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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACTS OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED March 31, 1998
COMMISSION FILE NUMBERS:
ACME Intermediate Holdings, LLC 333-40277
ACME Television, LLC 333-40281
-------------------------------
ACME TELEVISION, LLC
and
ACME INTERMEDIATE HOLDINGS, LLC
(Exact name of registrants as specified in their charter)
---------------------
Delaware ACME Television, LLC 52-2050588
Delaware ACME Intermediate Holdings, LLC 52-2050589
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
---------------------
2101 E. Fourth Street
Santa Ana, California 92705
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: 714-245-9499
---------------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered:
------------------- ---------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) have been subject to such
filing requirements for the past 90 days. Yes X No --- ---
100% of the membership units of ACME TELEVISION, LLC are owned directly
or indirectly by ACME INTERMEDIATE HOLDINGS, LLC. 92% of the membership units of
ACME INTERMEDIATE HOLDINGS, LLC are owned by ACME Television Holdings, LLC. Such
membership units are not publicly traded and have no quantifiable market value.
Indicate the number of membership units outstanding of each of ACME
Television, LLC's classes of equity as of the latest practicable date: At May
14, 1998, there were outstanding 200 membership units, without par value.
Indicate the number of membership units outstanding of each of ACME
Intermediate Holdings, LLC's classes of equity, as of the latest practicable
date: At May 14, 1998, there were 895,425 membership units without par value.
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ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
FORM 10-Q TABLE OF CONTENTS
<TABLE>
<CAPTION>
Item
Number Page
------ ----
<S> <C>
PART I - FINANCIAL STATEMENTS
Item 1. FINANCIAL STATEMENTS
Introductory Comments . . . . . . . . . . . . . . . . . . . . . . . 1
ACME INTERMEDIATE HOLDINGS, LLC and ACME
TELEVISION, LLC and Subsidiaries
Consolidated Balance Sheets as of
December 31, 1997 and March 31, 1998. . . . . . . . . . . . . 2
Consolidated Statements of Operations and
Members' Capital for the Three Months
Ended March 31, 1998 and March 31, 1997 . . . . . . . . . . . 3
Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 1998
and March 31, 1997. . . . . . . . . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements . . . . . . . . . . . 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . 6
PART II - OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . 9
SIGNATURES
</TABLE>
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ACME TELEVISION, LLC
AND
ACME INTERMEDIATE HOLDINGS, LLC
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements Important Explanatory Note:
This integrated Form 10-Q is filed pursuant to the Securities Exchange Act of
1934, as amended, for each of ACME INTERMEDIATE HOLDINGS, LLC and its
subsidiary, ACME TELEVISION, LLC. Unless the context requires otherwise,
references to the "Company" refer to both ACME INTERMEDIATE HOLDINGS, LLC and
ACME TELEVISION, LLC.
ACME INTERMEDIATE HOLDINGS, LLC is a holding company with no separate operations
apart from its operating subsidiary, ACME TELEVISION, LLC. Separate financial
information has been provided for each entity and, where appropriate, separate
disclosures. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. It is
suggested that these Consolidated Financial Statements be read in conjunction
with the financial information set forth in the Annual Reports on Form 10-K of
each of ACME INTERMEDIATE HOLDINGS, LLC and ACME TELEVISION, LLC for the fiscal
year ended December 31, 1997.
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ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
CONSOLIDATED BALANCE SHEETS
(Unaudited - in thousands)
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1998
----------------------------- ----------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 8,820 $ 8,820 $ 3,570 $ 3,570
Accounts receivable, net 699 677 5,640 5,640
Due from affiliates 162 54 200 75
Current portion of program
broadcast rights 614 614 4,360 4,360
Prepaid expenses and other assets 3,032 3,060 915 915
Deferred income taxes -- -- 342 342
-------- -------- -------- --------
Total current assets 13,327 13,225 15,027 14,902
Property and Equipment, net 7,346 7,346 12,150 12,150
Program broadcast rights,
less current portion 587 587 5,611 5,611
Intangible assets, net 36,004 36,004 187,855 187,855
Investment in affiliates -- -- 4,989 4,989
Deposits 143,000 143,000 4,725 4,725
Other assets 17,418 19,010 10,779 12,391
-------- -------- -------- --------
Total assets $217,682 $219,172 $241,136 $242,623
======== ======== ======== ========
LIABILITIES AND MEMBERS' CAPITAL
Current Liabilities
Accounts payable $ 3,361 $ 3,363 $ 4,324 $ 4,324
Accrued expenses 651 651 3,442 3,442
Current portion of program
rights payable 653 653 5,636 5,636
Current portion of obligations
under lease 292 292 292 292
Other current liabilities -- -- 1,317 1,317
-------- -------- -------- --------
Total current liabilities 4,957 4,959 15,011 15,011
Program broadcast rights
payable, net of current portion 1,351 1,351 4,903 4,903
Obligations under lease, net of
current portion 443 443 372 372
Deferred taxes -- -- 1,500 1,500
Other liabilities -- -- 2,214 2,214
Senior discount notes 130,833 130,833 134,296 134,296
Senior secured notes -- 36,863 -- 38,076
-------- -------- -------- --------
Total liabilities 137,584 174,449 158,296 196,372
-------- -------- -------- --------
Members' capital 85,516 51,357 91,514 57,352
Accumulated deficit (5,418) (6,634) (8,674) (11,101)
-------- -------- -------- --------
Total members' capital 80,098 44,723 82,840 46,251
-------- -------- -------- --------
Total liabilities and
members' capital $217,682 $219,172 $241,136 $242,623
======== ======== ======== ========
</TABLE>
2
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ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF OPERATIONS AND MEMBERS' CAPITAL
(Unaudited - in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1998
--------------------------- ------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Broadcast revenues $ 645 $ 645 $ 7,757 $ 7,757
Operating expenses:
Programming 287 287 2,330 2,330
Selling, general and administrative 922 922 4,209 4,209
Depreciation and amortization 61 61 849 849
------ ------ -------- -------
Operating expenses 1,270 1,270 7,388 7,388
Operating income (loss) (625) (625) 369 369
Interest income -- -- 45 45
Interest expense 267 267 3,652 4,864
------ ------ -------- -------
Loss before taxes (892) (892) (3,238) (4,450)
Income taxes -- -- 20 20
------ ------ -------- -------
Net loss $( 892) $ (892) $ (3,258) $(4,470)
)
Parent's contribution 450 450 6,000 6,000
Members' capital at
beginning of period -- -- 80,098 44,721
------ ------ -------- -------
Members' capital (deficit)
at end of period $ (442) $ (442) $ 82,840 $46,251
====== ====== ======== =======
</TABLE>
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ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------------------------------------------
1997 1998
------------------------------ -----------------------------
ACME ACME
ACME INTERMEDIATE ACME INTERMEDIATE
TELEVISION HOLDINGS TELEVISION HOLDINGS
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (892) $ (892) $ (3,258) $ (4,470)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation and amortization 61 61 849 849
Amortization of discount on
Senior Notes and
debt issuance costs -- -- 3,463 4,675
Changes in assets and liabilities:
Increase in accounts receivable, net -- -- (318) (318)
Increase in programming rights -- -- (778) (778)
Decrease in prepaid expenses
and other current assets -- -- 1,102 1,102
Decrease in accounts payable -- -- (42) (42)
Increase in accrued expenses 381 381 442 442
Increase in programming
rights payable -- -- 277 277
------- ------ -------- --------
Net cash provided by (used in)
operating activities (450) (450) 1,737 1,737
------- ------ -------- --------
Cash flows from investing activities
Purchase of property and equipment -- -- (2,970) (2,970)
Cash acquired in acquisition -- -- 779 779
Deposits for other stations -- -- (4,725) (4,725)
------- ------ -------- --------
Net cash used in
investing activities -- -- (6,916) (6,916)
------- ------ -------- --------
Cash flows from financing activities
Contribution from parent 450 450 -- --
Repayment of capital leases -- -- (71) (71)
------- ------ -------- --------
Net cash provided by (used in)
financing activities 450 450 (71) (71)
------- ------ -------- --------
Net decrease in cash -- -- (5,250) (5,250)
Cash at beginning of period -- -- 8,820 8,820
------- ------ -------- --------
Cash at end of period $ -- $ -- $ 3,570 $ 3,570
======= ====== ======== ========
Supplemental disclosures of cash flow
information: Cash paid during the period
for:
Interest $ 267 $ 267 $ 24 $ 24
Income taxes -- -- -- --
======= ====== ======== ========
Non cash transactions:
Contribution of the net assets of
ACME Television of Utah, LLC and
ACME Television of New Mexico, LLC
from Parent in exchange for
membership units $ -- $ -- $ 6,000 $ 6,000
======= ====== ======== ========
</TABLE>
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ACME TELEVISION, LLC AND
ACME INTERMEDIATE HOLDINGS, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
ACME INTERMEDIATE HOLDINGS, LLC ("ACME Intermediate") is a holding
company with no assets or independent operations other than its investment in
ACME TELEVIONS, LLC ("ACME TV"). ACME TV, through its subsidiaries, owns,
operates and / or holds licenses or options to acquire six commercially licensed
broadcast television stations (the "Stations") located throughout the United
States.
ACME Intermediate was formed on August 8, 1997. Upon formation, the
Company received a contribution from ACME Television Holdings, LLC (ACME Parent)
of ACME Parent's wholly-owned subsidiaries - ACME Television of Oregon, LLC
("ACME Oregon")and ACME Television of Tennessee, LLC ("ACME Tennessee")and
certain other assets. This contribution was made in exchange for membership
units in the Company and was treated as a transaction between entities under
common control, similar to a pooling of interests. Accordingly, the transaction
was recorded at historical cost and the ACME Intermediate has reflected the
results of operations of the entities contributed for all of the periods
presented.
ACME TV was formed on August 15, 1997. Upon formation, ACME Parent
contributed to ACME TV, through ACME Intermediate, the net assets of ACME
Oregon, ACME Tennessee and other net assets in exchange for membership units.
The accompanying unaudited consolidated financial statements of ACME
INTERMEDIATE include the accounts of ACME INTERMEDIATE and ACME TV. The
accompanying unaudited consolidated financial statements of ACME TV include the
accounts of ACME TV and its subsidiaries. All significant intercompany items and
transactions have been eliminated in each of the Sets of consolidated financial
statements.
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for the fair presentation of
the financial position as of March 31, 1998 and the results of operations for
the three months ended March 31, 1998 have been included. Operating results for
the three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1998. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Annual Reports on Form 10-K of each of ACME TV
and ACME Intermediate for the year ended December 31, 1997.
Note 2 - Acquisitions
The Company was formed in 1997 and operated only one station (under an
LMA) - KWBP Channel 32, serving Portland, Oregon - during the first quarter of
1997. In June 1997, the Company completed its acquisition of KWBP. During the
fourth quarter of 1997, the Company completed its acquisition of WBXX Channel
20, serving Knoxville, Tennessee and launched the station, which was previously
off the air.
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In September 1997, the Company entered into a purchase agreement to
acquire station KPLR Channel 11, serving St. Louis, Missouri, and effective
October 1, 1997, began operating the station pursuant to an LMA. The acquisition
was completed in March 1998, at which time the LMA was terminated. The Company
has not completed its allocation of the excess purchase price of approximately
$145 million to identifiable intangibles, such as FCC license, and goodwill. In
addition, the Company has not recorded deferred tax liability, if any, relating
to the book basis of identifiable intangibles in excess of their tax basis. The
Company anticipates completing its allocation during the quarter ended June 30,
1998. As the acquisition was recorded effective March 31, 1998, this did not
have any impact on the results for the three months ended March 31, 1998.
In early March 1998, the Company entered into an agreement to purchase
station WTVK Channel 46, serving the Ft. Myers / Naples, Florida marketplace and
began operating the station pursuant to an LMA. This transaction is subject to
regulatory approvals and is expected to close by early June 1998.
The Company also owns a 49% interest in KUWB (formerly KZAR) serving
the Salt Lake City, Utah marketplace and has an option to acquire the remaining
interests in the station exercisable upon the granting by the FCC of KUWB's
final license. The Company and the majority owners of KUWB have entered into an
agreement with another broadcaster in the Salt Lake City market to swap KUWB for
KUPX Channel 30. The swap of channels is subject to regulatory approvals, and
ACME TV commenced management of KUPX Channel 30 under an interim LMA and
exchanged call letters in April 1998.
In January 1998 the Company acquired the interest to the construction
permit for station KAUO serving the Albuquerque, New Mexico marketplace. The
Company expects the station to be built and operational by the end of 1998.
Note 3 - Recent pronouncements
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130 "Reporting
Comprehensive Income" which is effective for fiscal periods beginning after
December 15, 1997. SFAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components. The Company believes SFAS
No. 130 will not have an effect on the manner in which the Company currently
reports.
In June 1997, the FASB issued SFAS No. 131 "Disclosures About Segments
of an Enterprise and Related Information" which is effective for fiscal periods
beginning after December 15, 1997. SFAS No. 131 establishes standards for
reporting information about operating segments and for related disclosures about
products, services, geographic areas and major customers. The Company does not
divide its business into segments and, accordingly, does not believe SFAS No.
131 will have any applicability to the Company's financial reporting.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
This Quarterly Report on Form 10-Q contains forward-looking statements
that involve risks and uncertainties. Actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including changes in national and regional economies,
competition in the television business, pricing fluctuations in local and
national advertising, program ratings and changes in programming costs,
regulatory changes and technological advancements, among other factors.
The operating revenues of the Stations are derived primarily from the
sale of advertising time. The stations sell commercial time during the programs
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to national, regional and local advertisers. The networks also sell commercial
time during the programs to national advertisers. Credit arrangements are
determined on an individual customer basis. The Company generally pays
commissions to advertising agencies on local, regional and national advertising
and to national sales representatives on national advertising. All such
commission are reflected as deductions from gross revenues in the accompanying
consolidated financial statements.
The primary operating expenses of the Company consist of employee
salaries, programming, advertising and promotional expenses and depreciation and
amortization.
The following table sets forth certain operating data for ACME
Television and ACME Intermediate for the three months ended March 31, 1998 and
1997:
<TABLE>
<CAPTION>
Three months ended March 31,
Amounts in thousands ---------------------------
1998 1997
-------- -------
<S> <C> <C>
Operating income $ 369 $ (625)
Add:
Time brokerage agreement fees 57 --
Program amortization 1,009 --
Depreciation and amortization 849 61
Corporate expense 673 262
Less:
Program payments 1,151 --
------- ------
Broadcast cash flow $ 1,806 $ (302)
======= ======
</TABLE>
"Broadcast cash flow" means operating income plus time brokerage fee,
program amortization, depreciation and amortization, corporate expense and
non-cash compensation, less scheduled program payments as adjusted to reflect
reductions for impaired or expired rights in connection with acquisitions. The
Company has included broadcast cash flow data because such data are commonly
used as a measure of performance for broadcast companies and are also used by
investors to measure a company's ability to service debt. Broadcast cash flow is
not, and should not be used as, an indicator or alternative to operating income,
net income or cash flow as reflected in the consolidated financial statements,
is not a measure of financial performance under generally accepted accounting
principles and should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with generally accepted
accounting principles.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
Net broadcast revenues for the three months ended March 31, 1998
increased $7.1 million to $7.757 million compared to $645,000 for the three
months ended March 31, 1997. This increase is due to the expansion in the number
of the Company's operating stations as described in "Note 2 - Acquisitions"
above.
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Operating expenses increased to $7.388 million compared to the
prior year quarter's operating expense of $1.270 million. This increase was also
due to the additional stations added since the first quarter of 1997.
Depreciation and amortization expense for the three months ended March
31, 1998 includes $450,000 in the amortization of broadcast licenses. As of
March 31, 1997, no stations had been acquired and, accordingly, there was no
amortization expense for that period.
Interest expense for the current year quarter was $3.652 million for
ACME TV and $4.864 million for ACME Intermediate, primarily representing the
amortization of original issuance discount of the Company's September 1997
issued senior discount notes (ACME Television) and senior secured notes (ACME
Intermediate) along with related amortization of prepaid financing costs. The
interest expense of $267,000 during the first quarter 1997 represents primarily
the interest expense assumed by the Company, on behalf of the seller of KWBP
(Portland), during the interim LMA period.
Apart from the Company's Missouri operations (which pertain solely to
the Company's investment in KPLR), which are organized as traditional "C"
corporations, ACME Intermediate and ACME TV and its operating subsidiaries are
organized as limited liability companies. Accordingly, although the Company is
subject to various minimum state taxes, all federal tax attributes are passed
through to the members of the Company. The Company's Missouri operations, after
deduction of allocable interest charges, generated a net taxable loss and no
benefit has been recorded.
The net loss for ACME TV and for ACME Intermediate for the three months
ended March 31, 1998 was $3.258 million and $4.470 million, respectively,
compared to a net loss of $892,000 for the comparable quarter of the prior year.
These increased net losses are due primarily to the amortization of broadcast
licenses relating to the Companies' newly acquired and operating stations and
the substantially increased interest expense incurred in connection with the
September 1997 issuance of long-term debt to finance these acquisitions.
Broadcast cashflow for the three months ended March 31, 1998 was $1.805
million, an increase of $2.1 million over a negative broadcast cashflow of
$302,000 for the corresponding quarter in 1997. This increase is attributable to
the Company's profitable operations of KPLR which was operated under an LMA from
October 1, 1997 and acquired on March 13, 1998.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows provided by operating activities were $1,737,000 during the
three months ended March 31, 1998 compared to cash flows used by operating
activities of $450,000 during the three months ended March 31, 1997, an increase
of $2,157,000. The increase was primarily due to higher broadcast cash flow.
Cash flows used in investing activities were $6,916,000 during the
three months ended March 31, 1998. There were no investing activities during the
three months ended March 31, 1997.
Cash flows used in investing activities during the three months ended
March 31, 1998 related to capital expenditures and deposits in connection with
the Company's pending acquisition of WTVK - Channel 46 serving Ft. Myers/
Naples, Florida and the CP acquisition for Channel 31 serving Springfield,
Missouri. The Company anticipates that future requirements for capital
expenditures will include those incurred in the continued build-out of its
stations in Salt Lake City, Utah and Albuquerque, New Mexico and the upgrade
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of its other stations and will be financed primarily through a $20 million
capital equipment facility currently being negotiated.
