<PAGE> 1
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
--------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -----------
Commission File Number 1-13452
PAXSON COMMUNICATIONS CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3212788
------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
18401 U.S. HIGHWAY 19, N.
CLEARWATER, FLORIDA 34624
------------------------ ----------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (813) 536-2211
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the proceeding 12 months (or for shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common and preferred stock, as of April 18, 1994:
CLASS OF STOCK NUMBER OF SHARES
- - - - ---------------------------- --------------------------
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE. --------------------- 26,137,328
COMMON STOCK-CLASS B, $0.001
PAR VALUE PER SHARE. --------------------- 8,311,640
REDEEMABLE CUMULATIVE SENIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 2,000
REDEEMABLE CUMULATIVE SERIES B
PREFERRED STOCK, $0.001 PAR VALUE --------- 714.286
REDEEMABLE CUMULATIVE JUNIOR
PREFERRED STOCK, $0.001 PAR VALUE --------- 33,000
<PAGE> 2
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORP.
INDEX
- - - - -----------------------------------------------------------------------------------------
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
--------------------
Consolidated Balance Sheets
March 31, 1995 and December 31, 1994 3-4
Consolidated Statements of Operations
Three Months Ended March 31, 1995
and March 31, 1994 5
Consolidated Statements of Changes in
Common Stockholders' Equity 6
Consolidated Statements of Cash Flow
Three Months Ended March 31, 1995
and March 31, 1994 7-8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations 10-15
---------------------------------------------
Part II - Other Information
Item 1. Legal Proceedings 16
-----------------
Item 2. Changes in Securities 16
---------------------
Item 3. Defaults upon Senior Securities 16
-------------------------------
Item 4. Submission of Matters to a Vote of
----------------------------------
Security Holders 16
----------------
Item 5. Other Information 16
-----------------
Item 6. Exhibits and Reports on Form 8-K 16
--------------------------------
Signatures 17
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORP.
Consolidated Balance Sheets
- - - - ------------------------------------------------------------------------------
March 31, December 31,
1995 1994
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,442,238 $ 21,571,658
Accounts receivable, less allowance
for doubtful accounts of $716,349 and
$556,950 respectively 12,975,050 13,569,198
Related party note receivable 1,750,000 1,750,000
Prepaid expenses and other current assets 1,893,431 1,579,954
Current deferred income taxes 194,940 194,940
Current program rights 1,243,746 1,980,000
---------- -----------
Total current assets 21,499,405 40,645,750
Property and equipment, net 57,061,102 45,350,430
Intangible assets, net 63,026,497 53,350,967
Other assets, net 12,711,994 13,078,346
Program rights, net 630,000 244,888
---------- -----------
Total assets $154,928,998 $152,670,381
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 4,844,419 $ 5,123,691
Current portion of program rights payable 985,259 986,562
Current portion of long-term debt 9,282,202 6,393,415
------------ ------------
Total current liabilities 15,111,880 12,503,668
Program rights payable 453,461 562,770
Long-term debt 79,407,608 76,013,542
Deferred income taxes 1,154,940 1,474,940
Minority interest 1,155,944 1,217,314
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
3
<PAGE> 4
<TABLE>
PAXSON COMMUNICATIONS CORP.
Consolidated Statements of Operations (continued)
- - - - ---------------------------------------------------------------------------
<S> <C> <C>
Redeemable Cumulative Compounding Senior
preferred stock, $0.001 par value; 15%
dividend rate per annum, 2,000 shares
authorized, issued and outstanding 14,667,771 14,060,054
Redeemable Class A & B common stock warrants 1,881,952 1,735,979
Redeemable Cumulative Compounding Series B
preferred stock, $0.001 par value; 15%
dividend rate per annum, 714.286 shares
authorized, issued and outstanding 1,536,589 1,274,671
Redeemable Cumulative Compounding Junior
preferred stock, $0.001 par value; 12%
dividend rate per annum, 33,000 shares
authorized, issued and outstanding 27,983,397 26,808,053
Class A common stock, $0.001 par value; one
vote per share; 150,000,000 shares authorized,
26,042,561 shares issued and outstanding 26,042 26,042
Class B common stock, $0.001 par value; ten
votes per share, 30,000,000 shares authorized,
8,311,640 shares issued and outstanding 8,312 8,312
Class C common stock, $0.0001 par value; non-
voting; 12,500,000 shares authorized, 0 shares
issued and outstanding - -
Class C common stock warrants 5,338,952 5,338,952
Stock subscription notes receivable (77,666) (77,666)
Additional paid-in capital 20,647,647 20,647,647
Accumulated deficit (14,367,831) (8,923,897)
Commitments and contingencies ------------ ------------
Total liabilities and stockholders' equity $154,928,998 $152,670,381
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
<PAGE> 5
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORP.
Consolidated Statements of Operations (continued)
- - - - ------------------------------------------------------------------------------------
For the Three Months
Ended March 31,
1995 1994
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $18,483,224 $ 8,541,309
Retail and other 1,490,966 437,288
Trade 645,513 386,561
----------- -----------
Total revenue 20,619,703 9,365,158
Operating expenses:
Direct 5,634,155 2,879,892
Programming 3,126,804 1,399,278
Sales and promotion 2,179,513 1,182,799
Technical 979,206 383,533
General and administrative 4,657,850 1,983,353
Trade 471,541 495,479
Time brokerage agreement fees 239,048 -
Sports rights fees 1,041,582 -
Program rights amortization 351,835 -
Depreciation and amortization 3,784,629 2,410,146
----------- -----------
Total operating expenses 22,466,163 10,734,480
----------- -----------
Loss from operations (1,846,460) (1,369,322)
Other income (expense):
Interest expense, net (1,794,159) (618,274)
Other income, net 67,635 188,971
----------- -----------
Loss before income tax benefit (3,572,984) (1,798,625)
Income tax benefit 320,000 -
----------- -----------
Net loss (3,252,984) (1,798,625)
Dividends and accretion on preferred stock
and common stock warrants (2,190,952) (783,804)
----------- -----------
Net loss attributable to common stock and
common stock equivalents $(5,443,936) $(2,582,429)
=========== ===========
Pro forma net loss per share $ (.09) $ (.06)
Dividends and accretion on preferred stock
and common stock warrants per share (.07) (.02)
----------- -----------
Pro forma net loss attributable to common
stock and common stock equivalents per share $ (.16) $ (.08)
=========== ===========
Pro forma weighted average shares outstanding
primary & fully diluted 34,354,201 31,581,948
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
<PAGE> 6
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORP.
Consolidated Statements of Changes in Common Stockholders' Equity
- - - - ---------------------------------------------------------------------------------------------------------------------------------
Class C Stock
Common Stock Common Subscription Additional
----------------------------- Common Stock Notes Paid-in Accumulated
Class A Class B Class C Stock Warrants Receivable Capital Deficit
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $ 1 $16,895,623 $ (776,367)
RECAPITALIZATION OF
COMMON STOCK $ 15,791 $ 5,264 (1) (21,054)
STOCK ISSUED FOR
ANG ACQUISITION 1,570 277 $(77,666) 3,784,530
NET PROCEEDS FORM ISSUANCE OF
COMMON STOCK WARRANTS $ 5,338,952
DIVIDENDS ON REDEEMABLE
PREFERRED STOCK (2,216,137)
ACCRETION ON REDEEMABLE
SECURITIES (1,169,319)
NET LOSS (4,762,074)
STOCK DIVIDEND 8,681 2,771 (11,452)
-------- ------- ------- ------- ----------- --------- ----------- -----------
BALANCE AT DECEMBER 31, 1994 26,042 8,312 0 0 5,338,952 (77,666) 20,647,647 (8,923,897)
DIVIDENDS ON REDEEMABLE
PREFERRED STOCK(UNAUDITED) (1,729,917)
ACCRETION ON REDEEMABLE
SECURITIES (UNAUDITED) (461,033)
NET LOSS (UNAUDITED) (3,252,984)
-------- ------- ------- ------- ----------- --------- ----------- ------------
BALANCE AT MARCH 31, 1995
(UNAUDITED) $ 26,042 $ 8,312 $ 0 $ 0 $ 5,338,952 $ (77,666) $20,647,647 $(14,367,831)
======== ======= ======= ======= =========== ========= =========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
<PAGE> 7
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORP.
Consolidated Statements of Cash Flows
- - - - -------------------------------------------------------------------------------------------------
For the Three Months
Ended March 31,
1995 1994
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,252,984) $(1,798,625)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 3,784,629 2,410,146
Program rights amortization 351,835 -
Provision for doubtful accounts 143,257 89,910
Income tax benefit (320,000)
Minority interest in net loss (61,370) (86,667)
Decrease (increase) in accounts receivable 450,891 (421,938)
Decrease (increase) in prepaid expenses and
other current assets (313,477) 9,564
Increase in intangible assets (316,027) -
Decrease (increase) in other assets (300,213) (183,471)
Increase (decrease) in accounts payable and
accrued liabilities (279,273) 362,104
------------ -----------
Net cash provided by (used in) operating
activities (112,732) 381,023
------------ -----------
Cash flows from investing activities:
Acquisitions of broadcasting properties (18,211,875) (3,000,000)
Deposits on broadcasting properties (900,000) (1,100,000)
Purchases of property and equipment (5,079,492) (585,128)
------------ -----------
Net cash used for investing activities (24,191,367) (4,685,128)
------------ -----------
Cash flows from financing activities:
Increase in related party note payable - 3,500,000
Proceeds from long-term debt 6,300,000 3,000,000
Payments of long-term debt (17,147) (300,483)
Payments for program rights (108,174) -
------------ -----------
Net cash provided by financing activities 6,174,679 6,199,517
------------ -----------
Increase (decrease) in cash and cash equivalents (18,129,420) 1,895,412
------------ -----------
Cash and cash equivalents at beginning of period 21,571,658 7,019,747
------------ -----------
Cash and cash equivalents at end of period $ 3,442,238 $ 8,915,159
============ ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
<PAGE> 8
<TABLE>
<CAPTION>
PAXSON COMMUNICATIONS CORP.
Consolidated Statements of Cash Flows (continued)
- - - - ------------------------------------------------------------------------------
For the Three Months
Ended March 31,
1995 1994
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow
information:
Cash paid for interest $ 2,049,734 $ 618,273
=========== ==========
Cash paid for income taxes $ 18,500 $ -
=========== ==========
Non-cash operating and financing activities:
Dividends on redeemable preferred stock $ 1,729,917 $ 521,425
=========== ==========
Accretion on redeemable securities $ 461,033 $ 262,379
=========== ==========
Trade revenue $ 645,513 $ 386,561
=========== ==========
Trade expense $ 471,541 $ 495,479
=========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
8
<PAGE> 9
PAXSON COMMUNICATIONS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Paxson Communications Corp.'s (the "Company") financial information contained
in the financial statements and notes thereto as of March 31, 1995 and for the
three month periods ended March 31, 1995 and 1994, are unaudited. In the
opinion of management, all adjustments necessary for the fair presentation of
such financial information have been included. These adjustments are of a
normal recurring nature. There have been no changes in accounting policies,
nor has the composition of accounts substantially changed since the period
ended December 31, 1994, except to reflect the operations of acquisitions
discussed below.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These financial statements, footnotes, and
discussions should be read in conjunction with the December 31, 1994 financial
statements and related footnotes and discussions contained in the Company's
form 10-K, filed with the Securities and Exchange Commission on March 30, 1995
and the definitive proxy statement filed by the Company for the annual meeting
of stock holders to be held June 1, 1995.
Pro Forma Financial Information
The following represents the unaudited pro forma results of operations as if
the acquisitions described in Item 2 of Part I had been completed at the
beginning of 1995 and 1994, after giving effect to certain adjustments,
including increased depreciation and amortization of property and equipment and
intangible assets and interest expense for acquisition debt. These pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of the results of operations which would have been achieved had
these acquisitions been completed as of these dates, nor are the results
indicative of the Company's future results of operations.
