Exhibit 10.1
November 26, 1996
Arkansas Skies Corporation
Southern Skies Corporation
Xxx Xxxx Xxxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, President
Re: Asset Purchase Agreement dated as of February 8, 1996 by and
between Triathlon Broadcasting of Little Rock, Inc., Triathlon
Broadcasting Company, Southern Skies Corporation and Arkansas
Skies Corporation
--------------------------------------------------------------
Gentlemen:
This letter, when executed by appropriate officers of Southern Skies
Corporation and Arkansas Skies Corporation shall set forth our mutual
agreement with respect to amendments to the certain Asset Purchase Agreement
dated as of February 8, 1996 (the "Agreement") by and between Triathlon
Broadcasting of Little Rock, Inc. ("Buyer"), Triathlon Broadcasting Company
("Triathlon"), Southern Skies Corporation ("Southern Skies") and Arkansas
Skies Corporation ("Arkansas Skies" and together with Southern Skies, the
"Sellers"). Except as expressly set forth herein, the Agreement shall remain
in full force and effect on the terms set forth therein. Capitalized terms
used herein but not defined herein shall have the respective meanings ascribed
to them in the Agreement.
1. Buyer and Sellers shall close the acquisition of the assets of radio
stations KZSN-FM and KZSN(AM) (the "Wichita Stations") on January 9, 1997
(the "Wichita Closing"), subject only to those conditions set forth in the
Agreement as are applicable to the Wichita Stations, including but not
limited to (i) delivery of opinions, certificates, and other required
documentation and (ii) the satisfaction of all covenants and the accuracy
of all representations and warranties as provided in the Agreement. The
portion of the Purchase Price allocated for the Wichita Stations shall be
the sum of (i) $11,000,000 cash and (ii) 22,464 shares of Class A Stock
of Triathlon all of which shall be payable at the Wichita Closing in
accordance with the terms of the Agreement.
2. The conditions to Buyer's obligations to close the acquisition of the
assets of radio stations KSSN-FM and KMVK-FM (the "LR Stations") shall be
amended to add the following: (i) for the months of November 1996,
December 1996, January 1997, and February 1997, in the aggregate the total
gross revenue of KSSN-FM shall be not less than $950,000 (which amount
shall include guaranteed national sales figures recognized in accordance
with the normal accounting practices of the LR Stations) and the operating
profit shall be not less than $90,000 (in both instances such amounts
shall be calculated in a manner, and the calculation of operating profit
shall take into account items of revenue and expense on a basis, consistent
with the 1995 audited financial statements of Southern Skies) and (ii) the
fall Arbitron Survey Average Quarter Hour Estimate for KSSN-FM shall be not
less than 10.3 for the audience of Total Persons 12+, M-S, 6 a.m.-Mid. The
closing with respect to the LR Stations (the "LR Closing") shall occur
within
ten (10) business days following the satisfaction of the conditions to
Buyer's obligations thereto as set forth in the Agreement and in this
letter, but, subject to the following sentence, the LR Closing shall be
not later than April 30, 1997; if the conditions to Buyer's obligations
have not been satisfied or waived by Buyer by such date, all rights and
obligation with respect to the LR Stations shall terminate in accordance
with Article 18 of the Agreement. If as of March 30, 1997, all of the
conditions to Buyer's obligations to close the acquisition of the LR
Stations have been satisfied or waived by Buyer other than the condition
that the requisite FCC Consents have become Final Orders, Buyer at its
option may extend the date for the satisfaction of such condition from
April 30, 1997 to May 31, 1997. The portion of the Purchase Price
allocated for the LR Stations shall be the sum of (i) $11,617,000 cash and
(ii) 23,725 shares of Class A Stock of Triathlon all of which shall be
payable at the LR Closing in accordance with the terms of the Agreement.
The parties acknowledge that the cash consideration portion of the
Purchase Price for the Stations is reduced hereunder by the amount of
$1,383,000.
3. At and as part of the Wichita Closing, the Buyer shall make a loan to the
Sellers in the principal amount of $6,000,000 (the "Loan"). The Loan shall
be evidenced by a promissory note bearing interest at the rate of 9% per
year and maturing on the earlier of May 31, 1998 or the LR Closing; interest
shall be due on April 30, 1997 and thereafter on the first business day of
July 1997, October 1997, January 1998, and all remaining sums, including
principal, shall be due at maturity. The Loan shall be secured by (i) a
perfected first priority security interest in all of the tangible and
intangible operating assets of KSSN-FM, (ii) a pledge of all of the
outstanding stock of Southern Skies, (iii) a security interest in the
assets of KMVK-FM subject to the interest of Xxxxxxx Xxxxxxx, and (iv) a
pledge of all the outstanding stock of Arkansas Skies also subject to the
interest of Xxxxxxx Xxxxxxx, all pursuant to a security agreement containing
standard covenants concerning (x) preservation of collateral, (y) conduct
of business in the ordinary course consistent with prior practices, and
(z) default provisions, but no other business or operating covenants.