Cash flows used in financing activities were $71,000 related to
repayments of capital leases during the three months ended March 31, 1998
compared to cash flows provided by financing activities of $450,000 related to
founder contributions during the three months ended March 31, 1997.
The Company's existing credit agreement allows for revolving credit
borrowings of up to a maximum of $40,000,000, dependent upon certain financial
ratios of the Company. The revolving credit facility can be used to fund future
acquisitions of broadcast stations and for general corporate purposes. At March
31, 1998 there was no outstanding balance due under the the facility.
The Company believes that internally generated funds from operations,
financings under the Company's capital equipment facility and borrowings under
its credit agreement, if necessary, will be sufficient to satisfy the Company's
cash requirements for its existing operations for the next twelve months and for
the foreseeable future thereafter. The Company expects that any future
acquisitions of television stations would be financed through funds generated
from operations, through borrowings under the existing credit agreement and
through additional debt and equity financings.
PART II - OTHER INFORMATION
ITEM 1. - LEGAL PROCEDINGS
The Company currently and from time to time is involved in litigation
incidental to the conduct of its business. The Company is not currently party to
any lawsuit or proceding which, in the opinion of management, is likely to have
a material adverse effect on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit
Number Exhibit Description
------ -------------------
3.1 Certificate of Formation of ACME Intermediate Holdings, LLC,
incorporated by reference to Exhibit 3.1 of ACME Intermediate
Holdings, LLC's Registration Statement on Form S-4, File No.
333-40277 filed on November 14, 1997 (the "Intermediate Registration
Statement")
3.2 Limited Liability Company Agreement of ACME Intermediate Holdings,
LLC, incorporated by reference to Exhibit 3.2 of Intermediate
Registration Statement.
3.3 Certificate of Formation of ACME Television, LLC, incorporated by
reference to Exhibit 3.1 of ACME Television, LLC's Registration
Statement on Form S-4, File No. 333-40281, filed on November 14,
1997 (the "Television Registration Statement").
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3.4 Limited Liability Company Agreement of ACME Television, LLC,
incorporated by reference to Exhibit 3.2 of the Television
Registration Statement.
4.1 Indenture, dated September 30, 1997, by and among ACME Intermediate
Holdings, LLC and ACME Intermediate Finance, Inc., as Issuers, and
Wilmington Trust Company, incorporated by reference to Exhibit 4.2
of the Intermediate Registration Statement.
4.2 Form of Securities of ACME Intermediate Holdings, LLC, incorporated
by reference to Exhibit 4.3 of the Intermediate Registration
Statement.
4.3 Indenture, dated September 30, 1997, by and among ACME Television,
LLC and ACME Finance Corporation, as Issuers, the Guarantors named
therein, and Wilmington Trust Company, incorporated by reference to
Exhibit 4.1 of the Television Registration Statement.
4.4 Form of Securities of ACME Television, LLC incorporated by reference
to Exhibit 4.2 of the Television Registration Statement.
*4.5 First Supplemental Indenture, dated February 11, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company.
*4.6 Second Supplemental Indenture, dated March 13, 1998, by and among
ACME Television, LLC and ACME Finance Corporation, the Guarantors
named therein, and Wilmington Trust Company.
*10.1 Agreement, dated January 30, 1998, by and between ACME Television
Licenses of Tennessee, LLC, Ruth Payne Carman (dba E&R
Communications) and the Carman-Holly Partnership
*10.2 Asset Purchase Agreement, dated March 2, 1998, by and between ACME
Television, LLC and Second Generation of Florida, Ltd.
*10.3 Time Brokerage Agreement, dated March __, 1998, by and between ACME
Television, LLC and Second Generation of Florida, Ltd.
27.1 Financial Data Schedule for ACME Intermediate Holdings, LLC
27.2 Financial Data Schedule for ACME Television, LLC
- ------------
* Filed herewith
(b) Reports on Form 8-K. The Company filed no reports on Form 8-K during the
three months ended March 31, 1998.
10
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME TELEVISION, LLC.
Date: May 14, 1998 By: /s/ Doug Gealy
------------------------------
Doug Gealy, President
Date: May 14, 1998 By: /s/ Thomas D. Allen
------------------------------
Thomas D. Allen
Executive Vice President / CFO
(principal financial officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACME INTERMEDIATE HOLDINGS, LLC.
Date: May 14, 1998 By: /s/ Doug Gealy
-------------------------------
Doug Gealy, President
Date: May 14, 1998 By: /s/ Thomas D. Allen
-------------------------------
Thomas D. Allen
Executive Vice President / CFO
(principal financial officer)
11
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EXHIBIT 4.5
FIRST SUPPLEMENTAL INDENTURE, dated as of February 11, 1998 among ACME
TELEVISION, LLC, a Delaware limited liability company (the "Company"), and ACME
FINANCE CORPORATION, a Delaware corporation ("Finance" and, together with the
Company, jointly and severally, the "Issuers"), the Guarantors (as defined in
the Indenture (as defined herein) and referred to herein as the "Original
Guarantors"), ACME TELEVISION LICENSES OF UTAH, LLC, a Delaware limited
liability company, ACME TELEVISION OF NEW MEXICO, LLC, a Delaware limited
liability company, and ACME TELEVISION OF UTAH, LLC, a Delaware limited
liability company, (each an "Additional Guarantor" and, together the "Additional
Guarantors"), and ACME TELEVISION HOLDINGS OF TENNESSEE, LLC, a Delaware limited
liability company, ACME TELEVISION HOLDINGS OF OREGON, LLC, a Delaware limited
liability company, ACME TELEVISION LICENSES OF TENNESSEE, LLC, a Delaware
limited liability company, ACME TELEVISION LICENSES OF OREGON, LLC, a Delaware
limited liability company, ACME TELEVISION OF TENNESSEE, LLC, a Delaware limited
liability company, and ACME TELEVISION OF OREGON, LLC, a Delaware limited
liability company, (each a "Successor Guarantor" and, together the "Successor
Guarantors" and, together with the Additional Guarantors and the Original
Guarantors, the "Guarantors"), and WILMINGTON TRUST COMPANY (the "Trustee"), as
Trustee under the Indenture.
WHEREAS, the Company, the Original Guarantors and the Trustee have
previously entered into an Indenture dated as of September 30, 1997 (the
"Indenture") relating to the Issuers' 10 7/8% Senior Discount Notes due 2004
(the "Notes");
WHEREAS, with respect to the Additional Guarantors, Section 9.01 of the
Indenture provides that the Company, the Original Guarantors and the Trustee
may, without the written consent of the holders of the outstanding Notes, amend
the Indenture as provided therein to provide for the creation of subsidiaries by
the Issuers;
WHEREAS, with respect to the Successor Guarantors, Section 5.02 of the
Indenture provides for the substitution of successor entities into which an
Original Guarantor is merged;
WHEREAS, the Board of Directors or the Majority Member of each of the
Issuers and the Original Guarantors have consented to this First Supplemental
Indenture; and
WHEREAS, all acts and things prescribed by the Certificate of Formation
and the Limited Liability Company Agreements (each as now in effect) of the
Additional and Successor Guarantors necessary to make this First Supplemental
Indenture a valid instrument legally binding on each of the Additional and
Successor Guarantors for the purposes herein expressed, in accordance with its
terms, have been duly done and performed;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Issuers, the Original Guarantors, the Additional Guarantors, the Successor
Guarantors and the Trustee hereby agree for the benefit of each other and the
equal and ratable benefit of the holders of the Notes as follows:
<PAGE> 2
1. Additional Guarantors. As of the date hereof and pursuant to this
First Supplemental Indenture, ACME Television Licenses of Utah, LLC, a Delaware
limited liability company, ACME Television of New Mexico, LLC, a Delaware
limited liability company, and ACME Television of Utah, LLC, a Delaware limited
liability company, each hereby becomes a Guarantor under the Indenture in
accordance with the terms and conditions of the Indenture and shall each assume
all rights and obligations of a Guarantor thereunder.
2. Compliance with and Fulfillment of Condition of Article IX. Each
Additional Guarantor's execution and delivery of this First Supplemental
Indenture and the respective Guarantee (along with such documentation relating
thereto as the Trustee shall require, including, without limitation, an Opinion
of Counsel as to the enforceability of each such Guarantee and the First
Supplemental Indenture and an Officer's Certificate from each entity) fulfills
its requirements under Section 9.01 of the Indenture.
3. Successor Guarantors. As of the date hereof and pursuant to this
First Supplemental Indenture, ACME Television Holdings of Oregon, LLC, a
Delaware limited liability company, ACME Television Holdings of Tennessee, LLC,
a Delaware limited liability company, ACME Television Licenses of Oregon, LLC, a
Delaware limited liability company, ACME Television Licenses of Tennessee, LLC,
a Delaware limited liability company, ACME Television of Oregon, LLC, a Delaware
limited liability company, and ACME Television of Tennessee, LLC, a Delaware
limited liability company, each hereby expressly assumes all of the obligations
of ACME Television Holdings of Oregon, LLC, an Oregon limited liability company,
ACME Television Holdings of Tennessee, LLC, a Tennessee limited liability
company, ACME Television Licenses of Oregon, LLC, an Oregon limited liability
company, ACME Television Licenses of Tennessee, LLC, a Tennessee limited
liability company, ACME Television of Oregon, LLC, an Oregon limited liability
company, and ACME Television of Tennessee, LLC, a Tennessee limited liability
company, respectively, under the Indenture and each such Guarantee and the
obligations thereunder shall remain in full force and effect.
4. Compliance with and Fulfillment of Condition of Article V. Each
Successor Guarantor's execution and delivery of this First Supplemental
Indenture and the respective Guarantee (along with such documentation relating
thereto as the Trustee shall require, including, without limitation, an Opinion
of Counsel as to the enforceability of each such Guarantee and the First
Supplemental Indenture and an Officer's Certificate from each entity) fulfills
its requirements under Section 5.01 of the Indenture.
5. Construction. For all purposes of this First Supplemental Indenture,
except as otherwise herein expressly provided or unless the context otherwise
requires: (i) the terms and expressions used herein shall have the same meanings
as corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
First Supplemental Indenture refer to this First Supplemental Indenture as a
whole and not to any particular Section hereof.
<PAGE> 3
6. Trustee Acceptance. The Trustee accepts the amendment of the
Indenture effected by this First Supplemental Indenture, as hereby amended, but
only upon the terms and conditions set forth in the Indenture, as hereby
amended, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee in the performance of its duties
and obligations under the Indenture, as hereby amended. Without limiting the
generality of the foregoing, the Trustee has no responsibility for the
correctness of the recitals of fact herein contained which shall be taken as the
statements of each of the Issuers and the Guarantors, respectively, and makes no
representations as to the validity or enforceability against any of the Issuers
and the Guarantors.
7. Indenture Ratified. Except as expressly amended hereby, the Indenture
is in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
8. Holders Bound. This First Supplemental Indenture shall form a part of
the Indenture for all purposes, and every holder of the Notes heretofore and
hereafter authenticated and delivered shall be bound hereby.
9. Successors and Assigns. This First Supplemental Indenture shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
10. Counterparts. This First Supplemental Indenture may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original, and all of such counterparts shall together constitute one and the
same instrument.
11. Governing Law. This First Supplemental Indenture and the Guarantees
hereunder shall be governed by and construed in accordance with the internal
laws of the State of New York without giving effect to principles of conflicts
of laws.
<PAGE> 4
IN WITNESS WHEREOF, the Issuers, the Guarantors and the Trustee have
caused this First Supplemental Indenture to be duly executed as of the date
first above written.
ISSUERS:
ACME TELEVISION, LLC
ACME FINANCE CORPORATION
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- -----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
GUARANTORS:
SUCCESSOR GUARANTORS:
ACME TELEVISION HOLDINGS OF OREGON, LLC
ACME TELEVISION HOLDINGS OF TENNESSEE, LLC
ACME TELEVISION LICENSES OF OREGON, LLC
ACME TELEVISION LICENSES OF TENNESSEE, LLC
ACME TELEVISION OF TENNESSEE, LLC
ACME TELEVISION OF OREGON, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Successors Guarantors)
<PAGE> 5
ADDITIONAL GUARANTORS:
ACME TELEVISION LICENSES OF UTAH, LLC
ACME TELEVISION OF NEW MEXICO, LLC
ACME TELEVISION OF UTAH, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Additional Guarantors)
ORIGINAL GUARANTORS:
ACME TELEVISION LICENSES OF MISSOURI, INC.
ACME TELEVISION HOLDINGS OF UTAH, LLC
ACME TELEVISION HOLDINGS OF NEW MEXICO, LLC
ACME TELEVISION LICENSES OF NEW MEXICO, LLC
ACME SUBSIDIARY HOLDINGS III, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Original Guarantors)
WILMINGTON TRUST COMPANY
ATTEST:
By: /s/ Bruce L. Bisson By: /s/ C. Paglia
----------------------------- ----------------------------
Name: Bruce L. Bisson Name: Charlotte Paglia
Title: Vice President Title: Financial Services
Officer
<PAGE> 1
EXHIBIT 4.6
SECOND SUPPLEMENTAL INDENTURE, dated as of March 13, 1998 among ACME
TELEVISION, LLC, a Delaware limited liability company (the "Company"), and ACME
FINANCE CORPORATION, a Delaware corporation ("Finance" and, together with the
Company, jointly and severally, the "Issuers"), the Guarantors (as defined in
the Indenture (as defined herein) and referred to herein as the "Original
Guarantors"), the Additional Guarantors (as defined in the First Supplemental
Indenture (as defined herein) and referred to herein as the "Additional
Guarantors"), the Successor Guarantors (as defined in the First Supplemental
Indenture and referred to herein as the "Successor Guarantors") and ACME
Television of Missouri, Inc., a Missouri corporation ("Television Missouri"),
and ACME Television Licenses of Missouri, LLC, a Missouri limited liability
company ("Licenses Missouri"), (each an "Additional Missouri Guarantor" and,
together the "Additional Missouri Guarantors," and, together with the Additional
Guarantors, the Successor Guarantors and the Original Guarantors, the
"Guarantors"), and WILMINGTON TRUST COMPANY (the "Trustee"), as Trustee under
the Indenture.
WHEREAS, the Issuers, the Original Guarantors and the Trustee have
previously entered into an Indenture dated as of September 30, 1997 (the
"Indenture") relating to the Issuers' 10 7/8% Senior Discount Notes due 2004
(the "Notes") and the Issuers, the Original Guarantors, the Additional
Guarantors, the Successor Guarantors and the Trustee have previously entered
into a First Supplemental Indenture dated as of February 11, 1998 (the "First
Supplemental Indenture") which amended the Indenture to provide for the
guarantees of the Additional Guarantors and the Successor Guarantors;
WHEREAS, with respect to the Additional Missouri Guarantors, Section
9.01 of the Indenture provides that the Issuers, the Original Guarantors and the
Trustee may, without the written consent of the holders of the outstanding
Notes, amend the Indenture as provided therein to provide for the acquisition of
subsidiaries by the Issuers;
WHEREAS, the Board of Directors or the Majority Member of each of the
Issuers, and the Original Guarantors have consented to this Second Supplemental
Indenture; and
WHEREAS, all acts and things prescribed by the Certificate of Formation
and the Operating Agreement (each as now in effect) of Licenses Missouri and the
Articles of Incorporation and the Bylaws (each as now in effect) of Television
Missouri necessary to make this Second Supplemental Indenture a valid instrument
legally binding on each of the Additional Missouri Guarantors for the purposes
herein expressed, in accordance with its terms, have been duly done and
performed;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Issuers, the Original Guarantors, the Additional Guarantors, the Successor
Guarantors, the Additional Missouri Guarantors and the Trustee hereby agree for
the benefit of each other and the equal and ratable benefit of the holders of
the Notes as follows:
<PAGE> 2
1. Additional Guarantors. As of the date hereof and pursuant to this
Second Supplemental Indenture, ACME Television of Missouri, Inc., a Missouri
corporation, and ACME Television Licenses of Missouri, LLC, a Missouri limited
liability company, each hereby becomes a Guarantor under the Indenture in
accordance with the terms and conditions of the Indenture and shall each assume
all rights and obligations of a Guarantor thereunder.
2. Compliance with and Fulfillment of Condition of Article IX. Each Additional
Missouri Guarantor's execution and delivery of this Second Supplemental
Indenture and the respective Guarantee (along with such documentation relating
thereto as the Trustee shall require, including, without limitation, an Opinion
of Counsel as to the enforceability of each such Guarantee and the Second
Supplemental Indenture and an Officer's Certificate from each entity) fulfills
its requirements under Section 9.01 of the Indenture.
3. Construction. For all purposes of this Second Supplemental Indenture,
except as otherwise herein expressly provided or unless the context otherwise
requires: (i) the terms and expressions used herein shall have the same meanings
as corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Second Supplemental Indenture refer to this Second Supplemental Indenture as a
whole and not to any particular Section hereof.
4. Trustee Acceptance. The Trustee accepts the amendment of the
Indenture effected by this Second Supplemental Indenture, as hereby amended, but
only upon the terms and conditions set forth in the Indenture, as hereby
amended, including the terms and provisions defining and limiting the
liabilities and responsibilities of the Trustee in the performance of its duties
and obligations under the Indenture, as hereby amended. Without limiting the
generality of the foregoing, the Trustee has no responsibility for the
correctness of the recitals of fact herein contained which shall be taken as the
statements of each of the Issuers and the Guarantors, respectively, and makes no
representations as to the validity or enforceability against any of the Issuers
and the Guarantors.
5. Indenture Ratified. Except as expressly amended hereby, the Indenture
is in all respects ratified and confirmed and all the terms, conditions and
provisions thereof shall remain in full force and effect.
6. Holders Bound. This Second Supplemental Indenture shall form a part
of the Indenture for all purposes, and every holder of the Notes heretofore and
hereafter authenticated and delivered shall be bound hereby.
7. Successors and Assigns. This Second Supplemental Indenture shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
<PAGE> 3
8. Counterparts. This Second Supplemental Indenture may be executed in
any number of counterparts, each of which when so executed shall be deemed to be
an original, and all of such counterparts shall together constitute one and the
same instrument.