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1995 1994
(Unaudited)
<S> <C> <C>
Revenues $ 21,140,508 $ 16,447,411
============ ============
Broadcast cash flow $ 2,999,650 $ 2,101,545
============ ============
Loss from operations $ (1,248,338) $ (1,277,568)
============ ============
Net loss attributable to common
stock and common stock equivalents $ (4,862,466) $ (3,044,968)
============ ============
Net loss per share attributable to common
stock and common stock equivalents $ (.14) $ (.10)
============ ============
Pro forma weighted average shares
outstanding primary and fully diluted 34,354,201 31,581,948
============ ============
</TABLE>
"Broadcast cash flow" is defined as Income (loss) from Operations plus non-cash
expenses and non-broadcast operating results, less scheduled broadcast rights
payments and non-cash revenues. The Company has included broadcast
9
<PAGE> 10
cash flow data because such data is commonly used as a measure of performance
for broadcast companies and is 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 as it is not a measure of
financial performance under generally accepted accounting principles.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's growth since its inception in 1991 has primarily been due to the
acquisitions of or management of radio stations, television stations, and radio
networks, as well as the subsequent improvement of these operations. Certain
of the Company's radio and television stations were and continue to be operated
under time brokerage agreements for various periods. Under time brokerage
agreements, the stations' operating revenues and expenses are controlled by the
Company and are consolidated in the financial statements. The following table
discloses the date of acquisition and, where applicable, the date of
commencement of management under time brokerage agreements for each of the
Company's radio and television properties:
<TABLE>
<CAPTION>
DATE OF COMMENCEMENT DATE
STATION MARKET ACQUISITION OF BROKERAGE AGREEMENT
- - - - ------- ------ ----------- ----------------------
<S> <C> <C> <C>
WROO(FM) Jacksonville September 1991
WNZS(AM) Jacksonville May 1993(1)
WHPT(FM) Tampa/St. Petersburg November 1991
WHNZ(AM) Tampa/St. Petersburg November 1991
WZTA(AM) Miami/Ft. Lauderdale April 1992
WINZ(AM) Miami/Ft. Lauderdale April 1992
WWNZ(AM) Orlando April 1992
WMGF(FM) Orlando May 1993 June 1992
WJRR(FM) Orlando May 1993 July 1992
WAIA(FM) Jacksonville May 1993 June 1992
WZNZ(AM) Jacksonville May 1993 June 1992
WLVE(FM) Miami/Ft. Lauderdale April 1993
WGSQ(FM) Cookeville, TN April 1994 (2)
WPTN(AM) Cookeville, TN April 1994 (2)
WTLK(TV14) Atlanta July 1994 April 1994
WCTD(TV35) Miami Option April 1994
WPBF(TV25) Palm Beach July 1994
WNZE(AM) Tampa/St. Petersburg February 1995 August 1994
WFCT(TV66) Tampa/St. Petersburg Option August 1994
WWZN(AM) Orlando December 1994 (3)
WIRB(TV56) Orlando Option December 1994
WTGI(TV61) Philadelphia February 1995
KTFH(TV49) Houston Pending March 1995
WTWS(TV26) Hartford/New Haven March 1995
WEZY(FM) Tampa/St. Petersburg March 1995 (4)
</TABLE>
(1) Results of operations since October 1991 have been included in the
Company's results of operations pursuant to certain agreements the
Company had entered into as of that date.
(2) Acquired general partnership interest through ANG merger.
(3) Call letters changed from WGTO (AM). Former WWZN (AM) sold for $0.3
million in November 1994.
(4) Station acquired March 31, 1995 but will not be operated by the
Company until new transmission site completed.
10
<PAGE> 11
The Company acquired WWNZ(FM) Orlando in April 1992 and subsequently sold this
station in May 1993 to comply with FCC ownership regulations. The Company also
acquired the Florida Radio Network effective March 1993, and in connection with
the ANG merger, the Company began operating news radio networks in April 1994
in Tennessee and South Carolina and radio sports networks for the men's
football and basketball programs of the University of Florida, Pennsylvania
State University and Virginia Polytechnic Institute and State University.
Effective January 1, 1995 the Company purchased the Alabama News Network.
In February 1995 the Company purchased WNZE(AM) (formerly WYTA), serving the
Tampa/St. Petersburg, Florida market, for $1.1 million and WTGI (TV-61),
serving the Philadelphia, Pennsylvania market, for approximately $10.2 million.
In March 1995 the Company purchased WTWS (TV-26), serving the Hartford/New
Haven, Connecticut market, for approximately $2.7 million and WEZY (FM) serving
the Tampa/St. Petersburg, Florida market, for approximately $4.8 million. WEZY
(FM) will not be operated by the Company until a new transmission site is
completed. Commencement of WEZY(FM)'s operations is anticipated in the third
quarter of 1995.
In April 1995 the Company acquired substantially all the assets of radio
stations WGSQ(FM) and WPTN(AM) from Cookeville Radio General Partnership, a
general partnership of which the Company, through its wholly-owned subsidiary
ANG/Tennessee, Inc., was the managing general partner and Plymouth County
Retirement Association was the beneficial holder of the remaining partnership
interest. The Company acquired ANG/Tennessee, Inc., and indirectly became the
managing general partner of Cookeville Radio General Partnership, in connection
with its merger with ANG, and has consolidated the results of operations of the
Cookeville radio stations since April 1994. The consideration paid by the
Company to acquire the Cookeville radio stations was $3,436,065, and included
the foregiveness of approximately $2,036,065 of indebtedness owed by Cookeville
Radio General Partnership to the Company, as well as the payment of $200,000 in
cash and the issuance of 94,767 shares of the class A common stock of the
Company. The cash and common stock of the Company were, in accordance with the
terms of the acquisition, distributed to Plymouth County Retirement
Association.
11
<PAGE> 12
RESULTS OF OPERATIONS
The following tables set forth, for the periods indicated, selected financial
information as a percentage of revenues and the period-to-period changes in
such information.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
1995 1994 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 27.3% 30.8% -11.4%
Programming 15.2 14.9 2.0
Sales and promotion 10.6 12.6 -15.9
Technical 4.7 4.1 14.6
General and administrative 22.6 21.2 6.6
Trade 2.3 5.3 -56.6
Time brokerage agreement fees 1.2 0.0 0.0
Sport rights fees 5.1 0.0 0.0
Program rights amortization 1.7 0.0 0.0
Depreciation and amortization 18.4 25.7 -28.4
----- ----- -----
Total operating expenses -109.1 -114.6 -4.8
----- ----- -----
Loss from operations -9.1 -14.6 37.7
----- ----- -----
Other income (expense);
Interest expense, net -8.7 -6.5 -33.8
Other income (expense) net 0.3 1.9 84.2
----- ----- -----
Loss before income tax benefit -17.5 -19.2 8.9
----- ----- -----
Income tax benefit 1.6 0.0 0.0
----- ----- -----
Net loss -15.9% -19.2% 17.2%
===== ===== =====
</TABLE>
12
<PAGE> 13
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
Consolidated revenues for the three months ended March 31, 1995 increased 120%
(or $11.2 million) to $20.6 million from $9.4 million for the three months
ended March 31, 1994. This increase was primarily due to the acquisition of
WTGI (TV-61) on February 3, 1995, WTWS (TV-26) on March 17, 1995, and WPBF
(TV-25) on July 1, 1994, revenues received under the time brokerage agreement
for WTLK (TV- 14) beginning April 4, 1994 and the subsequent purchase thereof
on July 13, 1994, the consolidation of the ANG operations beginning April 14,
1994, and improved market conditions and better sales management within the
Company's existing properties. In addition, revenues increased due to the time
brokerages of WIRB (TV-56) beginning December 27, 1994, KTFH (TV-49) beginning
March 1, 1995, WCTD (TV-35) beginning April 1, 1994 and WFCT (TV-66) beginning
August 1, 1994.
Operating expenses for the three months ended March 31, 1995 increased 110% (or
$11.8 million) to $22.5 million from $10.7 million for the three months ended
March 31, 1994. The increase was primarily due to the costs of operating WTGI
(TV-61), WTWS (TV-26), WPBF (TV-25) and WTLK (TV-14), direct expenses such as
commissions which rise in proportion to revenues, the consolidation of ANG, and
higher depreciation and amortization related to assets acquired. In addition,
operating expenses increased because of the time brokerages of WIRB (TV-56),
KTFH (TV-49), WCTD (TV-35) and WFCT (TV-66) and related fees.
Broadcast cash flow for the three months ended March 31, 1995 increased 138%
(or $2.2 million) to $3.8 million, from $1.6 million for the three months ended
March 31, 1994. The increase in broadcast cash flow was a direct result of
acquisitions, revenue growth and continued expense controls.
Net interest expense for the three months ended March 31, 1995 increased to
$1.8 million from $0.6 million for the three months ended March 31, 1994, an
increase of 190% primarily due to a greater level of long-term debt throughout
the period and higher borrowing rates. As a result of acquisitions, at March
31, 1995, long-term debt was $88.7 million, or 152% higher that the $35.2
million outstanding a year prior.
The Company recognized $0.3 million of income tax benefit which resulted
primarily from the 1995 net loss and reversal of deferred taxes associated with
the 1993 tax provision resulting from the change in tax status.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 1995 and December 31, 1994 was $6.4
million and $28.1 million, respectively, and the ratio of current assets to
current liabilities was 1.42:1 and 3.25:1, on such dates respectively. Working
capital decreased primarily due to acquisitions previously discussed, and an
increase in the current portion of long-term debt.
Cash provided by (used in) operations of ($.1) and $0.4 million for the three
months ended March 31, 1995 and 1994, respectively, reflect the improvement in
operating results of existing properties, acquisitions and time brokerage
properties net of increased interest expense. Cash used for investing
activities primarily reflects the acquisitions WTGI (TV-61), WTWS (TV-26), and
WEZY (FM) and purchases of equipment for existing properties. Cash provided by
financing activities primarily reflects the proceeds from borrowings of
long-term debt.
Non-cash activity relates to reciprocal trade advertising revenue and expense,
as well as dividends and accretion on the preferred stock and common stock
warrants. Liquidity at the parent level has historically been provided
13
<PAGE> 14
primarily by proceeds of preferred stock and common stock warrant offerings, as
well as equity contributions and loans from its largest stockholder, Lowell W.
Paxson.
The Company was initially funded primarily by $37 million of equity invested by
Mr. Paxson. Beginning in 1992, the Company has also utilized senior long-term
debt provided to its principal operating subsidiaries by a consortium of
financial institutions. A credit facility of $32 million was established in
March 1993. This facility was subsequently increased to $40 million in
December 1993 and $150 million in July 1994. The credit terms require
amortization of principal over a seven-year period with the first payment due
December 31, 1995, and interest payable quarterly at a floating rate (presently
LIBOR plus 2.5%). As of March 31, 1995, $87 million has been drawn under this
facility.
Effective March 31, 1995 the credit facility was amended to allow the Company
to borrow up to $19.9 million to consummate the agreement with Whitehead Media,
Inc. ("Whitehead") discussed below, to reschedule the principal payment due
December 31, 1995 to be paid in equal installments on September 30, and
December 31, 1995, to alter certain covenant compliance calculations, and to
exchange certain collateral in conjunction with the formation of a new credit
facility under negotiation discussed below.
The Company believes that cash flow from operations will be sufficient to make
scheduled principal and interest payments under the existing credit facility
and meet working capital requirements for existing properties.
ACQUISITIONS
The Company has agreements to purchase the assets of the following television
and radio broadcasting stations, all of which are subject to various
conditions, including the receipt of regulatory approvals:
<TABLE>
<CAPTION>
PURCHASE
STATION MARKET PRICE
- - - - ------- ------ -----
<S> <C> <C>
KZKI (TV-30) Los Angeles, CA $18,000,000
KLXV (TV-65) San Francisco, CA $ 5,000,000
Channel 68 Dallas, TX (1) $ 2,000,000
KTFH (TV-49) Houston, TX (2) $ 7,900,000
WGOT (TV-60) Boston, MA $ 3,050,000
WFTL (AM) Miami, FL $ 2,000,000
WHKE (TV-55) Milwaukee, WI (4) $ 2,550,000
WIRB (TV-56) Orlando, FL (3)(4) $ 3,800,000
KUBD(TV-59) Denver, CO (4) $ 6,500,000
</TABLE>
(1) Station not currently on the air. The Company estimates spending
$2,000,000 in build-out costs before broadcasting can begin.
(2) Operated under a time brokerage agreement since March 1, 1995.
(3) Operated under a time brokerage agreement since December 27, 1994.
(4) Station licenses will be owned by The Christian Network, Inc. The
Company plans to enter into time brokerage agreements and acquire
certain real and personal tangible assets of the stations.
In September 1994, the Company entered into an agreement with Whitehead in
which the Company agreed to lend up to $18.0 million to purchase WTVX (TV-34),
West Palm Beach, Florida. Whitehead has signed an asset purchase agreement for
WTVX (TV-34) and has filed an application with the FCC for assignment of the
license. Under the agreement, the Company would operate WTVX (TV-34) under
14
<PAGE> 15
a time brokerage agreement following the closing of Whitehead's purchase of the
station.
The Company plans to fund these acquisition and related capital expenditure
requirements through a combination of additional borrowings on its senior debt
facility and a new $75 million facility presently under negotiation.
If the Company expands through acquisitions in addition to those described,
management may seek additional funding from a variety of potential sources,
including Mr. Paxson, and the public and private debt and equity markets. The
Company has no assurances that such funding shall become available.
15
<PAGE> 16
PAXSON COMMUNICATIONS CORP.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
No material legal proceedings are pending to which the Company, or any of its
property, is subject. To the knowledge of the Company, no such legal
proceedings are contemplated by any governmental authority.
Items 2-3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the period of
this report.
Item 5. Other Matters. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
EXHIBIT NO. DESCRIPTION
10.1 Paxson Broadcasting/Communications Second Amendment To Credit
Agreement, dated as of March 31, 1995.
10.2 Asset Purchase Agreement, dated as of March 31, 1995, by and
among The Christian Network, Inc. and LeSea Broadcasting
Corporation and PCC.
