial loan period ending June 30, 1995) and at the maturity of the Revolving Credit Note, whether by acceleration or otherwise. 2.3 Revolving Credit Advances, Payments and Voluntary Prepayment. Each ------------------------------------------------------------ Revolving Credit Loan requested by the Borrower from the Bank shall (i) be requested in writing or by telephone no later than 12:00 o'clock Noon (applicable current time in Tulsa, Oklahoma) on the date upon which the advance is to be made; (ii) be in the amount of $10,000 or an integral multiple thereof (unless the amount then available to borrow is less than $10,000, in which event an advance may be made in the amount available); (iii) not cause the aggregate outstanding and unpaid principal amount of the Revolving Credit Note to exceed the then applicable Revolving Credit Commitment and (iv) be advanced by the Bank on the applicable date, provided the request is timely made in accordance with Section 2.3(i) hereof and all other conditions of funding are met. In consideration of Bank permitting telephonic requests for advances, Borrower states that it fully understands the risk attendant thereto, agrees to accept all such risk and hold Bank harmless from any loss which the Borrower may incur by reason of an advance being made in response to a telephonic request whether such is caused by mistake or negligence of the Bank or otherwise, unless it is judicially established that such loss was due to the gross negligence and wanton disregard of the Bank. Borrower will designate in writing to the Bank the names of representatives of Borrower authorized to make telephone loan advance requests from time to time hereunder. All advances made by the Bank shall, for mutual convenience, be deposited to the Borrower's general deposit account with the Bank, and the Bank shall have no responsibility to monitor the distribution of such advances in any other respect. The Borrower may from time to time make prepayments of principal without premium or penalty. The Borrower may reborrow subject to the limitations and conditions for Revolving Credit Loans contained herein. Any payments or prepayments on the Revolving Credit Note received by the Bank after 12:00 o'clock Noon (applicable current time in Tulsa, Oklahoma) shall be deemed to have been made on the next succeeding Business Day. All outstanding principal of and accrued interest on the Revolving Credit Note not previously paid hereunder shall be due and payable at maturity thereof, unless such maturity shall be extended by the Bank in writing or accelerated pursuant to the terms hereof. ARTICLE III ----------- SECURITY -------- 3.1 Collateral. The repayment of the Indebtedness shall be secured by the ---------- following (the collateral described herein and in the Security Instruments being referred to as the "Collateral"): (a) A continuing and continuous security interest of first priority in, and/or assignment, as security, of: (i) all accounts, accounts receivable, reimbursements, notes receivable, contracts, contract rights, chattel paper, documents and instruments arising out of the sale of goods or services rendered and any and all agreements for the sale of goods or products or furnishing of services by the Borrower, including without limitation, all right, title and monies due and/or to become due to Borrower under that certain Covenant for 4 Continued Payments between World Publishing Company, an Oklahoma corporation, and the Borrower dated September 30, 1992; (ii) all general intangibles of the Borrower, whether now owned or hereafter acquired, including without limitation: (a) all sales contracts and purchase orders; (b) all processes, formulae, scientific and/or technical information, trade secrets, customer lists, plans, reports, samples, prototypes, know-how, all items in application, development or other pending status and all similar items which are used in connection with the Borrower's conduct of its business; and (c) all of Borrower's right, title, interest, and benefit under all leases of real and personal property (whether as lessor or lessee); provided, however, that the Bank hereby assumes no liabilities, obligations or responsibilities in connection therewith; (iii) all cash, money, certificates of deposit, time deposits and demand deposits of the Borrower, at any time in the possession or control of the Bank; (iv) all ledgers, journals, books, records, vouchers, shipping tickets, receipts, sales memoranda, contracts, partnership agreements, joint venture agreements, correspondence and other writings, data or papers evidencing or relating to the items or types of collateral described above in subsections (i) through (iii), inclusive; and (v) all products and proceeds of and all replacements, additions, substitutions, accessories, appurtenances, and parts for, the items or types of collateral described above in subsections (i) through (iv), inclusive, whether now owned or hereafter acquired including, without limitation insurance proceeds. 3.2 Security Agreement. The foregoing security interests shall be granted ------------------ to the Bank, as Secured Party, pursuant to the terms of the Security Agreement and Assignment, in a form acceptable to the Bank, (the "Security Agreement"); and the Borrower shall execute such financing statements, assignments, notices and other documents and instruments as shall be necessary or appropriate to perfect the security interests thus created. The Borrower hereby acknowledges that all of the Collateral is granted to the Bank as security for the repayment of all of the Indebtedness. If any portion of the Indebtedness remains unsatisfied, the Bank shall retain its security interest in all of the Collateral until the remaining Indebtedness is paid in full, even if the value of the Collateral far exceeds the amount of Indebtedness outstanding. ARTICLE IV ---------- CONDITIONS PRECEDENT TO LOANS ----------------------------- 4.1 Conditions Precedent to Initial Revolving Credit Loan. The obligation ----------------------------------------------------- of the Bank to make the Revolving Credit Loan is subject to the satisfaction of all of the following 5 conditions on or prior to the Closing Date (in addition to the other terms and conditions set forth herein): (a) No Default. There shall exist no Event of Default or Default on ---------- the Closing Date. (b) Representations and Warranties. The representations, warranties ------------------------------ and covenants set forth in Article VI shall be true and correct on and as of the Closing Date, with the same effect as though made on and as of the Closing Date. (c) Borrower's Certificate. The Borrower shall have delivered to the ---------------------- Bank a Certificate, dated as of the Closing Date, and signed by the President and the Secretary or Assistant Secretary of the Borrower certifying (i) to the matters covered by the conditions specified in subsections (a) and (b) of this Section 4.1, (ii) that the Borrower has performed and complied with all agreements and conditions required to be performed or complied with by it prior to or on the Closing Date, (iii) to the name and signature of each officer of the Borrower authorized to execute and deliver the Loan Documents and any other documents, certificates or writings and to borrow under this Agreement, and (iv) to such other matters in connection with this Agreement which the Bank shall determine to be advisable. The Bank may conclusively rely on such Certificate until it receives notice in writing to the contrary. (d) Proceedings. On or before the Closing Date, all corporate ----------- proceedings of the Borrower shall be taken in connection with the transactions contemplated by the Loan Documents and shall be satisfactory in form and substance to the Bank and its counsel; and the Bank shall have received certified copies, in form and substance satisfactory to the Bank and its counsel, of the Articles or Certificate of Incorporation and By- Laws of the Borrower and the Guarantors and the resolutions of the Board of Directors of the Borrower and Guarantors, as adopted, authorizing the execution and delivery of the Loan Documents pertaining thereto, the borrowings under this Agreement and the granting of the security interests in the Collateral pursuant to the Security Agreement, to secure the payment of the Indebtedness. (e) Note. The Borrower shall have delivered the Note to the order of ---- the Bank, appropriately executed. (f) Security Agreement. The Borrower shall have delivered to the Bank ------------------ its Security Agreement in form and content acceptable to the Bank together with applicable UCC financing statements pertaining thereto. (g) Guaranties. The Guarantors shall have duly executed and delivered ---------- their respective Guaranties to the Bank. Guarantors shall have delivered to the Bank appropriate corporate certificates and corporate resolutions duly authorizing the execution, delivery and performance of its Guaranty. The Bank may conclusively rely on such Certificate until it receives notice in writing to the contrary. TSFIC shall have delivered its Pledge Agreement to the Bank (with stock power in blank) pledging all of the outstanding capital stock of Borrower as security and collateral for TSFIC's guarantee obligations of the Indebtedness. 4.2 Conditions Precedent to All Additional Revolving Credit Loans. The ------------------------------------------------------------- Bank shall not be obligated to make any Revolving Credit Loan (i) if at such time any Event of Default shall have occurred or any Default shall have occurred and be continuing; or (ii) if any of the 6 representations, warranties and covenants contained in Article VI of this Agreement shall be false or untrue in any material respect on the date of such loan, as if made on such date. Each request by the Borrower for an additional Revolving Credit Loan shall constitute a representation by the Borrower that there is not at the time of such request an Event of Default or a Default, and that all representations, warranties and covenants in Article V of this Agreement are true and correct on and as of the date of each such request. ARTICLE V --------- COVENANTS --------- The Borrower covenants and agrees with the Bank that from the date hereof and so long as this Agreement is in effect (by extension, amendment or otherwise) and until payment in full of all Indebtedness and the performance of all other obligations of the Borrower under this Agreement, unless the Bank shall otherwise consent in writing: 5.1 Payment of Taxes and Claims. The Borrower will pay and discharge or --------------------------- cause to be paid and discharged all Taxes imposed upon the income or profits of the Borrower or upon the property, real, personal or mixed, or upon any part thereof, belonging to the Borrower before the same shall be in default, and all lawful claims for labor, rentals, materials and supplies which, if unpaid, might become a Lien upon its property or any part thereof; provided however, that the -------- ------- Borrower shall not be required to pay and discharge or cause to be paid or discharged any such Tax, assessment or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, and appropriate book reserves shall be established with respect thereto in accordance with GAAP, and the Borrower shall pay such Tax, charge or claim before any property subject thereto shall become subject to execution. 5.2 Maintenance of Corporate Existence. The Borrower will do or cause to ---------------------------------- be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises and will continue to conduct and operate its business substantially as being conducted and operated presently subject to changes in the ordinary course and appropriate changes advantageous to the business interests of Borrower. The Borrower will become and remain qualified to conduct business in each jurisdiction where the nature of the business or ownership of property by such Borrower requires such qualification and where the failure to do so would result in a material adverse effect on Borrower or its financial condition. 5.3 Preservation of Property. The Borrower will at all times maintain, ------------------------ preserve and protect all franchises and trade names and keep all the remainder of its properties which are used or useful in the conduct of its respective businesses whether owned in fee or otherwise, or leased, in good repair and operating condition; from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at all times; and comply with all material leases to which it is a party or under which it occupies property so as to prevent any material loss or forfeiture thereunder. 5.4 Insurance. The Borrower will keep or cause to be kept adequately --------- insured by financially sound and reputable insurers its plant, equipment, motor vehicles, and all other property of a character usually insured by businesses engaged in the same or similar businesses. Upon demand by the Bank any insurance policies covering Borrower's equipment and/or inventory, if any, shall be endorsed to provide that such policies may not be canceled, reduced or affected in any manner for any reason without thirty (30) days prior notice to the Bank, and to provide for any other matters which the Bank may reasonably require; and such insurance shall be against fire, casualty and any other hazards normally insured against and shall be in the amount of 7 the substantial full value (less a reasonable deductible not to exceed amounts customary in the industry for similarly situated businesses and properties) of the property insured. The Borrower shall at all times maintain adequate insurance against damage to persons or property, which insurance shall be by financially sound and reputable insurers and shall, without limitation, provide the following coverages: comprehensive general liability (including, without limitation, coverage, where applicable, for damage caused by explosion, broad form property damage coverage, and broad form coverage for contractually independent contractors), worker's compensation, products liability and automobile liability. 5.5 Compliance with Applicable Laws. The Borrower will comply with the ------------------------------- requirements of all applicable Laws and orders of any Tribunal and obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business, where non- compliance therewith or failure to obtain would have a material adverse effect on Borrower or its financial condition. 5.6 Financial Statements and Reports. -------------------------------- (a) Quarterly Operating Statements. The Borrower shall maintain a ------------------------------ standard system of accounting and shall furnish to the Bank as soon as practicable after the end of each of the first three quarters of each fiscal year, commencing with the quarter ending March 31, 1995, and in any event within forty-five (45) days after the end of each said fiscal quarter, operating statements for the Borrower which shall be certified on behalf of the Borrower by the chief financial officer of TSFCC, to have been prepared in accordance with GAAP and to fairly present the financial condition of the Borrower for such period, and shall include at least a balance sheet as at the end of such period, and a statement of income, all in reasonable detail. (b) Annual Financial Statements. As soon as practicable after the end --------------------------- of each fiscal year of the Borrower and in any event within one-hundred twenty (120) days thereafter, the Borrower shall furnish to the Bank the following financial statements (such statements to be certified by the chief financial officer of TSFCC): (i) A balance sheet of the Borrower at the end of such year, (ii) A statement of income of the Borrower for such year, and (iii) A statement of cash flows of the Borrower for such year, setting forth in each case in comparative form the figures for the previous fiscal year, if applicable, all in reasonable detail. (c) Annual Covenant Certificate. Concurrently with the furnishing of --------------------------- the financial statements pursuant to 5.6(b), there shall be furnished to Bank a separate certificate signed by the chief financial officer of TSFCC stating that: (a) the financial statements were prepared in conformity with GAAP,and (b) no Event of Default or an event which with the passage of time or notice, or both, could become an Event of Default has occurred, and is continuing, and status of any such event(s) if existing. Such certificate shall not be qualified or limited because of restricted or limited examination of any material portion of Borrower's records 8 by the party preparing such annual statements. All certificates of Borrower submitted pursuant to this Agreement in connection with compliance with certain financial or other covenants herein contained, shall fully demonstrate the method of calculations therein contained. (d) Special Auditing Reports. Promptly upon receipt thereof, the ------------------------ Borrower shall deliver to the Bank a copy of each report submitted to the Borrower, by independent accountants, if any, in connection with any annual, interim or special audit made by them of the books and records of the Borrower, including, without limitation, any comment letter submitted by such accountants to management in connection with their audit. 5.7 Notice of Default. Immediately upon the happening of any condition or ----------------- event which constitutes an Event of Default or Default or any default or event of default under any other loan, mortgage, financing or security agreement, the Borrower will give the Bank a written notice thereof specifying the nature and period of existence thereof and what actions, if any, the Borrower is taking and proposes to take with respect thereto. 5.8 Notice of Litigation. Immediately upon becoming aware of the -------------------- existence of any action, suit or proceeding at law or in equity before any Tribunal, an adverse outcome in which would (i) materially impair the ability of the Borrower to carry on its business substantially as now conducted, (ii) materially and adversely affect the condition (financial or otherwise) of the Borrower, or (iii) result in monetary damages in excess of $100,000, the Borrower will give the Bank a written notice specifying the nature thereof and what actions, if any, the Borrower is taking and proposes to take with respect thereto. 5.9 Inspection. The Borrower will keep complete and accurate books and ---------- records with respect to its properties, businesses and operations and will permit employees and representatives of the Bank to audit, inspect and examine the same and to make copies thereof and extracts therefrom during normal business hours. All such records shall be at all times kept and maintained at the offices of the Borrower in Tulsa, Oklahoma. 5.10 Net Worth. The Borrower will not permit its Net Worth to be less than --------- the following minimums for the time periods as hereinafter set forth:
Time Period Minimum Net Worth ----------- ----------------- Closing Date through September 30, 1995 $3,500,000 October 1, 1995 through December 31, 1995 $2,000,000 January 1, 1996 through maturity on March 1, 1996 positive
5.11 Working Capital. The Borrower will not at any time permit its Working --------------- Capital (current assets minus current liabilities) to be less than $1,000,000 except for the period from December 1, 1995 through March 1, 1996 for which Borrower shall maintain positive Working Capital. 5.12 Positive Net Income. Borrower will as of the close of each fiscal ------------------- quarter maintain positive net income as reflected on its quarterly and annual financial statements. 5.13 Limitation on Other Indebtedness. The Borrower will not create, -------------------------------- incur, assume, become or be liable in any manner in respect of, or suffer to exist, any indebtedness whether evidenced by a note, bond, debenture, agreement, letter of credit or similar or other obligation to any financial institution or other institutional lender, or accept any deposits or advances of any kind with or to any financial institution with which Borrower has a lockbox or similar depository 9 account arrangement except only for normal and ordinary accruals and other non- institutional liabilities not in excess of $250,000 in the aggregate at any time. 5.14 Limitation on Liens. The Borrower will not create or suffer to exist ------------------- any Lien upon any of its accounts, contract rights, inventory, general intangibles, instruments or documents of title, or proceeds and products thereof (whether cash or otherwise) except for (i) Liens in favor of the Bank and (ii) Liens incidental to the conduct of the business or ownership of property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit (including those arising under contracts with federal, state or local governmental entities or agencies thereof and pledges as deposits for the purpose of securing a stay or discharge of legal proceedings not exceeding $50,000 in the aggregate) and which do not in the aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of its business. 5.15 Contingent Liabilities; Advances. Other than short-term (12 months or -------------------------------- less) intra-company advances/loans in the ordinary course of Borrower's business operations to or with any of its corporate affiliates (including TSFIC and TSFCC), the repayment of all of which shall be and are hereby expressly subordinated to the prompt repayment of the Indebtedness) or short term advances/loans by the Borrower to any of the Guarantors, the Borrower will not either directly or indirectly, without the prior written consent of the Bank, (i) guarantee, become surety for, discount, endorse, agree (contingently or otherwise) to purchase, repurchase or otherwise acquire or supply or advance funds in respect of, or otherwise become or be contingently liable upon the indebtedness, obligation or liability of any Person, (ii) guarantee the payment of any dividends or other distributions upon the stock of any corporation, (iii) discount or sell with recourse or for less than the face value thereof, any of its notes receivable, accounts receivable or chattel paper; (iv) loan, agree to loan, or advance money to any Person; or (v) enter into any agreement for the purchase or other acquisition of any goods, products, materials or supplies, or for the making of any shipments or for the payment of services, if in any such case payment therefor is to be made regardless of the non-delivery of such goods, products, materials or supplies or the non-furnishing of the transportation of services; provided, however that the foregoing shall not be applicable to endorsement of negotiable instruments presented to or deposited with a bank for collection or deposit in the ordinary course of business. 5.16 Disposition or Sale of Assets. The Borrower will not sell, lease, ----------------------------- transfer or otherwise dispose of all or substantially all of its assets. Borrower will not assign or discount with or without recourse, any intra-company advances/loans made by or to Borrower and outstanding as of the Closing Date (as the same are more particularly described on Schedule 1 annexed hereto), accounts receivable, notes receivable or contract rights or sell, lease, transfer, scrap or otherwise dispose of any of its properties or assets, whether for replacement or not, except assets sold or disposed of in the ordinary course of business and for a full and fair consideration, unless such sale, disposition or abandonment has no material adverse effect on Borrower or its financial condition. 5.17 Merger, Consolidation. The Borrower will not merge or consolidate --------------------- with or into any other Person or adopt or effect any plan of reorganization, recapitalization, liquidation or dissolution or create or establish any subsidiaries. 5.18 Dividends. The Borrower will not declare, pay or become obligated to --------- declare or pay any dividend on any class of its capital stock now or hereafter outstanding, make any distribution of cash or property to holders of any shares of such stock, or redeem, retire, purchase or otherwise acquire, directly or indirectly, any shares of any class of its capital stock now or hereafter outstanding to the extent and for so long as any Event of Default exists hereunder and remains uncured. 10 5.19 No Prepayment of Covenant. Borrower will not permit or accept any ------------------------- prepayment (in whole or in part) of the monthly payment obligations due from World Publishing Company to Borrower pursuant to the terms and provisions of that certain Covenant for Continued Payments dated September 30, 1992. ARTICLE VI ---------- REPRESENTATIONS AND WARRANTIES ------------------------------ To induce the Bank to enter into this Agreement and to make the Revolving Credit Loans to the Borrower under the provisions hereof, and in consideration thereof, the Borrower represents, warrants and covenants as follows: 6.1 Organization and Qualification. The Borrower is duly organized, ------------------------------ validly existing, and in good standing under the Laws of the State of Delaware and is duly licensed and in good standing as a foreign corporation in Oklahoma and in other jurisdictions in which the nature of the business transacted or the property owned thereof is such as to require licensing or qualification as such. 6.2 Litigation. There is no action, suit, investigation or proceeding ---------- threatened or pending before any Tribunal against or affecting the Borrower or any properties or rights of the Borrower which, if adversely determined, would result in a liability of greater than $100,000 or would otherwise result in any material adverse change in the business or condition, financial or otherwise, of the Borrower except as described on Exhibit C annexed hereto. The Borrower is not in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any Tribunal. 6.3 Financial Statements. The Borrower's most recent financial statements -------------------- which have been furnished to the Bank have been prepared in conformity with GAAP, show all material liabilities, direct and contingent, and fairly present the financial condition of the Borrower as of the date of such statements and the results of its operations for the period then ended, and since the date of such statements there has been no material adverse change in the business, financial condition or operations of the Borrower. 6.4 Corporate Authorization. The Board of Directors of the Borrower has ----------------------- duly authorized the execution and delivery of each of the Loan Documents and the performance of their respective terms. No other consent of any other Person, except for the Bank, is required as a prerequisite to the binding effect, validity and enforceability of the Loan Documents. 6.5 Possession of Franchises, Licenses. The Borrower possesses all ---------------------------------- franchises, certificates, licenses, permits and other authorizations from governmental political subdivisions or regulatory authorities, free from burdensome restrictions, that are necessary in any material respect for the ownership, maintenance and operation of its respective properties and assets, and the Borrower is not in violation of any thereof in any material respect. 6.6 Leases. The Borrower enjoys peaceful and undisturbed possession of ------ all leases necessary in any material respect for the operation of its properties and assets, none of which contains any unusual or burdensome provisions which might materially affect or impair the operation of such properties and assets. All such leases are valid and subsisting and are in full force and effect. 6.7 Taxes. The Borrower has filed all Federal, state and other income tax ----- returns which are required to be filed and has paid all Taxes, as shown on said returns, and all Taxes due 11 or payable without returns and all assessments received to the extent that such Taxes or assessments have become due. Borrower shall not be required to pay and discharge or cause to be paid or discharged any such Tax, assessment or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, such Tax liabilities are adequately provided for on the books of the Borrower, including interest and penalties, and such Tax, charge or claim is paid before any property subject thereto shall become subject to execution. No income tax liability of a material nature has been asserted by taxing authorities for Taxes in excess of those already paid except as shown on Exhibit D annexed hereto. 6.8 Disclosure. Neither this Agreement nor any other Loan Document or ---------- writing furnished to the Bank by or on behalf of the Borrower in connection herewith contains any untrue statement of a material fact nor do such Loan Documents and writings, taken as a whole, omit to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact known to the Borrower and not reflected in the financial statements provided to the Bank which materially adversely affects or in the future may materially adversely affect the business, property, or assets, or financial condition of the Borrower which has not been set forth in this Agreement, in the Loan Documents or in other documents furnished to the Bank by or on behalf of the Borrower prior to the date hereof in connection with the transactions contemplated hereby. 