9. Governing Law. This Second Supplemental Indenture and the Guarantees
hereunder shall be governed by and construed in accordance with the internal
laws of the State of New York without giving effect to principles of conflicts
of laws.
<PAGE> 4
IN WITNESS WHEREOF, the Issuers, the Guarantors and the Trustee have
caused this Second Supplemental Indenture to be duly executed as of the date
first above written.
ISSUERS:
ACME TELEVISION, LLC
ACME FINANCE CORPORATION
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
GUARANTORS:
ADDITIONAL MISSOURI GUARANTORS:
ACME TELEVISION OF MISSOURI, INC.
ACME TELEVISION LICENSES OF MISSOURI, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Additional Missouri Guarantors)
<PAGE> 5
SUCCESSOR GUARANTORS:
ACME TELEVISION HOLDINGS OF OREGON, LLC
ACME TELEVISION HOLDINGS OF TENNESSEE, LLC
ACME TELEVISION LICENSES OF OREGON, LLC
ACME TELEVISION LICENSES OF TENNESSEE, LLC
ACME TELEVISION OF TENNESSEE, LLC
ACME TELEVISION OF OREGON, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Successor Guarantors)
ADDITIONAL GUARANTORS:
ACME TELEVISION LICENSES OF UTAH, LLC
ACME TELEVISION OF NEW MEXICO, LLC
ACME TELEVISION OF UTAH, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s/ Thomas Allen
----------------------------- -----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Additional Guarantors)
<PAGE> 6
ORIGINAL GUARANTORS:
ACME TELEVISION LICENSES OF MISSOURI, INC.
ACME TELEVISION HOLDINGS OF UTAH, LLC
ACME TELEVISION HOLDINGS OF NEW MEXICO, LLC
ACME TELEVISION LICENSES OF NEW MEXICO, LLC
ACME SUBSIDIARY HOLDINGS III, LLC
ATTEST:
By: /s/ Douglas E. Gealy By: /s /Thomas Allen
----------------------------- ----------------------------
Douglas Gealy Thomas Allen
President and Chief Operating Executive Vice-President and
Officer Chief Financial Officer
(for each of the above-listed Original Guarantors)
WILMINGTON TRUST COMPANY
ATTEST:
By: /s/ Bruce L. Bisson By: /s/ C. Paglia
----------------------------- ----------------------------------
Name: Bruce L. Bisson Name: Charlotte Paglia
Title: Vice President Title: Financial Services Officer
<PAGE> 1
EXHIBIT 10.1
AGREEMENT
This Agreement is made this 30th day of January, 1998 by and between
ACME Television Licenses of Tennessee, LLC ("Acme"), Ruth Payne Carman, d/b/a
E&R Communications ("E&R") and the Carman-Holly Partnership (the "Partnership")
(collectively, "the Parties").
WHEREAS, E&R filed an application (the "Application") with the
Federal Communications Commission (the "Commission" or "FCC") for a construction
permit to build a new television station on Channel 31 at Harrison, Arkansas
(the "Station"); and
WHEREAS, three (3) other parties (sometimes referred to as the
"Competing Applicants") filed separate and mutually exclusive applications for a
construction permit to build a new television station on Channel 31 at Harrison,
Arkansas; and
WHEREAS, E&R has executed separate settlement agreements (the
"Settlement Agreements") with each of the Competing Applicants to dismiss their
respective applications with prejudice and to grant E&R's application, subject
to the approval of the FCC; and
WHEREAS, the Partnership has assisted E&R to achieve the Settlement
Agreements with the Competing Applicants; and
WHEREAS, the Partnership and E&R require the financial assistance of
Acme to provide funds to effect the Settlement Agreements; and
<PAGE> 2
WHEREAS, Acme is capable of providing the necessary funds to effect
the Settlement Agreements and is willing to do so under the terms and conditions
set forth herein;
NOW, THEREFORE, in light of the mutual promises and covenants
contained herein, Acme, E&R and the Partnership agree as follows:
1. Acme will be substituted for E&R as the sole surviving applicant for the
Station in exchange for that right, ACME will pay Carman $425,000 at the closing
of this Agreement as specified herein. The aforesaid monies will be applied as a
credit to the monies to be paid ACME under paragraph 3 hereof upon exercise of
the Partnership's rights thereunder.
2. Within one business day after execution of this Agreement and the filing of
this Agreement, as well as the Settlement Agreements, with the FCC (if so filed
by January 30, 1998), ACME shall establish a separate account with NationsBank,
N.A. ("NationsBank") in St. Louis, Missouri and place in such account the sum of
Two Million Two Hundred Twenty-Five Thousand ($2,225,000) (the "Settlement
Monies"), which sum represents the total amount of monies to be paid to E&R
under paragraph 1 of this Agreement and the amounts which E&R is obligated to
pay the Competing Applicants under the Settlement Agreements. As soon thereafter
is practicable, ACME, E&R and the Partnership shall enter into an Escrow
Agreement with NationsBank as the Escrow Agent pursuant to an Escrow Agreement
in the form of Exhibit A annexed hereto, subject to any amendments as may be
required by NationsBank.
2
<PAGE> 3
3. Notwithstanding anything herein to the contrary, the Partnership shall have
an irrevocable right and obligation to acquire all of ACME's right and interest
as the surviving applicant or, in the event of FCC action, the construction
permit for the Station, by (a) making a payment to ACME of an amount equal to
$3,337,500 plus (i) ACME's expenses incurred by ACME in conjunction with the
negotiation, execution, and implementation of this Agreement, including legal
fees and (ii) an amount equal to any and all interest on the Settlement Monies
accrued from the date of placement of the Settlement Monies in an escrow account
with NationsBank through the date of exercise of the Partnership's rights
hereunder, and (b) accepting an assignment of ACME's rights and obligations
under The WB Television Network Affiliation Agreement (the "WB Affiliates
Agreement") which ACME has executed or will execute in due course for the
Station: provided, that the foregoing monies to be paid to ACME shall be reduced
by $100,000 if the Partnership exercises its rights within 30 days from the date
hereof, $50,000 if exercised within 60 days from the date hereof, and $25,000 if
exercised within 90 days from the date hereof. Simultaneously with the payment
of the foregoing monies and the acceptance of the assignment of the WB
Affiliation Agreement, ACME will execute an appropriate notice to NationsBank,
as the escrow agent under the aforementioned Escrow Agreement, assigning to the
Partnership any and all rights and obligations which ACME will have under that
Escrow Agreement, including the right to a return of the Settlement Monies plus
interest accrued thereon. The Partnership's right under this paragraph to
acquire ACME's interest in the application or, as the case may be, the
construction permit
3
<PAGE> 4
for the Station shall expire if not exercised within 120 days from the date of
this Agreement. In the event that the Partnership does not fulfill its
obligation within the aforesaid 120-day period, then, in that event, ACME will
have no obligation to pay Carman $300,000 of the monies which ACME is otherwise
obligated to pay Carman under paragraph 1 of the Agreement.
4. Within five (5) business days of any written request from the Partnership,
Acme shall provide documentation of the expenses to be paid pursuant to
Paragraph 3 hereof.
5. If and when the Partnership exercises its rights under paragraph 3 of this
Agreement, ACME and the Partnership shall, by a letter signed by an officer of
each party, notify the Commission within one business day thereafter of the
Partnerships exercise of its rights.
6. The Partnership and Acme shall cooperate with each other in the preparation
and prosecution of any joint request or other pleading necessary to secure FCC
approval of this Agreement.
7. Unless the Partnership exercises its rights under paragraph 3 of this
Agreement, the closing (the "Closing") of the transactions contemplated in this
Agreement and the Settlement Agreements shall occur at the offices of ACME's
counsel in Washington, DC at a mutually convenient time within ten (10) days
after the FCC order approving this Agreement and the Settlement Agreements,
along with the substitution of ACME as the party to receive the Construction
Permit for the Station, becomes "final," meaning that the order is no longer
subject to reconsideration or review by the FCC or a court of competent
4
<PAGE> 5
jurisdiction. At the Closing, the Settlement Monies shall be distributed in
accordance with the terms of the Escrow Agreement.
8. Any notice or other communication required or authorized by this Agreement
shall be delivered in person, by certified mail-return receipt requested
(postage prepaid) or by overnight courier (charges prepaid) to the parties at
the address specified below (or at any other address with any other party may
specify in writing to the other party:
Douglas Gealy
If to Acme: ACME Television Licenses of Tennessee, LLC
10829 Olive Boulevard
St. Louis, MO 63141
Ruth Payne Carman, d/b/a E&R Communications
If to E&R: 5864 New Harmony Road
Hartsville, TN 37074
Donald E. Holley
24561 Stonington Road
Omaha, AR 72662
If to Partnership:
Ruth Payne Carman
5864 New Harmony Road
Hartsville, TN 37074
9. This Agreement constitutes the entire understanding of the parties and
supersedes any and all prior or contemporaneous agreements, contracts and
understandings, whether oral or written. This Agreement may not be amended
except in a writing executed by all parties.
5
<PAGE> 6
10. This Agreement shall be governed by the laws of the District of Columbia
without regard to the conflict of laws provisions.
11. This Agreement may be executed in counterparts, and all counterparts shall
be collectively deemed to be one and the same document.
12. This Agreement shall terminate upon any one of the following events: (a) the
FCC issues an order which denies or dismisses any pleading requesting approval
of this Agreement: provided, that ACME may, in the exercise of its sole
discretion, postpone termination until such order becomes final; or (b) the FCC
has not issued an order approving this Agreement by August 1, 1998 or, if issued
such order does not become final by September 30, 1998.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement with the
intent of it being effective as of the date first set forth above
ACME TELEVISION, LICENSES OF
TENNESSEE, LLC
By: /s/ Douglas E. Gealy
--------------------------------
RUTH PAYNE CARMAN, D/B/A E&R
COMMUNICATIONS
By: /s/ Ruth P. Carmen
--------------------------------
CARMAN HOLLY PARTNERSHIP
By: /s/ Ruth P. Carmen
--------------------------------
7
<PAGE> 8
Exhibit A - Escrow Agreement has been intentionally omitted by the
Registrants.
A copy of this omitted Exhibit will be provided to the Securities and
Exchange Commission upon request.
8
<PAGE> 1
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is dated as of March 2, 1998, and is between Second
Generation of Florida, Ltd. (the "Seller"), a limited liability company
organized under the laws of Ohio, and ACME Television, LLC (the "Buyer"), a
limited liability company organized under the laws of Delaware.
R E C I T A L S:
1. Seller holds licenses from the Federal Communications Commission (the
"FCC") for broadcast television station WTVK-TV in Naples, Florida (the
"Station") and owns or holds other assets used or useful in the operation of the
Station.
2. Seller desires to sell, assign, and transfer, to the fullest extent
permitted by law, the FCC licenses and other assets owned or held by Seller and
used or useful in the operation of the Station.
3. To the fullest extent permitted by law, Buyer desires to acquire the
FCC licenses for the Station and other assets owned or held by Seller and used
or useful in the operation of the Station, all under the terms described herein.
4. On this same day, Seller and Buyer shall, subject to the expiration
of any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 ("HSR"), execute a Local Marketing Agreement ("LMA")
under which Buyer shall provide programming to be aired on the Station, which
shall remain under the exclusive control of Seller pending consummation of the
transactions contemplated by this Agreement.
5. Within fourteen days hereof, Seller shall enter into an affiliation
agreement with The WB Television Network and, simultaneously therewith, a
consulting agreement with Buyer or one of its executives to facilitate the
Station's transition to The WB Television Network.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants contained herein, the parties hereby agree as follows:
ARTICLE 1 EXCHANGE OF CONSIDERATION
1.1 CONSIDERATION CONVEYED BY SELLER. At the Closing, as defined
herein, Seller shall provide Buyer with the following consideration:
<PAGE> 2
1.1.1 STATION ASSETS. Subject to the terms and conditions of this
Agreement, Seller shall, to the fullest extent permitted by law, assign, convey,
transfer, and deliver to Buyer, and Buyer shall, to the fullest extent permitted
by law, acquire from Seller free and clear of all debts, liens, claims,
financing leases, security interests and encumbrances of any kind whatsoever
(except as permitted herein), all of Seller's right, title and interest in and
to Seller's assets, real and personal, tangible and intangible, of every kind
and description, owned or held by Seller and used or useful in the operation of
the Station (collectively the "Station Assets") except the assets described in
Section 1.1.2. of this Agreement. The Station Assets consist of the following
items:
(a) GOVERNMENT LICENSES. All licenses and other authorizations
issued by the FCC to Seller (the "FCC Licenses") with respect to the Station, as
well as any licenses and authorizations issued by any other governmental
authority, true copies of which are included in Schedule 1 to this Agreement,
together with any and all applications pending before the FCC or any other
governmental authority with respect to renewals, extensions, or modifications
thereof.
(b) TANGIBLE PERSONAL PROPERTY. All equipment, furniture,
fixtures, office materials and supplies, spare parts, and other tangible
personal property of every kind and description owned as of the date of this
Agreement by Seller and used or useful in the operation of the Station, with all
material items set forth on Schedule 2 to this Agreement, less any non-material
tangible assets consumed in the ordinary course of the Station's business after
the date hereof, and any additions, improvements, replacements, and alterations
made thereto in the ordinary course of business between the date of this
Agreement and the Closing Date, as defined herein. For purposes of this
paragraph only, a material asset is deemed to be one with a value of at least
$500.
(c) CONTRACTS. All rights in and under certain contracts,
agreements, and leases of any kind (except those relating to real property and
the sale of time on the Station) relating to the operation of the Station which
Buyer has agreed to assume, whether in existence as of the date of this
Agreement or entered into or acquired between the date hereof and the Closing
Date, as defined herein, in the ordinary course of business (all of the
foregoing collectively referred to herein as the "Contracts"): provided, that
Schedule 3 includes true copies of all written Contracts as well as accurate
descriptions of all oral Contracts to be assumed by Buyer; provided further,
that, except as provided herein, Buyer shall not assume any Contract not
identified in Schedule 3; provided further, that no Contract created subsequent
to the date of this Agreement shall be assigned to Buyer without Buyer's written
approval unless such Contract can be canceled upon 30 days notice without
liability to Buyer; and provided further, that Seller shall promptly provide
Buyer with a true copy or, in the event of an oral agreement, an accurate
description of all material terms, of any such Contract entered into subsequent
to the date of this Agreement which is to be assumed by Buyer ; and, provided
further, that, notwithstanding anything to the contrary in this Agreement,
Seller shall execute a 5-year affiliation agreement with The
<PAGE> 3
WB Television Network on or before March 6, 1998 which shall be a Contract to be
assumed by Buyer at Closing. To assist Seller in the transition to The WB
Television Network, Seller shall simultaneously therewith enter into a
consulting agreement with Buyer or one of its executives: provided, that in no
event shall such consulting agreement entitle Buyer or its executive to assume
control over any aspect of Station operations, including programming, personnel
or financing.
(d) LEASES. All leases relating to real property (the "Real
Estate Leases"), true copies of which or, in the case of oral agreements,
summaries of which are annexed hereto in Schedule 4.
(e) TIME SALES AGREEMENTS. All agreements, including trade and
barter agreements (collectively, the "Trade Agreements"), for the sale of time
on the Station in the ordinary course of business and in accordance with past
practices of the Station: provided, that Buyer shall only assume Trade
Agreements which involve the provision of goods or services related to and
useful in the business of the Station, and which may be satisfied by ROS
inventory and scheduling.
(f) MARKETING ITEMS. All trademarks, call signs, service marks,
franchises, patents, trade names, jingles, fictitious names, slogans, and
logotypes owned and used by Seller as of the date hereof, as well as those
acquired between the date hereof and the Closing Date in connection with the
operation of the Station.
(g) PROGRAMMING AND COPYRIGHTS. All programs and programming
materials and elements of whatever form or nature owned or licensed for use by
Seller and used in the operation of the Station as of the date hereof (except
those included in the Excluded Assets), together with all such programs,
materials, elements, intellectual property rights, and copyrights acquired
between the date hereof and the Closing Date, whether recorded on tape or any
other medium or intended for live performance, and whether completed or in
production, and all related common law and statutory copyrights owned or
licensed for use by Seller and used or useful in the operation of the Station.
(h) RECORDS. Any and all files, program logs, public inspection
files, and other records that relate to the operation of the Station in the
possession of Seller on the Closing Date, except Seller's records that pertain
to the organization of Seller.
(i) GOODWILL. All of Seller's goodwill in and going concern value
of the Station.
(j) ACCOUNTS RECEIVABLE. All notes and accounts receivable of
Seller relating to or arising out of the sale of advertising time on the Station
at any time on or after the date of the commencement of the LMA.
<PAGE> 4
1.1.2 EXCLUDED ASSETS. Notwithstanding the foregoing, there shall
be excluded from the Station Assets and retained by Seller, to the extent in
existence on the Closing Date, the following assets (the "Excluded Assets"):
(a) ACCOUNTS RECEIVABLE. All notes and accounts receivable
of Seller relating to or arising out of the sale of advertising time on the
Station prior to the date of the commencement of the LMA ("Seller Accounts
Receivable").
(b) CASH AND INVESTMENTS. All cash on hand or in bank
accounts and all cash equivalents and similar investments of Seller, such as
certificates of deposit.
(c) PREPAID ITEMS. All deposits, reserves, and prepaid
expenses and taxes (unless prorated as provided in Section 1.3. of this
Agreement).
(d) PERSONAL PROPERTY. All non-material tangible personal
property disposed of or consumed in the ordinary course of business of the
Station.
(e) INSURANCE. All contracts of insurance.
(f) SECURITIES. Any and all securities owned or held by
Seller.
(g) CLAIMS. Any and all claims of Seller with respect to
transactions which transpire prior to the Closing Date, including, without
limitation, claims for tax refunds.
(h) AGREEMENTS. Agreements, contracts, and leases not
assumed by Buyer in accordance with Section 1.1.1.(c), (e) and (f) of this
Agreement.
(i) MISCELLANEOUS ASSETS. Pension, profit-sharing, and
savings plans and trusts and any assets thereof.