10.3 Stock Purchase Agreement, dated as of April 30, 1995, by and
among Channel 59 of Denver, Inc. and David M. Drucker and
Charles Ergen and PCC.
10.4 Asset Purchase Agreement, dated as of Arpil 30, 1995, by and
among Channel 59 of Denver, Inc. and Echonet Corporation and PCC.
(b) Reports on Form 8-K. None.
16
<PAGE> 17
PAXSON COMMUNICATIONS CORP.
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.
Date: May 12, 1995 By: /s/ Lowell W. Paxson
----------------------------------
Lowell W. Paxson
Chairman of the Board of
Directors and Chief Executive
Officer
Date: May 12, 1995 By: /s/ Arthur D. Tek
---------------------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
17
<PAGE> 1
Exhibit 10.1
<PAGE> 2
EXHIBIT 10.1
EXECUTION
PAXSON BROADCASTING/COMMUNICATIONS
SECOND AMENDMENT TO CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is
dated as of March 31, 1995 and entered into by and among each of PAXSON
BROADCASTING OF JACKSONVILLE, LIMITED PARTNERSHIP, a Florida limited
partnership ("JACKSONVILLE LP"), PAXSON BROADCASTING OF MIAMI, LIMITED
PARTNERSHIP, a Florida limited partnership ("MIAMI LP"), PAXSON BROADCASTING
OF ORLANDO, LIMITED PARTNERSHIP, a Florida limited partnership ("ORLANDO
LP"), PAXSON BROADCASTING OF TAMPA, LIMITED PARTNERSHIP, a Florida limited
partnership ("TAMPA LP"), PAXSON COMMUNICATIONS OF ATLANTA-14, INC., a
Florida corporation ("ATLANTA-14"), PAXSON COMMUNICATIONS OF MIAMI-35, INC.,
a Florida corporation ("MIAMI-35"), PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC., a Florida corporation ("WEST PALM BEACH-25"), PAXSON
COMMUNICATIONS OF TAMPA-66, INC., a Florida corporation ("TAMPA-66" and
together with each of the foregoing Persons, the "EXISTING BORROWERS"),
PAXSON COMMUNICATIONS OF FT. PIERCE-34, INC., a Florida corporation ("FT.
PIERCE- 34"), PAXSON COMMUNICATIONS OF COOKEVILLE, INC., a Florida corporation
("COOKEVILLE"), PAXSON COOKEVILLE LICENSE, INC., a Florida corporation
("COOKEVILLE LICENSE SUB"), PAXSON NETWORKS, INC., a Florida corporation
("FLORIDA RADIO NETWORK"), and PAXSON COMMUNICATIONS NETWORKS, INC., a
Florida corporation ("NETWORK HOLDINGS"), each of the OTHER CREDIT PARTIES
LISTED ON THE SIGNATURE PAGES HEREOF, the FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (collectively, the "LENDERS") and BANQUE PARIBAS, as
agent (in such capacity "AGENT"), and is made with respect to that certain
Amended and Restated Credit Agreement dated as of July 1, 1994 as amended by
that certain First Amendment dated as of July 13, 1994 (as amended "CREDIT
AGREEMENT") among Existing Borrowers, Lenders and Agent. Capitalized terms
used herein without definition shall have the same meanings herein as set forth
in the Credit Agreement; references to Sections, subsections, Schedules and
Exhibits contained herein shall be to the applicable Credit Agreement Sections,
subsections, schedules and Exhibits, unless noted otherwise.
<PAGE> 3
RECITALS
WHEREAS, Holdings, the Existing Borrowers, Ft. Pierce-34, Cookeville,
Cookeville License Sub, Florida Radio Network, Network Holdings and the other
Credit Parties desire to amend the Credit Agreement and the other Loan
Documents to:
(i) permit Ft. Pierce-34 to:
(a) use the proceeds of Loans in an aggregate
amount not to exceed $17,175,000 to make a secured loan (the
"WTVX-TV LOAN") pursuant to that certain loan agreement (in
the form satisfactory to Requisite Lenders pursuant to the
Credit Agreement as amended hereby, the "WTVX-TV LOAN
AGREEMENT") to Whitehead Media, Inc., a Florida corporation
("WTVX-TV CO."), which is wholly owned by Eddie Whitehead,
an individual ("WHITEHEAD") to purchase (the "WTVX-TV
ACQUISITION") television station WTVX-TV, licensed to Ft.
Pierce, Florida, Channel 34, from Krypton Broadcasting of Ft.
Pierce, Inc., a debtor-in-possession, pursuant to that certain
purchase agreement (in the form satisfactory to Requisite
Lenders pursuant to the Credit Agreement as amended hereby,
the "WTVX-TV PURCHASE AGREEMENT") provided that (i) all
obligations in respect of the WTVX-TV Loan (and, by assignment
to Agent on behalf of Lenders, all Obligations) are secured by
all of the assets of WTVX-TV Co. and 100% of the issued and
outstanding capital stock of WTVX-TV Co. (collectively, the
"WHITEHEAD COLLATERAL"), pursuant to the WTVX-TV Collateral
Documents (as defined below) and (ii) all rights, interests
and remedies of any Credit Party in respect of the WTVX-TV
Documents (as defined below) are assigned by Ft. Pierce-34 to
Agent on behalf of Lenders as security for the Obligations;
(b) enter into that certain time brokerage
agreement with WTVX-TV Co. (in the form satisfactory to
Requisite Lenders pursuant to the Credit Agreement as amended
hereby, the "WTVX-TV LMA" and together with the WTVX-TV Loan
Agreement, WTVX-TV Collateral Documents, WTVX-TV Purchase
Agreement and all amendments, agreements, documents and
instruments delivered in connection with any of the foregoing,
the "WTVX-TV DOCUMENTS") pursuant to which Ft. Pierce-34
shall have the right for a seven-year term to provide
substantially all programming and sell all advertising time
and retain all economic benefits of such sales on WTVX-TV in
exchange for a monthly fee to be determined; and
(c) make Combined Capital Expenditures in an
aggregate amount not to exceed $2,700,000 for equipment and
improvements to be owned by Ft. Pierce-34 and related to
operations for the WTVX-TV LMA;
(ii) reflect the prior acquisition by (i) Tampa LP of
radio station WNZE-AM, licensed to Largo, Florida, and (ii) Orlando LP
of radio station WWZN-AM (formerly
2
<PAGE> 4
WGTO-AM), licensed to Pine Hills, Florida (collectively, the "FLORIDA
RADIO ACQUISITIONS");
(iii) add Cookeville (which has been formed to own and
operate radio stations WGSQ-FM and WPTN-AM, each licensed to
Cookeville, Tennessee) and each of Ft. Pierce-34, Florida Radio
Network, and Network Holdings (collectively, the "NEW BORROWERS") as
an "Additional Borrower" for all purposes under the Credit Agreement
and the other Loan Documents pursuant to this Amendment and that
certain (a) Counterpart and Acknowledgment to Credit Agreement
substantially in the form annexed hereto as Amendment Exhibit A, (b)
Counterpart and Acknowledgment to Borrower Security Agreement
substantially in the form annexed hereto as Amendment Exhibit B (c)
Counterpart and Acknowledgment to Note substantially in the form
annexed hereto as Amendment Exhibit C (collectively the "THE NEW
BORROWER COUNTERPARTS") and the other Security Documents;
(iv) add Cookeville License Sub (which has been formed to
hold the FCC Licenses related to the radio stations operated by
Cookeville) (the "NEW GUARANTOR") as a "Guarantor" and "License
Subsidiary" for all purposes under the Credit Agreement and the other
Loan Documents pursuant to this Amendment and that certain (a)
Counterpart and Acknowledgment to License Subsidiary Guaranty
substantially in the form annexed hereto as Amendment Exhibit D and
(b) Counterpart and Acknowledgment to License Subsidiary Security
Agreement substantially in the form annexed hereto as Amendment
Exhibit E (collectively, the "NEW GUARANTOR COUNTERPARTS");
(v) allow Cookeville until May 31, 1995 to complete the
transfer of all FCC Licenses for its Stations to Cookeville License
Sub pursuant to an appropriate order of the FCC (the "COOKEVILLE
LICENSE TRANSFER") which shall become a Final Order on or before June
30, 1995; provided that on or before the Second Amendment Effective
Date, Cookeville shall have made a proper and complete application
with the FCC seeking such consent to the Cookeville License Transfer,
in form and substance satisfactory to Agent (the "COOKEVILLE
APPLICATION");
(vi) release each of Atlanta-14, Miami-35 and Tampa-66
(collectively the "RELEASED BORROWERS"), as a "Borrower," and
"Credit Party" and release Atlanta-14 License Sub (the "RELEASED
GUARANTOR") as a "Guarantor", "Credit Party" and "License
Subsidiary", in each case, for all purposes under the Credit
Agreement and the other Loan Documents, including, without limitation,
the release of all Collateral pledged and assigned by such Persons to
Agent on behalf of Lenders in support of the Obligations;
(vii) permit all of the issued and outstanding capital
stock of Cookeville, Florida Radio Networks and Network Holdings, each
of which is currently owned (directly or indirectly) by Holdings, to
be contributed to Paxson Communications of Florida, Inc. ("BORROWERS
GENERAL PARTNER") pursuant to, in the case of Cookeville, an
appropriate Final Order of the FCC (the "NEW BORROWER STOCK
TRANSFER");
3
<PAGE> 5
(viii) revise the covenants regarding (a) combined Capital
Expenditures, (b) Combined Total Debt to Combined Operating Cash Flow,
(c) Combined Operating Cash Flow to Combined Cash Interest Expense,
(d) Combined Operating Cash Flow to Combined Debt Service and (e)
Combined Operating Cash Flow;
(ix) add a $3,187,500 September 30, 1995 Scheduled Tranche
A & B Term Loans Principal Payment and reduce the $6,375,000 December
31, 1995 Scheduled Tranche A & B Term Loans Principal Payment to
$3,187,500;
(x) revise the Event of Default regarding change of
control;
(xi) deem the Tranche B Revolving/Term Loans in the
aggregate principal amount of $5,000,000 which were used to consummate
the Tampa (WEZY-FM) Asset Purchase, as of and from the Funding Date
therefor, to be Tranche C Revolving/Term Loans for all purposes under
the Credit Agreement and the other Loan Documents, including, without
limitation, for purposes of calculating fees under subsection
2.3A(ii);
(xii) not require the Credit Parties to comply with the
real property security requirements of subsection 3.2C of the Credit
Agreement (a) until July 31, 1995 with respect to the leasehold
properties for Cookeville and (b) until the date (the "TOWER
COMPLETION DATE") that construction of the new transmitting tower for
WEZY-FM has been completed with respect to the tower site for WEZY-FM
(the "TOWER SITE");
(xiii) reflect the fact that Miami-35 License Sub and
Tampa-66 License Sub were never formed; and
(xiv) make such other amendments and revisions to the terms
and provisions of the Credit Agreement relating to the foregoing
generally, as set forth below.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
SECTION 1.