6.9 ERISA. Each plan subject to Title IV of ERISA and maintained for ----- employees of the Borrower, established or maintained by the Borrower is in material compliance with the applicable provisions of ERISA, and the Borrower has filed all reports required by ERISA and the Internal Revenue Code of 1986, as amended, to be filed with respect to each plan. 6.10 Environmental Laws. No hazardous or toxic substances have been ------------------ stored, treated, recycled or disposed of on property owned or leased by the Borrower, no litigation or threatened litigation has been incurred regarding the presence, disposal, release or threatened release of such substances on property owned or leased by the Borrower and the Borrower has not received any notification from any governmental authority with respect to any violation of any environmental laws. 6.11 Subsidiaries. Borrower has no corporate subsidiaries. ------------ ARTICLE VII ----------- EVENTS OF DEFAULT ----------------- 7.1 Events of Default. The following events shall constitute events of ----------------- default (herein called "Events of Default"), whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of Law or otherwise: (a) The Borrower shall fail to make any payment or mandatory prepayment of principal or interest upon the Note, or fail to pay any other Indebtedness within five (5) days after the same shall become due and payable (whether by extension, renewal, acceleration or otherwise); or (b) Any representation or warranty of the Borrower made herein or in any writing furnished in connection with or pursuant to any of the Loan Documents shall have been false or misleading in any material respect on the date when made; or 12 (c) The Borrower shall fail to duly observe, perform or comply with any covenant, agreement or term (other than payment provisions which are governed by Section 7.1(a) hereof) contained in this Agreement or any of the Loan Documents and such default or breach shall have not been cured or remedied within thirty (30) days following receipt of notice thereof from the Bank; or (d) The Borrower or the Guarantors shall default in the payment of principal or of interest on any other obligation for money borrowed or received as an advance (or any obligation under any conditional sale or other title retention agreement, or any obligation issued or assumed as full or partial payment for property whether or not secured by purchase money Lien, or any obligation under notes payable or drafts accepted representing extensions of credit) beyond any grace period provided with respect thereto, or shall default in the performance of any other agreement, term or condition contained in any agreement under which such obligation is created (or if any other default under any such agreement shall occur and be continuing beyond any period of grace provided with respect thereto) if the effect of such default is to cause, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause such obligation to become due prior to its date of maturity; or (e) Any of the following: (i) the Borrower or any of the Guarantors shall become insolvent or unable to pay its debts as they mature, make an assignment for the benefit of creditors or admit in writing its inability to pay its debts generally as they become due or fail generally to pay its debts as they mature; or (ii) an order for relief under the United States Bankruptcy Code, as amended, shall be entered against the Borrower or any of the Guarantors; or (iii) the Borrower or any of the Guarantors shall petition or apply to any Tribunal for the appointment of a trustee, receiver, custodian or liquidator of the Borrower or any of the Guarantors or of any substantial part of the assets of the Borrower or any of the Guarantors, or shall commence any proceedings relating to the Borrower or any of the Guarantors under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debts, dissolution, or liquidation Law of any jurisdiction, whether now or hereafter in effect; or (iv) any such petition or application shall be filed, or any such proceedings shall be commenced, of a type described in subsection (iii) above, against the Borrower or any of the Guarantors and the Borrower or any of the Guarantors by any act shall indicate its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree shall be entered appointing any such trustee, receiver, custodian or liquidator, or approving the petition in any such proceedings, and such order, judgment or decree shall remain unstayed and in effect, if being vigorously contested, for more than sixty (60) days; or (v) any order, judgment or decree shall be entered in any proceedings against the Borrower or any of the Guarantors decreeing the dissolution of the Borrower or any of the Guarantors and such order, judgment or decree shall remain unstayed and in effect for more than thirty (30) days; or (vi) any order, judgment or decree shall be entered in any proceedings against the Borrower decreeing a split-up of the Borrower which requires the divestiture of a substantial part of the assets of the Borrower, and such order, judgment or decree shall remain unstayed and in effect for more than thirty (30) days; or (vii) the Borrower or the any of Guarantors shall fail to make timely payment or deposit of any amount of tax required to be withheld by the Borrower and paid to or deposited to or to the credit of the United States of America pursuant to the provisions of the Internal Revenue Code of 1986, as amended, in respect of any and all wages and salaries paid to employees of the Borrower; or 13 (f) Any final judgment on the merits for the payment of money in an amount in excess of $50,000 shall be outstanding against the Borrower or any of the Guarantors, and such judgment shall remain unstayed and in effect and unpaid for more than thirty (30) days; or (g) Any Event of Default shall occur and be continuing under or pursuant to any of the credit facilities extended by the Bank to any of the Guarantors or subsidiaries of any of the Guarantors (including Transportation Information Services, Inc.), as such credit facilities are more particularly described on Schedule 1 annexed hereto and concerning the exercise of such foregoing cross-default provisions, the Bank shall provide Borrower with five (5) days prior written notice thereof insofar as the Bank's intention to exercise such provisions; or (h) Any one or more of the Guarantors shall attempt to revoke or renounce their applicable Guaranty; or (i) Any default or event of default occurs under (x) any of the other Loan Documents, including without limitation, the Guaranties or (y) that certain Covenant for Continued Payments dated September 30, 1992 between World Publishing Company and the Borrower; and such default or event of default under either clause (x) or (y) hereof shall not have been cured or remedied within thirty (30) days following receipt of notice thereof from the Bank, excepting only monetary defaults in any payment obligation of any applicable borrower, obligor or guarantor under the respective terms thereof (including World Publishing Company), which such monetary defaults must be cured within the grace or curative period, if any, therein specified. 7.2 Remedies. Upon the occurrence of any Event of Default referred to in -------- Section 7.1(e) the Commitment shall immediately terminate and the Note and all other Indebtedness shall be immediately due and payable, without notice of any kind. Upon the occurrence of any other Event of Default, and without prejudice to any right or remedy of the Bank under this Agreement or the Loan Documents or under applicable Law of under any other instrument or document delivered in connection herewith, the Bank may (i) declare the Commitment terminated or (ii) declare the Commitment terminated and declare the Note and the other Indebtedness, or any part thereof, to be forthwith due and payable, whereupon the Note and the other Indebtedness, or such portion as is designated by the Bank shall forthwith become due and payable, without presentment, demand, notice or protest of any kind, all of which are hereby expressly waived by the Borrower. No delay or omission on the part of the Bank in exercising any power or right hereunder or under the Note, the Loan Documents or under applicable law shall impair such right or power or be construed to be a waiver of any default or any acquiescence therein, nor shall any single or partial exercise by the Bank of any such power or right preclude other or further exercise thereof or the exercise of any other such power or right by the Bank. In the event that all or part of the Indebtedness becomes or is declared to be forthwith due and payable as herein provided, the Bank shall have the right to set off the amount of all the Indebtedness of the Borrower owing to the Bank against, and shall have, and is hereby granted by the Borrower, a lien upon and security interest in, all property of the Borrower in the Bank's possession at or subsequent to such default, regardless of the capacity in which the Bank possesses such property, including but not limited to any balance or share of any deposit, collection or agency account. After Default all proceeds received by the Bank may be applied to the Indebtedness in such order of application and such proportions as the Bank, in its discretion, shall choose. At any time after the occurrence of any Event of Default, the Bank may, at its option, cause an audit of any and/or all of the books, records and documents of the Borrower to be made by auditors satisfactory to the Bank at the 14 expense of the Borrower. The Bank also shall have, and may exercise, each and every right and remedy granted to it for default under the terms of the other Loan Documents. ARTICLE VIII ------------ MISCELLANEOUS ------------- 8.1 Notices. Unless otherwise provided herein, all notices, requests, ------- consents and demands shall be in writing and shall be mailed by certified mail, postage prepaid, to the respective addresses specified below, or, as to any party, to such other address as may be designated by it in written notice to the other parties: If to the Borrower, to: Tulsa Tribune Company 2407 E. Skelly Drive Tulsa, Oklahoma 74105 Attention: Chief Financial Officer with a copy to: T/SF Communications Corporation 2407 East Skelly Drive Tulsa, Oklahoma 74105 Attention: Chief Financial Officer If to the Bank, to: BancFirst P. O. Box 680 7625 East 51st Street Tulsa, Oklahoma 74101-0680 Attn: Roy C. Ferguson, III All notices, requests, consents and demands hereunder will be effective when mailed by certified mail, postage prepaid, addressed as aforesaid. 8.2 Place of Payment. All sums payable hereunder shall be paid in ---------------- immediately available funds to the Bank, at its principal banking offices in Tulsa, Oklahoma, or at such other place as the Bank shall notify the Borrower in writing. If any interest, principal or other payment falls due on a date other than a Business Day, then (unless otherwise provided herein) such due date shall be extended to the next succeeding Business Day, and such extension of time will in such case be included in computing interest, if any, in connection with such payment. 8.3 Survival of Agreements. All covenants, agreements, representations ---------------------- and warranties made herein shall survive the execution and the delivery of Loan Documents. All statements contained in any certificate or other instrument delivered by the Borrower hereunder shall be deemed to constitute representations and warranties by the Borrower. 8.4 Parties in Interest. All covenants, agreements and obligations ------------------- contained in this Agreement shall bind and inure to the benefit of the respective successors and assigns of the parties hereto, except that the Borrower may not assign its rights or obligations hereunder without the prior written consent of the Bank. 15 8.5 Governing Law and Jurisdiction. This Agreement and the Notes shall be ------------------------------ deemed to have been made or incurred under the Laws of the State of Oklahoma and shall be construed and enforced in accordance with and governed by the Laws of Oklahoma. 8.6 SUBMISSION TO JURISDICTION. THE BORROWER HEREBY CONSENTS TO THE -------------------------- JURISDICTION OF ANY OF THE LOCAL, STATE, AND FEDERAL COURTS LOCATED WITHIN TULSA COUNTY, OKLAHOMA AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY ----- --- ---------- SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH IN SUBSECTION 8.1 HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) BUSINESS DAYS AFTER MAILED OR DELIVERED BY MESSENGER. 8.7 No Waiver; Cumulative Remedies. No failure to exercise, and no delay ------------------------------ in exercising, on the part of the Bank, any right, power or privilege hereunder or under any other Loan Document or applicable Law shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege of the Bank. The rights and remedies herein provided are cumulative and not exclusive of any other rights or remedies provided by any other instrument or by law. No amendment, modification or waiver of any provision of this Agreement or any other Loan Document shall be effective unless the same shall be in writing and signed by the Bank. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. 8.8 Costs. The Borrower agrees to pay to the Bank on demand all costs, ----- fees and expenses (including without limitation reasonable attorneys fees and legal expenses) incurred or accrued by the Bank in connection with the preparation, execution, delivery, filing and recording of this Agreement and the other Loan Documents, or any amendment, waiver, consent or modification thereto or thereof, or any enforcement thereof. The Borrower further agrees that all such fees and expenses shall be paid regardless of whether or not the transactions provided for in this Agreement are eventually closed and regardless of whether or not any sums are advanced to the Borrower by the Bank. 8.9 Participation. The Borrower recognizes and acknowledges that the Bank ------------- reserves the right to sell participating interests in the Note to one or more financial institutions (the "Participants"). If there is only one Participant, upon receipt of notice of the identity and address of such Participant, the Borrower shall thereafter supply such Participant with the same information and reports communicated to the Bank, whether written or oral. The Borrower hereby acknowledge that each Participant shall be deemed a holder of the Note to the extent of its participation, and the Borrower hereby waives its right, if any, to offset amounts owing to the Borrower from the Bank against any Participant's portion of the Note. 8.10 Assignment of Loan Documents by Bank. For so long as no Event of ------------------------------------ Default has occurred hereunder or, to the extent the only Event of Default existing hereunder is World Publishing Company's failure to pay to Borrower the monthly installment obligations due thereto pursuant to the Covenant for Continued Payments dated September 30, 1992 for a period in excess of thirty (30) days beyond the due date thereof (the "World Publishing Event of Default"), the Bank represents to and covenants with Borrower that the Bank will not assign, endorse or otherwise sell the Indebtedness and the Loan Documents evidencing and securing the same to World Publishing Company or any affiliate thereof which is known to be such by the Bank. Borrower stipulates and acknowledges, however, that the foregoing limitation on assignability of the Loan Documents by the Bank shall not limit the Bank's right of assignment upon the occurrence of any Event of Default hereunder other than or in addition to the World Publishing Event of Default. 16 8.11 WAIVER OF JURY. BORROWER FULLY, VOLUNTARILY AND EXPRESSLY WAIVES ANY -------------- RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY IN THE FUTURE BE DELIVERED) IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT. BORROWER AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 8.12 Full Agreement. This Agreement and the other Loan Documents contain -------------- the full agreement of the parties and supersede all negotiations and agreements prior to the date hereof. 8.13 Headings. The article and section headings of this Agreement are for -------- convenience of reference only and shall not constitute a part of the text hereof nor alter or otherwise affect the meaning hereof. 8.14 Severability The unenforceability or invalidity as determined by a ------------ Tribunal of competent jurisdiction, of any provision or provisions of this Agreement shall not render unenforceable or invalid any other provision or provisions hereof. 8.15 Exceptions to Covenants. The Borrower shall not be deemed to be ----------------------- permitted to take any action or fail to take any action which is permitted as an exception to any of the covenants contained herein or which is within the permissible limits of any of the covenants contained herein if such action or omission would result in the breach of any other covenant contained herein. 8.16 Counterparts. This Agreement may be executed in any number of ------------ counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed in Tulsa, Oklahoma, effective as of the day and year first above written. "Borrower" TULSA TRIBUNE COMPANY By: /s/ Howard G. Barnett, Jr. ----------------------------------------------- Howard G. Barnett, Jr., President "Bank" BANCFIRST By: Roy C. Ferguson, III --------------------------------------------- Roy C. Ferguson, III, Regional Executive 17 SCHEDULE 1 (OTHER BANCFIRST CREDIT FACILITIES) 1. That certain Revolving Credit Loan Agreement between Transportation Information Services, Inc., as borrower, and BancFirst, as lender, dated as of July 14, 1993, as amended as of February 1, 1994 and June 30, 1994, respectively, providing for a $1,750,000 revolving line of credit facility. 2. That certain Revolving Credit Loan Agreement between T/SF Communications Corporation, as borrower, and BancFirst, as lender, dated as of June 30, 1994, providing for a revolving credit facility in the amount of $2,000,000. EX-10.2 3 RESTATED CREDIT LOAN AGREEMENT Exhibit 10.2 RESTATED REVOLVING CREDIT LOAN AGREEMENT --------------------- THIS RESTATED REVOLVING CREDIT LOAN AGREEMENT, dated as of June 30, 1995, is between T/SF COMMUNICATIONS CORPORATION, a Delaware corporation (referred to as the "Borrower") and BANCFIRST, a state banking association (the "Bank"). W I T N E S S E T H: WHEREAS, the Bank is willing to restate and extend its existing revolving line of credit to the Borrower in the maximum amount of $2,000,000 as presently evidenced by that certain Revolving Credit Loan Agreement dated as of June 30, 1994 (the "Prior Agreement"), subject to the terms, conditions, uses and provisions hereinafter set forth, all of which are material to the Bank and without which the Bank would not be willing to extend such credit. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, receipt of which is acknowledged by the parties hereto, the parties agree as follows: ARTICLE I --------- CERTAIN DEFINITIONS ------------------- When used herein, the following terms shall have the following meanings: 1.1 "Applicable Prime Rate" shall mean the annual rate of interest ----------------------- announced by Chase Manhattan Bank, National Association, New York, New York ("Chase") from time to time as its prime or base rate, which rate shall be the rate used by Chase as a base or standard for pricing purposes and which shall not necessarily be its "best" or lowest rate. Should Chase cease to announce a prime or base rate or should it be merged, consolidated, liquidated or dissolved in such a manner that it loses its separate corporate identity, then the Applicable Prime Rate shall be the Prime Rate published by the Wall Street ----------- Journal in its "Money Rates" column or a similar rate if such rate ceases to be ------- published. Any changes in the Applicable Prime Rate shall be effective as of the date of the change. 1.2 "Business Day" shall mean a day other than a Saturday, Sunday or a day -------------- upon which banks in the State of Oklahoma are closed to business generally. 1.3 "Cash Equivalents" shall mean: (a) securities with maturities of ------------------ ninety-one (91) days or less from the issue date, which are issued or fully guaranteed or insured by the United States Government or any agency thereof; (b) certificates of deposit, eurodollar time deposits, overnight bank deposits and bankers acceptances with maturities of ninety (90) days or less; (c) commercial paper with a maturity of ninety (90) days or less, of a domestic issuer and rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Services, Inc. and (d) auction rate preferred stock with rate reset dates of sixty (60) days or less of a domestic issuer and with a rating of "aaa" from Moody's Investors Services, Inc. or AAA from Standard & Poor's Corporation. 1.4 "Closing Date" shall mean June 30, 1995. -------------- 1.5 "Commitment" shall mean the Revolving Credit Commitment. ------------ 1.6 "Consolidated Fixed Charges" shall mean for any period, the sum of all ---------------------------- of the following (determined with reference to Borrower's Consolidated Net Income for such period): (a) All amounts recorded in respect of interest charges and expense for such period (whether paid or accrued or a cash or non-cash expense and including the interest component of all capital leases), and (b) All amounts recorded in respect of rental expense (whether paid or accrued or a cash or non-cash expense, but excluding amounts in respect of capital leases). 1.7 "Consolidated Net Income" for any period means the consolidated net ------------------------- income (or net loss) of the Borrower for such period including an amount equal to 60% of the actual amount of monthly cash payments received by the Borrower during the applicable period pursuant to the Covenant for Continued Payments described in that certain Amendment and Termination Agreement between Tulsa Tribune Company ("Tribune"), World Publishing Company ("World") and Newspaper Printing Corporation ("NPC") dated as of July 31, 1992, but not including any earnings of any person acquired by the Borrower or any subsidiary thereof through purchase, merger or consolidation or otherwise for any period prior to the time of acquisition, or any deferred credit representing the excess of equity in any subsidiary at the date of acquisition over the cost of the investment in such subsidiary and, other than the monthly cash payments described above and received and accounted for as described in the Tribune Amendment (and the resulting September 30, 1992 termination of the Joint Operating Agreement among Tribune, World and NPC dated June 28, 1941, as amended (the "JOA")) the gain from such termination of the JOA and related transactions shall not be included in the definition of "Consolidated Net Income" or the --- definition of "Consolidated Operating Income" defined in Section 1.8 hereof below; all determined in accordance with generally accepted accounting principles. 1.8 "Consolidated Operating Income" for any period means the sum of (i) ------------------------------- Consolidated Net Income for such period, plus (to the extent deducted in determining such Consolidated Net Income) (ii) all provisions for income or profits taxes made for such period, plus (iii) all provisions for depreciation, depletion, amortization expense (including amortization of assets recorded under capital leases) and other non-cash charges made for such period, plus (iv) all Fixed Charges recorded for such period. 1.9 "Current Ratio" shall mean the ratio of Borrower's consolidated Current --------------- Assets to the aggregate amount of Borrower's consolidated Current Liabilities, as each term is computed and consolidated in accordance with GAAP. 1.10 "Default Rate" shall mean the Applicable Prime Rate plus six and one- -------------- half percentage points (6-1/2%). 1.11 "ERISA" shall mean the Federal Employee Retirement Income Security ------- Act of 1974, as amended, together with all regulations and rulings promulgated with respect thereto. 1.12 "Event of Default" shall mean any of the events specified in Section ------------------ 6.1 of this Agreement, and "Default" shall mean any event, which together with ------- any lapse of time or giving of any notice, or both, would constitute an Event of Default. 1.13 "GAAP" shall mean generally accepted accounting principles applied in ------ all material respects in general conformance with those applied in the preceding period, unless the Borrower's outside accountants determine that there should be a different application or required changes or changes based upon relevant accepted Financial Accounting Standards. Unless otherwise indicated 2 herein, all accounting terms will be defined according to GAAP and further provided that references to the Borrower's consolidated financial statements or consolidated financial condition, results of operations or compliance with the financial covenants hereof shall be deemed to include Borrower and all of its corporate subsidiaries. 1.14 "Indebtedness" shall mean and include any and all: (i) -------------- indebtedness, obligations and liabilities of the Borrower to the Bank incurred or which may be incurred or purportedly incurred hereafter pursuant to the terms of this Agreement or any of the other Loan Documents, and any extensions, renewals, substitutions, amendments and increases in amount thereof, including such amounts as may be evidenced by the Note and all lawful interest, loan closing fees, service fees, facility fees, commitment fees, fees in lieu of balances and other similar charges, and all reasonable costs and expenses incurred in connection with the negotiation, preparation, closing, filing and recording of the Loan Documents, including attorneys fees and legal expenses; (ii) all reasonable costs and expenses paid or incurred by the Bank, including attorneys fees, in enforcing or attempting to enforce collection of any Indebtedness and in enforcing or realizing upon or attempting to enforce or realize upon any collateral or security for any Indebtedness, including interest on all sums so expended by the Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate; and (iii) all sums expended by the Bank in curing any Event of Default or Default of the Borrower under the terms of this Agreement, the other Loan Documents or any other writing evidencing or securing the payment of the Note together with interest on all sums so expended by the Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate. 1.15 "Laws" shall mean all statutes, laws, ordinances, regulations, ------ orders, writs, injunctions, or decrees of the United States, any state or commonwealth, any municipality, any foreign country, any territory or possession, or any Tribunal. 1.16 "Lien" shall mean any mortgage, pledge, security interest, ------ encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement or other similar form of public notice under the Laws of any jurisdiction). 1.17 "Loan Documents" shall mean this Agreement, the Note and all other ---------------- documents, instruments and certificates executed and delivered to the Bank by the Borrower pursuant to the terms of this Agreement. 1.18 "Net Worth" shall mean, on any date as of which the amount thereof is ----------- to be determined, the total stockholders' equity of the Borrower (calculated in accordance with GAAP) and less any shares of capital stock subject to redemption or repurchase prior to the stated maturity date of the Note (to the extent included in such computation) on a consolidated basis in accordance with GAAP. 1.19 "Note" shall mean the Revolving Credit Note and any extensions, ------ renewals, replacements, modifications, substitutions, rearrangements or changes in form thereof. 1.20 "Person" shall mean and include an individual, a partnership, a joint -------- venture, a corporation, a trust, an unincorporated organization, or a government or any department, agency or political subdivision thereof. 1.21 "Revolving Credit Commitment" shall mean the agreement of the Bank to ----------------------------- make Revolving Credit Loans under Article II of this Agreement, and pursuant to the terms and conditions hereof, from the Closing Date until June 30, 1996, or 3 such later date as the Bank may extend the commitment by an extension in writing, unless earlier terminated pursuant to the terms hereof. 1.22 "Taxes" shall mean all taxes, assessments, fees, or other charges or ------- levies from time to time or at any time imposed by any Laws or by any Tribunal. 1.23 "Tribunal" shall mean any municipal, state, commonwealth, Federal, ---------- foreign, territorial or other sovereign, governmental entity, governmental department, court, commission, board, bureau, agency or instrumentality. ARTICLE II ---------- REVOLVING CREDIT LOAN --------------------- 2.1 Revolving Credit Loans. The Bank agrees, upon the terms and subject to ---------------------- the conditions hereinafter set forth, to make loans ("Revolving Credit Loans") to the Borrower from the Closing Date until June 30, 1996, or until such later date as the Bank shall have extended its Revolving Credit Commitment in writing unless its Commitment shall be sooner terminated pursuant to the provisions of this Agreement, in such amounts as may from time to time be requested by the Borrower so long as the aggregate principal amount of all Revolving Credit Loans outstanding and unpaid at any time under the Revolving Credit Note does not exceed $2,000,000. 