(j) ORGANIZATIONAL DOCUMENTS. Seller's books and original
records that pertain to the organization, existence or capitalization of Seller.
1.1.3 SELLER'S RETAINED LIABILITIES. The Station Assets shall be
sold and conveyed to Buyer free and clear of all debts, liens, claims, financing
leases, security interests and encumbrances or liabilities of any kind or nature
except for liens for current taxes not yet due and payable (the "Permitted
Encumbrances"). Unless reflected in a document executed by Buyer, Buyer shall
not assume or be liable for (a) any contract, agreement or lease not
specifically assumed by Buyer hereunder; (b) any obligation of Seller arising
out of any contract of insurance, any pension, retirement or profit-sharing
plan, or any trust or other benefit plan; (c) any litigation, proceeding, or
claim relating to the business or operation of the Station prior to the Closing
(unless such claim is based on
<PAGE> 5
Buyer's conduct under the LMA), regardless of whether such litigation,
proceeding, or claim is pending, threatened, or asserted before, on, or after
the Closing; or (d) any obligation (including but not limited to wages,
salaries, vacation pay, payroll taxes, COBRA coverage or severance payments) to
or for persons employed by Seller (recognizing that Buyer has no obligation to
employ any of Seller's employees except as specified in Schedule 3).
1.2 PURCHASE PRICE.
At the Closing, as defined herein, Buyer will provide Seller with
Fifteen Million Five Hundred Thousand Dollars ($15,500,000) in consideration
(the "Purchase Price") which will be conveyed in accordance with the terms of
this Section.
1.2.1 CASH AT CLOSING. Buyer shall pay Seller at Closing Fifteen
Million Five Hundred Thousand Dollars ($15,500,000) by wire transfer of
immediately available federal funds pursuant to instructions from Seller, less
adjustments made pursuant to this Agreement.
1.2.2 SELLER'S OWNERSHIP ACQUISITION. At the Closing, Seller will
acquire from ACME Television Holdings, LLC ("ACME") and the Canadian Imperial
Bank of Commerce ("CIBC") Twenty Five Hundred (2500) "Seller Units," which are
defined and valued at $1000 in ACME's Limited Liability Operating Agreement of
June 17, 1997 (the "Operating Agreement"), subject to pro rata dilution for
financing agreements, management incentives, and acquisition of capital after
Closing from third parties, in exchange for payment of One Million Four Hundred
Fifty Three Thousand Five Hundred Dollars ($1,453,500) in cash to CIBC for
Fourteen Hundred Fifty Three and one-half (1453.5) Seller Units and payment of
One Million Forty Six Thousand Five Hundred Dollars ($1,046,500) in cash to ACME
for One Thousand Forty Six and One-half (1046.5) Seller Units.
1.2.3 ESCROW DEPOSIT. Upon execution of this Agreement, Buyer
shall place Two Million Five Hundred Thousand Dollars ($2,500,000) (the "Escrow
Deposit") in escrow in accordance with the terms of an Escrow Agreement in the
form of Exhibit A annexed hereto. The Escrow Deposit shall be paid to Seller as
a credit toward the Purchase Price at the Closing. If Buyer materially breaches
its obligations under this Agreement, the Escrow Deposit shall be paid to Seller
as liquidated damages and as Seller's exclusive remedy. In the event of a
termination of this Agreement under Article 9 for any other reason, the Escrow
Deposit shall be returned to Buyer. Interest on the Escrow Deposit shall at all
times be paid to Buyer.
1.2.4 NONCOMPETITION AGREEMENT. One Thousand Dollars ($1,000) of
the Purchase Price will be allocated as consideration for the execution by
Seller and its members of the Noncompetition Agreement annexed hereto as Exhibit
B.
<PAGE> 6
1.3 ADJUSTMENTS.
1.3.1 PRORATIONS. At the Closing, all income of the Station and
all taxes and assessments, rent, water, sewer and other utility charges and
lienable municipal services, if any, with respect to the Station Assets to be
acquired by Buyer shall be apportioned and allocated between Buyer and Seller as
of the date of this Agreement on the basis of the period of time to which such
income or liabilities apply. To the extent such items cannot be determined at
Closing, a final settlement on such prorations shall be made within thirty (30)
days after the Closing Date. If the Closing occurs before the tax rate is fixed
for the then current term, the apportionment of taxes at Closing shall be upon
the basis of the tax rate for the preceding tax year applied to the latest
assessed valuation. If the tax rate is changed with respect to any period of
time prior to the Closing Date, as defined herein, the post-Closing proration
shall include a corresponding adjustment in the final proration made pursuant to
this Section.
1.3.2 TRADE AND BARTER ITEMS. At the Closing, Seller shall
deliver to Buyer a report, dated the Closing Date (the "Trade Report"), which
lists all Trade Agreements included in the Station Assets, together with an
itemized statement of the aggregate value of time owed (based on the Station's
current rates) pursuant to each of the Trade Agreements and the fair market
value of goods and services to be received pursuant to each of the Trade
Agreements as of the commencement date of the LMA. The Purchase Price to be paid
by Buyer to Seller at Closing shall be reduced to the extent that the aggregate
value of the Station's obligations prior to the commencement date of the LMA
under Trade Agreements for the broadcast of advertising time exceeds $141,000.
Disputes. In the event of any disputes between the parties as to any adjustments
under this Section, the amounts not in dispute shall be paid at the time
provided herein and the dispute shall be resolved by an independent certified
public accountant ("CPA") who shall be jointly selected by the parties within
thirty (30) days after the Closing or after the final settlement on prorations,
as the case may be. The decision of the CPA shall be binding on each of the
parties and enforceable by a court of competent jurisdiction. The fees and
expenses of the CPA shall be paid one-half by Seller and one-half by Buyer.
1.4 ALLOCATION. At or before the Closing, the Purchase Price shall be
allocated between tangible and intangible assets in accordance with an
allocation to be prepared by Buyer and reasonably satisfactory to Seller. Seller
and Buyer shall use such allocation for all purposes related to the valuation of
the Station Assets, including, without limitation, in connection with any
federal, state, county or local tax returns and, unless required to do so in
accordance with a "determination" as defined in Section 1313(a)(1) of the Code,
neither Seller nor Buyer shall take any position in any tax return, tax
proceeding, tax audit or otherwise that is inconsistent with such allocation.
1.5 CLOSING.
<PAGE> 7
1.5.1 DATE AND LOCATION. The closing of the transactions provided
for in this Agreement (the "Closing") shall be held at the offices of Dickstein,
Shapiro, Morin & Oshinsky, LLP, 2101 L Street, N.W., Washington, D.C. 20037, or
at such other place mutually agreed to by the parties, commencing at 10:00 a.m.
on a date (the "Closing Date") selected by Buyer which shall be within ten (10)
business days after the date on which the FCC order (the "Order") approving the
assignment of the FCC Licenses from Seller to Buyer becomes a "Final Order"
(which, for purposes of this Agreement, means that the Order has not been
stayed, is not subject to reconsideration or review by the FCC or a court of
competent jurisdiction, and the time to institute such administrative or
judicial review has expired): provided, that the parties shall not be obligated
to proceed to Closing if (1) the Order includes conditions materially adverse to
Buyer or Seller; or (2) the conditions precedent to Closing have not been
satisfied or waived; and provided further, that Buyer shall have the right to
require that the Closing be held before the Order becomes a Final Order if no
petition to deny or other challenge has been filed against the Application, as
defined in Section 4.5 of this Agreement.
1.5.2 EXCHANGE OF DOCUMENTS. At the Closing, each party shall
execute and deliver to the other party the other items specified herein as well
as any additional document(s) and item(s) reasonably necessary for the
consummation of the transactions contemplated herein. Such additional documents
shall be reasonably satisfactory to the other party as to both form and
substance.
1.5.3 TIMING. Time is of the essence to implementation of this
Agreement. It is the intention of the parties that the Closing of the
transactions contemplated herein occur not later than twelve (12) months from
the date of the FCC Public Notice accepting the Application referenced in
Section 4.5 of this Agreement.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer that the following matters
are true and correct as of the date of this Agreement:
2.1 STATUS. Seller is a limited liability company duly organized,
validly existing, and in good standing in the State of Ohio. Seller has the
power to carry on the business of the Station as it is now being conducted, to
own, hold and use the Station Assets, and to enter into and consummate the
transactions contemplated by this Agreement.
2.2 LICENSES. Seller is the holder of the Licenses and other
authorizations from the Federal Aviation Administration ("FAA"), the FCC, and
other governmental authorities included in Schedule 1 to this Agreement, all of
which are in full force and effect. The FCC Licenses constitute all of the
licenses required under the Communications Act of 1934, as amended (the "Act"),
and the current rules, regulations, and policies of the
<PAGE> 8
FCC and the FAA for the operation of the Station as currently conducted. The FCC
Licenses authorize the operation of the Station for the license term expiring on
February 1, 2005. The Seller has filed with the FCC all material applications,
reports and other disclosures required by the Act and by FCC rules and policies.
As of the date of this Agreement, there is not pending or, to Seller's
knowledge, threatened, any petition, complaint, objection (whether formal or
informal), order to show cause, investigation, or other action by or before the
FCC or any court to revoke, cancel, rescind, modify, or refuse to renew any of
the FCC Licenses, or which would otherwise have a material adverse impact on the
operation of the Station. Other than proceedings of general applicability to the
broadcasting industry, there is not now pending or, to Seller's knowledge,
threatened, any other petition, complaint, objection (whether formal or
informal), investigation, order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or other proceeding by or before the
FCC or any court against Seller with respect to any matter affecting the
Station. Except as disclosed in Schedule 1, the Station has been and is
operating in material compliance with the FCC Licenses, the Act, and the rules,
regulations and policies of the FCC, and, to Seller's knowledge, the Station's
signal coverage is not subject to any interference which materially impairs the
reception of its signal within the Station's Grade A or Grade B contours. Except
as disclosed in Schedule 1, the Station is currently operating at its fully
authorized power under its FCC Licenses.
2.3 TITLE. On the Closing Date, the Station Assets will be in each case
free and clear of all debts, claims, liabilities, security interests, mortgages,
pledges, liens, conditional sales agreements, leases, encumbrances, or charges
of any kind or nature whatsoever except for the Permitted Encumbrances or such
liabilities expressly assumed by Buyer hereunder.
2.4 EMPLOYEES. Seller is not a party to any pending or, to its
knowledge, threatened labor dispute affecting the Station. Seller (1) has
complied in all material respects with all applicable federal, state, and local
laws, ordinances, rules and regulations and requirements relating to employment
or labor, including but not limited to provisions relative to wages, hours,
collective bargaining, pension, profit-sharing and savings plans and trusts
including, without limitation, 401-K plans ("Trusts") and payment of Social
Security, unemployment and withholding taxes and (2) is not liable for any
arrears of wages or Trusts or benefit payments ("Payments") or any taxes or
penalties for failure to comply with any of the foregoing. In accordance with
the provisions of Article 8 of this Agreement, Seller will hold Buyer harmless
from and against (1) any liability for any taxes or Payments or penalties which
have not been paid or made for employment of persons by Seller, (2) any claims
of discrimination or wrongful termination or hiring, including, without
limitation, violations of federal or state law relating to civil rights,
regulations of the United States Equal Employment Opportunity Commission, or the
Americans With Disabilities Act of 1990, (3) all claims for severance
(recognizing that Buyer has no obligation to employ any of Seller's employees),
and (4) any other claims by employees of Seller relating to or arising from
their employment (or severance therefrom) by Seller.
<PAGE> 9
There are no collective bargaining agreements, or negotiations for the same, in
existence which affect any of the Station's employees.
2.5 TAXES. Except as disclosed in Schedule 5 annexed hereto, Seller has
duly and timely filed all required federal, state and local tax returns and paid
all taxes, interest and penalties due with respect to Seller's interest in the
Station Assets or its operation of the Station, has sought and obtained
extensions of time to file such and pay same within the time provided therefor,
or is challenging such taxes in good faith in accordance with applicable
procedures (and has in place adequate financial reserves to satisfy any adverse
decision). Between the date hereof and the Closing Date Seller shall duly and
timely file all such required returns and pay all such taxes, interest and
penalties or obtain such extensions within the time provided therefor, unless
such taxes are being challenged in good faith in accordance with applicable
procedures (and has in place adequate financial reserves to satisfy any adverse
decision). In accordance with the provisions of Article 8 of this Agreement,
Seller shall indemnify, defend, save and hold Buyer harmless from and against
all claims, obligations and liabilities for all taxes, interest and penalties
attributable to Seller's ownership or operation of the Station and the ownership
or holding of the Station Assets prior to the Closing Date.
2.6 CONTRACTS. Schedule 3 hereto includes true copies of all written
Contracts and describes the material terms of all oral Contracts to which Seller
is a party as of the date of this Agreement and which will be assumed by Buyer.
Those Contracts requiring a third party's consent to assignment are identified
by an asterisk in Schedule 3. Seller has complied in all material respects with
all Contracts and is not in default beyond any applicable grace periods under
any of such Contracts. To Seller's knowledge, no other contracting party is in
material default under any of the Contracts. All Contracts are in full force and
effect and are valid, binding and enforceable in accordance with their
respective terms, except as enforceability may be limited by laws affecting
creditor rights or equitable principles generally.
2.7 ENVIRONMENTAL. Except as disclosed in Schedule 6 annexed hereto or
in the Environmental Audits, no hazardous or toxic waste, substance, material or
pollutant (collectively "Hazardous Waste"), as defined under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Section 9601 et seq., the Toxic Substances Control Act, as amended, 15
U.S.C. Section 2601 et seq., the Resource Conservation and Recovery Act of 1976,
as amended, 42 U.S.C. Section 6901 et seq., the Clean Water Act, as amended, 42
U.S.C. Section 1251 et seq., the Clean Air Act, as amended, 42 U.S.C. Section
7401 et seq. or any other applicable federal, state or local law, or any
regulations or policies adopted pursuant to such laws (the foregoing laws,
regulations and policies collectively referred to herein as the "Environmental
Laws") has been released, emitted or discharged or, to Seller's knowledge, is
currently located in or on the Station Assets or in, on or under the real
property on which any of the Station Assets are situated in violation of any
Environmental Laws. The Station Assets and Seller's use thereof are not in
material
<PAGE> 10
violation of any Environmental Laws, including but not limited to FCC rules,
policies and guidelines concerning RF radiation. Seller has not received any
notice, summons, citation, directive, letter or other communication, written or
oral, from the United States, the State of Florida, or any other party
concerning any intentional or unintentional action or omission on the part of
Seller or any other party which resulted in the releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leeching, dumping or disposing of Hazardous Waste on, above or under Station
Assets owned or used by Seller in operation of the Station.
2.8 FINANCIAL STATEMENTS. Seller has provided Buyer with true copies of
unaudited financial statements for the period ended on December 31, 1997 (the
"Financial Statements"). True copies of the Financial Statements are included in
Schedule 7. Except as disclosed on Schedule 7, the Financial Statements (1) have
been prepared in accordance with generally accepted accounting principles
consistently applied, (2) identify all of Seller's material obligations and
liabilities (contingent or matured) with respect to the Station, and (3) fairly
reflect the financial performance of the Station for the periods indicated.
2.9 LITIGATION. Seller has not been operating under and is not subject
to, or in default with respect to, any order, judgment, writ, injunction, or
decree of any court or any federal, state, municipal, or other governmental
department, commission, board, agency, or instrumentality, foreign or domestic,
which has had or could reasonably be expected to have a material adverse effect
on the Station Assets or the manner in which Seller currently operates the
Station. There is no litigation, arbitration, dispute, proceeding or
investigation ("Litigation") pending by or against, or, to Seller's knowledge,
threatened against the Station or Seller which relates to or affects the Station
Assets or the business of the Station or which materially interferes or could
reasonably be expected materially to interfere with Seller's (1) right, title
to, or interest in the Station Assets, (2) operation of the Station or (3)
ability to transfer the Station Assets to Buyer free of such Litigation.
2.10 INSURANCE. Annexed hereto in Schedule 8 are true copies of all
insurance policies maintained by Seller. All of such policies are in full force
and effect, and Seller is not in default of any material provision thereof.
Seller has not received notice from any issuer of any such policies of its
intention to cancel, terminate or refuse to renew any policy issued by it.
2.11 COMPLIANCE WITH LAWS. Except as disclosed in Schedule 9 annexed
hereto, Seller is in material compliance with all applicable laws, rules,
regulations, policies and orders of the federal, state, and local governments
with respect to the Station. The present uses by Seller of the Station Assets do
not violate any such laws, regulations, policies or orders in any material
respect, and there is no investigation or proceeding regarding the foregoing
which is currently pending or, to Seller's knowledge, threatened.
2.12 NO DEFAULTS. Neither the execution and delivery by Seller of this
Agreement nor the consummation by Seller of the transactions contemplated herein
are
<PAGE> 11
events that, by themselves or with the giving of notice or the passage of time
or both, constitute a material violation of or will conflict with or result in
any material breach of or any default under (a) the terms, conditions, or
provisions of any arbitration award, judgment, law, order, decree, writ, or
regulation to which Seller is subject, (b) Seller's operating agreement or other
organizational documents, or (c) any agreement or instrument to which Seller is
a party or by which Seller is bound, or result in the creation of imposition of
any lien, charge, or encumbrance on any of the Station Assets.
2.13 BROKERS. There is no broker or finder or other person who would, as
a result of any agreement of or action taken by Seller, have any valid claim
against any of the parties to this Agreement for a commission or brokerage fee
in connection with this Agreement or the transactions contemplated herein.
2.14 SELLER ACTION. All Seller actions and proceedings necessary to be
taken by or on the part of Seller in connection with the transactions
contemplated by this Agreement and necessary to make the Agreement effective
have been duly and validly taken. This Agreement has been duly and validly
authorized, executed, and delivered by Seller and constitutes the valid and
binding agreement of Seller, enforceable in accordance with and subject to its
respective terms, except as enforceability may be limited by laws affecting the
enforcement of creditor rights or equitable principles generally. At the
Closing, Seller will provide Buyer with a certified resolution executed by
Seller's members authorizing the execution, delivery, and performance of this
Agreement.
