-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WybkzefOlWMmzPmdYWC4NTpck9B5l540HWZBjY7E+2FTUNf1dVw+ApU+srSWYAdW alrbQ9lvGLfuNmhtqHZ4ew== 0000950152-98-008400.txt : 19981029 0000950152-98-008400.hdr.sgml : 19981029 ACCESSION NUMBER: 0000950152-98-008400 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19981028 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LAS VEGAS DISCOUNT GOLF & TENNIS INC CENTRAL INDEX KEY: 0000793044 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS SHOPPING GOODS STORES [5940] IRS NUMBER: 841034868 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-54765 FILM NUMBER: 98732305 BUSINESS ADDRESS: STREET 1: 5325 S VALLEY VIEW BLVD STE 10 CITY: LAS VEGAS STATE: NV ZIP: 89118 BUSINESS PHONE: 7027987777 MAIL ADDRESS: STREET 1: 53 FORMER COMPANY: FORMER CONFORMED NAME: LAGUNA CAPITAL CORP DATE OF NAME CHANGE: 19890123 FORMER COMPANY: FORMER CONFORMED NAME: LA JOLLA CAPITAL CORP DATE OF NAME CHANGE: 19860526 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: ASI GROUP LLC CENTRAL INDEX KEY: 0001072359 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 341875736 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O AGASSI ENTERPRISES INC STREET 2: 3960 HOWARD HUGES PARKWAY, SUITE 750 CITY: LAS VEGAS STATE: NV ZIP: 89109 BUSINESS PHONE: 7022275700 MAIL ADDRESS: STREET 1: C/O AGASSI ENTERPRISES INC STREET 2: 3960 HOWARD HUGES PARKWAY SUITE 750 CITY: LAS VEGAS STATE: NV SC 13D 1 LAS VEGAS DISCOUNT GOLF & TENNIS, INC. SC 13D 1
---------------------------- OMB APPROVAL ---------------------------- OMB Number: 3235-0145 Expires: August 31, 1999 UNITED STATES Estimated average burden SECURITIES AND EXCHANGE COMMISSION hours per expense....14.90 WASHINGTON, D.C. 20549 ----------------------------
SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No.____)* LAS VEGAS DISCOUNT GOLF & TENNIS, INC. - -------------------------------------------------------------------------------- (Name of Issuer) No Par Value Per Share - -------------------------------------------------------------------------------- (Title of Class of Securities) 517668 - -------------------------------------------------------------------------------- (CUSIP Number) Mr. Perry Rogers Copy to: Anthony D. Decello Agassi Enterprises, Inc. Investment Advisors 3960 Howard Hughes Parkway, Suite 750 International, Inc. Las Vegas, Nevada 89109 IMG Center, Suite 100 (702) 227-5700 1360 East 9th Street Cleveland, Ohio 44114-1782 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 19, 1998 ------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 page 2 of 22 ------- ------ CUSIP No. 517668 ----------------- - -------------------------------------------------------------------------------- 1 Names of Reporting Persons. I.R.S Identification Nos. of above persons (entities only) ASI Group, L.L.C. 34-1875738 - -------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (See Instructions) (a) --------------------------------------------------------------------- (b) X --------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC Use Only - -------------------------------------------------------------------------------- 4 Source of Funds (See Instructions) Affiliate (AF) - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Nevada - -------------------------------------------------------------------------------- 7 Sole Voting Power 2,651,265 (including options to acquire 347,975 shares) Number Of -------------------------------------------------------------- Shares Bene- ficially 8 Shared Voting Power 0 Owned by Each -------------------------------------------------------------- Reporting Person With 9 Sole Dispositive Power 2,651,265 (including options to acquire 347,975 shares) -------------------------------------------------------------- 10 Shared Dispositive Power 0 - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) N/A - -------------------------------------------------------------------------------- 14 Type of Reporting Person (See Instructions) (OO) Other ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INSTRUCTIONS FOR COVER PAGE (1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the full legal name of each person for whom the report is filed - i.e., each person required to sign the schedule itself - including each member of a group. Do not include the name of a person required to be identified in the report but who is not a reporting person. Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see "SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below). (2) If any of the shares beneficially owned by a reporting person are held as a member of a group and the membership is expressly affirmed, please check row 2(a). If the reporting person disclaims membership in a group or describes a relationship with other persons but does not affirm the existence of a group, please check row 2(b) [unless it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check row 2(b)] (3) The 3rd row is for SEC internal use; please leave blank. 3 page 3 of 22 ------- ------ CUSIP No. 517668 ----------------- - -------------------------------------------------------------------------------- 1 Names of Reporting Persons. I.R.S Identification Nos. of above persons (entities only) James Earl Rogers - -------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (See Instructions) (a) --------------------------------------------------------------------- (b) X --------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC Use Only - -------------------------------------------------------------------------------- 4 Source of Funds (See Instructions) Other (00) - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Nevada - -------------------------------------------------------------------------------- 7 Sole Voting Power 0 Number Of -------------------------------------------------------------- Shares Bene- ficially by 8 Shared Voting Power 2,651,265 (including options to Owned by Each acquire 347,975 shares) Reporting -------------------------------------------------------------- Person With 9 Sole Dispositive Power 0 -------------------------------------------------------------- 10 Shared Dispositive Power 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) N/A - -------------------------------------------------------------------------------- 14 Type of Reporting Person (See Instructions) Individual (IN) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INSTRUCTIONS FOR COVER PAGE (1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the full legal name of each person for whom the report is filed - i.e., each person required to sign the schedule itself - including each member of a group. Do not include the name of a person required to be identified in the report but who is not a reporting person. Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see "SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below). (2) If any of the shares beneficially owned by a reporting person are held as a member of a group and the membership is expressly affirmed, please check row 2(a). If the reporting person disclaims membership in a group or describes a relationship with other persons but does not affirm the existence of a group, please check row 2(b) [unless it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check row 2(b)] (3) The 3rd row is for SEC internal use; please leave blank. 4 page 4 of 22 ------- ------ CUSIP No. 517668 ----------------- - -------------------------------------------------------------------------------- 1 Names of Reporting Persons. I.R.S Identification Nos. of above persons (entities only) Andre K. Agassi - -------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (See Instructions) (a) --------------------------------------------------------------------- (b) X --------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC Use Only - -------------------------------------------------------------------------------- 4 Source of Funds (See Instructions) Personal Funds (PF) - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Nevada - -------------------------------------------------------------------------------- 7 Sole Voting Power 0 Number Of -------------------------------------------------------------- Shares Bene- ficially by 8 Shared Voting Power 2,651,265 (including options to Owned by Each acquire 347,975 shares) Reporting -------------------------------------------------------------- Person With 9 Sole Dispositive Power 0 -------------------------------------------------------------- 10 Shared Dispositive Power 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) N/A - -------------------------------------------------------------------------------- 14 Type of Reporting Person (See Instructions) Individual (IN) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INSTRUCTIONS FOR COVER PAGE (1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the full legal name of each person for whom the report is filed - i.e., each person required to sign the schedule itself - including each member of a group. Do not include the name of a person required to be identified in the report but who is not a reporting person. Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see "SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below). (2) If any of the shares beneficially owned by a reporting person are held as a member of a group and the membership is expressly affirmed, please check row 2(a). If the reporting person disclaims membership in a group or describes a relationship with other persons but does not affirm the existence of a group, please check row 2(b) [unless it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check row 2(b)] (3) The 3rd row is for SEC internal use; please leave blank. 5 page 5 of 22 ------- ------ CUSIP No. 517668 ----------------- - -------------------------------------------------------------------------------- 1 Names of Reporting Persons. I.R.S Identification Nos. of above persons (entities only) Perry Craig Rogers - -------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (See Instructions) (a) --------------------------------------------------------------------- (b) X --------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC Use Only - -------------------------------------------------------------------------------- 4 Source of Funds (See Instructions) Personal Funds (PF) and other (OO) - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Nevada - -------------------------------------------------------------------------------- 7 Sole Voting Power 0 Number Of -------------------------------------------------------------- Shares Bene- ficially by 8 Shared Voting Power 2,651,265 (including options to Owned by Each acquire 347,975 shares) Reporting -------------------------------------------------------------- Person With 9 Sole Dispositive Power 0 -------------------------------------------------------------- 10 Shared Dispositive Power 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) N/A - -------------------------------------------------------------------------------- 14 Type of Reporting Person (See Instructions) Individual (IN) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INSTRUCTIONS FOR COVER PAGE (1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the full legal name of each person for whom the report is filed - i.e., each person required to sign the schedule itself - including each member of a group. Do not include the name of a person required to be identified in the report but who is not a reporting person. Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see "SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below). (2) If any of the shares beneficially owned by a reporting person are held as a member of a group and the membership is expressly affirmed, please check row 2(a). If the reporting person disclaims membership in a group or describes a relationship with other persons but does not affirm the existence of a group, please check row 2(b) [unless it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check row 2(b)] (3) The 3rd row is for SEC internal use; please leave blank. 2 6 page 6 of 22 ------- ------ CUSIP No. 517668 ----------------- - -------------------------------------------------------------------------------- 1 Names of Reporting Persons. I.R.S Identification Nos. of above persons (entities only) Sunbelt Communications Company 88-0229427 - -------------------------------------------------------------------------------- 2 Check the Appropriate Box if a Member of a Group (See Instructions) (a) --------------------------------------------------------------------- (b) X --------------------------------------------------------------------- - -------------------------------------------------------------------------------- 3 SEC Use Only - -------------------------------------------------------------------------------- 4 Source of Funds (See Instructions) Bank (BK) - -------------------------------------------------------------------------------- 5 Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- 6 Citizenship or Place of Organization Nevada - -------------------------------------------------------------------------------- 7 Sole Voting Power 0 Number Of -------------------------------------------------------------- Shares Bene- ficially by 8 Shared Voting Power 2,651,265 (including options to Owned by Each acquire 347,975 shares) Reporting -------------------------------------------------------------- Person With 9 Sole Dispositive Power 0 -------------------------------------------------------------- 10 Shared Dispositive Power 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 11 Aggregate Amount Beneficially Owned by Each Reporting Person 2,651,265 (including options to acquire 347,975 shares) - -------------------------------------------------------------------------------- 12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- 13 Percent of Class Represented by Amount in Row (11) N/A - -------------------------------------------------------------------------------- 14 Type of Reporting Person (See Instructions) Corporation (CO) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- INSTRUCTIONS FOR COVER PAGE (1) Names and I.R.S. Identification Numbers of Reporting Persons -- Furnish the full legal name of each person for whom the report is filed - i.e., each person required to sign the schedule itself - including each member of a group. Do not include the name of a person required to be identified in the report but who is not a reporting person. Reporting persons that are entities are also requested to furnish their I.R.S. identification numbers, although disclosure of such numbers is voluntary, not mandatory (see "SPECIAL INSTRUCTIONS FOR COMPLYING WITH SCHEDULE 13D" below). (2) If any of the shares beneficially owned by a reporting person are held as a member of a group and the membership is expressly affirmed, please check row 2(a). If the reporting person disclaims membership in a group or describes a relationship with other persons but does not affirm the existence of a group, please check row 2(b) [unless it is a joint filing pursuant to Rule 13d-1(k)(1) in which case it may not be necessary to check row 2(b)] (3) The 3rd row is for SEC internal use; please leave blank. 7 page 7 of 22 ------- ------ CUSIP No. 517668 NOTES TO SCHEDULE 13D FOR ANDRE K. AGASSI 1. The Reporting Person shares voting and dispositive power as described in Item 5 of this Schedule 13D. 2. The Reporting Person disclaims beneficial ownership of these shares pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See Item 5 of this Schedule 13D. 8 page 8 of 22 ------- ------ CUSIP No. 517668 NOTES TO SCHEDULE 13D FOR SUNBELT COMMUNICATIONS COMPANY 1. The Reporting Person shares voting and dispositive power as described in Item 5 of this Schedule 13D. 2. The Reporting Person disclaims beneficial ownership of these shares pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See Item 5 of this Schedule 13D. 9 page 9 of 22 ------- ------ CUSIP No. 517668 NOTES TO SCHEDULE 13D FOR PERRY CRAIG ROGERS 1. The Reporting Person shares voting and dispositive power as described in Item 5 of this Schedule 13D. 2. The Reporting Person disclaims beneficial ownership of these shares pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See Item 5 of this Schedule 13D. 10 page 10 of 22 ------- ------ CUSIP No. 517668 NOTES TO SCHEDULE 13D FOR JAMES EARL ROGERS 1. The Reporting Person shares voting and dispositive power as described in Item 5 of this Schedule 13D. 2. The Reporting Person disclaims beneficial ownership of these shares pursuant to Rule 13d-4 of the Securities Act of 1934, as amended. See Item 5 of this Schedule 13D. 11 page 11 of 22 ------- ------ CUSIP No. 517668 ITEM 1. SECURITY AND ISSUER The title and class of equity securities to which this Schedule 13D relates is the Common Stock, no par value per share (the "Common Stock") of Las Vegas Discount Golf & Tennis, Inc., a Colorado corporation (the "Company"). The principal executive offices of the Company are located at 5325 South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118. ITEM 2. IDENTITY AND BACKGROUND (a, b, c and f) This Schedule 13D is being filed by the following persons: (i) ASI Group, L.L.C. (the "Reporting Person"), a Nevada limited liability company engaged in the business of investing in securities; its principal business address and its principal office address is 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109; and (ii) Andre K. Agassi ("Agassi"), an individual, a United States citizen, having a business address at Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109; Agassi is a professional tennis player; the services of Agassi are offered through his wholly owned service corporation, Agassi Enterprises, Inc., a Nevada corporation; the principal business address of Agassi Enterprises, Inc. is 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109; and (iii) Sunbelt Communications Company ("Sunbelt"), a Nevada corporation, engaged in the business of broadcasting; its business address and its principal office is 1500 Foremaster Lane, Las Vegas, Nevada 89101; and (iv) James Earl Rogers ("JRogers"), an individual, a United States citizen, having a business address at 1500 Foremaster Lane, Las Vegas, Nevada 89101; JRogers is engaged in the business of radio and television broadcasting and owns television stations through his wholly-owned corporation, Sunbelt Communications Company, a Nevada corporation; the principal business address of Sunbelt Communications is 1500 Foremaster Lane, Las Vegas, Nevada 89101; and (v) Perry Craig Rogers ("PRogers"), an individual, a United States citizen, having a business address at Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 12 page 12 of 22 ------- ------ 89109; PRogers is engaged in the business of acting as an attorney and business manager; his principal business address is at Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109; Agassi, Sunbelt and PRogers are the sole members and sole owners of the Reporting Person. JRogers is a controlling shareholder of Sunbelt. Exhibit 2.1 which is attached hereto and incorporated herein in its entirety by reference, sets forth the name, residence address or business address and certain employment information and citizenship of each of the executive officers and directors of Sunbelt. (d and e) None of the Reporting Person, Agassi, JRogers, PRogers or Sunbelt or to the best knowledge of the Reporting Person or Sunbelt, the persons listed in Exhibit 2.1, has, during the past five years, (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors); or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares of Common Stock were purchased by the Reporting Person with funds aggregating $2,500,000. Said funds were provided from personal funds of affiliates of the Reporting Person, proceeds of bank loans taken by Sunbelt and other funds of affiliates of the Reporting Person. Sunbelt obtained funds for this transaction from an additional draw (the "Draw") on an existing loan between AT&T Commercial Finance Corporation and Sunbelt. The Draw is in the amount of $1.2 million and bears interest at the commercial paper rate at the close of business on the first business day of every month plus 2.5%. Sunbelt is required to make monthly payments of principal and interest through June 1, 2008. In connection with such purchase the Reporting Person was also issued options to purchase up to Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock for a price of $1.8392 per share. ITEM 4. PURPOSE OF TRANSACTION (a) Pursuant to the terms of the Investment and Voting Agreement between the Reporting Person and the Company, the Reporting Person and the Company also entered into an Option Agreement pursuant to which the Reporting Person was issued options to purchase up to Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock for a price of $1.8392 per share. A copy of each of the Investment 13 page 13 of 22 ------- ------ Agreement and Voting Agreement and the Option Agreement, each dated as of October 19, 1998 are filed as Exhibits 4.1 and 4.2 respectively to this Schedule 13D and are incorporated herein by reference. (b) None. (c) None. (d) None. (e) None. (f) None. (g) None. (h) None. (i) None. (j) None. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) As of the date hereof, the Reporting Person may be deemed to be the beneficial owner of an aggregate of Two Million Six Hundred Fifty One Thousand Two Hundred Sixty Five (2,651,265) shares of Common Stock of the Company, representing approximately thirty one and one-quarter percent (31.25%) of the Common Stock of the Company, based upon the most recent available filing of the Company with the Securities and Exchange Commission. Of the Two Million Six Hundred Fifty One Thousand Two Hundred Sixty Five (2,651,265) shares, Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares are deemed to be beneficially owned by the Reporting Person by reason of the fact that the Reporting Person has options to acquire such shares. None of Agassi, JRogers, PRogers or Sunbelt own any shares of the Company directly but may be deemed to share beneficial ownership of all shares of Common Stock owned by the Reporting Person by virtue of the ownership relationship described in Item 2. (b) Subject to its obligations under the Investment and Voting Agreement described in this Schedule 13D, the Reporting Person shall have the sole power of voting and disposition with respect to Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares of Common Stock of the Company; and assuming the Reporting Person exercises all the 14 page 14 of 22 ------- ------ options it currently owns to acquire shares of the Company's Common Stock, the Reporting Person shall have the sole power of voting and disposition with respect to an additional Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock of the Company. By reason of their ownership of the Reporting Person, each of Sunbelt, PRogers and Agassi may be deemed to share powers of voting and disposition with respect to Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares of Common Stock of the Company; and assuming the Reporting Person exercises all the options it currently owns to acquire shares of the Company's Common Stock, each of, PRogers, Agassi and Sunbelt may be deemed to share powers of voting and disposition with respect to an additional Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock of the Company. By reason of his ownership of Sunbelt, JRogers may be deemed to share powers of voting and disposition with respect to Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares of Common Stock of the Company, and assuming the Reporting Person exercises all the options it currently owns to acquire shares of the Company's Common Stock, JRogers may be deemed to share powers of voting and disposition with respect to an additional Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock of the Company. By reason of their positions as executive officers and directors of Sunbelt the persons described in Exhibit 2.1 hereto may be deemed to share powers of voting with respect to Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares of Common Stock of the Company; and assuming the Reporting Person exercises all the options it currently owns to acquire shares of the Company's Common Stock such persons may be deemed to share powers of voting with respect to an additional Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock of the Company. (c) Set forth on Exhibit 5.1, attached hereto, is information concerning all transactions in the Company's stock by the Reporting Person that were effected during the past sixty (60) days. No transactions in the Company's stock were effected by any of Agassi, PRogers, JRogers or Sunbelt or the executive officers and directors of the Reporting Person during the past sixty (60) days. (d) None. 15 page 15 of 22 ------- ------ (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Pursuant to the terms of the Investment and Voting Agreement between the Reporting Person and the Company, attached as Exhibit 4.1 hereto, the Reporting Person has a right of first refusal to purchase its pro rata share of all or any part of any shares of capital stock of the Company (or securities of any type whatsoever that are, or may become, convertible into shares of common or preferred stock of the Company) which the Company may propose to sell or issue. The number of shares of Common Stock of the Company owned by the Reporting Person by reason of purchase pursuant to the Investment and Voting Agreement shall be adjusted in the event the Company offers to sell any shares of its capital stock to any other person or entities at a lower price per share than the purchase price so paid by the Reporting Person or otherwise on more favorable terms. Pursuant to the terms of the Option Agreement, attached as Exhibit 4.2 hereto, the Reporting Person has the option to purchase up to Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock of the Company at a price of $1.8392 per share. The Reporting Person has the right to demand that the Company effect a registration under the Securities Act of 1934 of the Common Stock of the Company purchased pursuant to the Investment and Voting Agreement or upon exercise of the options issued pursuant to the Option Agreement or to participate in any registration of Common Stock undertaken by the Company as long as the Reporting Person owns at least five percent (5%) of the Company's outstanding voting equity securities. Upon request of the Company or the underwriters managing an underwritten offering of the Company's securities, the Reporting Person will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any of the Common Stock of the Company (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed one hundred and twenty (120) days) from the effective date of such registration as may be requested by the underwriters; provided that the officers and directors of the Company who own stock of the Company also agree to such restrictions. Pursuant to the terms of the Voting Agreement between the Reporting Person and each of Messrs. Vaso Boreta, Ronald Boreta, and John Boreta and Boreta Enterprises, Ltd. (collectively, "Boreta"), attached as Exhibit 6.1 hereto and incorporated by reference herein, the Reporting Person and Boreta agreed that, while the Reporting Person is an equity owner of the Company and/or Saint Andrews Golf Corporation ("SAGC"), each of the Reporting Person and Boreta will (a) vote the shares of capital stock of the Company any of them is entitled to vote as mutually agreed by the Reporting Person and Boreta (provided that no party will be so required to vote its shares if the subject action implemented in accordance with such mutual agreement, would in any manner adversely effect the interests of such party or the Company or SAGC, or adversely affect the value of 16 page 16 of 22 ------- ------ such shares) and (b) Boreta will, if it acquires additional capital stock of the Company or SAGC, transfer a portion of such capital stock to the Reporting Person so as to maintain their relative proportionate direct and indirect equity ownership in each of the Company and SAGC. Pursuant to the terms of the Co-Sale Agreement between the Reporting Person and Boreta, attached as Exhibit 6.2 hereto and incorporated by reference herein, the Reporting Person and Boreta agreed that, until the fifth anniversary of such agreement, except with respect to certain limited transactions, if any of Boreta proposes to sell any shares of capital stock of the Company, the Reporting Person shall have the right to participate in such sale of capital stock on the same terms and conditions. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS The following documents are filed as exhibits: 2.1 Certain information about officers and directors of Sunbelt Communications Company. 3.1 Amended and Restated Loan Agreement dated as of May 18, 1998, as subsequently amended, by and between AT&T Commercial Finance Corporation (and other financial institution who may hereafter become parties hereto), as Lenders, AT&T Commercial Finance Corporation, as Agent and Sunbelt Communications Company, Valley Broadcasting Company, Yuma Broadcasting Company, Sierra Broadcasting Company, Oregon Trail Broadcasting Company, Falls Broadcasting Company, Two Ocean Broadcasting Company, Sierra Radio Company, Radio News Company, Ruby Mountain Broadcasting Company and Beartooth Communications Company, as Borrowers. 4.1 Investment and Voting Agreement, dated as of October 19, 1998, by and between ASI Group, L.L.C. and Las Vegas Discount Golf & Tennis, Inc. 4.2 Option Agreement, dated as of October 19, 1998, by and between ASI Group, L.L.C. and Las Vegas Discount Golf & Tennis, Inc. 5.1 Transactions by ASI Group, L.L.C. in Las Vegas Discount Golf & Tennis, Inc. stock 6.1 Voting Agreement dated as of October 19, 1998, by and among ASI Group, L.L.C. and Messrs. John Boreta, Ronald Boreta and Vaso Boreta and Boreta Enterprises Ltd. 6.2 Co-Sale Agreement, dated as of October 19, 1998, by and among 17 page 17 of 22 ------- ------ ASI Group, L.L.C., Las Vegas Discount Golf & Tennis, Inc. and Messrs. John Boreta, Ronald Boreta and Vaso Boreta and Boreta Enterprises Ltd. 7.1 Agreement, dated as of October 19, 1998, by and among Andre K. Agassi, James Earl Rogers, Perry Craig Rogers, ASI Group, L.L.C. and Sunbelt Communications Company relating to the filing of a joint acquisition statement. 7.2 Power of Attorney of James Earl Rogers. 18 page 18 of 22 ------- ------ Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. October 19, 1998 ----------------------------------------------------------------------- Date /s/ Perry Craig Rogers ----------------------------------------------------------------------- Signature ASI Group, L.L.C., by Perry Craig Rogers, member ----------------------------------------------------------------------- Name/Title 19 page 19 of 22 ------- ------ Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. October 19, 1998 ----------------------------------------------------------------------- Date /s/ Perry Craig Rogers ----------------------------------------------------------------------- Signature Perry Craig Rogers ----------------------------------------------------------------------- Name/Title 20 page 20 of 22 ------- ------ Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. October 19, 1998 ----------------------------------------------------------------------- Date /s/ Andre K. Agassi ----------------------------------------------------------------------- Signature Andre K. Agassi ----------------------------------------------------------------------- Name/Title 21 page 21 of 22 ------- ------ Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. October 19, 1998 ----------------------------------------------------------------------- Date /s/ James Earl Rogers, by Perry Craig Rogers, attorney-in-fact ----------------------------------------------------------------------- Signature Sunbelt Communications Company by James Earl Rogers, President by Perry Craig Rogers, attorney-in-fact ----------------------------------------------------------------------- Name/Title 22 page 22 of 22 ------- ------ Signature After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. October 19, 1998 ----------------------------------------------------------------------- Date /s/ James Earl Rogers ----------------------------------------------------------------------- Signature James Earl Rogers ----------------------------------------------------------------------- Name/Title EX-2.1 2 EXHIBIT 2.1 1 EXHIBIT 2.1 OFFICERS AND DIRECTORS OF SUNBELT COMMUNICATIONS COMPANY The following table sets forth the name, resident or business address, citizenship, present principal occupation or employment, and the name, principal business and address of any corporation in which employment is conducted by each executive officer and director of Sunbelt Communications Company. (a) James E. Rogers (a) Beverly Rogers (b) Sunbelt Communications Company (b) Western States Communications 1500 Foremaster Lane Company Las Vegas, NV 89101 1500 Foremaster Lane (c) President Las Vegas, NV 89101 Sunbelt Communications Company (c) Director 1500 Foremaster Lane Sunbelt Communications Company Las Vegas, NV 89101 1500 Foremaster Lane (d) No Las Vegas, NV 89101; (e) No Corporate Marketing Director (f) USA Western States Communications Company 1500 Foremaster Lane Las Vegas, NV 89101 (d) No (e) No (f) USA (a) Rolla Cleaver (a) Ralph Toddre (b) Valley Broadcasting Company (b) 1790 Vassar Street 1500 Foremaster Lane Reno, NV 89502 Las Vegas, NV 89101 (c) Director (c) Executive Vice President Sunbelt Communications Company Sunbelt Communications Company 1500 Foremaster Lane 1500 Foremaster Lane Las Vegas, NV 89101; Las Vegas, NV 89101; Vice President General Manager, Western States Communications Valley Broadcasting Company Company 1500 Foremaster Lane 1500 Foremaster Lane Las Vegas, NV 89101 Las Vegas, NV 89101 (d) No (d) No (e) No (e) No (f) USA (f) USA
2 (a) Gene Greenberg (a) Scott Mattox (b) Valley Broadcasting Company (b) Sunbelt Communications Company 1500 Foremaster Lane 1500 Foremaster Lane Las Vegas, NV 89101 Las Vegas, NV 89101 (c) Vice President, Sales (c) Treasurer Sunbelt Communications Company Sunbelt Communications Company 1500 Foremaster Lane 1500 Foremaster Lane Las Vegas, NV 89101; Las Vegas, NV 89101; Sales Manager Controller Valley Broadcasting Company Sunbelt Communications Company 1500 Foremaster Lane 1500 Foremaster Lane Las Vegas, NV 89101 Las Vegas, NV 89101 (d) No (d) No (e) No (e) No (f) USA (f) USA (a) Bill Fouch (a) Cindy Heinrich (b) Oregon Trail Broadcasting Company (b) Sunbelt Communications Company 902 E. Sherman Street 1500 Foremaster Lane Pocatello, ID 83201 Las Vegas, NV 89101 (c) Director (c) Secretary Sunbelt Communications Company Sunbelt Communications Company 1500 Foremaster Lane 1500 Foremaster Lane Las Vegas, NV 89101; Las Vegas, NV 89101; General Manager Director, Human Resources Oregon Trail Broadcasting Company Sunbelt Communications Company 902 E. Sherman Street 1500 Foremaster Lane Pocatello, ID 83201 Las Vegas, NV 89101 (d) No (d) No (e) No (e) No (f) USA (f) USA
EX-3.1 3 EXHIBIT 3.1 1 EXHIBIT 3.1 AMENDED AND RESTATED LOAN AGREEMENT by and between AT&T COMMERCIAL FINANCE CORPORATION (and other financial institutions who may hereafter become parties hereto), as Lenders AT&T COMMERCIAL FINANCE CORPORATION, AS AGENT and SUNBELT COMMUNICATIONS COMPANY, VALLEY BROADCASTING COMPANY, YITMA BROADCASTING COMPANY, SIERRA BROADCASTING COMPANY, OREGON TRAIL BROADCASTING COMPANY, FALLS BROADCASTING COMPANY, TWO OCEAN BROADCASTING COMPANY, SIERRA RADIO COMPANY, RADIO NEWS COMPANY, RUBY MOUNTAIN BROADCASTING COMPANY and BEARTOOTH COMMUNICATIONS COMPANY, as Borrowers dated as of May 18, 1998 2
TABLE OF CONTENTS I. DEFINITIONS...................................................................2 II. GENERAL TERMS ..............................................................13 Section 2.01. Tranche A Loans ................................................13 Section 2.02. Tranche B Loans ................................................14 Section 2.03. Prepayments ....................................................15 Section 2.04. Applicable Interest Rates; Payment of Interest................. 17 Section 2.05. Security for the Notes .........................................18 Section 2.06. Use of Proceeds ................................................19 Section 2.07. Termination Fee ................................................19 Section 2.08. Requirements of Law ............................................20 Section 2.09. Taxes .........................................................21 Section 2.10. Indemnification ................................................22 Section 2.11. Payments Under the Notes .......................................22 Section 2.13. Set-Off, Etc ................................................23 Section 2.13. Pro Rata Treatment; Sharing ....................................24 Section 2.14. Replacement of Notes ...........................................25 III. CONDITIONS OF MAKING THE LOANS............................................ 25 Section 3.01. Conditions to Closing ........................................25 Section 3.02. Acquisition Loans ..............................................27 Section 3.03. Supplemental Line ..............................................30 Section 3.04. Lender Approvals ..............................................31 IV. REPRESENTATIONS AND WARRANTIES .............................................32 Section 4.01. Financial Statements ...........................................32 Section 4.02. Organization, Etc ............................................. 32
3 Section 4.03. Authorization; Compliance, Etc ................................ 33 Section 4.04. Governmental and Other Consents................................ 33 Section 4.05. Litigation......................................................33 Section 4.06. Compliance with Laws and Agreements............................ 33 Section 4.07. Title to Properties.............................................34 Section 4.08. Interests in Other Businesses...................................34 Section 4.09. No Insolvency ................................................34 Section 4.10. Full Disclosure ................................................35 Section 4.11. Tax Returns ................................................35 Section 4.12. Pension Plans, Etc .............................................35 Section 4.13. Licenses, Etc ................................................37 Section 4.14. Material Agreements ........................................37 Section 4.15. Ownership of Companies ........................................ 38 Section 4.16. Patents, Trademarks, Etc ......................................38 Section 4.17. Brokers, Etc ................................................38 Section 4.18. Enforceability ................................................38 Section 4.19. Environmental Matters ........................................39 Section 4.20. Studio and Tower Sites ........................................40 Section 4.21. Margin Stock ................................................40 Section 4.22. Investment Company Act ........................................40 Section 4.23. Labor Matters ................................................40 Section 4.24. Recitals ................................................40 V. FINANCIAL COVENANTS ........................................................40 Section 5.01. After Tax Cash Flow ............................................41 Section 5.02. KVBC-TV ........................................................41 Section 5.03. Debt Service Coverage ..........................................41 Section 5.04. Senior Debt to After Tax Cash Flow .............................42
- ii - 4 Section 5.05. Fixed Charge Coverage Ratio; Current Ratio..................42 Section 5.06. Capital Expenditures....................................... 43 Section 5.07. Corporate Overhead .........................................43 Section 5.08. Restricted Payments.........................................43 VI. AFFIRMATIVE COVENANTS .................................................. 44 Section 6.01. Preservation of Assets; Compliance with Laws, Etc ...........44 Section 6.02. Insurance....................................................44 Section 6.03. Taxes, Etc...................................................45 Section 6.04. Notice of Proceedings, Defaults, Adverse Change, Etc ........46 Section 6.05. Financial Statements and Reports.............................46 Section 6.06. Inspection...................................................48 Section 6.07. Accounting System ...........................................48 Section 6.08. Notice of Purchase of Real Estate and Leases.................48 Section 6.09. Additional Assurances........................................48 Section 6.10. Environmental Indemnification ...............................49 Section 6.11. Ratings Reports .............................................50 Section 6.12. Accounts Payable.............................................50 Section 6.13. Use of Loan Proceeds ........................................50 Section 6.14. Appraisals ..................................................50 Section 6.15. Recommended Corrective Action ...............................51 VII. NEGATIVE COVENANTS..................................................... 51 Section 7.01. Indebtedness.................................................51 Section 7.02. Liens........................................................52 Section 7.03. Disposition of Assets........................................52 Section 7.04. Fundamental Changes; Acquisitions ...........................53 Section 7.05. Management ..................................................56
-iii- 5 Section 7.06. Sale and Leaseback ........................................56 Section 7.07. Investments................................................56 Section 7.08. Change in Business.........................................56 Section 7.09. Accounts Receivable........................................56 Section 7.10. Transactions with Affiliates.............................. 56 Section 7.11. Amendment of Certain Agreements............................57 Section 7.12. ERISA......................................................57 Section 7.13. Local Marketing Agreements ................................57 Section 7.14. Illegal Activities.........................................58 Section 7.15. Margin Stock...............................................58 Section 7.16. Negative Pledges, Etc......................................58 VIII. DEFAULTS...............................................................58 IX. REMEDIES ON DEFAULT, ETC.................................................62 Section 9.01. Remedies...................................................62 Section 9.02. Default Rate...............................................62 Section 9.03. Effect on Payments........................................ 63 Section 9.04. Consent to Receiver........................................63 X. THE AGENT.................................................................63 Section 10.01. Appointment, Powers and Immunities.........................63 Section 10.02. Reliance by Agent..........................................65 Section 10.03. Events of Default..........................................65 Section 10.04. Rights as a Lender.........................................65 Section 10.05. Indemnification ...........................................66 Section 10.06. Non-Reliance on Agent and other Lenders ...................66 Section 10.07. Failure to Act ...........................................67 Section 10.08. Resignation or Removal of Agent ...........................67
- iv- 6 Section 10.09. Cooperation of Lenders ...........................................67 XI. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; ACTIONS BY THE LENDERS ...........................................................................67 XII. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS..........................69 XIII. MISCELLANEOUS................................................................71 Section 13.01. Survival..........................................................71 Section 13.02. Expenses..........................................................71 Section 13.03. Setoffs, Etc .....................................................71 Section 13.04. Governing Law.....................................................72 Section 13.05. Amendment; Modification ..........................................72 Section 13.06. Waiver ...........................................................72 Section 13.07. Notice............................................................73 Section 13.08. Successors and Assigns ...........................................74 Section 13.09. Consent to Jurisdiction, Service of Process.......................74 Section 13.10. Waiver of Jury Trial ...........................................75 Section 13.11. Indemnification; Limitation of Liability .........................75 Section 13.12. Severability .....................................................76 Section 13.13. Section Headings..................................................77 Section 13.14. Amendment of Other Agreements ....................................77 Section 13.15. Accounting Principles ...........................................77 Section 13.16. Knowledge and Discovery ..........................................77 Section 13.17. FCC...............................................................77 Section 13.18. Maximum Enforceability ...........................................78 Section 13.19. Joint and Several Obligations; Suretyship Waivers and Consents ...78 Section 13.20. Several Nature of Lenders' Obligations ...........................80 Section 13.21. Integration ......................................................80 Section 13.22 Counterparts ......................................................81
-v- 7 AMENDED AND RESTATED LOAN AGREEMENT THIS AMENDED AND RESTATED LOAN AGREEMENT is made as of the 18th day of May, 1998, by and among SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation ("VALLEY"); YUMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH") (Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls, Two Ocean, Sierra Radio, Radio News, Ruby Mountain and Beartooth are sometimes referred to herein individually as a "Borrower" and collectively as the "Borrowers"); AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation ("AT&T-CFC"), and the various other financial institutions which are now, or in accordance with Article XII hereof hereafter become, parties hereto and "Lenders" hereunder by execution of the signature pages to this Agreement or otherwise (collectively, the "Lenders" and each individually, a "Lender"); and AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Agent"). RECITALS: A. The Borrowers, Radio Sales Company, a Nevada corporation ("Radio Sales"), and AT&T-CFC are parties to a certain Loan Agreement dated as of October 2, 1996, and a certain Credit Agreement dated as of October 2, 1996, as each has been amended from time to time (as amended, collectively, the "ORIGINAL LOAN AGREEMENTS"), pursuant to which AT&T-CFC made term loans to the Original Borrowers, and the Original Borrowers issued to AT&T-CFC their promissory notes in the respective amounts of such term loans, as follows (collectively, the "ORIGINAL PROMISSORY NOTES"): (i) that certain Secured Promissory Note dated October 2, 1996, issued by Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls, Two Ocean. Sierra Radio, Radio News and Radio Sales (collectively, the "ORIGINAL BORROWERS") to AT&T-CFC in the original principal amount of $21,200,000; 8 (ii) that certain Secured Promissory Note of Sunbelt dated November 1, 1996, issued to AT&T-CFC in the original principal amount of $3,500,000; (iii) that certain Secured Promissory Note of Sunbelt dated May 7, 1997, issued to AT&T-CFC in the original principal amount of $2,500,000; (iv) that certain Secured Promissory Note of Sunbelt dated July 8, 1997, issued to AT&T-CFC in the original principal amount of $2,500,000; (v) that certain Secured Promissory Note of Sunbelt and Beartooth dated December 1, 1997, issued to AT&T-CFC in the original principal amount of $2,800,000; and (vi) that certain Secured Promissory Note of Sunbelt dated December 1, 1997, issued to AT&T-CFC in the original principal amount of $1,200,000. B. As of the date hereof, the aggregate outstanding and unpaid principal balance of the Original Promissory Notes is $35,361,390.00. C. Subsequent to the date of execution of the Original Loan Agreements, Radio Sales transferred and assigned to Radio News all of the assets and liabilities of Radio Sales. D. The Borrowers have applied to AT&T-CFC for additional extensions of credit. E. AT&T-CFC is willing to provide such additional financing subject to the terms and conditions hereinafter set forth. F. The parties hereto desire to amend and restate the Original Loan Agreements to reflect the foregoing amendments. G. The Borrowers, AT&T-CFC and the Agent anticipate that one or more additional financial institutions will hereafter become parties hereto as Lenders hereunder, and therefore they desire to amend and restate their agreements in order to facilitate such additions. H. For ease of construction, interpretation and administration of their respective agreements in respect to the foregoing, the parties hereto desire to amend and restate the Original Loan Agreements in their entirety as hereinafter set forth. NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties, intending to be legally bound hereby, hereby agree, and hereby amend and restate the Original Loan Agreement in their entirety as a single agreement, as follows: I. DEFINITIONS As used herein the following terms shall have the following respective meanings: -2- 9 ACCOUNTANTS: the meaning specified in Section 6.05. ACQUISITION: the meaning specified in Section 7.04(a). ACQUISITION AGREEMENT: with respect to any Permitted Acquisition, the acquisition, purchase or other agreement which sets forth the terms and conditions of such Acquisition. ACQUISITION LOAN(S): a Tranche B Loan, the proceeds of which are used in whole or in part to pay the purchase price of a Permitted Acquisition. ADJUSTED NET OPERATING INCOME: for any twelve-month period, the sum of (a) the Companies' Net Operating Income, (b) cost savings identified by the Companies in connection with a Permitted Acquisition consummated within such twelve-month period, which cost savings have been approved and validated by the Agent in its sole discretion, (c) to the extent not included in the preceding clauses, the Net Operating Income of all Stations included in such Permitted Acquisitions occurring during such twelve-month period, and (d) if the calculation of Adjusted Net Operating Income is being made pursuant to Article II hereof in connection with a Request for Advance relating to an Acquisition Loan, the Net Operating Income of the broadcast stations covered by the Permitted Acquisition. ADVANCE(S): advance(s) of loan proceeds constituting all or a portion of a Loan. AFFILIATE(S): as applied to any Person, a spouse or relative of such Person within the third degree of consanguinity, any partner, shareholder, member, director, officer or manager of such Person, any corporation, association, partnership, joint venture, firm or other entity of which such Person is a partner, shareholder, venturer, member, director, officer or manager, and any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. AFFILIATE SUBORDINATION AGREEMENTS: the meaning specified in SECTION 2.05. AGENT: the meaning specified in the Preamble. AFTER TAX CASH FLOW: for any fiscal period, Net Operating Income minus cash payments made in respect of taxes. AGREEMENT: this Amended and Restated Loan Agreement, as the same may be amended from time to time. ASSIGNMENT AND ACCEPTANCE: the meaning specified in ARTICLE XII. ASSUMPTION AGREEMENT: the meaning specified in SECTION 3.02. AT&T-CFC: AT&T Commercial Finance Corporation, a Delaware corporation. - 3 - 10 BASE RATE: a rate per annum equal to two and one-half percentage points (2.50%) in excess of the Commercial Paper Rate. BEARTOOTH: the meaning specified in the Preamble. BENEFIT LIABILITIES: the meaning specified in SECTION 4.12. BORROWER(S): the meaning specified in the Preamble. BUSINESS DAY: any day other than a Saturday, Sunday or legal holiday on which banks in Newark, New Jersey, and New York, New York, are open for the transaction of a substantial part of their commercial banking business. CAPITAL EXPENDITURE: any payment made directly or indirectly for the purpose of acquiring or constructing fixed assets, real property or equipment which, in accordance with generally accepted accounting principles, would be added as a debit to the fixed asset account of the Person making such expenditure, including, without limitation, amounts paid or payable for labor or under any conditional sale or other title retention agreement or under any Lease or other periodic payment arrangement which is of such a nature that payment obligations of the lessee or obligor thereunder would be required by generally accepted accounting principles to be capitalized on the balance sheet of such lessee or obligor. CAPITAL LEASE: any Lease of property (real, personal or mixed) which, in accordance with generally accepted accounting principles, would be capitalized on the lessee's balance sheet or for which the amount of the asset and liability thereunder as if so capitalized should be disclosed in a note to such balance sheet. CERCLA: the meaning specified in SECTION 4.19. CLOSING DATE: the effective date of closing on the transactions contemplated hereby as evidenced by AT&T-CFC's funding of the initial Advance in respect of the Tranche B Loans, which Closing Date shall not be later than May 29, 1998, unless the Lenders otherwise agree. COBRA: the meaning specified in SECTION 4.12. CODE: the Internal Revenue Code of 1986, as amended from time to time. COLLATERAL: collectively, any and all collateral referred to herein or in the Security Documents, or any of them, and any and all other collateral pledged to the Agent and/or the Lenders from time to time in connection with the Loan Documents. COMMERCIAL PAPER RATE: the per annum rate of interest published from time to time by the Eastern Edition of THE WALL STREET JOURNAL as being the thirty day "commercial paper" rate (identified in THE WALL STREET JOURNAL as high-grade unsecured notes sold through dealers by -4- 11 major corporations), or if THE WALL STREET JOURNAL shall for any reason cease or fail to publish a "commercial paper" rate or shall for any reason discontinue publication or designation of a "commercial paper" rate, such other comparable interest rate index as the Lender shall reasonably designate in writing to the Borrowers as a substitute therefor. If THE WALL STREET JOURNAL quotes or publishes more than one such thirty day "commercial paper" rate, the highest of such rates will be used. COMMITMENTS: collectively, the Tranche A Commitment and the Tranche B Commitment. COMMONLY CONTROLLED ENTITY: the meaning specified in Section 4.12. COMPANY OR COMPANIES: the Borrowers and the New Subsidiaries, if any. CONSOLIDATED OR CONSOLIDATED: wherever used in conjunction with a financial statement, covenant or definition, such statement, covenant, or definition shall (unless otherwise specifically defined herein) refer to Sunbelt and the other Companies on a consolidated basis determined, calculated or applied in accordance with generally accepted accounting principles, applied on a consistent basis. CORPORATE OVERHEAD: during any period, the aggregate amount of (a) all salaries, bonuses, management fees and other compensation paid or payable to James Rogers, and (b) all compensation, traveling, entertainment and automobile expenses of Sunbelt and all other costs and expenses of the Companies, or any of them, which are not allocable to or incurred directly in the operation of the Stations, including, without limitation, reasonable accounting, auditing, legal, office and secretarial expense. COVENANT COMPLIANCE CERTIFICATE: the quarterly certificate issued and to be issued by the Companies pursuant to SECTION 6.05(c), in the form of SCHEDULE 6.05 hereto. CURRENT ASSETS: current assets of a Company, determined in accordance with generally accepted accounting principles on a basis consistent with that employed by the Accountants in preparing the financial statements referred to in SECTION 6.05. For the purposes of SECTION 5.05(b) hereof, Current Assets shall exclude accounts receivable outstanding more than one hundred twenty (120) days from date of invoice. CURRENT LIABILITIES: current liabilities of a Company, determined in accordance with generally accepted accounting principles on a basis consistent with that employed by the Accountants in preparing the financial statements referred to in SECTION 6.05. DEFAULT RATE: the meaning specified in SECTION 9.02. EMPLOYEE BENEFIT PLANS; EMPLOYEE PENSION PLAN AND EMPLOYEE WELFARE PLAN: the respective meanings specified in SECTION 4.12. -5- 12 ENVIRONMENTAL LAWS: the meaning specified in SECTION 4.19. ERISA: the meaning specified in SECTION 4.12. EVENT OF DEFAULT: the meaning specified in ARTICLE VIII. FALLS: the meaning specified in the Preamble. FCC: the Federal Communications Commission or any other federal governmental agency which may hereafter perform its functions. FEE LETTER: the letter agreement of even date herewith among the Borrowers and AT&T- CFC, as amended from time to time. FINAL ORDER: written action or order issued by the FCC setting forth the consent of the FCC (a) which has not been reversed, stayed, enjoined, set aside, annulled or suspended, and (b) with respect to which (i) no requests have been filed for administrative or judicial review, consideration, appeal or stay, and the normal time for filing any such requests and for the FCC to set aside the action on its own motion (whether upon reconsideration or otherwise) has expired, or (ii) in the event of review, reconsideration or appeal, the time for further review, reconsideration or appeal has expired. FISCAL OUARTERS: the three-month periods ending March 31, June 30, September 30 and December 31. FISCAL YEAR: the year ending December 31. FIXED CHARGES: for any fiscal period, the sum of (a) Total Debt Service for such period (but not more than the amount otherwise permitted by this Agreement for such period), (b) Capital Expenditures during such period (but not more than the amount otherwise permitted by SECTION 5.06 hereof for such period), and (c) taxes paid by the Companies and tax distributions to the Companies' Stockholders (but not more than the amount otherwise permitted by SECTION 5.08(b) hereof for such period). GOVERNMENTAL AUTHORITY: any nation or government, any state or other political subdivision thereof and any entity exercising any executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government. GUARANTY: the meaning specified in SECTION 2.05. GUARANTORS: James Rogers and the James Rogers Trust. HAZARDOUS MATERIAL: the meaning specified in SECTION 4.19. -6- 13 INDEBTEDNESS OR INDEBTEDNESS: as applied to any Person, (a) all items (except items of capital stock, capital or paid-in surplus or of retained earnings) which, in accordance with generally accepted accounting principles, would be included in determining total liabilities as shown on the liability side of a balance sheet of such Person as at the date as of which Indebtedness is to be determined, including any Lease which in accordance with generally accepted accounting principles consistently applied would constitute indebtedness, (b) all indebtedness secured by any mortgage, pledge, security, lien or conditional sale or other title retention agreement to which any property or asset owned or held by such Person is subject, whether or not the indebtedness secured thereby shall have been assumed, and (c) all indebtedness of others which such Person has directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), discounted or sold with recourse or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire, or in respect of which such Person has agreed to supply or advance funds (whether by way of loan, stock or equity purchase, capital contribution or otherwise) or otherwise to become directly or indirectly liable. INDEMNITEES: the meaning specified in SECTION 6.10. INTEREST EXPENSE: for any period, the aggregate amount (determined in accordance with generally accepted accounting principles) of interest accrued (whether or not paid) during such period 5y the Companies in respect of all Indebtedness for borrowed money and Capital Leases. INVOLUNTARY PETITION: the meaning specified in paragraph (1) of ARTICLE VIII. JAMES ROGERS: James E. Rogers of Las Vegas, Nevada. JAMES ROGERS TRUST: The James E. Rogers Trust created under agreement dated October 9, 1997, as the same may be amended and supplemented from time to time. KVBC-TV: television broadcast station KVBC (TV), Channel 3 (Las Vegas, Nevada). LEASE(S): any lease of, or other periodic payment arrangement for the use or possession of, property (real, personal or mixed). LENDER(S): the meaning specified in the Preamble. LICENSES: the meaning specified in SECTION 4.13. LOAN OR LOANS: the Tranche A Loans and the Tranche B Loans. LOAN DOCUMENTS: this Agreement, the Notes, the Security Documents and all other documents, certificates, and agreements contemplated by or executed in connection with the transactions contemplated hereby. -7- 14 MAJORITY LENDERS: Lenders holding in the aggregate at least two-thirds (2/3) of the sum of (i) the aggregate outstanding principal balance of the Loans, and (ii) the aggregate amount of the unused Commitments, if any, excluding from such calculation any Lender which has failed or refused to fund a Loan when required to do so. MATERIAL ADVERSE EFFECT: any circumstance or event which, individually or in the aggregate with other such circumstances or events, (a) has had, or could reasonably be expected to have, an adverse effect on the validity or enforceability of this Agreement or the other Loan Documents in any material respect, (b) has had, or could reasonably be expected to have, an adverse effect on the condition (financial or other), business, results of operations, prospects or properties of any Company in any material respect, or (c) has impaired, or could reasonably be expected to impair, the ability of any Company to fulfill its obligations under this Agreement, the Note(s) to which it is a party or any other Loan Document to which such Person is a party. MONTHLY DUE DATES: the first day of each calendar month. MULTIEMPLOYER PLAN: the meaning specified in SECTION 4.12. NET INCOME: for any fiscal period, the net income (or loss) of a Person or a radio or television broadcast station (as applicable), excluding any extraordinary income or non-cash gains for such period, after deducting all operating expenses, provisions for all taxes and reserves (including reserves for deferred income taxes), Corporate Overhead payments and all other proper deductions, all determined in accordance with generally accepted accounting principles; PROVIDED, HOWEVER, that income and expenses arising from Trades shall be excluded in determining Net Income. NET OPERATING INCOME: for any fiscal period, Net Income of a Person or a radio or television broadcast station (as applicable) for such period, after restoring thereto (without duplication) amounts deducted in the computation thereof for (a) depreciation; (b) amortization (including, without limitation, Programming amortization); (c) Interest Expense; (d) other non- cash expenses (excluding provisions for uncollectable accounts) determined in accordance with generally accepted accounting principles; and (e) taxes in respect of income and profits; MINUS Programming Payments. NET SALE PROCEEDS: with respect to any disposition of assets by a Company, the aggregate amount of all cash payments received by the Companies, directly or indirectly, in connection with such disposition, whether at the time thereof or after such disposition under deferred payment arrangements or investments entered into or received in connection with such disposition, MINUS the aggregate amount of any reasonable and customary legal, accounting, regulatory, title and recording tax expenses, transfer taxes, commissions and other fees and expenses paid at any time by the Companies in connection with such disposition. NEW SUBSIDIARIES: wholly-owned subsidiaries of Sunbelt which are either incorporated and organized by Sunbelt or acquired by Sunbelt through a capital stock acquisition, from time to -8- 15 time for the purpose of acquiring New Stations or FCC construction permits with the proceeds of the Acquisition Loans. NEW STATION(S): radio and/or television broadcasting stations not owned by the Borrowers on the date hereof and FCC construction permits not held by the Borrowers on the date hereof, but which, in either case, are to be acquired by one or more Companies from and after the date hereof utilizing the proceeds of the Acquisition Loans to pay some or all of the purchase price therefor. NOTE(S): the Tranche A Notes and the Tranche B Notes, as the same may be amended, extended and restated from time to time. NOTICE OF DEFAULT: the meaning specified in SECTION 10.03. OREGON TRAIL: the meaning specified in the Preamble. OPERATING LEASE: any Lease (real, personal or mixed) other than Capital Leases. ORIGINAL BORROWERS: the meaning specified in the Preamble. ORIGINAL LOAN AGREEMENTS; ORIGINAL PROMISSORY NOTES: the respective meanings specified in the Preamble. PARTICIPANT: the meaning specified in SECTION 2.12. PBGC: the meaning specified in SECTION 4.12. PERMITTED ACQUISITION: the meaning specified in SECTION 7.04(b). PERMITTED INVESTMENTS: (a) investments in property to be used by the Companies, or any of them, in the ordinary course of business; (b) current assets arising from the sale of goods and services in the ordinary course of business; (c) investments (of one year or less) in direct or guaranteed obligations of the United States or any agency thereof, (d) investments (of 90 days or less) in certificates of deposit of Nevada First Bank, a Nevada banking corporation in an aggregate amount not to exceed $1,000,000, and investments (of 90 days or less) in certificates of deposit of any national or state-chartered bank having capital, surplus and undivided profits in excess of $10,000,000; (e) investments (of 90 days or less) in commercial paper given the highest rating by Standard and Poor's Bond Rating Index or by Moody's Investor Service; (f) shares and certificates redeemable at any time without penalty and funds invested solely in money market instruments placed through national or state-chartered banks within the United States having capital, surplus and undivided profits in excess of $10,000,000; and (g) advances to employees in the ordinary course of business for the payment of BONA FIDE properly documented business expenses to be incurred on behalf of the Companies in an aggregate amount not to exceed Ten Thousand Dollars ($10,000) outstanding at any time. -9- 16 PERSON OR PERSON: any individual, corporation, partnership, joint venture, trust, limited liability company or unincorporated organization or any government or any agency or political subdivision thereof. PLEDGED INTERESTS: the meaning specified in SECTION 13.17. PREMISES: the meaning specified in SECTION 4.19. PREPAYMENT PREMIUM PERCENTAGE: the meaning specified in Section 2.03(b). PROGRAMMING: all programming and film rights and all rights to broadcast television programming of any kind, whether held under license, lease, agreement, contract or otherwise for use by any of the Companies in connection with any of the Stations or the New Stations, including, without limitation, all rights for programming of movies, television series productions, children's programming, sports productions, news coverage and other television viewing products, and the rights to all video tapes, films and other materials now or hereafter constituting or embodying such programming. PROGRAMMING PAYMENTS: for any period, all cash payments required to be made by the Companies, or any of them, in respect of Programming pursuant to Programming agreements. PURCHASE MONEY SECURITY AGREEMENT: any agreement pursuant to which a Company incurs Indebtedness for the limited purpose of funding the acquisition cost of equipment to be used in the ordinary course of such Company's business, and pursuant to which the Company grants to the holder of such agreement a security interest only in such equipment and its proceeds to secure only the payment of such Indebtedness. RADIO NEWS: the meaning specified in the Preamble. RADIO SALES: the meaning specified in the Preamble. RCRA: the meaning specified in SECTION 4.19. RECOVERING PARTY AND RECOVERY: the respective meanings specified in SECTION 2.13(b). REGULATORY CHANGE: with respect to any Lender, any change after the Closing Date in any law, rule or regulation (including, without limitation, Regulation D) of the United States, any state or any other nation or political subdivision thereof, including, without limitation, the issuance of any final regulations or guidelines, or the adoption or making after the Closing Date (or, if later, the date as of which such Person became a Lender) of any interpretation, directive or request under any such law, rule or regulation (whether or not having the force of law and whether or not failure to comply therewith would be unlawful) by any court or governmental or monetary authority charged with the interpretation thereof. -10- 17 REQUEST FOR ADVANCE: a signed and completed Request for Advance submitted by the Companies in the form of SCHEDULE 3.01 A. RESTRICTED PAYMENT: any distribution or payment of cash or property, or both, directly or indirectly (a) in respect of Subordinated Debt, or (b) to a Guarantor, or any Stockholder or other Affiliate of any of the Companies or any of their respective Affiliates for any reason whatsoever, including, without limitation, salaries, debt repayment, consulting fees, management fees, expense reimbursements and dividends, distributions and payments in respect of ownership interests in the Companies. RUBY MOUNTAIN: the meaning specified in the Preamble. SECURITY DOCUMENT(S): the meaning specified in SECTION 2.05. SELLER: the seller under an Acquisition Agreement. SENIOR DEBT: at any time, all outstanding Indebtedness of the Companies, or any of them, to the Lenders, including, without limitation, Indebtedness incurred pursuant to this Agreement. SENIOR DEBT SERVICE: for any period, the aggregate amount (determined in accordance with generally accepted accounting principles) of principal and interest and premium, commitment fees and other charges (exclusive, however, of the Termination Fee), if any, required to be paid during such period by the Companies in respect of Senior Debt. SIERRA AND SIERRA RADIO: the respective meanings specified in the Preamble. STATION(S): the meaning specified in SECTION 4.13. STOCKHOLDER(S): the meaning specified in SECTION 4.15 and all Persons who at any time hold or acquire capital stock of Sunbelt or any of the Companies. SUBORDINATED DEBT: indebtedness subordinated in writing in right of payment to the prior payment of Senior Debt, on terms approved by the Lender in writing. SUBORDINATION AGREEMENTS: the meaning specified in SECTION 2.05. SUNBELT: the meaning specified in the Preamble. SUPPLEMENTAL LINE: Twenty-four Million Six Hundred Thirty-eight Thousand Six Hundred Ten and no/100 Dollars ($24,638.61 0.00) of the Tranche B Commitment extended by AT&T-CFC to the Borrowers pursuant to SECTION 2.02(a). SUPPLEMENTAL LINE EXPIRATION DATE: June 30, 2000, or such later date as may be consented to by the Lenders holding the Tranche B Notes, in their sole discretion. The holders of -11- 18 the Tranche B Notes shall have no obligation to extend the Supplemental Line Expiration Date, and any extension of this date will be conditioned upon, INTER ALIA the payment of a fee equal to one-half of one percent (0.5%) of the unused Tranche B Commitment on the date of extension. SURETY: any person who is (or any part of whose assets are) at any time directly or contingently liable for all or any portion of the Companies' obligations to the Lender hereunder or under the Notes or Security Documents, whether pursuant to a guaranty, an assumption agreement, a pledge agreement, or otherwise and any person to whom any Company is at any time indebted if such Indebtedness has been subordinated to Indebtedness of the Companies to the Lender. The term "Surety" shall include the Guarantors. TAXES: the meaning specified in SECTION 2.09. TAX REFUND: the meaning specified in SECTION 2.04(c)(i). TERMINATION FEE: the meaning specified in SECTION 2.07. TAX LITIGATION: the litigation which the Borrowers will commence as plaintiffs in the United States District Court for the District of Nevada against the United States of America seeking a refund of Federal income taxes paid by the Borrowers in the aggregate amount of approximately $8,974,072, plus interest and penalties, if any, arising from a certain Notice of Deficiency issued by the Internal Revenue Service to Sunbelt and its Affiliates dated February 13, 1998. TOTAL DEBT SERVICE: for any period, the aggregate amount (determined in accordance with generally accepted accounting principles) of principal and interest and premium, commitment fees and other charges, if any, required to be paid during such period by the Companies in respect of all Indebtedness. TRADES: those assets and liabilities of the Companies which do not represent the right to receive payment in cash or the obligation to make payment in cash and which arise pursuant to so-called "trade" or "barter" transactions. TRANCHE A COMMITMENT: the aggregate maximum principal amount of all Tranche A Loans as of the Closing Date (i.e., $30,000,000). TRANCHE A LENDERS: all Lenders who hold Tranche A Notes. TRANCHE A LOANS: the meaning specified in SECTION 2.01(a). TRANCHE A NOTES: the meaning specified in SECTION 2.01(b). TRANCHE B COMMITMENT: the sum of the outstanding principal balance of the Tranche B Loans on the Closing Date and the aggregate principal amount of all Tranche B Loans which the -12- 19 Lenders may thereafter make pursuant to SECTION 2.02 in an aggregate amount not to exceed $30,000,000. TRANCHE B LOANS: the meaning specified in SECTION 2.02(a). TRANCHE B NOTES: the meaning specified in SECTION 2.02(b). TRANSACTION DOCUMENTS: the meaning specified in SECTION 4.02. TWO OCEAN: the meaning specified in the Preamble. UNMATURED EVENT OF DEFAULT: any event or condition, which, after notice or lapse of time, or both, would constitute an Event of Default. VALLEY: the meaning specified in the Preamble. YEAR-TO-DATE: at and as of any date, the amount accrued, earned, received, expended or calculated, as applicable, from the immediately preceding January 1 through such date. YUMA: the meaning specified in the Preamble. All accounting terms not specifically defined herein shall be construed in accordance with generally accepted accounting principles consistent with those applied in the preparation of the financial statements referred to in SECTION 4.01 hereof, PROVIDED, HOWEVER, that in any event income and expenses arising from Trades shall be excluded in determining Net Income and Net Operating Income. All references in this Agreement to the call letters and channel designations of a television broadcast station shall be deemed to include any subsequent call letters and channel designations corresponding to any digital television broadcast licenses awarded by the FCC to a Company for the same or similar market. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders. All references in this Agreement to Articles, Sections, subsections, paragraphs, clauses or Schedules shall refer to the corresponding Articles, Sections, subsections, paragraphs, clauses and Schedules, respectively, contained in or which are attached to or made part of this Agreement, as applicable, unless specific reference is made to the Articles, Sections or other subdivisions of, or Schedules to, another agreement or document. II. GENERAL TERMS SECTION 2.01. TRANCHE A LOANS. (a) LOANS. Subject to the terms and conditions contained in this Agreement, the Lenders and the Borrowers hereby agree that $30,000,000.00 in principal amount of the Senior Debt outstanding under the Original Loan Agreements and held by AT&T-CFC on the Closing Date shall be converted to loans under this SECTION 2.01 on the Closing Date (such Loans being herein referred to collectively as the "TRANCHE A LOANS"). By reason of such conversion, the -13- 20 Tranche A Commitment shall be deemed to have been fully funded, and the Lenders shall have no obligation to make any other or further Advances in respect to the Tranche A Commitment. (b) NOTES. The Tranche A Loans shall be evidenced by the Borrowers' Amended and Restated Secured Term Notes in the aggregate principal amount of $30,000,000.00, each in the form of SCHEDULE 2.01 hereto (with all blanks appropriately completed) (together with any additional Notes issued to any assignee of the Tranche A Loans under ARTICLE XII hereof, referred to collectively as the "TRANCHE A NOTES"), payable on the Closing Date to AT&T-CFC (or its successors and assigns). (b) PRINCIPAL IN RESPECT OF TRANCHE A LOANS. The Tranche A Loans shall be payable by the Borrowers, without setoff, deduction or counterclaim in ninety-six (96) consecutive monthly installments on the first day of each month (the "MONTHLY DUE DATES") commencing July 1, 1998, and continuing until June 1, 2006, when all remaining outstanding principal and accrued interest thereon shall be due and payable in full without setoff, deduction or counterclaim. Monthly payments of principal in respect of the Tranche A Loans shall be in the amounts set forth below:
Amount of Monthly Due Dates During the Period Monthly Principal Payment - ----------------------------------- ------------------------- July 1, 1998 through June 1, 1999 $230,000.00 July 1, 1999 through June 1, 2000 $250,000.00 July 1, 2000 through June 1, 2001 $271,000.00 July 1, 2001 through June 1, 2002 $295,000.00 July 1, 2002 through June 1, 2003 $320,000.00 July 1, 2003 through June 1, 2004 $347,000.00 July 1, 2004 through June 1, 2005 $377,000.00 July 1, 2005 through May 1, 2006 $409,000.00 June 1, 2006 The then remaining outstanding and unpaid principal balance of the Tranche A Loans.
SECTION 2.02. TRANCHE B LOANS. (a) LOANS. Subject to the terms and conditions contained in this Agreement, the Lenders and the Borrowers hereby agree that the remaining $5,361,390.00 in principal amount of Senior Debt outstanding under the Original Loan Agreements and held by AT&T-CFC on the Closing Date shall be converted to loans under this SECTION 2.02 on the Closing Date. Subject to the terms and conditions contained in this Agreement, the remaining $24,638,610.00 balance of the Tranche B Commitment (the "SUPPLEMENTAL LINE") may be borrowed by the Borrowers (together with any New Subsidiaries who benefit therefrom between the Closing Date and the Supplemental Line Expiration Date. (The outstanding balance of Senior Debt described in the first sentence of this SECTION 2.02(a), together with any Advances made under the Supplemental Line, are referred to collectively as the "TRANCHE B LOANS"). The Lenders shall have no -14- 21 obligation to readvance any principal sums repaid in respect to the Tranche B Loans, including the Supplemental Line. (b) NOTES. The Tranche B Loans shall be evidenced by the Borrowers' Amended and Restated Secured Promissory Notes in the aggregate principal amount of up to $30,000,000.00, each in the form of SCHEDULE 2.02 hereto (with all blanks appropriately completed) (together with any additional Notes issued to any assignee of the Tranche B Loans under ARTICLE XII hereof, referred to collectively as the "TRANCHE B NOTES"), payable to AT&T-CFC (or its successors and assigns). (c) PRINCIPAL IN RESPECT OF TRANCHE B LOANS. The Tranche B Loans shall be payable by the Borrowers and New Subsidiaries, without setoff, deduction or counterclaim in one hundred twenty (120) consecutive monthly installments on the first day of each month (the "MONTHLY DUE DATES") commencing July 1, 1998, and continuing until June 1, 2008, when all remaining outstanding principal and accrued interest thereon shall be due and payable in full without setoff, deduction or counterclaim. Monthly payments of principal in respect of the Tranche B Loans shall be in the amounts set forth below:
Amount of --------- Monthly Due Dates During the Period Monthly Principal Payment ----------------------------------- ------------------------- July 1, 1998 through June 1, 1999 $17,000.00 July 1, 1999 through June 1, 2000 $18,000.00 July 1, 2000 through June 1, 2001 $20,000.00 July 1, 2001 through June 1, 2002 $22,000.00 July 1, 2002 through June 1, 2003 $24,000.00 July 1, 2003 through June 1, 2004 $26,050.00 July 1, 2004 through June 1, 2005 $28,000.00 July 1, 2005 through June 1, 2006 $31,000.00 July 1, 2006 through June 1, 2007 $344,000.00 July 1, 2007 through May 1, 2008 $375,000.00 June 1, 2008 The then remaining outstanding and unpaid principal balance of the Tranche B Loans.