2.2 Revolving Credit Note/Commitment Fee. On the Closing Date, the ------------------------------------ Borrower shall execute and deliver to the order of the Bank the Borrower's revolving credit note in the principal amount of $2,000,000, the form of which is annexed hereto as Exhibit "A" and hereby made a part hereof (hereinafter ----------- referred to as "Revolving Credit Note"). From the Closing Date until the Revolving Credit Commitment is terminated, the Borrower shall pay to the Bank, as a commitment fee for its Revolving Credit Commitment, an amount equal to one- fourth of one percentage point (0.25%) per annum of the amount by which $2,000,000 exceeds the outstanding unpaid principal balance of the Revolving Credit Note from time to time computed daily on the basis of calendar year of 360 days but assessed for the actual number of days elapsed during each accrual period. Such fee shall be payable quarterly as the same accrues on the fifteenth (15th) day of each full or partial calendar quarter annual period, commencing October 15, 1995 (for the calendar quarter ending September 30, 1995), and at the maturity of the Revolving Credit Note, whether by acceleration or otherwise. In accordance with the provisions of the Prior Agreement the commitment fee specified therein for the calendar quarter ending June 30, 1995, is payable on July 15, 1995. 2.3 Revolving Credit Advances, Payments and Voluntary Prepayment. Each ------------------------------------------------------------ Revolving Credit Loan requested by the Borrower from the Bank shall (i) be requested in writing or by telephone no later than 12:00 o'clock Noon (applicable current time in Tulsa, Oklahoma) on the date upon which the advance is to be made; (ii) be in the amount of $10,000 or an integral multiple thereof (unless the amount then available to borrow is less than $10,000, in which event an advance may be made in the amount available); (iii) not cause the aggregate outstanding and unpaid principal amount of the Revolving Credit Note to exceed $2,000,000; and (iv) be advanced by the Bank on the applicable date, provided the request is timely made in accordance with Section 2.3(i) hereof and all other conditions of funding are met. In consideration of Bank permitting telephonic requests for advances, Borrower states that it fully understands the risk attendant thereto, agrees to accept all such risk and hold Bank harmless from any loss which the Borrower may incur by reason of an advance being made in 4 response to a telephonic request whether such is caused by mistake or negligence of the Bank or otherwise, unless it is judicially established that such loss was due to the gross negligence and wanton disregard of the Bank. Borrower will designate in writing to the Bank the names of representatives of Borrower authorized to make telephone loan advance requests from time to time hereunder. All advances made by the Bank shall, for mutual convenience, be deposited to the Borrower's general deposit account with the Bank, and the Bank shall have no responsibility to monitor the distribution of such advances in any other respect. The Borrower may from time to time make prepayments of principal without premium or penalty. The Borrower may reborrow subject to the limitations and conditions for Revolving Credit Loans contained herein. Any payments or prepayments on the Revolving Credit Note received by the Bank after 12:00 o'clock Noon (applicable current time in Tulsa, Oklahoma) shall be deemed to have been made on the next succeeding Business Day. All outstanding principal of and accrued interest on the Revolving Credit Note not previously paid hereunder shall be due and payable at maturity thereof, unless such maturity shall be extended by the Bank in writing or accelerated pursuant to the terms hereof. ARTICLE III ----------- CONDITIONS PRECEDENT TO LOANS ----------------------------- 3.1 Conditions Precedent to Initial Revolving Credit Loan. The obligation ----------------------------------------------------- of the Bank to make the Revolving Credit Loan is subject to the satisfaction of all of the following conditions on or prior to the Closing Date (in addition to the other terms and conditions set forth herein): (a) No Default. There shall exist no Event of Default or Default on ---------- the Closing Date. (b) Representations and Warranties. The representations, warranties ------------------------------ and covenants set forth in Article V shall be true and correct on and as of the Closing Date, with the same effect as though made on and as of the Closing Date. (c) Borrower's Certificate. The Borrower shall have delivered to the ---------------------- Bank a Certificate, dated as of the Closing Date, and signed by the Chairman/Chief Executive Officer, the President or Vice President and the Secretary or Assistant Secretary of the Borrower certifying (i) to the matters covered by the conditions specified in subsections (a) and (b) of this Section 3.1, (ii) that the Borrower has performed and complied with all agreements and conditions required to be performed or complied with by it prior to or on the Closing Date, (iii) to the name and signature of each officer of the Borrower authorized to execute and deliver the Loan Documents and any other documents, certificates or writings and to borrow under this Agreement, and (iv) to such other matters in connection with this Agreement which the Bank shall determine to be advisable. The Bank may conclusively rely on such Certificate until it receives notice in writing to the contrary. (d) Proceedings. On or before the Closing Date, all corporate ----------- proceedings of the Borrower shall be taken in connection with the transactions contemplated by the Loan Documents and shall be satisfactory in form and substance to the Bank and its counsel; and the Bank shall have received certified copies, in form and substance satisfactory to the Bank and its counsel, of the Articles or Certificate of Incorporation and By- Laws of the Borrower and the resolutions of the Board of Directors of the Borrower, as adopted, authorizing the execution and delivery of the Loan Documents pertaining thereto, the borrowings under this Agreement. (e) Note. The Borrower shall have delivered the Note to the order of ---- the Bank, appropriately executed. 5 (f) Other Information. The Bank shall have received such other ----------------- information, documents and assurances as shall be reasonably requested by the Bank. 3.2 Conditions Precedent to All Additional Revolving Credit Loans. The ------------------------------------------------------------- Bank shall not be obligated to make any Revolving Credit Loan (i) if at such time any Event of Default shall have occurred or any Default shall have occurred and be continuing; or (ii) if any of the representations, warranties and covenants contained in Article V of this Agreement shall be false or untrue in any material respect on the date of such loan, as if made on such date. Each request by the Borrower for an additional Revolving Credit Loan shall constitute a representation by the Borrower that there is not at the time of such request an Event of Default or a Default, and that all representations, warranties and covenants in Article V of this Agreement are true and correct on and as of the date of each such request. ARTICLE IV ---------- COVENANTS --------- The Borrower covenants and agrees with the Bank that from the date hereof and so long as this Agreement is in effect (by extension, amendment or otherwise) and until payment in full of all Indebtedness and the performance of all other obligations of the Borrower under this Agreement, unless the Bank shall otherwise consent in writing: 4.1 Payment of Taxes and Claims. The Borrower will pay and discharge or --------------------------- cause to be paid and discharged all Taxes imposed upon the income or profits of the Borrower or upon the property, real, personal or mixed, or upon any part thereof, belonging to the Borrower before the same shall be in default, and all lawful claims for labor, rentals, materials and supplies which, if unpaid, might become a Lien upon its property or any part thereof; provided however, that the -------- ------- Borrower shall not be required to pay and discharge or cause to be paid or discharged any such Tax, assessment or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, and appropriate book reserves shall be established with respect thereto in accordance with GAAP, and the Borrower shall pay such Tax, charge or claim before any property subject thereto shall become subject to execution. 4.2 Maintenance of Corporate Existence. The Borrower will do or cause to ---------------------------------- be done all things necessary to preserve and keep in full force and effect its corporate existence, rights and franchises and will continue to conduct and operate its business substantially as being conducted and operated presently subject to changes in the ordinary course and appropriate changes advantageous to the business interests of Borrower. The Borrower will become and remain qualified to conduct business in each jurisdiction where the nature of the business or ownership of property by such Borrower requires such qualification and where the failure to do so would result in a material adverse effect on Borrower or its financial condition. 4.3 Preservation of Property. The Borrower will at all times maintain, ------------------------ preserve and protect all franchises and trade names and keep all the remainder of its properties which are used or useful in the conduct of its respective businesses whether owned in fee or otherwise, or leased, in good repair and operating condition; from time to time make, or cause to be made, all needful and proper repairs, renewals, replacements, betterments and improvements thereto so that the business carried on in connection therewith may be properly and advantageously conducted at all times; and comply with all material leases to which it is a party or under which it occupies property so as to prevent any material loss or forfeiture thereunder. 6 4.4 Insurance. The Borrower will keep or cause to be kept adequately --------- insured by financially sound and reputable insurers its plant, equipment, motor vehicles, and all other property of a character usually insured by businesses engaged in the same or similar businesses. Upon demand by the Bank any insurance policies covering Borrower's equipment and/or inventory, if any, shall be endorsed to provide that such policies may not be canceled, reduced or affected in any manner for any reason without thirty (30) days prior notice to the Bank, and to provide for any other matters which the Bank may reasonably require; and such insurance shall be against fire, casualty and any other hazards normally insured against and shall be in the amount of the substantial full value (less a reasonable deductible not to exceed amounts customary in the industry for similarly situated businesses and properties) of the property insured. The Borrower shall at all times maintain adequate insurance against damage to persons or property, which insurance shall be by financially sound and reputable insurers and shall, without limitation, provide the following coverages: comprehensive general liability (including, without limitation, coverage, where applicable, damage caused by explosion, broad form property damage coverage, broad form coverage for contractually independent contractors), worker's compensation, products liability and automobile liability. 4.5 Compliance with Applicable Laws. The Borrower will comply with the ------------------------------- requirements of all applicable Laws and orders of any Tribunal and obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business, where non- compliance therewith or failure to obtain would have a material adverse effect on Borrower or its financial condition. 4.6 Financial Statements and Reports. -------------------------------- (a) Quarterly Operating Statements. The Borrower shall maintain a ------------------------------ standard system of accounting and shall furnish to the Bank as soon as practicable after the end of each of the first three quarters of each fiscal year, commencing with the quarter ending June 30, 1995, and in any event within forty-five (45) days after the end of each said fiscal quarter, consolidated and consolidating operating statements for the Borrower which shall be certified on behalf of the Borrower by the President or chief financial officer of the Borrower, to have been prepared in accordance with GAAP and to fairly present the consolidated and consolidating financial condition of the Borrower for such period, and shall include at least a consolidated and consolidating balance sheet as at the end of such period, and a consolidated and consolidating statement of income, all in reasonable detail. (b) Annual Financial Statements. As soon as practicable after the end --------------------------- of each fiscal year of the Borrower and in any event within one-hundred twenty (120) days thereafter, the Borrower shall furnish to the Bank the following consolidated and consolidating financial statements, together with an audit report on such consolidated financial statements (such consolidating statements to be certified by the Chief Financial Officer of Borrower) and an unqualified opinion, prepared in accordance with GAAP of reputable independent certified public accountants of recognized standing selected by the Borrower and acceptable to the Bank: (i) A consolidated and consolidating balance sheet of the Borrower at the end of such year, (ii) A consolidated and consolidating statement of income of the Borrower for such year, and 7 (iii) A consolidated and consolidating statement of cash flows of the Borrower for such year, setting forth in each case in comparative form the figures for the previous fiscal year, if applicable, all in reasonable detail. The report of the independent certified public accountants shall contain a certification that in the course of the audit necessary for the certification of such financial statements, they have obtained no knowledge of any Event of Default or Default as defined herein, or, if any Event of Default or Default existed or exists, specifying the nature and period of existence thereof; provided, however, that such accountants shall not be liable to the Bank by reason of their failure to obtain knowledge of any such Event of Default or Default which would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards. (c) Annual Covenant Certificate. Concurrently with the furnishing of --------------------------- the financial statements pursuant to 4.6(b), there shall be furnished to Bank a separate certificate signed by the chief financial officer of Borrower stating that: (a) the financial statements were prepared in conformity with GAAP, and (b) no Event of Default or an event which with the passage of time or notice, or both, could become an Event of Default has occurred, and is continuing, and status of any such event(s) if existing. Such certificate shall not be qualified or limited because of restricted or limited examination of any material portion of Borrower's records by the party preparing such annual statements. All certificates of Borrower submitted pursuant to this Agreement in connection with compliance with certain financial or other covenants herein contained, shall fully demonstrate the method of calculations therein contained. (d) Special Auditing Reports. Promptly upon receipt thereof, the ------------------------ Borrower shall deliver to the Bank a copy of each report submitted to the Borrower, by independent accountants in connection with any annual, interim or special audit made by them of the books and records of the Borrower, including, without limitation, any comment letter submitted by such accountants to management in connection with their audit. (e) Periodic Reports. Promptly upon their becoming available, copies ---------------- of all financial statements, reports, notices of proxy statements sent by the Borrower to its stockholders and all registration statements, periodic reports and other statements and schedules filed by the Borrower with any securities exchange, the Securities and Exchange Commission or any similar state or federal governmental authority. 4.7 Notice of Default. Immediately upon the happening of any condition or ----------------- event which constitutes an Event of Default or Default or any default or event of default under any other loan, mortgage, financing or security agreement, the Borrower will give the Bank a written notice thereof specifying the nature and period of existence thereof and what actions, if any, the Borrower is taking and proposes to take with respect thereto. 4.8 Notice of Litigation. Immediately upon becoming aware of the existence -------------------- of any action, suit or proceeding at law or in equity before any Tribunal, an adverse outcome in which would (i) materially impair the ability of the Borrower to carry on its business substantially as now conducted, (ii) materially and adversely affect the condition (financial or otherwise) of the Borrower, or (iii) result in monetary damages in excess of $50,000, the Borrower will give the Bank a written notice specifying the nature thereof and what actions, if any, the Borrower is taking and proposes to take with respect thereto. 8 4.9 Inspection. The Borrower will keep complete and accurate books and ---------- records with respect to its properties, businesses and operations and will permit employees and representatives of the Bank to audit, inspect and examine the same and to make copies thereof and extracts therefrom during normal business hours. All such records shall be at all times kept and maintained at the offices of the Borrower in Tulsa, Oklahoma. 4.10 Consolidated Net Worth. The Borrower will not permit its ---------------------- consolidated Net Worth to be less than $24,000,000 at any time. 4.11 Debt to Net Worth. The Borrower will not at any time permit the ----------------- ratio of its total liabilities, determined in accordance with GAAP, to its consolidated Net Worth to exceed 1.3 to 1.0. 4.12 Consolidated Current Ratio. The Borrower will not at any time permit -------------------------- the ratio of (a) Borrower's consolidated Current Assets to (b) consolidated Current Liabilities to be less than 1.0 to 1.0. 4.13 Consolidated Cash. Borrower will at all times maintain consolidated ----------------- cash plus consolidated Cash Equivalents of at least $500,000. 4.14 Consolidated Fixed Charges Coverage. Borrower will not permit its ----------------------------------- Consolidated Fixed Charges for any period of twelve (12) consecutive calendar months to exceed 66-2/3% of its Consolidated Operating Income for such period. 4.15 Limitation on Other Indebtedness. Neither the Borrower nor any of -------------------------------- its subsidiaries will create, incur, assume, become or be liable in any manner in respect of, or suffer to exist, any indebtedness whether evidenced by a note, bond, debenture, agreement, letter of credit or similar or other obligation, with or to any Person, including without limitation, any financial institution with which Borrower or any of its subsidiaries (including Transportation Information Services, Inc.) ("TISI") has a lockbox or similar depository account arrangement except only (i) indebtedness of Borrower, TISI or Tulsa Tribune Company ("Tribune") to the Bank, (ii) indebtedness evidenced by seller generated purchase money or other non-financial institution borrowed funds and/or capital leases not in excess of $500,000 and (iii) existing indebtedness as more particularly described on Schedule 1 annexed hereto. 4.16 Prohibition on Liens. Neither the Borrower nor any direct or -------------------- indirect subsidiary thereof will create or suffer to exist any Lien upon any of its assets or properties, including without limitation, accounts, contract rights, inventory, general intangibles, equipment, instruments or documents of title, or proceeds and products thereof (whether cash or otherwise) except for (i) Liens in favor of the Bank, (ii) Liens incidental to the conduct of the business or ownership of property and assets which were not incurred in connection with the borrowing of money or the obtaining of advances or credit (including those arising under contracts with federal, state or local governmental entities or agencies thereof and pledges as deposits for the purpose of securing a stay or discharge of legal proceedings not exceeding $500,000 in the aggregate) and which do not in the aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of its business, (iii) existing capital leases of Galaxy Registration, Inc. not in excess of $250,000 in the aggregate and (iv) existing liens/stock pledges as more particularly described on Schedule 2 annexed hereto. 4.17 Contingent Liabilities; Advances. Other than inter-company -------------------------------- advances/loans in the ordinary course of Borrower's business operations to or with any of its direct or indirect subsidiaries (including TISI), the Borrower will not either directly or indirectly, without the prior written consent of the 9 Bank, (i) guarantee, become surety for, discount, endorse, agree (contingently or otherwise) to purchase, repurchase or otherwise acquire or supply or advance funds in respect of, or otherwise become or be contingently liable upon the indebtedness, obligation or liability of any Person, (ii) guarantee the payment of any dividends or other distributions upon the stock of any corporation, (iii) discount or sell with recourse or for less than the face value thereof, any of its notes receivable, accounts receivable or chattel paper; (iv) loan, agree to loan, or advance money to any Person; or (v) enter into any agreement for the purchase or other acquisition of any goods, products, materials or supplies, or for the making of any shipments or for the payment of services, if in any such case payment therefor is to be made regardless of the non-delivery of such goods, products, materials or supplies or the non-furnishing of the transportation of services; provided, however that the foregoing shall not be applicable to endorsement of negotiable instruments presented to or deposited with a bank for collection or deposit in the ordinary course of business. 4.18 Disposition or Sale of Assets. The Borrower will not sell, lease, ----------------------------- transfer or otherwise dispose of all or substantially all of its assets. Borrower will not assign or discount with or without recourse, any shares of stock of T/SF Investments Co., accounts receivable, notes receivable or contract rights or sell, lease, transfer, scrap or otherwise dispose of any of its properties or assets, whether for replacement or not, except (i) assets sold or disposed of in the ordinary course of business and for a full and fair consideration, unless such sale, disposition or abandonment has no material adverse effect on Borrower or its financial condition, and (ii) fixed assets sold to an affiliate of Borrower, which assets will be leased by such entity to the Borrower. 4.19 Merger, Consolidation. The Borrower will not merge or consolidate --------------------- with or into any other Person; or permit TISI, Tribune or any other subsidiary to consolidate with or merge into the Borrower; or adopt or effect or permit TISI, Tribune or any other subsidiary to adopt or effect any plan of reorganization, recapitalization, liquidation or dissolution. ARTICLE V --------- REPRESENTATIONS AND WARRANTIES ------------------------------ To induce the Bank to enter into this Agreement and to make the Revolving Credit Loans to the Borrower under the provisions hereof, and in consideration thereof, the Borrower represents, warrants and covenants as follows: 5.1 Organization and Qualification. The Borrower is duly organized, ------------------------------ validly existing, and in good standing under the Laws of its jurisdiction of incorporation, and is duly licensed and in good standing as a foreign corporation in each jurisdiction in which the nature of the business transacted or the property owned thereof is such as to require licensing or qualification as such. 5.2 Litigation. There is no action, suit, investigation or proceeding ---------- threatened or pending before any Tribunal against or affecting the Borrower or any properties or rights of the Borrower which, if adversely determined, would result in a liability of greater than $500,000 or would otherwise result in any material adverse change in the business or condition, financial or otherwise, of the Borrower except as described on Exhibit B annexed hereto. The Borrower is not in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any Tribunal. 5.3 Financial Statements. The Borrower's most recent audited financial -------------------- statements and unaudited quarterly financial statements which have been furnished to the Bank have been prepared in conformity with GAAP, show all material liabilities, direct and contingent, and fairly present the financial condition of the Borrower as of the date of such statements and the results of its operations for the period then ended, and since the date of such statements there has been no material adverse change in the business, financial condition or operations of the Borrower. 10 5.4 Corporate Authorization. The Board of Directors of the Borrower has ----------------------- duly authorized the execution and delivery of each of the Loan Documents and the performance of their respective terms. No other consent of any other Person, except for the Bank, is required as a prerequisite to the binding effect, validity and enforceability of the Loan Documents. 5.5 Possession of Franchises, Licenses. The Borrower possesses all ---------------------------------- franchises, certificates, licenses, permits and other authorizations from governmental political subdivisions or regulatory authorities, free from burdensome restrictions, that are necessary in any material respect for the ownership, maintenance and operation of its respective properties and assets, and the Borrower is not in violation of any thereof in any material respect. 5.6 Leases. The Borrower enjoys peaceful and undisturbed possession of all ------ leases necessary in any material respect for the operation of its properties and assets, none of which contains any unusual or burdensome provisions which might materially affect or impair the operation of such properties and assets. All such leases are valid and subsisting and are in full force and effect. 5.7 Taxes. The Borrower has filed all Federal, state and other income tax ----- returns which are required to be filed and has paid all Taxes, as shown on said returns, and all Taxes due or payable without returns and all assessments received to the extent that such Taxes or assessments have become due. Borrower shall not be required to pay and discharge or cause to be paid or discharged any such Tax, assessment or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, such Tax liabilities are adequately provided for on the books of the Borrower, including interest and penalties, and such Tax, charge or claim is paid before any property subject thereto shall become subject to execution. No income tax liability of a material nature has been asserted by taxing authorities for Taxes in excess of those already paid except as shown on Exhibit B annexed hereto. 5.8 Disclosure. Neither this Agreement nor any other Loan Document or ---------- writing furnished to the Bank by or on behalf of the Borrower in connection herewith contains any untrue statement of a material fact nor do such Loan Documents and writings, taken as a whole, omit to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact known to the Borrower and not reflected in the financial statements provided to the Bank which materially adversely affects or in the future may materially adversely affect the business, property, or assets, or financial condition of the Borrower which has not been set forth in this Agreement, in the Loan Documents or in other documents furnished to the Bank by or on behalf of the Borrower prior to the date hereof in connection with the transactions contemplated hereby. 