2.15 STATION ASSETS. Except as disclosed in Schedule 10 annexed hereto,
the Station Assets are in good working order, meet any and all applicable
governmental and industry standards, and are sufficient to enable Seller to
operate the Station as currently conducted. All of the statements made and
Schedules referred to in this Agreement with respect to the Station Assets are
true, accurate, and complete in all material respects.
2.16 LEASES. All of the Real Estate Leases included in Schedule 4 have
been complied with in all material respects by Seller, and no material default
of Seller in respect to any duties or obligations required to be performed by
Seller has occurred. All such leases are valid, binding, and enforceable in
accordance with their respective terms. To Seller's knowledge, no other party to
any of the Real Estate Leases is in default thereunder, except as enforceability
may be limited by laws affecting the enforcement of creditor rights or equitable
principles generally.
2.17 INSOLVENCY. No insolvency proceedings of any character, including,
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting the Seller or
any of the Station Assets is pending or, to Seller's knowledge, threatened, and
Seller has not made any assignment for the benefit of creditors, nor taken any
actions with a view to, or which would constitute the basis for, the institution
of any such insolvency proceedings.
<PAGE> 12
2.18 APPROVALS. No approval of any third party, governmental agency or
court is required to be obtained by Seller with regard to the assignment of the
FCC Licenses and other Station Assets except (1) parties to certain Contracts
and Real Estate Leases being assumed by Buyer under this Agreement, (2) the
approval by the FCC as provided herein, and (3) unless otherwise determined by
the parties, the United States Department of Justice ("DOJ") and/or the Federal
Trade Commission ("FTC") under the HSR Act.
2.19 CABLE CARRIAGE. To Seller's knowledge, Schedule 11 annexed hereto
sets forth a correct and complete list of (1) all cable television systems which
carry the Station's signal on the date hereof under the FCC's "must carry" rules
or under agreements implementing such rules; and (2) all cable television
systems which carry the Station's signal pursuant to retransmission consent
agreements (with copies of all such agreements included in the schedule).
2.20 NO MATERIAL OMISSION. Seller has not failed to disclose any
material fact within its knowledge which would make any statement or
representation in this Agreement inaccurate or misleading.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller as to the truth of the following
matters as of the date of this Agreement:
3.1 STATUS. Buyer is a limited liability company duly organized, validly
existing, and in good standing in the State of Delaware, and has the power to
enter into and consummate the transactions contemplated by this Agreement.
3.2 ORGANIZATIONAL ACTION. All actions and proceedings necessary to be
taken by or on the part of Buyer in connection with the transactions
contemplated by this Agreement and necessary to make the Agreement effective
have been duly and validly taken. This Agreement has been duly and validly
authorized, executed, and delivered by Buyer and constitutes the valid and
binding agreement of Buyer, enforceable in accordance with and subject to its
terms, except as enforceability may be limited by laws affecting the enforcement
of creditors' rights or equitable principles generally. At the Closing, Buyer
will provide Seller with a certified copy of the resolution adopted by Buyer's
members and board of directors authorizing the execution, delivery and
consummation of this Agreement.
3.3 NO DEFAULTS. Neither the execution and delivery by Buyer of this
Agreement nor the consummation by Buyer of the transactions contemplated herein
are events that, by themselves or with the giving of notice or the passage of
time or both, constitute a material violation of or will conflict with or result
in any material breach of or any default under (a) the terms, conditions, or
provisions of any arbitration award,
<PAGE> 13
judgment, law, order, or regulation to which Buyer is subject, (b) the operating
agreement or other organizational documents of Buyer, or (c) any agreement or
instrument to which Buyer is a party or by which it is bound.
3.4 BROKERS. There is no broker or finder or other person who would, as
a result of any agreement of or action taken by Buyer, have any valid claim
against any of the parties to this Agreement for a commission or brokerage fee
in connection with this Agreement or the transactions contemplated herein.
3.5 LITIGATION. There is no litigation, proceeding, or investigation of
any nature pending or, to Buyer's knowledge, threatened against or affecting
Buyer that would affect Buyer's ability to carry out the transactions
contemplated herein.
3.6 QUALIFICATION AS A BROADCAST LICENSEE. To its knowledge, Buyer is
legally qualified under the Act and all other applicable federal, state and
local laws, rules and regulations, to acquire the Station Assets from Seller.
3.7 NO MATERIAL OMISSION. Buyer has not failed to disclose any material
fact within its knowledge which would make any statement or representation in
this Agreement inaccurate or misleading.
ARTICLE 4. COVENANTS OF SELLER PENDING CLOSING.
Seller covenants and agrees that, from the date of this Agreement to and
including the Closing Date, subject to the provisions of this Agreement, it will
take, or refrain from taking, the following actions:
4.1 MAINTENANCE OF STATION. Subject to the LMA, Seller shall continue to
carry on the Station business and keep its books of account, records, and files
in the ordinary course of business and shall continue to operate the Station in
all material respects in accordance with the terms of the FCC Licenses and in
material compliance with all applicable rules, regulations, policies and laws
except as otherwise disclosed in Schedule 10, in which case Seller shall operate
the Station in accordance with its current practices. To that end, Seller will
file with the FCC any and all reports, applications, and disclosures as may be
required by the Act or FCC rules or policies. Seller shall maintain in full
force and effect through and including the Closing Date the existing property
damage, liability, and other insurance with respect to the Station Assets to
cover contingencies that can reasonably be anticipated. Prior to the Closing,
Seller will not, without the prior written consent of Buyer:
4.1.1 sell, lease, transfer, or agree to sell, lease, or transfer
any Station Assets without replacement thereof with an asset of equivalent kind,
condition, and value;
<PAGE> 14
4.1.2 enter into any collective bargaining agreement or written
contract of employment without Buyer's prior approval, unless said contract is
subject to cancellation upon thirty (30) days notice without penalty to Buyer;
4.1.3 renew, renegotiate, modify, amend, or terminate any
existing Time Sales Agreements with respect to the Station except in the
ordinary course of business;
4.1.4 Subject to Section 1.1.1.(c) hereof, enter into any
contract or agreement with respect to the Station or the Station Assets except
in the ordinary course of business or as provided in this Agreement;
4.1.5 make, allow, or consent to any material change in the Real
Property or in any buildings, leasehold improvements, or fixtures used or useful
in the operation of the Station except in the ordinary course of business;
4.1.6 make any material change in the insurance policies included
in Schedule 8; or
4.1.7 take any action or, as the case may be, fail to take any
action necessary to preserve the Station's carriage on cable television systems
identified in Schedule 11.
4.2 ORGANIZATION, GOOD WILL, PROMOTION. Subject to the provisions of
this Agreement and the LMA, until the commencement date of the LMA, Seller shall
use its best efforts to preserve the business organization of the Station intact
and shall cooperate with Buyer to preserve the goodwill of the Station's
suppliers, customers, and others having business relations with the Station.
4.3 ACCESS TO FACILITIES, FILES, AND RECORDS. At the reasonable request
of Buyer, Seller shall give Buyer and its representatives (1) reasonable access
during normal business hours to all facilities, property, accounts, title
papers, insurance policies, licenses, agreements, commitments, records,
machinery, fixtures, furniture, and inventories related to the Station or the
Station Assets, and (2) all such other information concerning the affairs of the
Station as Buyer may reasonably request. The rights of Buyer under this Section
shall not be exercised in such a manner as to interfere unreasonably with the
business of the Station.
4.4 REPRESENTATIONS AND WARRANTIES. Seller shall give notice to Buyer
promptly upon the occurrence of, or upon becoming aware of the impending or
threatened occurrence of, any event that would cause or constitute a material
breach of any of Seller's representations or warranties in this Agreement.
4.5 APPLICATION FOR FCC CONSENT. Within five (5) business days after
execution of this Agreement, Seller shall prepare and file an appropriate
application (the
<PAGE> 15
"Application") with the FCC requesting its written consent to the assignment of
the FCC Licenses for the Station to Buyer. Seller shall diligently take, or
cooperate in the taking of, all steps necessary and appropriate to expedite the
preparation of the Application and its prosecution to a favorable conclusion.
Seller will promptly provide Buyer with a copy of any pleading, order, or other
document served on it relating to the Application. Seller will use its best
efforts and otherwise cooperate with Buyer in responding to any information
requested by the FCC related to the Application, in making any amendment to this
Agreement requested by the FCC which does not adversely affect Seller in a
material manner, and in defending against any petition, complaint, or objection
which may be filed against the Application. The FCC filing fees shall be divided
equally between Seller and Buyer.
4.6 CONSENTS. Seller shall use its best efforts to obtain or cause to be
obtained prior to the Closing consents to the assignment to or assumption by
Buyer of all Contracts and Real Estate Leases included in the Station Assets
that require the consent of any third party by reason of the transactions
provided for in this Agreement.
4.7 NOTICE OF PROCEEDINGS. Seller will promptly notify Buyer (and in any
event within five (5) business days) upon becoming aware of any actual or
threatened claim, dispute, arbitration, litigation, complaint, judgment, order,
decree action or proceeding relating to Seller, the Station, the Station Assets,
or the consummation of this Agreement or any transaction contemplated herein.
4.8 CONFIDENTIAL INFORMATION. If the transactions contemplated in this
Agreement are not consummated for any reason, Seller shall not disclose to third
parties (except its agents and representatives, who will be bound by this
section) any information designated as confidential and received from Buyer or
its agents in the course of investigating, negotiating, and consummating the
transactions contemplated by this Agreement: provided, that no information shall
be deemed to be confidential that (1) becomes publicly known or available other
than through disclosure by Seller; (2) is rightfully received by Seller from a
third party; or (3) is independently developed by Seller. All originals of all
material provided to Seller by Buyer or its agents shall be returned to Buyer
and all copies thereof shall be destroyed.
4.9 CONSUMMATION OF AGREEMENT. Seller shall fulfill and perform all
conditions and obligations to be fulfilled and performed by Seller under this
Agreement and make every reasonable effort to cause the transactions
contemplated by this Agreement to be fully carried out.
4.10 COMPLIANCE WITH LAW. Seller will comply in all material respects
with all applicable federal, state and local laws, ordinances and regulations,
including but not limited to the Act and the rules, regulations and policies of
the FCC.
<PAGE> 16
4.11 PERFORMANCE UNDER CONTRACTS AND LEASES. Seller will perform in all
material respects its obligations under, and keep in good standing, all
Contracts, Time Sales Agreements, and Real Estate Leases to which Seller is a
party and which will be assigned to Buyer at the Closing pursuant to this
Agreement (and which have not been previously assigned to and assumed by Buyer
under the LMA).
4.12 HSR FILING. Within fifteen (15) business days after execution of
this Agreement, Seller shall file with DOJ and/or the FTC any and all
applications and other documents necessary to comply with HSR and to secure any
necessary approval under HSR. The filing fees for any HSR application shall be
divided equally between Seller and Buyer.
ARTICLE 5. COVENANTS OF BUYER PENDING THE CLOSING.
Buyer covenants and agrees that, from the date of this Agreement to and
including the Closing, it will take, or refrain from taking, the following
actions:
5.1 REPRESENTATION AND WARRANTIES. Buyer shall give notice to Seller
promptly upon the occurrence of, or upon becoming aware of the impending or
threatened occurrence of, any event that would cause or constitute a material
breach of any of the representations and warranties of Buyer in this Agreement.
5.2 APPLICATION FOR COMMISSION CONSENT. Within five (5) business days
after execution of this Agreement, Buyer will prepare and provide Seller's
counsel with the assignee's portion of the Application. Buyer will diligently
take, or cooperate in the taking of, all steps necessary and appropriate to
expedite the preparation of the Application and its prosecution to a favorable
conclusion. Buyer will promptly provide Seller with a copy of any pleading,
order, or other document served on it relating to the Application. Buyer will
use its best efforts and otherwise cooperate with Seller in responding to any
information requested by the FCC related to the Application or this Agreement,
in making any amendment to this Agreement requested by the FCC which does not
adversely affect Buyer in a material manner, and in defending against any
petition, complaint, and other objection which may be filed against the
Application.
5.3 CONFIDENTIAL INFORMATION. If the transactions contemplated in this
Agreement are not consummated for any reason, Buyer shall not disclose to third
parties (except its lenders, agents and representatives, who will be bound by
this section) any information designated as confidential and received from
Seller or its agents in the course of investigating, negotiating, and performing
the transactions contemplated by this Agreement: provided, however, that no
information shall be deemed to be confidential that (1) becomes publicly known
or available other than through disclosure by Buyer; (2) is rightfully received
by Buyer from a third party; or (3) is independently developed by
<PAGE> 17
Buyer. All originals of material provided by Seller to Buyer or its agents shall
be returned to Seller and all copies thereof destroyed.
5.4 CONSUMMATION OF AGREEMENT. Buyer shall fulfill and perform in all
material respects all conditions and obligations to be fulfilled and performed
by Buyer under this Agreement and make every reasonable effort to cause the
transactions contemplated by this Agreement to be fully carried out.
5.5 NOTICE OF PROCEEDINGS. Buyer will promptly (and in any event within
five (5) business days) notify Seller upon becoming aware of any actual or
threatened claim, dispute, arbitration, litigation, complaint, judgment, order,
decree, action or proceeding relating to Buyer, the Station, the Station Assets,
or the consummation of this Agreement or any transaction contemplated herein.
5.6 HSR FILING. Within fifteen (15) business days after execution of
this Agreement, Buyer shall file with the DOJ and/or the FTC any and all
applications and other documents necessary to comply with HSR and to secure any
necessary approval under HSR. The filing fees for any HSR application shall be
divided equally between Seller and Buyer.
ARTICLE 6. CONDITIONS PRECEDENT TO OBLIGATION OF SELLER TO CLOSE.
The obligation of Seller to consummate the transactions under this
Agreement is subject to the fulfillment of the following conditions prior to or
at the Closing:
6.1 Representations, Warranties, Covenants.
6.1.1 BUYER'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Buyer contained in this Agreement shall have
been true and accurate in all material respects as of the date when made and as
of the Closing Date;
6.1.2 BUYER'S PERFORMANCE UNDER AGREEMENT. Buyer shall have
performed and complied in all material respects with each and every covenant and
agreement required by this Agreement to be performed or complied with by Buyer
prior to or at the Closing; and
6.1.3 BUYER'S DELIVERIES. Buyer shall have delivered to Seller
(a) a certificate executed by an officer of Buyer, dated the Closing Date,
certifying to the fulfillment of the conditions set forth in Sections 6.1.1. and
6.1.2., and (b) the resolution referred to in Section 3.2 of this Agreement.
6.2 PROCEEDINGS.
<PAGE> 18
6.2.1 ABSENCE OF LITIGATION. No action or proceeding shall have
been instituted before any court or governmental body which has resulted in the
issuance of a preliminary or permanent injunction against consummation of this
Agreement.
6.2.2 NOTICE OF INVESTIGATION. Neither of the parties to this
Agreement shall have received written notice from any governmental body of the
institution of any investigation to restrain, enjoin or nullify this Agreement
or the transactions contemplated hereby (other than a routine letter of inquiry,
including a routine Civil Investigative Demand).
6.3 FCC APPROVAL. The FCC approval contemplated by this Agreement shall
have been granted without any conditions materially adverse to Seller.
6.4 HSR APPROVAL. The parties shall have received any necessary approval
under HSR (or the applicable waiting period shall have expired without further
action by the United States Government).
6.5 LEGAL OPINION. Seller shall have received an opinion from Buyer's
counsel in the form annexed hereto as Exhibit C.
6.6 ISSUANCE OF SELLER UNITS. Seller shall have received a document
reflecting Seller's acquisition of the ownership interest in Buyer referenced in
Section 1.2.2. of this Agreement.
ARTICLE 7. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER TO CLOSE.
The obligation of Buyer to consummate the transactions under this
Agreement is subject to the fulfillment of the following conditions prior to or
at the Closing:
7.1 REPRESENTATIONS, WARRANTIES, COVENANTS.
7.1.1 SELLER'S REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Seller contained in this Agreement shall have
been true and accurate in all material respects as of the date when made and as
of the Closing Date.
7.1.2 SELLER'S PERFORMANCE UNDER AGREEMENT. Seller shall have
performed and complied in all material respects with each and every covenant and
agreement required by this Agreement to be performed or complied with by it
prior to or at the Closing, including but not limited to entry into the WB
Affiliation Agreement and the simultaneous execution of the related consulting
agreement with Buyer or one of its executives on or before March 16, 1998; and
7.1.3 SELLER'S DELIVERIES. Seller shall have delivered to Buyer
(a) a certificate executed by an officer of Seller, dated the Closing Date,
certifying to the
<PAGE> 19
fulfillment of the conditions set forth in Sections 7.1.1. and 7.1.2., (b) the
resolution of Seller's members identified in Section 2.15 of this Agreement, and
(c) the consents of third parties required for the assignment to Buyer of
Contracts and Real Estate Leases specified in Section 1.1.1. which have been
denoted as material by Buyer.
7.2 PROCEEDINGS.
7.2.1 ABSENCE OF LITIGATION. No action or proceeding shall be
pending or have been instituted before any court or governmental body to
restrain or prohibit, or to obtain substantial damages in respect of, the
consummation of this Agreement that, in the reasonable opinion of Buyer, may
reasonably be expected to result in the issuance of a preliminary or permanent
injunction against such consummation or otherwise result in a decision
materially adverse to Buyer.
7.2.2 ABSENCE OF INVESTIGATION. Neither of the parties to this
Agreement shall have received written notice from any governmental body of (1)
its intention to institute any action or proceeding to restrain or enjoin or
nullify this Agreement or the transactions contemplated hereby, or to commence
any investigation (other than a routine letter of inquiry, including a routine
Civil Investigative Demand) into the consummation of this Agreement or (2) the
actual commencement of such an investigation.