If the Tranche B Commitment is not fully advanced, AT&T-CFC may, at its option, adjust the payment schedule on a PRO RATA basis based upon the aggregate amount of Tranche B Loans actually funded. SECTION 2.03. PREPAYMENTS. (a) RIGHT OF VOLUNTARY PREPAYMENT. Subject to the provisions hereof, the Borrowers may at any time prepay the principal of the Notes, in whole or in part from time to time upon not less than five (5) business days prior written notice to the Agent, provided that any voluntary prepayment shall be an integral multiple of Fifty Thousand Dollars ($50,000 00) or such lesser amount as equals the then outstanding principal amount of the Notes Except as provided in SECTION 2.03(b), each prepayment shall be without premium or penalty Each such -15- 22 notice shall specify the prepayment date and the principal amount of the Notes to be prepaid. Except as provided in SECTION 2.03(c)(i), all prepayments shall, unless otherwise determined by all of the Lenders, be applied first to prepayment premiums, second to accrued but unpaid interest, late charges and fees, then to prepayments of installments of principal of the Notes being prepaid (PRO RATA based on outstanding unpaid principal balances thereof) in the inverse order of maturity thereof. The Lenders shall have no obligation to relend principal balances repaid or prepaid. (b) Notwithstanding the foregoing, except as otherwise specifically provided herein, any prepayment of a Loan made prior to June 1, 2001, shall, to the extent permitted by applicable law, be accompanied by the payment of a prepayment premium calculated as a percentage (the "PREPAYMENT PREMIUM PERCENTAGE") of the principal amount so prepaid in accordance with this paragraph (b). For the purposes hereof, the applicable Prepayment Premium Percentage shall be based upon the following schedule: The Prepayment If prepayment occurs: Premium Percentage - -------------------- shall be: --------- From the date hereof through May 31, 2000 2.0% From June 1, 1998 through May 31,2001 1.0% Notwithstanding the foregoing, (i) any prepayment of a Note made solely from or with either the proceeds of a loan made by all of the Lenders to the Companies, or identifiable Net Income generated by the Stations and retained by the Companies shall not be subject to the payment of a prepayment premium; (ii) the first $5,000,000 of principal prepayments of the Notes, if any, made as required by SECTION 2.03(c)(ii) shall not be subject to the payment of a prepayment premium; and (iii) the first $13,500,000 of principal prepayment of the Notes, if any, made as required by SECTION 2.03(c)(i) prior to June 1, 2001, shall be subject to a prepayment premium based upon a Prepayment Premium Percentage of one percent (1.0%). (c) MANDATORY PREPAYMENTS. (i) TAX REFUND. The Borrowers shall prepay principal IN RESPECT TO THE TRANCHE B LOANS ONLY in an amount equal to any and all refunds received by Sunbelt and the other Borrowers (collectively, the "TAX REFUND") from any decision in, or settlement of, the Tax Litigation, such prepayment to be made immediately if an Event of Default then exists, or in all other cases within one hundred twenty (120) days of the date of Sunbelt's receipt of the Tax Refund; PROVIDED, HOWEVER, that to the extent Sunbelt does not prepay principal of the Tranche B Loans immediately upon receipt of the Tax Refund in accordance with the provisions of this paragraph (i), the amount of the Tax Refund so retained by Sunbelt shall be deposited with a custodian or bank acceptable to the Agent and specifically pledged to the Agent for the benefit of the Lenders pursuant to pledge agreements in form and substance acceptable to the Agent and executed by the Borrowers and consented to by the custodian or depository bank holding such Tax Refund. The Lenders agree to consider any application made by Sunbelt during such 120 -16- 23 day period to apply the Tax Refund toward payment of the purchase price of a Permitted Acquisition. The amount of the Tax Refund, to the next not used to consummate a Permitted Acquisition consented to by the Lenders, shall be paid to the Agent to be applied in accordance with this paragraph (i). (ii) ASSET DISPOSITIONS. One hundred percent (100%) of the Net Sale Proceeds of all assets and properties sold or disposed of by the Companies pursuant to or as part of a disposition permitted by SECTION 7.03 shall be paid to the Agent on behalf of all of the Lenders; PROVIDED, HOWEVER, that, unless an Event of Default or Unmatured Event of Default shall have occurred and be then continuing, such Net Sale Proceeds shall not be required to be paid to the Agent if such disposition yields Net Sale Proceeds of not more than $100,000, except to the extent that the aggregate amount of Net Sale Proceeds resulting from all such Dispositions described in this proviso exceeds $150,000 in any Fiscal Year. Nothing contained herein is intended to constitute a consent by the Lenders to any such disposition. (d) APPLICATION OF REDUCTIONS AND PREPAYMENTS. All prepayments of the Notes under this SECTION 2.03, (i) shall be made without set-off, deduction or counterclaim, (ii) shall (except as provided in SECTION 2.03(c)(i))be applied to payment of the Lenders' Notes PRO RATA (based upon the outstanding principal balance thereof) and (iii) unless otherwise specified in this SECTION 2.03, shall be applied FIRST, to pay applicable prepayment premiums, SECOND, to pay to interest, fees and expenses hereunder, and THIRD to pay principal of the Notes, PROVIDED that applications of prepayments of principal shall be made, proportionately, to subsequent scheduled payments under the Notes, in the inverse order in which they appear. SECTION 2.04. APPLICABLE INTEREST RATES; PAYMENT OF INTEREST. (a) INTEREST RATES. Subject to the provisions of SECTION 9.02 hereof, the outstanding principal balance of each Loan shall bear interest from the date of the first Advance thereof until payment in full, both before and after maturity, at a rate or rates per annum calculated from time to time equal to the Base Rate. (b) INTEREST PAYMENT DATES. Interest on the Loans shall be payable monthly in arrears without setoff, deduction or counterclaim on the Monthly Due Dates and at maturity, whether by reason of acceleration, payment, prepayment or otherwise. If the initial Advance in respect of a Loan is made on or before the 15th day of the month, the first interest payment in respect of such Loan will be due on the first Monthly Due Date occurring after the date of such Advance; in all other cases, the first interest payment in respect of a Loan will be the second Monthly Due Date occurring after the date of such initial Advance. (c) INTEREST CALCULATIONS. Interest shall be computed on the basis of a three hundred sixty-five (365) day year counting the actual number of days elapsed. Each change in the interest rate hereunder and under the Notes which is tied to the Commercial Paper Rate shall take effect -17- 24 without notice as of the first (1st) day of each month based upon the first Commercial Paper Rate in effect for the first Business Day of such month. (d) DEFAULT RATE. The interest rate(s) in effect from time to time are also subject to increase from time to time in accordance with the provisions of Section 9.02. SECTION 2.05. SECURITY FOR THE NOTES. Each Company's obligations and indebtedness to the Lenders and to the Agent hereunder and under the Notes shall be secured at all times by: (a) Amended and Restated Security Agreements of the Companies granting to the Agent and the Lenders a continuing first priority perfected security interest in all presently owned and hereafter acquired tangible and intangible personal property and fixtures of the Companies (except for licenses and permits issued by the FCC to the extent it is unlawful to grant a security interest in such licenses and permits), subject only to any prior liens expressly permitted under this Agreement; (b) except as may be waived by the Agent, first mortgages or deeds of trust on all presently owned and hereafter acquired real estate owned by the Companies, subject only to any prior liens expressly permitted under this Agreement, together with mortgagee's title insurance policies acceptable to the Agent; (c) except as may be waived by the Agent, first priority perfected collateral assignments of, or leasehold mortgages or deeds of trust in respect of, all real estate leases in which the Companies now have or may in the future have an interest, subject only to any prior liens expressly permitted under this Agreement, together with such third party consents, lien waivers, mortgagee waivers and estoppel certificates as the Agent shall reasonably require; (d) one or more Pledge Agreements executed by all stockholders of the Companies effecting thereby a first priority perfected pledge of (i) all presently outstanding and hereafter issued shares of capital stock of the Companies, (ii) all voting trust certificates issued in respect of the capital stock of the Companies, or any extension or renewal thereof, and (iii) all warrants, options and other rights to acquire any such shares; (e) first priority perfected collateral assignments of such construction contracts, management agreements, programming agreements, network affiliation agreements, joint sales agreements, local marketing agreements, licenses, permits, authorizations and agreements as the Agent shall deem necessary to protect its interests, subject only to any prior lien expressly permitted under this Agreement, together with such third party consents, lien waivers and estoppel certificates as the Agent shall reasonably require; (f) the subordination in favor of the Lenders, pursuant to subordination agreements satisfactory to the Agent in form and substance (collectively, the "AFFILIATE SUBORDINATION -18- 25 AGREEMENTS"), of all indebtedness of the Companies to any Affiliates of the Companies, designated by the Agent; (g) the subordination in favor of the Lenders, pursuant to subordination agreements satisfactory to the Agent in form and substance (collectively, the "SUBORDINATION AGREEMENTS"), of all indebtedness of the Borrowers to any lenders to the Companies and any creditors of such Companies holding a note or non-competition agreement executed by the Companies, as obligor thereunder, designated by the Agent, together with UCC-3 and such other lien subordination documents as the Agent shall require; (h) the absolute and unconditional, joint and several Guaranty of the Guarantors (the "GUARANTY") which shall be limited to $5,000,000 plus interest and collection costs as provided therein; and (i) to the extent provided therein, Intercreditor Agreements in form and substance acceptable to the Agent with Pioneer Citizens Bank and Community Bank of Nevada. All agreements and instruments described or contemplated in this SECTION 2.05, together with any and all other agreements and instruments heretofore or hereafter securing the Notes and each Company's obligations hereunder or otherwise executed in connection with this Agreement, shall in all respects be acceptable to the Agent and its special counsel in form and substance, and such agreements and instruments, as the same may be amended from time to time, are sometimes hereinafter referred to collectively as the "SECURITY DOCUMENTS" and individually as a "SECURITY DOCUMENT". Each Company agrees to take such action as the Lenders or the Agent may reasonably request from time to time in order to cause the Lenders and the Agent to be secured at all times as described in this SECTION 2.05, and the Lenders' security interests to be perfected at all times. SECTION 2.06. USE OF PROCEEDS. (a) LOANS. $30,000,000.00 of the Tranche A Loans, and $5,361,390.00 of the Tranche B Loans are in substitution and replacement of the aggregate principal amount of the Borrowers' outstanding Senior Debt under the Original Loan Agreements, and represent a continuation (not a refinancing or reborrowing) of the outstanding obligations of the Borrowers with respect to such Senior Debt. The remaining $24,638,610.00 in proceeds of Advances available under the Tranche B Commitment shall be used exclusively in accordance with SCHEDULE 2.06 hereto. SECTION 2.07. TERMINATION FEE. In consideration of AT&T-CFC entering into this Agreement, the Borrowers agree jointly and severally to pay to AT&T-CFC a non-refundable fee (the "TERMINATION FEE") in accordance with the Fee Letter. -19- 26 SECTION 2.08. REQUIREMENTS OF LAW. (a) In the event that any Regulatory Change shall: (i) change the basis of taxation of any amounts payable to any Lender under this Agreement or the Notes in respect of any Loans (other than taxes imposed on the net income of such Lender); (ii) impose or modify any reserve, compulsory loan assessment, special deposit or similar requirement relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, any applicable office of such Lender; or (iii) impose any other conditions affecting this Agreement in respect of Loans (or any of such extensions of credit, assets, deposits or liabilities); and the result of any of the foregoing shall be to increase such Lender's costs of making or maintaining any Loans, or to reduce any amount receivable by such Lender hereunder in respect of any of its Loans, in each case only to the extent that such additional amounts are not included in the Base Rate applicable to such Loans, then the Borrowers shall pay on demand to such Lender, through the Agent, and from time to time as specified by such Lender, such additional amounts as such Lender shall reasonably determine are sufficient to compensate such Lender for such increased cost or reduced amount receivable. (b) If at any time after the date of this Agreement any Lender shall have determined that the applicability of any law, rule, regulation or guideline adopted after the Closing Date pursuant to, or arising after the Closing Date out of, the July 1988 report of the Basle Committee on Lending Regulations and Supervisory Practices entitled "International Convergence of Capital Measurement and Capital Standards", or the adoption or implementation after the Closing Date of any other Regulatory Change regarding capital adequacy or any change after the Closing Date in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof (whether or not having the force of law), has or will have the effect of reducing the rate of return on such Lender's capital or on the capital of such Lender's holding company, if any, as a consequence of the existence of its obligations hereunder to a level below that which such Lender or its holding company could have achieved but for such adoption, change or compliance (taking into consideration such Lender's policies with respect to capital adequacy) by an amount reasonably deemed by such Lender to be material, then from time to time following written notice by such Lender to the Borrowers as provided in paragraph (c) of this SECTION 2.08, within fifteen (15) days after demand by such Lender, the Borrowers shall pay to such Lender, through the Agent, such additional amount or amounts as such Lender shall reasonably determine will compensate such Lender or such corporation, as the case may be, for such reduction. (c) If any Lender becomes entitled to claim any additional amounts pursuant to this SECTION 2.08, it shall promptly notify the Borrowers of the event by reason of which it has become so entitled. A certificate setting forth in reasonable detail the computation of any -20- 27 additional amounts payable pursuant to this SECTION 2.08 submitted by such Lender to the Borrowers shall be presumed correct in the absence of manifest error. The covenants contained in this SECTION 2.08 shall survive the termination of this Agreement and the payment of the outstanding Notes. No failure on the part of any Lender to demand compensation under paragraph (a) or (b) above on any one occasion shall constitute a waiver of its rights to demand compensation on any other occasion. The protection of this SECTION 2.08 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of any law, regulation or other condition which shall give rise to any demand by such Lender for compensation thereunder. SECTION 2.09. TAXES. (a) All payments made by the Borrowers under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (all such taxes, levies, imposts, duties, charges, fees, deductions and withholdings being hereinafter called "TAXES"); PROVIDED, HOWEVER, that the term "TAXES" shall not include net income taxes or franchise taxes (imposed in lieu of net income taxes) imposed on the Agent or any Lender, as the case may be, as a result of a present or former connection or nexus between the jurisdiction of the government or taxing authority imposing such tax (or any political subdivision or taxing authority thereof or therein) and the Agent or such Lender. If any Taxes are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under the Notes, the amounts so payable to the Agent or such Lender shall be increased to the extent necessary to yield to the Agent or such Lender (after payment of all Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Taxes are payable by the Borrowers in respect of this Agreement or the Notes, as promptly as possible thereafter the Borrowers shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrowers showing payment thereof. If the Borrowers fail to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrowers shall, jointly and severally, indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. If, after any payment of Taxes by the Borrowers under this Section, any part of any Tax paid by the Agent or any Lender is subsequently recovered by the Agent or such Lender, the Agent or such Lender shall reimburse the Borrowers to the extent of the amount so recovered. A certificate of an officer of the Agent or such Lender setting forth the amount of such recovery and the basis therefor shall, in the absence of manifest error, be conclusive. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. (b) Each Lender, if any, that is not incorporated under the laws of the United States or a state thereof agrees that prior to the first date as of which any payment is required to be made to it hereunder it will deliver to the Borrowers and the Agent (i) two duly completed copies of -21- 28 United States Internal Revenue Service Form 1001 or 4224 or successor applicable form, as the case may be, and (ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable form. Each such Lender also agrees to deliver to the Borrowers and the Agent two further copies of the said Form 1001 or 4224 and Form W-8 or W-9, or successor applicable forms or other manner of certification, as the case may be, on or before the date that any such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrowers, and such extensions or renewals thereof as may reasonably be requested by the Borrowers or the Agent, unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrowers and the Agent. Such Lender shall certify (x) in the case of a Form 1001 or 4224, that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes and (y) in the case of a Form W-8 or W-9, that it is entitled to an exemption from United States backup withholding tax. SECTION 2.10. INDEMNIFICATION. The Borrowers shall pay to the Agent, for the account of each Lender, upon the request of such Lender delivered to the Agent and thereafter delivered by the Agent to the Borrowers, such amount or amounts as shall compensate such Lender for any loss, cost or expense incurred by such Lender (as reasonably determined by such Lender) as a result of any payment or prepayment. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid for the period from the date of such prepayment (if such date is not a Monthly Due Date) through the next Monthly Due Date at the applicable rate of interest for such Loans provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. The provisions of this SECTION 2.11 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. The determination by each such Lender of the amount of any such loss or expense, when set forth in a written notice delivered to the Agent (and thereafter delivered by the Agent to the Borrowers), containing such Lender's calculation thereof in reasonable detail, shall be presumed correct in the absence of manifest error. SECTION 2.11. PAYMENTS UNDER THE NOTES. All payments and prepayments made by the Borrowers of principal of, and interest on, the Notes and other sums and charges payable under this Agreement, shall be made via wire transfer in immediately available funds to the Agent, for the benefit of the Lenders, for receipt by the Agent not later than 2:00 P.M. (New York Time), on the date on which such payment shall become due. The failure by the Borrowers to make any such payment by such hour shall not constitute a default hereunder so long as payment is received later that day, provided that any such payment made after 2:00 P.M. (New York Time), on such due date shall be deemed to have been made on the next Business Day for the purpose of calculating interest on amounts outstanding on the Notes. The Borrowers shall, at the time of making each payment under this Agreement or the Notes, specify to the Agent the Notes or -22- 29 amounts payable by the Borrowers hereunder to which such payment is to be applied (and in the event that it fails to so specify, or if an Event of Default has occurred and is continuing, the Agent may distribute such payments in such manner as the Majority Lenders may direct or, absent such direction, as it determines to be appropriate, subject to the provisions of SECTION 2.13). If any payment hereunder or under the Notes shall be due and payable on a day which is not a Business Day, such payment shall be deemed due on the next following Business Day and interest shall be payable at the applicable rate specified herein through such extension period. Each payment received by the Agent under this Agreement or any Note or other Loan Document for the account of a Lender shall be paid promptly (and in any event within one (1) Business Day of receipt) to such Lender, in immediately available funds, for the account of such Lender for the Note in respect to which such payment is made. SECTION 2.12. SET-OFF, ETC. Each Borrower agrees that, in addition to (and without limitation of) any right of set-off, bankers' lien or counterclaim a Lender may otherwise have, each Lender shall be entitled, at its option, to offset balances held by it (other than accounts as to which the Borrower is acting solely as a fiduciary) for the account of such Borrower at any of its offices, against any principal of or interest on the Notes held by such Lender or other fees or charges owed to such Lender hereunder which are not paid when due (regardless of whether such balances are then due to such Borrower), in which case it shall promptly notify the Borrowers and the Agent thereof, provided that such Lender's failure to give such notice shall not affect the validity thereof and (as security for any Indebtedness hereunder) each Borrower hereby grants to the Agent and the Lenders a continuing security interest in any and all balances, credit, deposits, accounts or moneys of the Borrower maintained with the Agent and any Lender now or hereafter (other than accounts as to which the Borrower is acting solely as a fiduciary). If a Lender shall obtain payment of any principal, interest or other amounts payable under this Agreement through the exercise of any right of set-off, banker's lien or counterclaim or otherwise, it shall promptly purchase from the other Lenders participations in (or, if and to the extent specified by such Lender, direct interests in) the Note(s) held by the other Lenders in such amounts, and make such other adjustments from time to time as shall be equitable, to the end that all the Lenders shall share the benefit of such payment (net of any expenses which may be incurred by such Lender in obtaining or preserving such benefit) pro rata in accordance with the unpaid principal amounts of and interest on the Note(s) held by each of them within one Business Day of such event. To such end, the Lenders shall make appropriate adjustments among themselves (by the resale of participations sold or otherwise) within five (5) Business Days if such payment is rescinded or must otherwise be restored. Each Borrower agrees that any Lender or any other Person which purchases a participation (or direct interest) in the Note(s) held by any or all of the Lenders (each being hereinafter referred to as a "PARTICIPANT") may exercise all rights of set-off, bankers' lien, counterclaim or similar rights with respect to such participation as fully as if such Participant were a direct holder of Notes in the amount of such participation, provided that the Borrower was notified of such purchase. Nothing contained herein shall be deemed to require any Participant to exercise any such right or shall affect the right of any Participant to exercise, and retain the benefits of exercising, any such right with respect to any indebtedness or obligation of the Borrowers, other than the Borrowers' indebtedness and obligations under this Agreement. -23- 30 SECTION 2.13. PRO RATA TREATMENT; SHARING. (a) Except to the extent otherwise provided herein and with respect to the Termination Fee payable to AT&T-CFC under the Fee Letter and prepayments of principal made with the proceeds of the Tax Refund: (i) each borrowing from the Lenders shall be made from the Lenders and each reduction of the Commitments shall be applied to the Notes held by the Lenders PRO RATA according to the amounts of their respective Commitments; (ii) each payment and prepayment of principal of the Notes shall be made to the Lenders PRO RATA in accordance with the respective unpaid principal amounts of the respective Notes held by the Lenders; (iii) each payment of interest on the Notes shall be made for the accounts of the Lenders and each payment of sums and charges payable under this Agreement (except for fees which are payable in accordance with SECTION 2.07) shall be made to the Lenders PRO RATA in accordance with the respective unpaid principal amounts of, and interest on, the Loans made by each of them (calculated, as applicable, for each day of the relevant payment period); (iv) each payment under SECTION 2.08, 2.09 and 2.10 shall be made to each Lender in the amount required to be paid to such Lender pursuant to such Section for losses suffered or costs incurred by, such Lender; and (v) notwithstanding the foregoing, but subject to the proviso set forth at the end of this clause (v), after and during the continuance of an Event of Default, each distribution of cash, property, securities or other value received by any Lender, directly or indirectly, in respect of the Borrowers' Indebtedness hereunder, whether pursuant to any attachment, garnishment, execution or other proceedings for the collection thereof or pursuant to any bankruptcy, reorganization, liquidation or other similar proceeding, after payment of collection and other expenses as provided herein and in the Security Documents, shall be apportioned among the Lenders PRO RATA in accordance with the respective unpaid principal amounts of and interest on the Notes held by each of them; provided, however, that notwithstanding any provision contained herein to the contrary, all sums received by the Agent in respect to the Tax Refund (including, without limitation, proceeds realized in respect to any security interest therein), shall be applied first to the Tranche B Loans until payment in full thereof, and the balance only, if any, to the Tranche A Loans. (b) Notwithstanding the foregoing, if any Lender (a "RECOVERING PARTY") shall receive any such distribution referred to in SECTION 2.13(a)(v) (a "RECOVERY") in respect thereof, such Recovering Party shall pay to the Agent for distribution to the Lenders as set forth herein their respective pro rata shares of such Recovery, as set forth herein, unless the Recovering Party is legally required to return any Recovery, in which case each party receiving a portion of such Recovery shall return to the Recovering Party its PRO RATA share of the sum required to be returned without interest. For purposes of this Agreement, calculations of the amount of the PRO RATA share of each Lender shall be rounded to the nearest whole dollar. (c) Each Borrower acknowledges and agrees that, if any Recovering Party shall be obligated to pay to the other Lenders a portion of any Recovery pursuant to SECTION 2.13(b) and shall make such Recovery payment, the Borrowers shall be deemed to have satisfied its obligations in respect of Indebtedness held by such Recovering Party only to the extent of the Recovery actually retained by such Recovering Party after giving effect to the PRO RATA payments by such Recovering Party to the other Lenders. The obligations of each Borrower in respect of -24- 31 Indebtedness held by each other Lender shall be deemed to have been satisfied to the extent of the amount of the Recovery distributed to each such other Lender by the Recovering Party. SECTION 2.14. REPLACEMENT OF NOTES. Upon receipt of notice to the Borrowers of the loss, theft, destruction or mutilation of any Note and, in the case of any such loss, theft or destruction, upon delivery of an indemnity agreement reasonably satisfactory to the Borrowers, or in the case of any such mutilation, upon the surrender of such Note for cancellation, the Borrowers will execute and deliver, in lieu of such lost, stolen, destroyed, or mutilated Note, a new Note of like tenor. III. CONDITIONS OF MAKING THE LOANS SECTION 3.01. CONDITIONS TO CLOSING. The obligation of the Lenders to consummate the transactions evidenced hereby and to make the initial Advance in respect of the Tranche B Loans hereunder, is subject to the satisfaction of the following conditions on the Closing Date: (a) The representations and warranties set forth in this Agreement and in the Security Documents shall be true and correct on and as of the date hereof and shall be true and correct in all material respects as of the date each Advance is made, and the Borrowers shaH have performed all obligations which were to have been performed by them hereunder prior to the date the Advance is made. (b) The Borrowers shall have executed and delivered to the Agent (or shall have caused to be executed and delivered to the Agent by the appropriate Persons) the following (each of which shall be in form and substance satisfactory to the Agent): (i) The Notes; (ii) The Security Documents, together with any other documents required or contemplated by the terms thereof; (iii) Certified copies of resolutions of the Board of Directors of each Company, with incumbency certificate, authorizing the execution and delivery of this Agreement, the Notes and the Security Documents, as applicable; (iv) A copy of the corporate charter or articles of incorporation, certified by the Secretary of State of the state of organization, of each Company; (v) A certified copy of the by-laws of each Company; (vi) Certificates of good standing (both as to corporation law and tax matters) issued by the state in which each Company is organized and any other state in which it is authorized, qualified or required to be qualified to transact business; -25- 32 (vii) True and correct copies of all material consents, contracts, licenses, instruments and other documents specified in SCHEDULES 4.04, 4.13, 4.14 and 4.15; (viii) Certificates of insurance evidencing all insurance coverage and policy provisions required in this Agreement and the Security Documents; (ix) A pay-off letter, UCC termination statements and mortgage and lien releases from all lenders and creditors who are being paid with the proceeds of the Loans; (x) If available, a complete copy of the complaint filed by Sunbelt in the Tax Litigation; (xi) A certificate of the Borrowers confirming that, as of the date of the Advance, all representations and warranties contained in the Loan Documents are true, accurate and complete, and no Event of Default or Unmatured Event of Default exists; and (xiv) Such other supporting documents and certificates as the Lenders may reasonably request, including, without limitation, current financial statements of each Borrower, engineering reports, appraisals and environmental and Hazardous Material assessments, reports and questionnaires as the Lenders may reasonably request. (c) The Lenders and the Agent shall have received the favorable written opinions of general counsel for the Borrowers and FCC counsel for the Borrowers dated as of the Closing Date, satisfactory to the Agent in scope and substance. (d) The Lenders and the Agent shall have received (i) engineering, technical and operational reports and environmental reports on the Stations in form and substance acceptable to the Agent, and (ii) environmental questionnaires and other evidence satisfactory to the Agent confirming the absence of any Hazardous Material on the Premises. (e) The Agent shall have received written evidence reasonably satisfactory to the Agent and its counsel that, except as otherwise disclosed in SCHEDULE 4.20, all Leases covering tower and transmitter sites used by the Stations have lease terms (including all extension and renewal options exerciseable unilaterally by the Borrowers) through June 1, 2008. (f) All legal matters incident to the transactions hereby contemplated shall be satisfactory to special counsel for the Lenders. (g) Neither an Event of Default nor an Unmatured Event of Default shall have occurred and be continuing. (h) The Borrowers shall have executed and delivered to the Agent and the Lender(s) prior to 10:00 A.M. (New York time) at least one (1) Business Day prior to the date of the requested Advance, a Request for Advance in the form of SCHEDULE 3.01 hereto. -26- 33 (i) After taking into account the requested Advance, the ratio of the Companies' Senior Debt (including the amount of the requested Advance) to the Companies' consolidated Net Operating Income for the most recently ended twelve (12) month period, is less than or equal to 4.25:1.00. (k) The Borrowers shall have executed and delivered to the Agent a certificate of representations, warranties, compliance and non-default satisfactory in form and substance to the Agent. (1) The Agent shall have approved of the use of all proceeds of the Loans, including all working capital needs being paid from the proceeds of the Loans. SECTION 3.02. ACQUISITION LOANS. Without in any way limiting the discretion of the Majority Lenders to approve or withhold approval of any Acquisition or to impose additional conditions upon their consent to such Acquisitions, the obligation of the Lenders holding the Tranche B Commitment to make any Acquisition Loan under the Supplemental Line is also subject to the satisfaction of the following conditions as of the date of the requested Advance: (A) ACQUISITION CLOSING. (i) The transactions contemplated by the applicable Acquisition Agreement shall have been consummated (except for the payment of that portion of the Purchase Price thereunder being paid with the proceeds of such Acquisition Loan) substantially in accordance with the terms thereof and, in any event, in a manner reasonably satisfactory to the Agent, including, without limitation, (A) the repayment in full in cash (simultaneously with, and from the proceeds of, the Acquisition Loan or otherwise) of all Indebtedness of the applicable Seller(s) related to the assets and properties transferred under such Acquisition Agreement which is not being assumed by the buyer, and (B) the valid assumption by the buyer of all other liabilities of the applicable Seller(s) in respect of such assets and properties transferred under such Acquisition Agreement, other than liabilities not subject to assumption under such Acquisition Agreement which are otherwise addressed in a manner reasonably satisfactory to the Agent. (ii) The Agent shall have received evidence of the receipt of all licenses, permits, approvals and consents, if any, required with respect to such Acquisition and any other related transaction contemplated by this Agreement (including, without limitation, any necessary consents of the FCC to the sale contemplated by such Acquisition Agreement as evidenced by a Final Order, and any other required consents or filings of or with applicable governmental authorities or other third parties). (iii) The applicable Seller(s) shall have consented to the collateral assignment to the Agent of the rights of the Companies under the Acquisition Agreement and any other agreements executed thereunder, as required under SECTION 2.05. -27- 34 (iv) The Agent shall have received copies of the legal opinions delivered by the Seller(s) pursuant to the applicable Acquisition Agreement in connection with such Acquisition, together with a letter from each Person delivering an opinion (or authorization within the opinion) authorizing reliance thereon by the Lender. (v) Any other conditions imposed by the Majority Lenders in giving their consent (if required hereunder) to such Permitted Acquisition. (b) OFFICER'S CERTIFICATES AS TO COMPLIANCE, SOLVENCY, DOCUMENTS, ETC. The Companies shall have provided to the Agent one or more compliance and other closing certificates, in forms satisfactory to the Agent, executed on behalf of the Companies by their chief executive officer or chief financial officer, certifying as to satisfaction by the Companies of the conditions to lending set forth in this ARTICLE III and, specifically, as to certain matters reasonably specified therein. (c) SPECIAL COMPLIANCE CERTIFICATE. The Companies shall have executed and delivered to the Agent a certificate of representations, warranties, compliance and non-default satisfactory in form and substance to the Lender, together with updated versions of all Schedules to this Agreement and of the Exhibits to the Companies' Security Agreements, and otherwise adjusting the Companies' representations and warranties contained herein and therein, to the extent appropriate in connection with such Acquisition and approved by the Agent in writing in its sole discretion (which certificate, only if so approved, shall be deemed an amendment of this Agreement and such Security Documents and shall be incorporated by reference herein and therein). (d) DUE DILIGENCE. The Agent and its counsel shall have completed their due diligence review with respect to the proposed Permitted Acquisition, including a review of all material agreements, and shall be reasonably satisfied with the results of such review. (e) OTHER DELIVERIES. The Companies (including, without limitation, all New Subsidiaries who are formed as part of the transaction contemplated by the Acquisition Loan) shall have executed and/or delivered to the Agent (or shall have caused to be executed and delivered to the Agent by the appropriate persons), the following: (i) All lien searches reasonably required by the Agent with respect to the assets to be acquired pursuant to such Acquisition and the applicable Seller(s) (and their predecessors as owners of such assets), together with all Uniform Commercial Code financing statements and termination statements and all Mortgages and related title insurance policies reasonably required by the Agent in connection with the Companies' compliance with the provisions of SECTION 2.05; (ii) Certified copies of the resolutions of the Boards of Directors of the Companies, authorizing such Acquisition; -28- 35 (iii) Such certificates of public officials and copies of material consents, agreements and other documents and such other supporting documents and information as the Lender shall reasonably request (including, without limitation, all employment contracts of key employees with appropriate non-compete clauses therein); (iv) Not more than five (5) Business Days after the Companies' execution and delivery thereof, the applicable Acquisition Agreement, including detailed schedules of all owned and leased real property to be acquired thereunder; (v) If requested by the Agent, engineering reports, environmental site assessments or such other information (including environmental questionnaires) with respect to owned and leased real properties, which shall be reasonably satisfactory in all respects to the Agent; (vi) Such Uniform Commercial Code, Federal tax lien and judgment searches as the Agent shall reasonably require, the results thereof to disclose no liens except liens permitted by this Agreement and liens to be discharged upon completion of such Acquisition; (vii) A balance sheet for the Companies and the Station(s) to be acquired and updated projections, PRO FORMA, of the Acquisition and the proposed Advances and showing financial covenant compliance, and all other financial information required by Section 7.04; (viii) A current balance sheet of the Seller and related statements of income; (ix) Certificates of insurance evidencing the additional insurance coverage and policy provisions required in this Agreement; (x) Such other supporting documents and certificates as the Agent may reasonably request, including, without limitation, an Assumption Agreement in form and substance acceptable to the Agent pursuant to which such New Subsidiary shall assume as co-borrower all obligations of the Borrowers under the Loan Documents (an "ASSUMPTION AGREEMENT") and Security Documents from all New Subsidiaries who are formed as part of the transactions contemplated by the Acquisition Loan; and (xi) The Lenders holding the Tranche B Commitment shall have approved the Acquisition which is to be financed or refinanced by the Acquisition Loan as a Permitted Acquisition. (e) Opinions. The Agent shall have received the favorable written opinions of general, FCC and local counsel to the Companies, dated the date of such Advances, addressed to the Agent and reasonably satisfactory to the Agent in scope and substance. -29- 36 (f) LEGAL FEES. All reasonable legal fees and expenses of counsel to the Lenders and the Agent referred to in SECTION 13.02 incurred through the date of such Advances shall have been paid in full. (g) REVIEW BY LENDER'S COUNSEL. All legal matters incident to the transactions hereby and contemplated shall be reasonably satisfactory to counsel for the Agent. (h) COMMITMENT LIMIT. The amount of the requested Advance plus the aggregate original principal amount of all other Loans (after taking into consideration any and all other contemporaneous Advances being made by the Lenders) shall not exceed four and one-quarter (4.25) multiplied by the Companies' consolidated Adjusted Net Operating Income for the most recently ended twelve (12) month period. (i) PREPAID INTEREST. The Borrowers shall have paid the anticipated amount of interest which shall accrue on the Acquisition Loan from the date of funding through the end of the month in which such Acquisition Loan is funded. (j) TAX REFUND. If available, the Borrowers shall have used the full balance of the Tax Refund then in existence, if any, to pay the purchase price before receiving an Advance in respect to a Permitted Acquisition, SECTION 3.03. SUPPLEMENTAL LINE. The obligation of the Lenders holding the Tranche B Commitment to make any Advance under the Supplemental Line is subject to the following conditions: (a) All warranties and representations set forth (or, with respect to representations and warranties contained in the Original Agreement, confirmed) in this Agreement shall be true and correct in all material respects as of the date such Advances are made, except to the extent they relate specifically to an earlier date or are affected by transactions permitted hereunder occurring after the date hereof (or, as applicable, the Closing Date). (b) After giving effect to such Advances (both as of the proposed date thereof and, on a pro forma basis, the last day of the most recent fiscal quarter for which financial statements have been delivered to the Lenders or required under Section 6.05), no Event of Default and no Unmatured Event of Default shall have occurred and be continuing. Each telephonic or written request for such Advance shall constitute a representation to such effect as of the date of such request and as of the date of such borrowing. (c) No event(s) shall have occurred, and no circumstance(s) shall exist, which individually or in the aggregate with other such circumstances or events, (i) has had, or could reasonably be expected to have, an adverse effect on the validity or enforceability of this Agreement or the other Loan Documents in any material respect, (ii) has had, or could reasonably be expected to have, a Material Adverse Effect, other than any such events or circumstances which are generally applicable to the radio broadcast industry or to general economic conditions, or (iii) has impaired, or could reasonably be expected to impair, the ability of the Borrowers to fulfill -30- 37 their obligations under this Agreement, the Notes or any other Loan Document to which any Borrower is a party. (d) The Agent shall have received a properly completed Request for Advance together with all such financial and other information as the Agent shall require to substantiate the current and PRO FORMA certifications of no Event of Default and no Unmatured Event of Default contained therein. (e) The Agent shall have received such other supporting documents and certificates as the Agent and the Majority Lenders may reasonably request. (f) The Advance shall be made on not less than five (5) Business Days notice on or before the Supplemental Line Expiration Date, and shall not be less than $250,000.00. A Request for Advance must be received by 10:00 a.m. to be effective as a notice received on such day. (g) The Agent shall have approved the Borrowers' proposed use of the requested Advance after having received from the Borrowers such documentary evidence as the Agent shall have reasonably requested. (h) After taking into account the requested Advance, the ratio of the Companies' Senior Debt (including the amount of the requested Advance) to the Companies' consolidated Adjusted Net Operating Income for the most recently ended twelve (12) month period, is less than 4.25:1.00. SECTION 3.04. LENDER APPROVALS. For purposes of determining compliance with the conditions precedent referred to in SECTIONS 3.01, 3.02 and 3.03, as of the date hereof, as of the Closing Date, or, with respect to Advances made hereafter, as of the date of such Advances the Lenders shall be deemed to have consented to, approved or accepted or be satisfied with each document or other matter which is the subject of such Lender's consideration under any of the provisions of such Sections, unless an officer of the Agent responsible for the transactions contemplated by the Loan Documents shall have received written notice from such Lender at least five (5) Business Days prior to the date hereof or the applicable borrowing date, as the case may be, specifying its objection thereto and such Lender shall have failed to make available such Lender's ratable share of such Advances, as the case may be. IV. REPRESENTATIONS AND WARRANTIES Each Borrower hereby represents and warrants to the Lenders and the Agent (which representations and warranties shall survive the delivery of the Notes and the making of the Loans) that: -31- 38 SECTION 4.01. FINANCIAL STATEMENTS. The Borrowers have heretofore furnished to the Lenders and the Agent the audited balance sheets of the Borrowers as at December 31, 1997, and the internally prepared balance sheets of the Borrowers as at March 31, 1998, and the statement of operations, changes in stockholders' equity and changes in financial position of the Borrowers for the fiscal year or other period ending on each such date. Said financial statements and balance sheets have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with that of preceding periods, and are complete and correct in all material respects and fairly present the financial condition of the Borrowers as at said dates and the results of operations of the Borrowers for the periods indicated. Since December 31, 1997, there has occurred no material adverse change in the Borrowers' individual or consolidated business, assets, properties or condition (financial or otherwise) other than as disclosed in said balance sheets and financial statements. The Borrowers have no contingent obligations, liabilities for taxes or unusual long-term commitments except as specifically mentioned in the foregoing financial statements. All financial projections submitted to the Lenders and the Agent by the Borrowers are reasonable in light of all information presently known by the Borrowers. SECTION 4.02. ORGANIZATION, ETC. (a) Each Company (i) is a corporation duly organized and validly existing under the laws of the State of Nevada and is duly qualified to transact business in each jurisdiction where the nature of its activities requires such qualification, (ii) has the power and authority to own its properties and to carry on its business as now being conducted and as presently contemplated, and (iii) has the power and authority to execute and deliver, and perform its obligations under this Agreement, the Notes and the Security Documents (collectively, the "TRANSACTION DOCUMENTS") to which it is a party or signatory. Sunbelt owns eighty percent (80%) of the issued and outstanding capital stock of Beartooth and all of the issued and outstanding capital stock of each of the other Companies; otherwise, each Company has no subsidiaries as of the date hereof. (b) Effective September 1, 1997, pursuant to an Assignment and Assumption Agreement dated [undated], 1997, Radio Sales transferred to Radio News all of the assets and liabilities of Radio Sales, and Radio News assumed the payment and performance of all such liabilities. Effective September 15, 1997, Radio Sales was dissolved in accordance with all requirements of applicable law. -32- 39 SECTION 4.03. AUTHORIZATION; COMPLIANCE, ETC. The execution and delivery of, and the performance by each Company of its obligations under, the Transaction Documents have been duly authorized by all requisite corporate action and will not violate any provision of law, any order, judgment or decree of any court or other agency of government (including, without limitation, the FCC), the corporate charters, articles of incorporation or by-laws of the Companies, or any indenture, agreement or other instrument to which any of the Companies is a party, or by which any of the Companies is bound, or be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or except as may be permitted under this Agreement, result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Companies pursuant to, any such indenture, agreement or instrument. Each of the Transaction Documents constitutes the valid and binding obligation of the Companies, enforceable against the Companies in accordance with its terms. SECTION 4.04. GOVERNMENTAL AND OTHER CONSENTS. Except as described in SCHEDULE 4.04 hereto, none of the Companies is required to obtain any consent, approval or authorization from, or to file any declaration or statement with, any governmental instrumentality or other agency, including, without limitation, the FCC, or any other Person, in connection with or as a condition to the execution, delivery or performance of any of the Transaction Documents. All consents, approvals and authorizations described in SCHEDULE 4.04 have been duly granted and are in full force and effect on the date hereof and all filings described in such Schedule have been properly and timely made. SECTION 4.05. LITIGATION. Except as disclosed in SCHEDULE 4.05 hereto, there is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency, including, without limitation, the FCC or any arbitration board or tribunal, now pending or, to the knowledge of any of the Companies, threatened (nor is any basis therefor known to the Companies), (a) which questions the validity of any of the Transaction Documents, or any action taken or to be taken pursuant hereto or thereto, or (b) against or affecting any of the Companies which, if adversely determined, either in any case or in the aggregate, would have a Material Adverse Effect. SECTION 4.06. COMPLIANCE WITH LAWS AND AGREEMENTS. Except as otherwise disclosed in SCHEDULE 4.06 hereto, none of the Companies is party to any agreement or instrument or subject to any corporate or other restriction which could have a Material Adverse Effect. None of the Companies is in violation of any provision of its corporate charter, articles of incorporation or by-laws and no Company is in violation of any material indenture, agreement or instrument to which it is a party or by which it is bound or, to the best of the Companies' knowledge and belief, of any provision of law, the violation of which could have a Material Adverse Effect, or any order, judgment or decree of any court or other Governmental Authority (including, without limitation, the FCC). Without limiting the scope of the foregoing, -33- 40 (a) each Company is in compliance in all material respects with all federal and state laws and regulations, including all federal and state securities laws and regulations and all rules, regulations and administrative orders of the FCC, the violation of which could have a material adverse effect upon the Companies. and (b) none of the Companies has or is now engaged in any illegal activity, including without limitation, a pattern of racketeering activity, that could subject any of the Companies' assets to forfeiture or seizure. SECTION 4.07. TITLE TO PROPERTIES. Except as specified on SCHEDULE 4.07 hereto, each Company has good title to all of its properties and assets (including, without limitation, the assets shown on the financial statements referred to in SECTION 4.01), free and clear of all mortgages, security interests, restrictions, liens and encumbrances of any kind, including, without limitation, liens or encumbrances in respect of unpaid taxes, except liens and encumbrances permitted under this Agreement. Each Company enjoys quiet possession under all Leases to which it is a party as lessee, and all of such Leases are valid, subsisting and in full force and effect. None of such Leases contains any provision restricting the incurrence of indebtedness by the lessee. SECTION 4.08. INTERESTS IN OTHER BUSINESSES. None of the Companies holds or owns any of the issued and outstanding capital stock, partnership interests or other ownership interests. or any rights to acquire the same, of any corporation, partnership, firm or entity, except that (a) Sunbelt holds and owns eighty percent (80%) of the issued and outstanding capital stock of Beartooth and one hundred percent (100%) of the issued and outstanding capital stock of each of the other Companies, (b) Valley holds capital stock in two corporations, Alta Development Company and Microwave, Inc., and (c) Sunbelt holds 120,000 shares of common stock of Nevada First Bank, a Nevada banking corporation. SECTION 4.09. NO INSOLVENCY. Neither the borrowings made by the Companies under this Agreement nor the execution, delivery and performance of the Notes and the Security Documents render or will render any of the Companies insolvent or unable to pay its debts as they become due; none of the Companies is contemplating either the filing of a petition by it under any state or federal bankruptcy or insolvency laws or the liquidating of all or a substantial portion of its property, and the Companies have no knowledge of any person contemplating the filing of any such petition against any of the Companies. SECTION 4.10. FULL DISCLOSURE. No statement of fact made by or on behalf of any Person (other than the Lenders and the Agent) in this Agreement, the Security Documents, or any certificate or schedule furnished to the Lender pursuant hereto or thereto contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained therein or herein not misleading. -34- 41 To the best of the Companies' knowledge. there is no fact presently known to the Companies which has not been disclosed to the Lenders and the Agent in writing which materially affects adversely, or, as far as the Companies can foresee, could have a Material Adverse Effect. SECTION 4.11. TAX RETURNS. Except as set forth in SCHEDULE 4.11 hereto, each Company has filed all federal, state and local tax returns required to be filed, and has paid or made adequate provision for the payment of all material federal, state and local taxes, franchise fees, charges and assessments. The federal income tax returns of the Companies have been examined by the Internal Revenue Service (or closed by applicable statute) for all tax periods prior to and including the tax year ending December 31, 1995. All deficiencies that have been asserted against the Companies as a result of such examination have been paid or finally settled or are being contested in good faith, and no issue has been raised in any such examination that, by application of similar principles reasonably can be expected to result in the assertion of a material deficiency for any other year not so examined, except to the extent that such deficiency has been reserved for in the financial statements described in SECTION 4.01. No Company has taken any reporting positions for which it does not have a reasonable basis and does not anticipate any further material tax liability with respect to the tax years that have not been closed. For purposes of this SECTION 4.11, the term "Company" shall include each other Person with which any Company files consolidated or combined income tax returns or reports. SECTION 4.12. PENSION PLANS, ETC. (a) Plans. Except as set forth in SCHEDULE 4.12 hereto, neither the Companies nor any entity with which any Company would be aggregated (a "COMMONLY CONTROLLED ENTITY") under Section 414(b), (c), (m), or (o) of the Code, maintains or contributes to any pension, profit sharing or other similar plan providing for a program of deferred compensation to any employee or former employee. (b) FUNDING OF EMPLOYEE BENEFIT PLANS. All contributions and other payments required to be made by the Companies or any Commonly Controlled Entity to all employee benefit plans, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), which either any of the Companies or any Commonly Controlled Entity maintains or to which any of them contributes (the "EMPLOYEE BENEFIT PLANS") have been made or reserves adequate for such purposes have been set aside and reflected on the Companies' financial statements. With respect to any such Employee Benefit Plan which is an employee pension benefit plan, as defined in Section 3(2) of ERISA (an "EMPLOYEE PENSION PLAN"), there is no accumulated funding deficiency, as defined in Section 302 of ERISA and Section 412 of the Code, and no waiver has been applied for or obtained from the Internal Revenue Service of any minimum funding requirement under Section 412 of the Code. No lien has arisen under Section 412(n) of the Code with respect to the assets of the Companies. The Companies have no reason to believe that the level of contributions required to be made to each multi employer plan, as defined in Section 4001(a)(3) of ERISA to which any Company or any Commonly Controlled -35- 42 Entity contributed or contributes (a "MULTIEMPLOYER PLAN") is not sufficient to maintain the level of benefits under such plan now in effect or scheduled to become effective in the future. (c) FIDUCIARY DUTIES, PROHIBITED TRANSACTIONS AND ADMINISTRATION. Neither the Companies nor any Commonly Controlled Entity has breached any fiduciary duty imposed on it under Part 4 of Title I of ERISA with respect to any Employee Benefit Plan and has not engaged in any prohibited transaction, as defined in Title I of ERISA and Section 4975 of the Code, involving any Employee Benefit Plan for which no exemption is available. Each Employee Benefit Plan has been and is administered in accordance with its terms and applicable laws, rules and regulations. (d) STATUS OF FUNDED PENSION PLANS. Each funded Employee Pension Plan has been determined by the Internal Revenue Service to be qualified under Section 401(a) or Section 403(a) of the Code and nothing has occurred which would cause the loss of such qualification or the imposition of any tax liability or penalty under the Code or ERISA on the Companies. With respect to each Employee Pension Plan which is subject to Title IV of ERISA, other than Multiemployer Plans, (1) neither any Company nor any Commonly Controlled Entity has failed to make required contributions or incurred any liability to the Pension Benefit Guaranty Corporation ("PBGC"), (2) no reportable event, as defined in Section 4043(b) of ERISA, has occurred, (3) the actuarial present value of the benefit liabilities, as defined in Section 4001(a)(16) of ERISA ("BENEFIT LIABILITIES"), does not exceed the net assets available to provide the Benefit Liabilities. Neither any Company nor any Commonly Controlled Entity knows of any facts or circumstances which might give rise to any liability to the PBGC under Title IV of ERISA (other than for premium payments). With respect to Multiemployer Plans, neither any Company nor any Commonly Controlled Entity has withdrawn or partially withdrawn, as described in Subtitle E of Title IV of ERISA, from any such plan and thereby incurred any obligation to discharge a withdrawal liability (including but not limited to any contingent or secondary withdrawal liability) within the meaning of Sections 4201 and 4202 of ERISA to any Multiemployer Plan, and there exists no condition or set of circumstances which presents a risk of the occurrence of any withdrawal from or the partition, termination, reorganization or insolvency of any Multiemployer Plan which could result in any liability to the Companies or any Commonly Controlled Entity. (e) STATUS OF EMPLOYEE WELFARE PLANS. No Employee Benefit Plan which is an employee welfare benefit plan, as defined in Section 3(1) of ERISA (an "EMPLOYEE WELFARE PLAN"), provides for continuing benefits or coverage for any participant (or beneficiary) after the termination of the participant's employment except as may be required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") and regulations thereunder or by applicable state statutory law. With respect to any Employee Welfare Plan, each Borrower and each Commonly Controlled Entity have complied with the notice and continuation coverage requirements of COBRA and regulations thereunder such that there would not result in any loss of deduction under Section 162 of the Code or any tax, penalty or liability to the Companies. -36- 43 (f) CLAIMS. There are no claims (other than claims for benefits in the normal course), actions or lawsuits asserted or instituted with respect to, and neither any Company nor any Commonly Controlled Entity has knowledge of any threatened claims or litigation with respect to, any Employee Benefit Plan (other than a Multiemployer Plan) or any fiduciary thereof. SECTION 4.13. LICENSES, ETC. SCHEDULE 4.13 hereto accurately and completely lists all material authorizations, licenses, permits and franchises granted or assigned to the Companies by the FCC or any other public or governmental agency or regulatory body (with the exception of local business licenses held and maintained by the Borrowers in accordance with applicable local law), including (a) all material authorizations, licenses, permits and franchises for the operation of Television Station KVBC (TV) (Channel 3) (licensed to Las Vegas, Nevada), Television Station KYMA (TV) (Channel 11) (licensed to Yuma, Arizona), Television Station KXTF (TV) (Channel 35) (formerly know as KKVI (TV) (licensed to Twin Falls, Idaho), Television Station KPVI (TV) (Channel 6) (licensed to Pocatello, Idaho), Television Station KJWY (TV) (Channel 2) (formerly known as KJVI (TV) (licensed to Jackson, Wyoming), Television Station KRNV (TV) (Channel 4) (licensed to Reno, Nevada), Radio Station KRNV (FM) (licensed to Reno, Nevada), Television Station KENV (TV) (Channel 10) (licensed to Elko, Nevada), and Television Station KTVH (TV) (Channel 12) (licensed to Helena, Montana) (the "STATIONS"), and (b) all construction permits granted or assigned to the Companies by the FCC, and the same constitute the only material licenses, permits or franchises or other authorizations of any public or governmental agency or regulatory body required or advisable in connection with the conduct by the Companies of their business as presently conducted or proposed to be conducted (such licenses, permits, franchises and authorizations, together with any extensions or renewals thereof and any additional licenses, permits, franchises or authorizations hereafter issued to the Companies, being herein sometimes referred to collectively as the "LICENSES"). All existing Licenses are in full force and effect, are duly issued in the name of, or validly assigned to, the Companies and the Companies have full power and authority to operate thereunder. Such Schedule also specifies the expiration date of each existing License. SCHEDULE 4.13 hereto shall be supplemented from time to time with a list of all material Licenses hereafter issued to the Companies with respect to the New Stations at the time of funding each Acquisition Loan. SECTION 4.14. MATERIAL AGREEMENTS. SCHEDULE 4.14 hereto accurately and completely list all material agreements to which each of the Companies is a party, including, without limitation, all Leases, network affiliation, programming, engineering, consulting, employment, management and related agreements, if any, which are presently in effect in connection with the conduct of the Companies' business and the operation of the Stations and the New Stations. All of the foregoing agreements are valid, subsisting and in full force and effect and neither the Companies nor, to the best of the Companies' knowledge and belief, any other parties, are in material default thereunder. -37- 44 SECTION 4.15. OWNERSHIP OF COMPANIES. SCHEDULE 4.15 hereto correctly sets forth the number of shares of the Companies' capital stock of each class authorized, the name of each of its stockholders (the "STOCKHOLDERS"), and the number of shares of each class of such capital stock owned by such Stockholders. Such Schedule also sets forth the name of each Person holding a voting trust certificate in respect of the shares of capital stock of the Companies and the number of shares of the capital stock of the Companies deposited in exchange for each such certificate. All of said outstanding shares are validly issued, fully paid and non-assessable and are owned by such Stockholders as specified in such Schedule, free of any assignment, pledge, lien, security interest, charge, option or other encumbrance, except for liens and security interests granted to the Lenders and the Agent, transfer restrictions noted on the certificate evidencing such shares, transfer restrictions imposed by the FCC and other encumbrances specified in such Schedule. Such Schedule also sets forth a description of all warrants, options and other rights to acquire shares of the Companies' capital stock of any class and the names of the holders thereof. None of the Companies is obligated in any manner to issue any additional shares, or options or rights to acquire any such shares, of its capital stock. SECTION 4.16. PATENTS, TRADEMARKS, ETC. Each Company owns or possesses all the patents, trademarks, service marks, trade names, broadcast call letters, copyrights and licenses, and all rights with respect to the foregoing, necessary for the conduct of its business as now conducted, without any known conflict with the rights of others. SECTION 4.17. BROKERS. ETC. The Companies have not dealt with any broker, finder, commission agent or other similar person in connection with the Loans or the transactions contemplated by this Agreement, and the Companies are not under any obligation to pay, and the Companies covenant and agree to indemnify and hold harmless the Lenders and the Agent from and against, any broker's fee, finder's fee or commission in connection with such transactions. SECTION 4.18. ENFORCEABILITY. Assuming that this Agreement and the Security Documents have been duly authorized, executed and delivered by the Lenders and the Agent, this Agreement, each Note and the Security Documents constitute the legal, valid and binding obligations of the Companies, enforceable against the Companies in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally. -38- 45 SECTION 4.19. ENVIRONMENTAL MATTERS. Except as may be otherwise specifically stated in SCHEDULE 4.19 hereto: (a) neither the Companies nor, to the best of the Companies' knowledge and belief, any other Person has ever caused, permitted, or suffered to exist any oil, friable asbestos, hazardous waste, hazardous substance, or other hazardous or toxic material (as defined under applicable law including, but not limited to, the Comprehensive Environmental Response, Comprehension and Liability Act of 1980 ["CERCLA"], 42 U.S.C. Sections 9601(14) and (33), the Resource Conservation and Recovery Act ["RCRA"], 42 U.S.C. Section 6903(5), the Toxic Substances Control Act, or any comparable state statute or regulation [collectively, "ENVIRONMENTAL LAWS"] all of which material is collectively referred to herein as "HAZARDOUS MATERIAL") to be spilled, released, placed, held, located or disposed of on, nor, to the best of the Companies' knowledge and belief, are any now existing on, any real estate legally or beneficially owned by each Borrower or leased by any of the Companies (the "PREMISES"), or into the atmosphere, any body of water, any wetlands or the Premises, in any manner which violates any applicable Environmental Law; (b) to the best of the Companies' knowledge and belief after due inquiry, no portion of the Premises has ever been used (whether by the Companies or, to the best of the Companies' knowledge and belief, by any other Person) as a treatment, storage or disposal (whether permanent or temporary) site for any Hazardous Material; (c) to the best of the Companies' knowledge and belief after due inquiry, no portion of the no notice of violation, lien or other notice has been issued by any governmental agency with respect to the environmental condition of the Premises, the improvements thereon, any other property owned by the Companies, or any other property which was previously included in the property description of the Premises or such other real property, or with respect to the release of Hazardous Material at, upon, under or within the Premises, the improvements or such other real property, or the past or ongoing migration of Hazardous Material from neighboring lands or to the Premises or the improvements; (d) to the best of the Companies' knowledge and belief after due inquiry, no friable asbestos-containing materials, PCBs, radon gas, or urea formaldehyde foam insulation are located or present at, upon, under or within the Premises or any improvements thereon; (e) to the best of the Companies' knowledge and belief, no underground storage tanks, whether in use or closed, are on or under the Premises; and (f) to the best of the Companies' knowledge and belief after due inquiry, the Premises and all operations conducted on the Premises are in compliance with all Environmental Laws. -39- 46 SECTION 4.20. STUDIO AND TOWER SITES. SCHEDULE 4.20 hereto completely and accurately lists or shall list for each Company (a) each real estate location utilized by such Person as a studio, transmitter or tower site in the operation of any of the Stations, and (b) each other parcel of real estate owned or leased by such Person. As to each such site, SCHEDULE 4.20 sets forth (a) the name(s) of the record owner(s) of such site, (b) in the case of each leased site, the date of the Lease (and all amendments thereto), the expiration date thereof and the terms of any applicable renewal or extension options exerciseable unilaterally by the tenant thereunder, (c) the street address of such site, and (d) the legal description for such site. Expect as specified in SCHEDULE 4.20, none of the improved real property owned or leased by any Company that is required to be mortgaged under SECTION 2.05 is situated in a flood zone designated as type "A" "B" or "V" by the U.S. Department of Housing and Urban Development. SECTION 4.21. MARGIN STOCK. The Borrowers do not own or have any present intention of acquiring any "MARGIN STOCK" within the meaning of Regulation U (12 CFR Part 221), of the Board of Governors of the Federal Reserve System (herein called "MARGIN STOCK"). SECTION 4.22. INVESTMENT COMPANY ACT. None of the Borrowers is an "INVESTMENT COMPANY" within the meaning of the Investment Company Act of 1940, as amended, or a "HOLDING COMPANY," or a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY," or an "AFFILIATE" of a "HOLDING COMPANY," or of a "SUBSIDIARY COMPANY" of a "HOLDING COMPANY," within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 4.23. LABOR MATTERS. None of the Borrowers is experiencing any strike, labor dispute, slow down or work stoppage due to labor disagreements which could reasonably be expected to have a Material Adverse Effect; there is no such strike, dispute, slow down or work stoppage threatened against any of the Borrowers; and none of the Borrowers is subject to any collective bargaining or similar arrangements. SECTION 4.24. RECITALS. All recitals contained in the Preamble are true and correct. V. FINANCIAL COVENANTS. The Borrowers jointly and severally covenant and agree that, so long as the Lenders, or any of them, have any obligation to extend credit to the Borrowers, or any of them, hereunder, or there remains outstanding any portion of the principal of, or interest on, the Notes, or there remains outstanding any other Indebtedness of the Borrowers or any other Companies, or any of them, to the Lenders or the Agent, or any of them, whether now existing or arising hereafter and whether under this Agreement, the Notes, the Security Documents or otherwise: -40- 47 SECTION 5.01. AFTER TAX CASH FLOW. The Companies shall maintain for each period of twelve (12) consecutive months ending on the last day of each Fiscal Quarter during the respective periods indicated below, consolidated After Tax Cash Flow of not less than the respective amounts set forth below:
For Twelve Month Period Ending as of each The Companies' Consolidated March 31, June 30, September 30 and December 31, After Tax Cash Flow to be not as follows: less than: ----------- ---------- June 30, 1998, through and including September 30, 1998 $11,000,000.00 December 31, 1998, through and including September 30, 1999 $11,500,000.00 December 31, 1999, through and including September 30, 2000 $12,000,000.00 December 31, 2000, through and including September 30, 2001 $13,000,000.00 December 31, 2001, and thereafter $14,000,000.00
SECTION 5.02. KVBC-TV. Valley shall maintain for each period of twelve (12) consecutive months ending on the last day of each Fiscal Quarter during the respective periods indicated below, KVBC-TV's Net Operating Income plus its Corporate Overhead of not less than the respective amounts set forth below:
KVBC-TV's Net Operating For Twelve Month Period Ending as of each March 31, Income plus its Corporate June 30, September 30 and December 31 , as follows: Overhead to be not less than: - ---------------------------------------------------- ----------------------------- June 30, 1998, through and including September 30, 1998 $15,000,000.00 December 31, 1998, through and including September 30, 1999 $16,000,000.00 December 31, 1999, through and including September 30, 2000 $16,800,000.00 December 31, 2000, through and including September 30, 2001 $17,500,000.00 December 31, 2001, and thereafter $18,000,000.00
SECTION 5.03. DEBT SERVICE COVERAGE. The Companies shall maintain on a consolidated basis for each period of twelve (12) consecutive months ending on the last day of each Fiscal Quarter during the respective periods indicated below, a ratio of consolidated After Tax Cash Flow to Senior Debt Service of not less than the respective ratios set forth below: -41- 48
For Twelve Month Period Ending as of each Ratio of Consolidated After Tax March 31, June 30, September 30 and December 31, Cash Flow to Senior Debt Service as follows: to be not less than: ----------- -------------------- June 30, 1998, through and including September 30, 1998 1.75:1.00 December 31, 1998, through and including September 30, 1999 1.50:1.00 December 31, 1999, through and including September 30, 2000 1.50:1.00 December 31, 2000, through and including September 30, 2001 1.50:1.00 December 31, 2001, and thereafter 1.75:1.00
SECTION 5.04. SENIOR DEBT TO AFTER TAX CASH FLOW. The Companies shall maintain on a consolidated basis for each Fiscal Year ending on the respective dates indicated below, a ratio of the Companies' Senior Debt to the Companies' consolidated After Tax Cash Flow for such Fiscal Year of not more than the respective ratios set forth below:
Ratio of Senior Debt to For Fiscal Year Ending: After Tax Cash Flow to ---------------------- be not more than: ---------- December 31, 1998 6.00:1.00 December 31, 1999 5.20:1.00 December 31, 2000 4.70:1.00 December 31, 2001 4.00:1.00 December 31, 2002, and each December 31 thereafter 3.50:1.00
SECTION 5.05. FIXED CHARGE COVERAGE RATIO; CURRENT RATIO. (a) The Companies shall maintain on a consolidated basis at all times as of the last day of each Fiscal Quarter, a ratio of (i) the Companies' consolidated Net Operating Income for the preceding twelve (12) months to (ii) the Companies' Fixed Charges during such period of not less than 1.10:1.00. (b) The Companies shall maintain on a combined basis at all times as of the last day of each Fiscal Quarter, a ratio of (i) the Companies' consolidated Current Assets to (ii) their consolidated Current Liabilities of not less than 1.50:1.00. -42- 49 SECTION 5.06. CAPITAL EXPENDITURES. Without the prior written consent of the Majority Lenders, the Companies shall not make or incur Capital Expenditures in excess of (a) Five Million Dollars ($5,000,000) in the aggregate during Fiscal Year ending December 31, 1998, or (b) one hundred five percent (105%) of the maximum amount permitted to be made hereunder during the prior Fiscal Year, in each Fiscal Year beginning with the Fiscal Year ending December 31, 1999; PROVIDED, HOWEVER, that Capital Expenditures to the extent financed with the proceeds of the Supplemental Line, and up to $3,000,000 in leasehold and real estate improvements made during Fiscal Year 1998 at the Helena, Montana, and Pocatello, Idaho, studio sites, shall be excluded from the calculation of Capital Expenditures for the purposes of this SECTION 5.06. SECTION 5.07. CORPORATE OVERHEAD. Subject to SECTION 9.03, the Companies shall not pay Corporate Overhead which exceeds (a) $4,600,000 in the aggregate during Fiscal Year ending December 31, 1998, or (b) in each subsequent Fiscal Year, an amount equal to one hundred five percent (105%) of the aggregate maximum amount permitted to. be paid hereunder during the preceding Fiscal Year. SECTION 5.08. RESTRICTED PAYMENTS. (a) Except as permitted by SECTION 5.07, 5.08(b) or 5.08(c) hereof, the Companies will not directly or indirectly declare, order, pay or make any Restricted Payment or set aside any sum or property therefor without the Lender's prior written consent. (b) Subject to the limitations and restrictions set forth in the Affiliate Subordination Agreement, unless an Event of Default shall then exist, each Company may transfer cash in the form of intercompany loans for the limited purpose of funding working capital needs of the Companies, subject to appropriate documentation satisfactory of the Lender in its sole discretion. (c) Each Company may pay salaries, bonuses and other employee compensation in the ordinary course of business to (i) James Rogers as part of Corporate Overhead subject to the limitations set forth in SECTION 5.07, and (ii) other Stockholders who are employed by such Company and who individually hold not more than 5% of the capital stock of Sunbelt. VI. AFFIRMATIVE COVENANTS Each Borrower covenants and agrees that, so long as any Lender has any obligation to extend credit to the Borrowers, or any of them, hereunder, or there remains outstanding any portion of the principal of, or interest on, the Notes, or there remains outstanding any other Indebtedness of the Borrowers or the other Companies, or any of them, to the Lenders or the Agent, or any of them, whether now existing or arising hereafter and whether under this Agreement, the Notes, or otherwise, each Borrower will, and Sunbelt will cause each New Subsidiary to: -43- 50 SECTION 6.01. PRESERVATION OF ASSETS; COMPLIANCE WITH LAWS, ETC. Do or cause to be done all things necessary to preserve, renew and keep in full force and effect each Company's existence as a corporation, and all material rights, licenses, permits and franchises (including all Licenses) and comply in every material respect with all laws and regulations applicable to it and all material agreements to which it is a party, the violation of which could have a Material Adverse Effect; at all times maintain, preserve and protect all material trade names (including the call letters of the Stations and the New Stations) and preserve all the remainder of its material property used or useful in the conduct of its business and keep the same in good repair, working order and condition (reasonable wear and tear and damage by fire or other casualty excepted), and from time to time, make or cause to be made all needful and proper repairs, renewals, replacements, betterments and improvements thereto, so that the business carried on in connection therewith may be properly and advantageously conducted at all times. SECTION 6.02. INSURANCE. Keep all of its insurable properties used or useful in the operation of the Stations, and now or hereafter owned, adequately insured at all times against loss or damage by fire or other casualty to the extent customary with respect to like properties of companies conducting similar businesses; maintain commercial general liability, auto liability, broadcaster's liability and worker's compensation insurance insuring each Company to the extent customary with respect to companies conducting similar businesses, and maintain business interruption insurance with extra expense in respect of the Stations and the New Stations and the broadcasting businesses conducted by the Companies, in amount and form acceptable to the Agent, in each case issued by financially sound and reputable insurers, and, upon request of the Agent, furnish to the Agent satisfactory evidence of the same prior to the Closing Date and on or before any expiration date with respect to such insurance; notify the Agent of any material change in the insurance maintained on a Company's properties after the date hereof and furnish the Agent satisfactory evidence of any such change; maintain insurance with respect to its tower, transmission and studio facilities and related equipment and other insurable properties in an amount equal to the full replacement cost thereof; provide that each insurance policy shall: (a) as appropriate, name the Agent as an additional insured and/or as loss payee pursuant to a so-called "standard mortgagee clause", (b) provide that no action of the Companies or any tenant or sub-tenant shall void such policy as to the Agent, and (c) provide that the Agent shall be notified of any proposed cancellation of such policy at least thirty (30) days in advance thereof and will have the opportunity to correct any deficiencies justifying such proposed cancellation. In the event that any Company shall default in the performance of its obligations under this SECTION 6.02, the Agent may, at its option, effect such insurance coverage with an insurer acceptable to the Agent and add the premium(s) paid therefor to the principal amount of the indebtedness incurred pursuant hereto, and the amount of such premium shall be payable by the Companies on demand with interest thereon at the highest rate payable hereunder. In the event of a property or casualty loss, and so long as no Event of Default exists, the Companies shall be paid directly by the insurer the proceeds of any insurance for such loss not exceeding $100,000 per occurrence, provided that the Companies shall use such proceeds for the restoration or replacement of the - 44 - 51 property or asset which was the subject of such casualty loss. In all other instances, the insurance proceeds shall be paid to the Agent, and the Agent may deliver to the Companies the proceeds of any insurance thereon, provided that (i) the Companies shall use such proceeds for the restoration or replacement of the property or asset which was the subject of such loss, (ii) the Companies shall have demonstrated to the reasonable satisfaction of the Agent that such property or asset will be restored to substantially its previous condition or will be replaced by substantially identical property or assets, and (iii) if the Agent and the Lenders had a security interest in and lien upon the property or asset which was the subject of such loss, the Agent shall have received if requested by it, a favorable opinion from the Borrowers' counsel, in form and substance satisfactory to the Agent, as to the priority of the Agent's and Lenders' security interest in and lien upon such restored or replaced property or asset. Notwithstanding the foregoing, in lieu of delivering such proceeds to the Companies, the Agent shall have the right (x) to retain such proceeds if in excess of $100,000 for the purpose of making disbursement thereof to any contractors, subcontractors and materialmen to whom payment is owed in connection with such restoration, or (y) to apply such proceeds in payment of the Notes in the event of a total casualty loss to the insured properties. SECTION 6.03. TAXES, ETC. Pay and discharge or cause to be paid and discharged all taxes, assessments and governmental charges or levies imposed upon it or upon its income and profits or upon any of its property, real, personal or mixed, or upon any part thereof; before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise, which, if unpaid, might become a lien or charge upon such properties or any part thereof; PROVIDED, HOWEVER, that such Company shall not be required to pay and discharge or cause to be paid and discharged any such tax, assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and it shall have set aside on its books adequate reserves with respect to any such tax, assessment, charge, levy or claim, so contested; and PROVIDED, FURTHER that, in any event, payment of any such tax, assessment, charge, levy or claim shall be made before any of its property shall be seized or sold in satisfaction thereof. SECTION 6.04. NOTICE OF PROCEEDINGS, DEFAULTS, ADVERSE CHANGE, ETC. Promptly (and in any event within five days of Companies' discovery thereof; give written notice to the Agent of (a) any proceedings instituted or threatened by or in any federal, state or local court or before any commission or other regulatory body, whether federal, state or local, which, if adversely determined, could have a material adverse effect upon its business, operations, properties, assets, or condition, financial or otherwise; (b) any notices of default received by a Company (together with copies thereof; if requested by the Agent) with respect to alleged defaults under or violations of any of its material licenses, permits or franchises (including the Licenses), or any material agreements to which any Borrower is a party or any alleged defaults with respect to any evidence of material Indebtedness of any Borrower or any mortgage, indenture or other agreement relating thereto; (c) any material adverse change in the condition, financial or otherwise, of any Company; (d) the occurrence of any Event of Default or Unmatured Event of Default; and (e) all material pleadings, filings, judgments, orders and -45- 52 settlements in respect to the Tax Litigation (together with copies thereof, if requested by the Agent). SECTION 6.05. FINANCIAL STATEMENTS AND REPORTS. Furnish to the Agent (with copies to each Lender): (a) Within one hundred fifty (150) days after the end of each Fiscal Year, the audited consolidated and consolidating audited balance sheets of the Companies, and statements of income, changes in financial position and sources and uses of funds, together with supporting schedules, prepared and certified by independent certified public accountants selected by the Companies and acceptable to the Agent (the "ACCOUNTANTS"), the form of such statements to be satisfactory to the Agent and otherwise in form and substance satisfactory to the Agent, showing the financial condition of the Companies at the close of such Fiscal Year (beginning with Fiscal Year ending December 1997) and the results of operations during such year, containing supplemental schedules reporting balance sheets for each of the Stations markets (including detailed revenue sources, income and retained earnings statements and statements of cash flows) and containing a statement to the effect that such Accountants have examined the provisions of ARTICLE V of this Agreement and that, to the best of their knowledge, no Event of Default or Unmatured Event of Default has occurred by reason of a covenant default thereunder (or, if such an event has occurred, a statement explaining its nature and extent); PROVIDED, HOWEVER, that in issuing such statement, such Accountants shall not be required to exceed the scope of normal auditing procedures conducted in connection with their opinion referred to above; (b) Within sixty (60) days after the end of each month, (i) the consolidated and consolidating balance sheets of the Companies, and statements of income, together with supporting schedules, prepared by the Companies in accordance with generally accepted accounting principles, consistently applied, and certified by their chief financial officer, such balance sheets to be as of the end of such month and such statements of income to be for the month then ended and the period from the beginning of the then current Fiscal Year to the end of such month (in each case subject to normal audit and year-end adjustments) and including for each Station and New Station, a profit and loss statement (which includes detailed revenue sources) and balance sheet and (ii) whenever requested by the Agent or a Lender, monthly accounts payable and accounts receivable aging reports in form acceptable to the requesting party; (c) Concurrently with the delivery of any annual financial statements required by SECTION 6.05(a) and any monthly financial statements required by SECTION 6.05(b) for the months of March, June, September and December in each year, (i) a Covenant Compliance Certificate in the form of SCHEDULE 6.05 hereto signed by the chief financial officer of each Company setting forth the calculations contemplated in ARTICLE V of this Agreement, and certifying as to the fact that such Person has examined the provisions of this Agreement and that no Event of Default or Unmatured Event of Default has occurred (or, if such an event has occurred, a statement explaining its nature and extent and setting forth the steps the Borrowers propose to take to cure or prevent any Event of Default), and (ii) listings of Trades payable and Trades receivable of -46- 53 each Company accompanying the annual financial statements and, if requested by the Agent, in connection with the monthly statements for March, June and September; (d) Promptly upon circulation thereof; copies of any material written reports issued by a Company to any of its Stockholders or any material creditors relating to such Company's financial condition; (e) Promptly upon their becoming available, and in any event within thirty (30) Business Days following receipt thereof; (i) if subscribed to by any of the Companies (whether pursuant to the provisions of SECTION 6.11 hereof or otherwise), all Nielsen and other ratings reports applicable to each Company with respect to the television broadcast markets in which the Companies' television broadcast Stations are located, and (ii) copies of all material contracts relating to the Stations; (f) Promptly upon their becoming available, and in any event within five (5) Business Days after the receipt or filing thereof by any Company, copies of any periodic or special reports filed by such Company with the FCC, if such reports indicate any material change in the business, operations, affairs or condition of such Company or if copies thereof are requested by the Agent, and copies of any material notices and other material communications from the FCC which specifically relate to any Company, any Station or New Station, or any License; (g) At least thirty (30) days prior to the beginning of each Fiscal Year, a budget for such Fiscal Year containing projections of income and expenses for each Company in form acceptable to the Agent; (h) Promptly upon receipt thereof; and in any event within five (5) days after such receipt, copies of all material filings and rulings in the Tax Litigation and copies of all correspondence and notices received by a Borrower from the Internal Revenue Service relating to any adverse action or determination by the Internal Revenue Service in respect to such Company's tax status under the Code; (i) As soon as reasonably possible and in any event within ten (10) days after request therefor, such other information regarding the operations, assets, business, affairs and financial condition of the Companies, or any of them, as any Lender or the Agent may reasonably request from time to time; and (j) Within one hundred twenty (120) days of the end of each Fiscal Year, updated and current personal financial statements of the Guarantors and if requested by the Agent, copies of the Guarantors' most recent Federal income tax returns. SECTION 6.06. INSPECTION. Permit employees, agents and representatives of the Lenders and the Agent to inspect, during normal business hours, the Premises and each Company's books and records and to make abstracts or reproductions thereof. -47- 54 SECTION 6.07. ACCOUNTING SYSTEM. Maintain a standard system of accounting in accordance with generally accepted accounting principles consistently applied and maintain the Fiscal Year as its fiscal year. SECTION 6.08. NOTICE OF PURCHASE OF REAL ESTATE AND LEASES. Subject to SECTION 7.13 hereof; promptly notify the Agent in the event that any Borrower shall purchase any real estate or enter into any Lease of real estate or of equipment material to the operation of the Stations, supply the Agent with a copy of the related purchase agreement or of such Lease, as the case may be, and, without limiting the generality of SECTION 2.05, if requested by the Agent, execute and deliver, or cause to be executed and delivered, to the Agent a deed of trust or mortgage or assignment, together with landlord consents, in the case of leased property, satisfactory in form and substance to the Agent, granting a valid first lien on such property (subject to the provisions of SECTIONS 2.05 and 7.02). SECTION 6.09. ADDITIONAL ASSURANCES. From time to time hereafter, execute and deliver or cause to be executed and delivered, such additional instruments, certificates and documents, and take all such actions, as the Agent shall reasonably request for the purpose of implementing or effectuating the provisions of this Agreement, the Notes or the Security Documents, and upon the exercise by the Agent of any power, right, privilege or remedy pursuant to this Agreement or the Security Documents which requires any consent, approval, registration, qualification or authorization of any governmental authority or instrumentality, exercise and deliver all applications, certifications, instruments and other documents and papers that the Agent may be so required to obtain. SECTION 6.10. ENVIRONMENTAL INDEMNIFICATION. In respect of all environmental matters: (a) comply strictly and in all respects with the requirements of all federal, state, and local Environmental Laws; notify the Agent promptly in the event of any spill, release or disposal of Hazardous Material on, or hazardous waste pollution or contamination affecting, the Premises; forward to the Agent promptly any notices relating to such matters received from any governmental agency; and pay promptly when due any fine or assessment against the Premises; PROVIDED, HOWEVER, that the Borrowers shall not be required to pay any such fine or assessment so long as the validity thereof shall be diligently contested in good faith by appropriate proceedings and they shall have set aside on their books adequate reserves with respect to any such fine or assessment so contested; and PROVIDED FURTHER that, in any event, payment of any such fine or assessment shall be made before any of their property shall be seized or sold in satisfaction thereof; -48- 55 (b) promptly notify the Agent upon becoming aware of any fact or change in circumstances that would or reasonably could be expected to cause any of the representations and warranties contained in SECTION 4.19 hereof to cease to be true for any time before all Senior Debt is paid in full; (c) not become involved, and will not knowingly permit any tenant of the Premises to become involved, in any operations at the Premises generating, storing, disposing, or handling Hazardous Material or any other activity that could lead to the imposition on any Lender or the Agent, a Borrower or the Premises of any liability or lien under any Environmental Laws; (d) immediately contain any Hazardous Material found on the Premises and remove any Hazardous Material found on the Premises in violation of any applicable Environmental Law, which work must be done in compliance with applicable Environmental Laws and at the Borrowers' expense; and the Borrowers agree that the Agent has the right, at its sole option but at the Borrowers' expense, to have an environmental engineer or other representative review the work being done; (e) promptly upon the request of the Agent, based upon the Agent's reasonable belief that a hazardous waste or other environmental problem exists with respect to the Premises, provide the Agent with an environmental site assessment report or an update of any existing report, all in scope, form and content and performed by such company as may be reasonably satisfactory to the Agent; and (f) indemnify, protect, defend, and hold harmless each of the Lenders and the Agent, and each of their respective Affiliates, officers, directors, employees, attorneys, consultants and agents (collectively called the "INDEMNITEES") from and against any and all liabilities, obligations, losses, damages (including, without limitation, consequential damages), penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for and consultants of such Indemnitees in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnitees shall be designated a party thereto), which may be imposed on, incurred by, or asserted against such Indemnitees (whether direct, indirect, or consequential) now or hereafter arising as a result of any claim for environmental cleanup costs, any resulting damage to the environment and any other environmental claims against any Borrower, any Lender, the Agent or the Premises. The provisions of this SECTION 6.10(f) shall continue in effect and shall survive (among other things) any termination of this Agreement, payment and satisfaction of the Notes, and release of any Collateral. -49- 56 SECTION 6.11. RATINGS REPORTS. Subscribe to and maintain in full force and effect at all times (to the extent the same may be available) at Borrowers' expense not less than one rating report service covering (a) each of the television broadcast markets in which the Companies' television broadcast Stations are located, and (b) if reasonably requested by the Lender, any radio broadcast markets in which any radio broadcast Station is located. SECTION 6.12. ACCOUNTS PAYABLE. Cause each Company to pay each of its accounts payable not later than one hundred twenty (120) days following its respective due date; PROVIDED, HOWEVER, that a Company shall not be required to pay any account payable so long as the validity thereof shall be contested in good faith by appropriate proceedings and such Company shall have set aside adequate reserves with respect thereto. SECTION 6.13. USE OF LOAN PROCEEDS. Use and expend the proceeds of each Advance solely in accordance with the requirements of this Agreement. SECTION 6.14. APPRAISALS. If any Lender determines in good faith that it is required, by applicable law or by the Comptroller of the Currency or any other Governmental Authority, to obtain appraisals as to the market value of any Collateral, obtain such appraisals, at the sole cost and expense of the Borrowers and in conformity with all requirements of applicable law, as in effect from time to time. SECTION 6.15. RECOMMENDED CORRECTIVE ACTION. Within six (6) months of the Closing Date, complete to the reasonable satisfaction of the Agent all corrective actions described in SCHEDULE 6.15. VII. NEGATIVE COVENANTS Each Borrower covenants and agrees that, so long as any Lender has any obligation to extend credit to the Borrowers, or any of them, hereunder, or there remains outstanding any portion of the principal of; or interest on, any Note, or there remains outstanding any other Indebtedness of the Borrowers or the Companies, or any of them, to any Lender or the Agent, whether now existing or arising hereafter and whether under this Agreement, the Notes, or otherwise, unless the Agent shall otherwise consent in writing, it will not, directly or indirectly, and Sunbelt will not permit any New Subsidiary to, directly or indirectly: -50- 57 SECTION 7.01. INDEBTEDNESS. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness or liability of a Company, whether direct, indirect or contingent, except: (a) Indebtedness to the Lender under this Agreement, the Notes, and otherwise; (b) Indebtedness with respect to trade obligations and other normal accruals in the ordinary course of business; (c) Indebtedness under Capital Leases and Purchase Money Security Agreements relating to the purchase price of office and non-essential broadcast equipment to be used in the business of the Companies to the extent such Indebtedness was permitted by Article V hereof at the time incurred; PROVIDED, HOWEVER, that the aggregate unpaid principal balance of all such Indebtedness shall not exceed $2,000,000 outstanding at any time; (d) Indebtedness to any Affiliate, provided that such Indebtedness is subject to the applicable Affiliate Subordination Agreement; (e) Indebtedness existing on the date hereof and described in Schedule 7.01 attached hereto; PROVIDED, HOWEVER, that the terms of such Indebtedness shall not be modified or amended, nor shall payment thereof be extended, without the prior written consent of the Lender; (f) Indebtedness in respect of endorsements of negotiable instruments for collection in the ordinary course of business; and (g) Subordinated Debt consented to by the Majority Lenders. SECTION 7.02. LIENS. Create, incur, assume, suffer or permit to exist any mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of the assets or capital stock of a Company, now or hereafter owned, other than: (a) liens securing the payment of taxes, either not yet due or the validity of which is being contested in good faith by appropriate proceedings, and as to which it shall have set aside on its books adequate reserves; (b) deposits under workmen's compensation, unemployment insurance and social security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or Leases, or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds arising in the ordinary course of business; -51- 58 SECTION 7.01. Indebtedness. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness or liability of a Company, whether direct, indirect or contingent, except: (a) Indebtedness to the Lender under this Agreement, the Notes, and otherwise; (b) Indebtedness with respect to trade obligations and other normal accruals in the ordinary course of business; (c) Indebtedness under Capital Leases and Purchase Money Security Agreements relating to the purchase price of office and non-essential broadcast equipment to be used in the business of the Companies to the extent such Indebtedness was permitted by Article V hereof at the time incurred; PROVIDED, HOWEVER, that the aggregate unpaid principal balance of all such Indebtedness shall not exceed $1,000,000 outstanding at any time; (d) Indebtedness to any Affiliate, provided that such Indebtedness is subject to the applicable Affiliate Subordination Agreement; (e) Indebtedness existing on the date hereof and described in SCHEDULE 7.01 attached hereto; PROVIDED, HOWEVER, that the terms of such Indebtedness shall not be modified or amended, nor shall payment thereof be extended, without the prior written consent of the Lender; (f) Indebtedness in respect of endorsements of negotiable instruments for collection in the ordinary course of business; and (g) Subordinated Debt consented to by the Majority Lenders. SECTION 7.02. LIENS. Create, incur, assume, suffer or permit to exist any mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of the assets or capital stock of a Company, now or hereafter owned, other than: (a) liens securing the payment of taxes, either not yet due or the validity of which is being contested in good faith by appropriate proceedings, and as to which it shall have set aside on its books adequate reserves; (b) deposits under workmen's compensation, unemployment insurance and social security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or Leases, or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds arising in the ordinary course of business; -51- 59 (c) liens imposed by law, such as carriers', warehousemen's or mechanics' liens, incurred by it in good faith in the ordinary course of business, and liens with respect to judgments but only to the extent that (i) any such judgment does not otherwise constitute an Event of Default pursuant to clause (m) of ARTICLE VIII, and (ii) either (A) such lien is not prior or senior to any of the liens granted to the Lenders and the Agent pursuant to the Security Documents, or (B) such lien attaches solely to property of the Borrower, if any, with respect to which the Lenders and the Agent do not assert a lien. (d) security interests and liens in favor of the Lenders and the Agent; (e) Capital Leases described in SECTION 7.01(c) and security interests granted by Purchase Money Security Agreements to the extent permitted by SECTION 7.01(c), provided that each such lien shall at all times be limited solely to the item or items of property so acquired; (f) restrictions, easements and minor irregularities in title which do not and will not interfere with the occupation, use and enjoyment by the Borrower of such properties and assets in the normal course of its business as presently conducted or materially.impair the value of such properties and assets for the purpose of such business; (g) security interests and liens securing the Indebtedness permitted by Sections 7.01(e) to the extent set forth in said SCHEDULE 7.01; and (h) any other liens existing on the date hereof and described in SCHEDULE 7.02 attached hereto. SECTION 7.03. DISPOSITION OF ASSETS. Sell, lease, transfer or otherwise dispose of any of the properties, assets, rights, Licenses or franchises of or used by a Company to any Person, except in connection with the replacement of equipment with other equipment of at least equal utility and value (provided that the Lenders' and Agent's lien upon such newly-acquired equipment has the same priority as the Lenders' and Agent's lien upon the replaced equipment) and the disposition without replacement of obsolete assets not material, individually or in the aggregate, to the operation of its business; PROVIDED, HOWEVER, that in no event shall any Company sell, lease, transfer or dispose of any material portion of the assets of; or enter into any time brokerage agreement, local marketing agreement or similar arrangement in respect of; a Station or a New Station without the prior written consent of the Lenders, which consent will not be unreasonably withheld by the Lenders in the case of an arms' length fair market value sale of any broadcast property or real estate; and provided further, that all the Net Sales Proceeds of any sale or disposition shall be paid to the Agent and applied to the partial payment of Senior Debt. SECTION 7.04. FUNDAMENTAL CHANGES; ACQUISITIONS. (a) (i) Form any subsidiary (other than the New Subsidiaries which shall become co-borrowers pursuant to the Assumption Agreements) or otherwise change the legal structure or -52- 60 organization of any Company; (ii) permit or suffer any material amendment of its articles of organization, corporate charter, articles of incorporation, operating agreement or by-laws, as applicable; (iii) permit or suffer any amendment of any other agreement which could have a Material Adverse Effect; (iv) dissolve, liquidate, consolidate with or merge with, or otherwise acquire any radio or television broadcast property or all or any substantial portion of the ownership interests or assets or properties of any corporation, partnership or other entity or any other material assets (in each case, an "ACQUISITION"), other than pursuant to Permitted Acquisitions and Capital Expenditures permitted hereunder and other than purchases of inventory and supplies in the ordinary course of business; or (v) redeem any capital stock, except for redemptions effected solely by the issuance of securities (A) in respect of which the Companies have no obligation to redeem or to pay cash distributions or dividends or to accord any other preferential treatment, (B) the issuance of which does not result in any Event of Default and (C) which shall have been collaterally assigned or pledged to the Agent and the Lenders as required hereunder. (b) As used herein, the term "PERMITTED ACQUISITION" shall mean any Acquisition made after the Closing Date by a Company of radio or television broadcast properties, PROVIDED, HOWEVER, that, in each case, the following conditions shall have been satisfied in full: (A) If such Acquisition involves the purchase of stock or other ownership interests, the same shall be effected in such a manner as to assure that the acquired entity is either a New Subsidiary or is promptly merged into a Company, with such Company being the surviving entity; (B) (1) No later than ninety (90) days prior to the consummation of any such Acquisition or, if earlier, ten (10) Business Days after the execution and delivery of the related Acquisition Agreement, the Companies shall have delivered to the Agent copies of executed counterparts of such Acquisition Agreement, together with all Schedules thereto, the forms of any additional agreements or instruments to be executed at the closing thereunder (to the extent available), and all applicable financial information, including historical financial statements (including, without limitation, trailing twelve month financial statements for each station to be acquired, and current accounts receivable and accounts payable agings), a detailed Capital Expenditures budget and five (5) year projections, updated to reflect such Acquisition and any related transactions, a PRO FORMA balance sheet of the Companies as of the projected date of the Permitted Acquisition showing the financial condition of the consolidated entities after giving effect to the proposed Acquisition, and a description of the properties and markets accompanied by applicable market rating books and other information as the Agent shall require, (2) promptly following a request therefor, the Companies shall have delivered to the Agent copies of such other documents relating to such Acquisition as the Agent shall have reasonably requested, (3) all of the foregoing shall be satisfactory to the Agent, in its sole discretion and -53- 61 acting in good faith, and (4) promptly following the consummation of such Acquisition, the Companies shall have delivered to the Agent certified copies of the agreements, instruments and documents referred to above, to the extent the same have been executed and delivered at the closing under such Acquisition Agreement; (C) The aggregate Purchase Price payable by the Companies in connection with such Acquisition (other than earn-outs, customary post-closing adjustments, escrows, holdbacks, indemnities and Seller notes and non-competition agreements permitted by the Majority Lenders) shall be payable in full on the date of such Acquisition; (D) The Companies shall not, in connection with any such Acquisition, assume or remain liable with respect to any Indebtedness (including any material tax or ERISA liability) of the related Seller, except (i) to the extent permitted under SECTION 7.01 and (ii) obligations of the Seller incurred in the ordinary course of business and necessary or desirable to the. continued operation of the underlying properties, and any other such liabilities or obligations not permitted to be assumed or -otherwise supported by Companies hereunder shall be paid in full or released as to the assets being so acquired on or before the consummation of such Acquisition; (E) All other assets and properties acquired in connection with any such Acquisition shall be free and clear of any liens, charges and other encumbrances other than as permitted under SECTION 7.02; (F) The Companies shall have complied with all of the provisions of SECTIONS 2.05 and ARTICLE III including the execution and delivery of such additional agreements, instruments, certificates, documents, consents, environmental site assessments, engineering studies and reports, opinions and other papers as the Agent may require; (G) Immediately prior to any such Acquisition and after giving effect thereto, no Event of Default or Unmatured Event of Default shall have occurred or be continuing, including any default under the provisions of ARTICLE V, (1) determined on a PRO FORMA basis as of the end of and for the fiscal quarter most recently ended prior to the date of such Acquisition for which financial statements are required to be provided (and have been so delivered) under SECTION 6.05 and (2) as reflected in the Companies' updated Projections referred to above, and the Companies shall provide to the Agent a certificate signed on behalf of the Companies by their chief financial officer demonstrating such compliance in reasonable detail; -54- 62 (H) All FCC licenses and assets acquired in connection with the Acquisition shall be acquired by a Company (which, if a New Subsidiary shall have executed an Assumption Agreement and such Security Documents as shall be required in accordance with SECTION 2.05 hereof), subject only to the security interests granted to the Agent by the Security Documents; and (I) Any such Acquisition shall have been approved in writing by the Majority Lenders, in their sole discretion acting in good faith, after review of all information required hereby has been delivered to the Agent and the Agent's completion of such inspection and cash flow audit of the stations to be acquired as the Agent shall require. (c) Consent to any Acquisition shall be in the sole discretion of the Majority Lenders acting in good faith and shall be subject to any and all conditions designated by the Agent in the exercise of its sole discretion, including without limitation, compliance with the provisions of SECTION 2.05 and the execution and delivery of such additional agreements, instruments, certificates, documents, consents, environmental site assessments, opinions and other papers as the Agent may require. Any pre-approval by the Agent or Lenders of a proposed Acquisition shall be communicated to Sunbelt within thirty (30) days of the Agent's receipt of a complete information package which complies with the requirements hereof; but such pre-approval shall be subject to the Agent's completion of its final due diligence and receipt of all environmental reviews, engineering studies, technical reviews and questionnaires, financial statement reviews and all required contracts and representations of the Seller. SECTION 7.05. MANAGEMENT. Turn over the management of the properties, assets, rights, licenses and franchises of any Company to any Person other than the Stockholders or, to the extent permitted by applicable FCC rules and regulations, a full-time employee of a Company. SECTION 7.06. SALE AND LEASEBACK. Enter into any arrangements, directly or indirectly, with any Person whereby a Company or Station shall sell or transfer any property, real, personal or mixed, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property. SECTION 7.07. INVESTMENTS. Except for (a) Permitted Investments; (b) Sunbelt's existing investment in 120,000 shares of $1.00 par value common stock of Nevada First Bank, a Nevada banking corporation; and (c) Valley's existing investment in the capital stock of Microwave, Inc., and Alta Development Company, permit any Company to purchase, invest in or otherwise acquire or hold securities -55- 63 (including, without limitation, capital stock and interests in general or limited partnerships, either as a general or limited partner or otherwise) and evidences of indebtedness of; or make loans or advances to, or enter into any arrangement for the purpose of providing funds or credit to, any other Person. SECTION 7.08. CHANGE IN BUSINESS. Permit any Company to engage, directly or indirectly, in any business other than that of operating the Stations. SECTION 7.09. ACCOUNTS RECEIVABLE. Sell, assign, discount or dispose in any way of any of a Company's accounts receivable, promissory notes or trade acceptances held by any Company, with or without recourse, except for collection (including endorsements) in the ordinary course of business. SECTION 7.10. TRANSACTIONS WITH AFFILIATES. Except as may be otherwise specifically permitted by this Agreement, enter into any transaction, including, without limitation, the purchase, sale or exchange of property or assets or the rendering or accepting of any service with or to any Affiliate of any Company except in the ordinary course of business and pursuant to the reasonable requirements of such Company's business and upon terms not less favorable to such Company than it could obtain in a comparable arm's-length transaction with a third party other than such Affiliate. SECTION 7.11. AMENDMENT OF CERTAIN AGREEMENTS. Amend or modify in any material respect any License, any agreement or instrument evidencing Subordinated Debt, or any material agreement listed in SCHEDULE 4.14 to which any Company is a party, without the prior written consent of the Majority Lenders. SECTION 7.12. ERISA. (a) Fail, or permit any Commonly Controlled Entity to fail, to comply with the requirements of ERISA with respect to any Employee Benefit Plan; (b) permit any funded Employee Pension Plan to lose its qualified status under Section 401(a) or 403(a) of the Code; (c) fail, or permit any Commonly Controlled Entity to fail, to meet the minimum funding standards of Section 302 of ERISA and Section 412 of the Code; (d) fail, or permit any Commonly Controlled Entity to fail, to discharge any obligations to the PBGC with respect to the termination of an Employee Pension Plan or to any Multiemployer Plan on account of its withdrawal or partial withdrawal therefrom or allow to exist any event or condition which presents a substantial risk of Borrower incurring liability to the PBGC by reason of the termination of any Employee Pension Plan; (e) create or adopt, or permit any Commonly Controlled Entity to create or adopt, any new Employee Pension Plan without the prior written consent of the Lender; (f) modify, or permit any Commonly Controlled Entity to modify, any -56- 64 existing Employee Pension Plan so as to increase its obligations thereunder, except in the ordinary course of business consistent with past practice or with the prior written consent of the Lender; (g) create or adopt any new Employee Welfare Plan or modify any existing Employee Welfare Plan, or permit any Commonly Controlled Entity to create or adopt any new Employee Welfare Plan or modify any existing Employee Welfare Plan, to provide continuing benefits or coverage for any participant (or beneficiary) after the termination of the participant's employment except as may be required by COBRA, regulations thereunder or applicable state statutory law or with the prior written consent of the Lender; or (h) engage, or permit any Commonly Controlled Entity to engage, in any transaction which would reasonably result in the assessment of a direct or indirect liability to Borrower or any Commonly Controlled Entity under Section 409 or 502 of ERISA or Section 4975 of the Code. SECTION 7.13. LOCAL MARKETING AGREEMENTS. Enter into any time brokerage or local marketing agreement without the Majority Lenders' prior written consent. In the event that a Company shall seek to enter into a time brokerage agreement or local marketing agreement in respect to a radio or television station which is not then owned or operated by a Company, the Majority Lenders shall provide the Companies with a preliminary approval or rejection in response to the Companies' providing the Agent with a preliminary outline of the terms of such agreement; and the final terms of any approved agreement consummated by the Companies shall not be materially different from the outline approved by the Lenders. SECTION 7.14. ILLEGAL ACTIVITIES. Engage in any conduct or activity, including, without limitation, a pattern of racketeering activity, that could subject any of a Company's assets to forfeiture or seizure. SECTION 7.15. MARGIN STOCK. Use or permit the use of any of the proceeds of the Loans, directly or indirectly, for the purpose of purchasing or carrying, or for the purpose of reducing or retiring any Indebtedness which was originally incurred to purchase or carry, any Margin Stock or for any other purpose which might constitute the transactions contemplated hereby a "PURPOSE CREDIT" within the meaning of Regulation U (12 CFR Part 221) of the Board of Governors of the Federal Reserve System, or cause any Loan, the application of proceeds thereof or this Agreement to violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or the Securities Exchange Act of 1934, as amended, or any rules or regulations promulgated under such statutes. SECTION 7.16. NEGATIVE PLEDGES, ETC. Enter into any agreement (excluding this Agreement or any other Loan Document) prohibiting (a) the Companies from amending or otherwise modifying this Agreement or any -57- 65 other Transaction Document, or (b) the creation or assumption of any lien upon the properties, revenues or assets of the Companies, whether now owned or hereafter acquired. VIII. DEFAULTS Each of the following events (each of which is herein sometimes called an "EVENT OF DEFAULT") shall constitute an Event of Default under this Agreement: (a) any representation or warranty made in this Agreement, a Security Document, or any other Transaction Document, or in any report, certificate, financial statement or other instrument furnished in connection with this Agreement, or the borrowings hereunder, shall prove to be false or misleading in any material respect; or (b) default in the payment of any installment of the principal of a Note or the principal of any other Indebtedness of any of the Companies to the Lenders or the Agent, whether now existing or hereafter arising, when the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or by acceleration or otherwise, and continuation of such default for ten (10) days following the date such payment is due and payable; or (c) default in the payment of any fee, rental, expense, or other obligation payable by any of the Companies to the Lenders or the Agent, or any installment of any interest or premium on a Note or on or in respect of any other Indebtedness of any of the Companies to the Lenders or the Agent, whether now existing or hereafter arising, when the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment or by acceleration or otherwise, and continuation of such default for ten (10) days following the date such payment is due and payable; or (d) default in the due observance or performance by any Person other than the Lenders or the Agent of any covenant, condition or agreement contained in Articles II, III, V, VI and VII of this Agreement, or in any Security Document and, in the case of a default under any Security Document, continuance of such default unremedied for more than the applicable period of grace, if any, specified thereon; or (e) default in the due observance or performance of any other covenant, condition or agreement, on the part of any Person other than the Lenders or the Agent to be observed or performed pursuant to the terms hereof or any other agreement by and between any of the Companies on the one hand and the Lender on the other, which default shall continue unremedied for forty-five (45) days after the earlier to occur of (i) a Borrower's discovery of such default, or (ii) written notice thereof from the Agent to the Companies; PROVIDED, HOWEVER, that if such default cannot be remedied, then such default shall be deemed to be an Event of Default as of the date of the occurrence thereof; or (f) for any reason any Security Document at any time shall not be in full force and effect in all material respects or shall not be enforceable in all material respects in accordance -58- 66 with its terms, or any material security interest or material lien granted pursuant thereto shall fail to be perfected, or any party thereto other than the Lenders or the Agent shall contest the validity of any material lien granted under, or shall seek to disaffirm or reduce its obligations under, any Security Document; or (g) any Event of Default, as defined in any Security Document and the continuance of such default unremedied for more than the applicable period of grace, if any, specified therein; or (h) default with respect to any Subordinated Debt or any other evidence of Indebtedness of any of the Companies for borrowed money; default with respect to any other Indebtedness or under any agreement giving rise to monetary remedies, which, when aggregated with all other such defaults, exceeds $50,000, if the effect of such default is to permit the holder of such Indebtedness to accelerate the maturity of such Indebtedness; or if any Indebtedness is not paid at maturity; or (i) the on-the-air broadcast operations of a Station shall be interrupted at any time for more than seventy-two (72) hours (or, in the event of FORCE MAJEURE, ninety-six (96) hours), whether or not consecutive, during any period often (10) consecutive days; or (j) (i) any Company shall lose, fail to keep in force, suffer the termination, suspension or revocation of; or terminate, forfeit or suffer an amendment to, any License at any time held by it, which would have a material adverse effect on the operations of such Company; (ii) the FCC shall schedule or conduct a hearing on the renewal or revocation of any material License held by any Company and the Majority Lenders shall reasonably and in good faith believe that the result thereof shall be the termination, revocation, suspension, or material adverse amendment of such License; or (iii) any governmental regulatory authority shall commence an action or proceeding seeking the termination, suspension, revocation or material adverse amendment of any material License held by any Company and the Majority Lenders shall reasonably and in good faith believe that the result thereof shall be the termination, revocation, suspension or material adverse amendment of such License; or (k) any Company shall (i) discontinue its business or operation of a Station or a New Station, (ii) apply for or consent to the appointment of a receiver, trustee, custodian or liquidator of it or any of its property, (iii) admit in writing its inability to pay its debts as they mature, (iv) make a general assignment for the benefit of creditors, (v) be adjudicated a bankrupt or insolvent or be the subject of an order for relief under Title 11 of the United States Code, or (vi) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors or to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law, or corporate action shall be taken for the purpose of effecting any of the foregoing; or (1) there shall be filed against any Company an involuntary petition seeking reorganization of such Company or the appointment of a receiver, trustee, custodian or liquidator of any Company or any material part of its assets, or an involuntary petition under any -59- 67 bankruptcy, reorganization or insolvency law of any jurisdiction, whether now or hereafter in effect (any of the foregoing petitions being herein referred to as an "INVOLUNTARY PETITION"); or (m) final, non-appealable judgment for the payment of money which, when aggregated with all other outstanding judgments against the Companies, or any of them, exceeds $50,000, shall be rendered against the Companies, or any of them, if the same shall remain undischarged (unless fully bonded upon terms satisfactory to the Agent) for a period of thirty (30) consecutive days; or an execution in respect of any judgment against the Companies, or any of them, shall have issued; or (n) the occurrence of any attachment of any deposits or other property of the Companies, or any of them, in the hands or possession of a Lender or the Agent, or the occurrence of any attachment of any other property of the Companies, or any of them, in an amount exceeding $50,000 in the aggregate which shall not be discharged or fully bonded on terms satisfactory to the Agent within thirty (30) days of the date of such attachment, or if an execution in respect of such judgment shall have issued; or (o) the occurrence of any event or condition described in paragraph (k) or (1) with respect to any Surety; or (p) James Rogers shall die or be judicially declared incompetent; or for any reason James Rogers shall cease to be actively engaged as chief executive officer of the Borrowers and New Subsidiaries in the management of the Stations and the New Stations; or for any reason James Rogers shall cease to function or serve as the sole trustee of the James Rogers Trust; or (q) for any reason (i) less than one hundred percent (100%) of the issued and outstanding capital stock of each Company (other than Beartooth), or less than eighty percent (80%) of the issued and outstanding capital stock of Beartooth, is pledged to the Agent on behalf of the Lender on terms acceptable to the Agent, or (ii) the Guarantors shall own less than eighty percent (80 %) of the issued and outstanding capital stock of Sunbelt, or (iii) Sunbelt shall own less than eighty percent (80%) of the issued and outstanding capital stock of Beartooth; or (r) (i) the occurrence of any event (after the expiration of any applicable cure period provided in the applicable network affiliation agreement) under any network affiliation agreement to which a Company is a party, which may be used by the television network as the basis for termination of such agreement, or (ii) any Company's network affiliation agreement shall be terminated, or (iii) any Company's network affiliation agreement shall be amended in any material manner, or the format of any radio station operated by a Company changed in any material manner, without the prior written consent of the Majority Lenders (which consent shall not be unreasonably withheld) and the Companies shall fail to refinance and pay in full all Indebtedness of the Companies to the Lender within one hundred twenty (120) days of the Agent's giving notice to the Borrowers of the Lenders objection to such event or occurrence; or -60- 68 (s) any Company or any material part of its business or assets shall be the subject of any seizure or forfeiture proceeding or action instituted or conducted by any agency, office or department of state or federal government; or (t) any Lease of real estate used or to be used by any Company as a studio, tower or transmitter site (i) shall not be renewed by the Company or the landlord thereunder at least ninety (90) days (or one (1) year in the case of Valley's existing tower site on Black Mountain in Clark County, Nevada) prior to its scheduled expiration or termination date, unless the Agent consents thereto after having received from the Companies evidence and assurances acceptable to the Agent that (A) the Company has obtained a replacement location which is not less favorable to the Company and its business operations pursuant to a signed written Lease acceptable to the Agent, and (B) the Company will be able to relocate to such replacement premises without adversely affecting its continued business operations or station signal, or (ii) shall be in default as a result of the Company's failure to observe or abide by all terms, conditions and covenants contained therein, or (iii) shall be the subject of a default notice or eviction notice initiated or sent by the landlord thereof to the Company or the Agent; or (u) James Rogers s,hall be convicted by any state, local or federal authority of the commission of a felony; or James Rogers shall cease to function or serve as the sole trustee of the James Rogers Trust; or (v) the FCC does not issue to a Company, in the usual course specified by the FCC's rules and policies generally applicable to the broadcast television industry's imminent transition to digital television facilities, all authorizations, including transition authorizations, necessary for its television broadcast Station's or New Station's construction and operation of digital television facilities; or a Company fails to construct, or initiate operation from, authorized digital television facilities by or before the times specified for construction and operation in the initial digital television authorizations issued to such Company by the FCC for its Station or New Station. Upon the occurrence of any such Event of Default and at any time thereafter during the continuance of such Event of Default, at the election of the Majority Lenders, the Commitments shall terminate and the Notes and all other Indebtedness of the Companies, and each of them, to the Lenders and the Agent shall immediately become due and payable, both as to principal and interest, fees and charges, without presentment, demand, or protest, all of which are hereby expressly waived, anything contained herein or in the Notes or other evidence of such indebtedness to the contrary notwithstanding (except in the case of an Event of Default under paragraph (k) or (1) of this ARTICLE VIII, in which event the Commitments shall automatically terminate and such Indebtedness shall automatically become due and payable). In the event of an acceleration of the Companies' Indebtedness hereunder as a result of the filing of an Involuntary Petition as specified in paragraph (1) of this ARTICLE VIII, such acceleration shall be rescinded, and the Borrowers' rights hereunder reinstated, if; within sixty (60) days following the filing of such Involuntary Petition, such Involuntary Petition shall have been dismissed, and there shall then exist no other Event of Default or Unmatured Event of Default under this Agreement -61- 69 IX. REMEDIES ON DEFAULT, ETC. SECTION 9.01. REMEDIES. In case any one or more Events of Default shall occur and be continuing, the Agent, on behalf of the Lenders, may proceed to protect and enforce the Lenders' and the Agent's rights by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained in this Agreement, any Security Document, any Loan Document or the Notes or for an injunction against a violation of any of the terms hereof or thereof or in and of the exercise of any power granted hereby or thereby or by law. No right conferred upon the Agent or the Lenders hereby or by any Security Document, Loan Document or the Notes shall be exclusive of any other right referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. SECTION 9.02. DEFAULT RATE. Without regard to whether the Agent has exercised any other rights or remedies hereunder, the applicable interest rate under each Note shall at the option of the holder of such Note, but only to the extent permitted by law, be increased to a rate per annum (the "DEFAULT RATE") equal to the interest rate then in effect pursuant to SECTION 2.04, plus (a) four percent (4.0%) upon the occurrence of an Event of Default as defined in either paragraph (b) or (c) of ARTICLE VIII hereof; or (b) two percent (2.0%) upon the occurrence of any other Event of Default defined in ARTICLE VIII hereof. SECTION 9.03. EFFECT ON PAYMENTS. If an Event of Default shall have occurred and be continuing, the Companies shall not (a) make payments in respect of Corporate Overhead in excess of Three Million Dollars ($3,000,000) per Fiscal Year, or (b) make any other Restricted Payments to the Stockholders or anY Affiliates. SECTION 9.04. CONSENT TO RECEIVER. Without limiting the generality of the foregoing or limiting in any way the rights of the Lenders and the Agent under the Security Documents or otherwise under applicable law, and to the extent permitted by the FCC, at any time after the occurrence, and during the continuance, of an Event of Default, the Agent, at the direction of the Majority Lenders, shall be entitled to apply for and have a receiver or receiver and manager appointed under state, or Federal law of the United States by a court of competent jurisdiction in any action taken by the Agent or the Lenders to enforce their rights and remedies hereunder and under the Security Documents in order to manage, protect, preserve, sell and otherwise dispose of all or any portion of the Collateral and continue the operation of the business of the respective Borrowers, and to collect all revenues and profits thereof and apply the same to the payment of all expenses and other charges of such receivership. including the compensation of the receiver, and to the payment of the Notes until a sale or other disposition of such Collateral shall be finally made and -62- 70 consummated. EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AS PROVIDED ABOVE. EACH BORROWER GRANTS SUCH WAIVER AND CONSENT KNOWINGLY AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, ACKNOWLEDGES THAT THE UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS CONSIDERED ESSENTIAL BY THE MAJORITY LENDERS IN CONNECTION WITH THE ENFORCEMENT OF THEIR RIGHTS AND REMEDIES HEREUNDER AND UNDER THE SECURITY DOCUMENTS, AND THE AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING THE LENDERS TO MAKE (AND COMMIT TO MAKE) THE LOANS TO THE BORROWERS, AND AGREES TO ENTER INTO ANY AND ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN CONNECTION WITH THE FOREGOING AND TO COOPERATE FULLY WITH THE AGENT AND THE LENDERS AND THE AGENT IN CONNECTION WITH THE ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF THE COLLATERAL. X. THE AGENT. SECTION 10.01. APPOINTMENT, POWERS AND IMMUNITIES. (a) Each Lender hereby irrevocably (subject to SECTION 10.08) designates and appoints AT&T-CFC, which designation and appointment is coupled with an interest, as the Agent of such Lender under this Agreement and the other Transaction Documents, and each such Lender irrevocably authorizes AT&T-C FC, as the Agent of such Lender, to take such action on its behalf under the provisions of this Agreement and the other Transaction Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and the other Transaction Documents, together with such other powers as are reasonably incidental thereto. (b) The Agent (which term as used in this sentence and in SECTION 10.05 and such first sentence of SECTION 10.06 hereof shall include reference to its Affiliates and its own and such Affiliates' officers, directors, employees and agents) shall not: (i) have any duties or responsibilities to be a trustee for any Lender; (ii) be responsible to the Lenders for any recitals, statements, representations or warranties contained in this Agreement, or in any certificate or other document referred to or provided for in, or received by it under, this Agreement, or for the due execution, legality, value, validity, effectiveness, genuineness, enforceability, perfection or sufficiency of this Agreement, any Note, any Security Document or any other document referred to or provided for herein or for any failure by the Borrowers or any other Person to perform any of its obligations hereunder or thereunder; (iii) be required to initiate or conduct any litigation or collection proceedings hereunder, except to the extent requested by the Majority Lenders; and (iv) be responsible for any action taken or omitted to be taken by it hereunder or under any other -63- 71 document or instrument referred to or provided for herein or in connection herewith, except for its own gross negligence or willful misconduct. (c) The Agent may employ and consult with agents, attorneys-in-fact, public accountants and other experts selected by it and shall not be responsible for the negligence or misconduct of any such agents, attorneys-in-fact, public accountants or other experts it selects with reasonable care. (d) Subject to the foregoing, to ARTICLE XI and to the provisions of any intercreditor agreement among the Lenders in effect from time to time, the Agent shall, on behalf of the Lenders, (i) hold and apply any and all Collateral, and the proceeds thereof; at any time received by it, in accordance with the provisions of the Security Documents and this Agreement; (ii) exercise any and all rights, powers and remedies of the Lenders under this Agreement or any of the Security Documents, including the giving of any consent or waiver or the entering into of any amendment; (iii) execute, deliver and file UCC financing statements, mortgages, deeds of trust, lease assignments and other such agreements, and possess instruments on behalf of any or all of the Lenders; and (iv) in the event of acceleration of any Borrower's Indebtedness hereunder, sell or otherwise liquidate or dispose of any portion of the Collateral held by it and otherwise exercise the rights of the Lenders hereunder and under the Security Documents. (e) The Lenders hereby authorize the Agent, at its option and in its discretion, to release any lien or security interest granted to or held by the Agent upon any Collateral (i) upon termination of the Commitments and payment in full of all of the Senior Debt, (ii) constituting property sold or to be sold or disposed of as part of or in connection with any disposition expressly permitted hereunder or under any other Loan Document or to which the Majority Lenders have consented or (iii) otherwise pursuant to and in accordance with the provisions of any applicable Loan Document. Upon request by the Agent at any time, the Lenders will confirm in writing the Agent's authority to release Collateral pursuant to this Section. SECTION 10.02. RELIANCE BY AGENT. The Agent shall be entitled to rely upon any certification, notice or other communication (including any communication by telephone, telex, facsimile transmission, telegram or cable) believed by it to be genuine and correct and to have been signed or sent by or on behalf of the proper Person or Persons, and upon advice and statements of legal counsel, independent accountants and other experts selected by the Agent. The Agent may treat the payee of any Note as the holder thereof until the Agent receives written notice of the assignment or transfer thereof; in form satisfactory to the Agent, signed by such payee and including the agreement of the assignee or transferee to be bound hereby as it would have been if it had been an original Lender hereunder. As to any matters not expressly provided for by this Agreement, the Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder in accordance with instructions signed by the Majority Lenders and any action taken or failure to act pursuant thereto shall be binding on the Lenders. SECTION 10.03. EVENTS OF DEFAULT. The Agent shall not be deemed to have knowledge of the occurrence of an Event of Default (other than the non-payment of principal of or interest on the Notes which it holds as a Lender hereunder) unless such Agent has received written notice -64- 72 from any Lender or any Borrower specifying such Event of Default and stating that such notice is a "NOTICE OF DEFAULT". In the event that the Agent receives such a notice of the occurrence of an Event of Default, the Agent shall give prompt notice thereof to the Lenders (and shall give each Lender prompt notice of each such non-payment). The Agent shall (subject to SECTION 10.07) take such action with respect to such Event of Default as shall be directed by the Majority Lenders, as provided under ARTICLE XI, provided that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action on behalf of the Lenders, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable in the best interest of the Lenders. SECTION 10.04. RIGHTS AS A LENDER. With respect to its Commitments and the Loans made by AT&T-CFC hereunder, and the Notes issued to it, AT&T-CFC shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not acting as the Agent; and the terms "Lender", "Lenders" and "Majority Lenders" shall, unless otherwise expressly indicated, include AT&T-CFC in its individual capacity. The Agent and its Affiliates may, without having to account therefor to the Lenders and without giving rise to any fiduciary or other similar duty to any Lender, accept deposits from, lend money to and generally engage in any kind of banking, trust or other business with the Borrowers and any of their Affiliates as if it were not acting as an agent and as if CFC were not a Lender, and the Agent may accept fees and other consideration from or on behalf of the Borrowers for services in connection with this Agreement or otherwise without having to account for the same to the Lenders. SECTION 10.05. INDEMNIFICATION. The Lenders agree to indemnify the Agent (to the extent not reimbursed under SECTION 13.02, but without limiting the obligations of the Borrowers under such SECTION 13.02), ratably in accordance with the respective aggregate principal amounts of the Notes held by such Lenders, from and against any and all liabilities, obligations, losses, damages, penalties, action, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or any Security Document or Loan Document or any other document contemplated by or referred to herein or the transactions contemplated by or referred to herein or therein (including, without limitation, the costs and expenses which the Borrowers are obligated to pay under SECTION 13.02) or the enforcement of any of the terms of this Agreement or of any Security Document or of any such other documents, or in any way relating to any action taken or omitted by the Agent under this Agreement, provided that no Lender shall be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the party to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees, but exclusive of any costs and expenses of syndications) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of; or legal advice in respect of rights or responsibilities under, this Agreement, to the extent that the Agent is not reimbursed for such expenses by the Borrowers. -65- 73 SECTION 10.06. NON-RELIANCE ON AGENT AND OTHER LENDERS. Each Lender agrees that it has, independently and without reliance on the Agent or any other Lenders, and based on such documents and information as it has deemed appropriate, made its own credit analysis of the Borrowers and its own decision to enter into this Agreement and that it will, independently and without reliance upon the Agent or any other Lenders, and based on such documents and information as it shall deem appropriate at the time, continue to make its own analysis and decisions in taking or not taking action under this Agreement. The Agent does not make any warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with this Agreement. The Agent shall not be required to inquire or keep itself informed as to the performance or observance by the Borrowers of this Agreement or any other document referred to or provided for herein or to inspect the properties or books of the Borrowers. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall have no duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or businesses of the Borrowers or any Affiliates of the Borrowers which may come into the possession of the Agent or any of its Affiliates. Notwithstanding the foregoing, the Agent will provide to the Lenders any and all information reasonably requested by them and reasonably available to the Agent promptly upon such request. SECTION 10.07. FAILURE TO ACT. Except for action expressly required of the Agent hereunder, the Agent shall in all cases be fully justified in failing or refusing to act hereunder unless it shall be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. SECTION 10.08. RESIGNATION OR REMOVAL OF AGENT. AT&T-CFC (or any other Agent hereunder), may resign as the Agent at any time by giving thirty (30) days' prior written notice thereof to the Lenders and the Borrowers. Any such resignation or removal shall take effect at the end of such thirty (30) day period or upon the earlier appointment of a successor Agent by the Majority Lenders as provided below. Upon any resignation, the Majority Lenders shall appoint a successor agent from among the Lenders or, if such appointment is deemed inadvisable or impractical by the Majority Lenders, another financial institution with a combined capital and surplus of at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent. After the effective date of the resignation of an Agent hereunder, the retiring Agent shall be discharged from its duties and obligations hereunder, provided that the provisions of this ARTICLE X shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as the Agent. In the event that there shall not be a duly appointed and acting Agent, the Borrowers agree to make each payment due to the Agent hereunder and under the Notes, if any, directly to each Lender entitled thereto, pursuant to written instructions provided by the retiring Agent, and to provide copies of each certificate or other document required to be furnished to the Agent hereunder, if any, directly to each Lender. -66- 74 SECTION 10.09. COOPERATION OF LENDERS. Each Lender shall (a) promptly notify the other Lenders and the Agent of any Event of Default known to such Lender under this Agreement and not reasonably believed to have been previously disclosed to the other Lenders; (b) provide the other Lenders and the Agent with such information and documentation as such other Lenders or the Agent shall reasonably request in the performance of their respective duties hereunder, including, without limitation, all information relative to the outstanding balance of principal, interest and other sums owed to such Lender by each Borrower but excluding internally generated reports and analyses and other customarily confidential materials; and (c) cooperate with the Agent with respect to any and all collections and/or foreclosure procedures at any time commenced against the Borrowers or otherwise in respect of the Collateral by the Agent in the name and on behalf of the Lenders. XI. ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS; ACTIONS BY THE LENDERS. (a) This Agreement (including the Schedules hereto) and the other Loan Documents constitute the entire agreement of the parties herein and supersede any and all prior agreements, written or oral, as to the matters contained herein, and no modification or waiver of any provision hereof or of the Notes or any other Loan Document, nor consent to the departure by the Borrowers or any other Person therefrom, shall be effective unless the same is in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. Except as hereinafter provided or in cases where the consent of all Lenders is required by the terms of this Agreement or other Loan Document, the consent of the Majority Lenders shall be required and sufficient (i) to amend, with the consent of the Borrowers who are parties thereto, any term of this Agreement, the Notes or any other Loan Document; (ii) to waive the observance of any term of this Agreement, the Notes or any other Loan Document (either generally or in a particular instance or either retroactively or prospectively); (iii) to take or refrain from taking any action under this Agreement, the Notes, any other Loan Document or applicable law, including, without limitation, (A) the acceleration of the payment of the Notes, (B) the termination of the Commitments, (C) the exercise of the Agent's and the Lenders' remedies hereunder and under the Security Documents and (D) the giving of any approvals, consents, directions or instructions required under this Agreement or the Security Documents; PROVIDED, HOWEVER, that no such amendment, waiver or consent shall, without the prior written consent of all of the Lenders (other than a Defaulting Lender and, with respect to matters addressed in clause (1) below only such Lenders holding Senior Debt directly affected thereby), (1) extend the fixed maturity or reduce (except for reductions in the amortization schedule based upon and reflecting the Borrowers' failure to borrow the full amount of a Commitment) the principal amount of; or reduce the amount or extend the time of payment of any principal of; or interest on, any Note, (2) increase or extend any Commitment of any Lender (it being understood that waivers or modifications of conditions precedent, covenants, or Events of Default shall not constitute any such increase or extension), (3) release any guaranty or any Collateral, unless (x) such release of Collateral is in connection with a Disposition permitted under SECTION 7.03 or to which any required consent of the Majority Lenders has been given and (y) substantially all of the Net Sale Proceeds of such sale are used to repay the Borrowers' indebtedness to the Lenders hereunder or otherwise used in a manner permitted hereunder, (4) change the fraction or -67- 75 percentage referred to in the definition of "MAJORITY LENDERS" contained in Article I, (5) change any other provisions requiring the consent of all of the Lenders or the Majority Lenders or (6) amend the provisions of this ARTICLE XI, or (7) consent to the assignment or transfer by a Company of any of its rights or obligations under the Loan Documents; and PROVIDED FURTHER, that no such amendment, waiver, consent or other action shall (y) increase the dollar amount Commitment of any Lender over the amount thereof then in effect without the consent of such Lender, and (z) without the consent of the Agent, amend, modify or waive any provision of ARTICLE X as it applies to the Agent, or any other provision of any Loan Document as it relates to the rights or obligations of the Agent; and PROVIDED FURTHER, that neither notice to, nor consent of; the Companies shall be required for any modification, amendment or waiver of the provisions of the Loan Documents specifying or governing the number or percentage of lenders required to consent to any act or omission under the Loan Documents or defining "MAJORITY LENDERS". (b) Any amendment or waiver effected in accordance with this ARTICLE XI shall be binding upon each holder of any Note at the time outstanding, each future holder of any Note and the Borrowers. The Lenders' failure to insist (directly or through the Agent) upon the strict performance of any term, condition or other provision of this Agreement, any Note, or any of the Security Documents, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by the Lenders of any such term, condition or other provision or default or Event of Default in connection therewith, nor shall a single or partial exercise of any such right or remedy preclude any other or future exercise, or the exercise of any other right or remedy; and any waiver of any such term or condition or other provision or of any such default or Event of Default shall not affect or alter this Agreement, any Note or any of the Security Documents, and each and every term, condition and other provision of this Agreement, the Notes and the Security Documents shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent default or Event of Default in connection therewith. An Event of Default hereunder and a default under any Note or under any of the Security Documents shall be deemed to be continuing unless and until waived in writing by the Majority Lenders or all of the Lenders, as provided in paragraph (a) above. XII. BENEFIT OF AGREEMENT; ASSIGNMENTS AND PARTICIPATIONS (a) This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Lenders, the Agent and their respective successors and assigns, and all subsequent holders of any of the Notes or any portion hereof. (b) Each Lender may assign its rights and interests under this Agreement, the Notes and the Security Documents in whole or in part, and sell participations in the Notes and the Security Documents as security therefor, PROVIDED as follows: (i) No Lender shall make any assignment (other than assignment in full) other than to a separately organized branch or an Affiliate of the same Lender, if; after giving effect thereto, such Lender would hold less than $5,000,000 of the then aggregate outstanding principal amount of the Notes. -68- 76 (ii) Any such assignment made other than to a separately organized branch, or an Affiliate of; a Lender shall reflect an assignment of such assigning Lender's Notes which is in an aggregate principal amount of at least $5,000,000, and if greater, shall be an integral multiple of $1,000,000. (iii) Notwithstanding any provision of this Agreement to the contrary, each Lender may at any time assign all or any portion of its rights under this Agreement and each of the other Loan Documents, including, without limitation, the Notes held by such Lender, to a Federal Reserve Bank (or equivalent thereof in the case of Lenders chartered outside of the United States); provided that no such assignment shall release a Lender from any of its obligations and liabilities under the Loan Documents. Any Federal Reserve Bank (or equivalent thereof) which receives such an assignment from any Lender may make further assignments of such rights in accordance with the provisions of this Section. (iv) Any assignments made hereunder shall be pursuant to an instrument of assignment and acceptance (the "ASSIGNMENT AND ACCEPTANCE") substantially in the form of Schedule 12.01 and the parties to each such assignment shall execute and deliver to the Agent for its acceptance the Assignment and Acceptance together with any Note or Notes subject thereto. Upon such execution and delivery, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least two (2) Business Days after the execution thereof; (A) the assignee thereunder shall become a party hereto, to the Loan Documents and to the Intercreditor Agreement and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder with a commitment as set forth therein and (B) the assigning Lender thereunder shall, to the extent provided in such assignment, be released from its obligations under this Agreement as to that portion of its obligation being so assigned and delegated. The Assignment and Acceptance shall be deemed to amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of the assignee as a Lender and the resulting adjustment of Commitments arising from the purchase by and delegation to such assignee of all or a portion of the rights and obligations of such assigning Lender under this Agreement. (v) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and the assignee together with the Note subject to such assignment and payment by the assignee to the Agent of a registration and processing fee of $2,000.00, the Agent shall accept such Assignment and Acceptance. Promptly upon delivering such Assignment and Acceptance to the Agent, the assigning Lender shall give notice thereof to the Borrowers and the other Lenders. Within five (5) Business Days after receipt of such notice, the Borrowers shall execute and deliver to the Agent in exchange for such surrendered Note(s) a new Note or Notes payable to the order of such assignee in an amount equal to the portion of the Loan(s) assumed by such assignee pursuant to such Assignment and Acceptance and a new Note or Notes payable to the order of the assigning Lender in an amount equal to the portion of the Loans retained by it hereunder. Such new Notes shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form provided in Article II. The canceled Notes surrendered by the assigning Lender shall be returned to the Borrowers upon the execution and delivery of such new Notes. -69- 77 (vi) Each Lender may sell participations in all or a portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments and the Notes held by it); PROVIDED, HOWEVER, that, (A) the selling Lender shall remain obligated under this Agreement to the extent as it would if it had not sold such participation, (B) the selling Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (C) at no time shall the selling Lender agree with such participant to take or refrain from taking any action hereunder or under any other Loan Document, except that the selling Lender may agree not to consent, without such participant's consent, to any of the actions referred to ARTICLE XI, to the extent that the same require the consent of each Lender hereunder, (D) all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation and no participant shall be entitled to receive any greater amount pursuant to this Agreement than the selling Lender would have been entitled to receive in respect of the amount of the participation transferred by such Lender to such participant had no such transfer occurred, and (E) the Borrowers, the Agent, and the other Lenders shall continue to deal solely and directly with the selling Lender in connection with such Lender's rights and obligations under this Agreement. (vii) Except during the existence of an Event of Default, no assignment by a Lender referred to above other than to a separately organized branch or Affiliate of such Lender and other than under paragraph (b)(iii) hereof shall be permitted without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed. (viii) No Borrower may assign any of its rights or delegate any of its duties or obligations hereunder. (ix) Any Lender may, in connection with any assignment or participation pursuant to this Section, disclose to the assignee or participant any information relating to the Borrowers furnished to such Lender by or on behalf of the Borrowers and such assignee or participant shall treat such information as confidential. XIII. MISCELLANEOUS SECTION 13.01. SURVIVAL. This Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto, shall survive the making by the Lenders of the Loans and shall continue in full force and effect so long as the Notes or any other Indebtedness of the Companies, or any of them, to the Lenders is outstanding and unpaid or any Lender has any obligation to make credit extensions hereunder. SECTION 13.02. EXPENSES. The Borrowers agree jointly and severally to reimburse the Agent and the Lenders upon demand for all reasonable out-of-pocket costs, charges, liabilities, documentary stamp taxes, -70- 78 intangible taxes, any other taxes due under any applicable state law (exclusive of taxes measured or imposed in terms of any Lender's net income) and any other reasonable expenses of the Agent and the Lenders (including reasonable fees and disbursements of (i) counsel to the Agent and the Lenders, (ii) the appraisers and engineers referred to in SECTION 4.18(a) and (b) hereof and SECTION 6.10(d) hereof; and (iii) agents of the Agent and the Lenders not regularly in their employ) in connection with (a) the preparation, negotiation, interpretation, execution and delivery of this Agreement, the Notes, any Security Documents and any other agreements or documents relating thereto, (b) the making and administration of the Loans, (c) any amendments, modifications, consents or waivers in respect thereof; (d) any enforcement of any of the Transaction Documents, (e) any proceedings with respect to the bankruptcy, reorganization, insolvency readjustment of debt, dissolution or liquidation of the Borrower or any party to any Security Document, (f) any claims by third parties relating to the foregoing, and (g) any appraisal, studies or reports required by this Agreement. SECTION 13.03. SETOFFS, ETC. The Borrowers agree that, in addition to (and without limitation of) any right of set-off; bankers lien or counterclaim the Lenders and Agent may otherwise have, each Lender shall be entitled at its option, to offset balances held by it for the account of the Borrowers, or any of them, at any of its offices, against any Indebtedness or other fees or charges owed to such Lender hereunder if the same are not paid when due (regardless of whether such balances are then due to the Borrowers) or if a Borrower becomes insolvent, howsoever evidenced, or if any Event of Default occurs, and that such offset balances may be applied toward the payment of any Indebtedness of the Borrowers to the Lenders or to any purchaser of any participations in the Notes, whether or not such Indebtedness or any part thereof shall then be due; in which case such Lender shall promptly notify the Borrowers thereof; PROVIDED, HOWEVER, that such Lender's failure to give such notice shall not affect the validity thereof. SECTION 13.04. GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SAID STATE. SECTION 13.05. AMENDMENT; MODIFICATION. No modification or waiver of any provision of this Agreement, or of the Notes or any other Loan Document, nor consent to any departure by the Borrowers therefrom, shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance, and for the purpose, for which given. No notice to, or demand on, the Borrowers, in any case, shall entitle the Borrowers to any other or future notice or demand in the same, similar or other circumstances. -71- 79 SECTION 13.06. WAIVER. The failure by the Agent or any Lender to insist upon the strict performance of any term, condition or other provision of this Agreement, the Notes or any of the Security Documents or other Transaction Documents, or to exercise any right or remedy hereunder or thereunder, shall not constitute a waiver by the Agent or the Lenders of any such term, condition or other provision or default or Event of Default in connection therewith; and any waiver of any such term, condition or other provision or of any such default or Event of Default shall not affect or alter this Agreement, the Notes or any of the Security Documents or other Transaction Documents, and each and every term, condition and other provision of this Agreement, the Notes, the Security Documents and other Transaction Documents shall, in such event, continue in full force and effect and shall be operative with respect to any other then existing or subsequent default or Event of Default in connection therewith. An Event of Default hereunder or under any of the Security Documents shall be deemed to be continuing unless and until waived in writing by the Lenders. SECTION 13.07. NOTICE. All notices, requests, demands and other communications provided for hereunder shall be in writing and either mailed, sent by nationally recognized overnight courier service, or delivered to the applicable party at the addresses indicated below. If to the Agent: AT&T COMMERCIAL FINANCE CORPORATION 44 Whippany Road Morristown, New Jersey 07962 Attention: Michael V. Monahan, Vice President with a copy (which shall not constitute notice) to: AT&T COMMERCIAL FINANCE CORPORATION 44 Whippany Road Morristown, New Jersey 07962 Attention: Corporate Counsel and with a copy (which shall not constitute notice) to: Andrew J. Chlebus, Esq. Edwards & Angell 2700 Hospital Trust Tower Providence, Rhode Island 02903 - 72 - 80 If to any Lender, to it at the address set forth on the appropriate signature page hereto or, with respect to any assignee under ARTICLE XII, at the address designated by such assignee in a written notice to the other parties hereto. If to the Borrowers or any of them: c/o Sunbelt Communications Company 1500 Foremaster Lane Las Vegas, Nevada 89101 Attention: James E. Rogers, President with a copy (which shall not constitute notice) to: c/o Sunbelt Communications Company 1500 Foremaster Lane Las Vegas, Nevada 89101 Attention: Joan Zucker and a copy (which shall not constitute notice) to: Earl Monsey, Esq. Monsey & Andrews 3900 Paradise Road, Suite 283 Las Vegas, Nevada 89109 and a copy (which shall not constitute notice) to: Suzanne Rogers, Esq. 455 Capitol Mall, Suite 604 Sacramento, CA 95818 or, as to each party, at such other address as shall be designated by such parties in a written notice to the other party complying as to delivery with the terms of this Section. All such notices, requests, demands and other communication shall be deemed given upon the earliest to occur of (a) the third day following deposit thereof in the United States mail, (b) twelve noon local time on the first business day following timely deposit thereof with a nationally recognized overnight courier service with effective instructions to such courier to make delivery on the next business day, or (c) receipt by the party to whom such notice is directed. SECTION 13.08. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Agent and the Lenders and their respective successors and assigns, except that the Borrowers shall not have the right to assign any of their rights hereunder or delegate any of their obligations - 73 - 81 hereunder without the prior written consent of the Lenders. Any such impermissible assignment or delegation shall be void and of no effect. SECTION 13.09. CONSENT TO JURISDICTION, SERVICE OF PROCESS. Each Borrower, to the extent that it may lawfully do so, hereby consents to the jurisdiction of the courts of the States of Nevada, Arizona, California, Idaho, Wyoming, Montana and New Jersey and the United States District Courts for the Districts of Nevada, Arizona, California, Idaho, Wyoming, Montana and New Jersey, as well as to the jurisdiction of all courts from which an appeal may be taken from such courts, for the purpose of any suit, action or other proceeding arising out of any of its obligations arising hereunder or under the Notes, the Security Documents or any other Transaction Documents, or with respect to the transactions contemplated hereby, and expressly waives any and all objections it may have as to venue in any of such courts. In addition, to the extent that it may lawfully so do, each Borrower hereby consents to the service of process by U.S. certified or registered mail, return receipt requested, addressed to the Borrower at the address to which notices are to be given hereunder. SECTION 13.10. WAIVER OF JURY TRIAL. EACH BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS OR ANY OTHER AGREEMENTS EXECUTED IN CONNECTION HEREWITH. NEITHER THE BORROWERS NOR ANY ASSIGNEE OF OR SUCCESSOR TO THE BORROWERS, SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER LITIGATION OR PROCEDURE BASED UPON, OR ARISING OUT OF, THIS AGREEMENT, THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER DOCUMENTS, INSTRUMENTS AND AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THEREWITH OR THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG THE PARTIES HERETO, OR ANY OF THEM. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION 13.10 HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO ANY OTHER PARTY THAT THE PROVISIONS OF THIS SECTION 13.10 WILL NOT BE FULLY ENFORCED IN ALL INSTANCES. SECTION 13.11. INDEMNIFICATION; LIMITATION OF LIABILITY. (a) Each Borrower agrees to protect, indemnify and hold harmless the Indemnitees from and against any and all liabilities, obligations, losses, damages (including, without limitation, consequential damages), penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for and consultants of such Indemnitees in - 74 - 82 connection with any investigative, administrative or judicial proceeding, whether or not such Indemnitees shall be designated a party thereto), which may be imposed on, incurred by, or asserted against such Indemnitees (whether direct, indirect, or consequential and whether based on any federal or state laws or other statutory regulations, including, without limitation, securities, environmental and 'commercial laws and regulations, under common law or at equitable cause or on contract or otherwise) in any manner relating to or arising out of (i) any act or omission of the Borrowers, any Affiliate of any such Persons, or any other Person with respect to (x) the transactions evidenced by or relating to this Agreement, the Notes or any of the Security Documents or other Loan Documents, or any act, event or transaction related or attendant thereto, (y) the agreements of Lenders contained herein, the making of the Loans, or the management of the Loans or the Collateral, or (z) the use or the intended use of the proceeds of the Loans hereunder; or (ii) any claim, cause of action, event or circumstances relating to the business, assets, properties, licenses or operations of the Borrowers, including, without limitation, all claims relating to or arising out of the condition, quality, maintenance or use of any asset which constitutes Collateral, the manner in which the Borrowers operates the Stations and their business, and the Borrowers' compliance with the rules and regulations of the FCC and other applicable law; PROVIDED, HOWEVER, that the Borrowers shall have no obligation to any Indemnitee under this SECTION 13.11 with respect to matters indemnified hereby which are caused by or resulting from the willful misconduct or gross negligence of such Indemnitee. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrowers shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all indemnified matters incurred by the Indemnitees. (b) To the extent permitted by applicable law, no claim may be made by the Borrowers or any other Person against the Indemnitees for any special, indirect, consequential or punitive damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement, the Notes, or any of the Security Documents or any act, omission or event occurring in connection therewith; and the Borrowers hereby waive, release and agree not to sue upon any claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. No Indemnitee shall be liable for any action taken or omitted to be taken by it or them under or in connection with any of the above-referenced documents, except for its or their own gross negligence or willful misconduct. (c) The provisions of this SECTION 13.11 shall continue in effect and shall survive (among other things) any termination of this Agreement, payment and satisfaction of the Notes, and release of any Collateral. SECTION 13.12. SEVERABILITY. (a) Any provision of this Agreement, the Notes or any of the Security Documents which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the - 75 - 83 remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. (b) All agreements between the Borrowers and the Lenders are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the Indebtedness or otherwise, shall the amount paid or agreed to be paid to the Lenders for the use, forbearance or detention of the Indebtedness evidenced hereby or incurred pursuant hereto exceed the maximum permissible under applicable law. If; from any circumstances whatsoever, fulfillment of any provision hereof; at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any circumstance any Lender should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. As used herein, the term "APPLICABLE LAW" shall mean the law in effect as of the date hereof; provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Agreement shall be governed by such new law as of its effective date. This provision shall control every other provision of all Transaction Documents between the Borrowers and the Lenders. SECTION 13.13. SECTION HEADINGS. Any Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose. SECTION 13.14. AMENDMENT OF OTHER AGREEMENTS. All references in this Agreement to other documents and agreements to which the Lenders are not a party shall be deemed to refer to such documents and agreements as presently constituted and not as hereafter amended or modified unless the Majority Lenders shall have expressly consented to in writing pursuant to ARTICLE XI. SECTION 13.15. ACCOUNTING PRINCIPLES. All references in this Agreement to any calculations or determinations made in accordance with generally accepted accounting principles shall mean, for any fiscal period, such principles applied on a basis consistent with (a) the application of the same in prior fiscal periods, (b) that employed by the Accountants in preparing the financial statements referred to in SECTION 4.01 hereof. SECTION 13.16. KNOWLEDGE AND DISCOVERY. All references in this Agreement to "KNOWLEDGE" of; or "DISCOVERY" by, a Borrower shall be deemed to include any such knowledge of; or discovery by, any of the holders of common stock of such Borrowers or any of such Borrower's executive officers. - 76 - 84 SECTION 13.17. FCC. Notwithstanding anything to the contrary contained herein or in any of the Security Documents, the Agent and the Lenders will not take any action pursuant to this Agreement or any of the Security Documents that would constitute or result in any assignment of an FCC license or any change of control of the Stations if such assignment of license or change of control would require under then existing law (including the written rules and regulations promulgated by the FCC), the prior approval of the FCC, without first obtaining such approval of the FCC. Bach Lender and the Agent specifically agree that (a) voting rights in the capital stock or voting trust certificate of the Borrowers (the "PLEDGED INTERESTS") will remain with the holders of such voting rights upon and following the occurrence of an Event of Default unless any required prior approvals of the FCC to the transfer of such voting rights to the Lenders or the Agent shall have been obtained; (b) upon and following the occurrence of any Event of Default and foreclosure upon the Pledged Interests by the Lenders or the Agent, there will be either a private or public sale of the Pledged Interests; and (c) prior to the exercise of voting rights by the purchaser at any such sale, the prior consent of the FCC pursuant to 47 U.S.C. Section 310(d) will be obtained. The Borrowers agree to take any action which the Lenders or the Agent may reasonably request in order to obtain and enjoy the full rights and benefits granted to the Lender by this Agreement including specifically, at the Borrowers' own cost and expense, the use of the best efforts of the Borrowers to assist in obtaining approval of the FCC for any action or transaction contemplated by this Agreement or the Security Documents which is then required by law, and specifically, without limitation, upon request following the occurrence of an Event of Default, to prepare, sign and file (or cause to be prepared, signed or filed) with the FCC any portion of any application or applications for consent to the assignment of license or transfer of control required to be signed by the Borrowers and necessary or appropriate under the FCC's rules and regulations for approval of any sale or transfer of any of the capital stock or assets of the Borrowers or any transfer of control over any FCC license. SECTION 13.18. MAXIMUM ENFORCEABILITY. Notwithstanding any provision contained in this Agreement or any Security Document to the contrary, in the event of any bankruptcy or insolvency proceeding involving any Company or in the event of any challenge to the full enforceability of all or any of this Agreement or any Security Document by any creditor of any Company or a trustee, receiver or debtor-in-possession of; for or in respect to any Company, the liability of such Company hereunder, under the Notes, and pursuant to any related Security Documents shall be limited to the lesser of the following amounts MINUS, in either case, one dollar ($1.00): (i) the lowest amount which would render such entity's undertakings pursuant to this Agreement or any related security document a fraudulent conveyance under the laws of the State of Nevada or other similar or analogous law or statute of the state having jurisdiction over the subject matter; or - 77 - 85 (ii) the lowest amount which would render such entity's undertakings pursuant to this Agreement or any related Security Document a fraudulent transfer under Section 548 of the Bankruptcy Code of 1978, as amended. This provision shall control every other provision of this Agreement, the Notes or any related Security Document. SECTION 13.19. JOINT AND SEVERAL OBLIGATIONS; SURETYSHIP WAIVERS AND CONSENTS. (a) Each covenant, agreement, obligation, representation and warranty of the Borrowers contained herein constitutes the joint and several undertaking of each Borrower. (b) Each Borrower acknowledges that the obligations of such Borrower undertaken herein might be construed to consist, at least in part, of the guaranty of obligations of persons or entities other than such Borrower (including the other Borrowers party hereto) and, in full recognition of that fact, each Borrower consents and agrees that the Lenders and Agent may, at any time and from time to time, without notice or demand, whether before or after any actual or purported termination, repudiation or revocation of this Agreement by any one or more Borrowers, and without affecting the enforceability or continuing effectiveness hereof as to such Borrower: (i) with the consent of the other Borrowers, supplement, restate, modify, amend, increase, decrease, extend, renew or otherwise change the time for payment or the terms of this Agreement or any part thereof; including any increase or decrease of the rate(s) of interest thereon; (ii) supplement, restate, modify, amend, increase, decrease or waive, or enter into or give any agreement, approval or consent with respect to, this Agreement or any part thereof, or any of the Security Documents, or any condition, covenant, default, remedy, right, representation or term thereof or thereunder; (iii) accept partial payments; (iv) release, reconvey, terminate, waive, abandon, fail to perfect, subordinate, exchange, substitute, transfer or enforce any security or guarantees, and apply any security and direct the order or manner of sale thereof as the Agent and the Lenders in their sole and absolute discretion may determine; (v) release any person from any personal liability with respect to this Agreement or any part thereof; (vi) settle, release on terms satisfactory to the Lenders or by operation of applicable law or otherwise liquidate or enforce any security or guaranty in any manner, consent to the transfer of any security and bid and purchase at any sale; or (vii) consent to the merger, change or any other restructuring or termination of the corporate or partnership existence of any Borrower or any other person, and correspondingly restructure the obligations evidenced hereby, and any such merger, change, restructuring or termination shall not affect the liability of any Borrower or the continuing effectiveness hereof; or the enforceability hereof with respect to all or any part of the obligations evidenced hereby. (c) The Lenders and the Agent may enforce this Agreement independently as to each Borrower and independently of any other remedy or security the Lenders and the Agent at any time may have or hold in connection with the obligations evidenced hereby, and it shall not be necessary for the Lenders and the Agent to marshal assets in favor of any Borrower or any other person or to proceed upon or against or exhaust any security or remedy before proceeding to enforce this Agreement. Each Borrower expressly waives any right to require the Lenders and - 78 - 86 the Agent to marshal assets in favor of any Borrower or any other Person or to proceed against any other Borrower or any Collateral provided by any Person, and agrees that the Lenders and the Agent may proceed against Borrowers or any Collateral in such order as they shall determine in their sole and absolute discretion. (d) The Lenders' and the Agent's rights hereunder shall be reinstated and revived, and the enforceability of this Agreement shall continue, with respect to any amount at any time paid on account of the Borrowers' obligations to the Lenders which thereafter shall be required to be restored or returned by the Lenders, all as though such amount had not been paid. (e) To the maximum extent permitted by applicable law, each Borrower expressly waives any and all defenses now or hereafter arising or asserted by reason of (i) any disability or other defense of any other Borrower with respect to the obligations evidenced hereby, (ii) the unenforceability or invalidity of any security or guaranty for the obligations evidenced hereby or the lack of perfection or continuing perfection or failure of priority of any security for the obligations evidenced hereby, (iii) the cessation for any cause whatsoever of the liability of any other Borrower (other than by reason of the full payment and performance of all Obligations), (iv) any failure of the Agent and the Lenders to comply with applicable law in connection with the sale or other disposition of any Collateral or other security for any Obligation, (v) any act or omission of the Agent and the Lenders or others that directly or indirectly results in or aids the discharge or release of any Borrower or the Obligations evidenced hereby or any security or guaranty there for by operation of law or otherwise, (vi) the avoidance of any lien in favor of the Agent and the Lenders for any reason, or (vii) any action taken by the Agent the Lenders that is authorized by this Section or any other provision hereof or of any Security Document. Until such time, if any, as all of the Obligations have been paid and performed in full and no portion of any Commitment of any Lender to Borrowers under any agreement remains in effect, no Borrower shall have any right of subrogation, contribution, reimbursement or indemnity, and each Borrower expressly waives any right to enforce any remedy that the Agent and the Lenders now have or hereafter may have against any other Person and waives the benefit of; or any right to participate in, any Collateral now or hereafter held by Agent and the Lenders. SECTION 13.20. SEVERAL NATURE OF LENDERS' OBLIGATIONS. Notwithstanding anything in this Agreement or any other Loan Document to the contrary, all obligations of the Lenders hereunder shall be several, and not joint, in nature, and in the event any Lender fails to perform any of its obligations hereunder or thereunder, the Companies shall have no recourse against the Agent or any other Lender who has performed its obligations hereunder. SECTION 13.21. INTEGRATION. (a) This Agreement supersedes the Borrowers' application for the Loans, the Lenders' commitments and proposal letters in respect of the Loans, and all other prior written or oral agreements and representations between the parties hereto and their respective agents, employees or officers with respect to the credit facilities extended hereby, and this Agreement, - 79 - 87 together with the other Transaction Documents, constitutes the entire agreement of the parties hereto with respect to the subject matter hereof. (b) This Agreement constitutes an amendment and restatement of the Original Loan Agreements in their entirety and supersedes any inconsistent terms or provisions contained in the Original Loan Agreements. All Indebtedness of the Borrowers under the Original Loan Agreements shall hereafter constitute Indebtedness subject to this Agreement. SECTION 13.22 COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be an original and all of which, taken together, shall constitute one and the same Agreement. *THE NEXT PAGE IS THE SIGNATURE PAGE* - 80 - 88 IN WITNESS WHEREOF, the Agent, the Lenders and the Borrowers have caused this Agreement to be duly executed as a sealed instrument by their respective duly authorized officers, all as of the day and year first above written. SUNBELT COMMUNICATIONS COMPANY By: /s/ James E. Rogers -------------------------- Title: President VALLEY BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President YUMA BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President SIERRA BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President OREGON TRAIL BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President FALLS BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President - 81 - 89 TWO OCEAN BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President SIERRA RADIO COMPANY By: /s/ James E. Rogers -------------------------- Title: President RADIO NEWS COMPANY By: /s/ James E. Rogers -------------------------- Title: President RUBY MOUNTAIN BROADCASTING COMPANY By: /s/ James E. Rogers -------------------------- Title: President BEARTOOTH COMMUNICATIONS COMPANY By: /s/ James E. Rogers -------------------------- Title: President - 82 - 90 AGENT: AT&T COMMERCIAL FINANCE CORPORATION, as Agent By: /s/ Michael V. Monahan -------------------------- Title: Vice President LENDER: AT&T COMMERCIAL FINANCE CORPORATION By: /s/ Michael V. Monahan -------------------------- Title: Vice President Lending Office for all Loans: 44 Whippany Road Morristown, New Jersey 07962 Telecopier No.: 201-397-4196 Telephone No.: 201-397-3000 or 201-397-3482 Address for Notices: 44 Whippany Road Morristown, New Jersey 07962 Attention: Michael V. Monahan, Vice President With a copy to: AT&T Commercial Finance Corporation 44 Whippany Road Morristown, New Jersey 07962 Attention: Corporate Counsel - 83 - 91 And a copy to: Andrew J. Chlebus, Esq. Edwards & Angell 2700 Hospital Trust Tower Providence, Rhode Island 02903 Tranche A Commitment: $30,000,000 Tranche B Commitment: $30,000,000 - 84 - 92 INDEX OF SCHEDULES ------------------ Schedule 2.01A - $30,000,000 Amended and Restated E&A Secured Term Note of Borrowers Schedule 2.0IB - $30,000,000 Amended and Restated E&A Secured Promissory Note of Borrowers Schedule 2.06 - Use of Proceeds E&A Schedule 3.01 - Request for Advance Form E&A Schedule 4.04 - Governmental and Other Consents Borrowers Schedule 4.05 - Pending Litigation Borrowers Schedule 4.06 - Compliance with Laws and Agreements Borrowers Schedule 4.07 - Liens Borrowers Schedule 4.11 - Tax Returns and Taxes Borrowers Schedule 4.12 - Pension Plans, Etc. Borrowers Schedule 4.13 - Licenses Borrowers Schedule 4.14 - Material Agreements Borrowers Schedule 4.15 - Ownership of Borrowers Borrowers Schedule 4.19 - Environmental Matters Borrowers Schedule 4.20 - Studio and Tower Sites; Other Real Estate Borrowers Owned Schedule 6.05 - Periodic Reporting Certificate E&A Schedule 6.15 - Recommended Corrective Action Lender Schedule 7.01 - Indebtedness (to include all mortgage Borrowers indebtedness, automobile loans and other Indebtedness) Schedule 7.02 - Liens (to include all mortgage indebtedness, Borrowers automobile loans and other Indebtedness) Schedule 12.01 - Assignment and Acceptance E&A 93 SCHEDULE 2.01A --------------- AMENDED AND RESTATED SECURED TERM NOTE -------------------------------------- $30,000,000.00 May 18, 1998 FOR VALUE RECEIVED, the undersigned, SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation, VALLEY BROADCASTING COMPANY, a Nevada corporation, YUMA BROADCASTING COMPANY, a Nevada corporation, SIERRA BROADCASTING COMPANY, a Nevada corporation, OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation, FALLS BROADCASTING COMPANY, a Nevada corporation, TWO OCEAN BROADCASTING COMPANY, a Nevada corporation, SIERRA RADIO COMPANY, a Nevada corporation, RADIO NEWS COMPANY, a Nevada corporation, RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation, and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation (collectively, the "MAKERS"), do hereby jointly and severally promise to pay to the order of AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, with its principal place of business at 44 whippany Road, Morristown, New Jersey 07962 (the "LENDER"), the principal sum of Thirty Million Dollars ($30,000,000.00) (the "PRINCIPAL") in ninety-five (95) consecutive monthly installments of principal on the first day of each consecutive month ("MONTHLY DUE DATES") commencing July 1, 1998, in the following amounts:
MONTHLY DUE DATES DURING THE PERIOD AMOUNT OF MONTHLY PRINCIPAL PAYMENT - ----------------------------------- ----------------------------------- July 1, 1998 through June 1, 1999 $230,000.00 July 1, 1999 through June 1, 2000 $250,000.00 July 1, 2000 through June 1, 2001 $271,000.00 July 1, 2001 through June 1, 2002 $295,000.00 July 1, 2002 through June 1, 2003 $320,000.00 July 1, 2003 through June 1, 2004 $347,000.00 July 1, 2004 through June 1, 2005 $377,000.00 July 1, 2005 through May 1, 2006 $409,000.00
plus a final installment of all remaining Principal then outstanding being due and payable on June 1, 2006. The Makers hereby jointly and severally promise, to the extent permitted by law, to pay to the holder hereof on each Monthly Due Date commencing July 1, 1998, and upon payment in full hereof, interest on the outstanding unpaid balance of Principal from time to time from the date of advance until payment in full at a rate per annum equal to two and one-half percentage points (2.50%) above the thirty (30) day "commercial paper" rate published from time to time by the Eastern Edition of THE WALL STREET JOURNAL (identified in THE WALL STREET JOURNAL as the interest rate for high-grade unsecured notes sold through dealers by major corporations), or such other rate designated by the Lender in substitution therefor pursuant to the Loan Agreement (as hereinafter defined) (the "COMMERCIAL PAPER RATE"), with each change in such rate to become effective on the first (1st) day of each month based upon the first such Commercial Paper Rate published for such month by THE WALL STREET JOURNAL. Interest on the Principal shall be calculated on the basis of a three hundred sixty-five (365) day year counting the actual number of days elapsed. The interest rate charged hereunder is further subject to increase, to the extent permitted by applicable law, from time to time in accordance with Section 9.02 of the Loan Agreement (as hereinafter defined). Any payment of principal or interest not paid within ten (10) days of the 94 date the same is due and payable shall, to the extent permitted by applicable law, be subject to a late and handling charge of five percent (5%) of the overdue payment; PROVIDED, HOWEVER, that the Lender's acceptance of payment of such charge shall not be construed or be deemed to constitute a waiver of any such default or any "Event of Default" (as defined in the Loan Agreement). All Principal and interest hereunder are payable in lawful money of the United States of America to the Agent (as hereinafter defined), as Agent for the Lender, in accordance with the terms of the Loan Agreement. The Makers of this Note, for themselves and their respective legal representatives, successors and assigns, hereby expressly waive presentment, protest, notice of protest, presentment for the purpose of accelerating maturity, and diligence in collection, and consent that the Lender may release or surrender, exchange or substitute any personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note, and may extend the time for payment. This Note (a) is one of the "Tranche A Notes" referred to in the Amended and Restated Loan Agreement of even date herewith, among the Makers, the Lender and certain other financial institutions who may become "Lenders" thereunder, and AT&T Commercial Finance Corporation, as Agent for such Lenders (the "AGENT"), as the same may be amended, extended or restated from time to time (the "LOAN AGREEMENT"), (b) is being issued to amend and restate certain indebtedness outstanding on the date hereof as set forth in the Loan Agreement, and (c) is entitled to the benefits thereof, and the Loan Agreement and all other instruments evidencing and/or securing the indebtedness hereunder are hereby made part of this Note and are deemed incorporated herein in full. This Note is secured by and entitled to the benefits of certain "Security Documents" (as defined in the Loan Agreement). The occurrence or existence of an "Event of Default" as defined in the Loan Agreement or in any other agreement or instrument securing and/or evidencing this indebtedness shall constitute a default under this Note and shall entitle the Lender to accelerate the entire indebtedness hereunder and take such other action as may be provided for in the said agreements. This Note may be prepaid in accordance with the terms and provisions set forth in the Loan Agreement and reference is made thereto for rights and restrictions as to the prepayment hereof, including, without limitation, prepayment penalties pursuant to Section 2.03 thereof. All agreements between the Makers, or any of them, and the Lender are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Lender for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any circumstance the Lender should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. As used herein, the term "applicable law" shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This provision shall control every other provision of all agreements between the Makers and the Lender. 2 95 THIS NOTE AND ALL TRANSACTIONS HEREUNDER AND/OR EVIDENCED HEREIN SHALL BE GOVERNED BY, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SAID STATE. If this Note shall not be paid when due and shall be placed by the holder hereof in the hands of any attorney for collection, through legal proceedings or otherwise, the Makers hereby agree jointly and severally to pay a reasonable attorney's fee to the holder hereof together with reasonable costs and expenses of collection. IN WITNESS WHEREOF, the Makers have caused this Note to be executed by their respective duly authorized officers as of the date first above written. Witness: SUNBELT COMMUNICATIONS COMPANY ___________________________ By:________________________ Title: President Witness: VALLEY BROADCASTING COMPANY ___________________________ By:________________________ Title: President Witness: YUMA BROADCASTING COMPANY ____________________________ By:_________________________ Title: President Witness: SIERRA BROADCASTING COMPANY ____________________________ By:_________________________ Title: President Witness: OREGON TRAIL BROADCASTING COMPANY ___________________________ By:________________________ Title: President 3 96 Witness: FALLS BROADCASTING COMPANY ___________________________ By:__________________________ Title: President Witness: TWO OCEAN BROADCASTING COMPANY ____________________________ By:__________________________ Title: President Witness: SIERRA RADIO COMPANY ___________________________ By:__________________________ Title: President Witness: RADIO NEWS COMPANY ___________________________ By:__________________________ Title: President Witness: RUBY MOUNTAIN BROADCASTING COMPANY _____________________________ By:__________________________ Title: President Witness: BEARTOOTH COMMUNICATION COMPANY ___________________________ By:__________________________ Title: President 4 97 SCHEDULE 2.01B -------------- AMENDED AND RESTATED SECURED PROMISSORY NOTE -------------------------------------------- $30,000,000.00 May 18, 1998 FOR VALUE RECEIVED, the undersigned, SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation, VALLEY BROADCASTING COMPANY, a Nevada corporation, YUMA BROADCASTING COMPANY, a Nevada corporation, SIERRA BROADCASTING COMPANY, a Nevada corporation, OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation, FALLS BROADCASTING COMPANY, a Nevada corporation, TWO OCEAN BROADCASTING COMPANY, a Nevada corporation, SIERRA RADIO COMPANY, a Nevada corporation, RADIO NEWS COMPANY, a Nevada corporation, RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation, and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation (collectively, the "MAKERS"), do hereby jointly and severally promise to pay to the order of AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, with its principal place of business at 44 Whippany Road, Morristown, New Jersey 07962 (the "LENDER"), the principal sum of up to Thirty Million Dollars ($30,000,000.00), or, if less, the aggregate principal amount of all Advances made to the Makers pursuant to Section 2.02 of the Loan Agreement (as hereinafter defined) (the "PRINCIPAL") in one hundred nineteen (119) consecutive monthly installments of principal on the first day of each consecutive month ("MONTHLY DUE DATES") commencing July 1, 1998, in the following amounts: MONTHLY DUE DATES DURING THE PERIOD AMOUNT OF MONTHLY PRINCIPAL PAYMENT - ----------------------------------- ----------------------------------- July 1, 1998 through June 1, 1999 $ 17,000.00 July 1, 1999 through June 1, 2000 $ 18,000.00 July 1, 2000 through June 1, 2001 $ 20,000.00 July 1, 2001 through June 1, 2002 $ 22,000.00 July 1, 2002 through June 1, 2003 $ 24,000.00 July 1, 2003 through June 1, 2004 $ 26,050.00 July 1, 2004 through June 1, 2005 $ 28,000.00 July 1, 2005 through June 1, 2006 $ 31,000.00 July 1, 2006 through June 1, 2007 $344,000.00 July 1, 2007 through May 1, 2008 $375,000.00 plus a final installment of all remaining Principal then outstanding being due and payable on June 1, 2008. The Makers hereby jointly and severally promise, to the extent permitted by law, to pay to the holder hereof on each Monthly Due Date commencing July 1, 1998, and upon payment in full hereof, interest on the outstanding unpaid balance of Principal from time to time from the date of advance until payment in full at a rate per annum equal to two and one-half percentage points (2.50%) above the thirty (30) day "commercial paper" rate published from time to time by the Eastern Edition of THE WALL STREET JOURNAL (identified in THE WALL STREET JOURNAL as the interest rate for high-grade unsecured notes sold through dealers by major corporations), or such other rate designated by the Lender in substitution therefor pursuant to the Loan Agreement (as hereinafter defined) (the "COMMERCIAL PAPER RATE"), with each change in such rate to become effective on the first (1st) day of each month based upon the first such Commercial Paper Rate published for such month by THE WALL STREET JOURNAL. Interest on the Principal shall be calculated on the basis of a three hundred sixty-five (365) day year counting the actual number of days elapsed. 98 The interest rate charged hereunder is further subject to increase, to the extent permitted by applicable law, from time to time in accordance with Section 9.02 of the Loan Agreement (as hereinafter defined). Any payment of principal or interest not paid within ten (10) days of the date the same is due and payable shall, to the extent permitted by applicable law, be subject to a late and handling charge of five percent (5%) of the overdue payment; PROVIDED, HOWEVER, that the Lender's acceptance of payment of such charge shall not be construed or be deemed to constitute a waiver of any such default or any "Event of Default" (as defined in the Loan Agreement). All Principal and interest hereunder are payable in lawful money of the United States of America to the Agent (as hereinafter defined), as Agent for the Lender, in accordance with the terms of the Loan Agreement. The Makers of this Note, for themselves and their respective legal representatives, successors and assigns, hereby expressly waive presentment, protest, notice of protest, presentment for the purpose of accelerating maturity, and diligence in collection, and consent that the Lender may release or surrender, exchange or substitute any personal property or other collateral security now held or which may hereafter be held as security for the payment of this Note, and may extend the time for payment. This Note (a) is one of the "Tranche B Notes" referred to in the Amended and Restated Loan Agreement of even date herewith among the Makers, the Lender and certain other financial institutions who may become "Lenders" thereunder, and AT&T Commercial Finance Corporation, as Agent for the Lenders (the "AGENT"), as the same may be amended, extended or restated from time to time (the "LOAN AGREEMENT"), (b) is being issued to amend and restate certain indebtedness outstanding on the date hereof as set forth in the Loan Agreement, and (c) is entitled to the benefits thereof, and the Loan Agreement and all other instruments evidencing and/or securing the indebtedness hereunder are hereby made part of this Note and are deemed incorporated herein in full. This Note is secured by and entitled to the benefits of certain "Security Documents" (as defined in the Loan Agreement). The occurrence or existence of an "Event of Default" as defined in the Loan Agreement or in any other agreement or instrument securing and/or evidencing this indebtedness shall constitute a default under this Note and shall entitle the Lender to accelerate the entire indebtedness hereunder and take such other action as may be provided for in the said agreements. This Note may be prepaid in accordance with the terms and provisions set forth in the Loan Agreement and reference is made thereto for rights and restrictions as to the prepayment hereof, including, without limitation, prepayment penalties pursuant to Section 2.03 thereof. All agreements between the Makers, or any of them, and the Lender are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of acceleration of maturity of the indebtedness evidenced hereby or otherwise, shall the amount paid or agreed to be paid to the Lender for the use, forbearance or detention of the indebtedness evidenced hereby exceed the maximum permissible under applicable law. If, from any circumstances whatsoever, fulfillment of any provision hereof or of the Loan Agreement, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, IPSO FACTO, the obligation to be fulfilled shall be reduced to the limit of such validity, and if from any circumstance the Lender should ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied to the reduction of the principal balance evidenced hereby and not to the payment of interest. As used herein, the term "applicable law" shall mean the law in effect as of the date hereof, provided, however, that in the event there is a change in the law which results in a higher permissible rate of interest, then this Note shall be governed by such new law as of its effective date. This 2 99 provision shall control every other provision of all agreements between the Makers and the Lender. THIS NOTE AND ALL TRANSACTIONS HEREUNDER AND/OR EVIDENCED HEREIN SHALL BE GOVERNED BY, CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SAID STATE. If this Note shall not be paid when due and shall be placed by the holder hereof in the hands of any attorney for collection, through legal proceedings or otherwise, the Makers hereby agree jointly and severally to pay a reasonable attorney's fee to the holder hereof together with reasonable costs and expenses of collection. IN WITNESS WHEREOF, the Makers have caused this Note to be executed by their respective duly authorized officers as of the date first above written. Witness: SUNBELT COMMUNICATIONS COMPANY ___________________________ By:_________________________ Title: President Witness: VALLEY BROADCASTING COMPANY ____________________________ By:_________________________ Title: President Witness: YUMA BROADCASTING COMPANY ____________________________ By:_________________________ Title: President Witness: SIERRA BROADCASTING COMPANY ___________________________ By:_________________________ Title: President Witness: OREGON TRAIL BROADCASTING COMPANY ___________________________ By:_________________________ Title: President 3 100 Witness: FALLS BROADCASTING COMPANY ____________________________ By:__________________________ Title: President Witness: TWO OCEAN BROADCASTING COMPANY ____________________________ By:__________________________ Title: President Witness: SIERRA RADIO COMPANY _____________________________ By:__________________________ Title: President Witness: RADIO NEWS COMPANY ___________________________ By:__________________________ Title: President Witness: RUBY MOUNTAIN BROADCASTING COMPANY ___________________________ By:__________________________ Title: President Witness: BEARTOOTH COMMUNICATIONS COMPANY ____________________________ By:__________________________ Title: President 4 101 SCHEDULE 2.06 TO AMENDED AND RESTATED LOAN AGREEMENT ---------------------------------------------------- USE OF PROCEEDS --------------- The proceeds of the Tranche B Loans shall be used solely for the following purposes, subject, in each case, to the prior approval of the proposed use of the loan proceeds by the holder(s) of the Tranche B Note(s): 1. to fund the payment of an existing assessed Federal Income Tax deficiency which will be the subject of the Tax Litigation; 2. to pay the purchase price of one or more radio or television broadcast properties to be acquired by Sunbelt, any of the Borrowers or any other wholly-owned subsidiary of Sunbelt who becomes a Co-Borrower of such Acquisition Loan; 3. to fund capital expenditures associated with conversion to digital television broadcasting; 4. to fund working capital needs of Sunbelt and any of its wholly-owned subsidiaries; and 5. to fund other usual and customary corporate purposes of Sunbelt and its wholly-owned subsidiaries. 102 AUTHORIZATION AND REQUEST FOR ADVANCE ------------------------------------- May , 1998 AT&T Commercial Finance Corporation, as Agent 44 Whippany Road Morristown, New Jersey 07962 Gentlemen: Pursuant to the provisions of Article III of that certain Amended and Restated Loan Agreement dated May 18, 1998, between the undersigned, as borrowers, certain "Lenders" described therein, and you, as Agent for the Lenders (the "Agreement"), the undersigned, as borrowers, hereby request an advance of $ to be made on May , 1998, which Advance shall be evidenced by the undersigned's $30,000,000.00 Amended and Restated Secured Promissory Note dated May 18, 1998. The undersigned hereby represent and warrant to you that no event has occurred and is continuing, or would result from the proposed Advance, which constitutes an "Event of Default" or "Unmatured Event of Default", as those terms are defined in the Agreement. The proceeds of the requested Advance are to be used for the purposes set forth on the attached exhibit. You are hereby authorized and directed to remit the proceeds of the Advance in accordance with the following instructions: 1. By issuing your check in the amount of $14,197,799.00 made payable to "Internal Revenue Service" (in payment of the assessed Federal income tax deficiency of Sunbelt Communications Company), and by sending said check via Overnight Courier Service to [ ] for delivery to the Internal Revenue Service on or before May 25, 1998. 2. To: The officer signing below hereby individually represents that he is an authorized officer of the Borrowers named below and is authorized to request the Advance on behalf of the undersigned Borrowers. Very truly yours, SUNBELT COMMUNICATIONS COMPANY By:___________________________ Title: 103 SIERJJA BROADCASTING COMPANY By:__________________________ Title: YUMA BROADCASTING COMPANY By:__________________________ Title: VALLEY BROADCASTING COMPANY By:__________________________ Title: TWO OCEAN BROADCASTING COMPANY By:___________________________ Title: OREGON TRAIL BROADCASTING COMPANY By:__________________________ Title: FALLS BROADCASTING COMPANY By:___________________________ Title: SIERRA RADIO COMPANY By:__________________________ Title: RADIO NEWS COMPANY By:__________________________ Title: -2- 104 RUBY MOUNTAIN BROADCASTING COMPANY By:___________________________ Title: BEARTOOTH COMMUNICATIONS COMPANY By:__________________________ Title: -3- 105 SCHEDULE 4.04 ------------- GOVERNMENTAL AND OTHER CONSENTS ------------------------------- No consents are necessary in connection with or as a condition to the execution, delivery or performance of any of the Transaction Documents. However, copies of the loan agreements and any documents executed pursuant thereto must be filed with the FCC witliin thirty days of closing. 106 SCHEDULE 4.05 ------------- PENDING LITIGATION ------------------ 1. FCC INQUIRY OF KVBC ADVERTISING By letter dated June 6, 1991, the FCC issued a Notice of Inquiry as to an allegation that station KVBC aired announcements promoting lottery activities. Specifically, it is alleged that in each of the five promotions broadcast by KVBC, while non-purchasing entrants were allowed to participate, the persons playing various casino games at the host establishment were able to obtain sufficient bonus entries to put them on "an unequal footing with non-purchasing participants." By letter dated July 9, 1991, KVBC responded to the inquiry of the FCC, denying that any of the promotions were unsuitable for broadcast in violation of 18 U.S.C. Section 1304 or Section 73.1211 of the FCC Rules. By letter dated July 29, 1992, and officially released August 5, 1992, the FCC did issue a Notice of Apparent Liability (Hereinafter referred to as the NAL) against KVBC for a forfeiture in the amount of $12,500, pursuant to Section 503(b) of the Communications Act of 1934, as amended, for willful and repeated violation of the antilottery broadcast provisions of the United States Code, 18 U.S.C. Section 1304, and Section 73.1211. Regarding the forfeiture proceeding, KVBC was afforded an opportunity to "show, in writing, why a forfeiture penalty should not be imposed or should be reduced, or to pay the forfeiture." By letter dated September 9, 1992, KVBC did in fact respond to the FCC's Complaints and Investigations Branch objecting to the forfeiture assessed in the NAL issued against KVBC and asking that it be found not warranted and thus rescinded or reduced. To date, no response has been received from the FCC in response to KVBC's appeal. 2. SEXTON V. SUNBELT BROADCASTING CO. DBA KVBC-TV3; Charge of Sex Discrimination; NERC #0427-950210L and EEOC #34B95065 1; Charging Party: Lisa Sexton On May 1, 1995, the Equal Rights Commission formally notified Sunbelt Broadcasting Company that a charge of sex discrimination was filed against the Company by Lisa Sexton, a former employee of KVBC. Ms. Sexton alleges that she feels she was discriminated against because of her sex and was subjected to harassment, disparate treatment and suspension which forced her to resign her position as Technical Director at KVBC. Pursuant to her charge, Ms. Sexton requests a remedy of back pay from the date of the alleged forced termination to the date of settlement/judgment and removal of adverse information from her personnel file. 107 Schedule 4.05 Pending Litigation Page 2 - -------------------- On May 25, 1995, KVBC provided a position statement to the NERC and requested that Ms. Sexton's charges by disrnissed as she was not subjected to any form of discriminatory conduct while employed by the Company. On June 5, 1995, the parties participated in an informal settlement conference. However, no agreement was reached and the EEOC requested additional information to enable it to further investigate the matter. The Company has complied with this request. On February 9, 1998, the NERC contacted the Company to request a phone conference be scheduled to provide comparative salary information about a male co- worker who was hired as a Technical Director and paid more than Ms. Sexton in the same position. On February 11, 1998, when the Company attempted to schedule the requested telephone conference with the NERC, the NERC informed the Company that they had since been in contact with a witness who brought forth a claim that gender bias statements were made repeatedly by one of the named parties in the charge. Therefore, as a result of this alleged evidence, the NERC advised the Company that they plan to further investigate this charge by interviewing witnesses and would request additional information in writing. On March 13, 1997, the NERC requested written responses regarding whether any formal or informal gender harassment complaints were filed against the individuals named in the charge, management harassment training and comparative salary information. The Company provided the requested information to the NERC on April 24, 1998, to assist them in their continued investigation of this charge. The Company does not believe that any claim or assessment will result from this charge. 3. WALLING v. VALLEY BROADCASTING COMPANY, JAMES E. ROGERS, MARK GURANIK, et al.; Case No. A362608 On August 6, 1996, Sheila Walling filed a Complaint in the District Court for the State of Nevada alleging damages due to a Sunbelt Broadcasting Company employee's negligent operation of a company vehicle. Plaintiff seeks damages in the amount of $10,000. By letter dated August 15, 1996, the Company tendered defense of this suit to Fireman's Fund Insurance Company. Fireman's Fund accepted tender and secured legal representation to answer the Complaint. On September 9, 1996, an Amended Complaint was filed reflecting the change in Defendants from Sunbelt Broadcasting Company to Valley Broadcasting Company. An Answer to the Amended Complaint was filed on October 14, 1996. 108 Schedule 4.05 Pending Litigation Page 3 Discovery has been completed in this case and the parties have agreed to submit the case to binding arbitration. An arbitration hearing is scheduled for May 13, 1998. 4. BAILEY v. BEARTOOTH COMMUNICATIONS COMPANY, SUNBELT COMMUNICATIONS COMPANY, et al.; Case No. CDV-9800021 On January 15, 1998, Pam Bailey, a former employee of Beartooth Communications Company ("Beartooth") filed a Complaint against Beartooth, Sunbelt Communications Company ("Sunbelt"), and William Stebbins in the Montana First Judicial District Court alleging that she was wrongly terminated from her employment with Beartooth. An Answer on behalf of Beartooth, Sunbelt and William Stebbins was filed on March 11, 1998, with the Montana First Judicial District Court. 109 SCHEDULE 4.06 ------------- COMPLIANCE WITH LAWS AND AGREEMENTS ----------------------------------- No Borrower is party to any agreement or instrument or subject to any corporate or other restriction which materially and adversely affects its business, operations, properties, assets or condition, financial or otherwise. 110 SCHEDULE 4.07 ------------- LIENS ----- All Liens listed on Schedule 7.02 hereto. 111 SCHEDULE 4.11 TO LOAN AGREEMENT ------------------------------- TAX RETURNS AND TAXES --------------------- Each Borrower has filed all federal, state and local tax returns required to be filed, and has paid or made adequate provision for the payment of all material federal, state, and local taxes, franchise fees, charges and assessments. The federal income tax returns of the Borrowers have been examined by the Internal Revenue Service for all tax periods prior to and including the tax year ending December 31, 1994. The Company received notice from the Internal Revenue Service (IRS) that the service is assessing taxes, penalties and interest totaling approximately $13,700,000. This amount is related to the settlement of a debt dispute which the IRS asserts affects the 1994 tax year. The Company intends to pay the balance assessed by the IRS and sue for a refund in District Court. The Company believes that it has meritorious grounds for refund claims. SCHEDULE 4.12 TO LOAN AGREEMENT Pension Plans. Etc. 112 SCHEDULE 4.12 TO LOAN AGREEMENT ------------------------------- PENSION PLAN, ETC. ------------------ Sunbelt Communications Company maintains a 401k Retirement Plan which is available to any employee of any of the subsidiary companies who is over the age of twenty-one (21) and has been with the company for over one year. The Plan is managed by Prudential Securities and allows employees who choose to enroll to defer, tax free, sums of up to 15% of their gross income. Those monies are delivered by Sunbelt to Prudential Securities for depositing into the employees' accounts. Sunbelt and its subsidiary companies (collectively "the Corporations") do not have a commitment to match or contribute to the employees' fund. However, the Corporation have made voluntary contributions to the Plan since 1994. On April 1, 1998, Sunbelt Communications Company added a Section 125 Premium Only Plan (P.O.P.) which is available to any employee of any of the subsidiary companies that work over 30 hours per week and have been with the company for 90 days from their month of hire. The Plan is managed by Benefit America and allows employees to pay insurance premiums on a pre-tax basis. The monies are delivered by Sunbelt to Colonial Life & Accident Insurance Company. 113
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- VALLEY BROADCASTING COMPANY KVBC - LAS VEGAS, NV - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KVBC Black Mountain, Henderson 60.00-66.00 MHz Main/Alternate Transmitter 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A WAN-579 Las Vegas Studio 6975-7000 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A WLF-289 Blk. Mtn. Transmitter Site 6900-6925 MHz Transmitter-Studio Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 4 A KB-96756 Various Remote Locations 1990-2500 MHz Remote (ENG) Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 5 A KB-96742 Various (As Needed) 13075-13200 MHz Remote Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 6 A KGA-566 Auxiliary Radio 153.17 MHz Operational Communications WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 7 Bus KB-27842 Two-Way Voice Communication 151.805 MHz Portables (Handheld) 3/24/03 - ----------------------------------------------------------------------------------------------------------------------------------- 8 A BLP00787 ENG Vehicle 26.1 MHz Talent Cueing WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 9 PFM WPJB744 Fitzgerald Hotel 21975.0000 MHz Intracity Relay 12/14/00 - ----------------------------------------------------------------------------------------------------------------------------------- 10 PFM WPJC517 KVBC Studio 23175.0000 MHz Intracity Relay 01/11/01 - ----------------------------------------------------------------------------------------------------------------------------------- 11 A WGV-754 Mount Ella near Caliente 7075-7100 MHz Intercity Translator Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 12 A WGV-755 Highland Peak near Pioche 6900-6925 MHz Intercity Translator Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 13 A WGV-756 Cave Mountain near Ely 7100-7125 MHz Intercity Translator Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 14 A WGV-757 Prospect Peak near Eureka 7000-7025 MHz Intercity Translator relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 15 T K58BC Squaw Peak near Ely 734-740 MHz Ely-Mc Gill Translator 10/1/98 - ----------------------------------------------------------------------------------------------------------------------------------- 16 T K57BU Prospect Peak near Eureka 728-734 MHz Eureka Translator 10/l/98 - ----------------------------------------------------------------------------------------------------------------------------------- 17 T K06KD Austin Summit near Austin 82-88 MHz Austin Translator 10/l/98 - ----------------------------------------------------------------------------------------------------------------------------------- 18 T K40CQ Spirit Mountain near Laughlin 626-632 MHz Laughlin/Bullhead Translator 10/1/98 - ----------------------------------------------------------------------------------------------------------------------------------- 19 S E873698 Various Locations (SNG) 14000-14500 MHz Satellite Feeds As Required 09/18/07 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
114
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- SIERRA BROADCASTING COMPANY KRNV - RENO, NV - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KRNV Red Peak 66.00-72.00 MHz Main Transmitter 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A KFO24 Slide Mountain 6900-6925 MHz ENG Intercity (Relay) WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A KPV58 Studio 6950-6975 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 4 A WMU394* Slide Mountain 7075-7100 MHz Intercity Relay(Ch 56 Tahoe City) WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 5 A WMU395 Studio 6875-6900 MHz Intercity Relay (Ch,56 Tahoe City) WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 6 A WMU396* Slide Mountain 7075-7100 MHz Intercity Relay (Ward Peak) WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 7 A KF8027 TV Pickup 6875-6900 MHz Remote Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 8 A KB97294 TVPickup 1990-2110 MHz Remote Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 9 N/A E880662 Studio TVRO C /Ku Band Satellite Feeds As Required DELETED - ----------------------------------------------------------------------------------------------------------------------------------- 10 T K13QV Fallon 210-216 MHz Fallon Translator 10/l/98 - ----------------------------------------------------------------------------------------------------------------------------------- Tahoe Mountain/South Lake 11 T K33CN Tahoe/Meyers (California) 584-590+ MHz Tahoe Translator 12/l/98 - ----------------------------------------------------------------------------------------------------------------------------------- 12 T K50CM Slide Mountain 686-692+ MHz Tahoe west shore 10/1/98 - ----------------------------------------------------------------------------------------------------------------------------------- 13 T K52DN Duckhill 698-704+ MHz Carson City Translator 10/1/98 - ----------------------------------------------------------------------------------------------------------------------------------- 14 LPTV K56BW Tahoe City (California) 722-728 MHz Tahoe City Translator 12/1/98 - ----------------------------------------------------------------------------------------------------------------------------------- 15 A KOP355 Auxiliary Radio (2 way) 161.70/161.73 MHz Remote Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 16 A KOP356 Auxiliary Radio (2 way) 161.70/161.73 MHz Communications DELETED - ----------------------------------------------------------------------------------------------------------------------------------- 17 S E900116 Various Locations (SNG) 14000-1450O MHz Satellite Feeds As Required 04/06/00 - ----------------------------------------------------------------------------------------------------------------------------------- *Each license is for the same transmitter that feeds two antennas - -----------------------------------------------------------------------------------------------------------------------------------
115
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- YUMA BROADCASTING COMPANY KYMA - YUMA, AZ - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KYMA Black Mountain, California 198-204 MHz Main Transmitter 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A WL1423 Yuma Studio 6875-6900 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A WMU568 KYMA Transmitter Site, Blk.Mtn.,CA 6975-7000 MHz Transmitter-Studio Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 4 PFM WNET589 Yuma Studio 956.0 MHz Studio-Transmitter Data Link 12/24/07 - ----------------------------------------------------------------------------------------------------------------------------------- 5 PFM WPND938 KYMA Transmitter Site, Blk. Mtn., CA 959.6 MHz Transmitter-Studio Data Link 11/7/02 - ----------------------------------------------------------------------------------------------------------------------------------- 6 A KC26103 Various Locations (Dual Band) 1990/2110 MHz Remote (ENG) Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 2450/2467 MHz - ----------------------------------------------------------------------------------------------------------------------------------- 7 PFM WNTA202 Yuma Studio 23025 MHz TV Relay(Studio-Cable) 11/17/99 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
116
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- OREGON TRAIL BROADCASTING COMPANY KPVI - POCATELLO, ID - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KPVI 82-88 MHz Main Transmitter 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A WAB321 Pocatello Studio 2008-2025 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A WAB322 Pocatello Transmitter 6975-7000 MHz Transmitter-Studio Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 4 PFM WPNA841 Pocatello Studio 21825- MHz KJWY Microwave Carrier Feed 07/30/01 - ----------------------------------------------------------------------------------------------------------------------------------- 5 A KA45335 Pocatello Area Pocatello ENG 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 6 Bus KNFK230 Pocatello, ID 461.46 MHz Communications 11/04197 - ----------------------------------------------------------------------------------------------------------------------------------- 7 T K13VK Arco, ID 210-216 MHz Arco Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 8 T K09VD Ashton, ID 186-192 MHz Ashton Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 9 T K13VI Blackfoot, ID 210-216 MHz Blackfoot Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 10 T K040H Willow Creek, ID 66-72 MHz Intercity Relay (KO7VI) 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 11 T K07VI Challis, ID 174-180 MHz Challis Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 12 T K09UZ Freds Mountain, WY 186-192 MHz Driggs Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 13 T K120E Firth, ID 204-210 MHz Firth Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 14 T K12NZ Idaho Falls, ID 204-210 MHz Idaho Falls Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 15 T K120A Pocatello, ID 204-210 MHz Pocatello Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 16 T K120B St. Anthony, ID 204-210 MHz St. Anthony Translator 10/01198 - ----------------------------------------------------------------------------------------------------------------------------------- 17 T K13UF Rexburg, ID 210-216 MHz Rexburg Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 18 T K13VJ Shelley, ID 210-216 MHz Shelley Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
117
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- FALLS BROADCASTING COMPANY KXTF - TWIN FALLS, ID - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KXTF Flat Top Butte, Jerome, ID 596-602 MHz Main Transmitter 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A WMU823 Flat Top Butte, Jerome, ID 596-602 MHz Intercity Relay (Sun Valley) WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A WLP366 Twin Falls, ID 682-688 MHz Intercity Relay (KKVI) DELETED - ----------------------------------------------------------------------------------------------------------------------------------- 4 A WPJA615 Flat Top Butte, Jerome, ID 12800-12825 MHz Transmitter-Studio Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 5 A WPJA616 Twin Falls, ID 12850-12875 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 6 T KO2NO Rupert, ID 56-61 MHz Rupert Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 7 T KO4NO Paul, ID 66-72 MHz Paul Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 8 T KO5IX Twin Falls, ID 76-82 MHz Twin Falls Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 9 T KO7UL Burley, ID 174-180 MHz Burley Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 10 T KO8VK Jerome, ID 180-186 MHz Jerome Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 11 T K63BX Declo, ID 764-780 MHz Burley Area Translator 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
118
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- TWO OCEAN BROADCASTING COMPANY KJWY - JACKSON, WY - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KJWY Jackson, WY 54-60 MHz Main Transmitter 10/01/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 PFM WPNE392 Jackson Studio 21825-21850 MHz Studio Transmitter Link 04/22/02 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
119
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- RUBY MOUNTAIN BROADCASTING COMPANY KENV-ELKO,NV - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KENV Grindstone Mountain 192.0-198.0 MHz Main Transmitter 10/1/06 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A WPNG807 Elko Studio 12.700-12.725GHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A WPNG806 Elko Transmitter 13.075-13.100GHz Transmitter-Studio Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 4 A WMV408 Warm Springs, NV 6950-0-6975.0MHz TV Intercity Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 5 A WMW736 Winnemucca, NV 6950.0-6975.0MHz TV Intercity Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 6 A WMW737 Marys Mtn., NV 6875.0-6900.0MHz TV Intercity Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 7 A WPJ699 Toulon Peak, NV 7025.0-7050.0MHz TV Intercity Relay WMSL - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
120
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- SIERRA RADIO COMPANY KRNV-FM - RENO, NV - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KRNV-FM Red Peak (Class C3) 101.7 MHz Main Transmitter 10/l/05 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A WLJ464 1790 Vassar Street 949.0 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A WLF995 1500 East Prater Way (Sparks) 948.5 MHz ????????????? WMSL - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
121
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- BEARTOOTH COMMUNICATIONS COMPANY KTVH - HELENA, MT - ----------------------------------------------------------------------------------------------------------------------------------- 1 M KTVH Hogback Ridge 204.0-210.0 MHz Main Transmitter 4/l/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 A KPF67 Helena Studio 7025-7050 MHz Studio-Transmitter Link WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 3 A KB-96034 Various Remotes TV Remote Pickup WMSL - ----------------------------------------------------------------------------------------------------------------------------------- 461.500MHz & 4 Bus WPCS400 Studio & Transmitter Sites 466.500MHz Communications 7/19/98 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
122
- ----------------------------------------------------------------------------------------------------------------------------------- FCC LICENSE LIST - ----------------------------------------------------------------------------------------------------------------------------------- TYPE CALL TRANSMITTER LOCATION FREQUENCY USE EXPIRATION - ----------------------------------------------------------------------------------------------------------------------------------- DATE - ----------------------------------------------------------------------------------------------------------------------------------- SUNBELT COMMUNICATIONS COMPANY - ----------------------------------------------------------------------------------------------------------------------------------- Winnemucca, NV; CP issued 6/26/95; 1 M KWNV Ext. Granted 3/13/98 174.0-180.0MHz Main Transmitter CP Ext. 9/13/98 - ----------------------------------------------------------------------------------------------------------------------------------- 2 M KBOA Lewistown, MT Main Transmitter 12/12/99 - ----------------------------------------------------------------------------------------------------------------------------------- 3 M KBBJ Havre, MT Main Transmitter 12/8/99 - ----------------------------------------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------------------------------------
123 Schedule 4.14 Material Agreement Borrower: Valley Broadcasting Company Programming Agreements: - ---------------------- Distribution/Title BUENA VISTA/REGIS 97-98 BUENA VISTA/REGIS 98-99 KINGWORLD/AM JRNL 97/96 KINGWORLD/AM JRNL 98/99 KINGWORLD/HLYWDSQ98/99 KINGWORLD/HLYWDSQ99/00 KINGWORLD/HLYWDSQ00/01 KINGWORLD/JEOP,97-98 MF KINGWORLD/JEOP,97-98 WE KINGWORLD/JEOP,98-99 MF KINGWORLD/JEOP,98-99 WE KINGWORLD/JEOP,99-00 MF KINGWORLD/JEOP,99-00 WE KINGWORLD/JEOP,00-01 MF KINGWORLD/JEOP,00-01 WE KINGWORLD/JEOP,01-02 MF KINGWORLD/JEOP,01-02 WE KINGWORLD/Mr Food 97-98 KINGWORLD/Mr Food 98-99 KINGWORLD/Mr Food 99-00 KINGWORLD/Mr Food 00-01 KINGWORLD/Mr Food 01-02 KINGWRLD, Wheel 97-98 MF KINGWRLD, Wheel 97-98 WE KINGWRLD, Wheel 98-99 MF KINGWRLD, Wheel 98-99 WE KINGWRLD, Wheel 99-00 KINGWRLD, Wheel 00-01 KINGWRLD, Wheel 01-02 NEWS SVC/NEWS TRAVEL PARAMOUNT, MONTEL 97/98 PARAMOUNT, MONTEL 98/99 PARAMOUNT, MONTEL 99/00 PARAMOUNT, REAL TV 97/98 PARAMOUNT, REAL TV 98/99 PARAMOUNT, REAL TV 99/00 Leases: - ------ Antenna Lease Telecom Towers 9/3096 7/31/01 Antenna Site Agreement/Spirit Nextel Communicatio 11/1/95 10/31/98 Other Agreements: - ---------------- Affiliation Agreement, as evidenced by letter of October 2, 1995, by and between NBC AND KVBC. 8-1-95 to 7-31-04 MSNBC Interactive News Provider Agreements, as evidenced by letter dated July 12, 1996 by and among MSNBC, NBC and KVBC ASCAP annual music license agreement BMI annual music license agreement SESAC annual music license agreement Blair National Sales Rep 1-1-94 to 12-31-98 Various BLM/STATE OF NEVADA land leases as follows: Highland Mt. Ella Austin Summit Prospect Peak Cave Mountain State Of Nevada/Baby Your Baby 7-1-97 to 6-30-99 124 VALLEY BROADCASTING COMPANY EMPLOYEE AGREEMENTS
NAME - ------------------------------------------------------------------------ 1 Boesing Rachel - ----- ------------ ----------------------------------------------------- 2 Cheese Rikki - ----- ------------ ----------------------------------------------------- 3 Escalante Stacey - ----- ------------ ----------------------------------------------------- 4 Fredericks John - ----- ------------ ----------------------------------------------------- 5 Fuentes Rick - ----- ------------ ----------------------------------------------------- 6 Garcia Laura - ----- ------------ ----------------------------------------------------- 7 Hawley Thomas - ----- ------------ ----------------------------------------------------- 8 Haws Scott - ----- ------------ ----------------------------------------------------- 9 Holland Madeleine - ----- ------------ ----------------------------------------------------- 10 Kiem Lisa - ----- ------------ ----------------------------------------------------- 11 Kotnick Joyce - ----- ------------ ----------------------------------------------------- 12 Lippai Brain - ----- ------------ ----------------------------------------------------- 13 Manteris Sue - ----- ------------ ----------------------------------------------------- 14 Mattox Scott - ----- ------------ ----------------------------------------------------- 15 Overall John - ----- ------------ ----------------------------------------------------- 16 Pierce Katherine - ----- ------------ ----------------------------------------------------- 17 Pierce Jennifer - ----- ------------ ----------------------------------------------------- 18 Pritchard Kathryn - ----- ------------ ----------------------------------------------------- 19 Radetich Nina - ----- ------------ ----------------------------------------------------- 20 Rahn Debbie - ----- ------------ ----------------------------------------------------- 21 Rosch Denise - ----- ------------ ----------------------------------------------------- 22 Smith Andrew - ----- ------------ ----------------------------------------------------- 23 Spears Darcy - ----- ------------ ----------------------------------------------------- 24 Stanton Brenda - ----- ------------ ----------------------------------------------------- 25 Tannebaum Nathan - ----- ------------ ----------------------------------------------------- 26 Tenney Kendall - ----- ------------ ----------------------------------------------------- 27 Wilson Dan - ----- ------------ -----------------------------------------------------
125 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: YUMA BROADCASTING COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- AGDAY NETWORK AGDAY 97-98 KING WORLD JEOPARDY 97-99 ALL AMERICAN TELEVISION BAYWATCH KING WORLD MR. FOOD BEAU & ARROW PRODUCTIONS KWIK WITZ 97-98 KING WORLD OPRAH WINFREY 97-00 CA FARM BUREAU VOICE OF AGRICULTURE KING WORLD WHEEL OF FORTUNE 97-99 CALIFORNIA LOTTERY BIG SPIN MTM THE CAPE CNN CNN NEWS SATELLITE SVC PARAMOUNT REAL TV 97-98 COLUMBIA RICKI LAKE 97-98 PARAMOUNT WILD THINGS 97-98 DORIS WINDKLER SENIOR REPORT RYSHER COMEDY SHOWCASE 97-98 EYEMARK GEORGE MICHAEL SPORTS MACHINE RYSHER F/X 97-98 IVANHOE BROADCAST PRESCRIPTION HEALTH STEVE ROTFIELD PRODUCTIONS LIGHTER SIDE OF SPORTS 1996 KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN TWI (FORMERLY KNOWN AS GGP) TV.COM KING WORLD GERALDO 97-98 US CHAMBER OF COMMERCE FIRST BUSINESS 97-96 KING WORLD INSIDE EDITION 97-99 EMPLOYEE AGREEMENTS: NAME NAME ---- ---- ALBERTS, STEVE HOWELL, JAMES ALCARAZ, ADRIANNA MARRIES, DAN BRANDT, JENNIFER POTTER, SEAN ELLIOT, DANIELLE STONE, SHANNON HIRSHEK, STEPHEN TUNNEL, KEVIN LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- RIGHT OF WAY GRANT (TRANSMITTER SITE) BUREAU OF LAND MGMT 12/26/97 2017 EL CENTRO STUDIO LEASE PACIFIC VIEW COMPANY 10/14/03 AUTO RENEWAL FIRE BARN LEASE (Garage for Microwave Truck) CITY OF IMPERIAL 12/6/93 11/14/96
OTHER AGREEMENTS: ---------------- 1 Affiliation agreement, as evidenced by letter of October 2, 1995, by and between NBC and KYMA 2 MSNBC interactive News Provider Agreement, dated September 27, 1996, by and among MSNBC, NBC, and Yuma Broadcasting Company 3 BMI license agreement 4 ASCAP Local Television Blanket License 5 SESAC Broadcast Performance License for TV Station 126 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: SIERRA BROADCASTING COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- ABOUT THE HOUSE YOUR NEW HOUSE MTM DR. QUINN, MEDICINE WOMAN 97-98 OF ENTERTAINMENT AMERICAN ATHLETE PARAMOUNT THIS MORNINGS BUSINESS ECLIPSE TV AMERICA'S PASSION PARAMOUNT WILD THINGS EYEMARK PENSACOLA WINGS OF GOLD PARAMOUNT ENTERTAINMENT TONIGHT 97-96 EYEMARK PSI FACTOR PARAMOUNT HARDCOPY 97-99 HEARST ENTERTAINMENT SUCCESS BY SIX PARAMOUNT MAURY POVICH HEARST ENTERTAINMENT B SMITH WITH STYLE PARAMOUNT MONTEL WILLIAMS KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN PHOENIX SPORTS NEWS SATELLITE KING WORLD AMERICAN JOURNAL 97-98 TWENTIETH TELEVISION NYPD BLUE KING WORLD MR. FOOD 1998 TWENTIETH TELEVISION NFL FILMS PRESENTS KING WORLD INSIDE EDITION VOL III 97-98 TWENTIETH TELEVISION NFL SPECIALS EMPLOYEE AGREEMENTS: NAME NAME ---- ---- BHAKTA, KAUSIK HOPKINS, JOHN BROWN, BILL JESCHKE, GREGG BROWN, DAWN KILLORAN, JON CALABRESE, TISHA MAHAN, KEVIN CAMPBELL, VICTORIA MOEN, TRICIA COLE, DAWN MOUSEL, LISE DOUMITE, KERRY PAGAYUNAN, EMUTO FINLEY, DAVE SHEEHAN, SHELBY FROMME, JOHN SHELTON, WILLIAM GILBERT, BRANDON THOMPSON, NICOLE GRIFFITHS, TIERRA VICKREY, D. NEAL HART, JOE WOFFARD, CHRISTINE HOPKINS, JOHN LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- SPECIAL USE PERMIT (Tahoe Mountain Antenna Site) UNITED STATES FOREST SERVICE 01/12/97 NONE GIVEN SPECIAL USE PERMIT (Side Mountain Antenna Site) UNITED STATES FOREST SERVICE 09/25/62 NONE GIVEN RIGHT-OF-WAY GRANT (Red Peak Transmitter Site) BUREAU OF LAND MGMT 08/30/61 08/29/2011 TRANSLATOR K568W (Tahoe City, CA) GAVILAN COMMUNICATIONS 07/16/91 07/16/2001
OTHER AGREEMENTS: ---------------- 1 Affiliation agreement, as evidenced by letter of October 2, 1995, by and between NBC and KRNV 2 AP Membership Agreement with the Associated Press, as amended May 5, 1997. 3 BMI license agreement 4 ASCAP Local Television Blanket License 5 SESAC Broadcast Performance License for TV Station 127 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: OREGON TRAIL BROADCASTING COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- ABOUT THE HOUSE YOUR NEW HOUSE KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN BRIARGATE MEDIA MASQUERADE KINGWORLD INSIDE EDITION 97-96 BUENA VISTA BUENA VISTA I FEATURES KINGWORLD JEOPARDY 97-99 BUENA VISTA DISNEY MAGIC II KINGWORLD WHEEL OF FORTUNE 97-99 BUENA VISTA LIVE WITH REGIS & KATHIE LEE 97-96 KINGWORLD MR. FOOD 97-99 BUENA VISTA HONEY I SHRUNK THE KIDS (SERIES) MULLER MEDIA PRIME TARGETS II BUENA VISTA SISKEL & EBERT PARAMOUNT PORTFOLIO XIII BUENA VISTA DISNEY IMAGINATION III PARAMOUNT MONTEL WILLIAMS 97-98 COLUMBIA TRI-STAR DATING GAME 97-98 QUALITRON MEDIA AGDAY 97-98 COLUMBIA TRI-STAR NEWLYWED GAME 97-98 RYSHER SOLDIER OF FORTUNE COLUMBIA TRI-STAR RIKKI LAKE TWENTIETH TV CENTURY 16 EYEMARK PENSACOLA WINGS OF GOLD WALL STREET TV GROUP WALL STREET JOURNAL REPORT IVANHOE BROADCAST TODAY'S BREAKTHROUGHS WORLDVISION ENTERTAINMENT AMERICA'S DUMBEST CRIMINALS IVANHOE BROADCAST PRESCRIPTION: HEALTH EMPLOYEE AGREEMENTS: NAME NAME ---- ---- ALEXANDER, JAMES MEYERS, JERRY RUSSELL AUSTIN, LESLIE PALMER, TODD BEAUDOIN, SCOTT PARKER, JENNIFER CAMP, KRISTEN PETCASH, DOUGLAS CARPONELLI, LISA REICHELT, DAVE COARI, KEVIN REYNOLDS, JAY COHEN, REED ROSENBERG, JO DIXON, DUFFIE SCHROEDER, TROY ELLIS COLLARD, TONIA SMITH, JEFFREY FRANK, KEITH STEVENS, SCOTT HEBERTSON, TREVOR THOMAS, AMY HUTCHINS, AARON VADNAIS, ATHENA McATEER, SEAN WICKERSHAM, CAREY McDOUGALL, ED YOUNG, JOHN LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- IDAHO FALLS PROFESSIONAL BLDG WASHINGTON FEDERAL S&L 02/04/86 2/28/89 MO-TO-MO TRANSMITTER BLDG & TOWER LEASE E. POCATELLO STAKE OF THE LDS CHURCH 03/05/73 03/31/98 CENTER STREET STUDIO LEASE ALBERT & RUTH MINTON 03/01/78 02/28/03 RIGHT-OF-WAY GRANT (Flat Top Butte) BUREAU OF LAND MGMT 06/04/84 01/01/16 RIGHT-OF-WAY GRANT (Willow Creek Summit) BUREAU OF LAND MGMT 10/06/92 10/08/72 TRANSLATOR K13VK ROLLAND D. JONES 03/28/89 03/28/98 TRANSLATOR K09VD GREENLINE EO. COMPANY 07/06/90 NONE GIVEN TRANSLATOR K13VI REEVE NORMAN 05/10/88 05/09/98 TRANSLATOR K07VI ROBERT MAYFIELD 09/01/89 08/31/99 TRANSLATOR K120E GLENN CEDERBERG 06/28/88 06/27/98 TRANSLATOR K120A W.H. EHRSTROM 02/01/91 02/01/01 TRANSLATOR K120B FREMONT 6D #125 06/10/88 06/08/98 TRANSLATOR K13VJ KENT CARLSON 06/13/88 06/12/98 TRANSLATOR K12NZ DAVE KINGSTON 11/03/92 NONE GIVEN TRANSLATOR K13UF SPENSER LARSEN 01/02/90 01/01/00 TRANSLATOR K09UZ GRAND TARGHEE FOREST SVC
OTHER AGREEMENTS: ---------------- 1 Affiliation agreement, as evidenced by letter of January 22, 1996, by and between NBC and KPVI 2 BMI license agreement 3 ASCAP Local Television Blanket License 4 SESAC Broadcast Performance License for TV Station 128 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: FALLS BROADCASTING COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- ACI FILM LEADER 5 97-98 PARAMOUNT NICK NEWS 96-98 BAER MEDIA RACELINE 97-98 PARAMOUNT PARAMOUNT HOLIDAY SPECIALS BUENA VISTA BLOSSOM 96-99 PARAMOUNT PARAMOUNT PLUS II 96-98 BUENA VISTA BOY MEETS WORLD 97-2000 PARAMOUNT PARAMOUNT PLUS III 96-98 BUENA VISTA BV I (Features) 91-2004 PARAMOUNT FAMILY FESTIVAL V 98-99 CARSEY WERNER GRACE UNDER FIRE 97-2002 PARAMOUNT PORTFOLIO XV 96-99 CARSEY WERNER THIRD ROCK FROM THE SUN 99-2002 PARAMOUNT REAL TV 97-98 COLUMBIA DATING GAME PARAMOUNT THIS MORNINGS BUSINESS 97-98 COLUMBIA MAD ABOUT YOU 96-2000 PARAMOUNT VIPER 97-98 COLUMBIA MARRIED W/CHILDREN 91-98 SAB DOMESTIC SERVICES MARVEL SUPER HEROES 97-98 COLUMBIA MARRIED W/CHILDREN 98-99 SABAN DOMESTIC SERVICES THE ALL NEW CAPTAIN KANGAROO 97-98 COLUMBIA NEWLYWED GAME TIMBERWOLF PRODUCTIONS OUTDOORSMAN 97-98 COLUMBIA RICKI LAKE 97-99 TURNER PICTURES TURNER LEGENDS IV 97-98 COLUMBIA TRISTAR VIBE 97-98 TWENTIETH TELEVISION NFL FILM PRESENTS 97-98 COLUMBIA TRISTAR WALKER TEXAS RANGER 97-98 TWENTIETH TELEVISION NFL SPECIALS 96-98 EYEMARK PENSACOLA-WINGS OF GOLD TWENTIETH TV MASH 96-98 ITC DISTRIBUTION ITC NETWORK VII 98-99 TWENTIETH TV SIMPSONS 96-2001 KINGWORLD GERALDO 97-98 TWENTIETH TV COPS 98-99 MAXAM PSI FACTOR TWENTIETH TV CENTURY 17 96-2000 MGM OUTER LIMITS 97-99 TWENTIETH TV MYPD BLUE MTM DR. QUINN, MEDICINE WOMAN 96-98 TWENTIETH TV X-FILES 97-99 PARAMOUNT STAR TREK 96-99 WARNER BROS LEGENDS IV 97-98 PARAMOUNT HARD COPY 97-98 EMPLOYEE AGREEMENTS: NAME NAME ---- ---- NONE LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- LEASE AGREEMENT FOR OFFICE SPACE (STUDIO) GUDREN, L.L.C. 01/10/96 01/31/2000 TRANSMITTER W/TOWER & ANTENNA SITE LICENSE RADIO SERVICE CO. 08/17/88 08/31/93 TRANSLATOR K07UL ROBERT LARSEN 05/23/88 05/22/98 TRANSLATOR K63BX LEASE GEORGE KELLEY 02/21/96 12/31/2000 TRANSLATOR K08KV THOMAS NEWMAN 05/25/88 05/25/98 TRANSLATOR K04NO RALPH W. SCHNEIDER 05/10/88 05/09/98 TRANSLATOR K02NO WAYNE SUNDERLAND 11/23/96 11/22/98 TRANSLATOR K05IX FRANK MCMULLIN 10/05/88 10/04/98
OTHER AGREEMENTS ---------------- 1 FOX Affiliation Agreement 2 BMI license agreement 3 ASCAP Local Television Blanket License 4 SESAC Broadcast Performance License for TV Station 129 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: TWO OCEAN BROADCASTING COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- NONE EMPLOYEE AGREEMENTS: NAME NAME ---- ---- NONE LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- SNOW KING MOUNTAIN TOWER LEASE CRECELIUS-LUNDQUIST COMMUNICATIONS 11/03/88 11/02/93 STUDIO LEASE HORN INVESTMENT COMPANY 12/19/95 12/31/97
OTHER AGREEMENTS: ---------------- 1 Affiliation Agreement, as evidenced by letter of January 22, 1996, by and between NBC and KM (Now KWY) 2 BMI Escro agreement 3 SESAC Broadcast Performance License for TV Station 130 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: RADIO NEWS COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- SKY VIEW TRAFFIC TRAFFIC REPORTS UNITED STATIONS TALK RADIO NETWORK AUDIO HELPER Programming Agreement, effective December 15, 1994, by and between Compass Communications Company and Radio News Company EMPLOYEE AGREEMENTS: NAME NAME ---- ---- FRISCH, PAT RANGE, JULIE LORENZON, J.R. VILLANUCCI, JIM MALONE, KEVIN LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- NONE
OTHER AGREEMENTS: ---------------- 1 Representation Agreement by and between Radio Sales Company (now Radio News Company) and Compass Communications Company 2 Agreement between Vanik's Voice Works for voice services 3 Agreement dated July 1, 1995 with Associated Press for news services OTHER AGREEMENTS: ---------------- 1 FOX Affiliation Agreement 2 BMI license agreement 3 ASCAP Local Television Blanket License 4 SESAC Broadcast Performance License for TV Station 131 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: SIERRA RADIO COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- ASSOCIATED PRESS AP All News Radio Agreement J & K, INC. JOHN & KEN SHOW CNN UNISTAR RADIO NETSTAR SUSAN POWTER SHOW EMPLOYEE AGREEMENTS: NAME NAME ---- ---- NONE LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- TRANSMITTER & ANTENNA (Duck Hill) HIGH SIERRA COMMUNICATIONS
OTHER AGREEMENTS: ---------------- 1 Engineering Services Agreement with XMT Services 132 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: BEARTOOTH COMMUNICATIONS COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- ACI FILMLEADER 5 PARAMOUNT STAR TREK: DEEP SPACE NINE 97-98 ALL AMERICAN TELEVISION BAYWATCH PARAMOUNT STAR TREK: VOYAGER 97-98 BUENA VISTA LIVE WITH REGIS & KATHIE LEE PARAMOUNT WILD THINGS 97-98 BUENA VISTA KEENAN IVORY WAYANS SHOW 97-98 PARAMOUNT FAMILY FESTIVAL V COLUMBIA TRI-STAR WALKER, TEXAS RANGER 97-99 PARAMOUNT FAMILY FESTIVAL 2 COLUMBIA TRI-STAR DATING GAME PARAMOUNT PARAMOUNT PLUS II COLUMBIA TRI-STAR NEWLYWED GAME PARAMOUNT PARAMOUNT PORTFOLIO EYEMARK BOB VILLA'S HOME AGAIN 97-99 PARAMOUNT PARAMOUNT PORTFOLIO XV EYEMARK GEORGE MICHAEL SPORTS MACHINE STEVE ROTFIELD PRODUCTIONS LIGHTER SIDE OF SPORTS KELLEY BROADCASTING "WHERE NEWS COMES FIRST" SLOGAN TWENTIETH TELEVISION NFL FILMS PRESENTS MCA HERCULES/XENA 97-98 TWENTIETH TELEVISION NFL SPECIALS MULLER MEDIA PRIME TARGETS 97-98 TWENTIETH TV STUDENT BODIES 97-98 NATIONAL WEATHER NETWORK STUDI ENIGMA THEATER TWENTIETH TV X-FILES 97-99 NEW LINE BIG TICKET MOVIE PACKAGE TWENTIETH TV CENTURY 16 NEW WORLD ACCESS HOLLYWOOD 96-98 TWENTIETH TV CENTURY 17 PARAMOUNT ENTERTAINMENT TONIGHT WARNER BROTHERS DOMESTIC EXTRA: WEEKEND 97-98 PARAMOUNT MONTEL WILLIAMS WORLD VISION PICTIONARY 97-98 PARAMOUNT NICK NEWS 97-98 WORLDVISION JUDGE JUDY 97-98 EMPLOYEE AGREEMENTS: NAME NAME ---- ---- PEAK, CHRISTINA McDONOUGH, JULIANNE GARDNER, ERIC McGONIGAL, TIM HEIDENREICH, ARIK LAMB, JULIE LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- BROADCAST FACILITY AGREEMENT CARROLL COLLEGE 09/23/97 09/22/2047 SPECIAL USE PERMIT FOR US FOREST SVC-HELENA COMMUNICATIONS (Pending) RANGER DISTRICT PENDING SUBLEASE AGREEMENT (with Rural Fire Council) BIG SKY BROADCASTING 01/18/95 12/31/99 SUBLEASE AGREEMENT (with Dept. of Transportation) BIG SKY BROADCASTING 01/18/95 12/31/99 SUBLEASE AGREEMENT (with Last Change Public Radio Assoc.) BIG SKY BROADCASTING 11/14/94 ORALLY RENEWED AGREEMENT FOR USE OF SPACE (with Dept. of Military Affairs) BIG SKY BROADCASTING 08/18/88 INDEFINITE TERM
OTHER AGREEMENTS: ---------------- 1 NBC Affiliation Agreement entered into by NBC and Beartooth Communications on September 17, 1997 2 Nielsen Agreement 3 Associated Press Membership Agreement 4 BMI license agreement 5 ASCAP Local Television Blanket License 6 SESAC Agreement 133 EXHIBIT B - --------- REVISED SCHEDULE 4.14 TO LOAN AND CREDIT AGREEMENT Material Agreements BORROWER: BEARTOOTH COMMUNICATIONS COMPANY PROGRAMMING AGREEMENTS:
DISTRIBUTOR TITLE DISTRIBUTOR TITLE ----------- ----- ----------- ----- NONE EMPLOYEE AGREEMENTS: NAME NAME ---- ---- NONE LEASES: NAME LESSOR/GRANTOR DATE EXPIRATION ---- -------------- ---- ---------- STUDIO LEASE GREAT BASIN COLLEGE 07/27/96 07/27/2046 TOWER SITE LEASE ELKO TV DISTRICT 02/20/97 02/19/2007
OTHER AGREEMENTS: ---------------- 1 NBC Affiliation Agreement entered into by NBC and Ruby Mountain Broadcasting on October 2, 1995 2 Associated Press Membership Agreement, as amended May 5, 1997 3 BMI License agreement 4 ASCAP Local Television Blanket License dated April 15, 1997 134 SCHEDULE 4.15 ------------- OWNERSHIP OF BORROWERS ---------------------- SUNBELT COMMUNICATIONS COMPANY Parent Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 25,000 1967.50 1782.50 21,250.00 ==============================================================
Stock Ownership -
============================================================== Shareholder No of Shares Percentage ============================================================== James E. Rogers 1,750.00 88.94 Rolla Cleaver 56.25 2.86 Gene Greenberg 37.50 1.91 James E. Rogers 39.75 2.02 (Trustee for the Children of Elizabeth Ruybalid) Cheryl Purdue 34.00 1.73 Beverly Rogers 50.00 2.54 (Trustee) ==============================================================
Remainder of This Page Intentionally Left Blank -9- 135 Schedule 4.15 Ownership of Borrowers Page 2 - -------------------------- VALLEY BROADCASTING COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 50,000 3.750 3343.75 42,906.25 ==============================================================
Stock Ownership -
============================================================== Shareholder No of Shares Percentage ============================================================== Sunbelt Communications 3,750 100.00% Company ==============================================================
YUMA BROADCASTING COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 1,000 -0- 1,500 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 1,000 100.00% Company ==============================================================
136 Schedule 4.15 Ownership of Borrowers Page 3 - ----------------------- SIERRA BROADCASTING COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 200,000 25,000 25,000 150,000 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 25,000 100.00% Company ==============================================================
OREGON TRAIL BROADCASTING COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 100 -0- 2,400 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 100 100.00% Company ==============================================================
137 Schedule 4.15 Ownership of Borrowers Page 4 - ------------------------- FALLS BROADCASTING COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 100 -0- 2,400 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 100 100.00% Company ==============================================================
TWO OCEAN BROADCASTING COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 100 -0- 2,400 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 100 100.00% Company ==============================================================
138 Schedule 4.15 Ownership of Borrowers Page 5 - ---------------------------- SIERRA RADIO COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 100 -0- 2,400 ==============================================================
Stock Ownership -
============================================================== Shareholder. No. of Shares Percentage ============================================================== Sunbelt Communications 100 100.00% Company ==============================================================
RADIO NEWS COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 100 -0- 2,400 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 100 100.00% Company ==============================================================
139 Schedule 4.15 Ownership of Borrowers Page 6 - -------------------------- RUBY MOUNTAIN BROADCASTING COMPANY Subsidiary Capital Stock:
Number of Shares - ============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 2,500 100 -0- 2,400 ==============================================================
Stock Ownership -
============================================================== Shareholder No. of Shares Percentage ============================================================== Sunbelt Communications 100 100.00% Company ==============================================================
Remainder of This Page Intentionally Left Blank 140 Schedule 4.15 Ownership of Borrowers Page 7 - ------------------------ BEARTOOTH COMMUNICATIONS COMPANY Subsidiary Capital Stock: Number of Shares -
============================================================== Authorized Issued and Treasury Unissued Outstanding ============================================================== 25,000 1,000 -0- 24,000 ==============================================================
Stock Ownership -
============================================================== Shareholder No of Shares Percentage ============================================================== Sunbelt Communications 800** 80.00% Company J.W. Radeck 100** 10.00% William Sanders 100** 10.00% ==============================================================
**700 of those shares owned by Sunbelt (as evidenced by Stock Certificate No.2), and all of those shares owned by Mrs. Radeck and Mr. Sanders (as evidenced by Stock Certificate No(s). 3 and 4 respectively) are subject to certain rights and/or restrictions as more particularly described in the Stock Contribution, Put and Redemption Agreement by and between Beartooth, Sunbelt, Mrs. Radeck and Mr. Sanders dated as of May 5, 1997; a true and correct copy of which has previously been delivered to AT&T. 141 SCHEDULE 4.19 ------------- Environmental Matters NONE 142 SCHEDULE 4.20 ------------- Studio and Tower Sites, Other Real Estate Owned ----------------------------------------------- VALLEY BROADCASTING COMPANY Studio: ------- a. Record Owner: Valley Broadcasting Company b. Street Address: 1500 Foremaster Lane Lasvegas,NV 89101 Transmitter/Antenna: - -------------------- a. Record Owner; Fidelity Properties b. Date of Lease 1: July 20, 1988 c. Expiration Date: July 19, 1997 d. Date of Lease 2: September 27, 1996; Commencing July 20, 1997 e. Expiration Date: July 31, 2001 f. Renewal Options: None g. Legal Description: Black Mountain Section 25, Township 22 South, Range 62 East, MDM Henderson, Nevada YUMA BROADCASTING COMPANY Studio: ------- a. Record Owner: Yuma Broadcasting Company b. Street Address: 1385 S. Pacific Avenue Yuma,AZ 85365 Transmitter/Antenna: - -------------------- a. Record Owner: Bureau of Land Management b. Date of Grant: December 28, 1987 c. Expiration Date: December 27, 2017 d. Renewal Options: May be renewed at expiration e. Legal Description: Black Mountain, California 40 Kilometers Northwest of Yuma, Arizona Sections 11 and 12, Township 13 South, Range 30 East, SBM Imperial County, California 143 Loan Agreement - Schedule 4.20 Page 2 - -------------------------------- SIERRA BROADCASTING COMPANY Studio: ------- a. Record Owner: Sierra Broadcasting Company b. Street Address: 1790 Vassar Street Reno, NV 89502 Transmitter/Antenna: - -------------------- a. Record Owner: Bureau of Land Management b. Date of Grant: August 30, 1961 c. Expiration Date: August 20, 2011 d. Renewal Options: None e. Legal Description: Red Peak 4.1 miles North of Reno Post Office Reno, Nevada OREGON TRAIL BROADCASTING COMPANY Pocatello Studio: ----------------- a. Record Owner: Oregon Trail Broadcasting Company b. Street Address: 902 East Sherman Pocatello, ID 83201 Idaho Falls Satellite Studio: - ----------------------------- a. Record Owner: Washington Federal Savings and Loan b. Date of Lease: February 4, 1986 c. Expiration Date: Month-to-Month d. Street Address: 482 Constitution Way Idaho Falls, ID 83402 Transmitter/Antenna: - -------------------- a. Record Owner: East Pocatello Stake of the Church of Jesus Christ of Latter-Day Saints b. Date of Lease: March 6, 1973 c. Expiration Date: March 31, 1998 d. Renewal Options: None e. Legal Description: Approximately 5 miles Northeast of center of Pocatello, Idaho Southeast 1/4 of Southwest 1/4 of Southeast 1/2 of Section 3, Township 6 South, Range 35 East, BM Bannock County, Idaho 144 Loan Agreement - Schedule 4.20 Page 3 - -------------------------------- FALLS BROADCASTING COMPANY Studio: ------- a. Record Owner: Gudrun L.L.C. b. Date of Lease: January 10, 1996 c. Expiration Date: January 31, 2000 d. Renewal Options: May be renewed with consent 120 days prior to expiration e. Street Address: 1061 Blue Lakes Blvd. N. Twin Falls,ID 83301 Transmitter/Antenna: - -------------------- a. Record Owner: Bureau of Land Management BLM Use Permit No. IO-4600 to Radio Service Company b. Date of Lease: August 17, 1988 c. Expiration Date: August 16, 1998 d. Renewal Options: None e. Legal Description: Flat Top Butte 8.4 Kilometers East of Jerome, Idaho Latitude 40deg 42'42" North, Longitude 114 deg 24'43" West TWO OCEAN BROADCASTING COMPANY Studio: ------- a. Record Owner: Horn Investment Co. b. Date of Lease: December 19, 1995 c. Expiration Date: December 31, 1997 d. Renewal Options: Option to renew through December, 1999 e. Street Address: 970 West Broadway Suite 204 Jackson, WY 83001 Transmitter/Antenna: - -------------------- a. Record Owner: Crecelius-Lundquist Communications b. Date of Lease: November 3, 1988 c. Expiration Date: November 2, 1993 d. Renewal Options: Lease continues until cancelled upon notice of 1 year e. Legal Description: Snow King Mountain 2.1 Kilometers Southeast of Jackson, Wyoming 145 Loan Agreement - Schedule 4.20 Page 4 - -------------------------------- SIERRA RADIO COMPANY Studio: ------- a. Record Owner: Sierra Broadcasting Company b. Street Address: 1790 Vassar Street Reno,NV 89502 Transmitter/Antenna: - -------------------- a. Record Owner: High Sierra Communications b. Date of Lease: Unknown c. Expiration Date: Unknown d. Renewal Options: Unknown e. Legal Description: Red Peak 4.1 miles North of Reno Post Office Reno, Nevada BEARTOOTH COMMUNICATIONS COMPANY Studio: ------- a. Record Owner: Beartooth Communications Company b. Street Address: 2433 North Montana Avenue Helena, Montana 59604 Transmitter/Antenna: - -------------------- a. Record Owner: USDA Forest Service b. Dateofleease: 02/11/94 c. Expiration Date: 12/31/03 (Application for New Permit is Pending) d. Renewal Options: Unknown at this Time e. Legal Description: National Forest System land identified as a portion of the Hogback Mountain Communications Site, within Section 3, T. 12N., R. 1 W., PMM. REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK 146 Loan Agreement - Schedule 4.20 Page 5 - -------------------------------- RUBY MOUNTAIN BROADCASTING COMPANY Studio; ------- a. Record Owner: Great Basin College b. Date of Lease: July 27, 1996 c. Expiration Date: July 27, 2046 d. Renewal Options: Option to renew once for period of 25 years e. Street Address: 1025 Chiton Circle Elko, Nevada 89801 Transmitter/Antenna: a. Record Owner: Elko Television Translator District b. Date of Lease: February 20, 1997 c. Expiration Date: February 19, 2007 d. Renewal Options: Options to renew for 4 successive 10 year periods e. Legal Description: Grindstone Mountain Elko County, NV 147 Loan Agreement- Schedule 4.20 Page -6- - -------------------------------- VALLEY BROADCASTING COMPANY Condo: - ------ a. Record Owner: Valley Broadcasting Company b. Address: 521 South Maryland Parkway - Unit# A-5 Las Vegas, NV 89101 Condo: - ------ a. Record Owner: Valley Broadcasting Company b. Address: Lot# 38 of Tanglewood Vistas 2121 White Tail Way Flagstaff, AZ 86004 Condo: - ------ a. Record Owner: James E. Rogers and Beverly Rogers, Husband and Wife as joint tenants (1) b. Address: 3118 South Kennewick Drive - Unit# 3 Las Vegas, NV 89121 (1) In process of being quitclaimed to Valley Broadcasting Company 148 Loan Agreement- Schedule 4.20 Page -7- - -------------------------------- OREGON TRAIL BROADCASTING COMPANY Estate - 4.31 acres known as T.R. NE4NE4 Tax 207 Parcel 2 and structures: - ------------------------------------------------------------------------- a. Record Owner: Oregon Trail Broadcasting Company b. Address: 5688 Bannock Highway Pocatello, ID 83204 Bank Parking Lot: - ----------------- a. Record Owner: Sunbelt Broadcasting Company b. Address: Lots 6,7,8,9, & 10 Block 324 Pocatello Townsite Bannock County, Pocatello, ID 83204 149 Loan Agreement- Schedule 4.20 Page -8- - -------------------------------- RADIO NEWS COMPANY Transmitter Site: - ----------------- a. Record Owner: Radio News Company b. Address description: Kyle Canyon Road Site, identified as Government Lot 27 in the northeast quarter of the northwest quarter of Section 3, Township 19 south, Range 59 east, M.D.B. & M., excepting therefrom the north thirty feet and the south 30 feet as conveyed to the County of Clark for road purposes, by Grant, Bargain, Sale Deed recorded April 14, 1992 in Book 920414 as Document No. 00684, in the County of Clark, State of Nevada 150 Loan Agreement- Schedule 4.20 Page -9- - ------------------------------ SIERRA BROADCASTING COMPANY House and Property: - ------------------- a. Record Owner: Valley Broadcasting Company b. Address: 6220 Fieldstone Reno, NV 89523 151 Loan Agreement- Schedule 4.20 Page -10- - -------------------------------- BEARTOOTH COMMUNICATIONS COMPANY House - ----- a. Record Owner: James E. Rogers and Beverly Rogers, husband and wife as joint tenants (1) b. Address: 62 Park Drive Clancy, MT 59634 (1) In process of being quitolaimed to Valley Broadcasting Company 152 SCHEDULE 6.05 ------------- PERIODIC REPORTING-CERTIFICATE ------------------------------ ,1998 AT&T Commercial Finance Corporation, as Agent 44 Whippany Road Morristown, New Jersey 07962 Gentlemen: As required by Section 6.05(c) of that certain Amended and Restated Loan Agreement dated May 18,1998 (the "Loan Agreement") by and between AT&T COMMERCIAL FINANCE CORPORATION and other financial institutions referred to therein, as Lenders (the "Lenders"), you, as Agent (the "Agent") for the Lenders, and SUNBELT COMMUNICATIONS COMPANY, VALLEY BROADCASTING COMPANY, YUMA BROADCASTING COMPANY, SIERRA BROADCASTING COMPANY, OREGON TRAIL BROADCASTING COMPANY, FALLS BROADCASTING COMPANY, TWO OCEAN BROADCASTING COMPANY, SIERRA RADIO COMPANY, RADIO NEWS COMPANY, RUBY MOUNTAIN BROADCASTING COMPANY and BEARTOOTH COMMUNICATIONS COMPANY [other New Subsidiaries to be added, as necessary] (collectively, the "Borrowers"), a review of the activities of the Borrowers for the fiscal year and/or fiscal period ending []. 19[] (the "Fiscal Period") and the trailing twelve (12) month period ending [], 19[] (the "Trailing Twelve Months") has been made under my supervision with a view to determining whether the Companies (as such term is defined in the Loan Agreement) have kept, observed, performed and fulfilled all of their respective obligations under the Loan Agreement and all other agreements or undertakings contemplated thereby, and to the best of my knowledge, neither an Event of Default nor an Unmatured Event of Default (as such terms are defined in the Loan Agreement) has occurred and is continuing. I further certify that the amounts set forth below, with abbreviated descriptions, to the best of my knowledge accurately present amounts required to be calculated by various covenants of the Loan Agreement as of the last day of the Fiscal Period. Unless expressly specified herein, all terms used herein have the identical meanings as in the Loan Agreement. 1. SECTION 5.01 - CONSOLIDATED AFTER TAX CASH FLOW ------------- --------------------------------- Consolidated Net Income of the Companies (after deduction of all Corporate Overhead, management fees and other compensation)
Add Back: Interest Expense $___________ Depreciation $___________ Amortization $___________ Non-Cash Expenses $___________ Interest Expense $___________ Taxes in Respect of Income and Profits $___________
153
Minus: Programming Payments $___________ Equals: Consolidated Net Operating Income $___________ Minus: Cash Payments Made in Respect of Taxes $___________ Equals: Consolidated After Tax Cash Flow $___________ 2. SECTION 5.02 - KVBC-TV NET OPERATING INCOME ------------- ----------------------------- Net Income (loss) of KVBC-TV, operated by $ Valley Broadcasting Company, for Trailing Twelve Months (after deducting Corporate Overhead): Less: extraordinary income or non-cash gains $ Adjustment for Trade Income (Loss), if any $ Net Income (Loss) $ Add Back: Depreciation $ Amortization $ Interest Expense $ Other Non-cash Expenses $ Income Taxes $ Less: Programming Payments $ Equals Net Operating Income of KVBC-TV for $ Trailing Twelve Months Add Back: Corporate Overhead paid for period $ Total $ Minimum Required $
154 3. SECTION 5.03 - DEBT SERVICE COVERAGE ------------- ---------------------- Senior Debt Service for Trailing Twelve Months: Principal required to be paid on Senior Debt of Companies $ Interest required to be paid on Senior Debt of Companies $ Total Senior Debt Service $ Ratio of Consolidated Net Operating Income (from ___________:1.00 paragraph 1) to Senior Debt Service for Trailing Twelve Months Minimum Required ___________:1.00 4. SECTION 5.04 - SENIOR DEBT TO AFTER TAX CASH FLOW ------------- ----------------------------------- Outstanding Balance of Senior Date as of last day of Fiscal $ Period: Consolidated After Tax Cash Flow (from paragraph 1) $ Ratio of Senior Debt to After Tax Cash Flow ___________:1.00 Maximum Permitted ___________:1.00
5. SECTION 5.05 - FIXED CHARGE COVERAGE RATIO: CURRENT RATIO ------------- -------------------------------------------- (a) Total Debt Service for Trailing Twelve Months $ PLUS Capital Expenditures $ PLUS Taxes paid $ EQUALS Fixed Charges $ Ratio of Combined Net Operating Income to Fixed Charges ___________:1.00 Minimum Required 1.10:1.00 (b) Current Assets (exclusive of accounts over 120 days $ from date of invoice) Current Liabilities $ Ratio of Current Assets to Current Liabilities ___________:1.00 Minimum Re Required 1.50:1.00
155 6. SECTION 5.06 - CAPITAL EXPENDITURES ------------- --------------------- Capital Expenditures (Sunbelt year-to-date) $ Capital Expenditures (Valley year-to-date) $ Capital Expenditures (Yuma year-to-date) $ Capital Expenditures (Sierra year-to-date) $ Capital-Expenditures (Oregon Trail year-to-date) $ Capital Expenditures (Falls year-to-date) $ Capital Expenditures (Two Ocean year-to-date) $ Capital Expenditures (Sierra Radio year-to-date) $ Capital Expenditures (Radio News year-to-date) $ Capital Expenditures (Ruby Mountain year-to-date) $ Capital Expenditures (Beartooth year-to-date) $ Capital Expenditures (other Companies, as needed) $ Consolidated Capital Expenditures (year-to-date) $ Maximum Permitted $_________
7. SECTION 5.07 - OFFICER COMPENSATION AND CORPORATE OVERHEAD; ------------- --------------------------------------------- CONSULTING FEE -------------- Maximum Permitted [$4,600,000.00] 8. SECTION 5.08 - RESTRICTED PAYMENTS ------------- -------------------- The Companies have made the following Restricted Payments during the current Fiscal Year: [ to be completed by Companies] Very truly yours, 156 SCHEDULE 6.15 CORRECTIVE ACTION TO BE TAKEN None 157 SCHEDULE 7.01 TO LOAN AGREEMENT ------------------------------- Indebtedness ------------
3/31/98 Promissory Note Holder Matures Purpose Balance ----------- ------ ------- ------- ------------ $4,500,000.00 Janet Frazier Rogers April-07 Redemption of Sunbelt Stock 4,500,000.00 $400,000.00 Gloria J. Tester Sep-00 Redemption of Sunbelt Stock 308,563.40 $400,000.00 American Federal Savings Bank Sep-12 Deed of Trust on Helena House 244,400.05 $117,600.00 Bank of America Sep-08 Deed of Trust on Reno House 93,863.60 $203,000.00 Norwest Feb-11 Deed of Trust on Pocatello House 185,027.12 $298,241.00 Hall, Phillips, Phillips Aug-99 Deed of Trust on Las Vegas Studio 144,254.56 $90,300.00 Colonial Mortgage Jan-28 Deed of Trust on Las Vegas Condo 90,102.68 $100,600.00 Colonial Mortgage Jan-28 Deed of Trust on Flagstaff Condo 100,380.15 $297,579.00 Bank of America Mar-00 Deed of Trust on Black Mountain Site 35,768.93 $600,000.00 Cessna Finance Corp. Aug-06 Note - Collateralized by Airplane 537,706.64 $1,021,905.26 Ford Motor Credit Various 49 Notes - Collateralized by Vehicles 634,018.55 $900,000.00 Community Bank of Nevada Mar-99 Unsecured Note - Equipment 651,029.74 No Security Interest Given $162,900.00 Pioneer Citizens Bank Mar-99 Unsecured Notes - Vehicles 154,900.00 No Security Interest Given Pioneer Citizens Bank Various Unsecured Notes - Various equipment 1,403,664.88 No Security Interest Given Various Aug-01 Unsecured Notes 21,680.70 $1,500,000.00 Pioneer Citizens Bank Unsecured Note - To fund build out of - Helena, MT studio
158
SCHEDULE 7.02 TO LOAN AGREEMENT ------------------------------- Liens ----- 3/31/98 Holder Matures Purpose Balance - ----------------------------------------------------------------------------------------------- American Federal Savings Bank Sep-12 Deed of Trust on Helena House 244,400.05 Bank of America Sep-08 Deed of Trust on Reno House 93,863.60 Norwest Feb-11 Deed of Trust on Pocatello House 185,027.12 Hall, Phillips, Phillips Aug-99 Deed of Trust on Las Vegas Studio 144,254.56 Colonial Mortgage Jan-28 Deed of Trust on Las Vegas Condo 90,102.68 Colonial Mortgage Jan-28 Deed of Trust on Flagstaff Condo 100,380.15 Bank of America Mar-00 Deed of Trust on Black Mountain Site 35,768.93 Cessna Finance Corp. Aug-06 Note - Collateralized by Airplane 537,706.64 Ford Motor Credit Various 49 Notes - Collateralized by Vehicles 634,018.55