5.9 ERISA. Each plan subject to Title IV of ERISA and maintained for ----- employees of the Borrower, established or maintained by the Borrower is in material compliance with the applicable provisions of ERISA, and the Borrower has filed all reports required by ERISA and the Internal Revenue Code of 1986, as amended, to be filed with respect to each plan. 5.10 Environmental Laws. No hazardous or toxic substances have been ------------------ stored, treated, recycled or disposed of on property owned or leased by the Borrower, no litigation or threatened litigation has been incurred regarding the presence, disposal, release or threatened release of such substances on property owned or leased by the Borrower and the Borrower has not received any notification from any governmental authority with respect to any violation of any environmental laws. 5.11 Subsidiaries. TISI and Tribune are wholly owned subsidiaries of T/SF ------------ Investment Co., a Delaware corporation. T/SF Investment Co. is a wholly owned 11 subsidiary of the Borrower. All corporate subsidiaries of Borrower and T/SF Investment Co. are listed on Schedule 3 annexed hereto. ARTICLE VI ---------- EVENTS OF DEFAULT ----------------- 6.1 Events of Default. The following events shall constitute events of ----------------- default (herein called "Events of Default"), whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of Law or otherwise: (a) The Borrower shall fail to make any payment or mandatory prepayment of principal or interest upon the Note, or fail to pay any other Indebtedness within five (5) days after the same shall become due and payable (whether by extension, renewal, acceleration or otherwise); or (b) Any representation or warranty of the Borrower made herein or in any writing furnished in connection with or pursuant to any of the Loan Documents shall have been false or misleading in any material respect on the date when made; or (c) The Borrower shall fail to duly observe, perform or comply with any covenant, agreement or term (other than payment provisions which are governed by Section 6.1(a) hereof) contained in this Agreement or any of the Loan Documents and such default or breach shall have not been cured or remedied within thirty (30) days following receipt of notice thereof from the Bank; or (d) The Borrower shall default in the payment of principal or of interest on any other obligation for money borrowed or received as an advance (or any obligation under any conditional sale or other title retention agreement, or any obligation issued or assumed as full or partial payment for property whether or not secured by purchase money Lien, or any obligation under notes payable or drafts accepted representing extensions of credit) beyond any grace period provided with respect thereto, or shall default in the performance of any other agreement, term or condition contained in any agreement or guaranty under which such obligation is created including without limitation, Borrower's Guaranty and Indemnification Agreement with John R. Laughlin ("Laughlin") dated March 17, 1994 in connection with the $900,000 promissory note of T/SF Investment Co. to Laughlin of even date therewith (or if any other default under any such agreement shall occur and be continuing beyond any period of grace provided with respect thereto) if the effect of such default is to cause, or to permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause such obligation to become due prior to its date of maturity; or (e) Any of the following: (i) the Borrower shall become insolvent or unable to pay its debts as they mature, make an assignment for the benefit of creditors or admit in writing its inability to pay its debts generally as they become due or fail generally to pay its debts as they mature; or (ii) an order for relief under the United States Bankruptcy Code, as amended, shall be entered against the Borrower; or (iii) the Borrower shall petition or apply to any Tribunal for the appointment of a trustee, 12 receiver, custodian or liquidator of the Borrower or of any substantial part of the assets of the Borrower, or shall commence any proceedings relating to the Borrower under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debts, dissolution, or liquidation Law of any jurisdiction, whether now or hereafter in effect; or (iv) any such petition or application shall be filed, or any such proceedings shall be commenced, of a type described in subsection (iii) above, against the Borrower and the Borrower by any act shall indicate its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree shall be entered appointing any such trustee, receiver, custodian or liquidator, or approving the petition in any such proceedings, and such order, judgment or decree shall remain unstayed and in effect, if being vigorously contested, for more than sixty (60) days; or (v) any order, judgment or decree shall be entered in any proceedings against the Borrower decreeing the dissolution of the Borrower and such order, judgment or decree shall remain unstayed and in effect for more than thirty (30) days; or (vi) any order, judgment or decree shall be entered in any proceedings against the Borrower decreeing a split-up of the Borrower which requires the divestiture of a substantial part of the assets of the Borrower, and such order, judgment or decree shall remain unstayed and in effect for more than thirty (30) days; or (vii) the Borrower shall fail to make timely payment or deposit of any amount of tax required to be withheld by the Borrower and paid to or deposited to or to the credit of the United States of America pursuant to the provisions of the Internal Revenue Code of 1986, as amended, in respect of any and all wages and salaries paid to employees of the Borrower; or (f) Any final judgment on the merits for the payment of money in an amount in excess of $100,000 shall be outstanding against the Borrower, and such judgment shall remain unstayed and in effect and unpaid for more than thirty (30) days; or (g) Any Event of Default shall occur and be continuing under or pursuant to any of the credit facilities extended by the Bank to subsidiaries of the Borrower or T/SF Investment Co. (including TISI or Tribune), as such credit facilities are more particularly described on Schedule 4 annexed hereto and concerning the exercise of such foregoing cross-default provisions, the Bank shall provide Borrower with five (5) days prior written notice thereof insofar as the Bank's intention to exercise such provisions; or (h) Any default or event of default occurs under any of the other Loan Documents and such default or event of default shall not have been cured or remedied within thirty (30) days following receipt of notice thereof from the Bank, expressly excepting default in any payment obligation, including without limitation, the payment provisions of Section 6.1(a) hereof. 6.2 Remedies. Upon the occurrence of any Event of Default referred to in -------- Section 6.1(e) the Commitment shall immediately terminate and the Note and all other Indebtedness shall be immediately due and payable, without notice of any kind. Upon the occurrence of any other Event of Default, and without prejudice to any right or remedy of the Bank under this Agreement or the Loan Documents or under applicable Law of under any other instrument or document delivered in connection herewith, the Bank may (i) declare the Commitment terminated or (ii) declare the Commitment terminated and declare the Note and the other Indebtedness, or any part thereof, to be forthwith due and payable, whereupon the Note and the other Indebtedness, or such portion as is designated by the Bank shall forthwith become due and payable, without presentment, demand, notice or protest of any kind, all of which are hereby expressly waived by the Borrower. No delay or omission on the part of the Bank in exercising any power or right hereunder or under the Note, the Loan Documents or under applicable law 13 shall impair such right or power or be construed to be a waiver of any default or any acquiescence therein, nor shall any single or partial exercise by the Bank of any such power or right preclude other or further exercise thereof or the exercise of any other such power or right by the Bank. In the event that all or part of the Indebtedness becomes or is declared to be forthwith due and payable as herein provided, the Bank shall have the right to set off the amount of all the Indebtedness of the Borrower owing to the Bank against, and shall have, and is hereby granted by the Borrower, a lien upon and security interest in, all property of the Borrower in the Bank's possession at or subsequent to such default, regardless of the capacity in which the Bank possesses such property, including but not limited to any balance or share of any deposit, collection or agency account. After Default all proceeds received by the Bank may be applied to the Indebtedness in such order of application and such proportions as the Bank, in its discretion, shall choose. At any time after the occurrence of any Event of Default, the Bank may, at its option, cause an audit of any and/or all of the books, records and documents of the Borrower to be made by auditors satisfactory to the Bank at the expense of the Borrower. The Bank also shall have, and may exercise, each and every right and remedy granted to it for default under the terms of the other Loan Documents. ARTICLE VII ----------- MISCELLANEOUS ------------- 7.1 Notices. Unless otherwise provided herein, all notices, requests, ------- consents and demands shall be in writing and shall be mailed by certified mail, postage prepaid, to the respective addresses specified below, or, as to any party, to such other address as may be designated by it in written notice to the other parties: If to the Borrower, to: T/SF Communications Corporation 2407 E. Skelly Drive Tulsa, Oklahoma 74105 Attention: Chief Financial Officer If to the Bank, to: BancFirst P.O. Box 680 7625 E. 51st Street Tulsa, Oklahoma 74101 Attn: Roy C. Ferguson, III All notices, requests, consents and demands hereunder will be effective when mailed by certified mail, postage prepaid, addressed as aforesaid. 7.2 Place of Payment. All sums payable hereunder shall be paid in ---------------- immediately available funds to the Bank, at its principal banking offices in Tulsa, Oklahoma, or at such other place as the Bank shall notify the Borrower in writing. If any interest, principal or other payment falls due on a date other than a Business Day, then (unless otherwise provided herein) such due date shall be extended to the next succeeding Business Day, and such extension of time will in such case be included in computing interest, if any, in connection with such payment. 7.3 Survival of Agreements. All covenants, agreements, representations and ---------------------- warranties made herein shall survive the execution and the delivery of Loan Documents. All statements contained in any certificate or other instrument delivered by the Borrower hereunder shall be deemed to constitute representations and warranties by the Borrower. 14 7.4 Parties in Interest. All covenants, agreements and obligations ------------------- contained in this Agreement shall bind and inure to the benefit of the respective successors and assigns of the parties hereto, except that the Borrower may not assign its rights or obligations hereunder without the prior written consent of the Bank. 7.5 Governing Law and Jurisdiction. This Agreement and the Notes shall be ------------------------------ deemed to have been made or incurred under the Laws of the State of Oklahoma and shall be construed and enforced in accordance with and governed by the Laws of Oklahoma. 7.6 SUBMISSION TO JURISDICTION. THE BORROWER HEREBY CONSENTS TO THE -------------------------- JURISDICTION OF ANY OF THE LOCAL, STATE, AND FEDERAL COURTS LOCATED WITHIN TULSA COUNTY, OKLAHOMA AND WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY ----- --- ---------- SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH IN SUBSECTION 7.1 HEREOF AND THAT SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) BUSINESS DAYS AFTER MAILED OR DELIVERED BY MESSENGER. 7.7 No Waiver; Cumulative Remedies. No failure to exercise, and no delay ------------------------------ in exercising, on the part of the Bank, any right, power or privilege hereunder or under any other Loan Document or applicable Law shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege of the Bank. The rights and remedies herein provided are cumulative and not exclusive of any other rights or remedies provided by any other instrument or by law. No amendment, modification or waiver of any provision of this Agreement or any other Loan Document shall be effective unless the same shall be in writing and signed by the Bank. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. 7.8 Costs. The Borrower agrees to pay to the Bank on demand all costs, ----- fees and expenses (including without limitation reasonable attorneys fees and legal expenses) incurred or accrued by the Bank in connection with the preparation, execution, delivery, filing and recording of this Agreement and the other Loan Documents, or any amendment, waiver, consent or modification thereto or thereof, or any enforcement thereof. The Borrower further agrees that all such fees and expenses shall be paid regardless of whether or not the transactions provided for in this Agreement are eventually closed and regardless of whether or not any sums are advanced to the Borrower by the Bank. 7.9 Participation. The Borrower recognizes and acknowledges that the Bank ------------- reserves the right to sell participating interests in the Note to one or more financial institutions (the "Participants"). Upon receipt of notice of the identity and address of such Participant(s), the Borrower shall thereafter supply such Participant(s) with the same information and reports communicated to the Bank, whether written or oral. The Borrower hereby acknowledge that each Participant shall be deemed a holder of the Note to the extent of its participation, and the Borrower hereby waives its right, if any, to offset amounts owing to the Borrower from the Bank against any Participant's portion of the Note. 7.10 WAIVER OF JURY. BORROWER FULLY, VOLUNTARILY AND EXPRESSLY WAIVES ANY -------------- RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTE OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR WHICH MAY IN THE FUTURE BE DELIVERED) IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT. 15 BORROWER AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. 7.11 Full Agreement. This Agreement and the other Loan Documents contain -------------- the full agreement of the parties and supersede all negotiations and agreements prior to the date hereof. 7.12 Headings. The article and section headings of this Agreement are for -------- convenience of reference only and shall not constitute a part of the text hereof nor alter or otherwise affect the meaning hereof. 7.13 Severability. The unenforceability or invalidity as determined by a ------------ Tribunal of competent jurisdiction, of any provision or provisions of this Agreement shall not render unenforceable or invalid any other provision or provisions hereof. 7.14 Exceptions to Covenants. The Borrower shall not be deemed to be ----------------------- permitted to take any action or fail to take any action which is permitted as an exception to any of the covenants contained herein or which is within the permissible limits of any of the covenants contained herein if such action or omission would result in the breach of any other covenant contained herein. 7.15 Prior Agreement. This Agreement restates, continues and extends the --------------- terms and provisions of the Prior Agreement except only as expressly modified or amended hereby. 7.16 Counterparts. This Agreement may be executed in any number of ------------ counterparts, all of which taken together shall constitute one and the same instrument. 16 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. "Borrower" T/SF COMMUNICATIONS CORPORATION By: /s/ Howard G. Barnett, Jr. -------------------------------------------- Howard G. Barnett, Jr., President "Bank" BANCFIRST By: /s/ Roy C.Ferguson, III -------------------------------------------- Roy C. Ferguson, III, Regional Executive 17 SCHEDULE 1 T/SF COMMUNICATIONS CORPORATION INDEBTEDNESS JUNE 30, 1995 TISI Notes $3,336,923 Stock Purchase Note - GDF 365,297 Stock Purchase Note - Tribune/Swab-Fox PSP 218,813 Promissory Note - John Laughlin 525,000 Capital Lease - Galaxy 29,195 Tulsa Tribune Foundation Debenture 831,000 Tinney Investment Debenture 600,000 --------- $5,906,228 ========== Charles Dees $ 2,880,542(1) J.T. Potts 76,754 Tayloe Paper 96,504 Robert E. Craine 46,773 D-A-C Investments 117,993 C.W. Simcoe 102,938 Doris Lockwood 15,419 ----------- $ 3,336,923* ===========
(1) Secured by security interest in the 46,203 shares of TISI common stock acquired from Charles Dees. SCHEDULE 2 Pledge of 46,203 shares of common stock of TISI to Charles Dees to secure $3,404,276 debt (part of TISI stock purchase notes described on Schedule 1) SCHEDULE 3 T/SF COMMUNICATIONS CORPORATION ------------------------------- SUBSIDIARIES
Atwood Convention 100% (1) Missouri - convention Publishing, Inc. publications BMT Communications, Inc. 100% (1) Oklahoma - trade (formerly BMT publications Publications, Inc.) Convention News Source, 100% (2) Missouri - inactive Inc. DacNet, Inc. 100% (3) Oklahoma - inactive Expo Magazine, Inc. 100% (4) Kansas - trade publications Galaxy Design & Printing, 100% (5)* Maryland - commercial Inc. printing Galaxy Registration, Inc. 100% (1)* Maryland - convention registration M-R Creative, Inc. 100% (6)** New York - advertising design T/SF New York, Inc., 100% (1)** New York - (formerly shopper-newspaper Marks-Roiland publications Communications, Inc.) National Employment 100% (3) Oklahoma - employment Screening Services, Inc. screening New York Community 100% (4) New York - inactive Newspapers, Inc. publications Shopper's Guide, Inc. 100% (4)*** New Jersey - shopper-newspaper publications South Jersey Shopper, Inc. 100% (7) New Jersey - inactive Transportation 100% (3) Oklahoma - information Communications Services, service Inc. (formerly TSF Information Services Corp.) T/SF Investment Co. 100% (4) Delaware - investment holding company Transportation Information 100% (1) Oklahoma-motor vehicle Services, Inc reports and truck driver employment information Tulsa Tribune Company 100% (1) Delaware - newspaper -------------------------- publication until October 1, 1992
(1) Owned by T/SF Investment Co. (2) Owned by Atwood Convention Publishing, Inc. (3) Owned by Transportation Information Services, Inc. (4) Owned by T/SF Communications Corporation (5) Owned by Galaxy Registration, Inc. (6) Owned by Marks-Roiland Communications, Inc. (7) Owned by Shopper's Guide, Inc. * Acquired effective March 1, 1994. ** Sold assets effective November 1, 1993. *** Sold assets effective April 30, 1994.
SCHEDULE 4 (OTHER BANCFIRST CREDIT FACILITIES) 1. That certain Revolving Credit Loan Agreement between Tulsa Tribune Company, as borrower, and BancFirst, as lender, dated as of May 25, 1995, for the aggregate amount of $2,000,000. 2. That certain Revolving Credit Loan Agreement between Transportation Information Services, Inc., as borrower, and BancFirst, as lender, dated as of July 14, 1993, as amended February 1, 1994, June 30, 1994 and June 30, 1995, respectively, and providing for a $1,750,000 revolving line of credit facility. EX-10.3 4 3RD AMENDMENT TO LOAN AGREEMENT Exhibit 10.3 THIRD AMENDMENT TO REVOLVING CREDIT LOAN AGREEMENT -------------------------------------------------- THIS Third Amendment to Revolving Credit Loan Agreement by and between Transportation Information Services, Inc., an Oklahoma corporation (the "Borrower") and BancFirst, a state banking association (the "Bank") is entered into effective as of the 30th day of June, 1995. W I T N E S S E T H: WHEREAS, pursuant to that certain Revolving Credit Loan Agreement dated as of July 14, 1993 (the "Original Credit Agreement") the Bank has extended to the Borrower a $1,750,000 revolving line of credit upon the terms and conditions therein set forth and under which Revolving Credit Loans will be extended from time to time to Borrower by the Bank, all as secured by the Collateral defined and described in Section 3.1 of the Original Credit Agreement and in the Security Agreement described and defined in Section 3.2 of the Original Credit Agreement; WHEREAS, pursuant to that certain First Amendment to Revolving Credit Loan Agreement dated as of February 1, 1994 (the "First Amendment"), the Bank included a $250,000 standby letter of credit facility within the Revolving Loan Commitment upon the terms, provisions and conditions therein set forth and otherwise subject to the terms, provisions and conditions of the Original Credit Agreement; WHEREAS, pursuant to that certain Second Amendment to Revolving Credit Loan Agreement dated as of June 30, 1994 (the "Second Amendment") (the Original Credit Agreement as amended by the First Amendment and the Second Amendment are collectively referred to herein as the "Credit Agreement"), the Bank increased the standby letter of credit facility from $250,000 to $350,000 and extended the Revolving Credit Commitment until June 30, 1995; WHEREAS, Borrower has requested the Bank to extend and renew the Revolving Credit Commitment for a period of one (1) year until June 30, 1996; and WHEREAS, subject to the terms, provisions and conditions hereinafter set forth the Bank is willing to so extend and renew the Revolving Credit Commitment. NOW, THEREFORE, for good and valuable consideration and for the extension and renewal of the Revolving Credit Commitment established pursuant to the Credit Agreement, the Borrower and the Bank hereby agree as follows: 1. The maturity date of the Revolving Credit Commitment shall be extended to June 30, 1996 and the Revolving Credit Loan shall be evidenced by that certain replacement Revolving Credit Note of even date herewith in the original principal amount of $1,750,000 payable to the order of the Bank. A true and correct copy of the replacement Revolving Credit Note is annexed hereto as Exhibit A and made a part hereof (the "Replacement Note"). --------- 2. Section 2.2 of the Credit Agreement is amended and modified to provide that the commitment fee for the Revolving Credit Commitment shall be equal to one-fourth of one percentage point (.25%) per annum of the amount by which $1,750,000 exceeds the outstanding unpaid principal balance of the Replacement Note from time to time computed daily on the basis of a calendar year of 360 days but assessed for the actual number of days elapsed during each accrual period. Such fee shall be payable quarterly, commencing October 15, 1995 (for the calendar quarter ending September 30, 1995). In accordance with the Credit Agreement the commitment fee specified therein for the calendar quarter ending June 30, 1995 is payable on July 15, 1995. The remaining terms and provisions of Section 2.2 of the Credit Agreement shall remain in full force and effect. 3. The remaining terms, provisions and conditions set forth in the Credit Agreement shall remain in full force and effect. The Borrower restates, confirms and ratifies the warranties, covenants and representations set forth therein and further represents to the Bank that no default or Event of Default exists under the Credit Agreement as of the date hereof. The Borrower further confirms, grants and regrants and repledges to the Bank a continuing and continuous first and prior security interest in and pledge of the items and types of Collateral more particularly described in Section 3.1 of the Original Credit Agreement and in the Security Agreement and Assignment from the Borrower to the Bank dated as of July 14, 1993, as security for all indebtedness described in the Credit Agreement. The indebtedness described in the Credit Agreement shall include all advances, draws, letters of credit, application fees and fundings on such letters of credit issued pursuant thereto and all such Indebtedness shall be secured in all respects by the Collateral described in the Credit Agreement and the aforesaid Security Agreement and Assignment and the liens and priorities therein granted in favor of the Bank are hereby regranted, restated, ratified, confirmed and continued in all respects. 4. Each of the Guarantors, T/SF Communications Corporation and T/SF Investment Co., by virtue of its consent to this Third Amendment as indicated below, ratifies, confirms and continues in all respects the effectiveness and enforceability of its respective Guaranty of the TISI Note (as now evidenced by the Replacement Note) therein described and defined, including, insofar as the TISI Note (as now evidenced by the Replacement Note) is concerned, all draws under and all contingent liabilities of the Bank on outstanding letters of credit issued pursuant to the Credit Agreement. 5. The Borrower agrees to pay the Bank's legal fees incurred in connection with the negotiation, preparation and closing of this Third Amendment. IN WITNESS WHEREOF, this Third Amendment is executed and delivered to the Bank in Tulsa, Oklahoma, by the undersigned duly authorized officer of the Borrower, which officer has full power and authority to do so for, on behalf and in the name of the Borrower by virtue of all necessary corporate action of the Board of Directors of the Borrower, effective as of the 30th day of June, 1995. TRANSPORTATION INFORMATION SERVICES, INC., an Oklahoma corporation By: /s/ Richard A. Wimbish ------------------------------------- Richard A. Wimbish, President "Borrower" BANCFIRST, a state banking association By: /s/ Roy C. Ferguson, III ------------------------------------- Roy C. Ferguson, III Regional Executive "Bank" ACCEPTANCE BY GUARANTORS ------------------------ The terms and provisions of the foregoing Third Amendment to Revolving Credit Loan Agreement are accepted, agreed and consented to in all respects by each Guarantor and each Guarantor hereby ratifies, confirms, restates and continues its absolute and unconditional guarantee obligations set forth in the respective Guaranty thereby dated as of July 14, 1993, insofar as the TISI Note therein described and defined is concerned, and each Guarantor stipulates that the indebtedness previously evidenced by such TISI Note is now evidenced by the Replacement Note described and defined in paragraph 1 of the foregoing Third Amendment and that the maturity thereof has been extended and renewed to June 30, 1996. T/SF Communications Corporation By: /s/ Howard G. Barnett, Jr. ---------------------------------- Howard G. Barnett, Jr., President T/SF Investment Co. By: /s/ J. Gary Mourton ---------------------------------- J. Gary Mourton, President EX-10.4 5 ASSET PURCHASE AGREEMENT Exhibit 10.4 ASSET PURCHASE AGREEMENT SECTION 1. PARTIES, PRELIMINARY STATEMENTS This Asset Purchase Agreement (the "Agreement") is entered into this 16th day of June, 1995, between BMT Communications, Inc., an Oklahoma corporation ("Seller"), and Trade Publishing, L.L.C., a Delaware limited liability company ("Buyer"). PRELIMINARY STATEMENTS ---------------------- A. Seller, wholly-owned by T/SF Investment Co., a Delaware corporation, which is wholly-owned by T/SF Communications Corporation, a Delaware corporation ("T/SF"), is engaged in the business of publishing various trade magazines and related activities, including publishing Convenience Store News ("CSN"), United ---------------------- ------ States Distribution Journal ("DJ"), The Journal of Petroleum Marketing ("JPM") --------------------------- ---------------------------------- (CSN, DJ and JPM are referred to together as the "Transferred Magazines") and International Gaming and Wagering Business ("Gaming"). ------------------------------------------ B. Buyer is under common control with Macfadden Publishing, Inc., a Delaware corporation ("Macfadden"). C. Buyer desires to acquire the ongoing business and substantially all of the assets of Seller, other than the business and assets associated with Gaming, its related trade shows and other related activities (the "Gaming Assets") and certain other assets, and Seller desires to sell such business and assets to Buyer, upon the terms and conditions stated herein. In consideration of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the parties agree as follows: SECTION 2. PURCHASE AND SALE OF ASSETS 2.01 PURCHASE AND SALE. At the Closing (as hereinafter defined), Seller ----------------- agrees to sell, transfer, assign and deliver to Buyer, and Buyer agrees to purchase and accept from Seller, the Transferred Assets (as defined below). The "Transferred Assets" shall include all assets (including, without limitation, personal and real property leasehold interests referred to on Exhibit "A" hereto) owned by Seller as of the Effective Date (as hereinafter defined), excluding only any cash or cash equivalents of Seller and the Gaming Assets, all of which are listed on Exhibit "B" hereto (the "Excluded Assets"). 