7.3 PHYSICAL DAMAGE TO THE STATION ASSETS.
7.3.1 REPAIR OF STATION ASSETS. In the event of material loss or
damage to the Station Assets, Seller shall promptly and in any event within ten
(10) days notify Buyer thereof and use its best efforts promptly to repair,
replace or restore the lost or damaged property to its former condition:
provided, that any replacement property need only be of the same kind and
quality as the lost or damaged property, and Seller shall have no obligation to
replace used property with new property. If the estimated aggregate cost of
repairing, replacing or restoring any lost or damaged property is Fifty Thousand
Dollars ($50,000) or less, Closing shall occur as scheduled and Seller shall
assign to Buyer all rights under any insurance claim covering the loss or damage
and pay over to Buyer any proceeds under any such insurance policy theretofore
received by Seller with respect thereto along with the amount of any deductible
or other difference between the expected insurance proceeds and the cost of the
lost or damaged asset. If the estimated cost to repair, replace, or restore the
lost or damaged property exceeds Fifty Thousand Dollars ($50,000), and the lost
or damaged property has not been repaired, replaced or restored prior to
Closing, Buyer may, at its option:
(a) elect to consummate the Closing in which event Seller
shall assign to Buyer all of Seller's rights under any applicable insurance
policies covering the loss or damage and pay over to Buyer any proceeds under
any such insurance policy theretofore received by Seller with respect thereto
along with the amount of any deductible or other
<PAGE> 20
difference between the expected insurance proceeds and the cost of the lost or
damaged asset; or
(b) elect to postpone the Closing Date, with the prior
consent of the FCC if necessary, for such reasonable period of time (in no event
longer than (60 days) as is necessary for the lost or damaged property to be
repaired, replaced, or restored to its former condition. If, after the
expiration of the extension period, the lost or damaged property has not been
adequately repaired, replaced or restored, Buyer may, at its option, proceed
with the Closing in the manner provided for in Section 7.3.1(a) or terminate
this Agreement, in which event the Escrow Deposit shall be returned to Buyer and
the parties shall be released and discharged from any further obligation
hereunder; or
7.3.2 REPAIR OF TRANSMISSION FACILITIES. Notwithstanding anything
to the contrary in this Agreement, Seller shall make any and all necessary
repairs to the Station's transmission facilities to enable the Station to
operate at its fully-authorized power under its FCC Licenses. To that end, Buyer
shall purchase any and all necessary equipment and services with Seller's
approval (which approval shall not be unreasonably withheld) and Seller shall
thereafter pay for such equipment and services up to a limit of $160,000 in
expenditures in a timely fashion. To the extent necessary, Seller shall obtain
Special Temporary Authorizations and such other approvals of the FCC to enable
the Stations to utilize the repaired transmission facilities at the earliest
practicable date.
7.3.3 FAILURE OF BROADCAST TRANSMISSION. Seller shall give prompt
written notice to Buyer if any of the following (a "Service Interruption")
occurs: (a) the regular broadcast transmissions of the Station in the normal and
usual manner are interrupted or discontinued for four (4) or more consecutive
hours (except for routine maintenance between the hours of midnight and 8 a.m.
on Sundays) or (b) the Station is operated at less than its licensed antenna
height above average terrain or less than thirty (30%) of its licensed effective
radiated power for four (4) or more consecutive hours. If the Station is not
operating with its licensed facilities with at least thirty percent (30%) of its
licensed power on the Closing Date, or, if between the date hereof and the
Closing, the Station has experienced Service Interruptions aggregating
seventy-two (72) hours in any thirty (30) day period (whether or not
consecutive) or has experienced three (3) or more Service Interruptions, Buyer
may, at its option: (a) terminate this Agreement without liability, or (b)
proceed in the manner set forth in Sections 7.3.1(a) or 7.3.1(b).
Notwithstanding anything herein to the contrary, a disruption in service due to
a disruption in power provided by a public utility will not be deemed a Service
Interruption. Resolution of Disagreements. If the parties are unable to agree
upon the extent of any loss or damage, the cost to repair, replace or restore
any lost or damaged property, the adequacy of any repair, replacement, or
restoration of any lost or damaged property, or any other matter arising under
this Section, the disagreement shall be referred to a qualified consulting
communications engineer mutually acceptable to Seller and Buyer who is a member
of the Association of Federal Communications Consulting Engineers, whose
decision shall be final
<PAGE> 21
and binding, and whose fees and expenses shall be paid one-half by Seller and
one-half by Buyer.
7.4 FCC APPROVAL. The FCC approval contemplated by this Agreement shall
have been granted without any conditions materially adverse to Buyer and shall
have become a Final Order: provided, that the Buyer shall have the option to
waive the requirement that the Order become a Final Order if no petition to deny
or other challenge has been filed against the Application.
7.5 CONTRACT AND REAL ESTATE LEASE PAYMENTS. As of the Closing, Seller
shall be current in its payment of any and all obligations under Contracts or
Real Estate Leases to be assumed by Buyer, or such payments shall be subject to
proration hereunder, and Buyer shall have received appropriate estoppel
certificates to that effect.
7.6 LEGAL OPINION. Buyer shall have received an opinion from Seller's
counsel in the form annexed hereto as Exhibit D.
7.7 ENVIRONMENTAL AUDITS. Within twenty-one (21) days of the execution
of this Agreement, Buyer may initiate, at Buyer's expense, a Phase 1, and, if
Buyer deems it appropriate or necessary, a Phase 2 environmental audit of the
Station Assets conducted by an environmental firm licensed in the State of
Florida (the "Environmental Audits"). If the Environmental Audits reveal a
condition of material non-compliance with any Environmental Law, then, in that
event, Seller shall cure or remedy the condition of material non-compliance
prior to Closing. If Seller is unwilling or unable to cure or remediate the
condition of material non-compliance prior to Closing, then, in that event,
Buyer may elect to (1) accept the Station Assets in their then existing
condition and reduce the Purchase Price by the estimated amount necessary to
cure or remediate the material non-compliance or (2) terminate this Agreement
upon twenty (20) days' prior written notice to Seller without further liability.
Failure of Buyer to complete the environmental audits and/or to notify Seller of
any condition of material non compliance by the twenty first (21st) day
following execution of this Agreement will constitute a waiver by Buyer of its
rights under this section.
7.8 HSR APPROVAL. The parties shall have received any necessary approval
under HSR (or the applicable waiting period shall have expired without further
action by the United States Government).
7.9 NONCOMPETITION AGREEMENT. Seller and its members shall have executed
the Noncompetition Agreement in the form annexed hereto as Exhibit B.
7.10 NO MATERIAL ADVERSE CHANGE. Between the date of this Agreement and
the Closing, none of the Tangible Personal Property, Contracts, Real Estate
Leases or property associated therewith or shall have incurred or otherwise be
subject to any change
<PAGE> 22
which shall have, in the aggregate, caused a material adverse effect to the
business, operations or financial condition of the Station.
ARTICLE 8. INDEMNIFICATION.
8.1 SURVIVAL. The several representations, warranties, covenants, and
agreements of the Seller and Buyer contained in or made pursuant to this
Agreement shall be deemed to have been made on and as of the Closing, shall
survive the Closing, and shall remain operative and in full force and effect for
a period of twenty-four (24) months after the Closing: provided, that all
representations, warranties, covenants and agreements relating to litigation or
taxes shall remain operative until the expiration of any applicable statutes of
limitation; and provided further, that liabilities assumed or retained, as the
case may be, pursuant to this Agreement shall remain in effect until such
liabilities have been paid or discharged in full.
8.2 INDEMNIFICATION OF BUYER. Seller shall indemnify, defend, and hold
Buyer harmless from and against any and all damages, claims, losses, expenses,
costs, obligations, and liabilities including, without limiting the generality
of the foregoing, liabilities for reasonable attorneys' fees ("Loss and
Expense"), suffered, directly or indirectly, by Buyer after the Closing Date by
reason of, or arising out of, (1) any breach of a representation or warranty
made by Seller pursuant to this Agreement, (2) any failure by Seller to perform
or fulfill any of its covenants or agreements set forth in this Agreement, (3)
any failure by Seller to pay or discharge any liabilities which remain the
responsibility of Seller under this Agreement or to comply, if required, with
Florida's bulk sales law, (4) any litigation, proceeding, or claim by any third
party relating to the business or operation of the Station prior to the Closing,
or (5) Seller's failure to comply with the provisions of any bulk sales law
applicable to the transactions contemplated by this Agreement.
8.3 INDEMNIFICATION OF SELLER. Buyer shall indemnify, defend and hold
Seller harmless from and against any and all Loss and Expense suffered, directly
or indirectly, by Seller after the Closing Date by reason of, or arising out of,
(1) any breach of a representation or warranty made by Buyer pursuant to this
Agreement, (2) any failure by Buyer to perform or fulfill any of its covenants
or agreements set forth in this Agreement, (3) any failure by Buyer to pay or
discharge any liabilities assumed pursuant to this Agreement, or (4) any
litigation, proceeding, or claim by any third party relating to the business or
operation of the Station after the Closing.
8.4 NOTICE OF CLAIM. If either Seller or Buyer believes that any Loss
and Expense has been suffered or incurred, such party shall notify the other
promptly in writing describing such Loss and Expense, the amount thereof, if
known, and the method of computation of such Loss and Expense, all with
reasonable particularity and containing a reference to the provisions of this
Agreement in respect of which such Loss and Expense
<PAGE> 23
shall have occurred. If any action at law or suit in equity is instituted by a
third party with respect to which any of the parties intends to claim any
liability or expense as Loss and Expense under this Article 8, such party shall
promptly notify the indemnifying party of such action or suit. In no event,
however, may the indemnifying party avoid or limit its obligations under this
Article 8 by reason of delay unless such delay has materially prejudiced the
indemnifying party, and then the indemnifying party's obligations shall be
reduced only to the extent of such prejudice.
8.5 DEFENSE OF THIRD PARTY CLAIMS. The indemnifying party under this
Article 8 shall have the right to conduct and control, through counsel of that
party's own choosing, any third party claim, action, or suit at the indemnifying
party's sole cost and expense, but the indemnified party may, at that latter
party's election, participate in the defense of any such claim, action, or suit
at that party's sole cost and expense: provided, that if the indemnifying party
shall fail to defend any such claim, action, or suit, then the indemnified party
may defend, through counsel of that party's own choosing, such claim, action, or
suit and settle such claim, action, or suit, and recover from the indemnifying
party the amount of such settlement or of any judgment and the costs and
expenses of such defense; and provided further, that the indemnifying party
shall be given at least (15) days prior notice of the terms of any proposed
settlement thereof so that the indemnifying party may then undertake and/or
resume the defense against the claim. The indemnifying party shall not
compromise or settle any third party claim, action, or suit without the prior
written consent of the indemnified party, which consent will not be unreasonably
withheld or delayed: provided, that any such compromise or settlement shall
include a release for the Indemnified Party of all liability with respect to the
matter being compromised or settled.
8.6 LIMITATIONS. Neither party shall be required to indemnify the other
party under this Article 8 unless written notice of a claim under this Article 8
was received by the party within the pertinent survival period specified in
Section 8.1.
ARTICLE 9. MISCELLANEOUS.
9.1.1 TERMINATION OF AGREEMENT. This Agreement may be terminated
immediately on or prior to the Closing under one or more of the following
circumstances:
9.1.2 by the mutual consent of the parties hereto;
9.1.3 by Seller, if any of the conditions provided in Article 6
hereof have not been met by the time required and have not been waived;
<PAGE> 24
9.1.4 by Buyer, pursuant to Sections 7.3.3 or 7.9, or if any of
the conditions provided in Article 7 hereof have not been met by the time
required and have not been waived;
9.1.5 by Seller or Buyer, if the FCC has failed to grant the
Application in an Order which has become a Final Order within the time specified
in Section 1.6 of this Agreement (unless the condition set forth in Section
1.5.1 has been satisfied; or
9.1.6 by any party hereto, if the FCC denies the Application in
an order which has become Final.
9.2 LIABILITIES UPON TERMINATION.
9.2.1 SELLER'S REMEDIES. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due solely to Buyer's material
breach of any representation, warranty, covenant or condition hereunder, and
Seller is not at that time in breach of any material representation, warranty,
covenant or condition hereunder, then Seller would suffer direct and substantial
damages that cannot be determined with reasonable certainty. Seller may
therefore in such event obtain the Escrow Deposit as a reasonable estimate of
Seller's damages and as its exclusive remedy.
9.2.2 BUYER'S REMEDIES. If the parties hereto shall fail to
consummate this Agreement on the Closing Date due solely to Seller's material
breach of any representation, warranty, covenant or condition hereunder, and
Buyer is not at that time in material breach of any representation, warranty,
covenant or condition hereunder, then Buyer shall be entitled to specific
performance of the terms of this Agreement and of Seller's obligation to
consummate the transaction contemplated hereby. If any action is brought by
Buyer to enforce this Agreement by specific performance, Seller shall waive the
defense that Buyer has an adequate remedy at law.
(a) NOTICE OF BREACH. In the event that any party to this
Agreement believes that the other party is in material breach of its
representations, warranties or obligations hereunder, such party shall give
prompt written notice thereof, detailing the nature of the breach and the steps
necessary to cure such breach. For purposes of this Agreement, no "breach" shall
be deemed to have occurred hereunder unless the party alleged to be in breach
has been afforded a cure period of at least twenty (20) business days following
such notice within which to cure such breach: provided, that the cure period may
be extended for an additional 20 days in the event that such party is diligently
and in good faith proceeding to cure such breach and the breach is reasonably
capable of being cured within such extended period.
9.2.3 SURVIVAL OF CONFIDENTIALITY OBLIGATIONS. Notwithstanding
any other provision of this Agreement, the provisions of Sections 4.8, and 5.3
shall survive any termination of this Agreement.
9.3 EXPENSES. Except as otherwise provided herein, each party hereto
shall be solely responsible for all fees and expenses each party incurs in
connection with the
<PAGE> 25
transactions contemplated by this Agreement, including, without limitation,
legal fees incurred in connection herewith: provided, that the FCC and any HSR
filing fees shall be divided equally between Seller and Buyer; and, provided
further, that all transfer, sales, use or other taxes or assessments imposed by
any governmental body on the sale of the Station Assets shall be paid by Seller.
9.4 ASSIGNMENTS. Seller may not assign its rights or obligations under
this Agreement without the prior written consent of Buyer. Buyer may assign its
rights under this Agreement without the prior written consent of Seller to any
party who (1) controls Buyer or (2) is controlled by the same parties who
control Buyer. Buyer may also assign its rights and obligations under this
Agreement to any other party with Seller's consent, which shall not be
unreasonably withheld.
9.5 FURTHER ASSURANCES. From time to time prior to, at and after the
Closing, each party hereto will execute all such instruments and take all such
actions any other party shall reasonably request in connection with effectuating
the intent and purpose of this Agreement and all transactions contemplated by
this Agreement, including, without limitation, the execution and delivery of any
and all confirmatory and other instruments in addition to those to be delivered
at the Closing.
9.6 NOTICES. All notices, demands and other communications authorized or
required by this Agreement shall be in writing, shall be delivered by personal
delivery, by United States certified mail-return receipt requested (postage
prepaid), or by overnight delivery service (charges prepaid), and shall be
deemed to have been given or made when personally delivered, within five (5)
days after being deposited in the mail, postage prepaid, or within one (1) day
after being delivered to an overnight delivery service, charges prepaid. Notices
shall be delivered to each party at the following addresses (or at such other
address as any party may designate in writing to the other parties):
9.6.1 If to Seller --
Tom Embrescia,
Chairman
Second Generation of Florida, Ltd.
One Radio Lane
Cleveland, Ohio 44114-4092
with a copy to (but which shall not
constitute notice to Seller):
David Tillotson, Esq.
4606 Charleston Terrace, NW
Washington, D.C. 20037-2018
<PAGE> 26
If to Buyer --
Douglas Gealy,
President
ACME Television, LLC
10829 Olive Boulevard
St. Louis, Missouri 63141
and
Tom Allen,
Executive Vice President
ACME Television, LLC
Suite 202
2101 East 4th Street
Santa Ana, CA 92705
with a copy to (but which shall not
constitute notice to Buyer):
Lewis J. Paper, Esq.
Dickstein Shapiro Morin & Oshinsky LLP
2101 L Street, N.W.
Washington, DC 20037
9.7 LAW GOVERNING. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Ohio without regard to
conflict of laws provisions.
9.8 WAIVER OF PROVISIONS. The terms, covenants, representations,
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall not affect the exercise of a party's rights at a later date. No waiver by
any party of any condition or the breach of any provision, term, covenant,
representation, or warranty contained in this Agreement in any one or more
instances shall be deemed to be or construed as a further or continuing waiver
of any such condition or of the breach of any other provision, term, covenant,
representation, or warranty of this Agreement.
9.9 COUNTERPARTS. This Agreement may be executed in counterparts, and
all counterparts so executed shall collectively constitute one agreement,
binding on all of
<PAGE> 27
the parties hereto, notwithstanding that all the parties are not signatory to
the original or the same counterpart.
9.10 LITIGATION EXPENSES. If a formal legal proceeding is instituted by
a party to enforce that party's rights under this Agreement (including but not
limited to the use of a Dispute Panel under Section 9.14 of this Agreement), the
party prevailing in the proceeding shall be reimbursed by the other party for
all reasonable costs incurred thereby, including but not limited to reasonable
attorneys' fees.
9.11 PUBLICITY. Except as required by applicable law or with the other
party's express written consent, which shall not be unreasonably withheld, no
party to this Agreement nor any affiliate of any party shall issue any press
release or make any public statement (oral or written) regarding the
transactions contemplated by this Agreement.
9.12 SELLER'S ACCESS TO RECORDS. Any records delivered to Buyer by
Seller relating to the operation of the Station or Seller's business shall be
maintained by Buyer for a period of four (4) years from and after the Closing
Date. Upon reasonable prior notice, Seller shall be entitled to inspect and copy
any of such records for purposes of preparing and completing any tax returns or
other compilations of its operation of the Station. In the event that it wishes
to dispose of such records, Buyer shall give Seller thirty (30) days' prior
written notice and an opportunity to retrieve such records at Seller's expense.
9.13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among the parties, supersedes and cancels any and all prior or contemporaneous
agreements and understandings between them, and may not be amended except in a
writing signed by the parties.
9.14 RESOLUTION OF PRE-CLOSING DISPUTES. Except for (a) the right of
Buyer to seek specific performance of the Seller's obligation to consummate this
Agreement, and (b) the right of Seller or Buyer to enforce any determination of
post-closing indemnity made pursuant to Article 8, the parties agree to resolve
any disputes arising out of or in connection with this Agreement as provided in
this section.