Sellers hereby represent and warrant that the current indebtedness owed
to Xxxxxxx Xxxxxxx is not in excess of One Million Dollars ($1,000,000) and
covenant that prior to the maturity of the Loan no additional indebtedness
(other than accrued interest with respect to the existing obligations) to
Xxxxxxx Xxxxxxx will be incurred. If Buyer closes on the acquisition of the
LR Stations, all amounts of principal and interest then outstanding under
the Loan shall be offset against the purchase price allocated to the LR
Stations as set forth in paragraph 2 above.
4. At and as part of the Wichita Closing, (i) the Buyer shall enter into the
employment agreement with Xxxxx Xxxxxxx as provided in the Agreement,
provided, however, that the compensation due to Xxxxxxx under the
employment agreement shall be reduced to 50% of the compensation now set
forth therein and the bonus provisions set forth therein shall be waived
by Xxxxxxx until the LR Closing; (ii) the Buyer shall enter into the
noncompetition agreement with Xxxxx Xxxxxxx as provided in the Agreement
with respect to the Wichita area market, provided, however, that the
payments due Xxxxxxx under the
-2-
non-competition agreement shall be reduced to 50% of the compensation now
set forth therein, (iii) the face amount of the irrevocable standby letter
of credit currently held in the Escrow Account shall be reduced to
$612,500 and the expiration date shall be extended until June 15, 1998;
and (iv) the liquidated damages provisions of Section 19.2 of the
Agreement shall be reduced to $1,225,000. At and as part of the LR
Closing, the compensation provisions of the employment agreement with
Xxxxx Xxxxxxx shall be increased to 100% of the amounts set forth in the
Agreement as of the LR Closing and the bonus provisions of such employment
agreement shall become effective as of such date; also as a part of the LR
Closing the noncompetition agreement between Xxxxx Xxxxxxx and Buyer shall
be amended to include the Little Rock area market and to provide that the
payments due Xxxxx Xxxxxxx thereunder shall be increased from the date of
the LR Closing by an amount equal to 50% of the consideration now set
forth therein and extended so that the total amount to be paid to Xxxxx
Xxxxxxx under the noncompetition agreement is the total amount as
currently provided in the Agreement.
5. Not later than 5 days following publication of the fall Arbitron Survey,
Sellers shall give Buyer notice of whether the condition set forth in
(ii) of paragraph 2 above has been satisfied; not later than March 15,
1997, Sellers shall give Buyer notice of whether the conditions set forth
in (i) of paragraph 2 above have been satisfied. In each instance, if the
requisite condition has not been satisfied, within 10 days of notice from
Sellers Buyer will give Sellers notice of whether or not Buyer will waive
such condition. Any waiver of either such condition, or the declination to
waive either such condition, shall be irrevocable and Buyer acknowledges
that Sellers shall be entitled to rely upon the same.
6. If (i) the conditions to Buyer's obligation to close the acquisition of the
assets of the LR Stations are not satisfied within the periods set forth
in this letter, (ii) Buyer elects not to waive such conditions, and (iii)
Sellers dispose of the LR Stations prior to April 30, 1998, Xxxxx Xxxxxxx
hereby agrees to enter into a non-competition agreement with the Buyer
in the Little Rock, Arkansas market for a period of one year from the date
of such sale on the same terms and conditions as the non-competition
agreement contemplated by the Agreement (other than the consideration for
such agreement which shall be 50% of the amount set forth therein for such
one-year period). Notwithstanding the foregoing, Xxxxx Xxxxxxx shall not be
prohibited from providing services to or owning an interest in the
purchaser, or any affiliate or assignee thereof, of the LR Stations.
7. The parties hereto agree to cooperate promptly and negotiate in good faith
in the preparation of definitive documentation required to give effect to
this transaction (the "Definitive Documentation"). If the parties fail to
agree on the terms and conditions of the Definitive Documentation or there
is any other dispute or controversy between the parties with respect to or
arising under this letter or any amendment or modification hereof, such
dispute shall be resolved by arbitration in New York, New York in accordance
with the Rules for Commercial Arbitration of the American Arbitration's
-3-
Association before a panel of three (3) arbitrators, one appointed by the
Buyer, one appointed by the Sellers, and the third appointed by said
Association.
8. Without limiting any of the other provisions of this amendment, the
Agreement shall be deemed to be amended to the full extent necessary to
give effect to the provisions of this amendment.
9. Except as and to the extent amended hereby, the Agreement remains in full
force and effect in accordance with its terms.
10. All references in the Agreement and in any other agreement, instrument or
document executed or delivered in connection therewith to the "Agreement"
shall be deemed to refer to the Agreement as amended hereby and as it may
hereafter be amended.
11. This amendment shall be construed and interpreted according to the laws of
the state of New York without regard to the conflicts of laws principles
thereof.
If the foregoing accurately sets forth our agreement, kindly execute the
enclosed copy of this letter and return to my attention.
Sincerely,
TRIATHLON BROADCASTING COMPANY
By: /s/ Xxxxxx Xxxxx
---------------------------------------
Xxxxxx Xxxxx
President & Chief Executive Officer
Agreed and accepted to:
SOUTHERN SKIES CORPORATION As to paragraph 6 only:
By: ---------------------------------------- ----------------------------------
Xxxxx Xxxxxxx Xxxxx Xxxxxxx
President
ARKANSAS SKIES CORPORATION
By: ---------------------------------------
Xxxxx Xxxxxxx
President
-4-