CONSENTS AND AGREEMENTS
On and after the effectiveness of this Amendment on the Second
Amendment Effective Date in accordance with the terms hereof, the Lenders
hereby acknowledge, consent and agree, and the other parties hereto hereby
acknowledge, consent and agree, to each of the following, all in accordance
with, and as described in, this Amendment and the Credit Agreement as amended
hereby:
(i) On and after the WTVX-TV Closing Date (as defined
below), Ft. Pierce-34 may:
4
<PAGE> 6
(a) use the proceeds of Loans made in accordance
with the terms of the Credit Agreement as amended hereby in an
aggregate amount not to exceed $17,175,000 to make the WTVX-TV
Loan in accordance with the WTVX-TV Documents; provided that
the proceeds of such Loan are used by WTVX-TV Co. to
consummate the WTVX-TV Acquisition in accordance with the
WTVX-TV Documents;
(b) enter into and perform the WTVX-TV LMA; and
(c) make Combined Capital Expenditures in an
aggregate amount not to exceed $2,700,000 in respect of
WTVX-TV in accordance with subsection 6.8 (as amended hereby);
provided that such Combined Capital Expenditures are used only
for equipment and improvements owned by Ft. Pierce-34 and
related to the operations of WTVX-TV;
(ii) The Florida Radio Acquisitions;
(iii) Each of the New Borrowers shall be a "Borrower" and
a "Credit Party" for all purposes under the Credit Agreement and the
other Loan Documents including, without limitation, for purposes of
assuming all Obligations of the Released Borrowers on a joint and
several basis with the other Borrowers (as amended hereby);
(iv) The New Guarantor shall be a "Guarantor" and a
"Credit Party" for all purposes under the Credit Agreement and the
other Loan Documents including, without limitation, for purposes of
assuming all Obligations of the Released Guarantor on a joint and
several basis with the other License Subsidiaries (as amended hereby);
(v) Each of the Released Borrowers and the Released
Guarantor are hereby released as, and shall no longer be deemed to be,
a "Borrower", "Guarantor", "Credit Party" and "License
Subsidiary", in each case as their interests may appear, for all
purposes under the Credit Agreement and the other Loan Documents and
all Obligations of such Persons arising under the Loan Documents to
which they are a party are hereby terminated, each in accordance with
their respective terms, and Lenders hereby (i) authorize and direct
Agent to execute and deliver any agreements, documents or other
instruments necessary or advisable to evidence or facilitate such
release and termination, including without limitation, the release and
termination of any Security Documents to the extent they supply to
such Released Borrowers or Released Guarantor and (ii) consent to the
transfer and disposition of the issued and outstanding capital stock
of each Released Borrower and the Released Guarantor, pursuant to a
dividend of such stock by Borrowers General Partner to Holdings or by
such other reasonable means as Borrowers General Partner may elect, in
any case such that such capital stock shall no longer be subject to
the Liens created under the Security Documents;
5
<PAGE> 7
(vi) Anything in the Credit Agreement and the other Loan
Documents to the contrary notwithstanding, on and after the Second
Amendment Effective Date, all financial calculations and financial
reporting which the Credit Agreement and the other Loan Documents
require to be made and/or provided on the basis of the Combined
Borrowers on a Combined or Combining basis in accordance with GAAP,
including, without limitation, the calculation of the financial
covenants in subsection 6.6 and the financial information required
under subsection 5.1, shall be made and/or provided on the basis of
the Combined Borrowers (as such definition is amended hereby) on a
Combined and Combining basis in accordance with GAAP; provided further
that for purposes of making any of the foregoing calculations which
have Combined Operating Cash Flow as a component thereof, the portion
of Combined Operating Cash Flow attributable to (i) WWZN-AM for all
periods prior to January 1, 1995 and (ii) WNZE-AM for all periods
prior to August 1, 1994, in each case, shall not be less than zero;
(vii) consummation of the New Borrower Stock Transfer;
provided that concurrently therewith, the first priority lien in favor
of Agent on behalf of Lenders under the Holdings Pledge Agreement
shall be continued by Borrowers General Partner pursuant to the
Partners Pledge and Security Agreement and Borrowers General Partner
shall execute and deliver a supplement to the Partners Pledge and
Security Agreement confirming the same, in form and substance
satisfactory to Agent;
(viii) Cookeville shall not be required prior to the Second
Amendment Effective Date to (i) consummate the Cookeville License
Transfer, but shall do so as soon as practical and in any event by May
31, 1995 (it being understood that the order of the FCC approving such
transfer will not be a Final Order at the time of such transfer but
shall become a Final Order on or before June 30, 1995), it being
agreed that any failure to so consummate the Cookeville License
Transfer by such date shall constitute an Event of Default, or (ii)
satisfy the requirements of subsection 3.2C of the Credit Agreement or
Section 5B of this Amendment with respect to its leasehold properties
but shall do so as soon as practical after the Second Amendment
Effective Date and in any event by May 31, 1995, it being agreed that
any failure to so satisfy such requirements by such date shall
constitute an Event of Default;
(ix) Tampa LP shall not be required to satisfy the
requirements of subsection 3.2C of the Credit Agreement or Section 5B
of this Amendment with respect to the Tower Site until the Tower
Completion Date, it being agreed that any failure to satisfy such
requirements by such date shall constitute an Event of Default; and
(x) The Tranche B Revolving/Term Loans in the aggregate
principal amount of $5,000,000 which were used to consummate the Tampa
(WEZY) Asset Purchase as of and from the Funding Date therefor are
deemed to be Tranche C Revolving/Term Loans for all purposes under
the Credit Agreement and the other Loan Documents including, without
limitation, for purposes of calculating fees under subsection
2.3A(iii) of the Credit Agreement.
6
<PAGE> 8
SECTION 2.
AMENDMENTS TO THE CREDIT AGREEMENT
2.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO DEFINED TERMS.
A. NEW DEFINED TERMS. Subsection 1.1 is hereby amended by adding
the following new defined terms thereto in alphabetical order:
"`COOKEVILLE' has the meaning assigned that term in the
Second Amendment.
`FT. PIERCE-34' has the meaning assigned that term in the
Second Amendment.
`GUARANTOR' means each of Holdings, the Partners, the License
Subsidiaries, and any other Credit Party which delivers a guaranty of
the Obligations pursuant to subsection 5.14 and `GUARANTORS' means
such Persons collectively.
`PERMITTED PURCHASE' means any of (i) a Permitted Acquisition
or (ii) any other acquisition of a radio or television broadcast
station permitted hereunder or otherwise consented to by Requisite
Lenders from time to time in accordance with the terms hereof.
`PERMITTED TRANSFEREES' shall mean, with respect to Paxson,
(A) his spouse, members of his immediate family and/or any of his
lineal descendants and/or (B) any trust or similar entity all of the
beneficiaries of which are (x) any of the Persons identified in the
preceding clause (A) or (y) any entity described in this clause (B)
all of the beneficiaries of which are the Persons identified in the
preceding clause (A).
`SECOND AMENDMENT' means the Second Amendment to this
Agreement dated as of March 31, 1995.
`SECOND AMENDMENT EFFECTIVE DATE' has the meaning assigned to
that term in the Second Amendment.
`SUBSEQUENT PURCHASE AGREEMENT' means each of (i) the WTVX-TV
Purchase Agreement, (ii) each purchase agreement or acquisition
document pursuant to which any Permitted Purchase is consummated and
(iii) all material agreements, documents and instruments related to
any of the foregoing.
`SUCCESSION EVENT' shall be deemed to occur automatically and
without action or notice of any kind on any date (a `SIX-MONTH DATE')
which is six months after the date (such date being a `VACANCY DATE')
upon which (i) Paxson dies or becomes incapacitated or (ii) Paxson or
any Management-Approved Successor or Independently-Approved Successor
(as such terms are defined below and including successive successors)
ceases for any reason to be the chief executive officer ultimately
responsible for the management
7
<PAGE> 9
of Holdings (`CHIEF EXECUTIVE OFFICER') if, in each case, on such
Six-Month Date the board of directors of Holdings (the `BOARD OF
DIRECTORS') has not appointed a permanent successor Chief Executive
Officer which is a Management-Approved Successor or an
Independently-Approved Successor. A `MANAGEMENT-APPROVED SUCCESSOR'
means any individual who is appointed by the Board of Directors to be
the permanent Chief Executive Officer on a date which is not more than
120 days after the Vacancy Date in question and who has been approved
in writing by Marla Paxson and at least three individuals who are then
Senior Executives (as defined below). The `SENIOR EXECUTIVES' are
James B. Bocock, Dean Goodman, John Jay Hoker and Arthur D. Tek;
provided that any one of them shall cease to be a `Senior Executive'
if and when he is no longer employed by Holdings (and, if fewer than
three of them are employed by Holdings, no individual can become a
Management-Approved Successor). An `INDEPENDENTLY-APPROVED SUCCESSOR'
means any individual who is selected by the Board of Directors from a
list of the three candidates identified by an Independent Search Firm
(as defined below), which three candidates may, but need not, include
individuals who are then management employees of Holdings. An
`INDEPENDENT SEARCH FIRM' means an independent nationally-recognized
executive search firm which is experienced in identifying employment
candidates in the field(s) of industry in which Holdings is then
engaged and which has been approved by a majority (and, in any event,
not less than two) of the members of the Board of Directors who are
Non-Paxson Directors. `NONPAXSON DIRECTORS' means each of the members
of the Board of Directors who is not an officer of Holdings or any of
its Affiliates.
`WHITEHEAD' has the meaning assigned to that term in the
Second Amendment.
`WTVX-TV ACQUISITION' has the meaning assigned to that term in
the Second Amendment.
`WTVX-TV CLOSING DATE' means the date on which the conditions
to the WTVX-TV Loan and WTVX-TV Acquisition set forth in subsection
3.3 hereof are satisfied.
`WTVX-TV CO.' has the meaning assigned to that term in the
Second Amendment.
`WTVX-TV COLLATERAL' has the meaning assigned to that term in
the Second Amendment.
`WTVX-TV COLLATERAL DOCUMENTS' means all security agreements,
pledge agreements, deeds of trust, mortgages, security agreements,
pledge agreements, assignments, licenses, landlord consents and
releases and all other instruments or documents (including, without
limitation, UCC-1 financing statements, fixture filings or similar
documents required in order to perfect the Liens on the WTVX-TV
Collateral created by the foregoing) delivered pursuant to the WTVX-TV
Loan Agreement in order to grant to Ft. Pierce-34 (and to Agent on
behalf of Lenders as the assignee of Ft. Pierce-34) Liens
8
<PAGE> 10
in all of the WTVX-TV Collateral all as delivered in connection with
the WTVX-TV Loan Agreement and the Second Amendment and satisfactory
in form and substance to Agent.
`WTVX-TV DOCUMENTS' has the meaning assigned to that term in
the Second Amendment.
`WTVX-TV LMA' has the meaning assigned to that term in the
Second Amendment.
`WTVX-TV LOAN AGREEMENT' has the meaning assigned to that term
in the Second Amendment."
B. AMENDED AND RESTATED DEFINITIONS. Each of the following
definitions contained in subsection 1.1 are hereby amended and restated as
follows (and to the extent any of the same are defined by short-terms in the
recitals or introduction to the Credit Agreement or in any of the subsections
of the Credit Agreement, such short-terms are hereby superseded by the
following):
" `BORROWERS' means, collectively, Jacksonville LP, Miami LP,
Orlando LP, Tampa LP, West Palm Beach-25, Ft. Pierce-34, Cookeville,
Florida Radio Network, Network Holdings and each Additional Borrower.
`CAPEX CARRYFORWARD AMOUNT' has the meaning set forth in
subsection 6.8.
`CORPORATE BORROWER' means any Borrower which is incorporated.
`CREDIT PARTY' means any of the Borrowers, Borrowers General
Partner, Borrowers Limited Partner, any License Subsidiary, any
Guarantor (other than Holdings) and any Additional Credit Party; and
"CREDIT PARTIES" means all such Persons collectively.
`FCC CONSENT' means any of the written actions by the FCC
approving the transfer (in connection with any acquisition by a
Borrower or its License Subsidiary of an Owned Radio Station or Owned
Television Station), as the case may be, of the FCC Licenses relating
to the Broadcast Stations, including, without limitation, the License
Subsidiary FCC Consents, the Reorganization FCC Consent and each of
the FCC Consents received in connection with the consummation of a
Proposed Acquisition or Permitted Purchase, and `FCC CONSENTS' means
all such consents collectively.
`FINAL ORDER' means, as of any date of determination with
respect to any written action or consent by the FCC, such written
action or consent (i) which shall not have been reversed, stayed,
enjoined, annulled or suspended and (ii) for which the time for filing
a request for administrative or judicial relief or for instituting
administrative review thereof sua sponte, shall have expired without
any such filing having been made or notice of such
9
<PAGE> 11
review having been issued, or, in the event of such filing or review
sua sponte shall have been disposed of favorably to confirmation of
such written action or the grant of such consent and the time for
seeking further relief with respect thereto shall have expired without
any request for such further relief having been filed.
`GUARANTY' means any of the Holdings Guaranty, Partners
Guaranty, License Subsidiary Guaranty and any other guaranty of the
Obligations executed by any Guarantor pursuant to subsection 5.14
hereof, and `GUARANTIES' means all such guaranties collectively.
`LICENSE COMPANY' means any of West Palm Beach-25 License Sub,
Cookeville License Sub and any Additional License Subsidiary which,
pursuant to a Permitted Purchase or otherwise, becomes a holder of any
FCC License relating to a Broadcast Station operated by a Corporate
Borrower; and `LICENSE COMPANIES' means all such Persons collectively.
`LICENSE PARTNER' means any of Jacksonville License Partners,
Miami License Partners, Orlando License Partners, Tampa License
Partners and any Additional License Subsidiary which is a partnership
and which, pursuant to a Permitted Purchase or otherwise, becomes a
holder of any FCC License relating to a Broadcast Station operated by
a Partnership Borrower; and `LICENSE PARTNERS' means all such Persons
collectively.
`LMA AGREEMENTS' means (i) each of the agreements identified
on Schedule 4.1E annexed hereto pursuant to which certain of the
Borrowers identified in Schedule 4.1E operate an LMA Radio Station or
LMA Television Station, together with any amendments, supplements or
modifications thereto, as the same may be amended, restated,
supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof, and (ii) any other local marketing
agreements, local management agreements, local sales agreements, time
brokerage agreements or similar arrangements entered into by any
Borrower or any of their respective Subsidiaries to the extent
permitted hereby.
`LMA RADIO STATION' means each of the radio stations
(including, without limitation, those identified on Schedule 4.1E
hereto) operated by a Borrower pursuant to an LMA Agreement.
`LMA TELEVISION STATION' means each of the television stations
(including, without limitation, those identified on Schedule 4.1E
hereto) operated by a Borrower pursuant to an LMA Agreement.
`LOAN DOCUMENTS' means this Agreement, the Notes, the
Commitment Letter, the Security Documents, the Guaranties and any
Interest Rate Agreements entered into by any Borrower or any of their
respective Subsidiaries with any Lender.