9.14.1 APPOINTMENT OF DISPUTE PANEL. If any dispute is not
resolved in the time permitted by this Agreement or, if no time is specified,
within five (5) days of the date either party gives the other notice that it
intends to invoke the provisions of this section, each party will immediately
name one arbitrator who shall be a person with one of the following
qualifications (a) substantial experience in the ownership or management of
television stations, (b) an accountant with experience in television
broadcasting, or (c) a television broadcasting consultant, and within five (5)
days of their appointment, the two arbitrators so selected shall select a third
arbitrator with similar qualifications (the "Dispute Panel").
<PAGE> 28
9.14.2 DECISION PROCESS. Each party may submit such materials as
it may elect to the Dispute Panel: provided, that a copy of such material is
delivered by hand or overnight courier to the other party. Neither party will
contact any member of the Dispute Panel to discuss the dispute unless the other
party is present in person or by conference telephone call or the other party
consents. The Dispute Panel will request and review such information as its
members deem necessary to resolve the dispute. The Dispute Panel and each party
will treat all information received by it as confidential and will destroy such
information when the dispute is resolved. The Dispute Panel will resolve the
matters presented to it so as to give each Party the benefit of its bargain by
applying the provisions of this Agreement and, to the extent the Agreement is
not dispositive, the customs and practices which, in the view of Dispute Panel,
are common to transactions of this nature. The Dispute Panel will render its
decision as soon as possible, but in any event, within thirty (30) days of the
appointment of the third member. The decision will be in writing and signed by
each member of the Dispute Panel. The decision may include an award of damages
as permitted by this Agreement. Any party may rely upon an original copy of the
written decision or a copy of the decision certified by any member of the
Dispute Panel as evidence of the decision.
9.14.3 BINDING EFFECT. The decision of a majority of the members
of the Dispute Panel will be binding and final with respect to both parties and
may be enforced by seeking preliminary and permanent injunctive relief or entry
of a judgment by a court of competent jurisdiction.
ARTICLE 10. RULES OF CONSTRUCTION
10.1 NUMBER AND GENDER. Whenever the context so requires, words used in
the singular shall be construed to mean or include the plural and vice versa,
and pronouns of any gender shall be construed to mean or include any other
gender or genders.
10.2 HEADINGS AND CROSS-REFERENCES. Headings of the sections have been
included for convenience of reference only and shall in no way limit or affect
the meaning or interpretation of the specific provisions of this Agreement. All
cross-references to sections herein shall mean the section of this Agreement
unless otherwise stated or clearly required by the context. Words such as
"herein" and "hereof" shall be deemed to refer to this Agreement as a whole and
not to any particular provision of this Agreement unless otherwise stated or
clearly required by the context. The term "including" means "including without
limitation."
10.3 COMPUTATION OF TIME. Whenever any time period provided for in this
Agreement is measured in "business days," there shall be excluded from such time
period each day that is a Saturday, Sunday, recognized federal legal holiday, or
other day on which the FCC's offices are closed and are not reopened prior to
5:30 p.m. Washington, D.C. time. In all other cases all days shall be counted.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 29
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year written above.
SECOND GENERATION OF FLORIDA, LTD.
By: /s/ Tom Embrescia
-------------------------------
Tom Embrescia, Chairman
ACME TELEVISION, LLC
By: /s/ Thomas Allen
-------------------------------
Thomas S. Allen, Executive V.P.
<PAGE> 30
The following Exhibits and Schedules have been intentionally omitted
by the Registrants.
SCHEDULES
1. Government Licenses
2. Tangible Personal Property
3. Contracts
4. Leases
5. Taxes
6. Environmental
7. Financial Statements
8. Insurance
9. Compliance with Laws
10. Station Assets
11. Cable Carriage
EXHIBITS
A. Escrow Agreement
B. Noncompetition Agreement
C. Opinion Letter of Buyer's Counsel
D. Opinion Letter of Seller's Counsel
A copy of any omitted Exhibit or Schedule will be provided to the
Securities and Exchange Commission upon request.
<PAGE> 1
EXHIBIT 10.3
TIME BROKERAGE AGREEMENT
by and between
SECOND GENERATION OF FLORIDA LTD, OWNER
and
ACME TELEVISION, INC., BROKER
with respect to
Station WTVK(TV), Naples, Florida
Dated as of March 2, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 1 Sale of Station Air Time........................................ 2
1.1. Scope...................................................................... 2
1.2. Term....................................................................... 2
1.3. Consideration.............................................................. 3
1.4. Authorization.............................................................. 4
Section 2 Responsibilities and Rights..................................... 4
2.1. Owner's Responsibilities................................................... 4
2.2. Broker's Responsibilities.................................................. 5
2.3. Ancillary Broadcast Rights................................................. 6
2.4. Advertising and Programming; Assumption of Certain Contracts............... 6
2.5. Political Advertising...................................................... 6
2.6. Third Party Contracts...................................................... 7
Section 3 Compliance with Regulations..................................... 7
3.1. Licensee Authority......................................................... 7
3.2. Station Identification Announcements/EBS Tests............................. 8
3.3. Additional Licensee Rights and Obligations................................. 8
3.4. Access to Broker Materials................................................. 9
3.5. Regulatory Changes......................................................... 9
Section 4 Station Programming............................................. 9
4.1. Station Broadcast Guidelines............................................... 9
4.2. Licensee Control of Programming............................................ 10
4.3. Pre-Emption or Rejection of Programming; Interruption of Service........... 10
4.4. Children's Programming..................................................... 10
4.5. Advertising in Children's Television Programming........................... 11
Section 5 Termination; Remedies Upon Default.............................. 11
5.1. Termination................................................................ 11
5.3. Title to Property Purchased By Broker Upon Termination..................... 12
Section 6 Indemnification................................................. 13
6.1. Broker's Indemnification................................................... 13
6.2. Owner's Indemnification.................................................... 13
6.3. Procedure for Indemnification.............................................. 13
Section 7 Broker's Use of Owner's Office and Studio Space................. 14
Section 8 Miscellaneous................................................... 14
8.1. Assignment................................................................. 14
8.2. Call Letters............................................................... 14
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
8.3. Counterparts............................................................... 15
8.4. Entire Agreement........................................................... 15
8.5. Headings................................................................... 15
8.6. Governing Law.............................................................. 15
8.7. Notices.................................................................... 15
8.8. Attorneys' Fees............................................................ 16
8.10. Confidentiality............................................................ 16
</TABLE>
TIME BROKERAGE AND PURCHASE OPTION AGREEMENT
This Time Brokerage Agreement ("Agreement") , is made and entered
into as of the _____ day of March 1998, by and between SECOND GENERATION OF
FLORIDA LTD (the "Owner") and ACME TELEVISION, INC. (the "Broker").
WITNESSETH THAT:
WHEREAS, Owner is the licensee of Station WTVK(TV), Naples, Florida
(the "Station");
WHEREAS, Owner and Broker have entered into an Asset Purchase
Agreement ("Purchase Agreement") providing for the purchase of the Station
Assets as defined therein by Broker subject to the consent of the Federal
Communications Commission ("FCC");
WHEREAS, Broker desires to acquire and/or produce television programs
in conformity with this Agreement and all rules, regulations, and policies of
the Federal Communications Commission (the "FCC") for broadcast on the Station;
WHEREAS, Owner desires to accept the programs produced by Broker and
to make broadcasting time on the Station available to Broker on terms and
conditions which conform to FCC rules, regulations, and policies and to this
Agreement; and
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1
SALE OF STATION AIR TIME
1.1. SCOPE. Beginning on the commencement date specified in Section
1.2 hereof, Owner shall make available to Broker substantially all the Station's
air time, as set forth in this Agreement, for broadcast of the programs acquired
and/or produced by Broker. Broker shall provide entertainment and
non-entertainment programming of its selection, together with commercial matter,
news, public service announcements, and other suitable programming for broadcast
on the Station (the "Programming") twenty-four hours per day, seven days per
week, except during periods when Owner is presenting programming produced and/or
acquired by Owner in accordance with the terms of this Agreement. All
programming delivered by Broker to Owner shall be broadcast on the Station by
Owner at the time received except as follows: Owner may set aside such time as
it may require (up to eight hours per broadcast week) 6 a.m. and 10 a.m. on
Sundays and/or 11:00 p.m. Sundays and 1:00 a.m. Mondays, and at such other times
as Owner and
ii
<PAGE> 4
Broker may mutually agree upon, for the broadcast of regularly scheduled public
affairs and other programming produced and/or acquired by Owner.
1.2. TERM. The term of this Agreement shall commence on the later of
(a) the date of the Purchase Agreement or (b) the expiration of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "Commencement Date") and shall continue unless terminated earlier pursuant
to Section 5 hereof until the occurrence of the earliest of the following
events: (a) the consummation of the sale of the Station Assets pursuant to the
Purchase Agreement; (b) the first day of the month following termination of the
Purchase Agreement; or (c) the first day of the month following the date on
which an order of the FCC denying its consent to the assignment of the Station's
license to Broker becomes a Final Order.
1.3. CONSIDERATION. (a) Broker shall pay Owner for the air time on
the Station an amount that is sufficient to cover (i) the Owner's reasonable and
necessary monthly costs of owning and operating the Station including, without
limitation, the costs and expenses listed in Exhibit A hereto and (ii) Owner's
monthly payments with respect to its long term debt which are also listed on
Exhibit A (the "Monthly Fee"). The Monthly Fee shall be paid in advance, on the
commencement of the term of this Agreement and on the first day of each month
thereafter and shall be prorated for any partial month. Within fifteen (15) days
of the end of every calendar quarter and upon termination of this Agreement the
amount of the Monthly Fee paid during the calendar shall be reviewed to
determine whether it exceeded, or fell short of, Owner's actual reasonable
expenses of owning and operating the Station during the calendar quarter just
ended or portion thereof ending on the termination date. Any excess amount shall
be applied against the next Monthly Fee payment, or if the excess exists on the
termination date, shall be refunded to Broker, and any shortfall shall be made
up by Broker making a supplemental cash payment to Owner in the amount of the
shortfall.
(b) In addition to paying the Monthly Fee, Broker shall reimburse
Owner for all costs and expenses of repairing and/or replacing worn out or
defective equipment and components, including, without limitation, transmitter
tubes, that are not
2
<PAGE> 5
covered by the reimbursement of costs and expenses provided in Section 1.3(b)(i)
within ten (10) business days of receipt of a written request for such
reimbursement accompanied by bills or other evidence reasonably satisfactory to
Broker as to the actual cost of effectuating the equipment repairs or
replacements; provided that Broker shall not be obligated to reimburse Owner for
costs of repairing and replacing equipment and components which are covered by
insurance and/or manufacturer's or supplier's warranties; and provided further
that Broker shall not reimburse Owner for any capital improvements in the
Station unless such capital improvements are approved, in advance and in
writing, by Broker.
1.4. AUTHORIZATION. Owner and Broker each represent that it is
legally qualified, empowered, and able to enter into this Agreement, that this
Agreement has been approved by all necessary corporate action or membership
action, as the case may be, and that this Agreement will not constitute a breach
or default under its articles of organization, by-laws, operating agreement or
under any agreement or court order to which it is a party or under which it is
legally bound.
SECTION 2
RESPONSIBILITIES AND RIGHTS
2.1. OWNER'S RESPONSIBILITIES.
(a) Owner shall be solely responsible for, and shall pay
in a timely manner, all costs of operating, owning, and controlling the Station,
including, but not limited to, utilities, rent, and maintenance costs for the
Station's transmitter and antenna system and the Station's main studio, except
that Broker shall reimburse Owner for all music licensing fees attributable to
programming presented over the Station by Broker in the manner specified in
Section 2.2 hereof to the extent not paid for by Broker.
(b) Owner shall be responsible for the Station's
compliance with all applicable provisions of the Communications Act of 1934, as
amended, the rules, regulations, and policies of the FCC and all other
applicable laws pertaining to the ownership and operation of the Station.
(c) Owner shall be responsible for engaging its own
general manager, who shall be responsible for overseeing the operation and
programming of the Station, and for employing, or contracting with, its own
chief operator, who shall be responsible for the Station's compliance with all
engineering requirements and for the employment
3
<PAGE> 6
of an employee who will staff the main studio during regular business hours.
(d) Owner shall be responsible for the salaries, taxes,
insurance, and related costs of all personnel employed by Owner.
(e) Owner shall be responsible for maintaining all
authorizations required for the operation of the Station in full force and
effect during the term of this Agreement, unimpaired by any acts or omissions of
Owner.
(f) Owner shall be responsible for repair and maintenance
of the Station's equipment and facilities, all of which shall be kept in a good
state of repair and good working condition so as to permit their operation in
compliance with the rules and regulations of the FCC and the standards of good
engineering practice; provided that Owner shall be entitled to reimbursement for
all costs and expenses that Owner reasonably incurs in fulfilling this
responsibility as provided for in Section 1.3(b) hereof.
(g) Owner shall cooperate with Broker, at Broker's
expense, in making such arrangements as Broker shall reasonably request for
delivery of the Programming from any remote location to the Station's main
studio and/or directly to the Station's transmitter sites.
(h) Owner shall maintain full replacement value insurance
with respect to the Station's technical equipment and, in the event of any loss
or damage to such property, Broker shall use the proceeds of any applicable
insurance policies to replace, restore, or repair the lost or damaged property
as promptly as practicable.
(i) Owner shall receive and handle mail, telephone calls,
and faxes in connection with Owner's ownership and operation of the Station.
2.2. BROKER'S RESPONSIBILITIES.
(a) Broker shall employ and be responsible for the
salaries, taxes, insurance, and related costs for all personnel involved in the
production of the Programming supplied to the Station hereunder, and all other
costs incurred by Broker for the production of the Programming and the sale of
time in and promotion of the Programming.
(b) Broker shall be responsible for, and shall pay when
due, all music licensing fees in connection with the Programming during the term
of this Agreement regardless of whether the legal
4
<PAGE> 7
responsibility for the payment of such fees to the music licensing entities is
the Owner's or the Broker's.
(c) Broker shall be responsible for any expenses incurred
in the origination and/or delivery of the Programming from any remote location
to the Station's main studio and/or directly to the Station's transmitter site,
and for any publicity or promotional expenses incurred by Broker.
(d) Broker shall be responsible for including in the
Programming the sponsorship identification announcements with respect to the
time brokered programming and advertising and other material included in the
Programming in exchange for consideration as are required by the rules of the
FCC and the Communications Act of 1934, as amended (the "Act").
(e) When Broker's employees are on the Station's premises,
they will be subject to the supervision of the Station's General Manager and
Chief Operator.
(f) Broker shall be responsible for its own telephone
system and local and long distance telephone and fax service and costs.
2.3. ANCILLARY BROADCAST RIGHTS. During the term of this Agreement,
Owner shall lease the subcarriers on the Station to Broker in further
consideration of Owner's compensation pursuant to Section 1.3 of this Agreement.
Broker may transmit material over the subcarriers and retain any revenue
therefrom without additional compensation to Owner.
2.4. ADVERTISING AND PROGRAMMING; ASSUMPTION OF CERTAIN CONTRACTS.
Broker shall be entitled to all revenue from the sale of advertising or program
time on the Station. Broker does not assume any obligation of Owner under any
contract or advertising arrangement entered into by Owner, except that Broker
does assume (i) Owner's obligations under all contracts for the sale of air time
on the Station, for cash, that were entered into in the ordinary course of
business, are in effect on the Commencement Date and are cancelable on thirty
(30) days' notice and (ii) Owner's obligations under the programming, barter and
other agreements listed in Exhibit B hereto.
2.5. POLITICAL ADVERTISING. Broker shall cooperate and consult with
Owner concerning Owner's policies and practices regarding political advertising
and otherwise take such steps as may be necessary or appropriate in order to
assist Owner's compliance with its obligations under the Communications Act of
1934, as amended, and the rules, regulations and policies of the
5
<PAGE> 8
FCC, with respect to the carriage of political advertisements and programs
(including, without limitation, the rights of candidates and, as appropriate
others, to "equal opportunities") and the charges permitted therefor. To this
end, Broker will provide Owner with information as to the lowest unit rate for
all classes and categories of time in the Programming that Broker offers for
sale to commercial advertisers, and, at the request of Owner, shall provide
copies of advertising contracts and other documents used by Broker to determine
the lowest unit rate applicable to any class or category of time. Broker will
promptly notify Owner of any changes in its lowest rates which occur during the
forty-five day period before any primary election and the sixty days period
before any general election. Owner shall, after timely consultation with Broker,
have the right to sell to candidates for federal political office as much time
in the Programming for political advertisements as Owner reasonably believes is
necessary in order for Owner to satisfy its obligations to afford federal
candidates reasonable access to the facilities of the Stations and to comply
with its obligations to afford such candidates equal opportunities, and Broker
shall insert such political advertisements in the Programming; provided that to
the extent practicable and consistent with Owner's obligations as the licensee
of the Station, Owner will consult with Broker regarding the number and
scheduling of political advertisements to be inserted in the Programming; and
provided further that Broker will be entitled to the net revenue received by
Owner from the sale of political advertisements inserted in the Programming.
2.6. THIRD PARTY CONTRACTS. Broker will not enter into any
third-party contracts which purport to bind Owner in any way without Owner's
prior written approval, which approval shall not be unreasonably withheld.
SECTION 3
COMPLIANCE WITH REGULATIONS
3.1. LICENSEE AUTHORITY. Nothing in this Agreement shall abrogate
the unrestricted authority of the Owner to discharge its obligations to the
public and to otherwise comply with applicable law, and the rules, regulations,
and policies of the FCC. Without limiting the generality of the foregoing,
Broker recognizes that Owner will have certain obligations to broadcast
programming which covers issues of public importance in Naples, Florida. The
parties intend that Owner will use all or a substantial portion of the air time
reserved to it under Section 1.1 above to satisfy its programming obligations.