159 SCHEDULE 12.01A --------------- ASSIGNMENT AND ACCEPTANCE ------------------------- THIS ASSIGNMENT AND ACCEPTANCE ("this AGREEMENT") is made this ____ day of _____________, ____, by and between _______________________ ("ASSIGNOR"), and _________________________ ("ASSIGNEE"). 1. RECITALS. (a) Assignor is a party to the Amended and Restated Loan Agreement dated as of May 18, 1998 (which, as the same has been and may from time to time be amended, modified, renewed, extended or restated, is hereinafter called the "LOAN AGREEMENT") among SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation ("VALLEY"); YUMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH") (collectively, the "BORROWERS"), certain persons named therein as "LENDERS" and AT&T COMMERCIAL FINANCE CORPORATION, as Agent for the Lenders (the "AGENT"). (b) Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Loan Agreement. (c) Immediately prior to the assignment and assumption provided herein, Assignor's Commitments and its outstanding Loans are as specified in SCHEDULE A attached hereto. Assignor desires to assign and delegate to Assignee, and Assignee desires to acquire and assume from Assignor, a portion (the "PURCHASED PERCENTAGE") of Assignor's Tranche A [or B] Commitment/outstanding Tranche A [or B] Loans and all related claims for interest and fees after the Effective Date (as defined below). 2. ASSIGNMENT. For and in consideration of the assumption of obligations by Assignee set forth in SECTION 3 hereof and the other consideration set forth herein, and effective as of __________, _____ which date is at least five (5) Business Days following the execution hereof (the "EFFECTIVE DATE"), Assignor does hereby sell, assign, transfer and convey all of its right, title and interest in and to, and does hereby delegate its obligations in respect of, the Purchased Percentage of the Tranche A Commitment/Tranche B Commitment of Assignor (as in effect on the Effective Date) and all Tranche A [or B] Loans made by Assignor and outstanding on the Effective Date and the Loan Agreement and the other Loan Documents. Pursuant to ARTICLE XII of the Credit Agreement, on and after the Effective Date, Assignee shall have the rights, benefits and obligations of a Lender under the Loan Documents with respect to the Purchased Percentage of the Loan Documents. After giving effect to the assignment and delegation provided herein, the respective Commitments and outstanding Loans of the parties hereto shall be as set forth on SCHEDULE A hereto, which Schedule also contains certain additional information with respect to Assignee. 3. ASSUMPTION. For and in consideration of the assignment of rights by Assignor set forth in Section 2 hereof and the other consideration set forth herein, and effective as of the 160 Effective Date, Assignee does hereby accept the foregoing assignment of rights and delegation of obligations, and does hereby assume and covenant and agree fully, completely and timely to perform, comply with and discharge, each and all of the obligations, duties and liabilities of Assignor under the Loan Agreement, which are assigned to Assignee hereunder, which assumption includes, without limitation, the obligation to fund the unfunded portion of the Purchased Percentage of the Assignor's Commitments in accordance with the provisions set forth in the Loan Agreement. Assignee agrees to be bound by all provisions relating to the Lenders under, and as defined in, the Loan Agreement, including, without limitation, provisions relating to the dissemination of information and the payment of indemnification. From and after the Effective Date, Assignee shall be a party to the Loan Agreement and Assignor is released from Assignor's obligations with respect to the Purchased Percentage. 4. FEES; ETC. Assignor and Assignee have made arrangements with respect to (a) the portion, if any, to be paid, and the date or dates for payment, by Assignor to Assignee of any fees heretofore received by Assignor pursuant to the Loan Agreement prior to the Effective Date and (b) the portion, if any, to be paid, and the date or dates for payment, by Assignee to Assignor of fees or interest received by Assignee pursuant to the Loan Agreement from and after the Effective Date. 5. PAYMENT OBLIGATIONS. On and after the Effective Date, Assignee shall be entitled to receive all payments of principal, interest and fees with respect to the Purchased Percentage of Assignor's Commitments and Loans. In consideration for the sale and assignment of Loans hereunder, (i) on the date of execution hereof, Assignee shall pay to the Agent any registration and processing fee required to be paid pursuant to the Loan Agreement, and (ii) on the Effective Date, Assignee shall pay Assignor an amount equal to the Purchased Percentage of all Tranche A Loans made by Assignor outstanding on the Effective Date or such other purchase price for the Purchased Percentage agreed to by Assignor and Assignee. On and after the Effective Date, Assignee will also remit to Assignor any amounts of interest on Loans and fees received by Assignee which relate to the Purchased Percentage of Loans made by Assignor accrued for periods prior to the Effective Date. In the event that either party hereto receives any payment to which the other party hereto is entitled under this Agreement, then the party receiving such amount shall promptly remit it to the other party hereto. 6. REPRESENTATIONS AND CERTAIN AGREEMENTS. (a) ASSIGNEE'S REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Assignee represents, warrants and agrees to and with Assignor as follows: (i) Assignee ha full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to fulfill its obligations under, and consummate the transactions contemplated by, this Agreement; (ii) the making and performance by Assignee of this Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate any law or regulation of the jurisdiction of its organization or any other law or regulation applicable to it; (iii) this Agreement ha been duly executed and delivered by it and constitutes the legal, valid and binding obligations of Assignee, enforceable against it in accordance with its terms; (iv) all approvals and authorizations of, all filings with and all actions by any governmental or other administrative or judicial authority necessary for the 161 validity or enforceability of Assignee's obligations under this Agreement have been obtained; (v) Assignee has received a copy of the Loan Agreement and the other Loan Documents, together with copies of the most recent financial statements delivered pursuant to SECTIONS 6.05(a), (b) and (c) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Agreement; (vi) Assignee appoints and authorizes Agent to take such action as agent on its behalf and to exercise such powers under the Loan Agreement and the other Loan Documents as are delegated to Agent by the terms thereof, together with such powers as are reasonably incidental thereto; and (vii) Assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of the Loan Agreement are required to be performed by it as a Lender, including, without limitation, obligations to make Loans to the full amount of the portion of the Commitments acquired by Assignee. (b) ASSIGNOR'S REPRESENTATIONS AND WARRANTIES. Assignor represents and warrants to Assignee as follows: (i) Assignor has full power and authority, and has taken all action necessary, to execute and deliver this Agreement and to fulfill its obligations under, and consummate the transactions contemplated by, this Agreement; (ii) the making and performance by Assignor of this Agreement and all documents required to be executed and delivered by it hereunder do not and will not violate any law or regulation of the jurisdiction of its organization or any other law or regulation applicable to it; (iii) this Agreement has been duly executed and delivered by it and constitutes the legal, valid and binding obligations of Assignor, enforceable against it in accordance with its terms; (iv) all approvals and authorizations of, all filings with and all actions by any governmental or other administrative or judicial authority necessary for the validity or enforceability of Assignor's obligations under this Agreement have been obtained; (v) the amounts of Assignor's respective Commitments and the aggregate outstanding principal amount of the Loans held by the Assignor are, on and as of the date of this Agreement (immediately prior to giving effect to the sale, assignment and transfer contemplated by SECTION 2), correctly set forth in SCHEDULE A hereto; and (vi) immediately prior to giving effect to the sale, assignment and transfer contemplated by SECTION 2, the Assignor has good title to, and is the sole legal and beneficial owner of, the Purchased Percentage, free and clear of all liens, security interests, participations and other encumbrances. 7. CREDIT DETERMINATION; LIMITATIONS ON ASSIGNOR'S LIABILITY. It is understood and agreed that Assignee has independently made its own credit determinations and analysis 162 based upon such information as Assignee deems sufficient to enter into the transactions contemplated hereby and not based on any statements or representations by Assignor or the Agent and that it will, independently and without reliance upon Assignor, any other Lender or the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement. It is understood and agreed that the assignment and assumption hereunder are made WITHOUT RECOURSE to Assignor and that Assignor makes no representation or warranty of any kind to Assignee (except as set forth in SECTION 6(b) above) and shall not be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency, value or collectibility of the Loan Agreement or any other Loan Document, including without limitation, documents granting the Assignor and other Lenders a security interest in assets of the Borrowers, (ii) any representation, warranty or statement made in or in connection with any of the Loan Documents, (iii) the financial condition or creditworthiness of the Borrowers, (iv) the performance or compliance with any of the terms or provisions of any of the Loan Documents, (v) inspecting any of the property, books or records of the Borrowers or (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Loans. Neither Assignor nor any of its officers, directors, employees, agents or attorneys shall be liable for any mistake, error of judgment, or action taken or omitted to be taken in connection with the Loans or the Loan Documents, except for its or their own gross negligence or willful misconduct. 8. INDEMNITY. Assignee agrees to indemnify and to hold harmless Assignor from and against any and all losses, costs, damages, expenses (including, without limitation reasonable attorneys' fees) and liabilities incurred by Assignor in connection with or arising in any manner from Assignee's performance or nonperformance of obligations assumed under this Agreement. 9. SUBSEQUENT ASSIGNMENTS. After the Effective Date, Assignee shall have the right to assign the rights which are assigned to Assignee hereunder to any entity or person, provided that (a) any such subsequent assignment does not violate any of the terms and conditions of the Loan Documents or any law, rule, regulation, order, writ, judgment, injunction or decree and that any consent required under the terms of the Loan Documents has been obtained and (b) Assignee is not thereby released from any of its obligations to Assignor hereunder. 10. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF NEW JERSEY. 11. NOTICES. Notices shall be given under this Agreement in the manner set forth in the Loan Agreement. For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the addresses set forth under the parties' respective name(s) on the signature pages hereto. 12. FURTHER ASSURANCES. Assignor and Assignee hereby agree to execute and deliver such other instruments, and take such other actions, as either party may reasonably request in connection with the transaction contemplated by this Agreement. 13. EXPENSES. Each party hereto shall bear its own expenses in connection with the execution, delivery and performance of this Agreement. 14. AMENDMENT, MODIFICATION OR WAIVER. No provision of this Agreement may be amended, modified or waived except by an instrument in writing signed by Assignor and Assignee. 163 15. JURISDICTION; VENUE. Each of the parties hereto hereby submits to the nonexclusive jurisdiction of the United States District Courts for the Districts of New Jersey and of any New Jersey state courts for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, any objective which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 16. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 17. COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be identical and all of which, taken together, shall constitute one instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly authorized officers as of the date first above written. _______________________________________ By:____________________________________ Title:_________________________________ Address: Telephone: Telecopy: _______________________________________ By:____________________________________ Title:_________________________________ Address: Telephone: Telecopy: _______________________________________ ACKNOWLEDGED: AT&T COMMERCIAL FINANCE CORPORATION, AS AGENT By:__________________________ 164 SCHEDULE A TO ASSIGNMENT AND ACCEPTANCE AGREEMENT -------------------- LIST OF LENDING OFFICES, ADDRESSES FOR NOTICES AND COMMITMENT AND LOAN AMOUNTS ------------------------------------------- ASSIGNOR: [Insert Name of Assignor) ________________________________________________________________________________ Tranche A Tranche B Loans Commitment Commitment ________________________________________________________________________________ Original Amount $__________ $__________ $__________ Original Percentage _____% _____% _____% ________________________________________________________________________________ Following assignment of the Purchased Percentage, Assignor's portions of the Commitment and outstanding Term Loans will be as follows: ________________________________________________________________________________ Tranche A Tranche B Loans Commitment Commitment ________________________________________________________________________________ Revised Amount $__________ $__________ $__________ Revised Percentage _____% _____% _____% ________________________________________________________________________________ ASSIGNEE: [Insert Name of Assignee] ________________________________________________________________________________ Tranche A Tranche B Loans Commitment Commitment ________________________________________________________________________________ Original Amount, if any $__________ $__________ $__________ Original Percentage, if any _____% _____% _____% ________________________________________________________________________________ 165 Following assignment of the Purchased Percentage, Assignee's portions of the Commitments and outstanding Loans will be as follows: ________________________________________________________________________________ Tranche A Tranche B Loans Commitment Commitment ______________________________________________________________________ New Amount $__________ $__________ $__________ New Percentage _____% _____% _____% ________________________________________________________________________________ Address for Notices: - -------------------- [Address] Attention: _______________________ Telephone: Telecopy: _________________________ Telephone: Confirmation: ________________________ 166 NOTICE OF ASSIGNMENT AND ACCEPTANCE ----------------------------------- To: Sunbelt Communications Company, Valley Broadcasting Company, Yuma Broadcasting Company, Sierra Broadcasting Company, Oregon Trail Broadcasting Company, Falls Broadcasting Company, Two Ocean Broadcasting Company, Sierra Radio Company, Radio News Company, Ruby Mountain Broadcasting Company, and Beartooth Communications Company 1500 Foremaster Lane Las Vegas, Nevada 89101 From: [Name of Assignor] ("ASSIGNOR") [Name of Assignee] ("ASSIGNEE") ______________________,____________ 1. We refer to the Amended and Restated Loan Agreement, dated as of May _____, 1998 (as it may be amended, modified, renewed or extended from time to time, the "LOAN AGREEMENT") among SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation ("VALLEY"); YUMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH")(collectively, the "BORROWERS"), certain lenders who are parties thereto (each a "LENDER" and collectively the "LENDERS"), the above-referenced Assignor and AT&T COMMERCIAL FINANCE CORPORATION, in its separate capacity as Agent for the Lenders. Capitalized terms used herein without definition have the meanings assigned to them in the Loan Agreement. 2. This Notice of Assignment and Acceptance (this "NOTICE") is given and delivered to the Borrowers, the Lenders and the Agent pursuant to ARTICLE XII of the Loan Agreement. 3. Assignor and the above-referenced Assignee have entered into an Assignment and Acceptance, dated as of__________,____ (the "ASSIGNMENT AGREEMENT"), pursuant to which, among other things, Assignor has sold, assigned, delegated and transferred to Assignee, and Assignee has purchased, accepted and assumed from Assignor, a portion of Assignor's rights and obligations under the Loan Agreement and the other Loan Documents such that Assignee's percentage of the aggregate Commitments and the outstanding Tranche A [or B] Loans shall be as set forth in SCHEDULE A to the Assignment Agreement enclosed herewith (which Schedule 167 also sets forth Assignor's percentage of the Commitments and outstanding Loans prior to such transfer), effective as of the Effective Date. The Effective Date shall be ___________, ____, provided that the Effective Date shall not occur if any condition precedent explicitly agreed to in writing by Assignor and Assignee has not been satisfied. 4. Assignor and Assignee hereby give to the Borrowers, the other Lenders and the Agent notice of the assignment and delegation referred to herein [must be at least one (1) Business Day's notice] and enclose a fully executed counterpart of the Assignment Agreement. Assignor will confer with the Agent before __________, _____ to determine if the assignment will become effective on such date pursuant to SECTION 3 hereof, and will confer with the Agent to determine the Effective Date pursuant to SECTION 3 hereof if it occurs thereafter. Assignor shall notify the Agent if the assignment does not become effective on any proposed Effective Date as a result of the failure to satisfy the conditions precedent explicitly agreed to in writing by Assignor and Assignee. At the request of the Agent, Assignor will give the Agent written confirmation of the occurrence of the Effective Date. 5. Assignee hereby confirms its acceptance and assumption of the assignment and delegation referred to herein and agrees as of the Effective Date (a) to perform fully all of the obligations under the Loan Agreement which it has assumed pursuant to the Assignment Agreement and (b) to be bound by the terms and conditions of the Loan Agreement as a "Lender". 6. Assignor and Assignee request and agree that any payments to be made to Assignor on and after the Effective Date shall, to the extent of the assignment referred to herein, be made entirely to Assignee, it being understood that Assignor and Assignee shall make between themselves any desired allocations. [ 7. Assignor hereby agrees to deliver to the Agent on or before the Effective Date its original Note[s] subject to the assignment contemplated by the Assignment Agreement. Assignor and Assignee hereby request that the Borrowers deliver to the Agent on or before the Effective Date the following new Notes payable in accordance with paragraph (b)(iv) of ARTICLE XII of the Credit Agreement. [Describe each new Note for Assignor and Assignee with principal amount and payee.]] Upon receipt of the new Note(s) the superseded Note(s) will be surrendered for cancellation. 8. Assignee advises the Agent and the other Lenders that its address for notice purposes, as well as certain other relevant information, is set forth in SCHEDULE A to the Assignment Agreement. [Assignor] [Assignee] By:____________________________ By:____________________________ Title:_________________________ Title:_________________________ 168 FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT is made as of the ______ day of July, 1998, by and between SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation ("VALLEY"); YMMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTh COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH") (Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls, Two Ocean, Sierra Radio, Radio News, Ruby Mountain and Beartooth are sometirnes referred to herein individually as a "BORROWER" and collectively as the "BORROWERS"); AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation ("AT&T-CFC"), and the various other financial institutions which are now, or in accordance with ARTICLE XII hereof hereafter become, parties hereto and "Lenders" hereunder by execution of the signature pages to this Agreement or otherwise (collectively, the "LENDERS" and each individually, a "LENDER"); and AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "AGENT"). W I T N E S S E T H T H A T - - - - - - - - - - - - - - WHEREAS, the AT&T-CFC, the Agent and the Borrowers are parties to a certam Amended and Restated Loan Agreement dated as of May 18, 1998 (the "LOAN AGREEMENT"); and WHEREAS, the parties hereto desire to amend the Loan Agreement as hereinafter provided to set forth additional agreements and understandings with respect to the subject matter thereof; NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 169 1. DEFINITIONS. Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings assigned to them in the Loan Agreement, as amended hereby. 2. AMENDMENTS TO LOAN AGREEMENT. A. SECTION 5.06 of the Loan Agreement is hereby amended to read in its entirety as follows: "SECTION 5.06. CAPITAL EXPENDITURES. Without the prior written consent of the Majority Lenders, the Companies shall not make or incur Capital Expenditures in excess of (a) Five Million Dollars ($5,000,000) in the aggregate during Fiscal Year ending December 31, 1998, or (b) one hundred five percent (105%) of the maximum amount permitted to be made hereunder during the prior Fiscal Year, in each Fiscal Year beginning with the Fiscal Year ending December 31, 1999; PROVIDED, HOWEVER, that (i) Capital Expenditures to the extent financed with the proceeds of the Supplemental Line, and (ii) Capital Expenditures up to Three Million Dollars ($3,000,000) made in connection with leasehold and real estate improvements made during Fiscal Year 1998 at the Helena, Montana and Pocatello, Idaho studio sites, and (iii) Capital Expenditures made during Fiscal Year ending December 31, 1998, in connection with the acquisition of new equipment associated with the buildout of the Helena; Montana studio site, shall be excluded from the calculation of Capital Expenditures for the purposes of this SECTION 5.06." B. SECTION 5.07 of the Loan Agreement is hereby amended to read in its entirety as follows: "SECTION 5.07. CORPORATE OVERHEAD. Subject to SECTION 9.03, the Companies shall not pay Corporate Overhead which exceeds (a) Six Million Dollars ($6,000,000) in the aggregate during Fiscal Year ending December 31, 1998, or (b) in each subsequent Fiscal Year, an amount equal to one hundred and five percent (105%) of the aggregate maximum amount permitted to be paid hereunder during the preceding Fiscal Year." -2- 170 C. SECTIONS 7.01 and 7.02 of the Loan Agreement are hereby amended to read in their entirety as follows: "SECTION 7.01. INDEBTEDNESS. Incur, create, assume, become or be liable in any manner with respect to, or permit to exist, any Indebtedness or liability of a Company, whether direct, indirect or contingent, except: (a) Indebtedness to the Lender under this Agreement, the Notes, and otherwise; (b) Indebtedness with respect to trade obligations and other normal accruals in the ordinary course of business; (c) Indebtedness under Capital Leases and Purchase Money Security Agreements relating to the purchase price of office and non-essential broadcast equipment to be used in the business of the Companies to the extent such Indebtedness was permitted by ARTICLE V hereof at the time incurred; (d) Indebtedness to any Affiliate, provided that such Indebtedness is subject to the applicable Affiliate Subordination Agreement; (e) Indebtedness existing on the date hereof and described in SCHEDULE 7.01 attached hereto; PROVIDED, HOWEVER, that the terms of such Indebtedness shall not be modified or amended, nor shall payment thereof be extended, without the prior written consent of the Lender; (f) Indebtedness in respect of endorsements of negotiable instruments for collection in the ordinary course of business; (g) Subordinated Debt consented to by the Majority Lenders; and (h) other Indebtedness not otherwise described in the foregoing paragraphs (a) through (g) of this SECTION 7.01 conditional upon the satisfaction of each of the following conditions: (i) such other Indebtedness permitted by this paragraph (h) is not secured by a lien, mortgage or security interest on any equipment or other personal property (other than motor vehicles and office equipment) or real property used by any of the Companies in the operation of their respective radio and television broadcasting businesses; -3- 171 (ii) the Majority Lenders shall have first consented in writing to any such Indebtedness which, when added to all other Indebtedness owed by the Companies, or any of them, to the same creditor would result in the aggregate principal amount of all Indebtedness owed by the Companies to such creditor exceeding One Million Dollars ($1,000,000); and (iii) the aggregate outstanding and unpaid principal balance of all Indebtedness permitted under SECTION 7.01(c), SECTION 7.01(e) (EXCLUSIVE, HOWEVER, of such Indebtedness owed to Janet Rogers, her heirs, successors and assigns) and Section 7.01(h) shall not exceed Six Million Dollars ($6,000,000) at any time. "SECTION 7.02. LIENS. Create, incur, assume, suffer or permit to exist any mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on any of the assets or capital stock of a Company, now or hereafter owned, other than: (a) liens securing the payment of taxes, either not yet due or the validity of which is being contested in good faith by appropriate proceedings, and as to which it shall have set aside on its books adequate reserves; (b) deposits under workmen's compensation, unemployment insurance and social security laws, or to secure the performance of bids, tenders, contracts (other than for the repayment of borrowed money) or Leases, or to secure statutory obligations or surety or appeal bonds, or to secure indemnity, performance or other similar bonds arising in the ordinary course of business; (c) liens imposed by law, such as carriers', warehousemen's or mechanics' liens, incurred by it in good faith in the ordinary course of business, and liens with respect to judgments but only to the extent that (i) any such judgment does not otherwise constitute an Event of Default pursuant to clause (m) of ARTICLE VIII, and (ii) either (A) such lien is not prior or senior to any of the liens granted to the Lenders and the Agent pursuant to the Security Documents, or (B) such lien attaches solely to property of the Borrower, if any, with respect to which the Lenders and the Agent do not assert a lien. (d) security interests and liens in favor of the Lenders and the Agent; -4- 172 (e) Capital Leases described in SECTION 7.01(c) and security interests granted by Purchase Money Security Agreements to the extent permitted by SECTION 7.01(c), provided that each such lien shall at all times be limited solely to the item or items of property so acquired; (f) restrictions, easements and minor irregularities in title which do not and will not interfere with the occupation, use and enjoyment by the Borrower of such properties and assets in the normal course of its business as presently conducted or materially impair the value of such properties and assets for the purpose of such business; (g) security interests and liens securing the Indebtedness permitted by SECTION 7.01(e) to the extent set forth in said SCHEDULE 7.01; (h) security interests and liens securing the indebtedness permitted by SECTION 7.01(h) provided that such security interests and liens are limited to motor vehicles, office equipment and real property not used in the operation of the Companies' radio and television broadcast businesses to the extent permitted by said SECTION 7.01(h); and (i) any other liens existing on the date hereof and described in SCHEDULE 7.02 attached hereto." D. SECTION 9.03 of the Loan Agreement is hereby amended to read in its entirety as follows: "SECTION 9.03. EFFECT ON PAYMENTS. If an Event of Default shall have occurred and be continuing, the Companies shall not (a) make payments in respect of Corporate Overhead in excess of Four Million Dollars ($4,000,000) per Fiscal Year, or (b) make any other Restricted Payments to the Stockholders or any Affiliates." E. Effective August 10, 1998, the Notice provisions applicable to the Agent set forth in SECTION 13.07 of the Loan Agreement are hereby amended to provide for Notices to the Agent as follows: -5- 173 If to the Agent: AT&T Commercial Finance Corporation, as Agent c/o Newcourt Capital 2 Gatehall Drive Parsippany, New Jersey 07054 Attention: Michael V. Monahan, Vice President with a copy (which shall not constitute notice) to: AT&T Commercial Finance Corporation, as Agent c/o Newcourt Capital 2 Gatehall Drive Parsippany, New Jersey 07054 Attention: Corporate Counsel and with a copy (which shall not constitute notice) to: Andrew J. Chlebus, Esq. Edwards & Angell, LLP One BankBoston Plaza Providence, RI 02903 F. SCHEDULE 6.05 to the Loan Agreement is hereby amended to correspond with EXHIBIT A attached hereto and made a part hereof. 3. The Lenders hereby consent to Beartooth's redemption of all 100 shares of the Beartooth capital stock held by William Sanders during Fiscal Year ending December 31, 1998, for the aggregate purchase price of $400,000, which sum shall be borrowed from Pioneer Citizens Bank and repaid by Beartooth prior to December 31, 1998. 4. NO FURTHER AMENDMENTS. Except for the amendments set forth herein, the text of the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect. No waiver by the Lenders or the Agent under the Loan Agreement or any other Loan Document is granted or intended except as expressly set forth herein, and the Lenders and the Agent expressly reserve the right to require strict compliance with the terms of the Loan Agreement, as amended hereby, and the other Loan Documents in all respects. The amendments agreed to herein shall not constitute a modification of the Loan Agreement, as amended hereby, such as to require further notice by the Lenders or the Agent to require strict compliance with the terms of the Loan Agreement and the other Loan Documents in the future. -6- 174 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The Borrowers hereby represent and warrant to the Lenders and the Agent that: A. Each representation and warranty set forth in Article IV of the Loan Agreement, as amended hereby, is hereby restated and affirmed as true and correct as of the date hereof, B. The Borrowers have the power and authority to enter into this Amendment and all other agreements contemplated hereby, and to do all acts and things as are required or contemplated hereunder to be done, observed and performed by the Borrowers; C. Each of this Amendment and all other agreements to be executed by the Companies and contemplated hereby has been duly authorized (by all necessary corporate action and otherwise), validly executed and delivered by the Borrowers and constitutes the legal, valid and binding obligation of the Borrowers enforceable against them in accordance with its terms; D. The execution and delivery of this Amendment and all other agreements to be executed by the Borrowers and contemplated hereby and the Borrowers' performance hereunder and thereunder do not and will not require the consent or approval of any governmental authority, nor be in contravention of or in conflict with the Borrowers' Articles of Incorporation, or the provisions of any statute, or any judgment, order, or indenture, instrument, agreement, or undertaking, to which any Borrower is a party or by which any Borrower or its assets or properties are or may become bound. E. No Event of Default or Unmatured Event of Default exists on or as of the date hereof. 6. REFERENCES IN SECURITY DOCUMENTS. All references to the "Loan Agreement" in all Security Documents, and in any other documents or agreements by and between the Borrowers and their Affiliates, and each of them, and the Lenders and/or the Agent shall from and after the effective date hereof refer to, respectively, the Loan Agreement, as amended hereby, and all obligations of the Borrowers under the Agreements, as amended hereby, shall be secured by and be entitled to the benefits of said Security Documents and such other documents and agreements. All Security Documents heretofore executed by the Borrowers shall remain in full force and effect to secure the Notes, and such Security Documents, as amended hereby, are hereby ratified and affirmed. 7. COUNTERPARTS. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement. -7- 175 8. APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO BE MADE PURSUANT TO THE LAWS OF THE STATE OF NEW JERSEY WITH RESPECT TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY IN THE STATE OF NEW JERSEY AND SHALL BE CONSTRUED, INTERPRETED, PERFORMED AND ENFORCED IN ACCORDANCE THEREWITH. 9. CAPTIONS. The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof. 10. LEGAL FEES. The Borrowers shall pay all reasonable expenses incurred by the Agent in the drafting, negotiation and closing of the documents and transactions contemplated hereby, including the reasonable fees and disbursements of the Agent's special counsel. 11. REAFFIRMATION. Except as amended hereby, the Loan Agreement shall remain in full force and effect and are in all respects hereby ratified and affirmed. IN WITNESS WHEREOF, the Lenders, the Agent and the Borrowers have caused this Amendment to be duly executed as a sealed instrument by their respective duly authorized officers, as applicable, all as of the day and year first above written. AT&T COMMERCIAL FINANCE CORPORATION, individually and as Agent By: ------------------------------ Title: SUNBELT COMMUNICATIONS COMPANY By: /s/ James E. Rogers ------------------------------ Title: President -8- 176 VALLEY BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President YUMA BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President SIERRA BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President OREGON TRAIL BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President FALLS BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President TWO OCEAN BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President -9- 177 SIERRA RADIO COMPANY By: /s/ James E. Rogers ------------------------------ Title: President RADIO NEWS COMPANY By: /s/ James E. Rogers ------------------------------ Title: President RADIO SALES COMPANY By: /s/ James E. Rogers ------------------------------ Title: President RUBY MOUNTAIN BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President BEARTOOTH COMMUNICATIONS COMPANY By: /s/ James E. Rogers ------------------------------ Title: President Consented to as of date first above written. /s/ James E. Rogers ----------------------------------- [James E. Rogers] -10- 178 JAMES E. ROGERS, AS TRUSTEE OF THE JAMES E. ROGERS TRUST UNDER TRUST AGREEMENT DATED OCTOBER 9, 1997 /s/ James E. Rogers ----------------------------------- James E. Rogers, as Trustee - 11 - 179 SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT is made as of the 14th day of September, 1998, by and between SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"); VALLEY BROADCASTING COMPANY, a Nevada corporation ("VALLEY"): YUMA BROADCASTING COMPANY, a Nevada corporation ("YUMA"); SIERRA BROADCASTING COMPANY, a Nevada corporation ("SIERRA"); OREGON TRAIL BROADCASTING COMPANY, a Nevada corporation ("OREGON TRAIL"); FALLS BROADCASTING COMPANY, a Nevada corporation ("FALLS"); TWO OCEAN BROADCASTING COMPANY, a Nevada corporation ("TWO OCEAN"); SIERRA RADIO COMPANY, a Nevada corporation ("SIERRA RADIO"); RADIO NEWS COMPANY, a Nevada corporation ("RADIO NEWS"); RUBY MOUNTAIN BROADCASTING COMPANY, a Nevada corporation ("RUBY MOUNTAIN"); and BEARTOOTH COMMUNICATIONS COMPANY, a Nevada corporation ("BEARTOOTH") (Sunbelt, Valley, Yuma, Sierra, Oregon Trail, Falls, Two Ocean, Sierra Radio, Radio News, Ruby Mountain and Beartooth are sometimes referred to herein individually as a "BORROWER" and collectively as the "BORROWERS"); AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation ("AT&T-CFC"), and the various other financial institutions which, in accordance with ARTICLE XII of the Loan Agreement hereinafter referred to, are parties to said Loan Agreement and "Lenders" thereunder (collectively, with AT&T-CFC, the "LENDERS" and each individually, a "LENDER"); and AT&T COMMERCIAL FINANCE CORPORATION, a Delaware corporation, as agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "AGENT"). W I T N E S S E T H T H A T - - - - - - - - - - - - - - WHEREAS, the AT&T-CFC, the other Lenders, the Agent and the Borrowers are parties to a certain Amended and Restated Loan Agreement dated as of May 18, 1998, as amended (the "LOAN AGREEMENT"); and WHEREAS, the parties hereto desire to amend the Loan Agreement as hereinafter provided to set forth additional agreements and understandings with respect to the subject matter thereof, NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 180 1. DEFINITIONS. Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings assigned to them in the Loan Agreement. as amended hereby. 2. AMENDMENTS TO LOAN AGREEMENT. A. SECTION 7.07 of the Loan Agreement is hereby amended to read in its entirety as follows: "SECTION 7.07. INVESTMENTS. Except for (a) Permitted Investments; (b) Sunbelt's existing investment in 120,000 shares of$l .00 par value common stock of Nevada First Bank, a Nevada banking corporation; (c) Valley's existing investment in the capital stock of Microwave, Inc., and Alta Development Company, and (d) Sunbelt's investment in the common stock of St. Andrews Golf Corporation to be made by Sunbelt prior to November 1, 1998, for a total cost to Sunbelt of not more than $1,250,000, permit any Company to purchase, invest in or otherwise acquire or hold securities (including, without limitation, capital stock and interests in general or limited partnerships, either as a general or limited partner or otherwise) and evidences of indebtedness of, or make loans or advances to, or enter into any arrangement for the purpose of providing funds or credit to, any other Person." B. Effective November 1, 1998, the Notice provisions applicable to the Agent set forth in SECTION 13.07 of the Loan Agreement are hereby amended to provide for Notices to the Agent as follows: If to the Agent: AT&T Commercial Finance Corporation, as Agent c/o Newcourt Capital 2 Gatehall Drive Parsippany, New Jersey 07054 Attention: Michael V. Monahan, Vice President with a copy (which shall not constitute notice) to: AT&T Commercial Finance Corporation, as Agent c/o Newcourt Capital 2 Gatehall Drive Parsippany, New Jersey 07054 Attention: Corporate Counsel -2- 181 and with a copy (which shall not constitute notice) to: Andrew J. Chlebus, Esq. Edwards & Angell, LLP One BankBoston Plaza Providence, RI 02903 C. The portions of SCHEDULE 4.15 to the Loan Agreement which describe the stock ownership of Sunbelt and Beartooth are hereby amended to read in their entirety in the form of Exhibits A and B, respectively, attached hereto. 3. CONSENT TO STOCK PURCHASE. Pursuant to Section 7.07 of the Loan Agreement, as amended hereby, the Lenders and the Agent hereby consent to Sunbelt's purchase of common stock in St. Andrews Gold Corporation ("ST. ANDREWS"), on or before November 1, 1998, in consideration of a total purchase price to be paid by Sunbelt in an aggregate amount not to exceed $1,250,000. Sunbelt hereby agrees (a) that said common stock shall be subject to the security interests heretofore granted by Sunbelt to the Agent and the Lenders pursuant to the Security Documents, and (b) to execute and deliver to the Agent within sixty (60) days following consummation of said purchase, such additional documents as the Agent shall reasonably require to effect and evidence such security interests and to effect fully a perfected pledge of said common stock. The Lenders and the Borrowers hereby agree that AT&T-CFC may fund an Advance to the Borrowers in the principal amount of up to $1,250,000 pursuant to the Supplemental Line for the purpose of paying said purchase price for said common stock. 4. NO FURTHER AMENDMENTS. Except for the amendments set forth herein, the text of the Loan Agreement and all other Loan Documents shall remain unchanged and in full force and effect. No waiver by the Lenders or the Agent under the Loan Agreement or any other Loan Document is granted or intended except as expressly set forth herein, and the Lenders and the Agent expressly reserve the right to require strict compliance with the terms of the Loan Agreement, as amended hereby, and the other Loan Documents in all respects. The amendments agreed to herein shall not evidence or constitute a course of dealing at variance with the terms of the Loan Documents, and shall not constitute a modification of the Loan Agreement, as amended hereby, such as to require further notice by the Lenders or the Agent to require strict compliance with the terms of the Loan Agreement and the other Loan Documents in the future. 5. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The Borrowers hereby represent and warrant to the Lenders and the Agent that: - 3 - 182 A. Each representation and warranty set forth in Article IV of the Loan Agreement, as amended hereby, is hereby restated and affirmed as true and correct as of the date hereof; B. The Borrowers have the power and authority to enter into this Amendment and all other agreements contemplated hereby, and to do all acts and things as are required or contemplated hereunder to be done, observed and performed by the Borrowers; C. Each of this Amendment and all other agreements to be executed by the Companies and contemplated hereby has been duly authorized (by all necessary corporate action and otherwise), validly executed and delivered by the Borrowers and constitutes the legal, valid and binding obligation of the Borrowers enforceable against them in accordance with its terms; D. The execution and delivery of this Amendment and all other agreements to be executed by the Borrowers and contemplated hereby and the Borrowers' performance hereunder and thereunder do not and will not require the consent or approval of any governmental authority, nor be in contravention of or in conflict with the Borrowers' Articles of Incorporation, or the provisions of any statute, or any judgment, order, or indenture, instrument, agreement, or undertaking, to which any Borrower is a party or by which any Borrower or its assets or properties are or may become bound. E. No Event of Default or Unmatured Event of Default exists on or as of the date hereof. 6. REFERENCES IN SECURITY DOCUMENTS. All references to the "Loan Agreement" in all Security Documents, and in any other documents or agreements by and between the Borrowers and their Affiliates, and each of them, and the Lenders and/or the Agent shall from and after the effective date hereof refer to, respectively, the Loan Agreement, as amended hereby, and all obligations of the Borrowers under the Agreements, as amended hereby, shall be secured by and be entitled to the benefits of said Security Documents and such other documents and agreements. All Security Documents heretofore executed by the Borrowers shall remain in full force and effect to secure the Notes, and such Security Documents, as amended hereby, are hereby ratified and affirmed. 7. FURTHER AGREEMENTS. The Borrowers hereby acknowledge and confirm that they do not have any grounds and hereby agree not to challenge (or to allege or to pursue any matter, cause or claim arising under or with respect to, the Notes, the Loan Agreement, the Security Documents or any of the other Loan Documents, any document, instrument or agreement relating to any of the foregoing, any of the Senior Debt, covenants, promises, agreements, obligations, duties or liabilities thereunder, or the status of any thereof as legal, valid and binding obligations enforceable in accordance with their respective terms; and they do not possess (and hereby forever waive , remise, release, discharge and hold harmless the Agent, the Lenders and their respective parents, subsidiaries, Affiliates, stockholders, directors, officers, employees, attorneys, agents and representatives and each of their respective heirs, executors, administrators, successors and - 4 - 183 assigns [collectively, the "NOTEHOLDER PARTIES"] from and against, and agree not to allege or pursue) any action, cause of action, suit, debt, claim, counterclaim, cross-claim, demand, defense, offset, opposition, demand and other right of action whatsoever, whether in law, equity or otherwise (which they, all those claiming by, through or under them, or their successors or assigns, have or may have) against the Noteholder Parties, or any of them, prior to or as of the date of this Amendment for, upon, or by reason of, any matter, cause or thing whatsoever, arising out of, or relating to, the Notes, the Loan Agreement, the Security Documents, the Loan Documents or other any document, instrument or agreement relating to any of the foregoing (including, without limitation, any payment, performance, validity or enforceability of any or all of the Indebtedness, covenants, promises, agreements, provisions, rights, remedies, obligations, duties and liabilities thereunder) or any transaction relating to any of the foregoing, or any or all actions, courses of conduct or other matters in any manner whatsoever relating to or otherwise connected with any of the foregoing. 8. COUNTERPARTS. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute one and the same agreement. 9. APPLICABLE LAW. THIS AMENDMENT SHALL BE DEEMED TO BE MADE PURSUANT TO THE LAWS OF THE STATE OF NEW JERSEY WITH RESPECT TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY IN THE STATE OF NEW JERSEY AND SHALL BE CONSTRUED, INTERPRETED, PERFORMED AND ENFORCED IN ACCORDANCE THEREWITH. 10. CAPTIONS. The captions in this Amendment are for convenience of reference only and shall not define or limit the provisions hereof. 11. LEGAL FEES. The Borrowers shall pay all reasonable expenses incurred by the Agent in the drafting, negotiation and closing of the documents and transactions contemplated hereby, including the reasonable fees and disbursements of the Agent's special counsel. 12. REAFFIRMATION. Except as amended hereby, the Loan Agreement shall remain in full force and effect and is in all respects hereby ratified and affirmed. IN WITNESS WHEREOF, the Lenders, the Agent and the Borrowers have caused this - 5 - 184 Amendment to be duly executed as a sealed instrument by their respective duly authorized officers, as applicable, all as of the day and year first above written. AT&T COMMERCIAL FINANCE CORPORATION, individually and as Agent By:/s/ [ILLEGIBLE SIGNATURE] ------------------------------ Title: Vice President SUNBELT COMMUNICATIONS COMPANY By: /s/ James E. Rogers ------------------------------ Title: President VALLEY BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President YUMA BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President SIERRA BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President - 6 - 185 OREGON TRAIL BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President FALLS BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President TWO OCEAN BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President SIERRA RADIO COMPANY By: /s/ James E. Rogers ------------------------------ Title: President RADIO NEWS COMPANY By: /s/ James E. Rogers ------------------------------ Title: President RADIO SALES COMPANY By: /s/ James E. Rogers ------------------------------ Title: President - 7 - 186 RUBY MOUNTAIN BROADCASTING COMPANY By: /s/ James E. Rogers ------------------------------ Title: President BEARTOOTH COMMUNICATIONS COMPANY By: /s/ James E. Rogers ------------------------------ Title: President Consented to as of date first above written. /s/ James E. Rogers ----------------------------------- [James E. Rogers, individually] JAMES E. ROGERS, AS TRUSTEE OF THE JAMES E. ROGERS TRUST UNDER TRUST AGREEMENT DATED OCTOBER 9, 1997 /s/ James E. Rogers ----------------------------------- James E. Rogers, as Trustee - 8 - 187 EXHIBIT A SCHEDULE 4.15 ------------- OWNERSHIP OF BORROWERS ---------------------- SUNBELT COMMUNICATION COMPANY - ----------------------------- Parent Capital Stock: Number of Shares - =============================================================================== Authorized Issued and Treasury Unissued Outstanding =============================================================================== 25,000 1967.50 1782.50 21,250.00 =============================================================================== Stock Ownership - =============================================================================== Shareholder No. of Shares Percentage =============================================================================== James E. Rogers 1,750.00 88.94 (Trustee of the James E. Rogers Trust) Rolla Cleaver 56.25 2.86 Gene Greenberg 37.50 1.91 James E. Rogers 39.75 2.02 (Trustee for the Children of Elizabeth Ruybalid) Cheryl Purdue 34.00 1.73 Beverly Rogers 50.00 2.54 (Trustee) ================================================================================ Remainder of This Page Intentionally Left Blank 188 EXHIBIT B --------- Schedule 4.15 Ownership of Borrowers Page 7 BEARTOOTH COMMUNICATIONS COMPANY Subsidiary Capital Stock: Number of Shares - =============================================================================== Authorized Issued and Treasury Unissued Outstanding =============================================================================== 25,000 1,000 -0- 24,000 =============================================================================== Stock Ownership - =============================================================================== Shareholder No. of Shares Percentage =============================================================================== Sunbelt Communications 900** 90.00% Company J.W. Radeck 100** 10.00% ================================================================================ **800 of those shares owned by Sunbelt (as evidenced by Stock Certificates No. 2 and 5), and all of those shares owned by Mrs. Radeck (as evidenced by Stock Certificate No. 3) are subject to certain rights and/or restrictions as more particularly described in the Stock Contribution, Put and Redemption Agreement by and between Beartooth, Sunbelt, Mrs. Radeck and William Sanders dated as of May 5, 1997, a true and correct copy of which has previously been delivered to AT&T. EX-4.1 4 EXHIBIT 4.1 1 EXHIBIT 4.1 INVESTMENT AND VOTING AGREEMENT This Investment and Voting Agreement is made as of October 19, 1998, between LAS VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation (the "Company"), whose address is 5325 South Valley View Boulevard, Suite 4, Las Vegas, Nevada 89118, and ASI GROUP, L.L.C., a Nevada limited liability company (the "Purchaser"), whose address is c/o Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109. SECTION 1 AUTHORIZATION AND SALE OF COMMON STOCK 1.1 AUTHORIZATION. The Company will authorize the sale and issuance of Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares (the "Shares") of its Common Stock ("Common Stock"), no par value. 1.2 SALE OF COMMON STOCK. Subject to the terms and conditions hereof, and in reliance upon the representations, warranties and agreements of the parties contained herein, the Company will issue and sell to the Purchaser, and the Purchaser will buy from the Company, Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) shares of Common Stock at a purchase price of One Dollar and Eight and One-Half Cents ($1.085) per share, for an aggregate purchase price of Two Million Five Hundred Thousand Dollars ($2,500,000.00). 1.3 ADJUSTMENT OF PRICE AND/OR TERMS. (a) If at any time and each time within three (3) years after the Closing (as defined in Section 2.1 below), the Company offers to sell or grants, sells or issues shares of its capital stock to any persons or entity other than the Purchaser at a lower price per share than the purchase price paid by the Purchaser for the Shares and/or on more favorable terms and conditions than those afforded to the Purchaser in connection with the purchase of the shares of Common Stock (taking into account any equitable adjustment in accordance with the Anti-Dilution Provisions), the Company agrees to retroactively apply such lower price and/or more favorable terms and conditions to the Shares purchased by the Purchaser. At the Purchaser's request, the Company shall either (i) issue the Purchaser additional shares of Common Stock in the amount equal to (A) the amount of any such overpayment by the Purchaser divided by (B) such lower price charged by the Company to any person or entities or (ii) deliver to the Purchaser the amount of any such overpayment in cash. (b) If at any time after the Closing, while the Purchaser is an equity holder of the Company or has options, warrants or other rights to acquire equity of the Company, the Company offers to sell or grants, sells or issues shares of its capital stock to any of Messrs. Vaso Boreta, Ronald Boreta and John Boreta or Boreta Enterprises Ltd. or their respective - 1 - 2 affiliates (collectively, "Boreta") at any price or for any consideration (including, but not limited to, provision of services) the Company shall issue the Purchaser additional shares of Common Stock so as to maintain the relative proportionate equity ownerships of the Purchaser, on the one hand, and Boreta, on the other hand, in the Company as they were immediately prior to such offer, grant, sale or issuance, assuming the consummation of such offer, grant, sale or issuance. SECTION 2 CLOSING DATE; DELIVERY 2.1 CLOSING DATE. The closing of the purchase and sale of the Common Stock hereunder shall be held at the offices of the Company sixteen days from the execution hereof (the "Closing"), or at such other time and place upon which the Company and the Purchaser shall agree (the date of the Closing is hereinafter referred to as the "Closing Date"). 2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser a certificate or certificates, registered in the Purchaser's name representing Two Million Three Hundred Three Thousand Two Hundred Ninety (2,303,290) Shares against payment of the purchase price therefor, by check payable to the Company or wire transfer per the Company's instructions. The total purchase price shall be paid by the Purchaser to the Company in one installment without interest thereon. SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth on the Schedule of Exceptions attached hereto as Exhibit B (which Schedule makes specific reference to the particular representation or warranty as to which exception is taken, which in each case shall constitute the sole representation and warranty to which such exception shall apply), the Company represents and warrants to the Purchaser as follows: 3.1 DEFINITION OF MATERIAL. For purposes of this Section 3, material shall mean anything having a value or effect of more than $50,000. 3.2 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of the State of Colorado and is in good standing under such laws. The Company has requisite corporate power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. The Company is not presently qualified to do business as a foreign corporation in any jurisdiction, and the failure to be qualified will not have a material adverse affect on the Company's business as now conducted or as now proposed to be conducted. The Company has furnished the Purchaser with copies of its Articles of Incorporation and By-Laws, as amended. Said copies are true, correct and complete and contain all amendments through the Closing Date. - 2 - 3 3.3 CORPORATE POWER. The Company has all requisite legal and corporate power and authority to execute and deliver this Agreement, at the Closing will have all requisite legal and corporate power and authority to sell and issue the Shares hereunder, to issue the Option (as defined below), to issue the Option Shares (as defined below) upon exercise of the Option and to carry out and perform its obligations under the terms of this Agreement. 3.4 SUBSIDIARIES. The Company has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any equity interest in any corporation, association or business entity. 3.5 CAPITALIZATION. The authorized capital stock of the Company consists of 15,000,000 shares of Common Stock, of which 5,831,807 shares are issued and outstanding, and 5,000,000 shares of Preferred Stock, of which no shares are issued and outstanding. The outstanding shares have been duly authorized and validly issued, and are fully paid and nonassessable. Options to purchase 432,000 shares of Common Stock are issued and outstanding under the Company's employee stock option plan. All outstanding securities of the Company were issued in compliance with applicable federal and state securities laws. Except as set forth above, there are no option, warrants or other rights to purchase any of the Company's capital stock. Except as set forth in any agreement entered into with the Purchaser, the Company is not a party or subject to any agreement or understanding, and there is no agreement or understanding between any persons that affects or related to the voting or giving of written consents with respect to any security or the voting by a director of the Company. 3.6 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of this Agreement and the Option Agreement (as defined below) by the Company, the authorization, sale, issuance and delivery of the Shares, the Option, and the Option Shares and the performance of all of the Company's obligations hereunder and under the Option Agreement has been taken or will be taken prior to the Closing. This Agreement and the Option Agreement, when executed and delivered by the Company, shall constitute valid and legally binding obligations of the Company, enforceable in accordance with their respective terms. The Shares, when issued in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable the Option Shares have been duly and validly reserved and, when issued in compliance with the provisions of this Agreement, and the Option Agreement will be validly issued, fully paid and nonassessable; and the Shares and Option Shares will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon the holders hereof through no action of the Company; provided, however, that the Option Shares will be subject to restrictions on transfer under state and/or federal securities laws as set forth herein. The Shares are not subject to any preemptive rights or rights of first refusal. 3.7 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser its audited balance sheet and statements of operations and cash flow was of and for the period ended December 31, 1997, and its combined unaudited balance sheet and statements of operations - 3 - 4 and cash flows as of and for the period ended June 30, 1998 (collectively the "Financial Statements"). The Financial Statements are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except that the unaudited financial statements do not contain footnotes. The Financial Statements accurately set out and describe the financial condition and operating results of the Company as of the dates, and for the period, indicated therein. The financial statements for the year ended December 31, 1997, were audited by Arthur Andersen LLP. 3.8 ABSENCE OF CHANGES. Since June 30, 1998: (a) the Company has not entered into any transaction which was not in the ordinary course of business, (b) there has been no materially adverse change in the condition (financial or otherwise), business, property, assets or liabilities of the Company other than changes in the ordinary course of business, none of which, individually or in the aggregate, has been materially adverse, (c) there has been no damage to, destruction of or loss of physical property (whether or not covered by insurance) materially and adversely affecting the business or operations of the Company, (d) the Company has not declared or paid any dividend or made any distribution on its stock, or redeemed, purchased or otherwise acquired any of its stock, (e) the Company has not increased the compensation of any of its officers, or the rate of pay of its employees as a group, except as part of regular compensation increases in the ordinary course of business, (f) there has been no resignation or termination of employment of any key officer, consultant or employee of the Company, and the Company does not know of the impending resignation or termination of employment of any such officer, consultant or employee that if consummated would have a material adverse effect on its business, (g) there has been no labor dispute involving the Company or its employees and none is pending or, to the best of the Company's knowledge, threatened, (h) there has not been any change, except in the ordinary course of business, in the contingent obligations of the Company, by way of guaranty, endorsement, indemnity, warranty or otherwise, (i) there have not been any loans made by the Company to any of its employees, officers or directors other than travel advances and office advances made in the ordinary course of business and (j) to the best of the Company's knowledge, there has been no other event or condition of any character pertaining to and materially and adversely affecting the assets or business of the Company. 3.9 MATERIAL LIABILITIES. The Company has no material liabilities or obligations, absolute or contingent (individually or in the aggregate) except (a) the liabilities and obligations set forth in the Financial Statements, (b) liabilities and obligations which have been incurred subsequent to June 30, 1998, in the ordinary course of business which have not been in the aggregate materially adverse, (c) liabilities and obligations under lease for its principal offices and for equipment, and (d) liabilities and obligations under sales, procurement and other contracts and arrangements entered into in the normal course of business. 3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and marketable title to its properties and assets, and has good title to all of its leasehold interests in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than the - 4 - 5 lien of current taxes not yet due and payable. Each of the Company's assets is in good repair and good, marketable and operating condition and is suitable for the purposes for which it presently is being used and is intended to be used by the Company and is adequate and suitable to meet all present and reasonably anticipated future requirements of the Company. The Company's assets conform to all applicable laws, ordinances, codes, rules and regulations, and the Company has not received any notice to the contrary. The Company does not own, of record or beneficially, any real property. Exhibit C sets forth a list and description of all property leased or subleased to or by the Company. 3.11 COMPLIANCE WITH OTHER INSTRUMENTS; NONE BURDENSOME, ETC. The Company is not in violation of any term of its Articles or By-Laws, or, in any material respect, of any term or provision of any mortgage, indebtedness, indenture, contract, security agreement, agreement, instrument, judgment or decree, and, to the best of its knowledge, is not in violation of any order, statute, rule or regulation applicable to the Company where such violation would materially and adversely affect the Company. The execution, delivery and performance of and compliance with this Agreement and the Option Agreement, and the issuance of the Common Stock, the Option and the Option Shares have not resulted and will not result in any violation of, or conflict with, or constitute a default (or an event that might, with the passage of time or the giving of notice or either of them, constitute a default) any of the terms of, result in the termination of, result in the loss of any right under, or give to any other person the right to cause such a termination of or loss under and will be in compliance with, the Company's Articles, By-Laws and all of its agreements, permits and licenses or any provision of federal, state, local or foreign statute rule ordinance or regulation applicable to the Company or result in the creation of, any mortgage, pledge, lien, encumbrance or charge upon any of the capital stock, properties or assets of the Company in the creation, maturation or acceleration of any liability or obligation of the Company or the creation, maturation or acceleration of any liability or obligation of the Company (or give to any other person the right to cause such a creation, maturation or acceleration) and there is no such violation or default which adversely affects the business of the Company or any of its properties or assets. 3.12 INTANGIBLE ASSETS. (a) The Company (i) owns or has the right to use, free and clear of all liens, claims and restrictions, all Intellectual Property (as hereinafter defined) used in the conduct of its business as now conducted or as proposed to be conducted without infringing upon or otherwise acting adversely to the right or claimed right of any person under or with respect to any of the foregoing, and (ii) is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner of, license of, or other claimant to, any patent, trademark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business or otherwise. "Intellectual Property" means (a) all inventions (whether patentable or unpatentable) and whether or not - 5 - 6 reduced to practice, all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuance, continuations, continuations-in-part, revisions, extensions and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations and renewals in connection therewith, (d) all mask works and all applications, registrations and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and producing processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software and information systems, programs, (including data and related documentation), whether owned or leased by the Company, (g) all other proprietary rights and (h) all copies and tangible embodiments thereof (in whatever form or medium). The Company has taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses and has never granted any sublicense or similar right to any third party with respect to such Intellectual Property. (b) The Company owns and has the unrestricted right to use all Intellectual Property required for or incidental to the development, construction and operation of the SportPark segment of its business, free and clear of any rights, liens or claims of others, including without limitation, former employers of all current and former employees, consultants, officers, directors and shareholders of the Company. (c) The Company has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties, and none of the stockholders and directors and officers (and employees with responsibility for Intellectual Property matters) of the Company has ever received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation (including any claim that the Company must license or refrain from using any Intellectual Property rights of any third party). No third party has interfered - 6 - 7 with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of the Company. (d) Exhibit D identifies each patent or registration which has been issued to the Company with respect to any of its Intellectual Property, each pending patent application or application for registration which the Company has made with respect to any of its Intellectual Property, and each license, agreement or other permission which the Company has granted to any third party with respect to any of its Intellectual Property. The Company has delivered to the Purchaser correct and complete copies of all such patents, registrations, applications, licenses, agreements and permissions (as amended to date). Exhibit D also identifies each trade name or unregistered trademark used by the Company in connection with any of its businesses. With respect to each item of Intellectual Property required to be identified in Exhibit D: (i) the Company possesses all right, title and interest in and to the item, free and clear of any Liens, license or other restriction, (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, (iii) no action, suit proceeding hearing, investigation, charge, complaint, claim or demand is pending or, to the knowledge of each of the shareholders and the directors and officers (and employees with responsibility for Intellectual Property matters) of the Company, is threatened which challenges the legality, validity, enforceability, use or ownership of the item and (iv) the Company has never agreed to indemnify any person for or against any interference, infringement, misappropriation, or other conflict with respect to the item. 3.13 LITIGATION, ETC. There is no suit, action, hearing, investigation, claim or litigation, or legal, administrative, arbitration or other proceeding pending or, to the best knowledge of the Company after due inquiry, threatened against or affecting the Company, its business or any of its property or assets, before any court, arbitrator, or federal, state, municipal or other governmental board, department, agency or instrumentality, and there is no basis for any such action. There is no judgment, decree, injunction, ruling, award, charge, order or writ of any court, governmental department, commission, agency, instrumentality, arbitration or other person outstanding against, binding upon or involving the Company, its business, any directors or officers of the Company. None of the matters set forth on Exhibit B could result in any material adverse effect. The Company owns policies of casualty, liability or other forms of insurance which provide coverages in amount and scope sufficient to cover every claim, action, cause of action, suit, proceeding, litigation, arbitration or investigation arising out of, related to, or in connection with those matters listed on the schedule of exception. Neither the Company nor any of its directors, officers or employees is currently - 7 - 8 charged with, or is currently under investigation with respect to, any violation of any provision of any foreign, federal, state or local law or administrative regulation in respect of the business of the Company. The Company is not in default with respect to any judgment, decree, injunction, ruling, award, order or writ of any foreign, federal, state, municipal agency or other governmental department, board, commission, bureau, agency or instrumentality. 3.14 EMPLOYEES. To the best of the Company's knowledge, no employee of the Company is in violation of any term of any employment contract, non-disclosure agreement or any other contract or agreement relating to the relationship of such employee with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. There are no controversies pending nor, to the best knowledge of the Company any basis of any such controversies, between the Company and any of its employees. To the knowledge of the Company, and the directors and officers (and employees with responsibility for employment matters) of the Company, no executive, key employee, or group of employees has any plans to terminate employment with the Company. The Company is not bound by any collective bargaining agreement, nor has the Company experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. The Company has not committed any unfair labor practice. None of the shareholders or the directors or officers (or employees with responsibility for employment matters) of the Company has any knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Company. 3.15 EMPLOYEE AGREEMENTS. There are no pension, profit-sharing, bonus, group insurance, death benefit, vacation pay, severance pay, sick leave, holiday pay, welfare, or any other employee benefit or "fringe benefit" plans or arrangements relating to the current or former employees or consultants of the Company. In addition, there are no employment, deferred compensation, collective bargaining, retainer, savings, consulting, non-competition, retirement or incentive agreements, contracts, plans or arrangements relating to, with or for the benefit of any officers or employees of the Company or other persons. 3.16 CERTAIN TRANSACTIONS. The Company is not indebted, directly or indirectly, to any of its officers, directors or shareholders or to their respective spouses or children, in any amount whatsoever; none of said officers, directors or shareholders, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or shareholders of the Company may own less than 1% of the stock of publicly-traded companies which may compete with the Company. No officer, director or shareholder, or any member of their immediate families, is, directly or indirectly, interested in any contract with the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 3.17 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto as Exhibit E is a list of all agreements, contracts, indebtedness, liabilities and other obligations to which the Company is - 8 - 9 a party or by which it is bound that are material to the conduct and operations of its business and properties, which provide for payments to or by the Company; or which involve transactions or proposed transactions between the Company and its officers, directors, affiliates or any affiliate thereof. Copies of certain of such agreements and contracts and documentation evidencing such liabilities and other obligations have been made available for inspection by the Purchaser and its counsel. All of such agreements and contracts are valid, binding and in full force and effect in all respects, assuming due execution by the other parties to such agreements and contracts. To the best knowledge of the Company, the Company and each other party to each such agreement and contract has performed all obligations required to be performed by it thereunder and is not in breach or default, and is not alleged to be in breach or default, in any respect thereunder, and no event has occurred and no condition or state of facts exists (or would exist upon the giving of notice or the lapse of time or any of them) that would become or cause a breach, default or event of default thereunder, would give to any person the right to cause such a termination or would cause an acceleration of any obligation thereunder. 3.18 REGISTRATION RIGHTS. Except as set forth in this Agreement, the Company is not under any contractual obligation to register (as defined in Section 8.1 below) any of its presently outstanding securities or any of its securities which may hereafter be issued. 3.19 GOVERNMENTAL CONSENT, ETC. No consent, approval, order or authorization of (of designation, declaration or filing with) any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Common Stock, or the consummation of any other transaction contemplated hereby, except qualification (or taking such action as may be necessary to secure an exemption from qualification, if available) or the offer and sale of the Common Stock under applicable estate securities laws, which filings and qualifications, if required, will be accomplished in a timely manner. 3.20 OFFERING. Subject to the accuracy of the Purchaser's representations in Section 4 hereof, the offer, sale and issuance of the Common Stock and the Option Shares (as defined in Section 7.6 below) to be issued in conformity with the terms of this Agreement, and the issuance of the Option Shares upon exercise of the Option, constitute transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the "Securities Act"). 3.21 BROKERS OR FINDERS. The Company has not incurred, and will not incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement. 3.22 TAX MATTERS. The Company (a) has timely filed all tax returns that are required to have been filed by it with all appropriate federal, state, county and local governmental agencies (and all such returns fairly reflect the Company's operations for tax purposes), (b) has timely paid all taxes owed by it for which it is obligated to withhold from amounts owing - 9 - 10 to any employee (including without limitation social security taxes), creditor or third party (other than taxes the validity of which are being contested in good faith by appropriate proceedings), and (c) has not waived any statute of limitations with respect to taxes or agreed to any extension of time with respect to a tax assessment or deficiency. The assessment of any additional taxes for a period for which returns have been filed is not expected to exceed the recorded liability therefor, and there are no material unresolved questions or claims concerning the Company's tax liability. The Company's tax returns have not been reviewed or audited by any federal, state, local or county taxing authority. There is no pending dispute with any taxing authority relating to any of said returns which, if determined adversely to the Company, would result in the assertion by any taxing authority of any valid deficiency in any material amount for taxes. 3.23 INSURANCE. With respect to each insurance policy maintained by the Company: (a) the policy is legal, valid, binding, enforceable and in full force and effect, (b) the policy will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following consummation of the transactions contemplated hereby, (c) neither the Company nor any other party to the policy is in breach of default (including with respect to the payment of premiums or the giving of notices) and (d) no party to the policy has repudiated any provision thereof. The Company has been covered since its formation by insurance in type, scope and amount that (x) meet the minimum requirements of any contract, lease or agreement to which the Company is a party and (y) is customary and reasonable for the business in which it has engaged during such period including, without limitation, fire, casualty, liability and key-man life (on the lives of Ron and Vaso Boreta) insurance polices. The Company has not failed to give any notice or present any claim under any insurance policy in a due and timely fashion. 3.24 ENVIRONMENTAL AND SAFETY REGULATIONS. The Company is not in violation of any environmental laws or regulations, including without limitation any and all applicable federal, state and local laws, regulations and ordinances relating to air and water pollution and handling and disposal of chemical and hazardous materials (hereinafter the "Environmental Laws"). The Company possesses all of the authorizations, permits and approvals required to be obtained by applicable Environmental Laws; neither the Company nor any stockholder has received any notice from any governmental authority or has knowledge of any governmental inquiry or investigation or any other claim, suit or proceeding against or involving the Company with respect to any actual or alleged violation of any applicable Environmental Law and all hazardous waste and chemical waste materials have been disposed of in accordance with all applicable Environmental Laws. There have been no spills, dumping, discharge or clean-up of hazardous waste or chemical materials in violation of any Environmental Laws on or at any premises owned or any premises occupied by the Company. 3.25 EMPLOYEE BENEFIT PLANS. (a) The Company has never maintained or contributed to, and does not maintain or contribute to any Employee Benefit Plan as defined in the Employee Retirement Income Security Act of - 10 - 11 1974, as amended. The Company has not incurred any liability under ERISA (including any withdrawal liability) or under the Internal Revenue Code of 1986, as amended Code (the "Code"), with respect to any Employee Benefit Plan. (b) The Company does not contribute to, nor has ever had contributed to and has never been required to contribute to any multi-employer plan or has any liability (including withdrawal liability) under any multi-employer plan. (c) The Company does not maintain or contribute to, nor has it ever maintained or contributed to, nor has it ever been required to contribute to any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code Section 4980B). 3.26 MINUTE BOOKS. The minute books of the Company contain a complete summary of all meetings of directors and shareholders since the time of incorporation and reflect all transactions referred to in such minutes accurately. 3.27 LEGAL COMPLIANCE. The Company has complied with all applicable laws, statutes, and ordinances (including without limitation all rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and charges thereunder) of federal, state, local and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against it alleging any failure to so comply. The Company has all permits, certificates, licenses, approvals and other authorizations required in connection with the operation of its business, all of which are valid and effective. No notice has been issued and no investigation or review is pending or threatened by any governmental entity with respect to (a) any alleged violation by the Company of any law, statute or ordinance, rule, regulation, code, plan, injunction, judgment, order, decree, ruling, charge, policy or guideline of any federal, state, local or foreign governmental entity(or agency thereof), or (b) any alleged failure to have all permits, certificates, licenses, approvals and other authorizations required in connection with the operation of the business of the Company. 3.28 LVDGT AGREEMENT. The Investment Agreement (the "LVDGT Agreement") entered into as of the date hereof between LVDGT and SAGC and attached as Annex 3.28 hereto is valid, binding and in full force and effect. 3.29 SAGC. The Company's most significant asset is the Company's equity holding in Saint Andrews Golf Corporation, a Nevada corporation ("SAGC"). The Company owns 2 million shares of the Common Stock of SAGC (collectively, the "SAGC Shares"). Each of the SAGC Shares has been duly authorized, validly issued, fully paid and - 11 - 12 nonassessable. The Company has good, valid and marketable title to the SAGC Shares, free and clear of any lien, charge, encumbrance, security interest, claim or fight of others of whatever nature. No person or entity has any power or right, whether or not shared with any other person or entity, to dispose of or direct the disposition of any SAGC Shares or vote or direct the voting of any SAGC Shares. The Company hereby makes the same representations and warranties as contained in Section 3 of the LVDGT Agreement with respect to SAGC for the benefit of the Purchaser, which representations and warranties are incorporated herein by reference in their entirety. 3.30 DISCLOSURE. This Agreement with the Exhibits hereto and all information provided by the Company to the Purchaser do not contain any untrue statement of a fact or omit to state a fact necessary in order to make the statements contained herein not misleading in light of the circumstances under which they were made. SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser hereby represents and warrants to the Company with respect to the purchase of the Shares as follows: 4.1 EXPERIENCE. It has experience in evaluating and investing in private placement transactions of securities in companies so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. 4.2 INVESTMENT. It is acquiring the Shares for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. It understands that the Shares have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser's representations as expressed herein. 4.3 RULE 144. It acknowledges that the Shares must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. It is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a "brokers transaction" or in transactions directly with a "market maker" and the number of shares being sold during any three month period not exceeding specified limitations. 4.4 ACCESS TO DATA. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has had the - 12 - 13 opportunity to review the Company's facilities. It has also had an opportunity to ask questions of officers of the Company, which questions were answered to its satisfaction. It understands that such discussions, as well as any written information issued by the Company, were intended to describe certain aspects of the Company's business and prospects but were not a thorough or exhaustive description. However, no investigation by, or furnishing of information to, the Purchaser shall affect or modify the representations, warranties and agreements of the Company set forth herein or the right of the Purchaser to rely exclusively thereon and to seek and obtain all damages and other remedies available to the Purchaser in connection with the breach of any of the representations, warranties and covenants contained herein. 4.5 AUTHORIZATION. This Agreement when executed and delivered by the Purchaser will constitute a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms subject to (a) the laws of bankruptcy and the laws affecting creditor's rights generally and (b) the availability of equitable remedies. 4.6 BROKERS OR FINDERS. The Company has not incurred and will not incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finder's fees or agents' commissions or any similar charges in connection with this Agreement. 4.7 REQUIRED SEC FILINGS. The Purchaser acknowledges that within 10 days after the Closing, it will be required to file a Schedule 13D or Schedule 13G, as appropriate, or Schedule 13G, as appropriate, and a Form 3 with the Securities and Exchange Commission. SECTION 5 THE PURCHASER'S CONDITIONS TO CLOSING The Purchaser's obligations to purchase the Shares at the Closing are subject to the fulfillment of the below-listed conditions, the waiver of which shall not be effective against the Purchaser unless it consents in writing thereto. If at the Closing Date any of the conditions specified in this Agreement shall not have been fulfilled, the Purchaser shall, at the Purchaser's election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights Investor may have by reason of such nonfulfillment. 5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and warranties made by the Company in Section 3 hereof shall be true, complete and correct when made, and shall be true, complete and correct on the Closing Date. 5.2 COVENANTS. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all respects. 5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the Purchaser a certificate of the Company, executed by the President of the Company, dated the Closing - 13 - 14 Date, and certifying, among other things, to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this Agreement. 5.4 GOOD STANDING CERTIFICATE. The Company shall have delivered to the Purchaser a certificate of good standing of the Company under the laws of the State of Colorado. 5.5 LEGAL MATTERS. All matters of a legal nature which pertain to this Agreement and the transactions contemplated hereby shall have been reasonably approved by counsel to the Purchaser. 5.6 CO-SALE AGREEMENT. The Purchaser and John Boreta, the Company, Ron Boreta and Vaso Boreta shall each have entered into a Co-Sale Agreement which shall have a term of two years in the form attached hereto as Exhibit F. 5.7 LVDGT AGREEMENT. The transactions contemplated by the LVDGT Agreement have been consummated or are being consummated simultaneously herewith. 5.8 MERGER. The terms of the proposed merger between the Company and SAGC shall be entirely satisfactory, in both form and substance, to the Purchaser in its sole discretion. Without limiting the foregoing, the terms of such merger shall provide that the Purchaser's economic interest in the Company shall not be diluted by the consummation of such merger. 5.9 VOTING AGREEMENT. The voting agreement by and among the Purchaser and the individuals listed therein (the "Voting Agreement"), in the form attached hereto as Exhibit A, has been executed and is valid, binding and in full force and effect. 5.10 OPINION OF THE COMPANY'S COUNSEL. The Purchaser shall have received from Krys, Boyle, Freedman & Sawyer, P.C., counsel to the Company, an opinion dated the Closing Date, in form and substance satisfactory to the Purchaser, to the effect that: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado, and the Company has the requisite corporate power and authority to own it properties and to conduct its business. (b) The Company is not presently required to be qualified to do business as a foreign corporation in any state or jurisdiction of the United States. (c) The Company has the requisite corporate power and authority to execute, deliver and perform this Agreement and the Option Agreement. The Agreement and the Option Agreement have been duly and validly authorized by the Company, duly - 14 - 15 executed and delivered by an authorized officer of the Company and constitutes legal, valid and binding obligations of the Company, subject to bankruptcy and other laws of general application affecting the rights and remedies of creditors and except insofar as the enforceability of the indemnification provisions of Section 8.11 of the Agreement may be limited by applicable laws and except that no opinion need be given as to the availability of equitable remedies. (d) The capitalization of the Company is as follows: (i) The authorized capital stock of the Company consists of 15,000,000 shares of Common Stock, of which 5,831,807 shares are issued and outstanding, and 5,000,000 shares of Preferred Stock, of which no shares are issued and outstanding. The outstanding shares have been duly authorized and validly issued, and are fully paid and nonassessable. Options to purchase 432,000 shares of Common Stock are issued and outstanding under the Company's employee stock option plan. All outstanding securities of the Company were issued in compliance with applicable federal and state securities laws. Except as set forth above, there are no option, warrants or other rights to purchase any of the Company's capital stock. (ii) PREFERRED STOCK. 5,000,000 shares of Stock, of which no shares are issued and outstanding. (iii) COMMON STOCK. 15,000,000 shares of Common Stock, of which (A) 5,831,807 shares are issued and outstanding and (B) 2,303,290 shares are being purchased pursuant to this Agreement. All such shares of Common Stock have been duly authorized, issued and delivered and are validly outstanding, fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws and approved by all requisite shareholder action. (iv) Except for (A) the rights of first refusal contained in Section 9 hereof; (B) 347,975 shares of Common Stock reserved for issuance upon the exercise of the stock option granted herein, (C) 432,000 shares of Common Stock reserved for issuance to employees and consultants upon exercise of outstanding stock options, - 15 - 16 there are no preemptive rights or, to the best of counsel's knowledge, options, warrants, conversion privileges or other rights (or agreements of any such rights) outstanding to purchase or otherwise obtain any of the Company's securities. (e) The certificates representing shares of Common Stock are in due and proper form and have been duly and validly executed by the officers of the Company named thereon. (f) The execution, delivery, performance and compliance with the terms of this Agreement and the Option Agreement do not violate any provision of any federal, state or local law, rule or regulation or of any judgment, writ, decree or order binding upon the Company or any provision of the Company's amended Articles of Incorporation ("Articles") or By-Laws. (g) All consents, approvals, orders or authorizations of, and all qualifications, registrations, designations, declarations or filings with, any federal or state governmental authority on the part of the Company required in connection with the consummation of the transactions contemplated by this Agreement and the Option Agreement have been obtained and are effective as of the Closing, and such counsel is not aware of any proceedings, or threat thereof, which question the validity thereof. (h) Based in part upon the representations of the Purchaser in this Agreement, the offer and sale of the Common Stock pursuant to the terms of this Agreement are exempt from the registration requirements of Section 5 of the Securities Act by virtue of Section 4(2) thereof, and from the qualification requirements of the securities laws of the State of Nevada, or all requisite permits, qualifications and orders have been obtained. (i) Except as set forth on the Schedule of Exceptions attached to the Agreement as Exhibit B, such counsel is not aware of any action, proceeding or investigation pending against the Company or any of its officers, directors or employees, or that any of the foregoing has received any threat thereof, which questions the validity of the Agreement or the right of the Company or its officers, directors and employees to enter into such agreement or which might result, either individually or in the aggregate, in any adverse change in the assets, condition, affairs or prospects of the Company, nor is such counsel aware of any litigation pending, against the Company or any of its - 16 - 17 officers, directors or employees' or that any of the foregoing has received any threat thereof, by reason of the proposed activities of the Company, the past employment relationships of its officers, directors or employees, or negotiations by the Company or any of its officers or directors with possible investors in the Company. (j) The Company is not in violation of any provisions of its Articles or Bylaws, and neither of such documents is in violation of any provision of the Corporation Law of the State of Colorado. 