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<PAGE> 12
`OWNED RADIO STATION' means each of the radio stations
(including, without limitation, those identified on Schedule 4.1F
hereto) owned by a Borrower and such other radio stations acquired
pursuant to a Permitted Purchase.
`OWNED TELEVISION STATION' means each of the television
stations (including, without limitation, those identified on Schedule
4.1E hereto) owned by a Borrower and such other television stations
acquired pursuant to a Permitted Purchase.
`PARTNERSHIP BORROWER' means any Borrower which is organized
as a limited partnership.
`PERMITTED ACQUISITION' has the meaning assigned to that term
in subsection 6.7(v).
`RELATED DOCUMENTS' means (i) the Partnership Agreements, (ii)
the Real Estate Leases, (iii) the New Equity Documents, (iv) the
Reorganization Documents, (v) the Tax Sharing Agreement, (vi) the West
Palm Beach-25 Asset Purchase Agreements, (vii) the Subsequent Purchase
Agreements, (viii) the Tampa (WEZY) Asset Purchase Agreements, (ix)
the Management Agreement, (x) the LMA Agreements and (xi) the WTVX-TV
Documents.
`SECURITY DOCUMENTS' means the Security Agreements, the
WTVX-TV Collateral Documents, the Mortgages, Memoranda of Lease, the
Lenders' Policies, Landlord Consent Letters, and all deeds of trust,
mortgages, security agreements, pledge agreements, assignments,
licenses, landlord consents and releases and all other instruments or
documents (including, without limitation, UCC-1 financing statements,
fixture filings or similar documents required in order to perfect the
Liens created by the Security Documents) delivered by a Credit Party
pursuant to this Agreement and the other Loan Documents in order to
grant to Agent on behalf of Lenders Liens in real, personal or mixed
property of that Credit Party."
C. REVISED DEFINITIONS. The definition Scheduled Tranche A & B
Term Loans Principal Payment contained in subsection 1.1 is hereby amended by
deleting the row titled "December 31, 1995" contained in the table set forth
thereon and substituting the following therefor:
11
<PAGE> 13
<TABLE>
<CAPTION>
Scheduled
Tranche B Tranche A & B
Tranche A Converted Term Loans
Date Term Loans Loans Principal Payment
<S> <C> <C> <C>
September 30, 1995 $2,625,000 $ 562,500 $3,187,500
December 31, 1995 $2,625,000 $ 562,500 $3,187,500
</TABLE>
D. DELETED DEFINITIONS. The following defined terms are hereby
deleted from subsection 1.1, and all corresponding references to such defined
terms in the Credit Agreement and the other Loan Documents are hereby deleted
and shall be of no further force and effect:
(i) Atlanta-14;
(ii) Atlanta-14 Asset Purchase;
(iii) Atlanta-14 Asset Purchase Agreements;
(iv) Atlanta-14 Closing Date;
(v) Atlanta-14 FCC Consent;
(vi) Atlanta-14 License Sub;
(vii) Miami-35;
(viii) Miami-35 Asset Purchase Agreements;
(ix) Miami-35 Closing Date;
(x) Miami-35 FCC Consent;
(xi) Miami-35 License Sub;
(xii) Miami-35 Option;
(xiii) Miami-35 Option Agreement;
(xiv) Tampa-66;
(xv) Tampa-66 Asset Purchase Agreements;
12
<PAGE> 14
(xvi) Tampa-66 Closing Date;
(xvii) Tampa-66 FCC Consent;
(xviii) Tampa-66 License Sub;
(xix) Tampa-66 Option; and
(xx) Tampa-66 Option Agreement.
2.2 AMENDMENTS ON SECTION 2: AMOUNTS AND TERMS OF LOANS.
A new subsection 2.4B(iii)(g) is hereby added as follows:
"(g) Immediately upon the receipt by any Credit Party of any
amounts payable under or in respect of the WTVX-TV Loan
Agreement, Borrowers shall prepay the Loans and reduce the
Commitments in an amount equal to such payment. Any such
mandatory payments shall be applied as set forth in subsection
2.4B (iv)."
2.3 AMENDMENTS TO SECTION 3: CONDITIONS TO LOANS.
A. ATLANTA-14 CONDITIONS. Subsection 3.3 is hereby deleted in
its entirety and the following substituted therefor:
"3.3 CONDITIONS TO WTVX-TV TRANSACTIONS.
The obligations of Lenders to make Loans in respect
of the WTVX-TV Loan and the WTVX-TV Acquisition in addition to the
conditions precedent specified in subsections 3.2A and B, shall be
subject to prior or concurrent satisfaction of the following
conditions:
A. WTVX-TV DOCUMENTS. On or before the WTVX-TV Closing
Date, (i) Lenders shall have received executed or conformed copies of
each of the WTVX-TV Documents, the terms and conditions of which shall
be in all respects satisfactory to Requisite Lenders, such
satisfaction to be evidenced by the execution and delivery by
Requisite Lenders of the Consent to Documents in the form annexed to
the Second Amendment as Amendment Exhibit G, (ii) such WTVX-TV
Documents shall be in full force and effect and no term or condition
thereof shall have been amended, modified or waived after the
execution thereof, (iii) no Credit Party, Affiliated Party, Whitehead
or WTVX-TV Co., as the case may be, shall have failed in any material
respect to perform any material obligation or covenant required by the
WTVX-TV Documents to be performed or complied with by it on or before
the WTVX-TV Closing Date, and (iv) Agent shall have received an
Officers' Certificate in form and substance satisfactory to Agent from
Borrowers to the effect set forth in clauses (i), (ii) and (iii)
above.
13
<PAGE> 15
B. ENVIRONMENTAL AUDIT. On or before the Second
Amendment Effective Date, Borrowers shall have delivered copies of
any/each environmental audit report delivered in connection with the
WTVX-TV Acquisition and all other environmental information and
reports received in connection therewith to Lenders, all of the
foregoing to be in form and substance satisfactory to Agent and
Requisite Lenders.
C. FCC CONSENTS. All FCC Consents required for the
WTVX-TV Acquisition shall have become a Final Order. In addition,
Agent shall be satisfied with the form and substance of the FCC's
approval of the WTVX-TV Acquisition and the transactions contemplated
thereby.
D. WTVX-TV ACQUISITIONS; WTVX-TV LMA. On or before the
WTVX-TV Closing Date, each of the parties to the WTVX-TV Acquisition,
WTVX Loan and the WTVX-TV LMA shall deliver to Agent a certificate
stating that (i) the WTVX-TV Acquisition, WTVX-TV Loan and the
WTVX-TV LMA has been duly approved, (ii) all action necessary by it to
consummate the WTVX-TV Acquisition, WTVX Loan and the WTVX-TV LMA has
been taken (other than the payment of the purchase price and the
conveyance of the appropriate assets) and (iii) each such party
delivering such certificate will proceed to consummate the WTVX-TV
Acquisition, WTVX Loan and the WTVX-TV LMA immediately upon the
making of the Loans on the WTVX-TV Closing Date. The WTVX-TV
Acquisition, WTVX Loan and WTVX-TV LMA shall become effective in
accordance with the WTVX-TV Documents without any material variation
therefrom, except as disclosed to Lenders and consented to in writing
by Agent.
E. H.S.R. COMPLIANCE. On or before the WTVX-TV Closing
Date, Agent shall have received a certificate from Borrowers that (i)
the waiting period for the Notification and Report Form filed under
the Hart-Scott-Rodin Antitrust Improvements Act of 1976 with the
Federal Trade Commission and the Antitrust Division of the Department
of Justice in connection with the WTVX-TV Acquisition shall have
expired without the institution or threat of any action (or the early
termination of such waiting period shall have been granted) with
respect to the consummation of the WTVX-TV Acquisition or the
transactions contemplated thereby or (ii) that Borrowers have been
advised by their counsel (satisfactory to the Agent) that no such
filing is necessary.
F. WTVX-TV ACQUISITION ASSETS AND LIABILITIES. As of
the WTVX-TV Closing Date, the assets acquired pursuant to the
consummation of WTVX-TV Acquisition shall be free and clear of all
Liens (other than Permitted Encumbrances and Liens created pursuant to
the Security Documents) and (i) all acquired assets and liabilities
assumed by the Credit Parties pursuant to the WTVX-TV Acquisition and
WTVX-TV LMA and (ii) the projected Combined Operating Cash Flow
resulting from the WTVX-TV LMA, in each case, shall be acceptable to
Agent.
G. DELIVERY OF COMPLIANCE CERTIFICATE. Borrowers shall
have delivered to Agent a Compliance Certificate, substantially in the
form of Exhibit IV hereof, dated as
14
<PAGE> 16
of the WTVX-TV Closing Date and calculated to give effect to the
transactions consummated as of such date, demonstrating compliance
with the covenants set forth herein as of such date.
H. DELIVERY OF WTVX-TV DOCUMENTS OPINIONS OF COUNSEL.
On or before the WTVX-TV Closing Date, the Borrowers shall obtain and
deliver to the Agent, Lenders and their counsel originally executed
copies of the favorable written opinions of each of the counsel
referred to in the WTVX-TV Documents, in form and substance
satisfactory to Agent and its counsel, dated as of the WTVX-TV Closing
Date, as to the matters specified in such agreements, and each such
opinion of counsel shall state that Agent and Lenders are entitled to
rely thereon.
I. DELIVERY OF MORTGAGES; MORTGAGE POLICIES. Agent
shall have received from Ft. Pierce-34, Whitehead and WTVX-TV Co., as
appropriate (A) fully executed and acknowledged Mortgages, which
Mortgages shall cover the real property included in the WTVX-TV
Collateral (each a "MORTGAGED PROPERTY" and collectively the
"MORTGAGED PROPERTIES") sufficient to create a valid and enforceable
lien, (B) if any Real Estate Lease included in the Mortgaged
Properties is not currently of record in the name of the applicable
mortgagor (by recordation of the lease itself or a memorandum
thereof), a memorandum for each such lease and a schedule of the
lessor and lessee thereunder in form and substance satisfactory to
Agent (each a "MEMORANDUM OF LEASE"), (C) a Landlord Consent Letter
with respect to each Mortgage on a Real Estate Lease in form and
substance satisfactory to Agent and (D) an ALTA lender's title
insurance policy or other form of policy satisfactory to Agent
("LENDER'S POLICY") issued by a company or companies satisfactory to
Agent, in an amount satisfactory to Agent, with all premiums paid
thereon, and which shall insure that (i) all of the obligations of
Whitehead and WTVX-TV Co. in respect of the WTVX-TV Documents (the
"WHITEHEAD OBLIGATIONS") and the Obligations are secured by a valid
first Lien on the Mortgaged Properties subject only to the title
exceptions approved by Agent, and (ii) mortgagors are current in the
payment of all applicable state and local taxes, charges and
assessments affecting the Mortgaged Properties. The Lender's Policy
shall contain, to the extent available, (1) a comprehensive lender's
endorsement, (2) a broad form zoning endorsement, including parking,
(3) a survey accuracy endorsement, (4) a usury endorsement, (5)
appropriate encroachment endorsements, (6) a tie-in endorsement, and
(7) such other endorsements as Agent deems necessary or advisable. No
title indemnities shall be established in connection with the issuance
of the Lender's Policy.
J. SECURITY INTERESTS. Each of Ft. Pierce-34, Whitehead
and WTVX-TV Co. shall have taken or caused to be taken (and Agent
shall have received satisfactory evidence thereof) such actions in
such a manner so that Ft. Pierce-34 and Agent as assignee have a valid
and perfected first priority security interest (subject to the Liens
permitted hereunder) as of the WTVX-TV Closing Date in the entire
Collateral (including the WTVX-TV Collateral) as of such date. Such
actions shall include, without limitation, (i) delivery to Agent of
the promissory note evidencing the Whitehead Obligations
15
<PAGE> 17
(properly assigned and endorsed to Agent on behalf of Lenders) and of
certificates (which certificates shall be registered in the name of
Agent or properly endorsed in blank for transfer or accompanied by
irrevocable undated powers duly endorsed in blank, all in form and
substance satisfactory to Agent) representing the capital stock of
WTVX-TV Co. pledged pursuant to the WTVX-TV Collateral Documents and
delivery to Agent of all other instruments (duly endorsed where
appropriate) evidencing such WTVX-TV Collateral, (ii) filing of
Uniform Commercial Code financing statements, as to such Collateral
for all jurisdictions as may be necessary or desirable to perfect Ft.
Pierce-34's and Agent's, on behalf of Lenders, as the case may be,
security interests in such Collateral and (iii) delivery of all other
evidence reasonably satisfactory to Agent that all other filings,
recordings and other actions Agent deems necessary or advisable to
establish, preserve and perfect the first priority Liens granted to
Ft. Pierce-34 and Agent, on behalf of Lenders, shall have been made.
Without limiting the foregoing, all actions necessary to assign the
WTVX-TV Documents to Agent on behalf of Lenders shall have been taken,
including without limitation, the recording or filing, as the case may
be, of the WTVX-TV Collateral Documents expressly noting Agent as the
assignee of Ft. Pierce-34.