Owner shall, on a regular basis, assess the issues of concern to its community
and address those issues in its public service programming. Broker, in
cooperation with Owner,
6
<PAGE> 9
will endeavor to ensure that programming responsive to the needs and interests
of the community of license and the surrounding area is broadcast in compliance
with applicable FCC requirements. Owner will prepare and place in the Station's
public file (a) quarterly lists of public issues and the programming broadcast
in response thereto as required by the FCC's rules and (b) children's television
programming reports. Broker will submit to Owner on or before the 5th day of the
first month of each calendar quarter (a) a listing of the programs and public
service announcements included in the Programming during the preceding calendar
quarter that were responsive to the needs, issues and problems of the Station's
service area and (b) the draft quarterly reports of children's programming
referred to in Section 4.4. hereof for the purpose of assisting the Owner in
preparing its quarterly "issues/programs lists" and children's television
programming reports. Broker shall provide Owner, upon request, such other
information necessary to enable Owner to prepare records and reports required by
the FCC or other local, state or federal government entities.
3.2. STATION IDENTIFICATION ANNOUNCEMENTS/EAS TESTS. During all
hours when Broker is delivering the Programming for broadcast over Station,
Broker shall include in the Programming, at the appropriate times, the hourly
station identification announcement required to be broadcast over Station.
During all hours when Broker is delivering the Programming for broadcast over
Station, Broker shall maintain at the location from which the Programming is
being originated a receiver capable of receiving test messages and alerts over
the Emergency Alert System, which EAS receiver shall be continuously monitored.
If an EAS test or alert is received during the hours when Broker is delivering
the Programming for broadcast over Station, Broker shall cause the appropriate
EAS test or alert message to be transmitted over Station, shall, in the event of
an actual activation of the Emergency Alert System, cause all steps that Station
is required to take in such an event to be taken, and shall be responsible for
assuring that the receipt and broadcast of all EAS tests and alerts are properly
recorded in the station log.
3.3. ADDITIONAL LICENSEE RIGHTS AND OBLIGATIONS.
(a) Owner retains the right to interrupt Broker's
programming in case of an emergency, although both parties shall cooperate in
the broadcast of emergency information over the Station.
(b) Owner shall also coordinate with Broker the Station's
hourly station identification announcements so that such announcements are aired
in accord with FCC rules. Owner and Broker
7
<PAGE> 10
shall coordinate the broadcast of such sponsorship identification announcements
as are necessary and appropriate concerning the programming supplied by Broker
hereunder.
(c) Owner shall maintain a main studio within the
Station's principal city contour.
(d) Owner represents that all reports and applications
required to be filed with the FCC, including, without limitation, ownership
reports, employment reports, quarterly issues/programs lists, information
concerning the broadcast of children's educational and informational
programming, and documentation of compliance with commercial limits applicable
to certain children's television programming, and all reports and applications
required to be filed with any other governmental agency, department or body in
respect of the Station, have been, and will in the future be, filed in a timely
manner and are and will be true and complete and accurately present the
information contained therein and, to the extent required to be kept in the
public inspection file of the Station, are and will be kept in such file.
(e) Owner shall maintain the Stations logs, receive and
respond to telephone inquiries, and control and oversee any remote control point
which might be established for the station.
3.4. ACCESS TO BROKER MATERIALS. Owner, solely for the purpose of
ensuring Broker's compliance with the law, FCC rules, and Station policies,
shall be entitled to review on a confidential basis any programming material
relating to Station broadcasts as it may reasonably request. Broker shall
provide Owner with copies of all correspondence relating to the Station's
broadcasts and all complaints received from the public.
3.5. REGULATORY CHANGES. In the event of any directive, order or
decree of an administrative agency or court of competent jurisdiction, including
without limitation any material change or clarification in FCC rules, policies,
or precedent, that would cause this Agreement to be invalid or violate any
applicable law, and such order or decree has become effective and has not been
stayed, the parties will use their respective best efforts and negotiate in good
faith to modify this Agreement to the minimum extent necessary so as to comply
with such order or decree without material economic detriment to either party,
and this Agreement, as so modified, shall then continue in full force and
effect.
SECTION 4
STATION PROGRAMMING
8
<PAGE> 11
4.1. STATION BROADCAST GUIDELINES. Owner has adopted and will
enforce certain guidelines ("Guidelines"), a copy of which appears as Exhibit C
hereto. Broker agrees and covenants to comply in all material respects with the
Guidelines and to all rules and regulations of the FCC with respect to the
programming supplied to the Station by Broker.
4.2. LICENSEE CONTROL OF PROGRAMMING. Broker recognizes that the
Owner has full authority to control the operation of the Station. The parties
agree that Owner's authority includes, but is not limited to, the right to
reject or refuse such portions of Broker's programming which Owner reasonably
believes to be contrary to the public interest; provided that Owner shall use
its best efforts to give Broker prior notice of Owner's objection to Broker's
proposed programming, including the basis for such objection, and a reasonable
opportunity to substitute acceptable programming. In accordance with the
Guidelines and FCC rules, regulations and policies, Owner and Broker will
cooperate in an effort to avoid conflicts regarding programming on the Station.
4.3. PRE-EMPTION OR REJECTION OF PROGRAMMING; INTERRUPTION OF
SERVICE. Except as disclosed in the Purchase Agreement, on the Commencement Date
the Station shall be operating in material compliance with the terms of its FCC
licenses. In the event Owner pre-empts or rejects programming from Broker
pursuant to the terms of this Agreement (except in order to present children's
programming which Owner deems necessary in order to fulfill its obligations on
the Children's Television Rules referred to below), or in the event that the
Station experiences a Service Interruption as defined in the Purchase Agreement,
the amount due Owner pursuant to Section 1.3 shall be prorated based on the
percentage that the total hours in any calendar month of Programming pre-empted
or rejected by Owner, or not aired due to a Service Interruption, bears to the
total amount of Programming that Broker would have broadcast over the Station
during the month if no Programming had been pre-empted or rejected and/or no
Service Interruption had occurred; provided that no credit shall be given based
upon Service Interruptions unless the Service Interruptions in any month exceed
4 hours in the aggregate.
4.4. CHILDREN'S PROGRAMMING. Owner shall be responsible for ensuring
that the Station complies with its obligations under the Children's Television
Act of 1990 and the rules and policies promulgated by the FCC thereunder (the
"Children's Television Rules"). During the term of this Agreement, Broker agrees
that it will use a portion of the air time that it has acquired the rights to
program under this Agreement to fulfill the Owner's obligations
9
<PAGE> 12
under the Children's Television Rules. Specifically, Broker will include in the
Programming and broadcast at appropriate times at least three (3) hours per week
of "core" programming as defined in Section 73.671 (a) of the Commission' s
Rules, Broker shall broadcast announcements regarding the availability of FCC
Form 398, and Broker shall broadcast educational and informational public
service announcements. In connection with the children's programming broadcast
by Broker, on the last day of each calendar quarter during the term hereof
Broker shall provide Owner with draft quarterly reports on FCC Form 398 of
children's programming presented by Broker reflecting that the programming
broadcast by Broker during the quarter to which such report pertains satisfied
Owner's obligations under the Children's Television Rules. In the event that
Broker fails to fulfill its obligations under this Section, in addition to the
exercise of any other rights that Owner may have with hereunder, Owner shall
have the right to provide or, if necessary, substitute children's programming
and announcements of Owner's selection for Broker's Programming to the extent
deemed necessary by Owner to comply with its obligations under the Children's
Rules and Broker shall not be entitled to any reduction or adjustment in the
Monthly fee as a consequence of any such pre-emption.
4.5. ADVERTISING IN CHILDREN'S TELEVISION PROGRAMMING. Broker
warrants that it will not broadcast advertising within programs originally
designed for children aged 12 years and under in excess of the amounts permitted
under applicable FCC rules, and that it will take all steps reasonably necessary
to pre-screen children's programming broadcast during the hours it is providing
such programming to establish that advertising is not being broadcast in excess
of the applicable FCC Rules.
SECTION 5
TERMINATION; REMEDIES UPON MATERIAL BREACH
5.1. TERMINATION. This Agreement may be terminated as set forth
below by either Owner or Broker by written notice to the other if the party
seeking to terminate is not then in material breach hereof, upon the occurrence
of any of the following:
(a) this Agreement is declared invalid or illegal in whole
or substantial part by an order or decree of an administrative agency or court
of competent jurisdiction, such order or decree has gone into effect and has not
been stayed, and the parties are unable, after negotiating in good faith
pursuant to Section 3.5 for a period of at least thirty (30) days, to modify
this Agreement to comply with such order or decree.
10
<PAGE> 13
(b) the other party is in material breach of its
obligations hereunder and has failed to cure such breach within ten (10)
business days after receipt of written notice thereof from the non-breaching
party in the case of Broker's failure to pay Owner any amount due hereunder or
Broker's breach of the Guidelines or any FCC rule, regulation or policy
concerning the material broadcast by Broker over the Station; provided that, if
the breach is one that cannot be cured with reasonable diligence within ten (10)
days, but could be cured within an additional thirty (30) days and the breaching
party is diligently attempting to cure the breach, then the non-breaching party
may not terminate this Agreement on account of such breach until such additional
thirty (30) day period has elapsed without a cure;
(c) the mutual consent of both parties; or
(d) there is a change in FCC rules, policies or precedent
that would cause this Agreement to be in violation thereof and such change is in
effect and has not been stayed, and the parties are unable, after negotiating in
good faith pursuant to Section 3.5 for at least thirty (30) days, to modify this
Agreement to comply with the change in FCC rules, policies or precedent.
5.3. TITLE TO PROPERTY PURCHASED BY BROKER UPON TERMINATION. Upon
termination of this Agreement, title to any property purchased by Broker for use
in connection with the operation of the station or purchased by Owner for the
cost of which purchase Owner has been reimbursed pursuant to Section 1.3(c)(ii)
hereof, shall be transferred to Broker and Broker shall have the right to remove
and dispose of such property as it sees fit.
SECTION 6
INDEMNIFICATION.
6.1. BROKER'S INDEMNIFICATION. Broker shall indemnify, defend, and
hold harmless Owner from and against any and all claims, losses, costs,
liabilities, damages, FCC forfeitures, and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature, and
description, arising out of (i) Broker's broadcasts under this Agreement; (ii)
any misrepresentation or breach of any warranty of Broker contained in this
Agreement; (iii) any breach of any covenant, agreement, or obligation of Broker
contained in this Agreement; and (iv) any act or omission by Broker or Broker's
employees or agents in the exercise of any of Broker's rights or the performance
of any of its obligations hereunder.
11
<PAGE> 14
6.2. OWNER'S INDEMNIFICATION. Owner shall indemnify, defend, and
hold harmless Broker from and against any and all claims, losses, costs,
liabilities, damages, FCC forfeitures, and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature, and
description, arising out of (i) Owner's broadcasts under this Agreement; (ii)
any misrepresentation or breach of any warranty of Owner contained in this
Agreement; (iii) any breach of any covenant, agreement or obligation of Owner
contained in this Agreement; and (iv) any act or omission by Owner or Owner's
employees or agents in the exercise of any of Owner's rights or the performance
of any of its obligations hereunder.
6.3. PROCEDURE FOR INDEMNIFICATION. The party seeking
indemnification under this Section ("Indemnitee") shall give the party from whom
it seeks indemnification ("Indemnitor") prompt notice, pursuant to Section 10.7,
of the assertion of any such claim, provided that the failure to give notice of
a claim within a reasonable time shall only relieve the Indemnitor of liability
to the extent it is materially prejudiced thereby. Promptly after receipt of
written notice, as provided herein, of a claim by a person or entity not a party
to this Agreement, the Indemnitor shall assume the defense of such claim;
provided that (i) if the Indemnitor fails, within a reasonable time after
receipt of written notice of such claim, to assume the defense, compromise, and
settlement of such claim, Indemnitee shall have the right to assume the defense
of, and to compromise or settle the claim on behalf of and for the account and
risk of the Indemnitor subject to the right of the Indemnitor (upon notifying
the Indemnitee of its election to do so) to assume the defense of such claim at
any time prior to the settlement, compromise, judgment, or other final
determination thereof, (ii) if the Indemnitee in its sole discretion so elects,
it shall (upon notifying the Indemnitor of its election to do so) be entitled to
employ separate counsel and to participate in the defense of such claim, but the
fees and expenses of counsel so employed shall (except as contemplated by clause
(i) above) be borne solely by the Indemnitee, and (iii) the Indemnitor may not
settle any claim without the consent of the Indemnitee; provided that, if the
Indemnitee does not consent to a bona fide offer of settlement made by a third
party and the settlement involves only the payment of money, then the Indemnitor
may, in lieu of payment of that amount to such third party, pay that amount to
Indemnitee. After such payment to the Indemnitee, the Indemnitor shall have no
further liability with respect to that claim or proceeding and the Indemnitee
shall assume full responsibility for the defense, payment or settlement of such
claim or proceeding.
12
<PAGE> 15
SECTION 7
BROKER'S USE OF OWNER'S OFFICE AND STUDIO SPACE
In further consideration of the payments that Broker is to make to
Owner pursuant to Section 1.3 hereof, Owner shall permit Broker's employees to
utilize the office and studio space currently used as the Station's studios and
offices rent free for the conduct of Broker's programming and business
activities in connection and/or in furtherance of this Agreement.
SECTION 8
MISCELLANEOUS
8.1. ASSIGNMENT. Neither party may assign its rights and obligations
hereunder without the prior written consent of the other party which will not be
unreasonably withheld, except that Broker may assign its rights and obligations
under this Agreement to any entity to which it simultaneously assigns its rights
and obligations under the Purchase Agreement. Subject to the foregoing, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by
the parties hereto and their respective successors and assigns.
8.2. CALL LETTERS. During the term of this Agreement, Owner will
not, without Brokers's prior written consent, request that the Station's call
letters be changed. Upon request of Broker and at Broker's expense, Owner shall
change its call letters (with the consent of the FCC) to such call letters that
Broker shall designate.
8.3. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
8.4. ENTIRE AGREEMENT. This Agreement, the Exhibits hereto, and the
Purchase Agreement embody the entire agreement and understanding of the parties
with respect to the matters deal with herein and supersede any and all
contemporaneous and prior agreements, arrangements, and understandings relating
to matters provided for herein. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement will be
effective unless evidenced by an instrument in writing signed by the party to be
charged therewith.
8.5. HEADINGS. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
8.6. GOVERNING LAW. The obligations of Licensee and Broker are
subject to applicable federal, state and local law, rules
13
<PAGE> 16
and regulations, including, but not limited to, the Communications Act of 1934,
as amended, and the rules and regulations of the FCC. The construction and
performance of the Agreement will be governed by the laws of the State of
Florida without regard to the choice of law rules used in that jurisdiction.
8.7. NOTICES. Any notice, demand, or request required or permitted
to be given under the provisions of the Agreement shall be deemed effective if
made in writing (including telecommunications) and delivered to recipient's
address or facsimile number set forth under its name below by any of the
following means: (a) hand delivery, (b) registered or certified mail, postage
pre-paid, or (c) Federal Express or like courier service (but not Postal Service
Express Mail). Notice made in accordance with this section shall be deemed
delivered upon receipt.
To Owner: Thomas J. Embrescia, Chairman
Second Generation of Florida Ltd
One Radio Lane
Cleveland, OH 44114
Fax: 216-687-0145
With a copy that will not constitute notice to:
David Tillotson, Esquire
4606 Charleston Terrace, N.W.
Washington, D.C. 20007-1911
Fax: 202-965-2018
To Broker: Douglas Gealy, President
ACME Television, LLC
10829 Oliver Boulevard
St. Louis, MO 63141
Fax: 314-989-0616
and
Tom Allen, Executive Vice President
ACME TELEVISION, LLC
2101 East 4th Street, Suite 202
Santa Ana, CA 92705
Fax: 714-245-9494
With a copy that will not constitute notice to:
Lewis J. Paper, Esq.
Dickstein Shapiro Morin & Oshinsky, LLP
2101 L Street, N.W.
Washington, DC 20037
Fax: 202-887-0689
8.8. ATTORNEYS' FEES. If either party initiates any litigation
against the
14
<PAGE> 17
other involving this Agreement, the prevailing party in such action shall be
entitled to receive reimbursement from the other party for all reasonable
attorneys' fees and other costs and expenses incurred by the prevailing party in
respect of that litigation, including any appeal, and such reimbursement may be
included in the judgment or final order issued in that proceeding.
8.9. DISPUTES RESOLUTION. Any dispute arising out of or related to
this Agreement that the parties are unable to resolve between themselves shall
be settled in the manner specified in Section 9.14 of the Purchase Agreement
which provisions are incorporated herein by reference.
8.10. CONFIDENTIALITY. Subject to the requirements of applicable FCC
regulations, including Section 73.3613(d) of the Commission's rules [47 C.F.R.
Section 73.3613(d)], the parties agree to use their respective best efforts to
keep the terms of this Agreement confidential. The parties will not publicize
the existence of this Agreement, except that the parties will cooperate to
inform their respective employees of the existence of this Agreement and to
broadcast appropriate sponsorship identification announcements concerning the
programming provided by Broker hereunder. In the event that either party
receives a request, under the terms of a valid and effective subpoena or order
issued by a court of competent jurisdiction or a government body, including but
not limited to the FCC, to disclose all or any part of the information contained
in this Agreement, the party receiving the request shall (i) promptly notify the
other party of the existence of circumstances surrounding such request, (ii)
consult with the other party, to the extent practicable, as to the appropriate
response to the request, and (iii) if disclosure of such information is
required, exercise reasonable efforts to obtain an order or other reliable
assurance that confidential treatment will be accorded to the information
disclosed.
[Signatures are on the next page]
15
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Time
Brokerage Agreement on the day and year-first written above.
SECOND GENERATION OF FLORIDA LTD
By: /s/ Thomas Embrescia
------------------------------------
Thomas Embrescia
Chairman
ACME TELEVISION, LLC
By: /s/ Thomas D. Allen
------------------------------------
Thomas D. Allen
Executive Vice President and
Chief Financial Officer
16
<PAGE> 19
The following Exhibits have been intentionally omitted by the
Registrants.
Exhibit A - Monthly Fee
Exhibit B - Programming Agreements and Barter Commitments
Exhibit C - Guidelines
A copy of any omitted Exhibit will be provided to the Securities and
Exchange Commission upon request.
xvii
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