2.02 CONSIDERATION. In exchange and in full consideration for the purchase ------------- of the Transferred Assets, Buyer shall pay Seller as follows: a. At Closing, Buyer shall pay Seller by wire transfer of funds as directed by Seller the aggregate sum of Twenty-one Million Dollars ($21,000,000) (the "Purchase Price"). The Purchase Price shall be allocated among the Transferred Assets and the covenant-not-to-compete described in Section 5.05 below, as specified on Exhibit "C" hereto. b. Buyer agrees to assume, as part of the consideration for purchase of the Transferred Assets, only the following liabilities: (i) All liabilities, claims and obligations of Seller arising in the ordinary course of business, including but not limited to the obligations referred to in Exhibit "K" hereto, under all agreements (written or, if referenced on Exhibit "K" hereto, or of a similar type to those referenced if entered into subsequent to the date of this Agreement, oral) in effect on the Effective Date: (a) which relate to the Transferred Assets or the usual operation of Seller's business relating to the Transferred Assets (including, without limitation, all amounts due under those of Seller's real estate leases which are assumed by Buyer as noted on Exhibit "K", customer contracts, equipment maintenance and service agreements, contracts for newsprint, ink and other inventory items and other "operating" leases and agreements, to the extent and only to the extent each is specifically included as part of the Transferred Assets); (b) the historical costs of which have been fully charged and reflected in the financial statements described on Exhibit "D" hereto; (c) which are not listed on Exhibit "B" hereto as being part of the Excluded Assets; and (d) which are not violative of any representation or warranty contained in this Agreement; provided, that, except for unpaid amounts included in Payables assumed by Buyer (as described below), Buyer's obligations under such agreements shall apply only to payments accruing on and after the Effective Date (as defined below); and provided further, that Buyer shall not assume the obligations under contracts or agreements listed and included as part of the Excluded Assets; (ii) Accrued vacation and sick leave and other accruals as of the Closing Date relating to "Buyer's Employees" (as defined and described below) and those specific liabilities described on Exhibit "E" hereto, including, without limitation, the deferred subscription revenues related to the Transferred Magazines (collectively, the "Payables"); and (iii) All obligations of Seller relating to the Transferred Magazines and described as "free ads" and "make up ads" on Exhibit "L" hereto, as of the Effective Date. c. The Purchase Price has been agreed to by Buyer on the express agreement and representation by T/SF and Seller that, on the Effective Date, Transferred Current Assets (as defined below) of Seller will exceed the Assumed Current Liabilities (as defined below) of Seller by $694,000 (the amount by which the Transferred Current Assets exceed 2 the Assumed Current Liabilities as of the Effective Date is referred to hereinafter as the "Working Capital"). (i) In order to determine the amount of the Working Capital, promptly following the Closing, Seller shall cause to be prepared a balance sheet of Seller as of the Effective Date (the "Effective Date Balance Sheet"), along with an income statement reflecting the results of Seller's operations for the period of January 1, 1995, through the Effective Date (such income statement and the Effective Date Balance Sheet being referred to as the "Closing Financial Statements"). In preparing such financial information, Buyer shall make available to Seller for its reasonable use, the personnel then employed by Buyer who have heretofore been responsible for preparing Seller's financial statements. Seller shall present the Closing Financial Statements to Buyer not later than 45 days following the Closing. Included with the Closing Financial Statements will be sufficient detail to enable Buyer to identify the amount of and method of identifying Transferred Current Assets and Assumed Current Liabilities and to review the Working Capital calculation. Buyer shall have 15 days following receipt of the Closing Financial Statements to review the Closing Financial Statements and to either accept them or to dispute any amount shown thereon. If Buyer disputes any aspect of the Closing Financial Statements, it shall so notify Seller, specifying any such dispute in reasonable detail, on or before the end of such 15-day period. Buyer and Seller shall then, for a period of 15 days after the end of Buyer's 15-day review period, attempt to resolve each such dispute in good faith, and, if they are unable to do so, then the unresolved disputes shall be finally resolved, as promptly as practicable, by an independent accounting firm of national reputation to be selected jointly by the independent accountants for Buyer and Seller, with the cost thereof to be borne one-half by Buyer and one- half by Seller. If Buyer does not notify Seller of any dispute by the end of the initial 15-day period, then it shall be deemed to have accepted the Closing Financial Statements and the calculation of Working Capital included therewith. (ii) For purposes of this Agreement, Transferred Current Assets and Assumed Current Liabilities shall be based on those current assets transferred to and current liabilities assumed by Buyer hereunder (subject to adjustment as herein specifically provided) determined in accordance with generally accepted accounting principles ("GAAP") applied on a basis consistent with the past practices of Seller. In determining Transferred Current Assets, there shall be excluded from "current assets" (determined according to GAAP), those assets included as part of the Excluded Assets. Similarly, in determining Assumed Current Liabilities, there shall be excluded from "current liabilities" (determined in accordance with GAAP), those liabilities retained by Seller. (iii) Upon the date when the Closing Financial Statements are accepted or deemed accepted by Buyer or are finally determined by the independent accounting firm as provided in clause (i) of this Section 2.02c, if the Working 3 Capital is less than $694,000, the amount of such shortfall shall be immediately paid by Seller to Buyer by wire transfer or as otherwise directed by Buyer. Conversely, if the Working Capital is greater than $694,000, the amount of such excess shall be immediately paid by Buyer to Seller by wire transfer or as otherwise directed by Seller. d. In connection with the transactions contemplated herein, Buyer agrees to pay, in accordance with applicable laws and regulations, at or immediately after the Closing, any and all liabilities, claims and obligations for sales, use or other excise taxes (including penalties and interest, if applicable), if any, payable to any state or local jurisdiction in New York in connection with the sale of the Transferred Assets from Seller to Buyer. If required by law or regulation, Buyer agrees to pay the proper amounts due to Seller for remittance to the appropriate taxing authorities, and in such event Seller agrees to remit such payment to the authorities in accordance with applicable law. e. Other than as specifically provided herein, including, without limitation, as specified in Sections 2.02b. and c. above and Sections 5.04 and 8.06 below, Buyer shall not be liable for or assume any debts, claims or liabilities of Seller, and Seller agrees, pursuant to Section 8 hereof, to indemnify Buyer against and hold Buyer harmless from any and all liabilities, debts, claims and obligations of Seller not specifically assumed by Buyer. f. Any amounts due from any party to another party hereunder which are not timely paid shall bear interest at the rate of 15% per annum from the due date until paid. 2.03 CLOSING AND EFFECTIVE DATE. The consummation of the transactions -------------------------- contemplated hereby (the "Closing") shall be held on July 1, 1995, or such other later date, as may be mutually agreed by Buyer and Seller, upon which all of the conditions to closing described herein have been satisfied, but in no event later than September 30, 1995. The date of closing shall be referred to herein as the "Closing Date" and the "Effective Date," unless otherwise specified by the parties, shall mean the opening of business on the Closing Date. Unless otherwise agreed by the parties, the Closing shall not occur until each party hereto has complied with all covenants, agreements and conditions contained herein. The Closing shall be held at such place as the parties may mutually agree. 2.04 NON-COMPETITION AGREEMENTS. Seller and T/SF have certain rights to -------------------------- various covenants-not-to-compete, non-competition agreements and consulting and employment agreements between T/SF and/or Seller, on the one hand, and each of Irving Babson, Hedy Halpert, Samson Kowalski and Daniel Petrocelli, on the other, all of which agreements are listed in Exhibit "G" hereto (the "Non- Competition Agreements"). With respect to the Non-Competition Agreements, the following provisions shall apply: a. The benefits of the Non-Competition Agreements are intended to be included in the Transferred Assets. However, the parties acknowledge T/SF's and Seller's necessity to retain the benefits of those agreements with respect to the businesses of Seller 4 not being transferred to Buyer. T/SF and Seller agree to provide an assignment (a form of which is set forth as Exhibit "H" hereto) of the Non- Competition Agreements to Buyer which will provide that the benefits thereof relating to T/SF's and Seller's businesses other than with respect to the Transferred Assets shall be retained by T/SF and/or Seller. b. Seller represents that all payments due to Irving Babson under his covenant-not-to-compete have been made and that no breach has, to the knowledge of Seller or T/SF, occurred with respect to the obligations under such covenant-not-to-compete of Irving Babson. Seller shall remain liable for and continue to make payments as they come due under the agreements embodying the covenants-not-to-compete with each of Samson Kowalski and Daniel Petrocelli. With respect to the obligations due Hedy Halpert under the agreement giving rise to her covenant-not-to-compete, Seller agrees to make all payments due thereunder through December 31, 1995. If and to the extent that Buyer desires to continue the benefits of the covenant-not-to- compete with Hedy Halpert in 1996, Buyer understands that it will be required to make all payments due thereunder for 1996 with respect to the Transferred Magazines; provided, that Seller shall be liable for the portion of any payments in 1996 due with respect to the portion of the covenant-not-to-compete with Hedy Halpert allocable to Gaming and its related activities. None of the amounts which Buyer might so choose to pay to Hedy Halpert shall be considered as an Assumed Current Liability for purposes of calculating the Working Capital. c. Buyer acknowledges that, as described in Exhibits "G" and "H" hereto, the Noncompetition Agreement with Irving Babson purports to be nonassignable and, therefore, it is understood that the purported assignment of such agreement may not be effective. SECTION 3. REPRESENTATIONS AND WARRANTIES OF BUYER AND MACFADDEN 3. Buyer and Macfadden, jointly and severally, hereby make the following representations, warranties and undertakings to Seller and T/SF, each of which (a) is being relied upon by Seller and T/SF notwithstanding any review or investigation of Buyer's or Macfadden's business or financial condition, (b) shall be true and correct as of the date hereof and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, and (c) shall survive the Closing Date to the extent provided in Section 8.05 hereof: 3.01 AUTHORITY AND APPROVAL. Buyer and Macfadden have full power and ---------------------- authority, corporate and otherwise, to execute, deliver and perform this Agreement and all other documents and agreements executed in connection herewith, and all corporate and other actions of Buyer and Macfadden necessary for such execution, delivery and performance have been duly taken, and such execution, delivery and performance do not require any action or consent of, or registration with, any governmental regulatory body or other agency, instrumentality or authority, or of any other party under any contract or agreement to which Buyer or Macfadden is a party or by which 5 Buyer or Macfadden is bound. Neither Buyer nor Macfadden has any knowledge of any legal impediment to the consummation of the transactions contemplated by this Agreement. 3.02 VALIDITY. This Agreement and, when executed and delivered, the other -------- documents executed in connection herewith constitute the legal, valid and binding obligations of Buyer and Macfadden, enforceable against Buyer and Macfadden in accordance with the terms hereof and thereof, except as such enforceability may be limited by general principles of equity and subject to bankruptcy or other laws relating to or affecting the rights of creditors generally. The execution and performance of this Agreement by Buyer and Macfadden will not: (i) conflict with the Articles of Organization, Operating Agreement or other governing documents of Buyer or the Certificate (or Articles) of Incorporation or Bylaws of Macfadden, (ii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time or both, will become a default under, or result in the creation of any lien upon any of the assets of Buyer or Macfadden or create any rights of termination, cancellation, or acceleration in any person, under any agreement, arrangement or commitment of Buyer or Macfadden, or (iii) violate in any respect any agreement or any provision of any law, rule or regulation or any order, writ, injunction or decree to which Buyer or Macfadden is a party or by which Buyer or Macfadden or any of their assets, businesses or operations may be bound or affected. 3.03 BROKERAGE FEES. Except for fees which may be due from T/SF or Seller -------------- to Oppenheimer & Co., Inc. (which fees are the sole responsibility of T/SF and Seller), neither Buyer nor Macfadden nor any of their affiliates nor any stockholder, director, officer, member, manager or employee of Buyer or Macfadden has incurred or will incur any brokerage, finder's or similar commission or fee in connection with the transactions contemplated by this Agreement, and, to the extent any such fees, commissions or other compensation are incurred by Seller or T/SF as a result of actions of Buyer or Macfadden, such fees, commissions or compensation shall be the sole responsibility of Buyer or Macfadden, except with respect to fees due to Oppenheimer & Co., Inc. 3.04 FINANCIAL CAPABILITY OF BUYER. The information Buyer or Macfadden has ----------------------------- provided to Seller, T/SF or their agents concerning Buyer's and Macfadden's financing of its obligations hereunder is true and correct, and Buyer and Macfadden have available financial resources to meet all of their obligations hereunder. 3.05 ORGANIZATION. Buyer is a limited liability company duly organized, ------------ validly existing and in good standing under the laws of the State of Delaware. Macfadden is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Buyer has all requisite limited liability company power and authority, and Macfadden has all requisite corporate power and authority, to own and lease its properties and assets and to carry on its businesses as, and in the places where, such properties are owned or leased and such businesses are conducted. Each of Buyer and Macfadden is duly qualified to do business and is in good standing in all jurisdictions in which the nature of its respective businesses or the ownership of its respective properties or both make such qualification necessary and where the failure to be so qualified would have a material adverse effect on the financial condition, business or operations of Buyer and Macfadden. 6 3.06 OFFICERS AND DIRECTORS. Exhibit "I" hereto contains a true and ---------------------- correct list of the officers and directors of Buyer and Macfadden. SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER AND T/SF 4. Seller and T/SF, jointly and severally, hereby make the following representations, warranties and undertakings to Buyer and Macfadden, each of which (a) is being relied upon by Buyer and Macfadden, (b) shall be true and correct as of the date hereof and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date, and (c) shall survive the Closing Date to the extent provided in Section 8.05 hereof: 4.01 ORGANIZATION. Each of T/SF and T/SF Investment Co. ("Investment"), ------------ both of which are incorporated under the laws of the State of Delaware, and Seller, incorporated under the laws of the State of Oklahoma, is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and each has all requisite corporate power and authority to own or lease its properties and to carry on its businesses as, and in the places where, such properties are owned or leased and such businesses are conducted. Each of T/SF, Investment and Seller is duly qualified to do business and is in good standing in all jurisdictions in which the nature of its businesses or the ownership of its properties or both make such qualification necessary and where the failure to be so qualified would have a material adverse affect on its financial condition, business or operations. 4.02 SUBSIDIARIES. T/SF is the owner of 100% of the issued and outstanding ------------ capital stock of Investment which, in turn, owns 100% of the issued and outstanding capital stock of Seller. Other than as may be set forth on Exhibit "K" hereto and other than as may be related to the Excluded Assets, Seller has no direct or indirect subsidiaries and owns no capital stock or other equity securities in any person, corporation, association, partnership, joint venture, trust or other entity. 4.03 TITLE TO ASSETS. Except as set forth herein (including Exhibits --------------- hereto): (i) Seller has good and marketable title to the Transferred Assets and such title shall be transferred to Buyer at the Closing; (ii) none of the Transferred Assets are subject to any contract for sale, lease, claim, mortgage, encumbrance, security interest, lien, charge or any other restriction on title or transfer and, upon Closing, Buyer shall acquire the Transferred Assets free and clear of any contract for sale, lease, claim, mortgage, encumbrance, security interest, lien, charge or any other restriction on title or transfer not specifically described herein; and (iii) except for the Excluded Assets, the Transferred Assets constitute all of the assets used in the operation of Seller's business. 4.04 LEASES. The real property lease described on Exhibit "K" hereto (the ------ "Lease") is valid, in full force and effect and assignable to Buyer with the proper consent thereto of the lessor thereunder. To T/SF's knowledge, the present use of Seller's offices occupied under said real property lease (the "Leased Premises") is consistent with the present zoning classification of the 7 property occupied by Seller's facilities. All payments of rent and other amounts due under the Lease as of the date hereof have been paid by Seller. 4.05 EQUIPMENT CONDITION. Except as noted on Exhibit "A" hereto, the ------------------- equipment which constitutes part of the Transferred Assets is adequate for the operation of Seller's business relating to the Transferred Magazines and, subject to ordinary wear and tear and to the expectation of reasonable repair and replacement is, as a whole, in good condition and repair. 4.06 FINANCIAL STATEMENTS. Exhibit "D" hereto contains an unaudited -------------------- balance sheet of Seller as of March 31, 1995 ("Seller's March Balance Sheet"), and unaudited statements of income for Seller for each of the two years ended December 31, 1993, and December 31, 1994, as well as an unaudited statement of income for Seller for the three month period ended March 31, 1995. Exhibit "D" also includes summary financial information on the results of operations of Seller conducted with the Transferred Magazines, which include allocations of overhead and shared services of Seller to such magazines for the two years ended December 31, 1993 and 1994, and the three month period ended March 31, 1995, as well as a balance sheet as of March 31, 1995, derived for such separate part of Seller's business based on Seller's method of allocating certain shared assets and liabilities. Such financial statements, with the notes thereto, were prepared in accordance with GAAP (as to the interim statement of income, except for the absence of footnotes and subject to normal year-end adjustments), consistently applied throughout the periods covered, and such statements fairly present the financial condition of Seller and the results of its operations as of the dates and for the respective periods indicated; provided, that Buyer acknowledges having been fully informed (including having had the opportunity to ask questions of and receive answers from officers of Seller and T/SF) of the manner in which certain costs, assets and liabilities which were historically shared (and, therefore, allocated for financial statement purposes) between the activities of Seller conducted with the Gaming Assets and the Transferred Assets, including, without limitation, rent, executive compensation, and the costs of shared support departments, such as production and circulation, and neither Seller nor T/SF makes any representation or warranty with respect to the appropriateness of any such allocations or with respect to the presentation thereof in such financial information. 4.07 OFFICERS AND DIRECTORS. Exhibit "J" hereto contains a true and ---------------------- correct list of the officers and directors of Seller and the officers of T/SF. 4.08 ABSENCE OF MATERIAL ADVERSE CHANGE. Since March 31, 1995, other than ---------------------------------- as set forth in this Agreement or the Exhibits hereto, there has not been: (i) any material change in the assets, liabilities or businesses conducted with the Transferred Assets, other than changes in the ordinary course of business, none of which has been materially adverse; (ii) any damage, destruction or loss, whether or not covered by insurance, materially and adversely affecting any of the Transferred Assets; 8 (iii) any material change in the method of conducting any of the businesses of Seller relating to the Transferred Assets; (iv) any mortgage, sale, encumbrance or other transfer or assignment by Seller of a material portion of the Transferred Assets; or (v) any material change in the rate of compensation or other terms of employment of any employee of Seller. 4.09 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as described on Exhibit ------------------------------------- "K" or "N" hereto, Seller is not a party to (i) any lease (as lessor or lessee), note, bond or indenture which involves a liability of more than $20,000 in any one instance or $50,000 in the aggregate, or any agreement, guarantee or indemnification to any person or entity which involves a liability of more than $20,000 in any one instance or $50,000 in the aggregate, (ii) any agreement containing any covenant limiting the freedom of Seller (or which would limit the freedom of Buyer) to engage in any line of business or compete with any person, (iii) any agreement or commitment relating to capital expenditures and involving future payments which exceed $20,000 in any one instance or $50,000 in the aggregate, (iv) any agreement or commitment relating to the disposition or acquisition of assets or any interest in any business enterprise or for the purchase of materials, supplies or equipment which expires more than one year from the date hereof or which involves an amount in excess of $20,000 in any one instance or $50,000 in the aggregate, (v) any distributor, sales, agency, manufacturers representative or similar contract which is not cancelable without a penalty by not more than 90 days notice, or (vi) any material agreement with advertisers for the placement of advertising in any publication of Seller for a period of more than 15 issues of any one magazine on terms or rates which are materially different from the standard and usual practices of Seller; provided, that none of the matters described in this Section 4.09 shall apply to any of the Excluded Assets. 4.10 NO BREACH. Seller has not breached, or received notice of any claim --------- or allegation that it has breached, any of the terms or conditions of any lease, agreement, contract or commitment to which it is a party, or by which it is bound. Each lease, agreement, contract and commitment set forth on Exhibit "K" hereto is in full force and effect, has not been modified since the last date referenced and is not subject to any default thereunder by Seller or any other party thereto, and, subject to receipt of required consents, no such default will arise as a result of the assignment thereof to Buyer. Except as set forth on Exhibit "K" hereto, since March 31, 1995, Seller has not entered into any lease, agreement, contract or commitment other than in the ordinary course of business. 4.11 UNDISCLOSED LIABILITIES. Except as disclosed on Exhibit "L" hereto, ----------------------- in Seller's March Balance Sheet or in this Agreement or the other Exhibits hereto, and other than as may be incurred in the ordinary course of business, Seller has no liabilities, claims or obligations which have not been disclosed to Buyer and there is no pending or, to Seller's or T/SF's knowledge, threatened, litigation, claim or cause of action to which Seller is a party or to which the Transferred Assets may be subject. 9 4.12 COMPLIANCE WITH LAW. Seller is in substantial compliance with all ------------------- applicable federal, state and local laws, regulations and other governmental requirements (including, without limitation, all environmental laws and regulations) for the operation of its businesses and the ownership of the Transferred Assets. 4.13 ENVIRONMENTAL MATTERS. Except as may be set forth herein or in the --------------------- Exhibits hereto: a. Seller has obtained all permits, licenses and other authorizations which are required in connection with the conduct of its businesses under regulations relating to pollution or protection of the environment, including regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment (including without limitation ambient air, surface water, ground water, or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes. b. Seller is in full compliance in the conduct of its businesses with all terms and conditions of the required permits, licenses and authorizations, and is also in full compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in those laws or contained in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder. c. Seller has received no notice of any past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may interfere with or prevent compliance or continued compliance with those laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, or which may give rise to any common law or legal liability, or otherwise form the basis of any claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant, chemical, or industrial, toxic or hazardous substance or waste. d. There is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation or proceeding pending or threatened against Seller in connection with the conduct of its businesses relating in any way to those laws or any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder. 4.14 LICENSES AND PERMITS. Except as noted on Exhibit "M" hereto, Seller -------------------- has all governmental licenses and permits (Federal, state and local), if any, which may be required to conduct the businesses which it presently conducts. Except as noted on Exhibit "M" hereto, 10 neither Seller nor T/SF has any knowledge of any pending or threatened proceeding to revoke or limit any such license or permit and such licenses and permits are transferable to Buyer. 4.15 EMPLOYEE AND LABOR RELATIONS. ---------------------------- a. Exhibit "N" hereto contains, as of June 1, 1995: (i) a list of Seller's employees engaged in Seller's business relating to the Transferred Assets; (ii) a summary description of all of Seller's employee benefit plans and arrangements; and (iii) a complete list of all of Seller's employment and consulting agreements, executive compensation, incentive (but excluding normal commission arrangements with sales personnel), stock option, bonus, deferred compensation, profit sharing, pension and other employee benefit plans for Seller's employees engaged in Seller's business relating to the Transferred Assets, including without limitation medical and other insurance plans. The plans and arrangements described on Exhibit "N" hereto are referred to herein as the "Benefit Plans." In connection with the Closing and pursuant to such notices as Seller may deem appropriate, Seller has the right to amend and/or terminate the Benefit Plans in accordance with the provisions of each such Plan and applicable laws. b. Except as indicated on Exhibit "N" hereto, none of the employees of Seller engaged in Seller's business relating to the Transferred Assets are employed pursuant to any written employment agreement or an employment arrangement which is not terminable at will, except as may be limited by law or government regulation. c. The only severance pay practices or related arrangements or practices between Seller and its employees are described on Exhibit "N" hereto. d. Seller is in substantial compliance with all Federal, state and local laws and regulations respecting employment and employment practices, terms and conditions of employment, wages and hours and work places. Except as listed on Exhibit "N" hereto, (i) there is no unfair labor practice complaint against Seller pending before the National Labor Relations Board or strike, lockout, dispute, or work stoppage pending or threatened against or involving Seller and none has occurred since at least January 1, 1993; (ii) no union organization campaign has occurred at any time in the past two years nor is any in progress or threatened; (iii) no charges, audits, investigations or complaint proceedings are pending before the Equal Employment Opportunity Commission or any state, local or Federal agency responsible for the prevention of unlawful employment practices with respect to Seller; (iv) Seller has not received notice of the intent of any Federal, state or local agency to conduct an audit or an investigation of or relating to or including such employees or employment practices and no such investigation is in progress; and (v) Seller is not a party to any union contract or similar organized labor agreement. 