K. COMPLETION OF PROCEEDINGS. All corporate,
partnership and other proceedings taken or to be taken in connection
with the transactions contemplated hereby as of the WTVX-TV Closing
Date and all documents incidental thereto not previously found
acceptable by Agent and its counsel shall be satisfactory in form and
substance to Agent and such counsel, and Agent and its counsel shall
have received all such counterpart originals or certified copies of
such documents as Agent may reasonably request."
B. MIAMI-35 AND TAMPA-66 CONDITIONS. Subsection 3.5 is hereby
deleted in its entirety and the following substituted therefor:
"3.5 [Reserved]."
2.4 AMENDMENTS TO SECTION 5: AFFIRMATIVE COVENANTS.
A. ADDITIONAL BORROWERS AND CREDIT PARTIES. Subsection 5.14 is
hereby amended and restated as follows:
"5.14 ADDITIONAL BORROWERS AND CREDIT PARTIES.
In the event that (i) any Proposed Acquisition or Permitted
Purchase is to be made by any Subsidiary or Affiliate of Borrowers
General Partner or Borrowers Limited Partner and such Subsidiary or
Affiliate is not a Credit Party hereunder or under any of the other
Loan Documents immediately prior to the consummation of any such
transaction, or (ii) Borrowers propose for any other reason to add any
Subsidiary or Affiliate thereof as a Credit Party hereunder and such
proposal is approved in writing by Requisite Lenders (each such
Subsidiary or Affiliate in any case referred to herein as an
"ADDITIONAL CREDIT PARTY" and collectively as the "ADDITIONAL
CREDIT PARTIES"), then, on or before the
16
<PAGE> 18
consummation of any such transaction or addition as a Credit Party
hereunder, such Additional Credit Party shall deliver appropriate
counterparts and assumptions of each Loan Document to which it is to
be a party (depending on its status as a Borrower, Guarantor or other
Credit Party hereunder and under the other Loan Documents) and all
such documents, opinions of counsel, certificate and instruments as
such Additional Credit Party would have been required to deliver
pursuant to Section 3 had such Additional Credit Party been a Credit
Party hereunder on the Restatement Effective Date and such other
documents, certificates, instruments and assurances as are consistent
with the provisions of subsection 2.8 and Section 3 in relation to
such Additional Credit Party's proposed status hereunder and under the
other Loan Documents (including, without limitation, taking into
consideration whether the Obligations of such Additional Credit Party
are to be of a limited recourse nature or otherwise), all as shall be
determined at the time such Additional Credit Party is approved by
Requisite Lenders. Upon satisfaction of the foregoing conditions,
such Additional Credit Party shall be a Credit Party for all purposes
hereunder and under the other Loan Documents.
B. SCHEDULE SUPPLEMENTS. A new subsection 5.15 is hereby added
to the Credit Agreement as follows:
"5.15 SCHEDULE SUPPLEMENTS.
Each of the Schedules referred to in subsection 4.1 shall be
automatically amended from time to time upon written notice by
Borrowers to Agent and Lenders to reflect additional information
described in such notice under this Agreement including, without
limitation, the addition (or deletion) of any Subsidiaries, Broadcast
Stations, FCC Licenses or LMA Agreements resulting from a Permitted
Purchase or any other transaction permitted hereunder, and any
modifications resulting from the renewal or additional grant of any
FCC Licenses or LMA Agreements. Without limiting the foregoing, on
the request of Agent or any Lender (in the event that such information
is not otherwise delivered by Borrowers to Agent or Lenders pursuant
to this Agreement), Borrowers will supplement each Schedule hereto, or
representation herein or in any other Loan Document with respect to
any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or
described in such Schedule or as an exception to such representation
or which is necessary to correct any information in such Schedule or
representation which has been rendered inaccurate thereby; provided,
that such supplement to such Schedule or representation shall not be
deemed an amendment thereof if such amendment would require the
consent of Requisite Lenders under the terms of this Agreement, unless
expressly consented to in writing by Requisite Lenders, and no such
amendments, except as the same may be consented to in a writing which
expressly includes a waiver, shall be or be deemed a waiver by Lenders
of any Event of Default or Potential Event of Default disclosed
therein."
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<PAGE> 19
2.5 AMENDMENTS TO SECTION 6: NEGATIVE COVENANTS.
A. INVESTMENTS. A new subsection 6.3(ix) is hereby added to the
Credit Agreement (and the corresponding grammatical corrections to subsection
6.3 are hereby made) as follows:
"(ix) Ft. Pierce-34 may make and maintain Investments
evidenced by the WTVX-TV Documents."
B. FINANCIAL RATIOS. Subsections 6.6A, B and C are hereby
amended and restated as follows:
"A. TOTAL DEBT TO CASH FLOW. Borrowers will not permit
the ratio of (y) Combined Total Debt as of the last day of each
calendar quarter occurring during the period set forth below to (z)
Combined Operating Cash Flow for the four calendar quarter period
ending as of the last day of each such calendar quarter to be greater
than the correlative ratio indicated:
<TABLE>
<CAPTION>
Total Debt
Period Ended to Cash Flow Ratio
<S> <C>
Second Amendment Effective Date -
December 31, 1995 6.00:1.00
January 1, 1996 - March 31, 1996 5.75:1.00
April 1, 1996 - June 30, 1996 5.50:1.00
July 1, 1996 - September 30, 1996 5.00:1.00
October 1, 1996 - December 31, 1996 4.25:1.00
January 1, 1997 and thereafter 3.75:1.00
</TABLE>
B. CASH INTEREST COVERAGE. Borrowers will not permit
the ratio of (y) Combined Operating Cash Flow to (z) Combined Cash
Interest Expense for the four quarter period ending on the last day of
each calendar quarter occurring during the periods specified below, to
be less than the correlative ratio indicated:
18
<PAGE> 20
<TABLE>
<CAPTION>
Cash Interest
Period Coverage Ratio
<S> <C>
Second Amendment Effective Date -
March 31, 1996 1.75:1.00
April 1, 1996 - September 30, 1996 2.00:1.00
October 1, 1996 - December 31, 1996 2.25:1.00
January 1, 1997 and thereafter 2.50:1.00
</TABLE>
C. TOTAL DEBT SERVICE COVERAGE. Borrowers will not
permit the ratio of (y) Combined Operating Cash Flow to (z) Combined
Debt Service for the four quarter period ending on the last day of
each calendar quarter occurring during the periods specified below to
be less than the correlative amount indicated:
<TABLE>
<CAPTION>
Total Debt
Period Service
Coverage Ratio
<S> <C> <C>
Second Amendment Effective Date -
June 30, 1995 1.75:1.00
July 1, 1995 - September 30, 1995 1.35:1.00
October 1, 1995 - December 31, 1995 1.25:1.00
January 1, 1996 - June 30, 1996 1.15:1.00
July 1, 1996 - September 30, 1996 1.20:1.00
October 1, 1996 - December 31, 1996 1.30:1.00
"
January 1, 1997 and thereafter 1.40:1.00
</TABLE>
C. OPERATING CASH FLOW. Subsection 6.6E is hereby amended and
restated as follows:
"E. OPERATING CASH FLOW. Borrowers will not permit
Combined Operating Cash Flow for the four calendar quarter period
ending as of the last day of each calendar quarter occurring during
the periods specified below to be less than the correlative applicable
amount indicated (depending upon whether the WTVX-TV Closing Date
shall have occurred as of such date of determination):
19
<PAGE> 21
<TABLE>
<CAPTION>
Period Ended Operating Operating
Cash Flow Cash Flow On And
Prior To WTVX-TV After WTVX-TV
Closing Date Closing Date
<S> <C> <C>
Second Amendment Effective Date -
March 31, 1995 $13,181,000 $14,538,000
April 1, 1995 - June 30, 1995 $14,628,000 $16,166,000
July 1, 1995 - September 30, 1995 $14,690,000 $16,355,000
October 1, 1995 - December 31, 1995 $18,106,000 $19,858,000
January 1, 1996 - March 31, 1996 $18,149,000 $19,949,000
April 1, 1996 - June 30, 1996 $21,279,000 $23,143,000
July 1, 1996 - September 30, 1996 $21,342,000 $23,277,000
October 1, 1996 - September 30, 1997 $24,532,000 $26,565,000
October 1, 1997 - September 30, 1998 $29,877,000 $32,210,000
October 1, 1998 and thereafter $32,050,000 $34,604,000
</TABLE>
; provided, however, that the required amount of Combined Operating
Cash Flow specified in either case above in order to satisfy this
subsection 6.6E as of any date of determination shall be increased by
an amount equal to 70% of the aggregate Projected Acquisition Cash
Flow for all Permitted Acquisitions.
D. COMBINED CAPITAL EXPENDITURES. Subsection 6.8 is hereby
amended and restated as follows:
"6.8 COMBINED CAPITAL EXPENDITURES
Borrowers will not and will not permit their respective
Subsidiaries to incur Combined Capital Expenditures in any fiscal year
(excluding, for purposes of this subsection 6.8, expenditures of
proceeds of casualty insurance policies reasonably and promptly
applied to replace insured assets) if, after giving effect to the
incurrence thereof, either (A) the aggregate amount of Combined
Capital Expenditures actually made for such fiscal year exceeds the
sum of (x) the aggregate amount permitted for such year as set forth
in the table below plus (y) for any fiscal year, the amount (the
"CAPEX CARRYFORWARD AMOUNT"), which shall not exceed $4,000,000 for
any fiscal year, equal to the excess, if any, of the amount of
permitted Combined Capital Expenditures for the previous fiscal year
(as adjusted for any Capex Carryforward Amount for such previous
fiscal year) over the actual amount of Combined Capital Expenditures
incurred for such
20
<PAGE> 22
previous fiscal year, or (B) the amount of Combined Capital
Expenditures made during such fiscal year by any of (i) the Owned
Radio Stations and LMA Radio Stations, (ii) Tampa LP with respect to
Owned Radio Station WEZY (in addition to the amount of Combined
Capital Expenditures permitted under clause (B)(i) of this subsection
6.8(B)) and (iii) West Palm Beach-25, exceeds by more than $200,000
the sum of (x) the amount specified with respect to each such Borrower
or asset group set forth in the table below plus (y) the portion of
the Capex Carryforward Amount relating to such Borrower or such asset
group for such year, but subject, in any event, to the aggregate
limitation on Combined Capital Expenditures for such year set forth in
clause (A) above:
<TABLE>
<CAPTION>
1996 and
1995 Thereafter
<S> <C> <C>
Radio Stations (general) $ 800,000 $1,000,000
Radio Networks (general) 800,000 400,000
Television Stations (general) N/A 750,000
WEZY-FM (Const.) 1,900,000* N/A
WTVX-TV 2,700,000* N/A
WPBF-TV 500,000 N/A
WWZN-AM 250,000* N/A
WNZE-AM 350,000* N/A
Total: $7,300,000 $2,150,000
</TABLE>
; provided however that notwithstanding the foregoing, for the
purposes of calculating Combined Capital Expenditures under this
Agreement (other than for purposes of this subsection 6.8), there
shall be excluded the amount of Combined Capital Expenditures which
are identified with an asterisk in the table above (the "APPROVED
CAPITAL EXPENDITURES")."
2.6 AMENDMENTS TO SECTION 7: EVENTS OF DEFAULT.
Clause (vii) of subsection 7.16 is hereby deleted and a new clause
(vii) and (viii) are hereby added thereto as follows:
"or (vii) Paxson and the Permitted Transferees shall fail
(for any reason) to (A) own, directly or indirectly, at least 35% (on
a fully diluted basis) of the issued and outstanding capital stock of
Holdings, or (B) have voting control, directly or indirectly,
21
<PAGE> 23
equal to 51% (on a fully diluted basis) of the issued and outstanding
capital stock of Holdings entitled to vote in the election of the
board of directors of Holdings; or (viii) a Succession Event."
2.7 AMENDMENTS TO SCHEDULES.
Schedule 6.8 is hereby deleted in its entirety and all other Schedules
to the Credit Agreement are hereby restated in the form of the Schedules
delivered pursuant to Section 5 of this Amendment.
SECTION 3.
ASSIGNMENT AND ASSUMPTION
3.1 BORROWERS.
Each Released Borrower hereby assigns to each Existing Borrower other
than the Released Borrowers (collectively, the "CONTINUING BORROWERS") and
each New Borrower all of its rights and Obligations with respect to the
Commitments, Loans, the Loan Documents and the Obligations. All rights so
assigned shall be assigned as of the Second Amendment Effective Date. Each
Continuing Borrower and each New Borrower hereby agrees to assume, as of Second
Amendment Effective Date, all rights and Obligations with respect to the
Commitments, the Loans and the Loan Documents, fees and other amounts payable
under the Credit Agreement and the other Loan Documents and acknowledges and
agrees that it shall be deemed a Borrower for all purposes under the Credit
Agreement and the other Loan Documents. Each Continuing Borrower and each New
Borrower agrees that the execution and delivery of the New Borrower
Counterparts shall conclusively evidence the assumption of such Obligations.