5.11 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the Closing Date, there shall have been no material adverse change, regardless of insurance coverage therefor, in the business or any of the assets, results of operations, liabilities, prospects or conditions, financial or otherwise, of the Company. SECTION 6 THE COMPANY'S CONDITIONS TO CLOSING The Company's obligation to sell and issue the Shares at the Closing is, at the option of the Company, subject to the fulfillment as of the Closing Date of the following conditions: 6.1 REPRESENTATIONS. The representations made by the Purchaser in Section 4 hereof shall be true and correct when made, and shall be true and correct on the Closing Date. 6.2 LEGAL MATTERS. All material matters of a legal nature which pertain to this Agreement, and the transactions contemplated hereby, shall have been reasonably approved by counsel to the Company. SECTION 7 AFFIRMATIVE COVENANTS OF THE COMPANY The Company hereby covenants and agrees as follows: 7.1 FINANCIAL INFORMATION. The Company will mail the following reports to the Purchaser for so long as the Purchaser is a holder of any of the shares of Common Stock and the Option Shares: (a) As soon as practicable after the end of each fiscal year, and in any event within 90 days thereafter, consolidated balance sheets of the Company and its subsidiaries, if any, as of the end of such fiscal year, and consolidated statements of operations and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with - 17 - 18 generally accepted accounting principles and setting forth in each case in comparative form similar information of the previous fiscal year, all in reasonable detail and audited by independent public accountants of national standing selected by the Company. (b) As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company and in any event within 45 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and consolidated statements of operations and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles (other than for accompanying notes), all in reasonable detail and signed, subject to changes resulting from year-end audit adjustments, by the principal financial or accounting officer of the Company. (c) Within 15 days after the end of each fiscal month, unaudited consolidated balance sheets of the Company as of the end of such month, unaudited consolidated statements of operations including income statements, and unaudited consolidated rolling cash flow projections for each month and for the current fiscal year to date. Such financial statements shall be prepared in accordance with generally accepted accounting principles consistently applied (other than accompanying notes), all in reasonable detail subject to year-end audit adjustments. (d) Promptly after each meeting or the execution of an action by written consent, copies of the minutes of proceedings or actions by written consent of the Company's Board of Directors and shareholders. (e) With reasonable promptness, such other information and data with respect to the Company and its subsidiaries, if any, as the Purchaser may from time to time reasonably request. (f) For so long as the Purchaser is eligible to receive reports under this Section 7.1, it shall also have the right, at its expense, to visit and inspect any of the properties of the Company or any of its subsidiaries, to examine its books of account and records, and to discuss their affairs, finances and accounts with their officers, all at such reasonable times as often as may be - 18 - 19 reasonably requested, provided, however, that the Company shall not be obligated to provide any information, other than to the representatives of the Purchaser on the Board of Directors, that it reasonably considers to be a trade secret or to contain confidential information. 7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted pursuant to Section 7.1 may not be assigned or otherwise conveyed by the Purchaser or by any subsequent transferee of any such rights without the prior written consent of the Company; provided, however, that the Purchaser may assign such rights to a parent, subsidiary or affiliate of the Purchaser upon notice to the Company thereof. 7.3 USE OF PROCEEDS. The Company shall completely segregate the proceeds from the sale of the Shares from all other funds of the Company. These funds shall be strictly and exclusively used for the purchase of equity securities of SAGC and shall not be used for any other purposes. All such purchases shall be on terms and conditions satisfactory to the Purchaser. The Company shall maintain a separate accounting for the use of these proceeds and provide a copy of such accounting to the Purchaser upon request. 7.4 RULE 144 REPORTING. With a view to making available to the Purchaser the benefits of certain rules and regulations of the Securities and Exchange Commission which may permit the sale the Option Shares to the public without registration, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times; (b) Use its best efforts to file with the Securities and Exchange Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) So long as the Purchaser owns any Restricted Securities (as defined in Section 8.1 hereof) furnish to the Purchaser forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company filed with the Securities and Exchange Commission, and such other reports and documents of the Company and other information in the possession of or reasonably obtained by the Company as the Purchaser may reasonably request in availing itself of any due or regulation of the Securities and Exchange Commission - 19 - 20 allowing the Purchaser to sell any such securities without registration. 7.5 PROTECTIVE PROVISIONS. For so long as the Purchaser or its assignees is a holder of any shares of the Common Stock or Option Shares, the Company shall not without the Purchaser's prior written consent: (a) change any of the terms of Common Stock or any amendment, addition, change, modification or deletion of any portion of the By-Laws or Articles of the Company; (b) authorize or issue (i) any class or series of Preferred Stock or other securities having rights senior to the Common Stock, or (ii) any rights to purchase or any securities or instruments convertible or exchangeable into any such Preferred Stock and other securities of the Company; (c) sell, lease, convey or otherwise dispose of all or substantially all of its assets, or effect any merger, consolidation, reorganization or amalgamation of the Company, with another corporation; (d) adopt a statutory plan of share exchange; (e) redeem or repurchase (or enter into any agreement to become so obligated) any shares of Common Stock or Common Stock (other than pursuant to employee stock vesting or repurchase employee stock agreements; (f) enter into any transaction with or increase the compensation paid or issue any securities of the Company or SAGC, rights or options to purchase any securities of the Company or SAGC or any instrument convertible or exchangeable into or payable or satisfied with any securities of the Company or SAGC or any other compensation derived from or based on the profits or securities of the Company or SAGC to any of Boreta or SAGC or any of their respective affiliates or approve, allow or agree to any of the foregoing; (g) take or fail to take any action with respect to any shares of capital stock of SAGC or rights to purchase any such capital stock owned or under the control of the Company (including, but not limited to, the sale, transfer, assignment, disposition, exchange, conversion, pledge or voting of such shares, the granting of any proxies with respect to such shares, or entering into any agreement or arrangement with respect to any of the foregoing); - 20 - 21 (h) dissolve or liquidate the Company and/or its assets or close the business of the Company; or (i) file a petition to appoint a receiver for the Company or file a voluntary petition for bankruptcy, insolvency or to make any assignment for the benefit of creditors of the Company 7.6 GRANT OF STOCK OPTIONS. Simultaneously with the execution hereof, the Company and the Purchaser are entering into an option agreement (the "Option Agreement") attached as annex A hereto pursuant to which the Company is granting the Purchaser an option (the "Option") to purchase from the Company Three Hundred Forty Seven Thousand Nine Hundred Seventy Five (347,975) shares of Common Stock of the Company (the "Option Shares"), as such number may be adjusted pursuant to the terms of the Option Agreement. The Option may be exercised from time to time in full or in part by the Purchaser at any time prior to the tenth year anniversary of the Closing. The Option shall be exercisable at a purchase price of $1.8392 per share, subject to adjustment as described therein. The Company agrees that the Option Shares issued upon the exercise by Purchaser of the Option shall carry the same registration rights as set forth in Section 8 of this Agreement and be considered "Registrable Securities" under the terms of such Section 8. 7.7 PRINCIPAL BUSINESS. The Company shall ensure that all its principal shareholders, officers and directors (a) direct or refer all opportunities relating to, similar to or of the same nature as SAGC's Sports Park business exclusively to SAGC, (b) not realize any profit or gain with respect to such opportunities to the detriment or in lieu of the Company or SAGC and (c) not otherwise misappropriate any corporate opportunity. 7.8 MERGER. The Company shall amend the merger agreement (the "Merger Agreement") dated as of January 20, 1998 with SAGC such that upon consummation of the merger, the Purchaser will receive equity interests in the surviving company having terms, conditions, rights, designations, preferences and values at least as favorable as those of the Shares. Notwithstanding the foregoing, no amendment of or modification to the Merger Agreement shall be made without the prior approval of the Purchaser. SECTION 8 RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS; INDEMNIFICATION 8.1 CERTAIN DEFINITIONS. As used in this Agreement the following terms shall have the following respective meanings: "COMMISSION" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. - 21 - 22 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 as amended or any similar federal statute and the rules and regulations of the Commissions thereunder all as the same shall be in effect at the time. "HOLDER" shall mean the Purchaser and any person holding Registrable Securities or shares to whom the rights under this Section 8 have been transferred in accordance with Section 8.2 hereof. "REGISTRABLE SECURITIES" means (i) the Option Shares; and (ii) any Common Stock of the Company issued or issuable in respect of the Option Shares or other securities issued or issuable pursuant to the conversion of the shares upon any Recapitalization or any Common Stock otherwise issued or issuable with respect to the Shares provided however that shares of Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or (B) sold or are available for sale in the opinion of counsel to the Company in a single transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are or may be removed upon the consummation of such sale. The term "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "REGISTRATION EXPENSES" shall mean all expenses, except Selling Expenses as defined below, incurred by the Company in complying with Sections 8.5, 8.6 and 8.7, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). "RESTRICTED SECURITIES" shall mean the securities of the Company required to bear the legend set forth in Section 8.3 hereof. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the notes and regulations of the Commission thereunder all as the same shall be in effect at the time. "SELLING EXPENSES" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the holders. 8.2 RESTRICTION ON TRANSFERABILITY. The Shares shall not be sold, assigned, transferred or pledged except upon satisfaction of the conditions specified in this Section 8, which conditions are intended to ensure compliance with the provisions of the Securities Act. - 22 - 23 8.3 RESTRICTIVE LEGEND. Each certificate representing (i) the Shares, and (ii) any other securities issued in respect of the Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar events, shall (unless otherwise permitted by the provisions of Section 8.4 below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. The Purchaser consents to the Company making a notation on its records and giving instructions to any transfer agent of the Shares in order to implement the restrictions on transfer established in this Section 8. 8.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 8.4. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities (other than (i) transfers not involving a change in beneficial ownership or (ii) transactions involving the distribution of Restricted Securities by the Purchaser to a parent, subsidiary or affiliate of the Purchaser), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such holder's expense by either (i) an unqualified written opinion of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company. Each certificate evidencing the Restricted Securities Transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the - 23 - 24 appropriate restrictive legend set forth in Section 8.3 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such holder and the Company such legend is not required in order to establish compliance with any provision of the Securities Act. 8.5 REQUEST FOR REGISTRATION. (a) REQUEST FOR REGISTRATION. If the Company shall receive from the Purchaser at any time a written request that the Company effect any registration with respect to all or a part of the Registrable Securities, the Company will: (i) promptly give written notice of the proposed registration to all other Holders; and (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or holders joining in such request as are specified in a written request received by the Company within twenty (20) days after such written notice from the Company is mailed or delivered. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 8.5: (A) After the Company has initiated one such registration pursuant to this Section 8.5(a); (B) During the period starting with the date sixty (60) days prior to the Company's good faith estimate of the date of filing of, and ending on a date one hundred twenty (120) days after the effective date of, a Company-initiated registration; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; - 24 - 25 (b) Subject to the foregoing clauses (A) and (B), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Purchaser. The registration statement filed pursuant to the request of the Purchaser may include other securities of the Company, with respect to which registration rights have been granted, and may include securities of the Company being sold for the account of the Company. (c) UNDERWRITING. The right of any Holder to registration pursuant to Section 8.5 shall be conditioned upon such holder's participation in such underwriting and the inclusion of such holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Purchaser and such holder with respect to such participation and inclusion) to the extent provided herein. A Holder may elect to include in such underwriting all or a part of the Registrable Securities he or she holds. 8.6 THE COMPANY REGISTRATION. (a) NOTICE OF REGISTRATION. If at any time or from time to time the Company shall determine to register of its securities, either for its own account or the account of a Holder or Holders, other than a registration relating solely to employee benefit plans or a post effective amendment to the registration statement for the Company's initial public offering, the Company will: (i) promptly give to each Holder written notice thereof; and (ii) include in such registration (and any related qualification under the sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company, by any Holder. (b) UNDERWRITING. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 8.6(a)(i). In such event the right of any Holder to registration pursuant to this Section 8.6 shall be conditioned upon such Holder's - 25 - 26 participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 8.6, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration. The Company shall so advise all Holders and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such holders at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or other shareholder to the nearest 100 shares. If any Holder or other shareholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to 90 days after the effective date of the registration statement relating thereto, or such other shorter period of time as the underwriters may require. The Company may include shares of Common Stock held by shareholders other than Holders in a registration statement pursuant to this Section 8.6, so long as the amount of Registrable Securities otherwise includable in such registration statement would not thereby be diminished. (c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 8.6 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. - 26 - 27 8.7 REGISTRATION ON FORM S-3. (a) The Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use of Form S-3, in addition to the rights contained in the foregoing provisions of this Section 8, the Holders of Registrable Securities shall have the right to request registrations on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Holder or Holders). (b) If a request complying with the requirements of Section 8.7(a) hereof is delivered to the Company, the provisions of Section 8.5(a)(i) and (ii) and Section 8.5(b) hereof shall apply to such registration. If the registration is for an underwritten offering, the provisions of Section 8.5(c) hereof shall apply to such registration. 8.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in connection with the registration pursuant to Section 8.5, 8.6 and 8.7 shall be borne by the Company. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders and all other Registration Expenses shall be borne by the Holders of such securities pro rata on the basis of the number of shares registered. 8.9 REGISTRATION PROCEDURES. In the case of each registration, qualification or compliance effected by the Company pursuant to this Section 8, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will: (a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for at least one hundred twenty (120) days, and prepare and file with the Commission such amendments to such registration statement and supplements to the prospectus contained therein as may be necessary to keep such registration statement effective for at least one hundred twenty (120) days, provided that no such registration shall constitute a shelf registration under Rule 415 promulgated by the Commission under the Securities Act; (b) Enter into a written underwriting agreement in customary form and substance reasonably satisfactory to the Company, the - 27 - 28 Holders and the managing underwriting or underwriters of the public offering of such securities, if the offering is to be underwritten in whole or in part; (c) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus' final prospects and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d) Use its best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Holders may reasonably request within ten (10) days prior to the original filing of such registration statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business a foreign corporation in any jurisdiction where it is not so qualified; (e) Notify the Holders (of if they have appointed an attorney-in-fact, such attorney-in-fact) participating in such registration, promptly after it shall receive notice thereof, of the time when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (f) Notify such Holders or their attorney-in-fact promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information; (g) Prepare and file with the Commission promptly upon the request of such registration statement or prospectus which, in the reasonable opinion of counsel for such Holders, is required under the Securities Act or the rules and regulations thereunder in connection with the distribution of the Registration Securities by such Holders; (h) Prepare and promptly file with the Commission, and promptly notify such Holders or their attorney-in-fact of the filing of, such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such - 28 - 29 securities is required to be delivered under the Securities Act, any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances in which they were made; (i) In case any of such Holders or any underwriter for any such Holders is required to deliver a prospectus at a time when the prospectus then in effect may no longer be used under the Securities Act, prepare promptly upon request such amendment or amendments to such registration statement and such prospectus as may be necessary to permit compliance with the requirements of the Securities Act; (j) Advise such Holders or their attorney-in-fact, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and (k) At the request of any such holder, furnish on the effective date of the registration statement and, if such registration includes an underwritten public offering, at the closing provided for in the underwriting agreement, (i) an opinion, dated each such date, of the counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and to the Holder or Holders making such request, covering such matters with respect to the registration statement, the prospectus and each amendment or supplement thereto, proceedings under state and federal securities laws other matters relating to the Company, the securities being registered and the offer and sale of such securities as are customarily the subject of opinions of issuer's counsel provided to underwriters in underwritten public offerings, and (ii) to the extent the Company's accounting firm, is willing to do so, a letter dated each such date, from the independent public accountants of the Company, addressed to the underwriters, if any, and to the Holder or Holders making such request, stating that they are independent public accountants within the meaning of the Securities Act and that in the opinion of such accountants the financial statements and other financial data of the Company included in the registration - 29 - 30 statement or the prospectus or any amendment or supplement thereto comply in all material respects with the applicable accounting requirements of the Securities Act, and additionally covering such other financial matter, including information as to the period ending not more than five (5) business days prior to the data of such letter with respect to the registration statement and prospectus, as the underwriters or such requesting Holder or Holders may reasonably request. 8.10 INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities included in any registration shall furnish the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 8. 8.11 INDEMNIFICATION. (a) The Company will defend, indemnify and hold the Purchaser, each Holder, each of its officers, directors and partners, and each person controlling the Purchaser and each such Holder within the meaning of Section 15 of the Securities Act, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including without limitation, any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (i) any breaches of the representations, warrants or covenants contained herein, or (ii) any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse Purchaser, and each such holder, each of its officers and directors, and each person controlling such holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably - 30 - 31 incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder, controlling person or underwriter and stated to be specifically for use therein. (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company each to its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement prospectus' offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited to an amount equal to the initial public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful conduct by such Holder. (c) Each party entitled to indemnification under this Section 8.11 (the "Indemnified Party") shall give notice to the party required - 31 - 32 to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall, when applicable, permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 8 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matter as to which there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 8.12 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to register securities granted the Purchasers under Sections 8.5, 8.6 and 8.7 may be assigned to a transferee or assignee in connection with any transferor assignment of Registrable Securities by the Purchaser provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws and (ii) such assignee or transferee acquires at least 10,000 of the Shares (appropriately adjusted for Recapitalization). Notwithstanding the foregoing, the rights to cause the Company to register securities may be assigned to any parent, subsidiary or affiliate of the Purchaser, without compliance with item (ii) above, provided, written notice thereof is promptly given to the Company. 8.13 STANDOFF AGREEMENT. Each Holder agrees, so long as such Holder holds at least five percent (5%) of the Company's outstanding voting equity securities, that, upon request of the Company or the underwriters managing an underwritten offering of the Company's securities, it will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, a the case may be, for such period of time (not to exceed one hundred and twenty (120) days) from the effective date of such registration as may be requested by the underwriters; provided that the officers and directors of the Company who own stock of the Company also agree to such restrictions. - 32 - 33 SECTION 9 THE PURCHASER'S RIGHT OF FIRST REFUSAL 9.1 RIGHT OF FIRST REFUSAL. The Company hereby grants to the Purchaser the right of first refusal to purchase its pro rata share of all or any part of any New Securities (as defined in this Section 9.1) which the Company may, from time to time, propose to sell and issue. The Purchaser's pro rata share, for purposes of this right of first refusal, is the ratio that the sum of the number of shares of Common Stock then held by the Purchaser bears to the sum of the total number of shares of Common Stock then outstanding and the number of shares of Common Stock issuable upon conversion of the then outstanding Preferred Stock convertible into Common Stock. (a) Except as set forth below, "New Securities" shall mean any shares of capital stock of the Company including Common Stock and Preferred Stock, whether now authorized or not, and rights, options or warrants to purchase said shares of Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may become, convertible into said shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New Securities" does not include (i) the Shares and the Option Shares, (ii) securities offered to the public generally pursuant to a registration statement or pursuant to Regulation A under the Securities Act, (iii) securities issued in the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization whereby the Company or its shareholders own not less than fifty-one percent (51%) of the voting power of the surviving or successor corporation, (iv) shares of the Company's Common Stock or related options exercisable for such Common Stock issued to employees, officers and directors of the Company pursuant to any arrangement approved by the Board of Directors of the Company, (v) stock issued pursuant to any rights or agreements, including without limitation convertible securities, options, warrants, provided that the rights of first refusal established by this Section 9.1 apply with respect to the initial sale or grant by the Company of such rights or agreements, and (vi) stock issued in connection with any stock split, stock dividend or recapitalization by the Company. (b) In the event the Company proposes to undertake an issuance of New Securities, it shall give the Purchaser written notice of its intention, describing the type of New Securities, and the price and terms upon which the Company proposes to issue the same. The Purchaser shall have fifteen (15) days from the date of receipt of any such notice to agree to purchase up to the - 33 - 34 Purchaser's respective pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. (c) In the event the Purchaser fails to exercise such right of first refusal within said fifteen (15) day period, the Company shall have ninety (90) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within sixty (60) days from the date of said agreement) to sell the New Securities not elected to be purchased by the Purchaser at the price and upon the terms no more favorable to the purchasers of such securities than specified in the Company's notice. In the event the Company has not sold the New Securities or entered into an agreement to sell the New Securities within said ninety (90) day period (or sold and issued New Securities in accordance with the foregoing within sixty (60) days from the date of said agreement), the Company shall not thereafter issue or sell any of such New Securities, without first offering such securities in the manner provided above. (d) The right of first refusal hereunder is not assignable except to a parent, subsidiary or affiliate of the Purchaser, without the prior written consent of the Company, which consent will not be unreasonably withheld. SECTION 10 INDEMNIFICATION 10.01 SURVIVAL OF REPRESENTATIONS. All representations, warranties and agreements made by any party in this Agreement or pursuant hereto shall survive the Closing, but all claims for damages made by virtue of such representations, warranties and agreements shall be made under this Section 10. The representations and warranties set forth herein are cumulative, and any limitation or qualification set forth in any one representation and warranty therein shall not limit or qualify any other representation and warranty therein. 10.02 INDEMNIFICATION BY THE COMPANY. Notwithstanding any term in this Agreement to the contrary, the Company, shall indemnify, defend, save and hold the Purchaser and its officers, directors, employees, agents and Affiliates (excluding Ron Boreta, Vaso Boreta, John Boreta and the Company; collectively, "Purchaser Indemnitees") harmless from and against all demands, claims, allegations assertions, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs and expenses (including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing, whether or not the underlying demands, claims, - 34 - 35 allegations, etc., of third parties are meritorious (collectively, "Purchaser Damages") asserted against, imposed upon, resulting to, required to be paid by or incurred by any Purchaser Indemnitees, directly or indirectly, in connection with, arising out of, which could result in, or which would not have occurred but for, (a) a breach of any representation or warranty made by the Company in this Agreement, in any certificate or document furnished pursuant hereto by the Company or any other agreement to which the Company is or is to become a party, or (b) a breach or nonfulfillment of any covenant or agreement made by the Company in or pursuant to this Agreement or in any other agreement to which the Company is or is to become a party. 10.03 INDEMNIFICATION BY PURCHASER. The Purchaser shall indemnify, defend, save and hold the Company and its officers, directors, employees, agents and Affiliates (excluding Ron Boreta, Vaso Boreta, John Boreta and the Purchaser; (collectively, "Company Indemnitees") harmless from and against any and all demands, claims, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs and expenses (including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing, whether or not the underlying demands, claims, allegations, etc., of third parties are meritorious (collectively, "Company Damages") asserted against, imposed upon, resulting to, required to be paid by or incurred by any Company Indemnitees, directly or indirectly, in connection with, arising out of, which would result in, or which would not have occurred but for, (a) a breach of any representation or warranty made by the Purchaser in this Agreement or in any certificate or document furnished pursuant hereto by buyer or any other agreement to which the Purchaser is a party and (b) a breach of nonfulfillment of any covenant of agreement made by the Purchaser in or pursuant to this Agreement and in any other agreement to which the Purchaser is a party. 10.04 NOTICE OF CLAIMS. If any Purchaser Indemnitee or Company Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or will suffer or incur any Purchaser Damages or Company Damages, as the case may be ("Damages"), for which it is entitled to indemnification under this Section 10, such Indemnified Party shall so notify the party or parties from whom indemnification is being claimed (the "Indemnifying Party") with reasonable promptness and reasonable particularity in light of the circumstances then existing. If any action at law or suit in equity is instituted by or against a third party with respect to which any Indemnified Party intends to claim any Damages, such Indemnified Party shall promptly notify the Indemnifying Party of such action or suit. The failure of an Indemnified Party to give any notice required by this Section shall not affect any of such party's rights under this Section 10 or otherwise except and to the extent that such failure is actually prejudicial to the rights or obligations of the Indemnified Party. 10.05 THIRD PARTY CLAIMS. The Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense of any third party claim, action or suit, and the Indemnified Party may compromise or settle the same, provided that the Indemnified Party shall give the Indemnifying Party advance notice of any proposed compromise or settlement. The Indemnified Party shall permit the Indemnifying Party to participate in the defense of any such action or suit through counsel chosen by the Indemnifying Party, - 35 - 36 provided that the fees and expense of such counsel shall be borne by the Indemnifying Party. If the Indemnified Party permits the Indemnifying Party to undertake, conduct and control the conduct and settlement of such action or suit, (a) the Indemnifying Party shall not thereby permit to exist any encumbrance upon any asset of the Indemnified Party; (b) the Indemnifying Party shall not consent to any settlement that does not include as an unconditional term thereof the giving of a complete release from liability with respect to such action or suit to the Indemnified Party; (c) the Indemnifying Party shall permit the Indemnified Party to participate in such conduct or settlement through counsel chosen by the Indemnified Party; and (d) the Indemnifying Party shall agree promptly to reimburse the Indemnified Party for the full amount of any Damages including fees and expenses of counsel for the Indemnified Party incurred after giving the foregoing notice to the Indemnifying Party and prior to the assumption of the conduct and control of such action or suit by the Indemnifying Party. 10.6 GOOD FAITH EFFORTS TO SETTLE DISPUTES. The Purchaser and the Company agree that, prior to commencing any litigation against the other concerning any matter with respect to which such party intends to claim a right of indemnification in such proceeding, the respective chief executive officers (or officers holding such authority) of such parties shall meet in a timely manner and attempt in good faith to negotiate a settlement of such dispute during which time such officers shall disclose to the others all relevant information relating to such dispute. In the event that the parties are unable to amicably resolve the matter or matters in dispute, the parties shall submit all matters still in dispute to arbitration in accordance with the arbitration rules of the American Arbitration Association. The Purchaser shall select an arbitrator and the Company shall select an arbitrator and the two arbitrators so selected shall select a third arbitrator. The decision of the arbitrators shall be final and binding on the parties. Such matter shall be submitted to arbitration within thirty (30) days from the date that either the Company or the Purchaser declares that any matter in dispute cannot be amicable resolved. All costs and expenses of arbitration shall be paid equally by the Purchaser on one hand and the Company on the other. Any cash or other monetary award shall be paid within thirty (30) days of the arbitrators final decision. Arbitration shall be held in Las Vegas, Nevada. SECTION 11 MISCELLANEOUS 11.1 GOVERNING LAW. This Agreement shall be governed in all respects by the internal laws of the State of Colorado. 11.2 EVENTS OF DEFAULT AND REMEDIES. (a) For purpose of this Agreement, the term "Event of Default" shall mean the occurrence or happening of any breach or violation of or default in the observation or performance of any term, agreement, covenant, representation, warranty, condition or stipulation contained or referred to in this Agreement by any party to this Agreement. - 36 - 37 (b) (i) Upon the occurrence of an Event of Default, the non-defaulting party shall have all rights and remedies afforded by law or equity, including the remedy of specific performance, it being recognized that the Common Stock and Option Shares and the rights and benefits to be derived therefrom are unique and special. Any party awarded a money judgment against the other shall be entitled to recover in addition thereto interest thereon at the rate of twelve percent (12%) per annum. (ii) Each right, power and remedy provided for in this Agreement, or now or hereafter existing at law or in equity shall be cumulative and may be exercised successively or concurrently and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by either party of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise of all such other rights, powers or remedies. No failure or delay on the party of any party to exercise any such right, power or remedy shall operate as a waiver thereof. No waiver by a party will be effective unless and until it is in writing and signed by an authorized representative of such party. (c) Each party will pay to the other, in addition to all other sums due all costs and expenses (including, without limitation, attorneys' fees, brokerage fees and accountants' fees) reasonably incurred by or on behalf of a party in exercising and protecting their rights and remedies hereunder, enforcing the obligations of the other party hereunder and defending any unsuccessful counterclaim, cross-claim or other claim asserted by the other party. 11.3 SET OFF. In addition to, and not in lieu of, any and all other remedies which the Purchaser otherwise may have at law or in equity, or pursuant to this Agreement, the Purchaser shall have the right to set off, counterclaim and recoup any loss against any amounts to be paid to the Company under this Agreement. 11.4 NONEXCLUSIVITY. The foregoing set off right and the indemnification provision set forth in Section 8 are in addition to, and not in lieu or derogation of, any statutory, equitable or common law remedy the Purchaser may have arising out of or as a result of this Agreement or for breach of representations, warranties or covenants herein. Neither the exercise of nor the failure to exercise the set off right set forth in Section 10.3 shall constitute an election of remedies. 11.5 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchaser and the closing of the transactions contemplated hereby. - 37 - 38 11.6 ANTI-DILUTION PROVISIONS. The "Anti-Dilution Provisions" shall provide that in the event that any of the securities referenced herein as presently constituted, shall be changed into or exchanged for a different number or kind of securities or interests of the Company or of another entity (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares, sale of assets or otherwise), or if the number of such securities shall be increased through the payment of a dividend, or if the Company makes any other distribution of securities or other property including cash in respect of such securities, then there shall be substituted for and added to such securities, as the case may be, theretofore subject or which may become subject to the terms of this Agreement, the number and kind of securities, interests or property into which each outstanding security shall be so changed, or for which each such security shall be exchanged, or to which each such security shall be entitled, as the case may be, and the purchase price per security appropriately adjusted. 11.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS. The rights and obligations of the Company and the rights of the Purchaser to purchase the Shares shall not be assignable without the written consent of the other; provided, however, the Purchaser may assign its rights and obligations under this Agreement to a parent, subsidiary or affiliate of the Purchaser upon notice to the Company thereof. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 11.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents delivered pursuant hereto at the Closing constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom endorsement of any such amendment, waiver, discharge or termination is sought. 11.9 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to the Purchaser, at its address set forth on the cover page of this Agreement, or at such other address as the Purchaser shall have furnished to the Company in writing, or (b) if to any other holder of any Shares or Option Shares, at such address as such holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such Shares or Option Shares who has so furnished an address to the Company, or (c) if to the Company, one copy shall be sent to its address set forth on the cover page of this Agreement and addressed to the attention of the Corporate Secretary, or at such other address as the Company shall have furnished to the Purchaser. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given or received, as the case may be, when delivered if - 38 - 39 delivered personally, when sent by confirmed facsimile to the correct facsimile number, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 11.10 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any holder of any Shares or Option Shares, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Except as provided in Section 10.8 hereof, any waiver, permit, consent or approval of any kind or character on the part of any holder of any breach of default under this Agreement or any waiver on the part of any holder of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative. 11.11 EXPENSES. Except as otherwise provided herein, the Company and the Purchaser shall each bear their own expenses incurred on their behalf with respect to this Agreement and the transactions contemplated hereby. 11.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which may be executed by less than all of the parties, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. 11.13 CONFIDENTIALITY. Neither party shall make or issue, or cause to be made or issued, any announcement or written statement concerning this Agreement or the transactions contemplated hereby for dissemination to the general public without the prior written consent of the other party. This provision shall not apply, however, to any announcement or written statement which in the opinion of counsel to such party is required to be made by law or the regulations of any federal or state governmental agency or any stock exchange. 11.14 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. 11.15 TITLE AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement. 11.16 THIRD PARTY BENEFICIARY. It is understood that the Purchaser is a specific intended third party beneficiary of the LVDGT Agreement. - 39 - 40 The foregoing Agreement is hereby executed as of the date first above written. "PURCHASER" "COMPANY" ASI GROUP, L.L.C., LAS VEGAS DISCOUNT GOLF & TENNIS, a Nevada limited liability company INC., a Colorado corporation By: Sunbelt Communications Company, ------------------------------- a Member By /s/ Vaso Boreta ------------------------------- By /s/ James Earl Rogers Name: Vaso Boreta --------------------------- Title: President Name: James Earl Rogers Title: President The undersigned, Saint Andrews Golf Corporation, a Nevada corporation, acknowledges that, by virtue of entering into this Agreement, the Purchaser is a specific intended third party beneficiary of the LVDGT Agreement. SAINT ANDREWS GOLF CORPORATION By: /s/ Ron Boreta ----------------------- Name: Ron Boreta Title: President - 40 - 41 EXHIBIT A VOTING AGREEMENT VOTING AGREEMENT, dated as of October 19, 1998 by and among ASI Group, L.L.C., a Nevada limited liability company ("ASI"), c/o Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109, and the individuals and entities listed on the signature page hereto (collectively "Boreta"). WITNESSETH: WHEREAS, ASI and Las Vegas Discount Golf & Tennis, Inc., a Colorado corporation ("LVDGT"), are entering into an investment and voting agreement (the "ASI Agreement") pursuant to which, among other things, ASI is buying shares of common stock of LVDGT; and WHEREAS, LVDGT and Saint Andrews Golf Corporation, a Nevada corporation ("SAGC"), are entering into an investment agreement (the "LVDGT Agreement") pursuant to which, among other things, LVDGT is buying shares of preferred stock of SAGC; and WHEREAS, in order to induce each other to enter into the ASI Agreement, ASI and Boreta desire to enter into this Voting Agreement with respect to all the capital stock of LVDGT and SAGC now owned or controlled by and/or hereafter acquired or coming under the control of any of them respectively (collectively, the "Shares). Exhibit A lists all Shares currently owned or controlled by Boreta or ASI; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration given to each party hereto, the receipt of which is hereby acknowledged, the parties hereto agree as follows: Section 1. RESTRICTIONS ON AND VOTING OF SHARES. (a) During the term of this Agreement, Boreta agrees that it will not sell, assign, pledge or otherwise dispose of, or grant any proxies with respect to, the Shares, or enter into any contract, option or other arrangement or understanding with respect to the sale, assignment, pledge or other disposition, directly or indirectly, of the Shares except as expressly contemplated by the LVDGT Agreement or the ASI Agreement. (b) Boreta and ASI agree that, during the term of this Agreement, they will vote the Shares either of them is entitled to vote, in person or by proxy, at any annual, special or other meeting of the holders of capital stock of LVDGT or SAGC, as the case may be, and at any adjournments thereof or pursuant to any consent in lieu of a meeting, or otherwise, as mutually agreed by ASI and Boreta (provided that no party will be so required to vote its shares if the subject action implemented in accordance with such mutual agreement, would in any manner adversely effect the interests of Boreta in LVDGT or SAGC or the interests of ASI in LVDGT and indirectly in SAGC, as the case may be, or adversely affect the value of the Shares (or any securities into which such shares might be exchanged)). - 1 - 42 Section 2. SUBSEQUENT ACQUISITIONS. If at any time after the first to occur of the closing of the transactions contemplated by the LVDGT Agreement or the ASI Agreement, while ASI is an equity holder of LVDGT or SAGC or has options, warrants or other rights to acquire equity of either or both of LVDGT and/or SAGC, either of LVDGT or SAGC offers to sell or grants, sells or issues shares of its capital stock to any of Boreta or their respective affiliates at any price or for any consideration (including, but not limited to, provision of services), Boreta shall transfer or cause to be transferred to ASI Shares so as to maintain the relative proportionate direct and indirect (by virtue of ownership of LVDGT capital stock) equity ownerships of ASI, on the one hand, and Boreta, on the other hand, in each of LVDGT and SAGC as they were immediately prior to such offer, grant, sale or issuance, assuming the consummation of such offer, grant, sale or issuance. Section 3. TERM OF AGREEMENT. Except as otherwise specifically provided herein, this Agreement will be effective as of the closing of the transactions contemplated by the ASI Agreement (the "Effective Date"). The obligations of ASI and Boreta under this Agreement will terminate as of the date ASI no longer holds any equity interest, options, warrants or rights to purchase any equity interest in or instruments convertible or exchangeable into equity interests of SAGC or LVDGT or their respective successors. Section 4. REPRESENTATIONS AND WARRANTIES OF BORETA. Boreta represents and warrants to ASI as of the date and as of the Effective Date hereof that: (a) Boreta is the record owner of the Shares and the Shares represent all of the capital stock of SAGC or LVDGT owned of record by Boreta, directly or indirectly; (b) Boreta has full legal power and authority to execute and deliver this Agreement; (c) the Shares are free and clear of all proxies; and (d) Boreta has duly executed and delivered this Agreement. Section 5. REPRESENTATIONS AND WARRANTIES OF ASI. ASI represents and warrants to Boreta as of the date and as of the Effective Date hereof that: (a) ASI is the record owner of the Shares and the Shares represent all of the capital stock of SAGC or LVDGT owned of record by ASI, directly or indirectly; (b) ASI has full legal power and authority to execute and deliver this Agreement; (c) the Shares are free and clear of all proxies; and - 2 - 43 (d) ASI has duly executed and delivered this Agreement. Section 6. STOCK OPTIONS OWNED BY BORETA OR ASI. It is agreed that any Shares obtained by Boreta or ASI after the date hereof upon exercise of any option to purchase Shares or which otherwise become held of record by Boreta shall in all events be deemed to be "Shares" or subject to this Agreement. Section 7. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms of were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity without the necessity of posting bond or other security or showing actual damages. Section 8. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by confirmed facsimile to the correct facsimile number or otherwise delivered by hand or by messenger, addressed (a) if to ASI, at its address set forth on the cover page of this Agreement, or at such other address as ASI shall have furnished to the Company in writing, or (b) if to any of Boreta, at such address as listed on the signature page hereto. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, or if sent by confirmed facsimile to the correct facsimile number, upon the sending of such facsimile, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. Section 9. BINDING EFFECT. Upon execution and delivery of this Agreement by ASI, this Agreement shall become effective as to Boreta at the time Boreta executes and delivers this Agreement. This Agreement shall inure to the benefit of and, subject to applicable law, be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns. Section 10. ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns provided that neither this Agreement nor any rights hereunder may be assigned by either party without first obtaining the prior written consent of the other party. Section 11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the principles of conflict of laws thereof. - 3 - 44 Section 12. COUNTERPARTS. This Agreement may be executed in two counterparts, each of which shall be an original, but which together shall constitute one and the same agreement. Section 13. EFFECT OF HEADINGS. The section headings herein are for convenience only and shall not affect the construction hereof. Section 14. SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 15. AMENDMENT; WAIVER. No amendment or waiver of any provision of this Agreement or consent to departure therefrom shall be effective unless in writing and signed by ASI and Boreta, in the case of an amendment, or by the party which is the beneficiary of any such provision, in the case of a waiver or a consent to departure therefrom. Section 16. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, covenants, arrangements, communications, representations and warranties, whether oral or written, by either party with respect thereto. Section 17. OBLIGATIONS. The obligations of Boreta hereunder are joint and several. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto all as of the day and year first above written. ASI GROUP, L.L.C. BORETA: By: ------------------------------------- ------------------------------ James Earl Rogers VASO BORETA Member ------------------------------ RONALD BORETA ------------------------------ JOHN BORETA BORETA ENTERPRISES LTD By: --------------------------- Name: Title: - 4 - 45 EXHIBIT A
- ----------------------------------------------------- -------------------------------- ------------------------------ Company Shareholder Number of Shares Held - ----------------------------------------------------- -------------------------------- ------------------------------ - ----------------------------------------------------- -------------------------------- ------------------------------ Saint Andrews Golf Corporation Vaso Boreta 110,000 - ----------------------------------------------------- -------------------------------- ------------------------------ Saint Andrews Golf Corporation Ronald Boreta 110,000 - ----------------------------------------------------- -------------------------------- ------------------------------ Las Vegas Discount Golf & Tennis, Inc.(1) Vaso Boreta 1,837,637 - ----------------------------------------------------- -------------------------------- ------------------------------ Las Vegas Discount Golf & Tennis, Inc.(2) Ronald Boreta 1,723,288 - ----------------------------------------------------- -------------------------------- ------------------------------ Las Vegas Discount Golf & Tennis, Inc.(3) John Boreta 1,059,374 - ----------------------------------------------------- -------------------------------- ------------------------------ Las Vegas Discount Golf & Tennis, Inc. Boreta Enterprises Ltd. 1,304,445 - ----------------------------------------------------- -------------------------------- ------------------------------ Las Vegas Discount Golf & Tennis, Inc.(4) ASI Group, L.L.C. 2,303,290 - ----------------------------------------------------- -------------------------------- ------------------------------
- -------- (1) Includes 1,823,810 shares held directly and 13,827 shares which represent Vaso Boreta's share of the Common Stock held by Boreta Enterprises Ltd. (2) Includes 544,699 shares held directly, 897,589 shares which represent Ronald Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 281,000 shares underlying Stock Options held by Ronald Boreta. (3) Includes 536,345 shares held directly, 393,029 shares which represent John Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 130,000 shares underlying Stock Options held by John Boreta. (4) ASI Group, L.L.C. also has options for the purchase of 347,975 shares of the Common Stock of Las Vegas Discount Golf & Tennis, Inc. 46 EXHIBIT B SCHEDULE OF EXCEPTIONS All disclosures on this Schedule provide exceptions to the corresponding representations made in the Agreement. Section 3.4 SUBSIDIARIES. The Company has the following subsidiaries: 1. Saint Andrews Golf Corporation 2. Las Vegas Discount Golf & Tennis Rainbow, Inc. 3. Las Vegas Discount Golf & Tennis Development Corp. 4. All-American SportPark, Inc. 5. All-American Golf, LLC Section 3.13 LITIGATION. In 1995, Giant Ride, Inc. filed suit in the District Court of Clark County, Nevada, against Saint Andrews Golf Corporation ("SAGC") claiming that SAGC has breached a contract to purchase a giant slide for Saint Andrews' Las Vegas SportPark. Giant Ride, inc. is seeking an unspecified amount of damages. SAGC denies that it had a contract to purchase such a slide. Section 3.15 EMPLOYEE AGREEMENTS. The Company and its subsidiaries have employment and consulting agreements as follows: 1. Employment Agreement with Vaso Boreta 2. Employment Agreement with Ronald S. Boreta 3. Employment Agreement with Kevin Donovan The Company also has employee benefit plans referred to below concerning Section 3.25. Section 3.16 CERTAIN TRANSACTIONS. The Company owns 66.7% of the outstanding Common Stock of Saint Andrews Golf Corporation ("SAGC"). Effective August 1, 1994, the Company granted SAGC a license to use all of its trademarks, trade names and other commercial names and symbols for so long as such trademarks, trade names and other commercial names and symbols are being used by SAGC. Certain facilities used by the Company and SAGC are leased by the Company from Vaso Boreta. The Company leases approximately 15,500 square feet of warehouse space and 6,000 square feet of office space from Mr. Boreta at a base monthly rent of approximately $13,700. The Company owns a retail store in Las Vegas and LVDG and a store owned by Vaso Boreta share advertising costs in the Las Vegas market and on an equal basis. 47 See the Company's Form 10-KSB for the year ended December 31, 1997, for additional disclosures concerning transactions with affiliated persons. During September 1997, SAGC agreed to sell its right to the St. Andrews name to Boreta Enterprises, Ltd. for a $20,000 two-year promissory note since SAGC no longer intends to engage in the business of selling golf equipment or apparel. See SAGC's Form 10-KSB for the year ended December 31, 1997 for additional disclosures concerning transactions with affiliated persons. Section 3.25 EMPLOYEE BENEFIT PLANS. The Company's employees are included in the following plans: 1989 Stock Option Plan 1991 Stock Option Plan Employee Retirement and Savings Program (401(k)) Supplemental Retirement Plan 1994 Stock Option Plan (SAGC) Medical Insurance with Sierra Health 48 EXHIBIT C PROPERTY LEASES The Company leases approximately 15,500 square feet of warehouse space and approximately 6,000 square feet of office space at 5325 South Valley View Boulevard, Suite 10, Las Vegas, Nevada, at an aggregate monthly rent of approximately $13,700 from Vaso Boreta. The rent is adjustable annually based on increases in the consumer price index and the lease expires January 31, 2005. Beginning July 1, 1996, SAGC was allocated 67% of the rent and the Company was allocated 33% of the rent. In February 1997, the Company subleased a majority of the warehouse space and approximately one-half of the office space to the purchaser in the asset sale. The Company has a retail store at 2200 Rainbow Boulevard South in Las Vegas, Nevada. The store is located in leased space in a small shopping center in a growing area of Las Vegas. The space covers 5,600 square feet of space, and is leased from an unaffiliated party for $7,000 per month plus cost of living adjustments, real estate taxes and other expenses. The lease expires in August 2000. On June 20, 1997 SAGC entered into a lease for approximately 24 acres of land in Las Vegas on which SAGC is building the Sports Entertainment Complex portion of its SportPark. 49 EXHIBIT D INTELLECTUAL PROPERTY SAGC has filed an "intent to use" trademark application for "All-American SportPark" and a related design and Slugger Stadium. The Company has filed "intent to use" trademark applications with regard to the "St. Andrews" name and related designs with respect to mens' and womens' clothing and certain golf equipment and accessories. The trademarks "Las Vegas Discount Golf & Tennis, Inc." and "St. Andrews" on golf club bags, are registered on the principal register of the United States Patent and Trademark Office as well as in Canada and in the State of Nevada. These were owned by The Company. The Company also has common law trademark and tradename rights in "Saint Andrews" to the extent that it has used the mark as applied to goods or as a corporate source identifier. On August 1, 1994, the Company entered into a license agreement with SAGC pursuant to which the Company granted a license to SAGC to use all trademarks, tradenames and other commercial symbols that were owned by the Company and licensed to franchisees of Saint Andrews. Included in this license were the following: (a) Las Vegas Discount Golf & Tennis - name (Reg. No. 1,482,753) (b) Las Vegas Discount Golf & Tennis - logo ( Reg. No. 1,350,039) (c) St. Andrews - name and design (Reg. No. 1,303,946) and related applications (d) Saint Andrews (e) Birdie Golf (f) Royal Scot In February 1997, the rights to the trademarks "Las Vegas Discount Golf & Tennis" and "Birdie Golf" were assigned to the purchaser in connection with the sale of the franchise business. The purchaser of the assets granted back to Boreta Enterprises, Ltd. a perpetual license to use the name Las Vegas Discount Golf & Tennis for retail equipment stores in the State of Nevada, south of a line between Pahrump, Nevada and Mesquite, Nevada, except for Summerlin, Nevada. Boreta Enterprises, Ltd. has agreed to allow the Company's retail store on Rainbow Boulevard in Las Vegas to continue to use the name Las Vegas Discount Golf & Tennis. 50 EXHIBIT E MATERIAL CONTRACTS AND OBLIGATIONS THE COMPANY 1. Lease Agreement with Vaso Boreta, as amended 2. Employment Agreement with Vaso Boreta, as amended 3. License Agreement with Vaso Boreta 4. License Agreement between the Company and Saint Andrews Golf Corporation 5. Lease Agreement with A&R Management and Development Co., et al., and Sublease to Las Vegas Discount Golf & Tennis, Inc. 6. Lease Agreement with Vaso Boreta, as amended, and Assignment to Las Vegas Discount Golf & Tennis, Inc. 7. Agreement and Plan of Merger dated January 20, 1998 between Las Vegas Discount Golf & Tennis, Inc. and Saint Andrews Golf Corporation SAINT ANDREWS GOLF CORPORATION 1. Employment Agreement with Ronald S. Boreta. 2. Employment Agreement with Kevin Donovan. 3. Lease Agreement with A&R Management and Development Co., et al., and Sublease to Las Vegas Discount Golf & Tennis, Inc. 4. Lease Agreement with Vaso Boreta, as amended, and Assignment to Las Vegas Discount Golf & Tennis, Inc. 5. Letter Agreement with Oracle One Partners, Inc. 6. Agreement with Major League Baseball Properties, Inc. 7. License Agreement with National Association for Stock Car Auto Racing, Inc., dated August 1, 1995 51 8. Concept Development and Trademark Agreement with Callaway Golf Company dated May 23, 1995 9. Investment Agreement with Three Oceans, Inc. and ancillary agreements 10. Indenture of Lease Agreement between Urban Land of Nevada and All-American SportPark, Inc. 11. Indenture of Lease between Urban Land of Nevada and All-American Golf Center, LLC 12. Operating Agreement for All-American Golf, LLC, a limited liability company 13. Agreement dated September 30, 1997 with Boreta Enterprises, Ltd. 14. Sponsorship Agreement with Pepsi-Cola Company dated December 4, 1997. 15. Membership Interest Purchase Agreement dated May 5, 1998 between Callaway Golf Company, a California corporation ("Callaway Golf"), CGV, Inc., a California corporation ("CGV"), Saint Andrews Golf Corporation, a Nevada corporation ("Saint Andrews"), All-American SportPark, Inc., a Nevada corporation ("SportPark"), All-American Golf LLC, a California limited liability company ("AAG") and Ron Boreta 16. Covenant Not to Compete dated May 5, 1998 between CGV, Ron Boreta and Saint Andrews 17. Option Agreement dated May 5, 1998 between CGV and Saint Andrews 18. Amendment to Lease Agreement for Golf Retail Operations at Callaway Golf Center, Las Vegas, Nevada dated May 5, 1998 between AAG and Saint Andrews 19. Consulting Agreement dated May 5, 1998 between AAG and Saint Andrews 52 EXHIBIT F CO-SALE AGREEMENT This Co-Sale Agreement is made as of the 19th day of October, 1998 by and among LAS VEGAS DISCOUNT GOLF & TENNIS INC. (the "Company"), a Colorado corporation, RON BORETA, VASO BORETA and JOHN BORETA (collectively the "Boretas") and BORETA ENTERPRISES LTD. (the "Family Company"; the Family Company and the Boretas are each a "Significant Shareholder," and collectively are the "Significant Shareholders") and ASI GROUP, L.L.C., a Nevada limited liability company ("ASI"). In consideration of the mutual covenants set forth herein, the parties agree as follows: 1. DEFINITIONS. (a) "Stock" shall mean shares of the Company's Common and Preferred Stock now owned beneficially or of record or subsequently acquired beneficially or of record directly or indirectly by the Significant Shareholders. (b) "Preferred Stock" shall mean the Company's or LVDG&T's outstanding Preferred Stock of any series or designation. (c) "Common Stock" shall mean the Company's Common Stock and shares of Common Stock issued or issuable upon conversion of the Company's Preferred Stock. 2. SALE BY SIGNIFICANT SHAREHOLDERS. (a) On each occasion that any Significant Shareholder proposes to sell or transfer to any person any shares of Stock in one or more related transactions, such Significant Shareholder shall promptly give written notice (the "Notice") to ASI at least twenty (20) days prior to the closing of such sale or transfer. The Notice shall describe in reasonable detail the proposed sale or transfer including, without limitation, the number of shares of Stock to be sold or transferred, the nature of such sale or transfer, the consideration to be paid, and the name and address of each prospective purchaser or transferee. In the event that the sale or transfer is being made pursuant to the provisions of Section 3(a) or 3(b) hereof, the Notice shall state under which Section the sale or transfer is being made. (b) ASI shall have the right, exercisable upon written notice to such Significant Shareholder within fifteen (15) days after receipt of the Notice, to participate in such sale of Stock on the same terms and conditions. To the extent ASI exercises such right of participation in accordance with the terms and conditions set forth below, the number of shares of Stock that the Significant Shareholder may sell in the transaction shall be correspondingly reduced. - 1 - 53 (c) ASI may sell all or any part of that number of shares of Common Stock equal to the product obtained by multiplying (i) the aggregate number of shares of Stock covered by the Notice by (ii) a fraction the a numerator of which is the number of shares of Common Stock owned by ASI at the time of the sale or transfer and the denominator of which is the total number of shares of Common Stock owned by the Significant Shareholders and ASI at the time of the sale or transfer. (d) ASI shall effect its participation in the sale by promptly delivering to the Significant Shareholders for transfer to the prospective purchaser one or more certificates, properly endorsed for transfer, which represent: (i) the type and number of shares of Common Stock which ASI elects to sell; or (ii) that number of shares of Series B Convertible Preferred Stock which is at such time convertible into the number of shares of Common Stock which ASI elects to sell; provided, however, that if the prospective purchaser objects to the delivery of Series B Convertible Preferred Stock in lieu of Common Stock, ASI shall convert such Preferred Stock into Common Stock and deliver Common Stock as provided in Section 2(d)(i) above. The Company agrees to make any such conversion concurrent with the actual transfer of such shares to the purchaser. (e) The Stock certificate or certificates that ASI delivers to the Significant Shareholders pursuant to Section 2(d) shall be transferred to the prospective purchaser in consummation of the sale of the Common Stock pursuant to the terms and conditions specified in the Notice, and the Significant Shareholders shall concurrently therewith remit to ASI that portion of the sale proceeds to which ASI is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibits such assignment or otherwise refuses to purchase shares or other securities from ASI, the Significant Shareholders shall not sell to such prospective purchaser or purchasers any Stock unless and until, simultaneously with such sale, the Significant Shareholders shall purchase such shares or other securities from ASI. (f) The exercise or non-exercise of the rights of ASI hereunder to participate in one or more sales of Stock made by the Significant Shareholders shall to adversely affect its rights to participate in subsequent sales of Stock subject to Section 2(a). 3. EXEMPT TRANSFERS. Notwithstanding the foregoing, the co-sale rights of ASI shall not apply to (a) any pledge of Stock made pursuant to a bona fide third party loan transaction with a party not affiliated with or - 2 - 54 a stockholder of any significant shareholder that creates a mere security interest; (b) any transfer to the ancestors, descendants or spouse or to trusts for the benefit of such persons or a Significant Shareholder; (c) any bona fide gift; or (d) any sale or sales of not more than 25,000 shares of Common Stock individually or in the aggregate during the term hereof (as adjusted for stock splits, reverse stock splits and the like effected after the date of this Agreement); provided that (i) the transferring Shareholder shall inform ASI of such pledge, transfer or gift prior to effecting it and (ii) the pledgee, transferee or donee shall furnish ASI with a written agreement to be bound by and comply with all provisions of Section 2. Such transferred Stock shall remain "Stock: hereunder, and such pledge, transferee or donee shall be treated as a "Shareholder" for purposes of this Agreement. 4. PROHIBITED TRANSFERS. (a) In the event a Significant Shareholder should sell any Stock in contravention of the co-sale rights of ASI under this Agreement (a "Prohibited Transfer"), ASI, in addition to such other remedies as may be available at law, in equity or hereunder, shall have the put option provided below, and the Significant Shareholders shall be bound by the applicable provisions of such option. (b) In the event of a Prohibited Transfer, ASI shall have the right to sell to the Significant Shareholders the type and number of shares of Common Stock equal to the number of shares ASI would have been entitled to transfer to the purchaser had the Prohibited Transfer under Section 2(c) hereof been effected pursuant to and in compliance with the terms hereof. Such sale shall be made on the following terms and conditions: (i) The price per share at which the shares are to be sold to the Significant Shareholders shall be equal to the price per share paid by the purchaser to Significant Shareholders in this Prohibited Transfer. Significant Shareholders shall also reimburse ASI for any and all fees and expenses, including legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of ASI's rights under Section 2. (ii) Within ninety (90) days after the later of the dates on which ASI (A) received notice of the Prohibited Transfer or (B) otherwise became aware of the Prohibited Transfer, ASI shall, if exercising the option created hereby, deliver to Significant Shareholders the certificate or certificates representing shares to be sold, each certificate to be properly endorsed for transfer. (iii) Significant Shareholders shall, upon receipt of the certificate or certificates for the shares to be sold by ASI, pursuant to this Section 4(b), pay the aggregate purchase price therefor and the - 3 - 55 amount of reimbursable fees and expenses, as specified in Section 5(b)(i), in cash or by other means acceptable to ASI. (iv) Notwithstanding the foregoing, any attempt by a Significant Shareholder to transfer Stock in violation of Section 2 hereof shall be void and the Company agrees it will not effect such a transfer nor will it treat any alleged transferee as the holder of such shares without the written consent of ASI. 5. LEGEND. (a) Each certificate representing shares of Stock now or hereafter owned by the Significant Shareholder or issue to any person in connection with a transfer pursuant to Sections(a) and 3(b) hereof shall be endorsed with the following legend: "THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE AGREEMENT AMONG THE INITIAL HOLDER OF THE SECURITIES, THE COMPANY AND CERTAIN STOCKHOLDER(S) OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY." (b) Each Significant Shareholder agrees that the Company may instruct its transfer agent to impose transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 5(a) above to enforce the provisions of this Agreement and the Company agrees to promptly do so. The legend shall be removed upon termination of this Agreement. 6. MISCELLANEOUS. 6.1 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Nevada. 6.2 AMENDMENT. Any provision may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only by the written consent of the party or parties affected thereby. Any amendment or waiver effected in accordance with clauses (a), (b) and (c) of this Section shall be binding upon ASI, its successors and assigns, the Company and Significant Shareholders in question. 6.3 ASSIGNMENT OF RIGHTS. This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, their respective successors, assigns and legal representatives. - 4 - 56 6.4 TERM. This Agreement shall terminate on the fifth anniversary hereof. 6.5 OWNERSHIP. Each Significant Shareholder represents and warrants that it/he is the sole legal and beneficial owner of the shares of stock subject to this Agreement and that no other person has any interest (other than a community property interest) in such shares. 6.6 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given upon personal delivery to the party to be notified or five (5) days after deposit in the United States mail, by registered or certified mail, postage prepaid and properly addressed to the party to be notified as set forth on the signature page hereof or at such other address as such party may designate by ten (10) days' advance written notice to the other parties hereto. 6.7 SEVERABILITY. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 6.8 ATTORNEY FEES. In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 6.9 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The foregoing agreement is hereby executed as of the date first above written. SAINT ANDREWS GOLF ASI GROUP, L.L.C., a Nevada CORPORATION, a Nevada corporation ASI limited liability company By ______________________________ By ______________________________ Name: Name: Title: Title: LAS VEGAS DISCOUNT GOLF & TENNIS INC., a Nevada corporation - 5 - 57 By ______________________________ Name: Title: - ------------------------------ Vaso Boreta - ------------------------------ Ron Boreta - ------------------------------ John Boreta BORETA ENTERPRISES LTD. By________________________________ Name: Title: - 6 - 58 CONSENT OF SPOUSE I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of the company held of record by either or both of us, including my community property interest in such shares, if any, co-sale rights (as described in the Agreement) must be granted to ASI by the seller. I hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operations of, or violate, the Agreement. -------------------------------- (Signature) - 7 - 59 CONSENT OF SPOUSE I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of the company held of record by either or both of us, including my community property interest in such shares, if any, co-sale rights (as described in the Agreement) must be granted to ASI by the seller. I hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operations of, or violate, the Agreement. -------------------------------- (Signature) - 8 - 60 CONSENT OF SPOUSE I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of the company held of record by either or both of us, including my community property interest in such shares, if any, co-sale rights (as described in the Agreement) must be granted to ASI by the seller. I hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operations of, or violate, the Agreement. -------------------------------- (Signature) - 9 - 61 ANNEX A OPTION AGREEMENT OPTION AGREEMENT, effective as of October 19, 1998, by and between LAS VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation with offices at 5325 South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118 ("LVDGT"), and ASI GROUP, L.L.C., a Nevada limited liability company, c/o Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109 ("ASIG"): W I T N E S S E T H : WHEREAS, ASIG and LVDGT are entering into an investment agreement (the "Investment Agreement") simultaneously herewith which Investment Agreement provides for the purchase by ASIG of certain capital stock of LVDGT. All terms used but not defined herein shall have the meanings ascribed to them in the Investment Agreement. WHEREAS, to induce ASIG to enter into the Investment Agreement, ASIG is hereby granted options to purchase Shares (as defined herein) on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, ASIG and LVDGT hereby agree as follows: SECTION 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the respective meanings indicated below. "ACT" shall mean the Securities Act of 1933, as it may be amended. "ADDITIONAL SHARES" shall mean all Shares (including treasury Shares) issued or sold (or, deemed to be issued) by LVDGT after the date hereof, whether or not subsequently reacquired or retired by LVDGT. "AFFILIATE" shall mean any Person which, directly or indirectly, controls, is controlled by or is under common control with the relevant Person and, if such Person is an individual, any member of the immediate family (including parents, spouse and children) of such individual and any trust whose principal beneficiary is such individual, or one or more members of such immediate family or any Person who is controlled by any such member or trust. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, shall mean a member - 1 - 62 of the board of directors, a partner or an officer of such Person, or any other Person having, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, through the ownership (of record, as trustee, by voting agreement or by proxy) of voting securities or similar equity interests, by contract or otherwise. Any Person owning or controlling directly or indirectly 10% or more of the voting securities or similar equity interests of another Person shall be deemed to be an Affiliate of such person. "BUSINESS DAY" shall mean any other than a Saturday or a Sunday or a day on which commercial banking institutions in the City of New York are authorized by law or other governmental action to be closed. Any reference to "days" (unless Business Days are specified) shall mean calendar days. "CONVERTIBLE SECURITIES" shall mean any evidence of indebtedness, shares of stock (other than Shares) or other securities directly or indirectly convertible into or exchangeable for Additional Shares. "CURRENT MARKET PRICE" shall mean on any date specified herein, the average daily Market Price during the period of the most recent 20 days, ending on such date, on which the national securities exchanges were open for trading, except that if no Shares are then listed or admitted to trading on any national securities exchange or quoted in the over-the-counter market, the Current Market Price shall be the Market Price on such date. "EMPLOYEE OPTIONS" shall mean options (other than the Option) to subscribe for, purchase or otherwise acquire Additional Shares at an exercise price equal to no less than the Current Market Price on the date of issuance of such options, which options are issued to bona-fide employees of or consultants to LVDGT (other than members of the Boreta family) pursuant to a stock option plan adopted by the Board of Directors of LVDGT. "EMPLOYEE SHARES" shall mean Additional Shares issued upon exercise of an Employee Option. "MARKET PRICE" shall mean on any date specified herein, the amount per share of the Shares, equal to (a) the last sale price of such Shares, regular way, on such date or, if no such sale takes place on such date, the average of the closing bid and asked prices thereof on such date, in each case as officially reported on the principal national securities exchange on which such Shares is then listed or admitted to trading, or (b) if such Shares are not then listed or admitted to trading on any national securities exchange but it designated as a national market system security by the NASD, the last trading price of the Shares on such date, or (c) if there shall have been not trading on such date or if the Shares are not so designated, the average of the closing bid and asked prices of the Shares on such date as shown by the NASD automated quotation system, or (d) if such Shares are not then listed or admitted to trading on any national exchange or quoted in the over-the-counter market, the higher of (x) the book value thereof as determined by any firm of independent public accountants of recognized standing selected by the Board of Directors of LVDGT as of the last day of any month ending with 60 days preceding the date as of which the determination is to be made or (y) the fair value thereof determined in good faith by the Board of - 3 - 63 Directors of LVDGT as of a date which is within 180 days of the date as of which the determination is to be made. "NASD" shall mean The National Association of Securities Dealers, Inc. "OPTION" shall mean the right of ASIG to purchase, at ASIG's election, in accordance with the terms of this Agreement, a number of Shares up to the Option Number, upon payment of the aggregate Option Price for the number of Shares so purchased, subject to adjustment as provided herein. "OPTION NUMBER" shall mean 347,975 Shares, as such number may be adjusted as provided herein. "OPTION PRICE" shall be, on a per Share basis, $1.8392. The Option Price shall be adjusted and readjusted from time to time as provided herein and, as so adjusted or readjusted, shall remain in effect until a further adjustment or readjustment thereof is required hereby. In the event of a Shares dividend, Shares split, or combination of Shares which results in a proportionate increase or decrease in the number of Shares, the Option Price then in effect shall be decreased (in the case of a proportionate increase in Shares outstanding) or increased (in the case of a proportionate decrease in Shares outstanding) in the same proportion. In the event of a recapitalization, reorganization, consolidation, merger or similar transaction where Shares are changed into or exchanged for a different number of Shares or different capital stock or other securities, the Option Price then in effect shall apply to so much of the different shares of capital stock or other securities as are received with respect to each Share so changed or exchanged. ASIG shall be given prompt written notice of any such event, which notice shall include in reasonable detail the calculation of any adjustments to the Option Price. "OTHER OPTIONS" shall mean rights or options (other than the Option) to subscribe for, purchase or otherwise acquire either Additional Shares or Convertible Securities. "PERSON" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). "SHARES" shall mean the shares of the common stock of LVDGT, no par value, outstanding at any time. SECTION 2. OPTIONS. 2.1 GRANT OF OPTION. LVDGT hereby grants to ASIG the Option, which is immediately exercisable. The Option may be exercised in full or in any number of partial exercises at any time or times at or prior to the tenth anniversary hereof. 2.2 EXERCISE OF OPTION. An Option may be exercised in whole or in part by ASIG by serving written notice (the "Option Notice") upon LVDGT specifying the number of Shares then - 3 - 64 to be purchased. An Option shall be exercisable at a purchase price equal to the product of the number of Shares to be purchased multiplied by the Option Price then in effect. The closing for each such purchase shall be held at the offices of LVDGT on a day not later than 30 Business Days after the date of the Option Notice. At the closing, LVDGT shall deliver to ASIG, against payment of the purchase price specified in this Section 2.2, certificates for the Shares purchased, free and clear of all pledges, options, claims, liens, security interests and encumbrances of any kind, other than the requirements of federal and state securities laws respecting limitations on the subsequent transfer thereof, which certificates shall be duly endorsed in blank or with appropriate duly executed blank stock transfer powers attached, with signatures guaranteed by a commercial bank or trust company or a member firm of a national securities exchange and with all requisite stock transfer tax stamps attached or provided for. SECTION 3. ADJUSTMENT OF SHARES ISSUABLE UPON EXERCISE. 3.1 GENERAL; OPTION PRICE. The number of Shares which ASIG shall be entitled to receive upon each exercise of the Option shall be determined by multiplying the number of Shares which would otherwise (but for the provisions of this Section) be issuable upon such exercise, as designated by ASIG, by the fraction of which (a) the numerator is the Option Price in effect on the date hereof and (b) the denominator is the Option Price in effect on the date of such exercise. 3.2 ADJUSTMENT OF OPTION PRICE. 3.2.1 ISSUANCE OF ADDITIONAL SHARES. In case LVDGT at any time or from time to time after the date hereof shall issue or sell Additional Shares (including Additional Shares deemed to be issued pursuant hereto) without consideration or for a consideration per Share less than the greater of the Current Market Price and the Option Price in effect immediately prior to such issue or sale, then, and in each such case, subject to Section 3.7, such Option Price shall be reduced, concurrently with such issue or sale, to a price (calculated to the nearest .001 of a cent) determined by multiplying such Option Price by a fraction (a) the numerator of which shall be (i) the number of Shares outstanding immediately prior to such issue or sale plus (ii) the number of Shares which the aggregate consideration received by LVDGT for the total number of such Additional Shares so issued or sold would purchase at the greater of such Current Market Price and such Option Price, and (b) the denominator of which shall be the number of Shares outstanding immediately after such issue or sale, PROVIDED that, for the purposes of this subsection, (x) immediately after any Additional Shares are deemed to have been issued pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed to be outstanding and (y) treasury shares shall not be deemed to be outstanding. - 4 - 65 3.2.2 EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case LVDGT at any time or from time to time after the date hereof shall declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of other or additional stock or other securities or property or Other Options by way of dividend or spin-off, reclassification, recapitalization or similar corporate rearrangement) on the Shares, other than (a) a dividend payable in Additional Shares or (b) a regular periodic cash dividend at a rate not in excess of 110% of the rate of the last regular periodic cash dividend theretofore paid, then, and in each such case, subject to Section 3.7, the Option Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of any class of securities entitled to receive such dividend or distribution shall be reduced, effective as of the close of business on such record date, to a price (calculated to the nearest .001 of a cent) determined by multiplying such Option Price by a fraction (x) the numerator of which shall be the Current Market Price in effect on such record date or, in the Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading, less the amount of such dividend or distribution (as determined in good faith by the Board of Directors of LVDGT) applicable to one Share, and (y) the denominator of which shall be such Current Market Price, PROVIDED that, in the event that the amount of such dividend as so determined is equal to or greater than 50% of such Current Market Price or in the event that such fraction is less than 1/2, in lieu of the foregoing adjustment, adequate provision shall be made so that ASIG shall receive a pro rata share of such dividend based upon the maximum number of shares at the time issuable to ASIG (determined without regard to whether the Option is exercisable at such time). 3.3 TREATMENT OF OTHER OPTIONS AND CONVERTIBLE SECURITIES. In case LVDGT at any time or from time to time after the date hereof shall issue, sell, grant or assume, or shall fix a record date for the determination of holders of any class of securities entitled to received, any Other Options or Convertible Securities, then, and in each such case, the maximum number of Additional Shares (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Other Options or, in the case of Convertible Securities and Other Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares issued as of the time of such issue, sale, grant or assumption or, in case such a record date shall have been fixed, as of the close of business on such record date (or, if the Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), PROVIDED that such Additional Shares shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 3.5) of such Shares would be less than the greater of the Current Market Price and the Option Price in effect on the date of and immediately prior to such issue, sale, grant or assumption or immediately prior to the close of business on such record date (or, in the Shares trade on an ex-dividend basis, on the date prior to the commencement of ex- - 5 - 66 dividend trading), as the case may be, and PROVIDED, FURTHER, that in any such case in which Additional Shares are deemed to be issued (a) no further adjustment of the Option Price shall be made upon the subsequent issue or sale of Convertible Securities or Shares upon the exercise of such Options or the conversion or exchange of such Convertible Securities, except in the case of any such Other Options or Convertible Securities which contain provisions requiring an adjustment, subsequent to the date of the issue or sale thereof, of the number of Additional Shares issuable upon the exercise of such Other Options or the conversion or exchange of such Convertible Securities by reason of (x) a change of control of LVDGT, (y) the acquisition by any Person or group of Persons of any specified number of percentage of the voting securities of LVDGT or (z) any similar event or occurrence, each such case to be deemed hereunder to involve a separate issuance of Additional Shares, Other Options or Convertible Securities, as the case may be; (b) if such Other Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to LVDGT, or decrease in the number of Additional Shares issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise), the Option Price computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options, or the rights of conversion or exchange under such Convertible Securities, which are outstanding at such time; (c) upon the expiration (or purchase by LVDGT and cancellation or retirement) of any such Other Options which shall not have been exercised or the expiration of any rights of conversion or exchange under any such Convertible Securities which (or purchase by LVDGT and cancellation or retirement of any such Convertible Securities the rights of conversion or exchange under which) shall not have been exercised, the Option Price computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the records date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon such - 6 - 67 expiration (or such cancellation or retirement, as the case may be), be recomputed as if: (i) in the case of Other Options for Shares or Convertible Securities, the only Additional Shares issued or sold were the Additional Shares, if any, actually issued or sold upon the exercise of such Other Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by LVDGT for the issue, sale, grant or assumption of all such Other Options, whether or not exercised, plus the consideration actually received by LVDGT upon such exercise, or the issue or sale of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by LVDGT upon such conversion or exchange (less the consideration, if any, actually paid by LVDGT to purchase all such Other Options), and (ii) in the case of Other Options for Convertible Securities, only the Convertible Securities, if any, actually issued or sold upon the exercise of such Other Options were issued at the time of the issue, sale, grant or assumption of such Other Options, and the consideration received by LVDGT for the Additional Shares deemed to have then been issued was the consideration actually received by LVDGT for the issue, sale, grant or assumption of all such Other Options, whether or not exercised, plus the consideration deemed to have been received by LVDGT (pursuant to Section 3.5) upon the issue or sale of such Convertible Securities with respect to which such Other Options were actually exercised (less the consideration, if any, actually paid by LVDGT to purchase all such Other Options); (d) no readjustment pursuant to subdivision (b) or (c) above shall have the effect of increasing the Option Price by an amount in excess of the amount of the adjustment thereof originally made in respect of the issue, sale, grant or assumption of such Other Options or Convertible Securities; and (e) in the case of any such Other Options which expire by their terms not more than 30 days after the date of issue, sale, grant or assumption thereof, no adjustment of the Option Price shall be made until the expiration or exercise of all such Other Options, - 7 - 68 whereupon such adjustment shall be made in the manner provided in subdivision (c) above. 