11 4.16 EMPLOYEE BENEFIT PLANS AND ERISA. -------------------------------- a. Except as indicated on Exhibits "D" or "N" hereto (i) Seller has no present or future obligation or liability with respect to any employees or former employees under the Benefit Plans; and (ii) Seller has no present or future liability to any former employees or to their dependents, survivors or beneficiaries in connection with or arising out of any Benefit Plan or any compensation arrangement or practice maintained or adopted by Seller or to which Seller contributed prior to the Closing. b. The 401(k) Plan referred to in Exhibit "N" hereto as the T/SF Communications Savings and Retirement Plan (the "Plan"), meets the requirements of Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and the trust forming part of the Plan is exempt from Federal income tax under Section 501(a) of the Code, except as indicated on Exhibit "N" hereto. After the Closing, but prior to the final distribution of amounts due under the Plan to the then ex-employees of Seller who participated therein, T/SF shall have performed an ADP-ACP test on the Plan deferrals and will have made any required adjustments as to any such ex- employees on their account as may be required by applicable law to comply with permissible contributions under such test. c. Seller has not maintained or contributed to any "multiemployer plan", within the meaning of Section 3(37) of ERISA. Since January 1, 1991, no liability under Title IV of ERISA has been incurred by Seller, and no event has occurred and there exists no condition which presents a risk of the imposition of any liability under Title IV or ERISA with respect to a Benefit Plan. No Benefit Plan which is subject to Title IV of ERISA has been completely or partially terminated by Seller, and no proceedings by the PBGC to terminate any such Benefit Plan have been instituted or threatened. Seller is not a party to and has no liability under any agreement imposing secondary liability on it as a seller of the assets of a business under Title IV of ERISA, or under any other agreement, and no contingent liability exists under Title IV of ERISA to the PBGC or to any plan, and none of the assets of Seller is subject to a lien under Title IV of ERISA. d. None of the Benefit Plans of Seller has been subject to a "reportable event" within the meaning of Section 4043 of ERISA nor have there been any "prohibited transactions" within the meaning of Section 4975 of the Code or Part 4 of Subtitle B of Title I of ERISA. All reports and information required to be filed with the United States Department of Labor, the IRS, the PBGC, or plan participants and their beneficiaries with respect to the Benefit Plans have been timely filed. e. Full payment has been made, or will be made prior to the Closing, of all amounts which Seller is required to pay under the terms of each of the Benefit Plans as a contribution as of the last day of the most recent fiscal year of each of such Plans ended prior to the date of this Agreement. Seller's March Balance Sheet includes, in accordance with GAAP, an accrual for all amounts, if any, due Seller's employees under the Benefit Plans. 12 f. In connection with the medical benefits plan maintained by Seller ("Seller's Medical Plan"), or by T/SF on behalf of Seller, the liability to pay for all covered claims incurred on or before the Effective Date shall be retained by Seller (through Seller's Medical Plan), and such claims shall be processed and paid by Seller and its plan administrator pursuant to the terms of Seller's Medical Plan in accordance with current practices. 4.17 REPORTS AND TAXES. T/SF, on behalf of Seller and with respect to the ----------------- business operations of Seller, has duly prepared and filed with all appropriate United States, state and local governmental agencies all corporate and other tax returns and reports required by law within the time or extended time required or permitted and has paid all taxes and related payments required to be made, when due as shown on such returns. All such reports and returns were accurate and complete as filed and prepared in accordance with all applicable government regulations. Seller, or T/SF on behalf of Seller, has made timely payments of the taxes and related payments and charges required to be deducted and withheld from the wages paid to its employees. The Federal, state and local income tax liability, if any, of Seller due as of the Effective Date has been or will be paid in full by T/SF for or on behalf of Seller. The charges, accruals and reserves, if any, which have been made on Seller's financial statements with respect to Federal, state and local taxes for all periods to date are adequate as to Seller and no deficiencies for any tax, assessment or governmental charge have been asserted or assessed against Seller. 4.18 INSURANCE AND DAMAGE. Seller has previously provided Buyer with a -------------------- summary listing of Seller's property, casualty and/or liability insurance. Each such policy shall remain in effect through the Closing Date, but not later, and all premiums for same due to and including the Closing Date have been or will be paid by Seller or T/SF. Except for medical insurance, Seller has not received any notice from any insurance company with which it maintains insurance that coverage or premium rates will be changed materially in the future or that it may not qualify for continued coverage with respect to any such insurance. Seller is in compliance in all material respects with all such insurance contracts. Except for medical insurance and property damage claims made in the ordinary course of business and which are covered by existing insurance maintained with reputable and responsible carriers with respect to which all premiums have been duly paid, there is not now pending with any insurance carrier any material claim by Seller or T/SF for payment pursuant to any insurance policy relating to the Transferred Assets. Seller has not suffered damage to its assets, however caused, of such nature as to necessitate interruption or curtailment of any of its businesses in any material respect. 4.19 ACCOUNTS RECEIVABLE. All accounts receivable of Seller at the date ------------------- hereof and as of the Effective Date arose or will have arisen in the ordinary course of business, and are or will be accurately and fairly reflected in the financial statements and the books and records of Seller, subject to all applicable reserves. The reserves established by Seller for bad debts or uncollectible receivables on its balance sheet have been established and will, on the Effective Date Balance Sheet, be established in accordance with GAAP, consistently applied. 13 4.20 INVENTORIES. The inventory described on Seller's March Balance Sheet ----------- is valued on a basis (cost) consistent with that adopted in prior years. Except as set forth in Exhibit "A" hereto, the inventory of Seller included in the Transferred Assets, net of applicable reserves, is of merchantable quality, in good condition and usable in the ordinary course of business. 4.21 TRADENAMES, TRADEMARKS, SERVICE MARKS, SOFTWARE LICENSES AND ------------------------------------------------------------ COPYRIGHTS. Exhibit "O" hereto lists all of the patents, trademarks, service ---------- marks, trademark registrations and applications therefor, trade names, copyrights, and copyright registrations and applications therefor owned by or registered in the name of Seller in the United States or any other country, or in which Seller has any rights by license or otherwise. Except as set forth on Exhibit "L" or Exhibit "O" hereto, Seller owns, is validly licensed under or has the non-exclusive right to use (with Exhibit "O" specifically noting those for which Seller claims the exclusive or protected right to use), such patents, trademarks, service marks, trade names and copyrights necessary for the conduct of its businesses as now operated, without conflict with the rights of others. Except as described herein or on Exhibit "O" hereto, no patent, trademark or other property right used by Seller in connection with its businesses is owned exclusively by any other party. Seller has the right to use all processes, systems, computer software, business plans, publications and products used by it in its businesses or necessary for its businesses, subject only to the restrictions or agreements listed on Exhibit "O" hereto, which Exhibit includes a list, complete to Seller's and T/SF's knowledge, of all software licenses under which Seller is licensee. Seller shall deliver to Buyer at Closing suitable evidence of the right of Buyer to so use such software, subject, in certain cases, to the payment of a fee, the payment of which shall, upon Buyer's applying for transfer thereof, be the obligation of Buyer. Without limiting the generality of the foregoing, Seller has the unrestricted right to use all of its customer lists, distribution and circulation lists and lists of advertisers, free of any rights of third parties, but with the acknowledgment that Seller's customer, advertiser, circulation or distribution lists may be similar in whole or in part to those used by other parties; provided that, with respect to JPM, certain of such lists are provided by the Petroleum Marketers Association of America ("PMAA") and may be subject to the provisions of the agreement with PMAA which is listed on Exhibit "K." No such lists have at any time been transferred or furnished to any third party and Seller has taken reasonable actions to protect sensitive or confidential information concerning its lists. Except as described on Exhibit "L" or "O" hereto or on any other Exhibit hereto, T/SF knows of no other person or entity who or which is presently using or claiming the right to use any of the trade names listed on Exhibit "O" hereto in the areas in which such publications are now distributed. 4.22 AUTHORITY AND APPROVAL. Seller and T/SF have full power and ---------------------- authority, corporate and otherwise, to execute, deliver and perform this Agreement and all other documents and agreements executed in connection herewith, and all corporate and other actions of Seller, T/SF and Investment necessary for such execution, delivery and performance have been duly taken, and such execution, delivery and performance do not require any action or consent of, or registration with, any governmental regulatory body or other agency, instrumentality or authority, or of any other party under any contract or agreement to which Seller or T/SF is a party or is bound. T/SF has no knowledge of any legal impediment to the consummation of the transactions contemplated by this Agreement. 14 4.23 VALIDITY. This Agreement and, when executed and delivered, the other -------- documents executed in connection herewith constitute the legal, valid and binding obligations of Seller and T/SF, enforceable against Seller and T/SF in accordance with the terms hereof and thereof, except as such enforceability may be limited by general principles of equity and subject to bankruptcy or other laws relating to or affecting the rights of creditors generally. The execution and performance of this Agreement by Seller and T/SF will not: (i) conflict with the Certificate of Incorporation or Bylaws of Seller, T/SF or Investment, (ii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time or both, will become a default under, or result in the creation of any lien upon, any of the assets of Seller or T/SF or create any rights of termination, cancellation, or acceleration of any person, under any agreement, arrangement or commitment of Seller or T/SF, or (iii) violate in any respect any agreement or any provision of any law, rule or regulation or any order, writ, injunction or decree to which T/SF or, to T/SF's knowledge, Seller is a party or by which Seller or T/SF or any of its assets, businesses or operations may be bound or affected. 4.24 BROKERAGE AND FINDERS' FEES. Except for fees which may be due to ---------------------------- Oppenheimer & Co., Inc. (which fees are the sole responsibility of T/SF and Seller), neither T/SF nor Seller, nor any of their respective stockholders, directors, officers or employees, has incurred or will incur any brokerage, finders' or similar commission or fee in connection with the transactions contemplated by this Agreement, and, to the extent any such fees, commissions or other compensation are incurred by Buyer as a result of actions of T/SF or Seller, such fees, commissions or compensation shall be the sole responsibility of Seller or T/SF. SECTION 5. COVENANTS 5.01 INTERIM COVENANTS. ------------------ a. Access and Information. Buyer and Macfadden have conducted ---------------------- interviews with personnel of T/SF and Seller and conducted investigations of Seller and its respective markets, businesses and affairs. Seller and T/SF have given or will give to Buyer and Macfadden and their accountants, counsel and other representatives throughout the period prior to the Closing Date full access to all employees, properties, books, contracts and records of or relating to Seller and have furnished and will furnish to Buyer and Macfadden all information reasonably requested by Buyer or Macfadden. Each of the parties hereto acknowledges that, pursuant to the right of access set forth above, Buyer and Macfadden have or may become privy to confidential information of Seller (excluded from the meaning of confidential information is any information generally available to the public), and the use of such confidential information or the disclosure of such confidential information to third parties could injure the business operations of Seller if the transactions contemplated by this Agreement are not completed. Accordingly, Buyer and Macfadden shall take reasonable steps to ensure that such information about Seller obtained by it or any of its employees, officers, agents, lenders, attorneys or representatives shall remain confidential and shall not be used or disclosed or revealed to outside parties, except in connection with and as reasonably needed for Buyer and Macfadden to meet their obligations under this Agreement. If the transactions contemplated by this Agreement are 15 not consummated, upon written request, Buyer and Macfadden shall return to Seller all written information provided hereunder concerning Seller and its business and all analyses thereof prepared by or for Buyer or Macfadden, including all copies thereof. In addition, the terms of the Confidentiality Agreement, dated March 17, 1995, by and between T/SF and Macfadden, a copy of which is attached hereto as Exhibit "P," shall remain in full force and effect in accordance with its terms, and Buyer shall be bound by all of the terms thereof in the same manner and to the same extent as Macfadden. b. Public Announcements. T/SF and Buyer shall consult in advance --------------------- and cooperate with one another in connection with the preparation and publication of any press release or other public announcement with respect to this Agreement. Until the Closing, each party shall limit its public announcements and press releases to those required by applicable securities laws, it being recognized that T/SF is a public company and, as such, is subject to certain public disclosure obligations. c. Maintenance of Properties and Business. Seller shall conduct its --------------------------------------- business in the ordinary and usual course and shall maintain its properties and business and preserve its business organization and the goodwill of advertisers, subscribers, employees and suppliers. Additionally, without the prior written consent of Buyer or Macfadden, Seller shall not (other than with respect to the Excluded Assets and the business relating thereto): (i) engage in any activity or enter into any transaction that would cause any of the representations and warranties set forth in Section 4 hereof to be inaccurate if made as of a date subsequent to such activity or transactions, other than contracts entered into in the ordinary course of business; (ii) make any material change in the business or operations of Seller; (iii) make any type of investment in or loan to any other person or enterprise; (iv) merge with or into any other company or business or engage in any transaction which would have the same effect, e.g., a sale of substantially all of the assets or business of Seller; (v) enter into any material contractual arrangements, or materially altering any existing arrangements, other than in the ordinary and usual course of business; or (vi) agree to any of the foregoing. d. Interim Financial Statements. T/SF will furnish to Buyer interim ----------------------------- financial statements of Seller prepared for any period subsequent to March 31, 1995, when the same become available. 16 e. Notice of Breach. T/SF will immediately give notice to Buyer of ----------------- the occurrence of any event or the failure of any event to occur the result of which is a breach of a representation and warranty of T/SF or Seller or the failure by Seller or T/SF to comply with any covenant, condition or agreement contained herein. 5.02 CONSENTS, WAIVERS AND APPROVALS. As soon as practicable after ------------------------------- the date hereof, the parties shall use their best efforts to obtain in writing all consents, waivers, approvals and authorizations required to allow the consummation of the transactions contemplated hereby, it being understood that it is Seller's obligation to obtain any necessary consents to the transfer of the Transferred Assets to Buyer as herein contemplated. 5.03 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. In addition to the ------------------------------------------- Exhibits and other items specifically required to be furnished hereunder, the parties hereby agree that each will promptly furnish to the other such further schedules, certificates and other instruments and take such other action as may reasonably be requested in order to effectuate the purposes of this Agreement. 5.04 EMPLOYEES AND BUYER'S BENEFIT PLANS. (a) Buyer covenants and ----------------------------------- agrees that, at the Closing and as of the Effective Date, immediately upon the termination by Seller of the employment of the employees listed on Exhibit "F" hereto ("Buyer's Employees"), Buyer shall offer employment to all of Buyer's Employees on substantially the same economic terms as they are then employed by Seller, including time-in-service credit for accrued employment related benefits such as sick leave, vacation, severance and retirement and medical plans, and shall not apply any pre-existing condition rules under Buyer's medical plan to such employees. Provided, however, that Buyer reserves the right, which may only be exercised after four months following the Closing Date, to modify the terms upon which Buyer's Employees are employed with Buyer so as to achieve consistency with Buyer's policies, practices and procedures. As used herein, "Buyer's Employees" shall include any employee hired to replace any employee listed on Exhibit "F," subject to the right of Buyer to consent to any such hire, with such consent not to be unreasonably withheld. (b) Without limiting the generality of the foregoing, unless the matter or agreement giving rise to the claim or liability is a breach of any representation or warranty of Seller or T/SF under Section 4.15 hereof, Buyer shall be liable for, and shall indemnify and hold Seller and T/SF harmless from, any liability, including severance or other obligations, which may come due to any of Buyer's Employees, from and after the Effective Date. Provided, however, that Seller shall pay and reimburse Buyer, up to a maximum amount of $75,000, for and with respect to all Excess Benefit Amounts (as hereinafter defined) which Buyer may be required to pay to Buyer's Employees as a result of Buyer's obligations under this Section 5.04. "Excess Benefit Amounts" shall be defined as all amounts which Buyer may be required to pay to Buyer's Employees, on and after the Effective Date, for the following employee benefits, to the extent the amount paid pursuant to this Section 5.04 exceeds the amounts which Buyer would have paid to such employees under Buyer's existing employment policies and employee benefit plans: sick leave, vacation, severance, 401(k) and the amounts paid by Buyer for employee health insurance coverage. Any claim for reimbursement under this Section 5.04 shall be in writing and shall be paid within ten days after Seller's receipt of same, and any such claim, to be valid, must be 17 presented to Seller on or before one year after the Closing Date. For purposes of this Section 5.04, references to Buyer shall be deemed to include Macfadden. 5.05 COVENANTS-NOT-TO-COMPETE. It is acknowledged and agreed that ------------------------ some of Buyer's Employees have been involved with the activities of Seller related to the Excluded Assets and that the employees of Seller who are not Buyer's Employees, similarly, have experience and information relating to the business to be conducted by Buyer with the Transferred Assets. Accordingly, and as part of the consideration for the transaction described in this Agreement, at Closing, Seller and T/SF shall enter into a Covenant-Not-to-Compete with Buyer for a period of two years from the Effective Date, substantially in the form of Exhibit "Q" hereto and, similarly, Buyer and Macfadden shall enter into a Covenant-Not-to-Compete with Seller for a period of two years from the Effective Date, substantially in the form of Exhibit "R" hereto. 5.06 BOOKS AND RECORDS AND PERSONNEL. ------------------------------- a. It is understood and agreed that, on the Closing Date, Seller and T/SF shall deliver to Buyer all books, accounts, records, files, agreements and reports relating to the Transferred Assets and Buyer's Employees; provided, however, that, with respect to any personnel records relating to Buyer's Employees, Seller and T/SF shall only be obligated to deliver to Buyer the following records regarding each employee and any other records required by law to be transferred (collectively, the "Permitted Personnel Records"): (i) date of hire; (ii) reprimands and disciplinary action taken against such employee during the last five years; (iii) attendance records during the last five years; and (iv) pay records. In addition, Seller shall not be obligated to provide Buyer with any medical records regarding its employees. Notwithstanding the foregoing, in consideration of the indemnity provided by Buyer to Seller and T/SF as set forth at Section 8.02(ii) hereof, if Buyer requests any medical records or personnel records other than the Permitted Personnel Records, then Seller and T/SF shall provide same to Buyer promptly upon Buyer's request. b. It is understood and agreed that T/SF and Seller may, at its option, retain copies of any or all records transferred to Buyer pursuant to Section 5.06(a) above. It is also understood that Seller may have retained records which are useful to Buyer in the business to be conducted by it with the Transferred Assets. Accordingly, for a period of six years following the Effective Date, 18 (i) Neither Seller nor Buyer shall dispose of or destroy any of the existing business records and files of Seller (whether transferred in connection herewith or not) without first offering to turn over possession thereof to the other party by written notice to the other party at least 30 days prior to the proposed date of such disposition or destruction; (ii) Each of Buyer and Seller shall allow the other party access to all the business records and files of the other party which relate to assets transferred in connection herewith or assets of Seller which exist on the Effective Date, during normal working hours at any location where such records are stored, and the other party shall have the right, at its own expense, to make copies of any such records and files; provided, however, that any such access or copying shall be accomplished in such a manner so as not to interfere unreasonably with the normal conduct of the business of the party granting such access; and (iii) T/SF and Seller agree to allow Buyer reasonable access to files, records and information remaining in Seller's possession concerning Seller's operations and financial matters during the period up to the Effective Date. It is recognized that the effect of the transactions described in this Agreement is to split the businesses of Seller and, accordingly, it is probable that a perfect transfer of complete records with respect to only the Transferred Assets cannot or will not occur despite the best efforts of the parties. Accordingly, the intent of this Section 5.06 is to afford each party the opportunity to review records that relate to the business of Seller prior to and through the Closing Date to the extent reasonably necessary for the on-going business of each party, regardless of in whose possession such records are kept. It is also recognized that the covenants-not-to-compete to be entered into by each party pursuant to Section 5.05 above restrict each party's use of any such information. 5.07 USE OF NAME. Included within the Transferred Assets to be ----------- transferred to Buyer hereunder is the right to continue the use of the name "BMT Communications" or any derivative or similar name. T/SF and Seller agree that they will not use the name "BMT Communications" or any derivative thereof in any business operation after the Closing, except in connection with the transition of Seller to a new corporate name. Within 30 days after the Closing Date, Seller shall change its corporate name to a name which does not use and is not similar to "BMT Communications." 5.08 BULK SALES. Buyer hereby waives any necessary compliance by ---------- Seller with the bulk sales or any similar law in New York. T/SF and Seller hereby agree to indemnify, defend and hold Buyer harmless from and against any loss, claim, liability, cost or expense which Buyer may suffer or incur because of Seller's non-compliance with the New York bulk sales or similar laws; 19 provided, however, that this Section 5.08 shall have no effect on the liabilities agreed to be assumed by Buyer under Section 2 of this Agreement. 5.09 PRINTING CONTRACT; SUPPORT SERVICES. Exhibit "K" hereto ------------------------------------ includes a description of the printing contract (the "Printing Contract") currently held by Seller with Quebecor Printing [USA] Corp. ("Quebecor"). The Printing Contract provides for the printing by Quebecor of CSN, DJ, JPM and Gaming through the October 1996 issues. Subject to the condition that Quebecor consents prior to Closing, it is the intent of the parties that Seller assign all of its rights under the Printing Contract to Buyer, and that Buyer assume all of Seller's obligations thereunder, subject to Seller's continuing to utilize Quebecor and receive the benefits of the Printing Contract for Gaming through the term of the Printing Contract. Accordingly, Buyer and Seller shall cooperate fully to receive the consent of Quebecor to this arrangement and shall agree to all reasonable changes in the Printing Contract which Quebecor may request to effect this arrangement. Upon the consent of Quebecor to this arrangement, Buyer and Seller agree to cooperate to maintain the effectiveness of the Printing Contract and to fully comply with their respective separate obligations under the Printing Contract to ensure the continued effectiveness of the same for the benefit of both parties. If requested by Quebecor, Seller shall be treated as a subcontracting party to Buyer and, in such event, Buyer shall assume primary liability for all charges under the Printing Contract and will bill Seller for its costs of printing Gaming. In such event, Seller shall remit payment within 10 days of invoice therefor. 