3.2 GUARANTORS.
Each Released Guarantor hereby assigns to each License Subsidiary
other than the Released Guarantors (collectively, the "CONTINUING
GUARANTORS") and the New Guarantor all of its rights and Obligations with
respect to the License Subsidiary Guaranty, License Subsidiary Security
Agreement, each other Loan Document to which it is a party and the Obligations.
All rights so assigned shall be assigned as of the Second Amendment Effective
Date. Each Continuing Guarantor and New Guarantor hereby agrees to assume, as
of Second Amendment Effective Date, all rights and Obligations with respect to
the License Subsidiary Guaranty, License Subsidiary Security Agreement and each
such other Loan Document and acknowledges and agrees that it shall be deemed a
Guarantor for all purposes under the Credit Agreement and the other Loan
Documents. Each Continuing Guarantor and New Guarantor agrees that the
execution and delivery of the New Guarantor Counterparts shall conclusively
evidence the assumption of such Obligations.
22
<PAGE> 24
SECTION 4.
NETWORK HOLDINGS OBLIGATIONS
Upon the Second Amendment Effective Date, (i) the Network Holdings
Guaranty and Network Holdings Pledge Agreement shall be terminated, (ii) all of
the Obligations of Network Holdings under the Network Holdings Guaranty and the
Network Holdings Pledge Agreement shall be subsumed and superseded by its
Obligations as a "Borrower" under the Credit Agreement and the other Loan
Documents to which it shall become a party as of such date, and (iii) the
security interests granted pursuant to the Networks Holdings Pledge Agreement
shall be continued and expanded under and pursuant to the Borrower Security
Agreement, all of the foregoing to be effected and evidenced by the execution
and delivery of the New Borrower Counterparts.
SECTION 5.
CONDITIONS TO EFFECTIVENESS
Sections 1, 2, 3 and 4 of this Amendment shall become effective only
upon the satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "SECOND
AMENDMENT EFFECTIVE DATE"; the terms "Borrower" and "Credit Party" as used
in this Section 5 shall, unless otherwise noted, have the meaning assigned such
terms in the Credit Agreement as amended hereby):
A. DELIVERY OF NEW BORROWER AND NEW GUARANTOR DOCUMENTS.
On or before the Second Amendment Effective Date, each of the New
Borrowers and the New Guarantor shall deliver or cause to be delivered
to Lenders (or to Agent for Lenders with sufficient originally
executed copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Second
Amendment Effective Date:
(i) Certified copies of its Articles of
Incorporation and Bylaws or its Partnership Agreement, as the
case may be, together with a good standing certificate from
the Secretary of State of the state of its organization (other
than for states which as a matter of law, do not have good
standing certificates for partnerships) and each other state
in which it is qualified as a foreign corporation or
partnership to do business, in each case to be dated a recent
date prior to the Second Amendment Effective Date;
(ii) Resolutions of its Board of Directors or its
Managing General Partner, as the case may be, approving and
authorizing or ratifying, as the case may be, the execution,
delivery and performance of the Credit Agreement and the other
Loan Documents to which it is a party, and the issuance and
payment of its Notes (in the case of the New Borrowers), each
in form and substance satisfactory to Agent and its counsel,
certified as of the Second Amendment Effective Date by
23
<PAGE> 25
an appropriate officer as being in full force and effect
without modification or amendment;
(iii) Signature and incumbency certificates of its
officers executing the Loan Documents to which it is a party;
and
(iv) Executed originals of the New Borrower
Counterparts, New Guarantor Counterparts and the other Loan
Documents to which it is a party.
B. DELIVERY OF MORTGAGES; MORTGAGE POLICIES. Subject to
Section 1 of this Amendment, Agent shall have received from each New
Borrower and the New Guarantor as appropriate (A) fully executed and
acknowledged Mortgages, which Mortgages shall cover the real property
and the Real Estate Leases owned or leased by each of the New
Borrowers and the New Guarantor (each a "MORTGAGED PROPERTY" and
collectively the "MORTGAGED PROPERTIES") sufficient to create a
valid and enforceable lien, (B) if any Real Estate Lease included in
the Mortgaged Properties is not currently of record in the name of the
applicable mortgagor (by recordation of the lease itself or a
memorandum thereof), a memorandum for each such lease and a schedule
of the lessor and lessee thereunder in form and substance satisfactory
to Agent (each a "MEMORANDUM OF LEASE"), (C) a Landlord Consent
Letter with respect to each Mortgage on a Real Estate Lease in form
and substance satisfactory to Agent and (D) an ALTA lender's title
insurance policy or other form of policy satisfactory to Agent
("LENDER'S POLICY") issued by a company or companies satisfactory to
Agent, in an amount satisfactory to Agent, with all premiums paid
thereon, and which shall insure that (i) the Obligations are secured
by a valid first Lien on the Mortgaged Properties subject only to the
title exceptions approved by Agent, and (ii) mortgagors are current in
the payment of all applicable state and local taxes, charges and
assessments affecting the Mortgaged Properties. The Lender's Policy
shall contain, to the extent available, (1) a comprehensive lender's
endorsement, (2) a broad form zoning endorsement, including parking,
(3) a survey accuracy endorsement, (4) a usury endorsement, (5)
appropriate encroachment endorsements, (6) a tie-in endorsement, and
(7) such other endorsements as Agent deems necessary or advisable. No
title indemnities shall be established in connection with the issuance
of the Lender's Policy. Without limiting the foregoing, Agent shall
have received from each Credit Party, as appropriate, fully executed
and acknowledged amendments, supplements and endorsements, if any, to
each of the Mortgages, Mortgage Policies and Consent Letters
previously delivered under the Credit Agreement, in each case in form
and substance satisfactory to Agent and its counsel, as are necessary
or advisable to ensure the continued validity of such documents with
respect to the Obligations as amended hereby.
C. SECURITY INTERESTS. Subject to Section 1 of this
Amendment, each New Borrower and the New Guarantor shall have taken or
caused to be taken (and Agent shall have received satisfactory
evidence thereof) such actions in such a manner so that Agent has a
valid and perfected first priority security interest (subject to the
Liens permitted hereunder) as of the Second Amendment Effective Date
in the entire Collateral as of such
24
<PAGE> 26
date. Such actions shall include, without limitation, (i) delivery to
Agent of certificates (which certificates shall be registered in the
name of Agent or properly endorsed in blank for transfer or
accompanied by irrevocable undated powers duly endorsed in blank, all
in form and substance satisfactory to Agent) representing the capital
stock of each of the New Borrowers and the New Guarantor pledged
pursuant to the Security Documents and delivery to Agent of all other
instruments (duly endorsed where appropriate) evidencing such
Collateral, (ii) filing of Uniform Commercial Code financing
statements, as to such Collateral for all jurisdictions as may be
necessary or desirable to perfect Agent's, on behalf of Lenders,
security interests in such Collateral and (iii) delivery of all other
evidence reasonably satisfactory to Agent that all other filings,
recordings and other actions Agent deems necessary or advisable to
establish, preserve and perfect the first priority Liens granted to
Agent, on behalf of Lenders, shall have been made.
D. SCHEDULES TO LOAN DOCUMENTS. Borrowers shall have
delivered an Officer's Certificate setting forth amendments to each of
the Schedules to the Credit Agreement and the other Loan Documents,
including, without limitation, the Security Agreements, setting forth
the information necessary to make such Schedules true, correct and
complete in all material respects as of the Second Amendment Effective
Date, and such revised schedules shall be in form and substance
satisfactory to Agent.
E. DELIVERY OF COMPLIANCE CERTIFICATE. Borrowers shall
have delivered to Agent a Compliance Certificate, substantially in the
form of Exhibit IV to the Credit Agreement, dated as of the Second
Amendment Effective Date and calculated to give effect to the
transactions consummated as of such date and contemplated hereby
(including, without limitation, the release of certain Borrowers and
Guarantors hereunder and the amendments to the covenants effected
hereby), demonstrating compliance with the covenants set forth in the
Credit Agreement as amended hereby as of the Second Amendment
Effective Date.
F. DELIVERY OF FINANCIAL CONDITION CERTIFICATE. Each
Borrower shall have delivered a Financial Condition Certificate,
substantially in the form annexed hereto as Amendment Exhibit F with
appropriate attachments, demonstrating that after giving effect to the
consummation of the transactions on the Second Amendment Effective
Date (including incurrence of the Obligations) each such Borrower is
Solvent, all in form and substance satisfactory to Agent.
G. COOKEVILLE APPLICATION. Cookeville shall have filed
the Cookeville Application with the FCC, all in form and substance
satisfactory to Agent.
H. RADIO NETWORKS. Agents shall be satisfied that all
of the rights and assets related to the Alabama Radio Network, Florida
Radio Network, Penn State Sports Network, South Carolina Radio
Network, Tennessee Radio Network, University of Florida Sports Network
and Virginia Tech Sports Network are held and owned by Florida Radio
Network and/or Network Holdings.
25
<PAGE> 27
I. REAL ESTATE LEASES. Agent shall have received copies
of the Real Estate Leases for any New Guarantors and any amendments
thereto and Agent shall be satisfied with the form and substance of
such Real Estate Leases.
J. EVIDENCE OF INSURANCE. Agent shall have received an
Officer's Certificate of Borrowers setting forth a schedule of
insurance with respect to each of the insurance policies required
pursuant to subsection 5.4 hereof, and Agent shall be satisfied with
the nature and scope of these insurance policies and each such
insurance policy shall name Agent on behalf of Lenders as loss payee.
K. INFORMATION. Agent shall have received (i) Combined
and Combining balance sheets of each Borrower and their respective
Subsidiaries and of the Combined Borrowers, in each case, to the year
ended December 31, 1994, and the related Combined statements of
income, partners' capital accounts, shareholders' equity and cash
flows of such Borrowers, and their respective Subsidiaries and
Combined Borrowers for such fiscal year, which financial statements
shall be accompanied by, among other things, a statement of operating
income for each Broadcast Station as of such year end and setting
forth in comparative form the corresponding consolidated,
consolidating and Combined, as the case may be, figures for each such
Person for the previous fiscal year, all in reasonable detail and (a)
accompanied by a report thereon of Price Waterhouse, which report
shall contain no qualifications with respect to the continuance of
each such Person as going concerns and shall state that such financial
statements present fairly the financial position of each such Person
as at the dates indicated and the statements of income and cash flows
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years (except as otherwise stated therein) and
that the examination by such accountants in connection with such
financial statements has been made in accordance with generally
accepted auditing standards without any limitations being imposed on
the scope of such examination and (b) certified by the chief financial
officer of Borrowers that they fairly present the financial condition
and results of operations of each such Person, as at the dates and for
the periods indicated and (ii) copies of the information described in
subsection 5.1(i) for each Borrower, and their respective Subsidiaries
for the most recent periods ended on or prior to the Second Amendment
Effective Date, and all such information shall be in form and
substance satisfactory to Agent.
L. FCC LICENSES. Each of the FCC Licenses shall be in
full force and effect.
M. OPINIONS OF CREDIT PARTIES' COUNSEL. Lenders and
their respective counsel shall have received originally executed
copies of one or more favorable written opinions, dated as of the
Second Amendment Effective Date, of (i) Anthony L. Morrison, general
counsel of the Credit Parties, in form and substance satisfactory to
Agent and its counsel and setting forth substantially the matters in
the opinions delivered by such counsel pursuant to subsection 3.1 of
the Credit Agreement (as they would apply to the documents delivered
hereunder and the transactions consummated by this Second Amendment
and contemplated hereby (collectively, the "SECOND AMENDMENT
26
<PAGE> 28
TRANSACTIONS") if such documents were delivered and such transactions
were consummated as of the Restatement Effective Date) and, as to such
other matters as Agent may reasonably request, (ii) Holland & Knight,
special counsel for the Credit Parties, in form and substance
satisfactory to Agent and Requisite Lenders, setting forth
substantially the matters in the opinions delivered by such counsel
pursuant to subsection 3.1 of the Credit Agreement (as they would
apply to the Second Amendment Transactions if such documents were
delivered and such transactions were consummated as of the Restatement
Effective Date), and (iii) Dow Lohnes & Albertson, special counsel for
the Credit Parties as to the communications matters set forth in the
opinions delivered by such counsel pursuant to subsection 3.1 of the
Credit Agreement (as they would apply to the Second Amendment
Transactions if such documents were delivered and such transactions
were consummated as of the Restatement Effective Date) and as to such
other matters as Agent may reasonably request all in form and
substance satisfactory to Agent and its counsel. Each Credit Party
hereby directs each such counsel to deliver such opinions.
N. NO ACTION OR INJUNCTION. No litigation, inquiry or
other action and no injunction or restraining order shall be pending
or threatened with respect to the making of the Loans hereunder or the
transactions contemplated hereby.