3.4 TREATMENT OF SHARE DIVIDENDS, SHARE SPLITS, ETC. In case LVDGT at any time or from time to time after the date hereof shall declare or pay any dividend on the Shares payable in Shares, or shall effect a subdivision of the outstanding Shares into a greater number of Shares (by reclassification or otherwise than by payment of a dividend in Shares), then, and in each such case, Additional Shares shall be deemed to have been issued (a) in the case of any such dividend, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend, or (b) in the case of any such subdivision, at the close of business on the day immediately prior to the day upon which such corporate action becomes effective. 3.5 COMPUTATION OF CONSIDERATION. For the purposes of this Section, (a) the consideration for the issue or sale of any Additional Shares shall, irrespective of the accounting treatment of such consideration, (i) insofar as it consists of cash, be computed at the net amount of cash received by LVDGT, without deducting any expenses paid or incurred by LVDGT or any commissions or compensations paid or concessions or discounts allowed to underwriters, dealers or others performing similar services in connection with such issue or sale, (ii) insofar as it consists of property (including securities) other than cash, be computed at the fair value thereof at the time of such issue or sale, as determined in good faith by the Board of Directors of LVDGT, and (iii) in case Additional Shares are issued or sold together with other stock or securities or other assets of LVDGT for a consideration which covers both, be the portion of such consideration so received, computed as provided in clauses (i) and (ii) above, allocable to such Additional Shares, all as determined in good faith by the Board of Directors of LVDGT; (b) Additional Shares deemed to have been issued pursuant to Section 3.3, relating to Other Options and Convertible Securities, shall be deemed to have been issued for a consideration per share determined by dividing - 8 - 69 (i) the total amount, if any, received and receivable by LVDGT as consideration for the issue, sale, grant or assumption of the Other Options or Convertible Securities in question, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration to protect against dilution) payable to LVDGT upon the exercise in full of such Other Options or the conversion or exchange of such Convertible Securities or, in the case of Other Options for Convertible Securities, the exercise of such Other Options for Convertible Securities and the conversion or exchange of such Convertible Securities, in each case computing such consideration as provided in the foregoing subdivision (a), by (ii) the maximum number of Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number to protect against dilution) issuable upon the exercise of such Other Options or the conversion or exchange of such Convertible Securities; and (c) Additional Shares deemed to have been issued pursuant to Section 3.4, relating to stock dividends, stock splits, etc., shall be deemed to have been issue for no consideration. 3.6 ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding Shares shall be combined or consolidated, by reclassification or otherwise, into a lesser number of Shares, the Option Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. 3.7 MINIMUM ADJUSTMENT OF OPTION PRICE. If the amount of any adjustment of the Option Price required pursuant to this Section would be less than one percent (1%) of the Option Price in effect at the time such adjustment is otherwise so required to be made, such amount shall be carried forward and adjustment with respect thereto made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate at least one percent (1%) of such Option Price. 3.8 EMPLOYEE OPTIONS; EMPLOYEE SHARES. Notwithstanding anything to the contrary contained herein, no adjustment to the Option Price shall be required to be made hereunder with respect to the grant or exercise of Employee Options or the issuance of Employee Shares. - 9 - 70 4. CONSOLIDATION, MERGER, ETC. 4.1 ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC. In case LVDGT after the date hereof (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other Person to consolidate with or merge into LVDGT and LVDGT shall be the continuing or surviving Person but, in connection with such consolidation or merger, the Shares shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (c) shall transfer all or substantially all of its properties or assets to any other Person, or (d) shall effect a capital reorganization or reclassification of the Shares (other than a capital reorganization or reclassification resulting in the issue of Additional Shares for which adjustment in the Option Price is provided herein), then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Option, ASIG, upon the exercise hereof at any time after the consummation of such transaction, shall be entitled to receive (at the aggregate Option Price in effect at the time of such consummation for all Shares issuable upon such exercise immediately prior to such consummation), in lieu of the Shares issuable upon such exercise prior to such consummation, the highest amount of securities, cash or other property to which such holder would actually have been entitled as a shareholder upon such consummation if such holder had exercised the rights represented by this Option immediately prior thereto (determined without regard to whether the Option is exercisable at such time). 4.2 ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained in this Option to the contrary, LVDGT will not effect any of the transactions described in subdivision (a) through (d) of Section 4.1 unless, prior to the consummation thereof, each Person (other than LVDGT) which may be required to deliver any stock, securities, cash or property upon the exercise of this Option as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the holder of this Option, (a) the obligations of LVDGT under this Option (and if LVDGT shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release LVDGT from, any continuing obligations of LVDGT under this Option), and (b) the obligation to deliver to such holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Section 4, such holder may be entitled to receive, and such Person shall have similarly delivered to such holder an opinion of counsel for such Person, which counsel shall be reasonably satisfactory to such holder, stating that this Option shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this Section 4) shall be applicable to the stock, securities, cash or property which such Person may be required to deliver upon any exercise of this Option or the exercise of any rights pursuant hereto. - 10 - 71 SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LVDGT. LVDGT jointly and severally represents, warrants and covenants to ASIG as follows: (a) ORGANIZATION AND QUALIFICATION. LVDGT is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. (b) AUTHORITY RELATIVE TO THIS AGREEMENT. LVDGT has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate actions and no other proceedings on the part of LVDGT or its respective stockholders are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by LVDGT, and (assuming this Agreement is the valid and binding obligation of ASIG) constitutes a valid and binding agreement of LVDGT, enforceable against LVDGT in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) NO VIOLATION. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby will not (i) constitute a breach or violation of or default under the Certificate of Incorporation or the By-laws of LVDGT or (ii) violate, conflict with, or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of LVDGT under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which LVDGT is a party or to which LVDGT or any of its properties or assets may be subject, other than, in the case of clause (ii), such events that would not, either individually or in the aggregate, prevent or delay the consummation of the transactions contemplated hereby. The (i) execution, delivery and performance of this Agreement by LVDGT will not require the consent or approval of any other party, and (ii) the execution, delivery and performance by LVDGT - 11 - 72 of this Agreement and the consummation of the transactions contemplated hereby will not constitute a breach or violation of or default under any law, rule or regulation or any judgment, decree, order, governmental permit or license to which LVDGT is subject. To the knowledge of LVDGT, no challenges to the validity or effectiveness of this Agreement, or any other agreement or instrument necessary to consummate the transactions contemplated hereby, have been made by any governmental authority or other person. (d) OWNERSHIP OF SHARES. Upon payment of the Option Price, ASIG will acquire, good and valid title to the Shares received, free and clear of any lien, charge, encumbrance, security interest, claim or right of others of whatever nature other than the requirements of the federal and state securities laws respecting limitations on the subsequent transfer thereof, and shall be free or preemptive rights. SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASIG. ASIG hereby represents, warrants and covenants: (a) That ASIG, either individually or together with ASIG's advisers, has knowledge and experience in financial and business matters; is familiar with all of the financial and other features of LVDGT; is capable of evaluating the merits and risks of an investment in LVDGT; and is able to bear the economic risk of an investment in the Option and, upon exercise of the Option, the Shares. (b) That AEI's acquisition of the Option and in the event of the exercise thereof, the Shares is based upon and will be based upon ASIG's independent evaluation of the long-term prospects of LVDGT, and that ASIG has been furnished with such financial and other information as it has requested concerning LVDGT. (c) That ASIG is acquiring the Option and will acquire the Shares which may be transferred to ASIG upon the exercise of the Option for ASIG's own account, for investment purposes only, and not with a view to the resale, transfer or other disposition thereof. (d) That ASIG will not offer, sell, hypothecate, transfer or otherwise dispose of the Option or any of the Shares, as the case may be, unless: (i) A registration statement covering such of the Shares which are to be so transferred has been filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and such sale, transfer or other disposition is - 12 - 73 accompanied by a prospectus relating to a registration statement which is in effect under the Act covering such of the Shares which are to be sold, transferred or otherwise disposed of and meeting the requirements of Section 10 of the Act; or (ii) Counsel satisfactory to LVDGT renders an opinion in writing and addressed to LVDGT, reasonably satisfactory in form and substance to LVDGT, that in the opinion of such counsel, registration under the Act or the Exchange Act is not required in order to effect such proposed transaction SECTION 7. RESERVATION OF SHARES, ETC. LVDGT will at all times reserve and keep available, solely for issuance and delivery upon exercise of the Option the number of Shares from time to time issuable upon full exercise of the Option. All Shares issuable upon exercise of the Option at any time shall be duly authorized and, when issued upon such exercise, shall be validly issued and fully paid and nonassessable with no liability on the part of ASIG. SECTION 8. NO DILUTION OR IMPAIRMENT. LVDGT will not by amendment of its organizational documents or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Option, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Option against dilution or other impairment. Without limiting the generality of the foregoing, LVDGT (a) will not permit the par value of any Shares receivable upon the exercise of this Option to exceed the amount payable therefor upon such exercise, (b) will take all such action as may be necessary or appropriate in order that LVDGT may validly and legally issue fully paid and non-assessable Shares on the exercise of the Option from time to time, (c) will not take any action which results in any adjustment of the Option Price if the total number of Shares issuable after the action upon full exercise of the Option would exceed the total number of Shares then authorized by LVDGT's certificate of incorporation and available for the purpose of issue upon such exercise, and (d) will not issue any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon voluntary or involuntary dissolution, liquidation or winding-up, unless the rights of the holders thereof shall be limited to a fixed sum or percentage of par value or a sum determined by reference to a formula based on a published index of interest rates, an interest rate publicly announced by a financial institution or a similar indicator of interest rates in respect of participation in dividends and to a fixed sum or percentage of par value in any such distribution of assets. In case any event shall occur as to which any of the provisions of this Option are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Option in accordance with the essential intent and principles contained herein, then, in each such case, LVDGT shall, at its sole cost and expense, appoint a firm of independent certified public accountants of - 13 - 74 recognized national standing (which may be the regular auditors of LVDGT), which shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established herein, necessary to preserve, without dilution, the purchase rights represented by this Option. Upon receipt of such opinion, LVDGT will promptly mail a copy thereof to the holder of this Option and shall make the adjustments described therein. SECTION 9. REGISTRATION. 9.1 ISSUANCE OF SHARES. If any Shares required to be reserved for purposes of exercise of this Option require registration with or approval of any governmental authority under any federal or state law (other than the Act) before such Shares may be issued upon exercise, LVDGT will, at its expense and as expeditiously as possible, cause such Shares to be duly registered or approved, as the case may be. At any such time as Shares are listed on any national securities exchange, LVDGT will, at its expense, obtain promptly and maintain the approval for listing on each such exchange, upon official notice of issuance, the Shares issuable upon exercise of the then outstanding portion of the Option and maintain the listing of such Shares after their issuance; and LVDGT will also list on such national securities exchange, will register under the Securities Exchange Act of 1934 and will maintain such listing of, any other securities that at any time are issuable upon exercise of the Option, if and at the time that any securities of the same class shall be listed on such national securities exchange by LVDGT. 9.2 REGISTRABLE SECURITIES. The Shares issued upon exercise of the Option shall be considered "Registrable Securities" pursuant to and under the Investment Agreement and the holders of such Shares shall have all the rights and privileges of holders of Registrable Securities as set forth in the Investment Agreement, which is incorporated herein by reference. SECTION 10. SPECIFIC PERFORMANCE; REMEDIES. The parties acknowledge and agree that irreparable damage will result to ASIG in the event that this Agreement is not specifically enforced. Therefore, the rights to, or obligations of, purchase and sale of the Shares hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement or available at law or in equity shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which either party may have under this Agreement or otherwise. SECTION 11. SEVERABILITY. If any provisions of this Agreement shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair or invalidate the remainder of this Agreement but shall be confined in its operation to the provision of this Agreement directly involved in the controversy in which such judgment shall have been rendered. - 14 - 75 SECTION 12. NOTICES. All notices, requests, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if mailed by first class, registered mail, return receipt required, postage and registry fees prepaid, and addressed as follows: If to LVDGT: 5325 South Valley View Boulevard Suite 10 Las Vegas, Nevada 89118 If to ASIG: c/o Agassi Enterprises, Inc. 3960 Howard Hughes Parkway, Suite 750 Las Vegas, Nevada 89109 with a copy to: International Merchandising Corporation IMG Center, Suite 100 1360 East 9th Street Cleveland, Ohio 44114 Attention: Tony Decello Either party by notice in writing mailed to the other party may change the name and address to which notices, requests, demands and other communications shall be mailed. SECTION 13. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any conflict of law principles that might require the application of the laws of another jurisdiction. SECTION 14. ARBITRATION. The parties agree to submit to arbitration any dispute related to this Agreement and agree that the arbitration process shall be the exclusive means for resolving disputes which the parties cannot resolve. Any arbitration hereunder shall be conducted under the Dispute Resolution Rules of the American Arbitration Association ("AAA") as modified herein. Arbitration proceedings shall take place in Las Vegas, Nevada, before a single arbitrator who shall be a lawyer. All arbitration proceedings shall be confidential. Neither party shall disclose any information about the evidence produced by the other party in the arbitration proceedings, except in the course of judicial, regulatory, or arbitration proceeding, or as may be demanded by government authority. Before making any disclosure permitted by the preceding sentence, a party shall give the other party reasonable advance written notice of the intended disclosure and an opportunity to prevent disclosure. Each party shall have the right to take the deposition of one individual and any expert witness designated by the other party. Additional discovery may be had only where the arbitrator so orders, upon a showing of substantial need. Only evidence that is directly relevant to the issues may be obtained in discovery. Each party bears the burden of - 15 - 76 persuasion of any claim or counterclaim raised by that party. The arbitration provisions of this Agreement shall not prevent any party from obtaining injunctive relief from a court of competent jurisdiction to enforce the obligations for which such party may obtain provisional relief pending a decision on the merits by the arbitrator. Each of the parties hereby consents to the jurisdiction of Nevada courts for such purpose. The arbitrator shall have authority to award any remedy or relief that a court of the State of Nevada could grant in conformity to applicable law, except that the arbitrator shall have no authority to award attorneys' fees or punitive damages. Any arbitration award shall be accompanied by a written statement containing a summary of the issues in controversy, a description of the award, and an explanation of the reasons for the award. The arbitrator's award shall be final and judgment may be entered upon such award by any court. SECTION 15. AMENDMENTS, ETC. This Agreement may not be modified or amended, and no provision hereof may be waived, except by an instrument in writing signed by the parties hereto. SECTION 16. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, and permitted assigns and transferees. No party hereto may assign their rights and obligations hereunder without the prior written consent of the other party hereto; except that ASIG may, after providing LVDGT with written notice, transfer and assign its rights under this Agreement to any member of ASIG, any other entity wholly owned by any such member or to one or more trusts for such member's estate planning purposes. SECTION 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. LAS VEGAS DISCOUNT GOLF & TENNIS, INC. ASI GROUP, L.L.C. By ______________________________ By ______________________________ Name: Name: Title: Title: - 16 - 77 Annex 3.28 ---------- INVESTMENT AGREEMENT -------------------- This Investment Agreement is made as of October _____, 1998, between SAINT ANDREWS GOLF CORPORATION, a Nevada corporation (the "Company"), whose address is 5325 South Valley View Boulevard, Suite 4, Las Vegas, Nevada 89118, and LAS VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation (the "Purchaser"), whose address is 5325 South Valley View Boulevard, Suite 4, Las Vegas, Nevada 89118. SECTION 1 AUTHORIZATION AND SALE OF SERIES B PREFERRED 1.1 AUTHORIZATION. The Company will authorize the sale and issuance of Two Hundred Fifty Thousand (250,000) shares (the "Shares") of its Series B Convertible Preferred Stock ("Series B Preferred"), having the rights, privileges and preferences as set forth in the Certificate of Designation (the "Certificate") in the form attached to this Agreement as Exhibit A. The Shares of Common Stock into which the Shares will be convertible are referred to herein as the "Conversion Stock." 1.2 SALE OF SERIES B PREFERRED. Subject to the terms and conditions hereof, and in reliance upon the representations, warranties and agreements of the parties contained herein, the Company will issue and sell to the Purchaser, and the Purchaser will buy from the Company, Two Hundred Fifty Thousand (250,000) shares of Series B Preferred at a purchase price of Ten Dollars ($10.00) per share, for an aggregate purchase price of Two Million Five Hundred Thousand Dollars ($2,500,000.00). The parties hereto understand that the number of shares of Series B Preferred to be purchased hereunder may be reduced, and the aggregate purchase price reduced accordingly, to the extent Three Oceans, Inc. ("Three Oceans") exercises its rights of first refusal pursuant to that certain Investment Agreement between Three Oceans and the Company (the "Sanyo Agreement"). 1.3 SUMMARY OF TERMS OF SERIES B PREFERRED. The following summary of the Series B Preferred is provided for information purposes only and is subject to the description set forth in Exhibit A: Each share of Series B Preferred is convertible, at the option of the Purchaser, into one share of the Company's Common Stock, subject to the Anti-Dilution Provisions set forth herein. In the event of liquidation or dissolution of the Company, each share of Series B Preferred will have a $10.00 liquidation preference to be paid pari passu on a prorata basis with liquidation preference of the Series A Convertible Preferred Stock of the Company (the "Series A Preferred") and over all other shareholders. After the distribution described above has been paid, the remaining assets of the Company available for distribution to shareholders shall be distributed among the holders of Series B Preferred, the Series A Preferred (together with the Series B Preferred and any other series of preferred stock of the Company which may hereafter be issued, the "Preferred") and Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of all such Series B Preferred and Series A -1- 78 Preferred). In addition, holders of Series B Preferred shall be entitled to receive dividends at a rate equal to the rate per share payable to Common Stock or Series A Preferred holders, assuming conversion of Series B Preferred and Series A Preferred, payable out of funds legally available therefor. Such dividends shall be payable only when, as, and if declared payable to holders of Common Stock or Series A Preferred by the board of directors of the Company and shall be non-cumulative. In the event the Company shall declare a distribution payable in securities of other persons, evidences of indebtedness issued by the Company or other persons, assets (excluding cash dividends) or options or rights to purchase any such securities or evidences of indebtedness, then, in each such case the holders of the Series B Preferred shall be entitled to a proportionate share of any such distribution as though the holders of the Series B Preferred were the holders of the number of shares of Common Stock of the Company into which their respective shares of Series B Preferred are convertible as of the record date fixed for the determination of the holders of Common Stock of the Company entitled to receive such distribution. Each share of Series B Preferred will have one vote and will vote along with the holders of the Common Stock and the Series A Preferred except as otherwise specified herein. The Series B Preferred can be redeemed by the Company if there is an effective registration statement filed with the Securities and Exchange Commission covering the issuance of the Common Stock upon conversion of the Series B Preferred and the following two conditions are satisfied: (a) the Company earns $1,000,000 of pre-tax income for a fiscal year according to the year-end audited financial statements; and (b) the closing bid price of the Company's Common Stock is a least $15.00 for 20 consecutive trading days. If the Company notifies the Purchaser of its intent to redeem the Series B Preferred, the Purchaser will have at least 30 days to elect to convert its Series B Preferred or accept the redemption price of $12.50 per Share. The Series B Preferred shall be pari passu with the Series A Preferred and the Company shall not authorize or issue any class or series of securities having rights or preferences senior to or pari passu with those of Series B Preferred without a vote of the holders of a majority of the Series B Preferred outstanding, voting separately as a class. 1.4 ADJUSTMENT OF PRICE AND/OR TERMS. If at any time and each time within three (3) years after the Closing (as defined in Section 2.1 below), the Company offers to sell or grants, sells or issues shares of its capital stock to any persons or entity other than the Purchaser at a lower price per share than the purchase price paid by the Purchaser for the Shares and/or on more favorable terms and conditions than those afforded to the Purchaser in connection with the purchase of the shares of Series B Preferred (taking into account any equitable adjustment in accordance with the Anti-Dilution Provisions), the Company agrees to retroactively apply such lower price and/or more favorable terms and conditions to the Shares purchased by the Purchaser or to the Conversion Stock acquired by the Purchaser. At the Purchaser's request, the Company shall either (a) issue the Purchaser additional shares of Series B Preferred in the amount equal to (i) the amount of any such overpayment by the Purchaser divided by (ii) such lower price charged by the Company to any person or entities or (b) deliver to the Purchaser the amount of any such overpayment in cash. -2- 79 SECTION 2 CLOSING DATE; DELIVERY 2.1 CLOSING DATE. The closing of the purchase and sale of the Series B Preferred hereunder shall be held at the offices of the Company sixteen days from the execution hereof (the "Closing"), or at such other time and place upon which the Company and the Purchaser shall agree (the date of the Closing is hereinafter referred to as the "Closing Date"). 2.2 DELIVERY. At the Closing, the Company will deliver to the Purchaser a certificate or certificates, registered in the Purchaser's name representing Two Hundred Fifty Thousand (250,000) Shares against payment of the purchase price therefor, by check payable to the Company or wire transfer per the Company's instructions. The total purchase price shall be paid by the Purchaser to the Company in one installment without interest thereon. SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY Except as set forth on the Schedule of Exceptions attached hereto as Exhibit B (which Schedule makes specific reference to the particular representation or warranty as to which exception is taken, which in each case shall constitute the sole representation and warranty to which such exception shall apply), the Company represents and warrants to the Purchaser as follows: 3.1 DEFINITION OF MATERIAL. For purposes of this Section 3, material shall mean anything having a value or effect of more than $50,000. 3.2 ORGANIZATION AND STANDING; ARTICLES AND BY-LAWS. The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of the State of Nevada and is in good standing under such laws. The Company has requisite corporate power and authority to own and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. The Company is not presently qualified to do business as a foreign corporation in any jurisdiction, and the failure to be qualified will not have a material adverse affect on the Company's business as now conducted or as now proposed to be conducted. The Company has furnished the Purchaser with copies of its Articles of Incorporation (the "Articles") and By-Laws, as amended. Said copies are true, correct and complete and contain all amendments through the Closing Date. 3.3 CORPORATE POWER. The Company has all requisite legal and corporate power and authority to execute and deliver this Agreement, at the Closing will have all requisite legal and corporate power and authority to sell and issue the Shares hereunder, to issue the Conversion Stock upon conversion of the Shares, and to carry out and perform its obligations under the terms of this Agreement. 3.4 SUBSIDIARIES. The Company has no subsidiaries or affiliated companies and does not otherwise own or control, directly or indirectly, any equity interest in any corporation, association or business entity. -3- 80 3.5 CAPITALIZATION. The authorized capital stock of the Company consists, or upon the filing of the Certificate will consist, of 10,000,000 shares of Common Stock, of which 3,000,000 shares are issued and outstanding, and 5,000,000 shares of Preferred Stock, of which (a) 500,000 shares have been designated "Series A Preferred" and are issued and outstanding and (b) 250,000 shares have been designated "Series B Preferred," of which none is issued and outstanding prior to the Closing. The outstanding shares have been duly authorized and validly issued, and are fully paid and nonassessable. The Company has reserved shares of Series B Preferred for issuance hereunder, 250,000 shares of Common Stock upon conversion of the Series B Preferred, 500,000 shares of Common Stock upon conversion of Series A Preferred, 500,000 shares for issuance upon exercise of outstanding Class A Warrants (exercise price of $6.50), 100,000 shares of Common Stock for issuance upon exercise of outstanding Underwriter's Warrants (exercise price of $5.40), 250,000 shares of Common Stock for issuance upon exercise of the option under the Sanyo Agreement and 50,000 shares of Common Stock for issuance upon exercise of the Underwriter's Class A Warrants (exercise price of $7.80). Options to purchase 657,000 shares of Common Stock are issued and outstanding under the Company's employee stock option plan. All outstanding securities of the Company were issued in compliance with applicable federal and state securities laws. The Series B Preferred shall have the rights, preferences, privileges and restrictions set forth in the Certificate. Except as set forth above, there are no options, warrants or other rights to purchase any of the Company's capital stock. Except as set forth in any agreement entered into with the Purchaser, the Company is not a party or subject to any agreement or understanding, and there is no agreement or understanding between any persons that affects or related to the voting or giving of written consents with respect to any security or the voting by a director of the Company. 3.6 AUTHORIZATION. All corporate action on the part of the Company, its officers, directors and shareholders necessary for the authorization, execution, delivery and performance of this Agreement by the Company, the authorization, sale, issuance and delivery of the Shares and the Conversion Stock and the performance of all of the Company's obligations hereunder has been taken or will be taken prior to the Closing. This Agreement, when executed and delivered by the Company, shall constitute a valid and legally binding obligation of the Company, enforceable in accordance with its respective terms. The Shares, when issued in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable and will have the rights, preferences and privileges described in the Certificate; the Conversion Stock has been duly and validly reserved and, when issued in compliance with the provisions of this Agreement and the Certificate, will be validly issued, fully paid and nonassessable; and the Shares and Conversion Stock will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon the holders hereof through no action of the Company; provided, however, that the shares of the Conversion Stock will be subject to restrictions on transfer under state and/or federal securities laws as set forth herein. Except as set forth in the Sanyo Agreement, the Shares are not subject to any preemptive rights or rights of first refusal. 3.7 FINANCIAL STATEMENTS. The Company has delivered to the Purchaser its audited balance sheet and statements of operations and cash flow was of and for the period ended December 31, 1997, and its combined unaudited balance sheet and statements of operations and cash flows as of and for the period ended June 30, 1998 (collectively the "Financial -4- 81 Statements"). The Financial Statements are complete and correct in all material respects and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated, except that the unaudited financial statements do not contain footnotes. The Financial Statements accurately set out and describe the financial condition and operating results of the Company as of the dates, and for the period, indicated therein. The financial statements for the year ended December 31, 1997, were audited by Arthur Andersen LLP. 3.8 ABSENCE OF CHANGES. Since June 30, 1998: (a) the Company has not entered into any transaction which was not in the ordinary course of business, (b) there has been no materially adverse change in the condition (financial or otherwise), business, property, assets or liabilities of the Company other than changes in the ordinary course of business, none of which, individually or in the aggregate, has been materially adverse, (c) there has been no damage to, destruction of or loss of physical property (whether or not covered by insurance) materially and adversely affecting the business or operations of the Company, (d) the Company has not declared or paid any dividend or made any distribution on its stock, or redeemed, purchased or otherwise acquired any of its stock, (e) the Company has not increased the compensation of any of its officers, or the rate of pay of its employees as a group, except as part of regular compensation increases in the ordinary course of business, (f) there has been no resignation or termination of employment of any key officer, consultant or employee of the Company, and the Company does not know of the impending resignation or termination of employment of any such officer, consultant or employee that if consummated would have a material adverse effect on its business, (g) there has been no labor dispute involving the Company or its employees and none is pending or, to the best of the Company's knowledge, threatened, (h) there has not been any change, except in the ordinary course of business, in the contingent obligations of the Company, by way of guaranty, endorsement, indemnity, warranty or otherwise, (i) there have not been any loans made by the Company to any of its employees, officers or directors other than travel advances and office advances made in the ordinary course of business and (j) to the best of the Company's knowledge, there has been no other event or condition of any character pertaining to and materially and adversely affecting the assets or business of the Company. 3.9 MATERIAL LIABILITIES. The Company has no material liabilities or obligations, absolute or contingent (individually or in the aggregate) except (a) the liabilities and obligations set forth in the Financial Statements, (b) liabilities and obligations which have been incurred subsequent to June 30, 1998, in the ordinary course of business which have not been in the aggregate materially adverse, (c) liabilities and obligations under lease for its principal offices and for equipment, and (d) liabilities and obligations under sales, procurement and other contracts and arrangements entered into in the normal course of business. 3.10 TITLE TO PROPERTIES AND ASSETS; LIENS, ETC. The Company has good and marketable title to its properties and assets, and has good title to all of its leasehold interests in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than the lien of current taxes not yet due and payable. Each of the Company's assets is in good repair and good, marketable and operating condition and is suitable for the purposes for which it presently is being used and is intended to be used by the Company and is adequate and suitable to meet all present and reasonably anticipated future requirements of the Company. The Company's assets conform to -5- 82 all applicable laws, ordinances, codes, rules and regulations, and the Company has not received any notice to the contrary. The Company does not own, of record or beneficially, any real property. Exhibit C sets forth a list and description of all property leased or subleased to or by the Company. 3.11 COMPLIANCE WITH OTHER INSTRUMENTS; NONE BURDENSOME, ETC. The Company is not in violation of any term of its Articles or By-Laws, or, in any material respect, of any term or provision of any mortgage, indebtedness, indenture, contract, security agreement, agreement, instrument, judgment or decree, and, to the best of its knowledge, is not in violation of any order, statute, rule or regulation applicable to the Company where such violation would materially and adversely affect the Company. The execution, delivery and performance of and compliance with this Agreement, and the issuance of the Series B Preferred and the Conversion Stock has not resulted and will not result in any violation of, or conflict with, or constitute a default (or an event that might, with the passage of time or the giving of notice or either of them, constitute a default) under any of the terms of, result in the termination of, result in the loss of any right under, or give to any other person the right to cause such a termination of or loss under, and will be in compliance with, the Company's Articles, By-Laws and all of its agreements, permits and licenses or any provision of federal, state, local or foreign statute rule ordinance or regulation applicable to the Company or result in the creation of, any mortgage, pledge, lien, encumbrance or charge upon any of the capital stock, properties or assets of the Company or the creation, maturation or acceleration of any liability or obligation of the Company (or give to any other person the right to cause such a creation, maturation or acceleration); and there is no such violation or default which adversely affects the business of the Company or any of its properties or assets. 3.12 INTANGIBLE ASSETS. (a) The Company (i) owns or has the right to use, free and clear of all liens, claims and restrictions, all Intellectual Property (as hereinafter defined) used in the conduct of its business as now conducted or as proposed to be conducted without infringing upon or otherwise acting adversely to the right or claimed right of any person under or with respect to any of the foregoing, and (ii) is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner of, license of, or other claimant to, any patent, trademark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business or otherwise. "Intellectual Property" means (a) all inventions (whether patentable or unpatentable) and whether or not reduced to practice, all improvements thereto, and all patents, patent applications and patent disclosures, together with all reissuance, continuations, continuations-in-part, revisions, extensions and reexaminations thereof, (b) all trademarks, service marks, trade dress, logos, trade names and corporate names, together with all translations, adaptations, derivations and combinations thereof and including all -6- 83 goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (c) all copyrightable works, all copyrights, and all applications, registrations and renewals in connection therewith, (d) all mask works and all applications, registrations and renewals in connection therewith, (e) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and producing processes and techniques, technical data, designs, drawings, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals), (f) all computer software and information systems, programs, (including data and related documentation), whether owned or leased by the Company, (g) all other proprietary rights and (h) all copies and tangible embodiments thereof (in whatever form or medium). The Company has taken all necessary action to maintain and protect each item of Intellectual Property that it owns or uses and has never granted any sublicense or similar right to any third party with respect to such Intellectual Property. (b) The Company owns and has the unrestricted right to use all Intellectual Property required for or incidental to the development, construction and operation of the SportPark segment of its business, free and clear of any rights, liens or claims of others, including without limitation, former employers of all current and former employees, consultants, officers, directors and shareholders of the Company. (c) The Company has not interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Intellectual Property rights of third parties, and none of the stockholders and directors and officers (and employees with responsibility for Intellectual Property matters) of the Company has ever received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation (including any claim that the Company must license or refrain from using any Intellectual Property rights of any third party). No third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property rights of the Company. (d) Exhibit D identifies each patent or registration which has been issued to the Company with respect to any of its Intellectual Property, each pending patent application or application for registration which the Company has made with respect to any of its Intellectual Property, and each license, agreement or other permission which the Company has granted to any third party with respect to any of its Intellectual Property. The Company has -7- 84 delivered to the Purchaser correct and complete copies of all such patents, registrations, applications, licenses, agreements and permissions (as amended to date). Exhibit D also identifies each trade name or unregistered trademark used by the Company in connection with any of its businesses. With respect to each item of Intellectual Property required to be identified in Exhibit D: (i) the Company possesses all right, title and interest in and to the item, free and clear of any Liens, license or other restriction, (ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge, (iii) no action, suit proceeding hearing, investigation, charge, complaint, claim or demand is pending or, to the knowledge of each of the shareholders and the directors and officers (and employees with responsibility for Intellectual Property matters) of the Company, is threatened which challenges the legality, validity, enforceability, use or ownership of the item and (iv) the Company has never agreed to indemnify any person for or against any interference, infringement, misappropriation, or other conflict with respect to the item. 3.13 LITIGATION, ETC. There is no suit, action, hearing, investigation, claim or litigation, or legal, administrative, arbitration or other proceeding pending or, to the best knowledge of the Company after due inquiry, threatened against or affecting the Company, its business or any of its property or assets, before any court, arbitrator, or federal, state, municipal or other governmental board, department, agency or instrumentality, and there is no basis for any such action. There is no judgment, decree, injunction, ruling, award, charge, order or writ of any court, governmental department, commission, agency, instrumentality, arbitration or other person outstanding against, binding upon or involving the Company, its business, any directors or officers of the Company. None of the matters set forth on Exhibit B could result in any material adverse effect. The Company owns policies of casualty, liability or other forms of insurance which provide coverages in amount and scope sufficient to cover every claim, action, cause of action, suit, proceeding, litigation, arbitration or investigation arising out of, related to, or in connection with those matters listed on the schedule of exception. Neither the Company nor any of its directors, officers or employees is currently charged with, or is currently under investigation with respect to, any violation of any provision of any foreign, federal, state or local law or administrative regulation in respect of the business of the Company. The Company is not in default with respect to any judgment, decree, injunction, ruling, award, order or writ of any foreign, federal, state, municipal agency or other governmental department, board, commission, bureau, agency or instrumentality. 3.14 EMPLOYEES. To the best of the Company's knowledge, no employee of the Company is in violation of any term of any employment contract, non-disclosure agreement or any other contract or agreement relating to the relationship of such employee with the Company or any other party because of the nature of the business conducted or to be conducted by the Company. There are no controversies pending nor, to the best knowledge of the Company any basis of any such controversies, between the Company and any of its employees. To the knowledge of the Company, and the directors and officers (and employees with responsibility for -8- 85 employment matters) of the Company, no executive, key employee, or group of employees has any plans to terminate employment with the Company. The Company is not bound by any collective bargaining agreement, nor has the Company experienced any strikes, grievances, claims of unfair labor practices or other collective bargaining disputes. The Company has not committed any unfair labor practice. None of the shareholders or the directors or officers (or employees with responsibility for employment matters) of the Company has any knowledge of any organizational effort presently being made or threatened by or on behalf of any labor union with respect to employees of the Company. 3.15 EMPLOYEE AGREEMENTS. There are no pension, profit-sharing, bonus, group insurance, death benefit, vacation pay, severance pay, sick leave, holiday pay, welfare, or any other employee benefit or "fringe benefit" plans or arrangements relating to the current or former employees or consultants of the Company. In addition, there are no employment, deferred compensation, collective bargaining, retainer, savings, consulting, non-competition, retirement or incentive agreements, contracts, plans or arrangements relating to, with or for the benefit of any officers or employees of the Company or other persons. 3.16 CERTAIN TRANSACTIONS. The Company is not indebted, directly or indirectly, to any of its officers, directors or shareholders or to their respective spouses or children, in any amount whatsoever; none of said officers, directors or shareholders, or any members of their immediate families, are indebted to the Company or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, except that officers, directors and/or shareholders of the Company may own less than 1% of the stock of publicly-traded companies which may compete with the Company. No officer, director or shareholder, or any member of their immediate families, is, directly or indirectly, interested in any contract with the Company. The Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 3.17 MATERIAL CONTRACTS AND OBLIGATIONS. Attached hereto as Exhibit E is a list of all agreements, contracts, indebtedness, liabilities and other obligations to which the Company is a party or by which it is bound that are material to the conduct and operations of its business and properties, which provide for payments to or by the Company; or which involve transactions or proposed transactions between the Company and its officers, directors, affiliates or any affiliate thereof. Copies of certain of such agreements and contracts and documentation evidencing such liabilities and other obligations have been made available for inspection by the Purchaser and its counsel. All of such agreements and contracts are valid, binding and in full force and effect in all respects, assuming due execution by the other parties to such agreements and contracts. To the best knowledge of the Company, the Company and each other party to each such agreement and contract has performed all obligations required to be performed by it thereunder and is not in breach or default, and is not alleged to be in breach or default, in any respect thereunder, and no event has occurred and no condition or state of facts exists (or would exist upon the giving of notice or the lapse of time or any of them) that would become or cause a breach, default or event of default thereunder, would give to any person the right to cause such a termination or would cause an acceleration of any obligation thereunder. -9- 86 3.18 REGISTRATION RIGHTS. Except as set forth in this Agreement or as set forth in the Sanyo Agreement, the Company is not under any contractual obligation to register (as defined in Section 8.1 below) any of its presently outstanding securities or any of its securities which may hereafter be issued. 3.19 GOVERNMENTAL CONSENT, ETC. No consent, approval, order or authorization of (of designation, declaration or filing with) any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Series B Preferred and the Conversion Stock, or the consummation of any other transaction contemplated hereby, except (a) filing of the Certificate in the office of the Secretary of the State of Nevada, and (b) qualification (or taking such action as may be necessary to secure an exemption from qualification, if available) or the offer and sale of the Series B Preferred and the Conversion Stock under applicable estate securities laws, which filings and qualifications, if required, will be accomplished in a timely manner. 3.20 OFFERING. Subject to the accuracy of the Purchaser's representations in Section 4 hereof, the offer, sale and issuance of the Series B Preferred to be issued in conformity with the terms of this Agreement, and the issuance of the Conversion Stock upon conversion of the Series B Preferred, constitute transactions exempt from the registration requirements of Section 5 of the Securities Act of 1933, as amended (the "Securities Act"). 3.21 BROKERS OR FINDERS. The Company has not incurred, and will not incur, directly or indirectly, as a result of any action taken by the Company, any liability for brokerage or finders' fees or agents' commissions or any similar charges in connection with this Agreement. 3.22 TAX MATTERS. The Company (a) has timely filed all tax returns that are required to have been filed by it with all appropriate federal, state, county and local governmental agencies (and all such returns fairly reflect the Company's operations for tax purposes), (b) has timely paid all taxes owed by it for which it is obligated to withhold from amounts owing to any employee (including without limitation social security taxes), creditor or third party (other than taxes the validity of which are being contested in good faith by appropriate proceedings), and (c) has not waived any statute of limitations with respect to taxes or agreed to any extension of time with respect to a tax assessment or deficiency. The assessment of any additional taxes for a period for which returns have been filed is not expected to exceed the recorded liability therefor, and there are no material unresolved questions or claims concerning the Company's tax liability. The Company's tax returns have not been reviewed or audited by any federal, state, local or county taxing authority. There is no pending dispute with any taxing authority relating to any of said returns which, if determined adversely to the Company, would result in the assertion by any taxing authority of any valid deficiency in any material amount for taxes. 3.23 INSURANCE. With respect to each insurance policy maintained by the Company: (a) the policy is legal, valid, binding, enforceable and in full force and effect, (b) the policy will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following consummation of the transactions contemplated hereby, (c) neither the Company nor any other party to the policy is in breach of default (including with respect to the payment of premiums or the giving of notices) and (d) no party to the policy has repudiated any provision -10- 87 thereof. The Company has been covered since its formation by insurance in type, scope and amount that (x) meet the minimum requirements of any contract, lease or agreement to which the Company is a party and (y) is customary and reasonable for the business in which it has engaged during such period including, without limitation, fire, casualty, liability and key-man life (on the lives of Ron and Vaso Boreta) insurance polices. The Company has not failed to give any notice or present any claim under any insurance policy in a due and timely fashion. 3.24 ENVIRONMENTAL AND SAFETY REGULATIONS. The Company is not in violation of any environmental laws or regulations, including without limitation any and all applicable federal, state and local laws, regulations and ordinances relating to air and water pollution and handling and disposal of chemical and hazardous materials (hereinafter the "Environmental Laws"). The Company possesses all of the authorizations, permits and approvals required to be obtained by applicable Environmental Laws; neither the Company nor any stockholder has received any notice from any governmental authority or has knowledge of any governmental inquiry or investigation or any other claim, suit or proceeding against or involving the Company with respect to any actual or alleged violation of any applicable Environmental Law and all hazardous waste and chemical waste materials have been disposed of in accordance with all applicable Environmental Laws. There have been no spills, dumping, discharge or clean-up of hazardous waste or chemical materials in violation of any Environmental Laws on or at any premises owned or any premises occupied by the Company. 3.25 EMPLOYEE BENEFIT PLANS. (a) The Company has never maintained or contributed to, and does not maintain or contribute to any Employee Benefit Plan as defined in the Employee Retirement Income Security Act of 1974, as amended. The Company has not incurred any liability under ERISA (including any withdrawal liability) or under the Internal Revenue Code of 1986, as amended Code (the "Code"), with respect to any Employee Benefit Plan. (b) The Company does not contribute to, nor has ever had contributed to and has never been required to contribute to any multi-employer plan or has any liability (including withdrawal liability) under any multi-employer plan. (c) The Company does not maintain or contribute to, nor has it ever maintained or contributed to, nor has it ever been required to contribute to any Employee Welfare Benefit Plan providing medical, health, or life insurance or other welfare-type benefits for current or future retired or terminated employees, their spouses, or their dependents (other than in accordance with Code Section 4980B). -11- 88 3.26 MINUTE BOOKS. The minute books of the Company contain a complete summary of all meetings of directors and shareholders since the time of incorporation and reflect all transactions referred to in such minutes accurately. 3.27 LEGAL COMPLIANCE. The Company has complied with all applicable laws, statutes, and ordinances (including without limitation all rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and charges thereunder) of federal, state, local and foreign governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against it alleging any failure to so comply. The Company has all permits, certificates, licenses, approvals and other authorizations required in connection with the operation of its business, all of which are valid and effective. No notice has been issued and no investigation or review is pending or threatened by any governmental entity with respect to (a) any alleged violation by the Company of any law, statute or ordinance, rule, regulation, code, plan, injunction, judgment, order, decree, ruling, charge, policy or guideline of any federal, state, local or foreign governmental entity(or agency thereof), or (b) any alleged failure to have all permits, certificates, licenses, approvals and other authorizations required in connection with the operation of the business of the Company. 3.28 DISCLOSURE. This Agreement with the Exhibits hereto and all information provided by the Company to the Purchaser do not contain any untrue statement of a fact or omit to state a fact necessary in order to make the statements contained herein not misleading in light of the circumstances under which they were made. SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser hereby represents and warrants to the Company with respect to the purchase of the Shares as follows: 4.1 EXPERIENCE. It has experience in evaluating and investing in private placement transactions of securities in companies so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. 4.2 INVESTMENT. It is acquiring the Shares and the Conversion Stock for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. It understands that the Shares and the Conversion Stock have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Purchaser's representations as expressed herein. 4.3 RULE 144. It acknowledges that the Shares and the Conversion Stock must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from such registration is available. It is aware of the provisions of Rule 144 promulgated under the Securities Act which permit limited resale of shares purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public -12- 89 market for the shares, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sale being effected through a "brokers transaction" or in transactions directly with a "market maker" and the number of shares being sold during any three month period not exceeding specified limitations. 4.4 ACCESS TO DATA. It has had an opportunity to discuss the Company's business, management and financial affairs with the Company's management and has had the opportunity to review the Company's facilities. It has also had an opportunity to ask questions of officers of the Company, which questions were answered to its satisfaction. It understands that such discussions, as well as any written information issued by the Company, were intended to describe certain aspects of the Company's business and prospects but were not a thorough or exhaustive description. However, no investigation by, or furnishing of information to, the Purchaser shall affect or modify the representations, warranties and agreements of the Company set forth herein or the right of the Purchaser to rely exclusively thereon and to seek and obtain all damages and other remedies available to the Purchaser in connection with the breach of any of the representations, warranties and covenants contained herein. 4.5 AUTHORIZATION. This Agreement when executed and delivered by the Purchaser will constitute a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms subject to (a) the laws of bankruptcy and the laws affecting creditor's rights generally and (b) the availability of equitable remedies. 4.6 BROKERS OR FINDERS. The Company has not incurred and will not incur, directly or indirectly, as a result of any action taken by the Purchaser, any liability for brokerage or finder's fees or agents' commissions or any similar charges in connection with this Agreement. 4.7 REQUIRED SEC FILINGS. The Purchaser acknowledges that within 10 days after the Closing, it will be required to file an amended Schedule 13D or Schedule 13G, as appropriate, and a Form 4 with the Securities and Exchange Commission. SECTION 5 THE PURCHASER'S CONDITIONS TO CLOSING The Purchaser's obligations to purchase the Shares at the Closing are subject to the fulfillment of the below-listed conditions, the waiver of which shall not be effective against the Purchaser unless it consents in writing thereto. If at the Closing Date any of the conditions specified in this Agreement shall not have been fulfilled, the Purchaser shall, at the Purchaser's election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights Investor may have by reason of such nonfulfillment. 5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and warranties made by the Company in Section 3 hereof shall be true, complete and correct when made, and shall be true, complete and correct on the Closing Date. -13- 90 5.2 COVENANTS. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all respects. 5.3 COMPLIANCE CERTIFICATE. The Company shall have delivered to the Purchaser a certificate of the Company, executed by the President of the Company, dated the Closing Date, and certifying, among other things, to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this Agreement. 5.4 GOOD STANDING CERTIFICATE. The Company shall have delivered to the Purchaser a certificate of good standing of the Company under the laws of the State of Nevada. 5.5 CERTIFICATE OF AMENDMENT. The Certificate shall have been filed with the Secretary of State of the State of Nevada. 5.6 LEGAL MATTERS. All matters of a legal nature which pertain to this Agreement and the transactions contemplated hereby shall have been reasonably approved by counsel to the Purchaser. 5.7 CO-SALE AGREEMENT. The Purchaser and each of Messrs. John Boreta, Ron Boreta or Vaso Boreta or Boreta Enterprises Ltd. or any of their respective affiliates shall each have entered into a Co-Sale Agreement which shall have a term of two years in the form attached hereto as Exhibit F. 5.8 RIGHT OF FIRST REFUSAL. The Company shall have complied with all provisions of the Sanyo Agreement as such provisions relate to, or are applied to, this Agreement or consummation of the transactions contemplated hereby. 5.9 OPINION OF THE COMPANY'S COUNSEL. The Purchaser shall have received from Krys, Boyle, Freedman & Sawyer, P.C., counsel to the Company, an opinion dated the Closing Date, in form and substance satisfactory to the Purchaser, to the effect that: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, and the Company has the requisite corporate power and authority to own it properties and to conduct its business. (b) The Company is not presently required to be qualified to do business as a foreign corporation in any state or jurisdiction of the United States. (c) The Company has the requisite corporate power and authority to execute, deliver and perform this Agreement. The Agreement has been duly and validly authorized by the Company, duly executed and delivered by an authorized officer of the Company and constitutes legal, valid and binding obligations of the Company, -14- 91 subject to bankruptcy and other laws of general application affecting the rights and remedies of creditors and except insofar as the enforceability of the indemnification provisions of Section 8.11 of the Agreement may be limited by applicable laws and except that no opinion need be given as to the availability of equitable remedies. (d) The capitalization of the Company is as follows: (i) PREFERRED STOCK. 5,000,000 shares of Stock, of which (A) 500,000 shares have been designated Series A Preferred Stock and are issued and outstanding and (B) 250,000 shares have been designated as Series B Preferred and purchased pursuant to this Agreement. Such shares of Series B Preferred Stock have been duly authorized, issued and delivered, are validly outstanding, fully paid and nonassessable, and have been approved by all requisite shareholder action. The respective rights, privileges and preferences of the Preferred Series B are as stated in the Certificate attached as Exhibit A to the Agreement. The Conversion Stock has been duly and validly reserved for issuance and, when issued in accordance with the Certificate, will be validly issued, fully paid and nonassessable. (ii) COMMON STOCK. 10,000,000 shares of Common Stock, of which 3,000,000 shares have been duly authorized, issued and delivered and are validly outstanding, fully paid and nonassessable and were issued in compliance with all applicable federal and state securities laws. (iii) Except for (A) the conversion privileges of the Series A Preferred Stock, (B) the conversion privileges of the Series B Preferred, (C) the rights of first refusal contained in Section 9 hereof, (D) the rights of first refusal contained in the Sanyo Agreement, (E) 250,000 shares of Common Stock reserved for issuance upon the exercise of the stock option granted in the Sanyo Agreement, (F) 500,000 shares of Common Stock reserved for issuance upon exercise of outstanding Class A Warrants, (G) 150,000 shares of Common Stock reserved for issuance upon exercise of outstanding Underwriter's Warrants and (H) 657,000 shares of Common Stock reserved for issuance to employees and consultants upon exercise of outstanding stock options, there are no preemptive rights or, to the best of counsel's knowledge, options, warrants, conversion privileges or -15- 92 other rights (or agreements of any such rights) outstanding to purchase or otherwise obtain any of the Company's securities. (e) The certificates representing shares of the Preferred Stock and shares of Common Stock are in due and proper form and have been duly and validly executed by the officers of the Company named thereon. (f) The execution, delivery, performance and compliance with the terms of this Agreement do not violate any provision of any federal, state or local law, rule or regulation or of any judgment, writ, decree or order binding upon the Company or any provision of the Company's amended Articles or By-Laws. (g) All consents, approvals, orders or authorizations of, and all qualifications, registrations, designations, declarations or filings with, any federal or state governmental authority on the part of the Company required in connection with the consummation of the transactions contemplated by this Agreement have been obtained and are effective as of the Closing, and such counsel is not aware of any proceedings, or threat thereof, which question the validity thereof. (h) Based in part upon the representations of the Purchaser in this Agreement, the offer and sale of the Series B Preferred pursuant to the terms of this Agreement are exempt from the registration requirements of Section 5 of the Securities Act by virtue of Section 4(2) thereof, and from the qualification requirements of the securities laws of the State of Nevada, or all requisite permits, qualifications and orders have been obtained. (i) Except as set forth on the Schedule of Exceptions attached to the Agreement as Exhibit B, such counsel is not aware of any action, proceeding or investigation pending against the Company or any of its officers, directors or employees, or that any of the foregoing has received any threat thereof, which questions the validity of the Agreement or the right of the Company or its officers, directors and employees to enter into such agreement or which might result, either individually or in the aggregate, in any adverse change in the assets, condition, affairs or prospects of the Company, nor is such counsel aware of any litigation pending, against the Company or any of its officers, directors or employees' or that any of the foregoing has received any threat thereof, by reason of the proposed activities of the Company, the past employment relationships of its officers, directors or employees, or negotiations by the Company -16- 93 or any of its officers or directors with possible investors in the Company. (j) The Company is not in violation of any provisions of its Articles or Bylaws, and neither of such documents is in violation of any provision of the Corporation Law of the State of Nevada. 5.10 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the Closing Date, there shall have been no material adverse change, regardless of insurance coverage therefor, in the business or any of the assets, results of operations, liabilities, prospects or conditions, financial or otherwise, of the Company. SECTION 6 THE COMPANY'S CONDITIONS TO CLOSING The Company's obligation to sell and issue the Shares at the Closing is, at the option of the Company, subject to the fulfillment as of the Closing Date of the following conditions: 6.1 REPRESENTATIONS. The representations made by the Purchaser in Section 4 hereof shall be true and correct when made, and shall be true and correct on the Closing Date. 6.2 LEGAL MATTERS. All material matters of a legal nature which pertain to this Agreement, and the transactions contemplated hereby, shall have been reasonably approved by counsel to the Company. SECTION 7 AFFIRMATIVE COVENANTS OF THE COMPANY The Company hereby covenants and agrees as follows: 7.1 FINANCIAL INFORMATION. The Company will mail the following reports to the Purchaser for so long as the Purchaser is a holder of any of the shares of Series B Preferred or shares of Conversion Stock: (a) As soon as practicable after the end of each fiscal year, and in any event within 90 days thereafter, consolidated balance sheets of the Company and its subsidiaries, if any, as of the end of such fiscal year, and consolidated statements of operations and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles and setting forth in each case in comparative form similar information of the previous fiscal year, all in reasonable detail and audited by independent public accountants of national standing selected by the Company. -17- 94 (b) As soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company and in any event within 45 days thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and consolidated statements of operations and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such period and for the current fiscal year to date, prepared in accordance with generally accepted accounting principles (other than for accompanying notes), all in reasonable detail and signed, subject to changes resulting from year-end audit adjustments, by the principal financial or accounting officer of the Company. (c) Within 15 days after the end of each fiscal month, unaudited consolidated balance sheets of the Company as of the end of such month, unaudited consolidated statements of operations including income statements, and unaudited consolidated rolling cash flow projections for each month and for the current fiscal year to date. Such financial statements shall be prepared in accordance with generally accepted accounting principles consistently applied (other than accompanying notes), all in reasonable detail subject to year-end audit adjustments. (d) Promptly after each meeting or the execution of an action by written consent, copies of the minutes of proceedings or actions by written consent of the Company's Board of Directors and shareholders. (e) With reasonable promptness, such other information and data with respect to the Company and its subsidiaries, if any, as the Purchaser may from time to time reasonably request. (f) For so long as the Purchaser is eligible to receive reports under this Section 7.1, it shall also have the right, at its expense, to visit and inspect any of the properties of the Company or any of its subsidiaries, to examine its books of account and records, and to discuss their affairs, finances and accounts with their officers, all at such reasonable times as often as may be reasonably requested, provided, however, that the Company shall not be obligated to provide any information, other than to the representatives of the Purchaser on the Board of Directors, that it reasonably considers to be a trade secret or to contain confidential information. 7.2 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted pursuant to Section 7.1 may not be assigned or otherwise conveyed by the Purchaser or by any subsequent transferee of any such rights without the prior written consent of the Company; provided, -18- 95 however, that the Purchaser may assign such rights to a parent, subsidiary or affiliate of the Purchaser upon notice to the Company thereof. 7.3 USE OF PROCEEDS. The Company shall completely segregate the proceeds from the sale of the Shares from all other funds of the Company. These funds shall be strictly and exclusively used for activities directly related to the SportPark segment of the Company's business and shall not be used for the Company's franchise business or for any other purposes. The Company shall maintain a separate accounting for the use of these proceeds and provide a copy of such accounting to the Purchaser upon request. 7.4 RULE 144 REPORTING. With a view to making available to the Purchaser the benefits of certain rules and regulations of the Securities and Exchange Commission which may permit the sale of the Conversion Stock to the public without registration, the Company agrees to use its best efforts to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times; (b) Use its best efforts to file with the Securities and Exchange Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (c) So long as the Purchaser owns any Restricted Securities (as defined in Section 8.1 hereof) furnish to the Purchaser forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company filed with the Securities and Exchange Commission, and such other reports and documents of the Company and other information in the possession of or reasonably obtained by the Company as the Purchaser may reasonably request in availing itself of any due or regulation of the Securities and Exchange Commission allowing the Purchaser to sell any such securities without registration. 7.5 PROTECTIVE PROVISIONS. For so long as the Purchaser or its assignees is a holder of any shares of the Series B Preferred or Conversion Stock, the Company shall not without the Purchaser's prior written consent: (a) change any of the terms of Series B Preferred as stated in the Certificate or any amendment, addition, change, modification or deletion of any portion of the By-Laws or Articles of the Company; -19- 96 (b) authorize or issue (i) any class or series of securities having rights senior to or pari passu with those of the Series B Preferred or (ii) any rights to purchase or any securities or instruments convertible or exchangeable into any such securities; (c) sell, lease, convey or otherwise dispose of all or substantially all of its assets, or effect any merger, consolidation, reorganization or amalgamation of the Company, with another corporation; (d) adopt a statutory plan of share exchange; (e) redeem or repurchase (or enter into any agreement to become so obligated) any shares of Common Stock or Series B Preferred (other than pursuant to employee stock vesting or employee stock repurchase agreements or pursuant to the Certificate); (f) enter into any transaction with or increase the compensation paid or issue any securities of the Company, rights or options to purchase any securities of the Company or any instrument convertible or exchangeable or payable or satisfied with any securities of the Company or any other compensation derived from or based on the profits or securities of the Company to any of Messrs. John Boreta, Ron Boreta or Vaso Boreta or Boreta Enterprises Ltd. or any of their respective affiliates; (g) subject to the Sanyo Agreement and to the Agreement, dated as of July 29, 1996, by and between Three Oceans and the Company regarding the granting of certain rights to Three Oceans by the Company, including the right to participate in the ownership, development, management, and/or operation of a SportPark in Asia, Anaheim, California or Las Vegas, Nevada, the right to invest in or finance certain transactions, the right to supply certain products to the Company and certain signage rights, purchase, sell or lease any material parcel of real property for any SportPark, any single sport interactive entertainment or training complex ("Single Sport Complex") or similar facility or enter into any single transaction or series of related transactions in excess of $100,000 with respect to or relating to or in connection with any Single Sport Complex or similar facility without first providing the Purchaser an opportunity to approve the transactions(s) and to review and provide comments on the relevant documents prior to closing the transaction; (h) dissolve or liquidate the Company and/or its assets or close the business of the Company; or -20- 97 (i) file a petition to appoint a receiver for the Company or file a voluntary petition for bankruptcy, insolvency or to make any assignment for the benefit of creditors of the Company. 7.6 PRINCIPAL BUSINESS. The Company shall ensure that all its principal shareholders officers and directors (a) direct or refer all opportunities relating to, similar to or of the same nature as the Company's Sports Park business exclusively to the Company, (b) not realize any profit or gain with respect to such opportunities to the detriment or in lieu of the Company and (c) not otherwise misappropriate any corporate opportunity. SECTION 8 RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; COMPLIANCE WITH SECURITIES ACT; REGISTRATION RIGHTS; INDEMNIFICATION 8.1 CERTAIN DEFINITIONS. As used in this Agreement the following terms shall have the following respective meanings: "COMMISSION" shall mean the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "CONVERSION STOCK" means the Common Stock issued or issuable pursuant to conversion of the Shares. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934 as amended or any similar federal statute and the rules and regulations of the Commissions thereunder all as the same shall be in effect at the time. "HOLDER" shall mean the Purchaser and any person holding Registrable Securities or shares to whom the rights under this Section 8 have been transferred in accordance with Section 8.2 hereof. "REGISTRABLE SECURITIES" means (i) the Conversion Stock, and (ii) any Common Stock of the Company issued or issuable in respect of the Conversion Stock or other securities issued or issuable pursuant to the conversion of the shares upon any Recapitalization or any Common Stock otherwise issued or issuable with respect to the Shares provided however that shares of Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction or (B) sold or are available for sale in the opinion of counsel to the Company in a single transaction exempt from the registration and prospectus delivery requirements of the Securities Act so that all transfer restrictions and restrictive legends with respect thereto are or may be removed upon the consummation of such sale. The term "REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. -21- 98 "REGISTRATION EXPENSES" shall mean all expenses, except Selling Expenses as defined below, incurred by the Company in complying with Sections 8.5, 8.6 and 8.7, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company). "RESTRICTED SECURITIES" shall mean the securities of the Company required to bear the legend set forth in Section 8.3 hereof. "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or any similar federal statute and the notes and regulations of the Commission thereunder all as the same shall be in effect at the time. "SELLING EXPENSES" shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the securities registered by the holders. 8.2 RESTRICTION ON TRANSFERABILITY. The Shares and the Conversion Stock shall not be sold, assigned, transferred or pledged except upon satisfaction of the conditions specified in this Section 8, which conditions are intended to ensure compliance with the provisions of the Securities Act. The Purchaser will cause any proposed assignee, transferee, or pledge of the shares of Conversion Stock held by the Purchaser to agree to take and hold such securities subject to the provisions and conditions of this Section 8. 8.3 RESTRICTIVE LEGEND. Each certificate representing (i) the Shares, (ii) the Conversion Stock and (iii) any other securities issued in respect of the Shares or the Conversion Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar events, shall (unless otherwise permitted by the provisions of Section 8.4 below) be stamped or otherwise imprinted with a legend in the following form (in addition to any legend required under applicable state securities laws): THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION. -22- 99 The Purchaser consents to the Company making a notation on its records and giving instructions to any transfer agent of the Shares or the Conversion Stock in order to implement the restrictions on transfer established in this Section 8. 8.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 8.4. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities (other than (i) transfers not involving a change in beneficial ownership or (ii) transactions involving the distribution of Restricted Securities by the Purchaser to a parent, subsidiary or affiliate of the Purchaser), unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and shall be accompanied, at such holder's expense by either (i) an unqualified written opinion of legal counsel who shall be, and whose legal opinion shall be, reasonably satisfactory to the Company addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company. Each certificate evidencing the Restricted Securities Transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 8.3 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such holder and the Company such legend is not required in order to establish compliance with any provision of the Securities Act. 8.5 REQUEST FOR REGISTRATION. (a) REQUEST FOR REGISTRATION. If the Company shall receive from the Purchaser at any time a written request that the Company effect any registration with respect to all or a part of the Registrable Securities, the Company will: (i) promptly give written notice of the proposed registration to all other Holders; and (ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the -23- 100 Registrable Securities of any Holder or holders joining in such request as are specified in a written request received by the Company within twenty (20) days after such written notice from the Company is mailed or delivered. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this Section 8.5: (A) After the Company has initiated one such registration pursuant to this Section 8.5(a); (B) During the period starting with the date sixty (60) days prior to the Company's good faith estimate of the date of filing of, and ending on a date one hundred twenty (120) days after the effective date of, a Company-initiated registration; provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statement to become effective; (b) Subject to the foregoing clauses (A) and (B), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable after receipt of the request or requests of the Purchaser. The registration statement filed pursuant to the request of the Purchaser may include other securities of the Company, with respect to which registration rights have been granted, and may include securities of the Company being sold for the account of the Company. (c) UNDERWRITING. The right of any Holder to registration pursuant to Section 8.5 shall be conditioned upon such holder's participation in such underwriting and the inclusion of such holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Purchaser and such holder with respect to such participation and inclusion) to the extent provided herein. A Holder may elect to include in such underwriting all or a part of the Registrable Securities he or she holds. 8.6 THE COMPANY REGISTRATION. (a) NOTICE OF REGISTRATION. If at any time or from time to time the Company shall determine to register of its securities, either for its own account or the account of a Holder or Holders, other than a registration relating solely to employee benefit plans or a post -24- 101 effective amendment to the registration statement for the Company's initial public offering, the Company will: (i) promptly give to each Holder written notice thereof; and (ii) include in such registration (and any related qualification under the sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company, by any Holder. (b) UNDERWRITING. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to Section 8.6(a)(i). In such event the right of any Holder to registration pursuant to this Section 8.6 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and any other shareholders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company. Notwithstanding any other provision of this Section 8.6, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the Registrable Securities to be included in such registration. The Company shall so advise all Holders and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such holders at the time of filing the registration statement. To facilitate the allocation of shares in accordance with the above provisions, the Company may round the number of shares allocated to any Holder or other shareholder to the nearest 100 shares. If any Holder or other shareholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the managing underwriter. Any securities excluded or withdrawn from such underwriting shall be withdrawn from such registration, and shall not be transferred in a public distribution prior to 90 days after the effective date of the registration statement relating thereto, or such other shorter period -25- 102 of time as the underwriters may require. The Company may include shares of Common Stock held by shareholders other than Holders in a registration statement pursuant to this Section 8.6, so long as the amount of Registrable Securities otherwise includable in such registration statement would not thereby be diminished. (c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 8.6 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. 8.7 REGISTRATION ON FORM S-3. (a) The Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use of Form S-3, in addition to the rights contained in the foregoing provisions of this Section 8, the Holders of Registrable Securities shall have the right to request registrations on Form S-3 (such requests shall be in writing and shall state the number of shares of Registrable Securities to be disposed of and the intended methods of disposition of such shares by such Holder or Holders). (b) If a request complying with the requirements of Section 8.7(a) hereof is delivered to the Company, the provisions of Section 8.5(a)(i) and (ii) and Section 8.5(b) hereof shall apply to such registration. If the registration is for an underwritten offering, the provisions of Section 8.5(c) hereof shall apply to such registration. 8.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in connection with the registration pursuant to Section 8.5, 8.6 and 8.7 shall be borne by the Company. Unless otherwise stated, all Selling Expenses relating to securities registered on behalf of the Holders and all other Registration Expenses shall be borne by the Holders of such securities pro rata on the basis of the number of shares registered. 8.9 REGISTRATION PROCEDURES. In the case of each registration, qualification or compliance effected by the Company pursuant to this Section 8, the Company will keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will: (a) Prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for at least one hundred twenty (120) days, and prepare and file with the Commission such amendments to such registration statement and -26- 103 supplements to the prospectus contained therein as may be necessary to keep such registration statement effective for at least one hundred twenty (120) days, provided that no such registration shall constitute a shelf registration under Rule 415 promulgated by the Commission under the Securities Act; (b) Enter into a written underwriting agreement in customary form and substance reasonably satisfactory to the Company, the Holders and the managing underwriting or underwriters of the public offering of such securities, if the offering is to be underwritten in whole or in part; (c) Furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus' final prospects and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities; (d) Use its best efforts to register or qualify the securities covered by such registration statement under such state securities or blue sky laws of such jurisdictions as such participating Holders may reasonably request within ten (10) days prior to the original filing of such registration statement, except that the Company shall not for any purpose be required to execute a general consent to service of process or to qualify to do business a foreign corporation in any jurisdiction where it is not so qualified; (e) Notify the Holders (of if they have appointed an attorney-in-fact, such attorney-in-fact) participating in such registration, promptly after it shall receive notice thereof, of the time when such registration statement has become effective or a supplement to any prospectus forming a part of such registration statement has been filed; (f) Notify such Holders or their attorney-in-fact promptly of any request by the Commission for the amending or supplementing of such registration statement or prospectus or for additional information; (g) Prepare and file with the Commission promptly upon the request of such registration statement or prospectus which, in the reasonable opinion of counsel for such Holders, is required under the Securities Act or the rules and regulations thereunder in connection with the distribution of the Registration Securities by such Holders; -27- 104 (h) Prepare and promptly file with the Commission, and promptly notify such Holders or their attorney-in-fact of the filing of, such amendment or supplement to such registration statement or prospectus as may be necessary to correct any statements or omissions if, at the time when a prospectus relating to such securities is required to be delivered under the Securities Act, any event has occurred as the result of which any such prospectus or any other prospectus as then in effect would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading in light of the circumstances in which they were made; (i) In case any of such Holders or any underwriter for any such Holders is required to deliver a prospectus at a time when the prospectus then in effect may no longer be used under the Securities Act, prepare promptly upon request such amendment or amendments to such registration statement and such prospectus as may be necessary to permit compliance with the requirements of the Securities Act; (j) Advise such Holders or their attorney-in-fact, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such registration statement or the initiation or threatening of any proceeding for that purpose and promptly use its best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued; and (k) At the request of any such holder, furnish on the effective date of the registration statement and, if such registration includes an underwritten public offering, at the closing provided for in the underwriting agreement, (i) an opinion, dated each such date, of the counsel representing the Company for the purpose of such registration, addressed to the underwriters, if any, and to the Holder or Holders making such request, covering such matters with respect to the registration statement, the prospectus and each amendment or supplement thereto, proceedings under state and federal securities laws other matters relating to the Company, the securities being registered and the offer and sale of such securities as are customarily the subject of opinions of issuer's counsel provided to underwriters in underwritten public offerings, and (ii) to the extent the Company's accounting firm, is willing to do so, a letter dated each such date, from the independent public accountants of the Company, addressed to the underwriters, if any, and to the Holder or Holders making such request, stating that they -28- 105 are independent public accountants within the meaning of the Securities Act and that in the opinion of such accountants the financial statements and other financial data of the Company included in the registration statement or the prospectus or any amendment or supplement thereto comply in all material respects with the applicable accounting requirements of the Securities Act, and additionally covering such other financial matter, including information as to the period ending not more than five (5) business days prior to the data of such letter with respect to the registration statement and prospectus, as the underwriters or such requesting Holder or Holders may reasonably request. 