5.10 LEASE; USE OF EQUIPMENT. It is recognized that Buyer is ------------------------ assuming Seller's real estate leases in Chicago, Illinois, and Tampa, Florida, but not Seller's lease at Seven Penn Plaza, New York, New York (the "New York Lease"). It is also recognized that Seller may move its remaining business (the "Gaming Business") and its remaining employees ("Seller's Retained Employees") and the Excluded Assets out of the premises covered by the New York Lease (the "Leased Premises") if and when it decides to do so (if Seller moves the exact date of Seller's move out is referred to herein as "Seller's Departure Date"). Buyer desires to occupy the Leased Premises through January 31, 1996, and Seller desires to be able to continue to occupy the Leased Premises and utilize certain of the Transferred Assets and have the use of certain of Buyer's then employees until Seller's Departure Date (and possibly thereafter, as provided below). Accordingly, effective on the Effective Date, the parties agree as follows: (a) Buyer shall have the right to continue to occupy the Leased Premises through January 31, 1996, and, with respect to such occupation, shall be considered a subtenant of Seller. As of February 1, 1996, Buyer shall have vacated the Leased Premises and removed all of its property. Such subtenancy, in addition to the payments described herein, shall provide for the following: (i) Buyer shall be bound by and shall comply with all of the provisions of the New York Lease binding on Seller, including, without limitation, the provisions relating to the removal of property upon move out. Any failure of Buyer to comply with the provisions of this Section 5.10 shall entitle Seller, upon 10 days written notice specifying such failure (and during which time Buyer may cure the same) to require Buyer to vacate the 20 Leased Premises in which case Seller shall be entitled to (A) a payment of the maximum amount due it pursuant to this Section 5.10, due on demand, and (B) the free use of the Transferred Assets through September 30, 1995, and all of Seller's obligations and Buyer's rights under this Section 5.10 shall cease. (ii) Each of Seller and Buyer shall indemnify and hold harmless the other from and against any loss, liability, cost or claim to which the other may become subject by reason of any action or nonaction on the part of any agent or employee of the indemnifying party (whether such liability is contractual or by tort) or the failure of the indemnifying party to comply with any of the provisions of this Section 5.10 or the New York Lease. (iii) The parties shall endeavor to maintain separate phone systems, mailing equipment (including postage and postage meters), fax lines and supplies, but the parties shall act reasonably and in good faith in fairly reimbursing each other for any incidental use of the telephone, postage, fax or supplies of the other, it being recognized that the contemplated joint occupancy of the Leased Premises will be awkward and will require the good faith cooperation of both parties. (iv) Seller agrees to assist Buyer with any requests of Buyer of the landlord and to otherwise take all actions, including timely rental payments, to ensure the New York Lease stays in effect; provided, that nothing herein shall prevent Seller from appropriately contesting any alleged breach of the New York Lease by the landlord. (v) Buyer's then employees shall be entitled to occupy the areas currently occupied and the parties shall share all common areas. In addition, the former office of Hedy Halpert, former President of Seller, shall be available exclusively to Buyer and the small conference room in the northwest corner of the Leased Premises shall be available exclusively to Seller. (b) Until Seller's Departure Date (if Seller vacates the Leased Premises), Seller and Seller's Retained Employees and agents shall have the right to use any equipment or assets of Buyer in the Leased Premises. It is specifically contemplated that copiers and certain production equipment will be necessary for Seller to profitably conduct its business, and Buyer agrees to make available to Seller reasonable access to such equipment, in a manner consistent with the use thereof by the employees producing Gaming and the Transferred Magazines. Similarly, Buyer will be utilizing the System 36 computer system and related software and Seller agrees to make such assets available for Buyer's use through January 31, 1996 (it being recognized that the employees who have heretofore operated such system will then be employed by Buyer, and Seller shall not be required to supply any personnel to assist Buyer in its use of such assets). The parties shall cooperate in good faith on 21 the use of the Transferred Assets and the System 36 and related software to accommodate the legitimate needs of both parties. (c) Certain of Buyer's then employees, specifically the formerly shared employees, such as mail room and accounting employees, receptionist and the employees who operate Seller's System 36, will be made available to Seller for its reasonable needs consistent with past practices until the earlier of Seller's Departure Date or January 31, 1996. Similarly, Seller's circulation director (Zory Gojaniuk) and an accounting employee (Cord Brody) who are included in Seller's Retained Employees, shall be made available for Buyer's reasonable needs on a transitional basis through the earlier of Seller's Departure Date or January 31, 1996. (d) The parties recognize that Seller should pay Buyer for the use of the Transferred Assets and the use of the employees of Buyer and Buyer should pay Seller for the use of the Leased Premises and the use of Seller's Retained Employees. However, the parties have agreed that the value of what each is providing to the other is approximately the same and, therefore, the parties shall make no payments to each other through Seller's Departure Date. Thereafter, Buyer shall pay to Seller the sum of $6,800 per month (prorated for any partial month) due on the last day of each month beginning with the month of Seller's Departure Date. (e) At the election of Seller, to be made on or before Seller's Departure Date, Seller may continue to use the Transferred Assets for a period of 30 days after Seller's Departure Date, in which case the amount due from Buyer under subsection (c) above shall be zero for such 30 day period. 5.11 NAG/CSN EXPO. Exhibit "K" hereto includes a listing of that certain ------------- letter agreement, dated June 23, 1989, as amended (the "NAG Agreement"), by and between Seller and National Advisor Group ("NAG"), pursuant to which NAG and Seller jointly sponsor and operate a trade show known as the "NAG/CSN Expo" ("Expo"). The NAG Agreement is, by its terms, not assignable without the consent of NAG. Buyer and Seller agree to cooperate and use all reasonable efforts to obtain NAG's consent to the transfer of the NAG Agreement to Buyer. However, if such consent is not obtained by the Closing Date, Seller shall retain the NAG Agreement (unless NAG subsequently consents to the assignment of the NAG Agreement to Buyer), and shall subcontract all of Seller's rights and obligations thereunder to Buyer under the following terms: (a) The subcontract shall be co-terminus with the NAG Agreement. (b) Buyer shall assume and indemnify and hold Seller harmless from and against all obligations of Seller and all costs, liabilities, or claims arising under the NAG Agreement or in connection with the operation of EXPO, whether brought or claimed by NAG or any third party. 22 (c) Buyer shall retain all profits and revenues from EXPO or otherwise arising under the NAG Agreement. (d) Seller shall take no action under the NAG Agreement (such as notices to NAG or other ministerial matters) unless directed in writing by Buyer and Seller shall be reimbursed for its reasonable out-of-pocket expenses in taking any such action; provided, that it is not the intention of this subsection (d) to impose any affirmative obligations for EXPO on Seller. 5.12 MISCELLANEOUS CLOSING MATTERS. ------------------------------ a. The bank and credit card accounts maintained by Seller shall remain the property of Seller, and Buyer agrees to open and maintain new bank and, if desired by Buyer, credit card accounts from and after the Closing Date. b. It is recognized that Seller is retaining certain accounts receivable attributable to the business activities conducted by Seller with the Excluded Assets and that it is probable that certain payments with respect to such accounts receivable may be received by Buyer after the date hereof. In such event, Buyer agrees to promptly forward such payments to Seller and Seller shall have the right to endorse any such payments made out in the name of "BMT Communications" with such name for deposit and collection. Conversely, should Seller receive any payments on accounts receivable hereby sold to Buyer, Seller shall properly remit the same to Buyer. 5.13 BUYER'S ACTIVITIES. Neither Buyer nor Macfadden nor any of their ------------------- affiliates, officers, directors or employees will take any action (or omit to take any action) which would cause any representation or warranty contained in this Agreement to be untrue at any time prior to the Closing Date as if such representation or warranty were made at and as of such time. Buyer and Macfadden and their officers, directors and employees shall use their best efforts to cause the conditions to Closing specified herein to be satisfied so that a Closing may be effected hereunder. 5.14 HART, SCOTT, RODINO. Buyer and Seller shall each prepare and file ------------------- with the appropriate governmental authorities, as soon as practical after the date hereof, a premerger notification and report form and all other required documents pursuant to the Hart, Scott, Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and take such other actions as may reasonably be required to obtain early termination of the waiting period under the HSR Act. 5.15 ENVIRONMENTAL PERMITS. Seller agrees to cooperate with Buyer in ---------------------- connection with Buyer's application for the transfer, renewal or issuance of any permits, licenses, approvals or other authorizations or to satisfy any environmental regulatory requirements involving Seller's businesses or the Transferred Assets. 5.16 ACCOUNTS RECEIVABLE. After Closing, Buyer shall take no actions, ------------------- other than in the ordinary course of business consistent with past practices of Seller, which would adversely 23 affect the amount of net accounts receivable which would be included as Transferred Current Assets in the Effective Date Balance Sheet. SECTION 6. CONDITIONS TO OBLIGATIONS OF BUYER AND MACFADDEN 6. The obligations of Buyer to acquire the Transferred Assets and the respective obligations of Buyer and Macfadden to consummate the transactions contemplated hereby are subject to the satisfaction or waiver by Buyer and Macfadden of each of the following conditions at or prior to the Closing: 6.01 SELLER'S AND T/SF'S PERFORMANCE. Seller and T/SF shall have (i) ------------------------------- performed and complied in all material respects with all of their agreements, obligations and covenants under this Agreement, and the representations and warranties of each of them which are contained herein shall be true and correct in all material respects as of the Closing Date as though such representations and warranties were made at and as of the Closing Date, and (ii) delivered to Buyer a certificate to the foregoing effect. 6.02 NO ADVERSE CHANGE. Since the date of this Agreement, Seller shall not ----------------- have suffered any material adverse change to its business, prospects, operations, assets or financial condition relating to the Transferred Assets for which offsetting operational gains do not exist. 6.03 NO RESTRICTIONS. Neither Buyer nor Macfadden shall not have received --------------- any notice of (i) any order, ruling or regulation (general or specific) of any governmental, regulatory agency or authority having been issued or promulgated, (ii) any judicial or administrative action having been taken and which shall not have been rescinded, canceled or reversed, or (iii) any litigation having been instigated, which, in any such event, has the effect or purpose of prohibiting the transactions contemplated hereby or interfering with or materially affecting the right or ability of any party to this Agreement to consummate any of the transactions contemplated hereby, or which, if such litigation were determined adverse to Seller, would result in a material adverse effect on business, prospects, operations, assets or financial condition of the business conducted or to be conducted by Buyer with the Transferred Assets. 6.04 CONSENTS. All consents and approvals described on Exhibit "S" hereto -------- necessary to the acquisition of the Transferred Assets by Buyer and the consummation of the transactions contemplated hereby shall have been duly and validly obtained and shall remain effective as of the Closing. 6.05 DOCUMENT DELIVERY. Seller and T/SF shall have delivered the following ----------------- documents, appropriately executed, to Buyer and Macfadden: a. Bill of Sale and other assignment documents, substantially in the form of Exhibit "T" hereto, required to transfer ownership of the Transferred Assets to Buyer, with a separate assignment in such form being executed with respect to each assigned contract for which third party consent is required; 24 b. The Covenant-Not-To-Compete substantially in the form of Exhibit "Q"; c. Certified copies of the resolutions of the Board of Directors and shareholder of Seller and the Board of Directors of T/SF authorizing the execution and delivery of this Agreement and consummation of the transactions contemplated hereby; d. (i) Certificates of good standing from their respective states of incorporation issued with respect to Seller, Investment and T/SF as of a date not more than 30 days prior to the Closing Date; (ii) all such other documents as may be reasonably requested by Buyer or Macfadden, including secretaries' certificates relating to incumbency and corporate proceedings; and (iii) possession of all books, accounts, records, documents, files, agreements and reports relating to the Transferred Assets; e. The consents necessary under Section 7.05 hereof, which are to be obtained by T/SF and Seller; and f. Such other and further releases or other documents as may be reasonably necessary, in the opinion of counsel to Buyer, to effectuate the transactions contemplated by this Agreement. 6.06 COUNSEL'S OPINION. Buyer and Macfadden shall have received an ----------------- opinion, dated the Closing Date, of Conner & Winters, A Professional Corporation, counsel to Seller and T/SF, in substantially the form of Exhibit "U" hereto. 6.07 HART, SCOTT, RODINO. All applicable waiting periods under the HSR Act ------------------- relating to the transactions contemplated herein shall have expired or been terminated. SECTION 7. CONDITIONS TO OBLIGATIONS OF SELLER AND T/SF 7. The respective obligations of Seller and T/SF to consummate the sale of Transferred Assets to Buyer and the other transactions contemplated hereby are subject to the satisfaction or waiver by Seller and T/SF of each of the following conditions at or prior to the Closing: 7.01 BUYER'S AND MACFADDEN'S PERFORMANCE. Buyer and Macfadden shall have ----------------------------------- (i) performed and complied in all material respects with all of its agreements, obligations and covenants under this Agreement, and the representations and warranties of Buyer and Macfadden contained herein shall be true and correct in all material respects as of the Closing Date as though such representations and warranties were made at and as of the Closing Date, and (ii) delivered to T/SF and Seller a certificate to the foregoing effect. 7.02 NO RESTRICTIONS. Neither Seller nor T/SF shall have received any --------------- notice of (i) any order, ruling or regulation (general or specific) of any governmental, regulatory agency or authority having issued or promulgated, or (ii) any judicial or administrative action having been taken and which shall not have been rescinded, canceled or reversed, which, in any such event, has 25 the effect or purpose or would have the effect of prohibiting the transactions contemplated hereby or of interfering with or materially affecting the right or ability of any party to this Agreement to consummate any of the transactions contemplated hereby. No suit, litigation, action or other proceeding shall be pending or directly threatened in which it is sought (a) to restrain or prohibit consummation of the transactions contemplated by this Agreement, (b) to obtain a divestiture of a material part of the assets or properties of Seller or T/SF, or (c) to subject T/SF or Seller to a material liability. 7.03 DOCUMENT DELIVERY. Buyer and Macfadden shall have delivered the -------- following to T/SF and Seller, and where documents are involved, the documents shall be appropriately executed: a. The cash payments due (by wire transfer of funds as directed by Seller) at the Closing; b. The Covenant-Not-To-Compete substantially in the form of Exhibit "R" hereto; c. Certified copies of the resolutions of the members of Buyer and the Board of Directors of Macfadden authorizing the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; d. (i) Certificates of good standing from their respective states of organization issued with respect to Buyer and Macfadden as of a date not more than 30 days prior to the Closing Date; (ii) all such other documents as may be reasonably requested by Seller, including secretaries' certificates relating to incumbency and corporate proceedings; e. the consents necessary under Section 6.04 hereof; and f. Such other and further releases or other documents as may be reasonably necessary, in the opinion of counsel to Seller, to effectuate the transactions contemplated by this Agreement. 7.04 COUNSEL OPINION. T/SF and Seller shall have received an opinion, --------------- dated the Closing Date, of Arnelle, Hastie, McGee, Willis & Greene, counsel to Buyer and Macfadden, in substantially the form of Exhibit "V" hereto. 7.05 CONSENTS. T/SF and Seller shall have secured all consents and -------- approvals necessary to the sale of the Transferred Assets by Seller and the consummation of the transactions contemplated hereby, including but not limited to the consent and approval by each of T/SF's and Seller's lenders, Quebecor and the landlord pursuant to which Seller occupies its leased facilities, and such consents and approvals shall remain effective as of the Closing. 7.06 HART, SCOTT, RODINO. All applicable waiting periods under the HSR Act -------------------- relating to the transactions contemplated herein shall have expired or been terminated. 26 SECTION 8. INDEMNITY 8.01 SCOPE OF T/SF AND SELLER INDEMNITY. T/SF and Seller, jointly and ---------------------------------- severally, shall indemnify, defend and hold harmless Buyer and Macfadden and their shareholders, officers and directors after the Effective Date against and in respect of any damage or deficiency sustained by Buyer or Macfadden as a result of any assessment of taxes, judgments or as the result of any other liabilities of, or claims made against, Buyer and Macfadden of any nature with respect to Seller or its business or assets, whether accrued, absolute, contingent or otherwise, known or unknown (excluding any such damage or deficiency arising out of matters as to which Seller and T/SF are entitled to be indemnified by Buyer or Macfadden pursuant to Section 8.02 below), which (i) existed at, or arise out of transactions entered into or events occurring prior to, the Effective Date, to the extent that such tax, liability or claim is attributable for accounting purposes to the period prior to the Effective Date and is not otherwise assumed by Buyer herein, (ii) arise out of or the existence of which is a breach of any representation or warranty or the non-fulfillment of any covenant or undertaking of T/SF or Seller contained in this Agreement, or (iii) are required to be indemnified by Seller pursuant to Section 5.10 hereof. 8.02 SCOPE OF INDEMNITY OF BUYER. Buyer and Macfadden, jointly and --------------------------- severally, shall indemnify, defend and hold harmless T/SF and Seller and their shareholders, officers and directors after the Effective Date against and in respect of any damage or deficiency sustained by T/SF or Seller as a result of any assessment of taxes, judgments or as the result of any other liabilities of, or claims made against, T/SF or Seller of any nature, whether accrued, absolute, contingent or otherwise, known or unknown (excluding any such damage or deficiency arising out of matters as to which Buyer and Macfadden are entitled to be indemnified by Seller or T/SF pursuant to Section 8.01 above), which (i) arise out of or the existence of which is a breach of any representation or warranty or the non-fulfillment of any covenant or undertaking of Buyer or Macfadden contained in this Agreement; (ii) relate in any way to the Transferred Assets and arise or result from a transaction entered into, events occurring or liabilities incurred after, or attributable to the period following, the Effective Date; (iii) relate to any liability, obligation or agreement assumed by Buyer hereunder; (iv) relate to any claim, action, suit or proceeding brought by, or in the name of, any employee of Seller which Buyer has agreed to hire pursuant to Section 5.04 above against Seller and/or T/SF, including, without limitation, as a result of personnel records (other than the Permitted Personnel Records) and medical records provided by Seller to Buyer pursuant to Section 5.06 of this Agreement and Buyer's use thereof with respect to such employee; (v) are required to be indemnified by Buyer pursuant to Section 5.10 hereof, or (vi) arise under Section 5.11 hereof. 8.03 MAKING OF CLAIMS. A claim for indemnity pursuant to this Section 8 ---------------- may only be made by an indemnified party by written notice to the indemnifying party which notice shall be given within 30 days after the indemnified party becomes aware of the claim or matter giving rise to an indemnification right. Such written notice shall set forth in reasonable detail the basis upon which such claim for indemnity or right to indemnification is made. 27 8.04 LIMITATIONS. Except as herein specifically provided, no party hereto ----------- shall have a right of indemnity against any other party hereto until the aggregate value of the claim(s) for which indemnity is sought by such party exceeds $75,000. Neither T/SF and Seller in the aggregate, on the one hand, nor Buyer and Macfadden in the aggregate, on the other, shall in any event have a right to seek or impose any liability to pay any amount in excess of $5,000,000 in the aggregate pursuant to this Section 8. Any liability, claim or obligation which Buyer assumes under Section 2 hereof shall not be included in the determination of the $75,000 de minimis provision or the $5,000,000 aggregate limitation of this Section 8.04. These limitations shall not apply to any claim under Sections 5.04, 5.10 or 5.11 hereof. 8.05 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and ------------------------------------------ warranties of the parties and the indemnities contained in Sections 8.01 and 8.02 hereof shall, despite any investigation by or on behalf of an indemnified party, survive the Closing for a period of 16 months from and after the Effective Date; provided, that claims arising under Section 5.10 hereof shall survive until April 30, 1997; and provided further, that claims arising under Section 5.11 hereof shall survive for 16 months following the termination of the NAG Agreement. 8.06 CLAIMS AND LITIGATION. If any person or entity not a party to this --------------------- Agreement shall make any demand or claim or pursue or file or threaten to file any lawsuit, which demand, claim or lawsuit may result in any liability, damage or loss to an indemnified party for which the indemnified party may seek indemnity from an indemnifying party hereunder, after notice by an indemnified party to an indemnifying party of such demand, claim or lawsuit, the indemnifying party shall have the option, at the cost and expense of the indemnifying party, to retain counsel to defend any such demand, claim or lawsuit. Thereafter, the indemnified party shall be permitted to participate in such defense at its or their own expense. If the indemnifying party shall fail to respond within 30 days after receipt of such notice of any such demand, claim or lawsuit, or shall notify the indemnified party that it does not intend to defend such demand, claim or lawsuit, the indemnified party shall conduct the defense of such demand, claim or lawsuit as it or they may in their discretion deem proper, at the cost and expense of the indemnifying party. If the indemnifying party elects to assume the defense of a third party claim, the indemnified party will cooperate in all reasonable respects with the indemnifying party in connection with such defense including retaining and delivering to the indemnifying party records and information which are reasonably relevant to such third party claim. Whether or not the indemnifying party shall have assumed the defense of a third party claim, no party shall admit any liability with respect to, or settle, compromise or discharge, such third party claim without the prior written consent of the other parties, which consent shall not be withheld if the proposed settlement is in fact reasonable under the prevailing facts and circumstances. Nothing in this Section 8.06 shall prevent an indemnified party from taking such action as may be necessary prior to the end of the 30 day period provided for above to prevent a default judgment from being entered. 8.07 ATTORNEYS' FEES AND EXPENSES. The rights of an indemnified party ---------------------------- shall extend, subject to the limitations set forth in Section 8.04 above, to all interest, penalties, costs and expenses, including, without limitation, reasonable attorneys' fees, incident to any of the matters covered by Section 8.01 or 8.02 above, as the case may be. 28 SECTION 9. MISCELLANEOUS 9.01 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto) ---------------- shall,except as specifically set forth herein,supersede all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof, and no party shall be liable or bound to the other in any manner by any warranties or representations not set forth herein or contemplated hereby. 9.02 SUCCESSORS AND ASSIGNS. The terms and conditions of this Agreement ---------------------- shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto. This Agreement may not be assigned by any party without the prior written consent of the other parties hereto and any purported assignment in violation of this Section 9.02 shall be void. Nothing expressed or implied in this Agreement is intended to or shall be construed to give any person other than Buyer, Seller, Macfadden, T/SF and their respective successors and permitted assigns any legal or equitable right, remedy or claim under or in respect of this Agreement, it being the intention of the parties hereto that this Agreement shall be for the sole and exclusive benefit of such parties and their successors and assigns and for the benefit of no other person. 9.03 HEADINGS. The headings of the sections and subsections of this -------- Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof. 9.04 MODIFICATION AND WAIVER. Any of the terms or conditions of this ----------------------- Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof, and this Agreement may be modified or amended at any time by agreement of the parties. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by all of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver. 9.05 TERMINATION. This Agreement may be terminated at any time prior to ------------ the Closing Date as follows: a. by the mutual written consent of Buyer, Macfadden, T/SF and Seller; b. by Buyer and Macfadden, if any of the conditions to its obligations specified in Section 6 has not been satisfied on or prior to the Closing Date or shall have become impossible to fulfill for reasons beyond the control of Buyer and Macfadden and shall not have been waived by Buyer and Macfadden; c. by T/SF and Seller if any of the conditions to their obligations specified in Section 7 has not been satisfied on or prior to the Effective Date or shall have become impossible to fulfill for reasons beyond the control of T/SF and Seller and shall not have been waived by T/SF and Seller; or 29 d. by Buyer and Macfadden or T/SF and Seller if it is determined in good faith that the consummation of this Agreement has become inadvisable or impracticable by reason of a threat or initiation of any litigation or proceedings or the institution of a formal investigation, in either case to restrain or prohibit the consummation of this Agreement or any part hereof or to obtain any other relief in connection with the transactions contemplated hereby. In the event of the termination and abandonment of this Agreement as provided in this Section 9.05, this Agreement shall forthwith be void and have no effect, without any liability on the part of any party (except as provided in Sections 3.03 and 5.01a) or on the part of any of their respective directors, officers or stockholders. Nothing contained in this Section 9.05 shall relieve any party from liability for any breach of this Agreement. 9.06 EXHIBITS. All Exhibits annexed hereto and the documents, certificates -------- and instruments required to be delivered simultaneously herewith or at or prior to the Closing are expressly made a part of this Agreement as fully as though completely set forth herein, and all references to this Agreement herein or in any such Exhibits, documents, certificates or other instruments shall be deemed to refer to and include all such Exhibits, documents, certificates and instruments. 9.07 NOTICES. Any notice, request, instruction or other document required ------- or permitted to be given hereunder by any party hereto to any other party shall be in writing and delivered personally, sent by registered or certified mail, or by facsimile transmission: If to T/SF or Seller to: Howard G. Barnett, Jr., President T/SF Communications Corporation 2407 East Skelly Drive Tulsa, Oklahoma 74105 Fax: 918-743-1291 with a copy, which shall not constitute notice, to: Robert A. Curry, Esq. Conner & Winters 2400 First Place Tower 15 East Fifth Street Tulsa, Oklahoma 74103 Fax: 918-586-8548 30 and if to Macfadden or Buyer, to such party at the following address: Maynard Rabinowitz Vice Chairman, Macfadden Holdings, Inc. 235 Park Avenue South New York, NY 10003 Fax: 212-979-7344 with a copy, which shall not constitute notice, to: Sol V. Slotnik, Esq. Arnelle, Hastie, McGee, Willis & Greene One Battery Park Plaza, 12th Floor New York, NY 10004-1482 Fax: 212-742-9506 or at such other address or facsimile transmission number for a party as shall be specified by like notice. Any notice which is delivered personally or by facsimile transmission in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed upon actual receipt by such party. Any notice which is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the third day after the day it is so placed in the mail. 9.08 GOVERNING LAW. The parties hereby agree that this Agreement shall be ------------- construed, enforced and governed by the laws of the State of New York. 9.09 EXTENSION OR WAIVER. At any time prior to the Closing, T/SF or Seller, ------------------- on the one hand, or Buyer or Macfadden, on the other, may (a) extend the time for the performance of any of the obligations or other acts of the other, (b) waive any inaccuracies in the representations and warranties of the other contained herein or in any document, certificate or writing delivered pursuant hereto, or (c) waive compliance by the other with any of the agreements, covenants or conditions contained herein. Any agreement on the part of any party to any such extension or waiver shall be valid only if set forth in a written instrument signed by such party. 9.10 INVALID PROVISIONS. If any provision of this Agreement is held to be ------------------ illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. 9.11 EXPENSES. Except as otherwise specifically provided herein, whether or -------- not the transactions contemplated by this Agreement are consummated, all legal, accounting and other costs and expenses in connection with this Agreement and the transactions contemplated hereby incurred by T/SF or Seller shall be paid by them, and such expenses incurred by Buyer or Macfadden shall be paid by them. 31 9.12 COUNTERPARTS. This Agreement may be executed in multiple ------------- counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. 9.13 FURTHER ASSURANCES. For no additional consideration, each party ------------------- hereto agrees that it shall provide to any other party, as from time to time requested, such additional documents, instruments or agreements as any such other party shall reasonably request to further evidence or put into effect the agreements set forth herein. Each of the parties hereto has executed this Agreement the date and year first-above written. "Buyer" TRADE PUBLISHING L.L.C. By: /s/ Anna Blanco ------------------------ Name: Anna Blanco ----------------- Title: Manager ----------------- "Seller" BMT COMMUNICATIONS, INC. By: /s/ Stuart P. Honeybone ------------------------------ Name: Stuart P. Honeybone ----------------------- Title: President ----------------------- 32 The above is acknowledged and agreed to by T/SF Communications Corporation to the extent it has agreed to certain matters pursuant to the foregoing Agreement. Dated this 16th day of June, 1995. "T/SF" T/SF COMMUNICATIONS CORPORATION By: /s/ Robert E. Craine, Jr. -------------------------------- Name: Robert E. Craine, Jr. ------------------------- Title: Executive Vice President ------------------------- The above is acknowledged and agreed to by Macfadden Publishing, Inc., to the extent it has agreed to certain matters pursuant to the foregoing Agreement. In addition, Macfadden Publishing, Inc., hereby absolutely and unconditionally guarantees the performance by Trade Publishing, L.L.C. of its obligations under the foregoing Agreement. Dated this 16th day of June, 1995. "Macfadden" MACFADDEN PUBLISHING, INC. By: /s/ Anna Blanco ------------------------- Name: Anna Blanco ------------------ Title: Vice President ------------------ 33 The following exhibits to the Asset Purchase Agreement have been omitted, but will be furnished supplementally to the Commission upon request. INDEX
DESCRIPTION EXHIBIT ----------- ------- Transferred Assets A Excluded Assets B Allocation of Purchase Price C Financial Statements of Seller D Payables Assumed by Buyer E Buyer's Employees F Non-Competition Agreements G Assignment of Employment and Non-Competition Agreements H Officers and Directors of Buyer I Officers and Directors of Seller and Officers of T/SF J Material Contracts K Claims and Litigation L Licenses and Permits M Employees, Employment Agreements, Benefit Plans, Labor Matters N Tradenames, Trademarks, Service Marks and Copyrights O Confidentiality Agreement P Form of Covenant-Not-To-Compete of Seller and T/SF Q Form of Covenant-Not-To-Compete of Buyer R Consents S Form of Bill of Sale, Transfer and Assignment T Form of Opinion of Counsel for Seller and T/SF U Form of Opinion of Counsel for Buyer V
34 EX-10.5 6 MEMO OF CLOSING Exhibit 10.5 MEMORANDUM OF CLOSING AND AMENDMENT TO AGREEMENT SALE BY BMT COMMUNICATIONS INC., A WHOLLY-OWNED SUBSIDIARY OF T/SF COMMUNICATIONS CORPORATION, OF CONVENIENCE STORE NEWS, UNITED STATES DISTRIBUTION JOURNAL ---------------------------------------------------------- AND THE JOURNAL OF PETROLEUM MARKETING ---------------------------------- TO TRADE PUBLISHING L.L.C., AN AFFILIATE OF MACFADDEN PUBLISHING, INC. ---------------------------------------------------------------------- I. THE CLOSING; TIME AND PLACE. On Wednesday, August 2, 1995, at 11:00 ---------------------------- a.m., EDT, at the offices of Arnelle, Hastie, McGee, Willis and Greene, counsel to Trade Publishing L.L.C., a Delaware limited liability company ("Buyer"), there took place the closing (the "Closing"), pursuant to that certain Asset Purchase Agreement (the "Agreement"), dated June 16, 1995, by and between Buyer, an affiliate of Macfadden Publishing, Inc., a Delaware corporation ("Macfadden"), and BMT Communications Inc., an Oklahoma corporation ("Seller"), a subsidiary of T/SF Communications Corporation, a Delaware corporation ("T/SF"), of the sale of the business (and related assets and certain liabilities) related to the publishing of various trade magazines and associated activities, including the publishing of Convenience Store News, United ------------------------------ States Distribution Journal and The Journal of Petroleum Marketing, as --------------------------- ---------------------------------- described in the Agreement (the assets transferred are referred to in the Agreement as the "Transferred Assets"), all on the terms and conditions specified in the Agreement as herein amended, and certain transactions incidental to the foregoing. II. PERSONS PRESENT AT CLOSING. At Closing, the following persons were --------------------------- present: For Seller and T/SF: ------------------- Howard G. Barnett, Jr., Chairman, President and Chief Executive Officer of T/SF and Chairman and Chief Executive Officer of Seller Robert E. Craine, Jr., Executive Vice President of T/SF and Vice President of Seller J. Gary Mourton, Senior Vice President, Chief Financial Officer and Treasurer of T/SF and Secretary-Treasurer of Seller Stuart P. Honeybone, Vice President and Assistant Secretary of T/SF and President of Seller For Buyer and Macfadden: ------------------------- Michael Boylan, Vice Chairman of Macfadden and Manager of Buyer Maynard Robinowitz, Vice Chairman of Macfadden and Manager of Buyer Anna Blanco, Vice President of Macfadden and Manager of Buyer Sol V. Slotnik, Esq., of Arnelle, Hastie, McGee, Willis & Greene, counsel to Macfadden and Buyer For Oppenheimer & Co., Inc.: ---------------------------- Robert Poupolo, Managing Director John E. Stuart, Vice President III. ACTION TAKEN PRIOR TO CLOSING. ------------------------------ On June 16, 1995, Buyer and Seller entered into the Agreement, which previously had been approved by the respective boards of directors of the parties. On June 21, 1995, Seller and T/SF filed their information for compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended ("HSR"). On June 30, 1995, Buyer and Macfadden filed their information for compliance with HSR. On July 20, 1995, counsel to the parties received a telephone call (confirmed by letter of the same date) from the United States Federal Trade Commission informing the parties that early termination of the waiting period had been granted under HSR. IV. ACTION TAKEN AT CLOSING. ------------------------ All transactions occurring at Closing were deemed to have taken place simultaneously, unless specifically noted otherwise, and were conditioned upon completion of all contemplated transactions, none of which, except as specifically stated, were effective until all were completed. Unless otherwise indicated, all documents and instruments were dated August 2, 1995 (the "Closing Date"), with the effective date, for financial purposes, being the close of business on June 30, 1995 (the "Effective Date"). One executed copy of each document was delivered to each of Buyer, Seller and their respective counsel. 2 A. Documents delivered by Seller or T/SF: -------------------------------------- 1. The following consents relating to the assignment of contracts or licenses were delivered: a. Petroleum Marketing Association of America b. Global Turnkey Systems, Inc. c. Quebecor Printing (USA) Corp. d. 370 Seventh Avenue Associates L.L.C. Hedy Halpert, Samuel Kowalski and Daniel Petrocelli declined to consent to the transfer of the employment portion of their respective employment agreements. Irving Babson did not consent nor did he refuse consent to the transfer of the non- competition agreement with him. 2. The opinion of Conners & Winters, counsel to Seller and T/SF, in substantially the form of Exhibit "U" of the Agreement. 3. Certificate of Secretary of Seller regarding resolutions by the Board of Directors of Seller authorizing the execution and delivery of the Agreement and the consummation of the transactions contemplated thereby. 4. Certificate of Assistant Secretary of T/SF regarding resolutions by the Board of Directors of T/SF authorizing the execution and delivery of the Agreement and the consummation of the transactions contemplated thereby. 5. Certificate of Seller regarding approval of the Agreement and the consummation of the transactions contemplated thereby by T/SF Investment Co., sole stockholder of Seller. 6. Certificate of officers of Seller and T/SF complying with Section 6.01(ii) of the Agreement. 7. Certificates of good standing from their respective states of incorporation for Seller, T/SF and T/SF Investment Co., a Delaware corporation. 8. Bill of Sale in the form of Exhibit "T" to the Agreement. 9. Three separate Assignment of Registration of a Mark assigning the names "Convenience Store News," "United States Distribution Journal," and "The Journal of Petroleum Marketing" to Buyer. 3 10. Assignment of Non-Competition Agreements in the form of Exhibit "H" to the Agreement. 11. Covenant-Not-to-Compete in the form of Exhibit "Q" to the Agreement. B. Documents delivered by Buyer or Macfadden: ----------------------------------------- 1. Opinion of Arnelle, Hastie, McGee, Willis & Greene, counsel to Buyer and Macfadden, in substantially the form of Exhibit "V" to the Agreement. 2. Certificates of resolutions of the members of Buyer and the Board of Directors of Macfadden authorizing the execution and delivery of the Agreement and the consummation of the transactions contemplated thereby. 3. Certificates of good standing from the Secretary of State of the State of Delaware for Buyer and Macfadden. 4. Certificates of officers of Buyer and Macfadden complying with Section 7.01(ii) of the Agreement. 5. Assumption of liabilities complying with Section 2.02(b) of the Agreement. 6. Covenant-Not-to-Compete in the form of Exhibit "R" to the Agreement. 7. Wire transfer of $21,000,000, the purchase price, pursuant to wire instructions delivered by T/SF. C. Additional Actions Taken at Closing. The parties executed and ----------------------------------- delivered this Memorandum of Closing and Amendment to Agreement to acknowledge the matters set forth herein and to effect the amendment of the Agreement contemplated by Section VII below. V. CONDITIONS PRECEDENT. The parties reviewed the evidence of the -------------------- satisfaction of the various conditions precedent to their respective obligations, as outlined in the Agreement, as herein amended, including, without limitation, Sections 6 and 7 of the Agreement, such evidence including minutes or certificates of resolutions of the various entities involved, evidence regarding the approval of necessary third parties, and early termination under HSR. It was determined that all conditions precedent to a closing of the transactions under the Agreement had been satisfied. 4 VI. ACTIONS TO BE TAKEN AFTER CLOSING. --------------------------------- A. A press release concerning the Closing in the form attached hereto as Exhibit "A" shall be issued jointly by the parties. B. Form 8-K promulgated by the Securities and Exchange Commission shall be filed by T/SF. C. Within thirty days of the date hereof, Seller shall change its name and shall no longer use "BMT" in any form of its name. D. The Working Capital adjustment contemplated by Section 2.02c of the Agreement and Interim Operations adjustments contemplated by Section IV.D below will be made. VII. AMENDMENTS TO AGREEMENT. By execution hereof, the parties agree ----------------------- to the following amendments of the Agreement, effective as of the Effective Date: A. Transferred Software. The software for the System 36 which is -------------------- licensed by Seller from Global Turnkey Systems, Inc., known as "imps Publishing System" shall be included as a Transferred Asset and shall be transferred at Closing to Buyer. Section 5.10 of the Agreement is hereby amended by replacing the third sentence in subsection (d) thereof with the following sentence: "Similarly, Seller will be utilizing the System 36 computer system owned by Seller to run certain software included in the Transferred Assets and Buyer will be utilizing such software for its separate activities, and Seller agrees to make the System 36 computer system available for Buyer's use and Buyer agrees to make the related software available for Seller's use through January 31, 1996 (it being recognized that the employees who have heretofore operated such system and software will then be employed by Buyer, and Seller shall not be required to supply any personnel to assist Buyer in the use of the System 36 computer system or such software)." B. Extension of Benefits. Section 5.04 of the Agreement is amended --------------------- to provide that the reference to "four months" in the second sentence of subsection (a) thereof shall become "six months." C. Effective Date. The second sentence of Section 2.03 of the -------------- Agreement is amended in its entirety to read as follows: "The date of closing shall be referred to herein as the "Closing Date" and the "Effective Date" shall be the close of business on June 30, 1995." 5 D. Interim Operations. Because the business conducted with the ------------------- Transferred Assets has been operated by Seller from the Effective Date to the Closing Date, it shall be necessary for the parties to account for the activities during such interim period. It is hereby agreed that, in addition to providing financial statements through the Effective Date as required above, Seller shall also provide, within the time provided in Section 2.02c(i) above, a statement of operations for the period from the Effective Date through the Closing Date (the "Interim Period Financials") which shall track the Transferred Assets, the liabilities assumed pursuant to Section 2.02b., the collection of receivables and the payment of expenses such that, in addition to the Working Capital adjustment provided in said Section 2.02c, the parties can further adjust for the net effect of such activities since the Effective Date. The payment of the net amount due shall be made with (or netted against) the payment for the Working Capital adjustment under Section 2.02c. Buyer shall have a right to review and object to the Interim Period Financials, and disputes shall be resolved, as provided in Section 2.02c. for the Closing Financial Statements. The intent of this paragraph is for each party to account to the other for benefits which it has received or expenses which it has incurred which would have been attributable to the other party if the Closing had occurred as of the Effective Date, including, as to expenses incurred by Seller since such date, an allocable portion of those general expenses of Seller which, in accordance with and to the same extent as with past accounting practices of Seller, have been allocated to the business conducted with the Transferred Assets. For example, the accounts receivable for purposes of the Working Capital adjustment in Section 2.02c will be determined as of June 30, 1995; since such date, Seller has collected certain of such receivables and, pursuant to this paragraph, would account to Buyer for such collections. Similarly, Seller would have incurred various expenses since the Effective Date, such as for employees' salaries and publication costs, which would be subject to accounting and reimbursement by Buyer. The Agreement provides that included in the Transferred Assets are to be 561,500 pounds of 38-pound newsprint. For purposes of determining Working Capital, 561,500 pounds of the 38-pound newsprint owned by Seller at June 30, 1995, shall be deemed owned by Buyer on the Effective Date. In addition, the Bill of Sale to be delivered by Seller to Buyer shall transfer an amount of such paper equal to the difference of 561,500 pounds of such paper less the amount consumed in printing the Transferred Magazines after the Effective Date through the Closing Date. E. NAG Agreement. The parties acknowledge that they have used ------------- their best efforts to acquire the consent of National Advisory Group ("NAG") to the assignment of the NAG Agreement (as defined in the Agreement) as contemplated by Section 5.11 of the Agreement. However, such consent has not been received. Accordingly, the Bill of Sale to be delivered at Closing by Seller shall exclude the NAG Agreement and the same shall never be assigned to Buyer unless NAG should later consent thereto. In lieu of any assignment thereof, as between Seller and NAG, Seller shall remain fully responsible for meeting Seller's obligations 6 under the NAG Agreement. As between Seller and Buyer, by closing under the Agreement, Seller shall be deemed to have subcontracted its obligations and responsibilities to Buyer on the terms of Section 5.11 of the Agreement. In addition to Buyer's obligation under said Section 5.11, Buyer hereby agrees to use all reasonable efforts, consistent with good business practices, to ensure that all of Seller's responsibilities under the NAG Agreement are faithfully met. Subject to Buyer's compliance with the foregoing obligations and its compliance with the NAG Agreement, if NAG should claim that the subcontract under Section 5.11 of the Agreement is a violation of the NAG Agreement, then Seller agrees as follows: (i) Seller, at its sole expense, shall undertake and vigorously conduct the legal defense of the parties' actions hereunder as not being a breach of a material portion of the NAG Agreement and defend any counterclaim or similar action by NAG as a result of the parties actions hereunder; and (ii) Should NAG prevail in such an action and have the subcontracting of the NAG Agreement declared a breach of a material provision of the NAG Agreement, Seller, at its sole expense, shall undertake any legal action reasonably necessary to enforce the provisions of paragraph 9(c) of the NAG Agreement. subcontracting Buyer shall cooperate reasonably with Seller, at Seller's expense, in any of the above actions. Seller shall be entitled to rely on the advise of counsel regarding the likelihood of success of any appeal of any adverse ruling in any action described in (i) or ii) above and shall not be obligated to pursue an appeal which Seller is advised by counsel does not have a reasonable chance of success. Buyer, at its sole expense, may prosecute an appeal if Seller, in compliance with the preceding sentence, elects not to do so. In such event, Seller shall cooperate reasonably with Buyer, at Buyer's expense, in such appeal. The parties recognize that the arbitration clause of the NAG Agreement may require that the issues described herein be settled by arbitration and that the ability to appeal from a ruling in arbitration may be limited. F. First Payroll; Medical. Buyer's next payroll is August 4, 1995. ---------------------- On such date, Buyer shall deliver to Seller payroll checks for all Buyer's Employees (as defined in the Agreement) for the period July 28, 1995 (Seller's last pay period having ended July 27, 1995), through August 2, 1995, and Buyer shall deliver such checks to such employees with its payroll check for the period August 3-4, 1995. Buyer has requested Seller to continue to cover Buyer's Employees under Seller's medical insurance plan until August 31, 1995. Seller hereby agrees to maintain such coverage and, as part of the interim period adjustments contemplated by Section VII.D. above, Seller shall be reimbursed its $12,400 costs for such continued coverage as well as the cost of such payroll. 7 G. No Other Changes. Except as specifically provided above in this ---------------- Section VII of this Memorandum of Closing and Amendment to Agreement, the parties hereby ratify and confirm the terms and provisions of the Agreement. Capitalized terms used in this Section VII and not defined shall have the meaning ascribed to them in the Agreement. IN WITNESS WHEREOF, the parties have executed this Memorandum of Closing and Amendment to Agreement this 2nd day of August, 1995. BMT COMMUNICATIONS INC. By: /s/ Stuart Honeybone ----------------------------------- T/SF COMMUNICATIONS CORPORATION By: /s/ Howard G. Barnett, Jr. ------------------------------------ TRADE PUBLISHING L.L.C. By: /s/ Anna Blanco ------------------------------------ MACFADDEN PUBLISHING, INC. By: /s/ Anna Blanco ----------------------------------- 8 Exhibit A" PRESS RELEASE For More Information, Call:
Howard G. Barnett, Jr., Chairman, Chief Executive For Immediate Release Officer and President August 2, 1995 Robert E. Craine, Jr., Executive Vice President J. Gary Mourton, Senior Vice President-Finance Telephone: 918-747-2600
T/SF COMMUNICATIONS COMPLETES SALE OF TRADE PUBLICATIONS TO MACFADDEN PUBLISHING New York, NY. T/SF Communications Corporation (AMEX - TCM) today announced that it has closed its previously announced sale of three trade magazines and their related activities to an affiliate of Macfadden Publishing, Inc. The magazines, Convenience Store News, United States Distribution Journal and The ---------------------------------------------------------- --- Journal of Petroleum Marketing, were sold to the Macfadden affiliate for the ------------------------------ payment of $21,000,000 in cash at closing. Howard G. Barnett, Jr., Chairman, President and Chief Executive Officer of T/SF Communications, stated: "With this sale and completion of our merger in May of this year with our then parent company, Tribune/Swab-Fox Companies, Inc., we have completed the restructuring program which we embarked on two years ago. T/SF is now well positioned for future profitability and growth, both from internal activities and through acquisitions. In addition to its non-trade publishing activities, including its pre- employment screening/information and its exposition services divisions, T/SF is retaining its International Gaming and Wagering Business and EXPO magazines, and ------------------------------------------ ---- their associates activities, including the World Gaming Congress. 9 EX-11 7 COMPUTATION OF EARNINGS Exhibit 11 T/SF COMMUNICATIONS CORPORATION Computation of Earnings per Share (In thousands, except per share amounts)
Three Months Ended June 30, 1995 1994 ----------- ------------ (Unaudited) PRIMARY EARNINGS PER SHARE: Income from continuing operations $ 544 $ 556 Add: After tax interest expense applicable to 11% Convertible Debentures due 1997 -- 10 Deduct: Dividends on New Senior Preferred Stock -- (26) Dividends on Class A Preferred Stock -- (3) ----------- ------------ Income before discontinued operations applicable to common and common equivalent shares 544 537 Discontinued operations, net of income tax 7 (63) ----------- ------------ Net income applicable to common and common equivalent shares $ 551 $ 474 =========== ============ Weighted average number of common and common equivalent shares outstanding Common shares 3,872 3,735 Common equivalent shares: From 6 1/2% Preferred Stock -- 173 From 11% Convertible Debentures due in 1997 -- 35 ----------- ------------ 3,872 3,943 Income per common =========== ============ and common equivalent share: Continuing operations $ 0.14 $ 0.14 Discontinued operations - (0.02) ----------- ------------ Net income per common share $ 0.14 $ 0.12 =========== ============ FULLY DILUTED EARNINGS PER SHARE: Income before discontinued operations $ 544 556 Add: After tax interest expense applicable to: 11% Convertible Debentures due in 1997 -- 10 11% Convertible Debentures due in 1998 14 14 Deduct: Dividends on Class A Preferred Stock -- (3) ----------- ------------ Income before discontinued operations applicable to common and common equivalent shares 558 577 Discontinued operations, net of income tax 7 (63) ----------- ------------ Net income applicable to common and common equivalent shares $ 565 $ 514 =========== ============
T/SF COMMUNICATIONS CORPORATION Computation of Earnings per Share - Continued- (In thousands, except per share amounts)
Three Months Ended June 30, 1995 1994 ---------- ---------- (Unaudited) FULLY DILUTED EARNINGS PER SHARE - Continued: Weighted average number of common and common equivalent shares outstanding Common shares and common equivalent shares 3,872 3,943 Assumed conversion of 11% Debentures due in 1998 44 44 Assumed conversion of New Senior Preferred Stock -- 122 ---------- ---------- 3,916 4,109 ========== ========== Income per common and common equivalent share: $ 0.14 $ 0.14 Continuing operations -- (0.01) Discontinued operations ---------- ---------- Net income per common share $ 0.14 $ 0.13 ========== ==========
Exhibit 11 T/SF COMMUNICATIONS CORPORATION Computation of Earnings per Share (In thousands, except per share amounts)
Six months ended June 30, 1995 1994 ---------- ----------- (Unaudited) PRIMARY EARNINGS PER SHARE: Income from continuing operations $ 862 $ 1,015 Add: After tax interest expense applicable to 11% Convertible Debentures due 1997 - 34 Deduct: Dividends on New Senior Preferred Stock - (51) Dividends on Class A Preferred Stock - (8) ---------- ----------- Income before discontinued operations applicable to common and common equivalent shares 862 990 Discontinued operations, net of income tax (15) 234 ---------- ----------- Net income applicable to common and common equivalent shares $ 847 $ 1,224 ========== =========== Weighted average number of common and common equivalent shares outstanding Common shares 3,869 3,735 Common equivalent shares: From 6 1/2% Preferred Stock - 173 From 11% Convertible Debentures due in 1997 - 71 ---------- ----------- 3,869 3,979 ========== =========== Income per common and common equivalent share: Continuing operations $ 0.22 $ 0.25 Discontinued operations - 0.06 ---------- ----------- Net income per common share $ 0.22 $ 0.31 ========== =========== FULLY DILUTED EARNINGS PER SHARE: Income before discontinued operations $ 862 $ 1,015 Add: After tax interest expense applicable to: 11% Convertible Debentures due in 1997 - 34 11% Convertible Debentures due in 1998 28 28 Deduct: Dividends on Class A Preferred Stock - (8) Income before discontinued operations ---------- ----------- applicable to common and common equivalent shares 890 1,069 Discontinued operations, net of income tax (15) 234 ---------- ----------- Net income applicable to common and common equivalent shares $ 875 $ 1,303 ========== ===========
T/SF COMMUNICATIONS CORPORATION Computation of Earnings per Share - Continued - (In thousands, except per share amounts)
Six months ended June 30, 1995 1994 ------------ ------------ (Unaudited) FULLY DILUTED EARNINGS PER SHARE - Continued: Weighted average number of common and common equivalent shares outstanding Common shares and common equivalent shares 3,869 3,978 Assumed con version of 11% Debentures due in 1998 44 44 Assumed conversion of New Senior Preferred Stock - 122 ------------ ------------ 3,913 4,144 ============ ============ Income per common and common equivalent share: Continuing operations $ 0.23 $ 0.26 Discontinued operations - 0.06 ------------ ------------ Net income per common share $ 0.23 $ 0.32 ============ ============
EX-27 8 FDS, ARTICLE 5
5 This schedule contains summary financial information extracted from Form 10-Q for the six months ended June 30, 1995 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1995 JAN-01-1995 JUN-30-1995 1,721 0 10,554 653 437 24,937 8,544 3,696 47,187 17,471 4,612 372 0 0 21,998 47,187 29,634 30,436 20,411 20,411 7,568 0 434 2,023 895 862 (15) 0 0 847 .22 0