8.10 INFORMATION BY HOLDER. The Holder or Holders of Registrable Securities included in any registration shall furnish the Company such information regarding such Holder or Holders, the Registrable Securities held by them and the distribution proposed by such Holder or Holders as the Company may request in writing and as shall be required in connection with any registration, qualification or compliance referred to in this Section 8. 8.11 INDEMNIFICATION. (a) The Company will defend, indemnify and hold the Purchaser, each Holder, each of its officers, directors and partners, and each person controlling the Purchaser and each such Holder within the meaning of Section 15 of the Securities Act, and each underwriter, if any, and each person who controls any underwriter within the meaning of Section 15 of the Securities Act, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including without limitation, any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on (i) any breaches of the representations, warrants or covenants contained herein, or (ii) any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act or any rule or regulation promulgated under the Securities Act applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse Purchaser, and each such holder, each of its officers and directors, and each person controlling such holder, each such underwriter and each person who controls any such underwriter, for any legal and any other -29- 106 expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder, controlling person or underwriter and stated to be specifically for use therein. (b) Each Holder will, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Company each to its directors and officers, each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such Holder, each of its officers and directors and each person controlling such Holder within the meaning of Section 15 of the Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement prospectus' offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each Holder under this subsection (b) shall be limited to an amount equal to the initial public offering price of the shares sold by such Holder, unless such liability arises out of or is based on willful conduct by such Holder. (c) Each party entitled to indemnification under this Section 8.11 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to -30- 107 which indemnity may be sought, and shall, when applicable, permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 8 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matter as to which there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 8.12 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to register securities granted the Purchasers under Sections 8.5, 8.6 and 8.7 may be assigned to a transferee or assignee in connection with any transferor assignment of Registrable Securities by the Purchaser provided that: (i) such transfer may otherwise be effected in accordance with applicable securities laws and (ii) such assignee or transferee acquires at least 10,000 of the Shares and /or Conversion Stock (appropriately adjusted for Recapitalization). Notwithstanding the foregoing, the rights to cause the Company to register securities may be assigned to any parent, subsidiary or affiliate of the Purchaser, without compliance with item (ii) above, provided, written notice thereof is promptly given to the Company. 8.13 STANDOFF AGREEMENT. Each Holder agrees, so long as such Holder holds at least five percent (5%) of the Company's outstanding voting equity securities, that, upon request of the Company or the underwriters managing an underwritten offering of the Company's securities, it will not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any Registrable Securities (other than those included in the registration) without the prior written consent of the Company or such underwriters, a the case may be, for such period of time (not to exceed one hundred and twenty (120) days) from the effective date of such registration as may be requested by the underwriters; provided that the officers and directors of the Company who own stock of the Company also agree to such restrictions. -31- 108 SECTION 9 THE PURCHASER'S RIGHT OF FIRST REFUSAL 9.1 RIGHT OF FIRST REFUSAL. The Company hereby grants to the Purchaser the right of first refusal to purchase its pro rata share of all or any part of any New Securities (as defined in this Section 9.1) which the Company may, from time to time, propose to sell and issue. The Purchaser's pro rata share, for purposes of this right of first refusal, is the ratio that the sum of the number of shares of Common Stock issuable upon conversion of the shares held by the Purchaser and the number of shares of Conversion Stock then held by the Purchaser bears to the sum of the total number of shares of Common Stock then outstanding and the number of shares of Common Stock issuable upon conversion of the then outstanding Preferred Stock convertible into Common Stock. (a) Except as set forth below, "New Securities" shall mean any shares of capital stock of the Company including Common Stock and Preferred Stock, whether now authorized or not, and rights, options or warrants to purchase said shares of Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may become, convertible into said shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New Securities" does not include (i) the Shares and the Conversion Stock, (ii) securities offered to the public generally pursuant to a registration statement or pursuant to Regulation A under the Securities Act, (iii) securities issued in the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets or other reorganization whereby the Company or its shareholders own not less than fifty-one percent (51%) of the voting power of the surviving or successor corporation, (iv) shares of the Company's Common Stock or related options exercisable for such Common Stock issued to employees, officers and directors of the Company pursuant to any arrangement approved by the Board of Directors of the Company, (v) stock issued pursuant to any rights or agreements, including without limitation convertible securities, options, warrants, provided that the rights of first refusal established by this Section 9.1 apply with respect to the initial sale or grant by the Company of such rights or agreements, and (vi) stock issued in connection with any stock split, stock dividend or recapitalization by the Company. (b) In the event the Company proposes to undertake an issuance of New Securities, it shall give the Purchaser written notice of its intention, describing the type of New Securities, and the price and terms upon which the Company proposes to issue the same. The Purchaser shall have fifteen (15) days from the date of receipt of any such notice to agree to purchase up to the Purchaser's respective pro rata share of such New Securities for the price and -32- 109 upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. (c) In the event the Purchaser fails to exercise such right of first refusal within said fifteen (15) day period, the Company shall have ninety (90) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within sixty (60) days from the date of said agreement) to sell the New Securities not elected to be purchased by the Purchaser at the price and upon the terms no more favorable to the purchasers of such securities than specified in the Company's notice. In the event the Company has not sold the New Securities or entered into an agreement to sell the New Securities within said ninety (90) day period (or sold and issued New Securities in accordance with the foregoing within sixty (60) days from the date of said agreement), the Company shall not thereafter issue or sell any of such New Securities, without first offering such securities in the manner provided above. (d) The right of first refusal hereunder is not assignable except to a parent, subsidiary or affiliate of the Purchaser, without the prior written consent of the Company, which consent will not be unreasonably withheld. SECTION 10 INDEMNIFICATION 10.01 SURVIVAL OF REPRESENTATIONS. All representations, warranties and agreements made by any party in this Agreement or pursuant hereto shall survive the Closing, but all claims for damages made by virtue of such representations, warranties and agreements shall be made under this Section 10. The representations and warranties set forth herein are cumulative, and any limitation or qualification set forth in any one representation and warranty therein shall not limit or qualify any other representation and warranty therein. 10.02 INDEMNIFICATION BY THE COMPANY. Notwithstanding any term in this Agreement to the contrary, the Company, shall indemnify, defend, save and hold the Purchaser and its officers, directors, employees, agents and Affiliates (excluding Ron Boreta, Vaso Boreta, John Boreta and the Company; collectively, "Purchaser Indemnitees") harmless from and against all demands, claims, allegations assertions, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs and expenses (including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing, whether or not the underlying demands, claims, allegations, etc., of third parties are meritorious; collectively, "Purchaser Damages") asserted against, imposed upon, resulting to, required to be paid by or incurred by any Purchaser Indemnitees, directly or indirectly, in connection with, arising out of, which could result in, or which would not have occurred but for, (a) a breach of -33- 110 any representation or warranty made by the Company in this Agreement, in any certificate or document furnished pursuant hereto by the Company or any other agreement to which the Company is or is to become a party, or (b) a breach or nonfulfillment of any covenant or agreement made by the Company in or pursuant to this Agreement or in any other agreement to which the Company is or is to become a party. 10.03 INDEMNIFICATION BY THE PURCHASER. The Purchaser shall indemnify, defend, save and hold the Company and its officers, directors, employees, agents and Affiliates (excluding Ron Boreta, Vaso Boreta, John Boreta and the Purchaser; collectively, "Company Indemnitees") harmless from and against any and all demands, claims, actions or causes of action, assessments, losses, damages, deficiencies, liabilities, costs and expenses (including reasonable legal fees, interest, penalties, and all reasonable amounts paid in investigation, defense or settlement of any of the foregoing, whether or not the underlying demands, claims, allegations, etc., of third parties are meritorious (collectively, "Company Damages") asserted against, imposed upon, resulting to, required to be paid by or incurred by any Company Indemnitees, directly or indirectly, in connection with, arising out of, which would result in, or which would not have occurred but for, (a) a breach of any representation or warranty made by the Purchaser in this Agreement or in any certificate or document furnished pursuant hereto by buyer or any other agreement to which the Purchaser is a party and (b) a breach of nonfulfillment of any covenant of agreement made by the Purchaser in or pursuant to this Agreement and in any other agreement to which the Purchaser is a party. 10.04 NOTICE OF CLAIMS. If any Purchaser Indemnitee or Company Indemnitee (an "Indemnified Party") believes that it has suffered or incurred or will suffer or incur any Purchaser Damages or Company Damages, as the case may be ("Damages"), for which it is entitled to indemnification under this Section 10, such Indemnified Party shall so notify the party or parties from whom indemnification is being claimed (the "Indemnifying Party") with reasonable promptness and reasonable particularity in light of the circumstances then existing. If any action at law or suit in equity is instituted by or against a third party with respect to which any Indemnified Party intends to claim any Damages, such Indemnified Party shall promptly notify the Indemnifying Party of such action or suit. The failure of an Indemnified Party to give any notice required by this Section shall not affect any of such party's rights under this Section 10 or otherwise except and to the extent that such failure is actually prejudicial to the rights or obligations of the Indemnified Party. 10.05 THIRD PARTY CLAIMS. The Indemnified Party shall have the right to conduct and control, through counsel of its choosing, the defense of any third party claim, action or suit, and the Indemnified Party may compromise or settle the same, provided that the Indemnified Party shall give the Indemnifying Party advance notice of any proposed compromise or settlement. The Indemnified Party shall permit the Indemnifying Party to participate in the defense of any such action or suit through counsel chosen by the Indemnifying Party, provided that the fees and expense of such counsel shall be borne by the Indemnifying Party. If the Indemnified Party permits the Indemnifying Party to undertake, conduct and control the conduct and settlement of such action or suit, (a) the Indemnifying Party shall not thereby permit to exist any encumbrance upon any asset of the Indemnified Party; (b) the Indemnifying Party shall not consent to any settlement that does not include as an unconditional term thereof the giving of a complete release -34- 111 from liability with respect to such action or suit to the Indemnified Party; (c) the Indemnifying Party shall permit the Indemnified Party to participate in such conduct or settlement through counsel chosen by the Indemnified Party; and (d) the Indemnifying Party shall agree promptly to reimburse the Indemnified Party for the full amount of any Damages including fees and expenses of counsel for the Indemnified Party incurred after giving the foregoing notice to the Indemnifying Party and prior to the assumption of the conduct and control of such action or suit by the Indemnifying Party. 10.6 GOOD FAITH EFFORTS TO SETTLE DISPUTES. The Purchaser and the Company agree that, prior to commencing any litigation against the other concerning any matter with respect to which such party intends to claim a right of indemnification in such proceeding, the respective chief executive officers (or officers holding such authority) of such parties shall meet in a timely manner and attempt in good faith to negotiate a settlement of such dispute during which time such officers shall disclose to the others all relevant information relating to such dispute. In the event that the parties are unable to amicably resolve the matter or matters in dispute, the parties shall submit all matters still in dispute to arbitration in accordance with the arbitration rules of the American Arbitration Association. The Purchaser shall select an arbitrator and the Company shall select an arbitrator and the two arbitrators so selected shall select a third arbitrator. The decision of the arbitrators shall be final and binding on the parties. Such matter shall be submitted to arbitration within thirty (30) days from the date that either the Company or the Purchaser declares that any matter in dispute cannot be amicable resolved. All costs and expenses of arbitration shall be paid equally by the Purchaser on one hand and the Company on the other. Any cash or other monetary award shall be paid within thirty (30) days of the arbitrators final decision. Arbitration shall be held in Las Vegas, Nevada. SECTION 11 MISCELLANEOUS 11.1 GOVERNING LAW. This Agreement shall be governed in all respects by the internal laws of the State of Nevada. 11.2 EVENTS OF DEFAULT AND REMEDIES. (a) For purpose of this Agreement, the term "Event of Default" shall mean the occurrence or happening of any breach or violation of or default in the observation or performance of any term, agreement, covenant, representation, warranty, condition or stipulation contained or referred to in this Agreement by any party to this Agreement. (b) (i) Upon the occurrence of an Event of Default, the non-defaulting party shall have all rights and remedies afforded by law or equity, including the remedy of specific performance, it being recognized that the Series B Preferred and Conversion Stock and the rights and benefits to be derived therefrom are unique and special. Any party awarded a money judgment against the other shall be entitled to recover in addition thereto interest thereon at the rate of twelve percent (12%) per annum. -35- 112 (ii) Each right, power and remedy provided for in this Agreement, or now or hereafter existing at law or in equity shall be cumulative and may be exercised successively or concurrently and shall be in addition to every other such right, power or remedy. The exercise or beginning of the exercise by either party of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise of all such other rights, powers or remedies. No failure or delay on the party of any party to exercise any such right, power or remedy shall operate as a waiver thereof. No waiver by a party will be effective unless and until it is in writing and signed by an authorized representative of such party. (c) Each party will pay to the other, in addition to all other sums due all costs and expenses (including, without limitation, attorneys' fees, brokerage fees and accountants' fees) reasonably incurred by or on behalf of a party in exercising and protecting their rights and remedies hereunder, enforcing the obligations of the other party hereunder and defending any unsuccessful counterclaim, cross-claim or other claim asserted by the other party. 11.3 SET OFF. In addition to, and not in lieu of, any and all other remedies which the Purchaser otherwise may have at law or in equity, or pursuant to this Agreement, the Purchaser shall have the right to set off, counterclaim and recoup any loss against any amounts to be paid to the Company under this Agreement. 11.4 NONEXCLUSIVITY. The foregoing set off right and the indemnification provision set forth in Section 8 are in addition to, and not in lieu or derogation of, any statutory, equitable or common law remedy the Purchaser may have arising out of or as a result of this Agreement or for breach of representations, warranties or covenants herein. Neither the exercise of nor the failure to exercise the set off right set forth in Section 10.3 shall constitute an election of remedies. 11.5 SURVIVAL. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchaser and the closing of the transactions contemplated hereby. 11.6 ANTI-DILUTION PROVISIONS. The "Anti-Dilution Provisions" shall provide that in the event that any of the securities referenced herein as presently constituted, shall be changed into or exchanged for a different number or kind of securities or interests of the Company or of another entity (whether by reason of merger, consolidation, recapitalization, reclassification, split-up, combination of shares, sale of assets or otherwise), or if the number of such securities shall be increased through the payment of a dividend, or if the Company makes any other distribution of securities or other property including cash in respect of such securities, then there shall be substituted for and added to such securities, as the case may be, theretofore subject or which may become subject to the terms of this Agreement, the number and kind of securities, interests or property into which each outstanding security shall be so changed, or for which each such security shall be exchanged, or to which each such security shall be entitled, as the case may be, and the purchase price per security appropriately adjusted. -36- 113 11.7 ASSIGNMENT; SUCCESSORS AND ASSIGNS. The rights and obligations of the Company and the rights of the Purchaser to purchase the Shares shall not be assignable without the written consent of the other; provided, however, the Purchaser may assign its rights and obligations under this Agreement to a parent, subsidiary or affiliate of the Purchaser upon notice to the Company thereof. Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. 11.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents delivered pursuant hereto at the Closing constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom endorsement of any such amendment, waiver, discharge or termination is sought. 11.9 NOTICES, ETC. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by confirmed facsimile to the correct facsimile number or otherwise delivered by hand or by messenger, addressed (a) if to the Purchaser, at its address set forth on the cover page of this Agreement, or at such other address as the Purchaser shall have furnished to the Company in writing, or (b) if to any other holder of any Shares or Conversion Stock, at such address as such holder shall have furnished the Company in writing, or, until any such holder so furnishes an address to the Company, then to and at the address of the last holder of such Shares or Conversion Stock who has so furnished an address to the Company, or (c) if to the Company, one copy shall be sent to its address set forth on the cover page of this Agreement and addressed to the attention of the Corporate Secretary, or at such other address as the Company shall have furnished to the Purchaser. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 11.10 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any holder of any Shares or Conversion Shares upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy of such holder nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Except as provided in Section 11.8 hereof, any waiver, permit, consent or approval of any kind or character on the part of any holder of any breach of default under this Agreement or any waiver on the part of any holder of any provisions -37- 114 or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any holder, shall be cumulative and not alternative. 11.11 EXPENSES. Except as otherwise provided herein, the Company and the Purchaser shall each bear their own expenses incurred on their behalf with respect to this Agreement and the transactions contemplated hereby. 11.12 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which may be executed by less than all of the parties, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. 11.13 CONFIDENTIALITY. Neither party shall make or issue, or cause to be made or issued, any announcement or written statement concerning this Agreement or the transactions contemplated hereby for dissemination to the general public without the prior written consent of the other party. This provision shall not apply, however, to any announcement or written statement which in the opinion of counsel to such party is required to be made by law or the regulations of any federal or state governmental agency or any stock exchange. 11.14 SEVERABILITY. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. 11.15 TITLE AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not considered in construing or interpreting this Agreement. The foregoing Agreement is hereby executed as of the date first above written. "PURCHASER" "COMPANY" LAS VEGAS DISCOUNT GOLF & TENNIS, INC., SAINT ANDREWS GOLF CORPORATION, a a Colorado corporation Nevada corporation By By ----------------------------------- ------------------------------- Name: Name: Ronald S. Boreta Title: Title: President -38- EX-4.2 5 EXHIBIT 4.2 1 PGS-10/12/98 - Option Agreement EXHIBIT 4.2 ----------- OPTION AGREEMENT ---------------- OPTION AGREEMENT, effective as of October 19, 1998, by and between LAS VEGAS DISCOUNT GOLF & TENNIS, INC., a Colorado corporation with offices at 5325 South Valley View Boulevard, Suite 10, Las Vegas, Nevada 89118 ("LVDGT"), and ASI GROUP, L.L.C., a Nevada limited liability company, c/o Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109 ("ASIG"): W I T N E S S E T H : --------------------- WHEREAS, ASIG and LVDGT are entering into an investment agreement (the "Investment Agreement") simultaneously herewith which Investment Agreement provides for the purchase by ASIG of certain capital stock of LVDGT. All terms used but not defined herein shall have the meanings ascribed to them in the Investment Agreement. WHEREAS, to induce ASIG to enter into the Investment Agreement, ASIG is hereby granted options to purchase Shares (as defined herein) on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, ASIG and LVDGT hereby agree as follows: SECTION 1. DEFINITIONS. For purposes of this Agreement, the following capitalized terms shall have the respective meanings indicated below. "ACT" shall mean the Securities Act of 1933, as it may be amended. "ADDITIONAL SHARES" shall mean all Shares (including treasury Shares) issued or sold (or, deemed to be issued) by LVDGT after the date hereof, whether or not subsequently reacquired or retired by LVDGT. "AFFILIATE" shall mean any Person which, directly or indirectly, controls, is controlled by or is under common control with the relevant Person and, if such Person is an individual, any member of the immediate family (including parents, spouse and children) of such individual and any trust whose principal beneficiary is such individual, or one or more members of such immediate family or any Person who is controlled by any such member or trust. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlled -1- 2 PGS-10/12/98 - Option Agreement by" and "under common control with"), as used with respect to any Person, shall mean a member of the board of directors, a partner or an officer of such Person, or any other Person having, directly or indirectly, the power to direct or cause the direction of the management and policies of such Person, through the ownership (of record, as trustee, by voting agreement or by proxy) of voting securities or similar equity interests, by contract or otherwise. Any Person owning or controlling directly or indirectly 10% or more of the voting securities or similar equity interests of another Person shall be deemed to be an Affiliate of such person. "BUSINESS DAY" shall mean any other than a Saturday or a Sunday or a day on which commercial banking institutions in the City of New York are authorized by law or other governmental action to be closed. Any reference to "days" (unless Business Days are specified) shall mean calendar days. "CONVERTIBLE SECURITIES" shall mean any evidence of indebtedness, shares of stock (other than Shares) or other securities directly or indirectly convertible into or exchangeable for Additional Shares. "CURRENT MARKET PRICE" shall mean on any date specified herein, the average daily Market Price during the period of the most recent 20 days, ending on such date, on which the national securities exchanges were open for trading, except that if no Shares are then listed or admitted to trading on any national securities exchange or quoted in the over-the-counter market, the Current Market Price shall be the Market Price on such date. "EMPLOYEE OPTIONS" shall mean options (other than the Option) to subscribe for, purchase or otherwise acquire Additional Shares at an exercise price equal to no less than the Current Market Price on the date of issuance of such options, which options are issued to bona-fide employees of or consultants to LVDGT (other than members of the Boreta family) pursuant to a stock option plan adopted by the Board of Directors of LVDGT. "EMPLOYEE SHARES" shall mean Additional Shares issued upon exercise of an Employee Option. "MARKET PRICE" shall mean on any date specified herein, the amount per share of the Shares, equal to (a) the last sale price of such Shares, regular way, on such date or, if no such sale takes place on such date, the average of the closing bid and asked prices thereof on such date, in each case as officially reported on the principal national securities exchange on which such Shares is then listed or admitted to trading, or (b) if such Shares are not then listed or admitted to trading on any national securities exchange but it designated as a national market system security by the NASD, the last trading price of the Shares on such date, or (c) if there shall have been not trading on such date or if the Shares are not so designated, the average of the closing bid and asked prices of the Shares on such date as shown by the NASD automated quotation system, or (d) if such Shares are not then listed or admitted to trading on any national exchange or quoted in the over-the-counter market, the higher of (x) the book value thereof as determined by any firm of independent public accountants of recognized standing selected by the Board of Directors of LVDGT as of the last day of any month ending with 60 days preceding the date as of which the -2- 3 PGS-10/12/98 - Option Agreement determination is to be made or (y) the fair value thereof determined in good faith by the Board of Directors of LVDGT as of a date which is within 180 days of the date as of which the determination is to be made. "NASD" shall mean The National Association of Securities Dealers, Inc. "OPTION" shall mean the right of ASIG to purchase, at ASIG's election, in accordance with the terms of this Agreement, a number of Shares up to the Option Number, upon payment of the aggregate Option Price for the number of Shares so purchased, subject to adjustment as provided herein. "OPTION NUMBER" shall mean 347,975 Shares, as such number may be adjusted as provided herein. "OPTION PRICE" shall be, on a per Share basis, $1.8392. The Option Price shall be adjusted and readjusted from time to time as provided herein and, as so adjusted or readjusted, shall remain in effect until a further adjustment or readjustment thereof is required hereby. In the event of a Shares dividend, Shares split, or combination of Shares which results in a proportionate increase or decrease in the number of Shares, the Option Price then in effect shall be decreased (in the case of a proportionate increase in Shares outstanding) or increased (in the case of a proportionate decrease in Shares outstanding) in the same proportion. In the event of a recapitalization, reorganization, consolidation, merger or similar transaction where Shares are changed into or exchanged for a different number of Shares or different capital stock or other securities, the Option Price then in effect shall apply to so much of the different shares of capital stock or other securities as are received with respect to each Share so changed or exchanged. ASIG shall be given prompt written notice of any such event, which notice shall include in reasonable detail the calculation of any adjustments to the Option Price. "OTHER OPTIONS" shall mean rights or options (other than the Option) to subscribe for, purchase or otherwise acquire either Additional Shares or Convertible Securities. "PERSON" shall mean any individual, corporation, company, voluntary association, partnership, joint venture, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). "SHARES" shall mean the shares of the common stock of LVDGT, no par value, outstanding at any time. SECTION 2. OPTIONS. 2.1 GRANT OF OPTION. LVDGT hereby grants to ASIG the Option, which is immediately exercisable. The Option may be exercised in full or in any number of partial exercises at any time or times at or prior to the tenth anniversary hereof. -3- 4 PGS-10/12/98 - Option Agreement 2.2 EXERCISE OF OPTION. An Option may be exercised in whole or in part by ASIG by serving written notice (the "Option Notice") upon LVDGT specifying the number of Shares then to be purchased. An Option shall be exercisable at a purchase price equal to the product of the number of Shares to be purchased multiplied by the Option Price then in effect. The closing for each such purchase shall be held at the offices of LVDGT on a day not later than 30 Business Days after the date of the Option Notice. At the closing, LVDGT shall deliver to ASIG, against payment of the purchase price specified in this Section 2.2, certificates for the Shares purchased, free and clear of all pledges, options, claims, liens, security interests and encumbrances of any kind, other than the requirements of federal and state securities laws respecting limitations on the subsequent transfer thereof, which certificates shall be duly endorsed in blank or with appropriate duly executed blank stock transfer powers attached, with signatures guaranteed by a commercial bank or trust company or a member firm of a national securities exchange and with all requisite stock transfer tax stamps attached or provided for. SECTION 3. ADJUSTMENT OF SHARES ISSUABLE UPON EXERCISE. 3.1 GENERAL; OPTION PRICE. The number of Shares which ASIG shall be entitled to receive upon each exercise of the Option shall be determined by multiplying the number of Shares which would otherwise (but for the provisions of this Section) be issuable upon such exercise, as designated by ASIG, by the fraction of which (a) the numerator is the Option Price in effect on the date hereof and (b) the denominator is the Option Price in effect on the date of such exercise. 3.2 ADJUSTMENT OF OPTION PRICE. 3.2.1 ISSUANCE OF ADDITIONAL SHARES. In case LVDGT at any time or from time to time after the date hereof shall issue or sell Additional Shares (including Additional Shares deemed to be issued pursuant hereto) without consideration or for a consideration per Share less than the greater of the Current Market Price and the Option Price in effect immediately prior to such issue or sale, then, and in each such case, subject to Section 3.7, such Option Price shall be reduced, concurrently with such issue or sale, to a price (calculated to the nearest .001 of a cent) determined by multiplying such Option Price by a fraction (a) the numerator of which shall be (i) the number of Shares outstanding immediately prior to such issue or sale plus (ii) the number of Shares which the aggregate consideration received by LVDGT for the total number of such Additional Shares so issued or sold would purchase at the greater of such Current Market Price and such Option Price, and (b) the denominator of which shall be the number of Shares outstanding immediately after such issue or sale, -4- 5 PGS-10/12/98 - Option Agreement PROVIDED that, for the purposes of this subsection, (x) immediately after any Additional Shares are deemed to have been issued pursuant to Section 3.3 or 3.4, such Additional Shares shall be deemed to be outstanding and (y) treasury shares shall not be deemed to be outstanding. 3.2.2 EXTRAORDINARY DIVIDENDS AND DISTRIBUTIONS. In case LVDGT at any time or from time to time after the date hereof shall declare, order, pay or make a dividend or other distribution (including, without limitation, any distribution of other or additional stock or other securities or property or Other Options by way of dividend or spin-off, reclassification, recapitalization or similar corporate rearrangement) on the Shares, other than (a) a dividend payable in Additional Shares or (b) a regular periodic cash dividend at a rate not in excess of 110% of the rate of the last regular periodic cash dividend theretofore paid, then, and in each such case, subject to Section 3.7, the Option Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of any class of securities entitled to receive such dividend or distribution shall be reduced, effective as of the close of business on such record date, to a price (calculated to the nearest .001 of a cent) determined by multiplying such Option Price by a fraction (x) the numerator of which shall be the Current Market Price in effect on such record date or, in the Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading, less the amount of such dividend or distribution (as determined in good faith by the Board of Directors of LVDGT) applicable to one Share, and (y) the denominator of which shall be such Current Market Price, PROVIDED that, in the event that the amount of such dividend as so determined is equal to or greater than 50% of such Current Market Price or in the event that such fraction is less than 1/2, in lieu of the foregoing adjustment, adequate provision shall be made so that ASIG shall receive a pro rata share of such dividend based upon the maximum number of shares at the time issuable to ASIG (determined without regard to whether the Option is exercisable at such time). 3.3 TREATMENT OF OTHER OPTIONS AND CONVERTIBLE SECURITIES. In case LVDGT at any time or from time to time after the date hereof shall issue, sell, grant or assume, or shall fix a record date for the determination of holders of any class of securities entitled to received, any Other Options or Convertible Securities, then, and in each such case, the maximum number of Additional Shares (as set forth in the instrument relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Other Options or, in the case of Convertible Securities and Other Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares issued as of the time of such issue, sale, grant or assumption or, in case such a record date shall have been fixed, as of the close of business on such record date (or, if the Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), PROVIDED that such Additional Shares shall not be deemed to have been issued unless the consideration per share (determined pursuant to Section 3.5) of such Shares would be less than the greater of the -5- 6 PGS-10/12/98 - Option Agreement Current Market Price and the Option Price in effect on the date of and immediately prior to such issue, sale, grant or assumption or immediately prior to the close of business on such record date (or, in the Shares trade on an ex-dividend basis, on the date prior to the commencement of ex-dividend trading), as the case may be, and PROVIDED, FURTHER, that in any such case in which Additional Shares are deemed to be issued (a) no further adjustment of the Option Price shall be made upon the subsequent issue or sale of Convertible Securities or Shares upon the exercise of such Options or the conversion or exchange of such Convertible Securities, except in the case of any such Other Options or Convertible Securities which contain provisions requiring an adjustment, subsequent to the date of the issue or sale thereof, of the number of Additional Shares issuable upon the exercise of such Other Options or the conversion or exchange of such Convertible Securities by reason of (x) a change of control of LVDGT, (y) the acquisition by any Person or group of Persons of any specified number of percentage of the voting securities of LVDGT or (z) any similar event or occurrence, each such case to be deemed hereunder to involve a separate issuance of Additional Shares, Other Options or Convertible Securities, as the case may be; (b) if such Other Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to LVDGT, or decrease in the number of Additional Shares issuable, upon the exercise, conversion or exchange thereof (by change of rate or otherwise), the Option Price computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the record date, or date prior to the commencement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options, or the rights of conversion or exchange under such Convertible Securities, which are outstanding at such time; (c) upon the expiration (or purchase by LVDGT and cancellation or retirement) of any such Other Options which shall not have been exercised or the expiration of any rights of conversion or exchange under any such Convertible Securities which (or purchase by LVDGT and cancellation or retirement of any such Convertible Securities the rights of conversion or exchange under which) shall not have been exercised, the Option Price computed upon the original issue, sale, grant or assumption thereof (or upon the occurrence of the records date, or date prior to the commencement -6- 7 PGS-10/12/98 - Option Agreement of ex-dividend trading, as the case may be, with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration (or such cancellation or retirement, as the case may be), be recomputed as if: (i) in the case of Other Options for Shares or Convertible Securities, the only Additional Shares issued or sold were the Additional Shares, if any, actually issued or sold upon the exercise of such Other Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by LVDGT for the issue, sale, grant or assumption of all such Other Options, whether or not exercised, plus the consideration actually received by LVDGT upon such exercise, or the issue or sale of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by LVDGT upon such conversion or exchange (less the consideration, if any, actually paid by LVDGT to purchase all such Other Options), and (ii) in the case of Other Options for Convertible Securities, only the Convertible Securities, if any, actually issued or sold upon the exercise of such Other Options were issued at the time of the issue, sale, grant or assumption of such Other Options, and the consideration received by LVDGT for the Additional Shares deemed to have then been issued was the consideration actually received by LVDGT for the issue, sale, grant or assumption of all such Other Options, whether or not exercised, plus the consideration deemed to have been received by LVDGT (pursuant to Section 3.5) upon the issue or sale of such Convertible Securities with respect to which such Other Options were actually exercised (less the consideration, if any, actually paid by LVDGT to purchase all such Other Options); (d) no readjustment pursuant to subdivision (b) or (c) above shall have the effect of increasing the Option Price by an amount in excess of the amount of the adjustment thereof originally made in respect of the issue, sale, grant or assumption of such Other Options or Convertible Securities; and (e) in the case of any such Other Options which expire by their terms not more than 30 days after the date of issue, sale, grant or assumption thereof, no adjustment of the Option Price shall be -7- 8 PGS-10/12/98 - Option Agreement made until the expiration or exercise of all such Other Options, whereupon such adjustment shall be made in the manner provided in subdivision (c) above. 3.4 TREATMENT OF SHARE DIVIDENDS, SHARE SPLITS, ETC. In case LVDGT at any time or from time to time after the date hereof shall declare or pay any dividend on the Shares payable in Shares, or shall effect a subdivision of the outstanding Shares into a greater number of Shares (by reclassification or otherwise than by payment of a dividend in Shares), then, and in each such case, Additional Shares shall be deemed to have been issued (a) in the case of any such dividend, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend, or (b) in the case of any such subdivision, at the close of business on the day immediately prior to the day upon which such corporate action becomes effective. 3.5 COMPUTATION OF CONSIDERATION. For the purposes of this Section, (a) the consideration for the issue or sale of any Additional Shares shall, irrespective of the accounting treatment of such consideration, (i) insofar as it consists of cash, be computed at the net amount of cash received by LVDGT, without deducting any expenses paid or incurred by LVDGT or any commissions or compensations paid or concessions or discounts allowed to underwriters, dealers or others performing similar services in connection with such issue or sale, (ii) insofar as it consists of property (including securities) other than cash, be computed at the fair value thereof at the time of such issue or sale, as determined in good faith by the Board of Directors of LVDGT, and (iii) in case Additional Shares are issued or sold together with other stock or securities or other assets of LVDGT for a consideration which covers both, be the portion of such consideration so received, computed as provided in clauses (i) and (ii) above, allocable to such Additional Shares, all as determined in good faith by the Board of Directors of LVDGT; (b) Additional Shares deemed to have been issued pursuant to Section 3.3, relating to Other Options and Convertible Securities, shall be deemed to have been issued for a consideration per share determined by dividing -8- 9 PGS-10/12/98 - Option Agreement (i) the total amount, if any, received and receivable by LVDGT as consideration for the issue, sale, grant or assumption of the Other Options or Convertible Securities in question, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration to protect against dilution) payable to LVDGT upon the exercise in full of such Other Options or the conversion or exchange of such Convertible Securities or, in the case of Other Options for Convertible Securities, the exercise of such Other Options for Convertible Securities and the conversion or exchange of such Convertible Securities, in each case computing such consideration as provided in the foregoing subdivision (a), by (ii) the maximum number of Shares (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number to protect against dilution) issuable upon the exercise of such Other Options or the conversion or exchange of such Convertible Securities; and (c) Additional Shares deemed to have been issued pursuant to Section 3.4, relating to stock dividends, stock splits, etc., shall be deemed to have been issue for no consideration. 3.6 ADJUSTMENTS FOR COMBINATIONS, ETC. In case the outstanding Shares shall be combined or consolidated, by reclassification or otherwise, into a lesser number of Shares, the Option Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased. 3.7 MINIMUM ADJUSTMENT OF OPTION PRICE. If the amount of any adjustment of the Option Price required pursuant to this Section would be less than one percent (1%) of the Option Price in effect at the time such adjustment is otherwise so required to be made, such amount shall be carried forward and adjustment with respect thereto made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate at least one percent (1%) of such Option Price. 3.8 EMPLOYEE OPTIONS; EMPLOYEE SHARES. Notwithstanding anything to the contrary contained herein, no adjustment to the Option Price shall be required to be made hereunder with respect to the grant or exercise of Employee Options or the issuance of Employee Shares. -9- 10 PGS-10/12/98 - Option Agreement 4. CONSOLIDATION, MERGER, ETC. 4.1 ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION, ETC. In case LVDGT after the date hereof (a) shall consolidate with or merge into any other Person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other Person to consolidate with or merge into LVDGT and LVDGT shall be the continuing or surviving Person but, in connection with such consolidation or merger, the Shares shall be changed into or exchanged for stock or other securities of any other Person or cash or any other property, or (c) shall transfer all or substantially all of its properties or assets to any other Person, or (d) shall effect a capital reorganization or reclassification of the Shares (other than a capital reorganization or reclassification resulting in the issue of Additional Shares for which adjustment in the Option Price is provided herein), then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Option, ASIG, upon the exercise hereof at any time after the consummation of such transaction, shall be entitled to receive (at the aggregate Option Price in effect at the time of such consummation for all Shares issuable upon such exercise immediately prior to such consummation), in lieu of the Shares issuable upon such exercise prior to such consummation, the highest amount of securities, cash or other property to which such holder would actually have been entitled as a shareholder upon such consummation if such holder had exercised the rights represented by this Option immediately prior thereto (determined without regard to whether the Option is exercisable at such time). 4.2 ASSUMPTION OF OBLIGATIONS. Notwithstanding anything contained in this Option to the contrary, LVDGT will not effect any of the transactions described in subdivision (a) through (d) of Section 4.1 unless, prior to the consummation thereof, each Person (other than LVDGT) which may be required to deliver any stock, securities, cash or property upon the exercise of this Option as provided herein shall assume, by written instrument delivered to, and reasonably satisfactory to, the holder of this Option, (a) the obligations of LVDGT under this Option (and if LVDGT shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release LVDGT from, any continuing obligations of LVDGT under this Option), and (b) the obligation to deliver to such holder such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Section 4, such holder may be entitled to receive, and such Person shall have similarly delivered to such holder an opinion of counsel for such Person, which counsel shall be reasonably satisfactory to such holder, stating that this Option shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this Section 4) shall be applicable to the stock, securities, cash or property which such Person may be required to deliver upon any exercise of this Option or the exercise of any rights pursuant hereto. -10- 11 PGS-10/12/98 - Option Agreement SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LVDGT. LVDGT jointly and severally represents, warrants and covenants to ASIG as follows: (a) ORGANIZATION AND QUALIFICATION. LVDGT is a corporation duly organized, validly existing and in good standing under the laws of the State of Colorado. (b) AUTHORITY RELATIVE TO THIS AGREEMENT. LVDGT has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated thereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate actions and no other proceedings on the part of LVDGT or its respective stockholders are necessary to authorize this Agreement and the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by LVDGT, and (assuming this Agreement is the valid and binding obligation of ASIG) constitutes a valid and binding agreement of LVDGT, enforceable against LVDGT in accordance with its terms, except that (i) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws now or hereafter in effect relating to creditors' rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) NO VIOLATION. The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and thereby will not (i) constitute a breach or violation of or default under the Certificate of Incorporation or the By-laws of LVDGT or (ii) violate, conflict with, or result in a breach of any provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration under, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of LVDGT under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which LVDGT is a party or to which LVDGT or any of its properties or assets may be subject, other than, in the case of clause (ii), such events that would not, either individually or in the aggregate, prevent or delay the consummation of the transactions contemplated hereby. The (i) execution, delivery and performance of this Agreement by LVDGT will not require the consent or approval of any other party, and (ii) the execution, delivery and performance by LVDGT -11- 12 PGS-10/12/98 - Option Agreement of this Agreement and the consummation of the transactions contemplated hereby will not constitute a breach or violation of or default under any law, rule or regulation or any judgment, decree, order, governmental permit or license to which LVDGT is subject. To the knowledge of LVDGT, no challenges to the validity or effectiveness of this Agreement, or any other agreement or instrument necessary to consummate the transactions contemplated hereby, have been made by any governmental authority or other person. (d) OWNERSHIP OF SHARES. Upon payment of the Option Price, ASIG will acquire, good and valid title to the Shares received, free and clear of any lien, charge, encumbrance, security interest, claim or right of others of whatever nature other than the requirements of the federal and state securities laws respecting limitations on the subsequent transfer thereof, and shall be free or preemptive rights. SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ASIG. ASIG hereby represents, warrants and covenants: (a) That ASIG, either individually or together with ASIG's advisers, has knowledge and experience in financial and business matters; is familiar with all of the financial and other features of LVDGT; is capable of evaluating the merits and risks of an investment in LVDGT; and is able to bear the economic risk of an investment in the Option and, upon exercise of the Option, the Shares. (b) That AEI's acquisition of the Option and in the event of the exercise thereof, the Shares is based upon and will be based upon ASIG's independent evaluation of the long-term prospects of LVDGT, and that ASIG has been furnished with such financial and other information as it has requested concerning LVDGT. (c) That ASIG is acquiring the Option and will acquire the Shares which may be transferred to ASIG upon the exercise of the Option for ASIG's own account, for investment purposes only, and not with a view to the resale, transfer or other disposition thereof. (d) That ASIG will not offer, sell, hypothecate, transfer or otherwise dispose of the Option or any of the Shares, as the case may be, unless: (i) A registration statement covering such of the Shares which are to be so transferred has been filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and such sale, transfer or other disposition is -12- 13 PGS-10/12/98 - Option Agreement accompanied by a prospectus relating to a registration statement which is in effect under the Act covering such of the Shares which are to be sold, transferred or otherwise disposed of and meeting the requirements of Section 10 of the Act; or (ii) Counsel satisfactory to LVDGT renders an opinion in writing and addressed to LVDGT, reasonably satisfactory in form and substance to LVDGT, that in the opinion of such counsel, registration under the Act or the Exchange Act is not required in order to effect such proposed transaction SECTION 7. RESERVATION OF SHARES, ETC. LVDGT will at all times reserve and keep available, solely for issuance and delivery upon exercise of the Option the number of Shares from time to time issuable upon full exercise of the Option. All Shares issuable upon exercise of the Option at any time shall be duly authorized and, when issued upon such exercise, shall be validly issued and fully paid and nonassessable with no liability on the part of ASIG. SECTION 8. NO DILUTION OR IMPAIRMENT. LVDGT will not by amendment of its organizational documents or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Option, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Option against dilution or other impairment. Without limiting the generality of the foregoing, LVDGT (a) will not permit the par value of any Shares receivable upon the exercise of this Option to exceed the amount payable therefor upon such exercise, (b) will take all such action as may be necessary or appropriate in order that LVDGT may validly and legally issue fully paid and non-assessable Shares on the exercise of the Option from time to time, (c) will not take any action which results in any adjustment of the Option Price if the total number of Shares issuable after the action upon full exercise of the Option would exceed the total number of Shares then authorized by LVDGT's certificate of incorporation and available for the purpose of issue upon such exercise, and (d) will not issue any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon voluntary or involuntary dissolution, liquidation or winding-up, unless the rights of the holders thereof shall be limited to a fixed sum or percentage of par value or a sum determined by reference to a formula based on a published index of interest rates, an interest rate publicly announced by a financial institution or a similar indicator of interest rates in respect of participation in dividends and to a fixed sum or percentage of par value in any such distribution of assets. In case any event shall occur as to which any of the provisions of this Option are not strictly applicable but the failure to make any adjustment would not fairly protect the purchase rights represented by this Option in accordance with the essential intent and principles contained herein, then, in each such case, LVDGT shall, at its sole cost and expense, appoint a firm of independent certified public accountants of -13- 14 PGS-10/12/98 - Option Agreement recognized national standing (which may be the regular auditors of LVDGT), which shall give their opinion upon the adjustment, if any, on a basis consistent with the essential intent and principles established herein, necessary to preserve, without dilution, the purchase rights represented by this Option. Upon receipt of such opinion, LVDGT will promptly mail a copy thereof to the holder of this Option and shall make the adjustments described therein. SECTION 9. REGISTRATION. 9.1 ISSUANCE OF SHARES. If any Shares required to be reserved for purposes of exercise of this Option require registration with or approval of any governmental authority under any federal or state law (other than the Act) before such Shares may be issued upon exercise, LVDGT will, at its expense and as expeditiously as possible, cause such Shares to be duly registered or approved, as the case may be. At any such time as Shares are listed on any national securities exchange, LVDGT will, at its expense, obtain promptly and maintain the approval for listing on each such exchange, upon official notice of issuance, the Shares issuable upon exercise of the then outstanding portion of the Option and maintain the listing of such Shares after their issuance; and LVDGT will also list on such national securities exchange, will register under the Securities Exchange Act of 1934 and will maintain such listing of, any other securities that at any time are issuable upon exercise of the Option, if and at the time that any securities of the same class shall be listed on such national securities exchange by LVDGT. 9.2 REGISTRABLE SECURITIES. The Shares issued upon exercise of the Option shall be considered "Registrable Securities" pursuant to and under the Investment Agreement and the holders of such Shares shall have all the rights and privileges of holders of Registrable Securities as set forth in the Investment Agreement, which is incorporated herein by reference. SECTION 10. SPECIFIC PERFORMANCE; REMEDIES. The parties acknowledge and agree that irreparable damage will result to ASIG in the event that this Agreement is not specifically enforced. Therefore, the rights to, or obligations of, purchase and sale of the Shares hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance and appropriate injunctive relief may be applied for and granted in connection therewith. Such remedies and all other remedies provided for in this Agreement or available at law or in equity shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which either party may have under this Agreement or otherwise. SECTION 11. SEVERABILITY. If any provisions of this Agreement shall, for any reason, be adjudged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair or invalidate the remainder of this Agreement but shall be confined in its operation to the provision of this Agreement directly involved in the controversy in which such judgment shall have been rendered. -14- 15 PGS-10/12/98 - Option Agreement SECTION 12. NOTICES. All notices, requests, demands and other communications hereunder must be in writing and shall be deemed to have been duly given if mailed by first class, registered mail, return receipt required, postage and registry fees prepaid, and addressed as follows: If to LVDGT: 5325 South Valley View Boulevard Suite 10 Las Vegas, Nevada 89118 If to ASIG: c/o Agassi Enterprises, Inc. 3960 Howard Hughes Parkway, Suite 750 Las Vegas, Nevada 89109 with a copy to: International Merchandising Corporation IMG Center, Suite 100 1360 East 9th Street Cleveland, Ohio 44114 Attention: Tony Decello Either party by notice in writing mailed to the other party may change the name and address to which notices, requests, demands and other communications shall be mailed. SECTION 13. GOVERNING LAW This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to any conflict of law principles that might require the application of the laws of another jurisdiction. SECTION 14. ARBITRATION. The parties agree to submit to arbitration any dispute related to this Agreement and agree that the arbitration process shall be the exclusive means for resolving disputes which the parties cannot resolve. Any arbitration hereunder shall be conducted under the Dispute Resolution Rules of the American Arbitration Association ("AAA") as modified herein. Arbitration proceedings shall take place in Las Vegas, Nevada, before a single arbitrator who shall be a lawyer. All arbitration proceedings shall be confidential. Neither party shall disclose any information about the evidence produced by the other party in the arbitration proceedings, except in the course of judicial, regulatory, or arbitration proceeding, or as may be demanded by government authority. Before making any disclosure permitted by the preceding sentence, a party shall give the other party reasonable advance written notice of the intended disclosure and an opportunity to prevent disclosure. Each party shall have the right to take the deposition of one individual and any expert witness designated by the other party. Additional discovery may be had only where the arbitrator so orders, upon a showing of substantial need. Only evidence that is directly relevant to the issues may be obtained in discovery. Each party bears the burden of -15- 16 PGS-10/12/98 - Option Agreement persuasion of any claim or counterclaim raised by that party. The arbitration provisions of this Agreement shall not prevent any party from obtaining injunctive relief from a court of competent jurisdiction to enforce the obligations for which such party may obtain provisional relief pending a decision on the merits by the arbitrator. Each of the parties hereby consents to the jurisdiction of Nevada courts for such purpose. The arbitrator shall have authority to award any remedy or relief that a court of the State of Nevada could grant in conformity to applicable law, except that the arbitrator shall have no authority to award attorneys' fees or punitive damages. Any arbitration award shall be accompanied by a written statement containing a summary of the issues in controversy, a description of the award, and an explanation of the reasons for the award. The arbitrator's award shall be final and judgment may be entered upon such award by any court. SECTION 15. AMENDMENTS, ETC. This Agreement may not be modified or amended, and no provision hereof may be waived, except by an instrument in writing signed by the parties hereto. SECTION 16. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors, and permitted assigns and transferees. No party hereto may assign their rights and obligations hereunder without the prior written consent of the other party hereto; except that ASIG may, after providing LVDGT with written notice, transfer and assign its rights under this Agreement to any member of ASIG, any other entity wholly owned by any such member or to one or more trusts for such member's estate planning purposes. SECTION 17. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. LAS VEGAS DISCOUNT GOLF & TENNIS, INC. ASI GROUP, L.L.C. By: Sunbelt Communications Company, ------------------------------ a Member By /s/ Vaso Boreta By /s/ James Earl Rogers -------------------------------- -------------------------------- Name: Vaso Boreta Name: James Earl Rogers Title: President Title: President -16- EX-5.1 6 EXHIBIT 5.1 1 EXHIBIT 5.1 Transactions by the Reporting Person in the Company stock during past sixty (60) days:
NUMBER OF DATE SHARES PURCHASED PRICE PER SHARE COST - ---- ---------------- --------------- ---- October 19, 1998 2,303,290 shares of $1.0854039 $2,500,000 Common Stock October 19, 1998 347,975(1) $1.8392(2) $639,995.62(3) (1) Grant of options to purchase shares of Common Stock (2) Option exercise price (3) Assumes all options exercised; no cost allocated to purchase of options
EX-6.1 7 EXHIBIT 6.1 1 EXHIBIT 6.1 ----------- VOTING AGREEMENT ---------------- VOTING AGREEMENT, dated as of October 19, 1998 by and among ASI Group, L.L.C., a Nevada limited liability company ("ASI"), c/o Agassi Enterprises, Inc., 3960 Howard Hughes Parkway, Suite 750, Las Vegas, Nevada 89109, and the individuals and entities listed on the signature page hereto (collectively "Boreta"). WITNESSETH: WHEREAS, ASI and Las Vegas Discount Golf & Tennis, Inc., a Colorado corporation ("LVDGT"), are entering into an investment and voting agreement (the "ASI Agreement") pursuant to which, among other things, ASI is buying shares of common stock of LVDGT; and WHEREAS, LVDGT and Saint Andrews Golf Corporation, a Nevada corporation ("SAGC"), are entering into an investment agreement (the "LVDGT Agreement") pursuant to which, among other things, LVDGT is buying shares of preferred stock of SAGC; and WHEREAS, in order to induce each other to enter into the ASI Agreement, ASI and Boreta desire to enter into this Voting Agreement with respect to all the capital stock of LVDGT and SAGC now owned or controlled by and/or hereafter acquired or coming under the control of any of them respectively (collectively, the "Shares). Exhibit A lists all Shares currently owned or controlled by Boreta or ASI; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration given to each party hereto, the receipt of which is hereby acknowledged, the parties hereto agree as follows: Section 1. RESTRICTIONS ON AND VOTING OF SHARES. (a) During the term of this Agreement, Boreta agrees that it will not sell, assign, pledge or otherwise dispose of, or grant any proxies with respect to, the Shares, or enter into any contract, option or other arrangement or understanding with respect to the sale, assignment, pledge or other disposition, directly or indirectly, of the Shares except as expressly contemplated by the LVDGT Agreement or the ASI Agreement. (b) Boreta and ASI agree that, during the term of this Agreement, they will vote the Shares either of them is entitled to vote, in person or by proxy, at any annual, special or other meeting of the holders of capital stock of LVDGT or SAGC, as the case may be, and at any adjournments thereof or pursuant to any consent in lieu of a meeting, or otherwise, as mutually agreed by ASI and Boreta (provided that no party will be so required to vote its shares if the subject action implemented in accordance with such mutual agreement, would in any manner adversely effect the interests of Boreta in LVDGT or SAGC or the interests of ASI in LVDGT and indirectly in SAGC, as the case may be, or adversely affect the value of the Shares (or any securities into which such shares might be exchanged)). 2 Section 2. SUBSEQUENT ACQUISITIONS. If at any time after the first to occur of the closing of the transactions contemplated by the LVDGT Agreement or the ASI Agreement, while ASI is an equity holder of LVDGT or SAGC or has options, warrants or other rights to acquire equity of either or both of LVDGT and/or SAGC, either of LVDGT or SAGC offers to sell or grants, sells or issues shares of its capital stock to any of Boreta or their respective affiliates at any price or for any consideration (including, but not limited to, provision of services), Boreta shall transfer or cause to be transferred to ASI Shares so as to maintain the relative proportionate direct and indirect (by virtue of ownership of LVDGT capital stock) equity ownerships of ASI, on the one hand, and Boreta, on the other hand, in each of LVDGT and SAGC as they were immediately prior to such offer, grant, sale or issuance, assuming the consummation of such offer, grant, sale or issuance. Section 3. TERM OF AGREEMENT. Except as otherwise specifically provided herein, this Agreement will be effective as of the closing of the transactions contemplated by the ASI Agreement (the "Effective Date"). The obligations of ASI and Boreta under this Agreement will terminate as of the date ASI no longer holds any equity interest, options, warrants or rights to purchase any equity interest in or instruments convertible or exchangeable into equity interests of SAGC or LVDGT or their respective successors. Section 4. REPRESENTATIONS AND WARRANTIES OF BORETA. Boreta represents and warrants to ASI as of the date and as of the Effective Date hereof that: (a) Boreta is the record owner of the Shares and the Shares represent all of the capital stock of SAGC or LVDGT owned of record by Boreta, directly or indirectly; (b) Boreta has full legal power and authority to execute and deliver this Agreement; (c) the Shares are free and clear of all proxies; and (d) Boreta has duly executed and delivered this Agreement. Section 5. REPRESENTATIONS AND WARRANTIES OF ASI. ASI represents and warrants to Boreta as of the date and as of the Effective Date hereof that: (a) ASI is the record owner of the Shares and the Shares represent all of the capital stock of SAGC or LVDGT owned of record by ASI, directly or indirectly; (b) ASI has full legal power and authority to execute and deliver this Agreement; (c) the Shares are free and clear of all proxies; and -2- 3 (d) ASI has duly executed and delivered this Agreement. Section 6. STOCK OPTIONS OWNED BY BORETA OR ASI. It is agreed that any Shares obtained by Boreta or ASI after the date hereof upon exercise of any option to purchase Shares or which otherwise become held of record by Boreta shall in all events be deemed to be "Shares" or subject to this Agreement. Section 7. SPECIFIC PERFORMANCE. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms of were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity without the necessity of posting bond or other security or showing actual damages. Section 8. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by confirmed facsimile to the correct facsimile number or otherwise delivered by hand or by messenger, addressed (a) if to ASI, at its address set forth on the cover page of this Agreement, or at such other address as ASI shall have furnished to the Company in writing, or (b) if to any of Boreta, at such address as listed on the signature page hereto. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, or if sent by confirmed facsimile to the correct facsimile number, upon the sending of such facsimile, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. Section 9. BINDING EFFECT. Upon execution and delivery of this Agreement by ASI, this Agreement shall become effective as to Boreta at the time Boreta executes and delivers this Agreement. This Agreement shall inure to the benefit of and, subject to applicable law, be binding upon the parties hereto and their respective heirs, personal representatives, successors and assigns. Section 10. ASSIGNMENT. This Agreement will be binding upon and inure to the benefit of the parties and their respective successors and permitted assigns provided that neither this Agreement nor any rights hereunder may be assigned by either party without first obtaining the prior written consent of the other party. Section 11. GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the principles of conflict of laws thereof. -3- 4 Section 12. COUNTERPARTS. This Agreement may be executed in two counterparts, each of which shall be an original, but which together shall constitute one and the same agreement. Section 13. EFFECT OF HEADINGS. The section headings herein are for convenience only and shall not affect the construction hereof. Section 14. SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 15. AMENDMENT; WAIVER. No amendment or waiver of any provision of this Agreement or consent to departure therefrom shall be effective unless in writing and signed by ASI and Boreta, in the case of an amendment, or by the party which is the beneficiary of any such provision, in the case of a waiver or a consent to departure therefrom. Section 16. ENTIRE AGREEMENT. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, covenants, arrangements, communications, representations and warranties, whether oral or written, by either party with respect thereto. Section 17. OBLIGATIONS. The obligations of Boreta hereunder are joint and several. IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto all as of the day and year first above written. ASI GROUP, L.L.C. BORETA: By: SUNBELT COMMUNICATIONS COMPANY, a Member By: /s/ James Earl Rogers /s/ Vaso Boreta ------------------------------- -------------------------------- James Earl Rogers VASO BORETA President /s/ Ronald Boreta -------------------------------- RONALD BORETA /s/ John Boreta -------------------------------- JOHN BORETA BORETA ENTERPRISES LTD By: /s/ Ron Boreta -------------------------------- Name: Ron Boreta Title: General Partner -4- 5 EXHIBIT A
Company Shareholder Number of Shares Held - ------- ----------- --------------------- Saint Andrews Golf Corporation Vaso Boreta 110,000 Saint Andrews Golf Corporation Ronald Boreta 110,000 Las Vegas Discount Golf & Tennis, Inc.(1) Vaso Boreta 1,837,637 Las Vegas Discount Golf & Tennis, Inc.(2) Ronald Boreta 1,723,288 Las Vegas Discount Golf & Tennis, Inc.(3) John Boreta 1,059,374 Las Vegas Discount Golf & Tennis, Inc. Boreta Enterprises Ltd. 1,304,445 Las Vegas Discount Golf & Tennis, Inc.(4) ASI Group, L.L.C. 2,303,290
- ---------------- (1) Includes 1,823,810 shares held directly and 13,827 shares which represent Vaso Boreta's share of the Common Stock held by Boreta Enterprises Ltd. (2) Includes 544,699 shares held directly, 897,589 shares which represent Ronald Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 281,000 shares underlying Stock Options held by Ronald Boreta. (3) Includes 536,345 shares held directly, 393,029 shares which represent John Boreta's share of the Common Stock held by Boreta Enterprises Ltd. and 130,000 shares underlying Stock Options held by John Boreta. (4) ASI Group, L.L.C. also has options for the purchase of 347,975 shares of the Common Stock of Las Vegas Discount Golf & Tennis, Inc. EX-6.2 8 EXHIBIT 6.2 1 EXHIBIT 6.2 ----------- CO-SALE AGREEMENT ----------------- This Co-Sale Agreement is made as of the 19th day of October, 1998 by and among LAS VEGAS DISCOUNT GOLF & TENNIS INC. (the "Company"), a Colorado corporation, RON BORETA, VASO BORETA and JOHN BORETA (collectively the "Boretas") and BORETA ENTERPRISES LTD. (the "Family Company"; the Family Company and the Boretas are each a "Significant Shareholder," and collectively are the "Significant Shareholders") and ASI GROUP, L.L.C., a Nevada limited liability company ("ASI"). In consideration of the mutual covenants set forth herein, the parties agree as follows: 1. DEFINITIONS. (a) "Stock" shall mean shares of the Company's Common and Preferred Stock now owned beneficially or of record or subsequently acquired beneficially or of record directly or indirectly by the Significant Shareholders. (b) "Preferred Stock" shall mean the Company's or LVDG&T's outstanding Preferred Stock of any series or designation. (c) "Common Stock" shall mean the Company's Common Stock and shares of Common Stock issued or issuable upon conversion of the Company's Preferred Stock. 2. SALE BY SIGNIFICANT SHAREHOLDERS. (a) On each occasion that any Significant Shareholder proposes to sell or transfer to any person any shares of Stock in one or more related transactions, such Significant Shareholder shall promptly give written notice (the "Notice") to ASI at least twenty (20) days prior to the closing of such sale or transfer. The Notice shall describe in reasonable detail the proposed sale or transfer including, without limitation, the number of shares of Stock to be sold or transferred, the nature of such sale or transfer, the consideration to be paid, and the name and address of each prospective purchaser or transferee. In the event that the sale or transfer is being made pursuant to the provisions of Section 3(a) or 3(b) hereof, the Notice shall state under which Section the sale or transfer is being made. (b) ASI shall have the right, exercisable upon written notice to such Significant Shareholder within fifteen (15) days after receipt of the Notice, to participate in such sale of Stock on the same terms and conditions. To the extent ASI exercises such right of participation in accordance with the terms and conditions set forth -1- 2 below, the number of shares of Stock that the Significant Shareholder may sell in the transaction shall be correspondingly reduced. (c) ASI may sell all or any part of that number of shares of Common Stock equal to the product obtained by multiplying (i) the aggregate number of shares of Stock covered by the Notice by (ii) a fraction the a numerator of which is the number of shares of Common Stock owned by ASI at the time of the sale or transfer and the denominator of which is the total number of shares of Common Stock owned by the Significant Shareholders and ASI at the time of the sale or transfer. (d) ASI shall effect its participation in the sale by promptly delivering to the Significant Shareholders for transfer to the prospective purchaser one or more certificates, properly endorsed for transfer, which represent: (i) the type and number of shares of Common Stock which ASI elects to sell; or (ii) that number of shares of Series B Convertible Preferred Stock which is at such time convertible into the number of shares of Common Stock which ASI elects to sell; provided, however, that if the prospective purchaser objects to the delivery of Series B Convertible Preferred Stock in lieu of Common Stock, ASI shall convert such Preferred Stock into Common Stock and deliver Common Stock as provided in Section 2(d)(i) above. The Company agrees to make any such conversion concurrent with the actual transfer of such shares to the purchaser. (e) The Stock certificate or certificates that ASI delivers to the Significant Shareholders pursuant to Section 2(d) shall be transferred to the prospective purchaser in consummation of the sale of the Common Stock pursuant to the terms and conditions specified in the Notice, and the Significant Shareholders shall concurrently therewith remit to ASI that portion of the sale proceeds to which ASI is entitled by reason of its participation in such sale. To the extent that any prospective purchaser or purchasers prohibits such assignment or otherwise refuses to purchase shares or other securities from ASI, the Significant Shareholders shall not sell to such prospective purchaser or purchasers any Stock unless and until, simultaneously with such sale, the Significant Shareholders shall purchase such shares or other securities from ASI. (f) The exercise or non-exercise of the rights of ASI hereunder to participate in one or more sales of Stock made by the Significant Shareholders shall to adversely affect its rights to participate in subsequent sales of Stock subject to Section 2(a). -2- 3 3. EXEMPT TRANSFERS. Notwithstanding the foregoing, the co-sale rights of ASI shall not apply to (a) any pledge of Stock made pursuant to a bona fide third party loan transaction with a party not affiliated with or a stockholder of any significant shareholder that creates a mere security interest; (b) any transfer to the ancestors, descendants or spouse or to trusts for the benefit of such persons or a Significant Shareholder; (c) any bona fide gift; or (d) any sale or sales of not more than 25,000 shares of Common Stock individually or in the aggregate during the term hereof (as adjusted for stock splits, reverse stock splits and the like effected after the date of this Agreement); provided that (i) the transferring Shareholder shall inform ASI of such pledge, transfer or gift prior to effecting it and (ii) the pledgee, transferee or donee shall furnish ASI with a written agreement to be bound by and comply with all provisions of Section 2. Such transferred Stock shall remain "Stock: hereunder, and such pledge, transferee or donee shall be treated as a "Shareholder" for purposes of this Agreement. 4. PROHIBITED TRANSFERS. (a) In the event a Significant Shareholder should sell any Stock in contravention of the co-sale rights of ASI under this Agreement (a "Prohibited Transfer"), ASI, in addition to such other remedies as may be available at law, in equity or hereunder, shall have the put option provided below, and the Significant Shareholders shall be bound by the applicable provisions of such option. (b) In the event of a Prohibited Transfer, ASI shall have the right to sell to the Significant Shareholders the type and number of shares of Common Stock equal to the number of shares ASI would have been entitled to transfer to the purchaser had the Prohibited Transfer under Section 2(c) hereof been effected pursuant to and in compliance with the terms hereof. Such sale shall be made on the following terms and conditions: (i) The price per share at which the shares are to be sold to the Significant Shareholders shall be equal to the price per share paid by the purchaser to Significant Shareholders in this Prohibited Transfer. Significant Shareholders shall also reimburse ASI for any and all fees and expenses, including legal fees and expenses, incurred pursuant to the exercise or the attempted exercise of ASI's rights under Section 2. (ii) Within ninety (90) days after the later of the dates on which ASI (A) received notice of the Prohibited Transfer or (B) otherwise became aware of the Prohibited Transfer, ASI shall, if exercising the option created hereby, deliver to Significant Shareholders the certificate or certificates representing shares to be sold, each certificate to be properly endorsed for transfer. -3- 4 (iii) Significant Shareholders shall, upon receipt of the certificate or certificates for the shares to be sold by ASI, pursuant to this Section 4(b), pay the aggregate purchase price therefor and the amount of reimbursable fees and expenses, as specified in Section 5(b)(i), in cash or by other means acceptable to ASI. (iv) Notwithstanding the foregoing, any attempt by a Significant Shareholder to transfer Stock in violation of Section 2 hereof shall be void and the Company agrees it will not effect such a transfer nor will it treat any alleged transferee as the holder of such shares without the written consent of ASI. 5. LEGEND. (a) Each certificate representing shares of Stock now or hereafter owned by the Significant Shareholder or issue to any person in connection with a transfer pursuant to Sections(a) and 3(b) hereof shall be endorsed with the following legend: "THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN CO-SALE AGREEMENT AMONG THE INITIAL HOLDER OF THE SECURITIES, THE COMPANY AND CERTAIN STOCKHOLDER(S) OF THE COMPANY. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY." (b) Each Significant Shareholder agrees that the Company may instruct its transfer agent to impose transfer restrictions on the shares represented by certificates bearing the legend referred to in Section 5(a) above to enforce the provisions of this Agreement and the Company agrees to promptly do so. The legend shall be removed upon termination of this Agreement. 6. MISCELLANEOUS. 6.1 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of Nevada. 6.2 AMENDMENT. Any provision may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only by the written consent of the party or parties affected thereby. Any amendment or waiver effected in accordance with clauses (a), (b) and (c) of this Section shall be binding upon ASI, its successors and assigns, the Company and Significant Shareholders in question. -4- 5 6.3 ASSIGNMENT OF RIGHTS. This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, their respective successors, assigns and legal representatives. 6.4 TERM. This Agreement shall terminate on the fifth anniversary hereof. 6.5 OWNERSHIP. Each Significant Shareholder represents and warrants that it/he is the sole legal and beneficial owner of the shares of stock subject to this Agreement and that no other person has any interest (other than a community property interest) in such shares. 6.6 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given upon personal delivery to the party to be notified or five (5) days after deposit in the United States mail, by registered or certified mail, postage prepaid and properly addressed to the party to be notified as set forth on the signature page hereof or at such other address as such party may designate by ten (10) days' advance written notice to the other parties hereto. 6.7 SEVERABILITY. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 6.8 ATTORNEY FEES. In the event that any dispute among the parties to this Agreement should result in litigation, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement, including without limitation, such reasonable fees and expenses of attorneys and accountants, which shall include, without limitation, all fees, costs and expenses of appeals. 6.9 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The foregoing agreement is hereby executed as of the date first above written. SAINT ANDREWS GOLF CORPORATION, a Nevada corporation ASI GROUP, L.L.C., a Nevada limited liability company By /s/ Ron Boreta By: Sunbelt Communications Company, --------------------------- -------------------------------- Name: Ron Boreta a Member Title: President By /s/ James Earl Rogers -------------------------------- Name: James Earl Rogers Title: President -5- 6 LAS VEGAS DISCOUNT GOLF & TENNIS INC., a Nevada corporation By /s/ Vaso Boreta ---------------------------------- Name: Vaso Boreta Title: President /s/ Vaso Boreta - ------------------------------------- Vaso Boreta /s/ Ron Boreta - ------------------------------------- Ron Boreta /s/ John Boreta - ------------------------------------- John Boreta BORETA ENTERPRISES LTD. By /s/ Ron Boreta - ------------------------------------- Name: Ron Boreta Title: General Partner -6- 7 CONSENT OF SPOUSE ----------------- I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of the company held of record by either or both of us, including my community property interest in such shares, if any, co-sale rights (as described in the Agreement) must be granted to ASI by the seller. I hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operations of, or violate, the Agreement. /s/ Keri Boreta --------------------------- (Signature) Keri Boreta -7- 8 CONSENT OF SPOUSE I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of the company held of record by either or both of us, including my community property interest in such shares, if any, co-sale rights (as described in the Agreement) must be granted to ASI by the seller. I hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operations of, or violate, the Agreement. /s/ Stacey Boreta --------------------------- (Signature) Stacey Boreta -8- 9 CONSENT OF SPOUSE I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware that by its provisions if I and/or my spouse agree to sell all or part of the shares of the company held of record by either or both of us, including my community property interest in such shares, if any, co-sale rights (as described in the Agreement) must be granted to ASI by the seller. I hereby agree that those shares and my interest in them, if any, are subject to the provisions of the Agreement and that I will take no action at any time to hinder operations of, or violate, the Agreement. --------------------------- (Signature) EX-7.1 9 EXHIBIT 7.1 1 EXHIBIT 7.1 ----------- AGREEMENT --------- AGREEMENT, dated as of October 19, 1998, by and among ASI GROUP, L.L.C., a Nevada limited liability company ("ASI"), ANDRE K. AGASSI, an individual ("AGASSI"), JAMES EARL ROGERS, an individual ("JROGERS") and PERRY CRAIG ROGERS, individual ("PROGERS"), and SUNBELT COMMUNICATIONS COMPANY, a Nevada corporation ("SUNBELT"). RECITALS A. AGASSI, SUNBELT and PROGERS are the sole members of ASI. B. JROGERS is the controlling shareholder of SUNBELT. C. ASI has acquired (the "Acquisition") in excess of 20% of the common stock, no par value ("Common Stock"), of Las Vegas Discount Golf & Tennis, Inc., a Colorado corporation ("LVDG&T"). D. As a result of the Acquisition, ASI, AGASSI, JROGERS, PROGERS and SUNBLET are required under federal securities laws to file a Schedule 13D with respect to the Common Stock acquired by ASI in the Acquisition. NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree that a single Schedule 13D will be filed on behalf of each of ASI, AGASSI, JROGERS, PROGERS and SUNBELT with respect to the Acquisition. This Agreement may be executed in two or more counterparts, each of which shall be an original, but which together shall constitute one and the same agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. ASI GROUP, L.L.C. a Nevada limited SUNBELT COMMUNICATIONS liability company COMPANY By /s/ Perry Craig Rogers By /s/ James Earl Rogers, By Perry Craig ------------------------------ --------------------------------------- Perry Craig Rogers, member Rogers, attorney-in-fact ------------------------ James Earl Rogers, President by Perry Craig Rogers, attorney-in-fact /s/ Andre K. Agassi - --------------------------------- ANDRE K. AGASSI /s/ James Earl Rogers, By Perry Craig ------------------------------------- Rogers, attorney-in-fact ------------------------ /s/ Perry Craig Rogers James Earl Rogers, By - --------------------------------- Perry Craig Rogers, Attorney-in-fact Perry Craig Rogers EX-7.2 10 EXHIBIT 7.2 1 Exhibit 7.2 LIMITED POWER OF ATTORNEY Dated: October 19, 1998 The undersigned, James Earl Rogers, hereby constitutes and appoints Perry Craig Rogers with full power to act, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities (until revoked in writing) (i) to sign the Schedule 13D and Form 3 to be filed by each of James Earl Rogers and Sunbelt Communications Company in connection with the acquisition by ASI Group, L.L.C. of common stock of Las Vegas Discount Golf & Tennis, Inc. on October 19, 1998, and all related, amended or corrective documents, instruments or filings with the Securities and Exchange Commission and any other federal or state regulatory agency, and (ii) to file the same, with all exhibits thereto, and other documents in connection therewith with the Securities and Exchange Commission and any other federal or state regulatory agency, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite, proper or necessary as fully to all intents and purposes as he might or could do in person thereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. /s/ James Earl Rogers - -------------------------------- James Earl Rogers Notary: /s/ Kristine Sims-Roethel State of Nevada, County of Clark On this 19th day of October, personally appeared before me, a Notary Public, James Earl Rogers, personally known to me, who acknowledged that he executed the attached instrument. - -------------------------------------------- Notary Public-State of Nevada [State County of Clark Seal] KRISTINE SIMS-ROETHEL My Appointment Expires July 9, 2001 No: 97-4448-1 - -------------------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----