O. NO EVENT OF DEFAULT, ETC. As of the Second Amendment
Effective Date, (i) no Event of Default or Potential Event of Default
under the Credit Agreement as in effect as of such date and as amended
hereby shall have occurred and be continuing or would result from the
Second Amendment Transactions, (ii) the representations and warranties
set forth in the Credit Agreement and this Amendment shall be true,
correct and complete in all material respects on and as of the Second
Amendment Effective Date to the same extent as though made on and as
of that date, (iii) each Credit Party shall have performed in all
material respects all agreements which this Amendment and the Credit
Agreement as amended hereby provides shall be performed on or before
the Second Amendment Effective Date (except as otherwise disclosed to
and agreed to in writing by Agent), and (iv) Agent shall have received
an Officers' Certificate from each Credit Party to such effect in form
and substance satisfactory to Agent.
P. FEES AND EXPENSES. Borrowers shall have (i) paid to
Agent for distribution to Lenders in accordance with their Pro Rata
Shares an amendment fee equal to $187,500 and (ii) shall have
reimbursed Agent for its costs, fees and expenses (including legal
fees) as described in subsection 9.3, incurred through the Second
Amendment Effective Date.
Q. COMPLETION OF PROCEEDINGS. All corporate,
partnership and other proceedings taken or to be taken in connection
with the transactions contemplated hereby and all documents incidental
thereto not previously found acceptable by Agent and its counsel shall
be satisfactory in form and substance to Agent and such counsel, and
Agent and its counsel shall have received all such counterpart
originals or certified copies of such documents as Agent may
reasonably request.
27
<PAGE> 29
SECTION 6.
REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment, each Existing
Borrower, New Borrower, New Guarantor, each other Credit Party and Holdings
represents and warrants to Lenders that after giving effect to this Amendment
in the manner contemplated by this Amendment, each of the following is true and
correct:
(a) no event has occurred and is continuing which
constitutes an Event of Default or Potential Event of Default;
(b) the representations and warranties of such Person
contained in the Credit Agreement and the other Loan Documents are
true and correct on and as of the date hereof and as of the Second
Amendment Effective Date to the same extent as though made on and as
of the date hereof and as of the Second Amendment Effective Date
except to the extent such representations and warranties specifically
relate to an earlier date, in which case they are true and correct in
all material respects as of such earlier date;
(c) such Person has performed all agreements on its part
to be performed prior to the date hereof as set forth in the Credit
Agreement and the other Loan Documents;
(d) such Person has all requisite corporate or
partnership power and authority, as the case may be, to enter into
this Amendment and to carry out the Second Amendment Transactions to
the extent such Person is a party to such transactions including,
without limitation, the execution and delivery of the Related
Documents and Loan Documents required hereunder (collectively, the
"SECOND AMENDMENT DOCUMENTS") and the performance of its obligations
hereunder and under the Credit Agreement and the other Loan Documents
(as currently in effect and as amended hereby);
(e) the execution of this Amendment and the Second
Amendment Documents and the consummation and performance of the Second
Amendment Transactions have been duly authorized by all necessary
corporate or partnership action, as the case may be, on the part of
each such Person required to approve the same; and
(f) the execution and delivery by each such Person of
this Amendment and the Second Amendment Documents and consummation and
performance of the Second Amendment Transactions do not and will not
(i) violate any provision of any law or any governmental rule or
regulation applicable to any such Person, or any of their respective
Subsidiaries, the Articles or Certificate of Incorporation, By-Laws or
Partnership Agreement, as the case may be, of any such Person, or any
of their respective Subsidiaries, or any order, judgment or decree of
any court or other agency of government binding on any such Person, or
any of their respective Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any
28
<PAGE> 30
Contractual Obligation of any such Person, or any of their respective
Subsidiaries, (iii) result in or require the creation or imposition of
any Lien upon any of the properties or assets of any Credit Party, or
any of their respective Subsidiaries (other than any Liens created
under any of the Loan Documents in favor of Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any approval
or consent of any Person under any Contractual Obligation of any such
Person or any of their respective Subsidiaries which has not been
obtained and is in full force and effect.
SECTION 7.
ACKNOWLEDGEMENT AND CONSENT
Each Guarantor acknowledges and agrees that (i) the Holdings Guaranty,
Network Holdings Guaranty, Partners Guaranty, or License Subsidiaries Guaranty,
as the case may be, the Security Agreements and each other Loan Document to
which it is a party or otherwise bound shall continue in full force and effect
and (ii) all of its obligations thereunder shall be valid and enforceable and
shall not be impaired or affected by the execution or effectiveness of this
Amendment; provided that the foregoing shall not in any manner limit the
release of the Released Guarantors and the termination of the Network Holdings
Guaranty and the Network Holdings Pledge Agreement, all as set forth herein as
of the Second Amendment Effective Date.
Each such Guarantor acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Amendment, such Guarantor is
not required by the terms of the Credit Agreement or any other Loan Document to
consent to the amendments to the Credit Agreement effected pursuant to this
Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other
Loan Document shall be deemed to require the consent of any such Guarantor to
any future amendments to the Credit Agreement.
SECTION 8.
MISCELLANEOUS
8.1 REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
A. On and after the Second Amendment Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit
Agreement, and, each reference in the other Loan Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the Credit Agreement as
amended by this Amendment.
B. Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
29
<PAGE> 31
C. The execution, delivery and performance of this Amendment
shall not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent or
any Lender under, the Credit Agreement, any Guaranty, the Security Agreements
or any of the other Loan Documents.
8.2 FEES AND EXPENSES.
Borrowers acknowledge that all costs, fees and expenses as described
in subsection 9.3 of the Credit Agreement incurred by Agent and its counsel
with respect to this Amendment and the documents and transactions contemplated
hereby shall be for the account of Borrowers.
8.3 EXECUTION IN COUNTERPARTS; EFFECTIVENESS.
This Amendment may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
taken together shall constitute but one and the same instrument. This
Amendment (other than the provisions of Sections 1, 2, 3 and 4 hereof) shall
become effective upon the execution of a counterpart hereof by all Lenders and
each of the other parties hereto and receipt by Borrowers and Agent of written
or telephonic notification of such execution and authorization of delivery
thereof. Agent shall notify each Lender of the date which is the Second
Amendment Effective Date in accordance with Section 5 hereof.
8.4 HEADINGS.
Section and subsection headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.
8.5 APPLICABLE LAW.
THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO
AND ALL OTHER ASPECTS HEREOF SHALL BE DEEMED TO BE MADE UNDER, SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
30
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed as of the date first above written by their respective officers
thereunto duly authorized.
CONTINUING BORROWERS:
PAXSON BROADCASTING OF JACKSONVILLE,
LIMITED PARTNERSHIP
PAXSON BROADCASTING OF MIAMI,
LIMITED PARTNERSHIP
PAXSON BROADCASTING OF ORLANDO,
LIMITED PARTNERSHIP
PAXSON BROADCASTING OF TAMPA,
LIMITED PARTNERSHIP
By: PAXSON COMMUNICATIONS OF FLORIDA, INC.,
a Florida corporation, as Managing General
Partner
By: /s/ Arthur Tek
---------------------------------
Arthur Tek
Treasurer
PAXSON COMMUNICATIONS OF WEST PALM
BEACH-25, INC.
By: /s/ Arthur Tek
------------------------------------------
Arthur Tek
Treasurer
S-1
<PAGE> 33
RELEASED BORROWERS:
PAXSON COMMUNICATIONS OF ATLANTA-14, INC.
PAXSON COMMUNICATIONS OF MIAMI-35, INC.
PAXSON COMMUNICATIONS OF TAMPA-66, INC.,
each a Florida corporation
By: /s/ Arthur Tek
--------------------------------
Arthur Tek
Treasurer
NOTICE ADDRESS:
c/o Paxson Communications Corp.
18401 U.S. Highway 19 North
Clearwater, Florida 34624
Attention: Lowell W. Paxson
NEW BORROWERS:
PAXSON COMMUNICATIONS OF COOKEVILLE,
INC.
PAXSON COMMUNICATIONS OF FT. PIERCE-34,
INC.
PAXSON COMMUNICATIONS NETWORKS, INC.
PAXSON NETWORKS, INC.
By: /s/ Arthur Tek
--------------------------------
Arthur Tek
Treasurer
S-2
<PAGE> 34
NEW GUARANTOR:
PAXSON COOKEVILLE LICENSE INC.
By: /s/ Arthur Tek
-----------------------------------
Arthur Tek
Treasurer
OTHER CREDIT PARTIES:
PAXSON COMMUNICATIONS CORP.
PAXSON COMMUNICATIONS OF
FLORIDA, INC.
PAXSON COMMUNICATIONS LP, INC.
PAXSON ATLANTA LICENSE, INC.
PAXSON WEST PALM BEACH LICENSE, INC.
By: /s/ Arthur Tek
-----------------------------------
Arthur Tek
Treasurer
PAXSON JACKSONVILLE LICENSE LIMITED
PARTNERSHIP
PAXSON ORLANDO LICENSE LIMITED
PARTNERSHIP
PAXSON MIAMI LICENSE LIMITED
PARTNERSHIP
PAXSON TAMPA LICENSE LIMITED
PARTNERSHIP
By: PAXSON COMMUNICATIONS OF
FLORIDA, INC.,
as managing general partner
By: /s/ Arthur Tek
--------------------------
Arthur Tek
Treasurer
S-3
<PAGE> 35
NOTICE ADDRESS:
c/o Paxson Communications Corp.
18401 U.S. Highway 19 North
Clearwater, Florida 34624
Attention: Lowell W. Paxson
S-4
<PAGE> 36
LENDERS:
BANQUE PARIBAS,
Individually, and as Agent
By: Errol Antzis
------------------------
Errol Antzis
Group Vice President
By: Nicole Cawley
------------------------
Name: Nicole Cawley
Title: Vice President
THE DAIWA BANK, LIMITED
By: Brian M. Smith
------------------------
Name: Brian M. Smith
Title: Senior Vice President &
Regional Manager (EAST)
By: David G. Hume
------------------------
Name: David G. Hume
Title: General Counsel
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: Paul Thomason
------------------------
Name: Paul Thomason
Title: Vice President
S-5
<PAGE> 37
BANK OF MONTREAL
By: Gretchen Shugart
------------------------
Name: Gretchen Shugart
Title: Director
UNION BANK
By: Christine P. Ball
------------------------
Name: Christine P. Ball
Title: Asst. Vice President
BANKERS TRUST COMPANY
By: Dana Klein
------------------------
Name: Dana Klein
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON
By: Mark S. Denomme
------------------------
Name:
Title: Vice President
MICHIGAN NATIONAL BANK
By: Stephane E. Lubin
------------------------
Name: Stephane E. Lubin
Title: Vice President
S-6
<PAGE> 1
Exhibit 10.2
<PAGE> 2
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of the 31st day of March,
1995, by and between The Christian Network, Inc., a Florida not for profit
corporation ("Buyer"), and LeSea Broadcasting Corporation, an Indiana
not-for-profit corporation ("Seller").
RECITALS
A. Seller is the licensee of and owns and operates television station
WHKE-TV, Kenosha, Wisconsin (the "Station") pursuant to licenses issued by the
Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer desires to buy, substantially
all the assets that are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1 DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of spot advertising time run on the Station by Seller prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means (i) all Contracts listed in Schedule 3.7
that are to be assumed by Buyer upon its purchase of the Station, (ii) any
Contracts entered into by Seller between
<PAGE> 3
the date of this Agreement and the Closing Date that Buyer agrees in writing to
assume, and (iii) time sales contracts entered into by Seller in compliance
with Section 5.3.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto) to which Seller is a party or which are binding upon
Seller and which relate to or affect the Assets or the business or operations
of the Station, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by Seller between the date of this Agreement and
the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
2
<PAGE> 4
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities to Seller in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
SECTION 2 PURCHASE AND SALE OF ASSETS
3
<PAGE> 5
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer, and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of the
tangible and intangible assets used or useful in connection with the conduct of
the business or operations of the Station, together with any additions thereto
between the date of this Agreement and the Closing Date, but excluding the
assets described in Section 2.2, free and clear of any claims, liabilities,
security interests, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for liens for current taxes not
yet due and payable), including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Assumed Contracts;
(e) The Intangibles and all intangible assets of Seller
relating to the Station that are not specifically included within the
Intangibles, including the goodwill of the Station, if any;
(f) All of Seller's proprietary information, technical
information and data, machinery and equipment warranties, maps, computer discs
and tapes, plans, diagrams, blueprints, and schematics, including filings with
the FCC relating to the business and operation of the Station;
(g) The Accounts Receivable as of 11:59 p.m., local time, on
the day prior to the Closing Date ("Seller's Receivables");
(h) All choses in action of Seller relating to the Station;
and
(i) All books and records relating to the business or
operations of the Station, including executed copies of the
4
<PAGE> 6
Assumed Contracts, and all records required by the FCC to be kept by the
Station.
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Seller's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that Seller is required by law to
retain and that pertain to Seller's corporate organization;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
(d) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets and the
covenants of Seller set forth in the Noncompetition Agreement referred to in
Section 6.14 shall be TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000)
adjusted as provided below:
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and personal property taxes and assessments levied
against the Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Assets under this Agreement), and similar prepaid and deferred
items, shall be prorated between Buyer and Seller in accordance with the
principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
on and after the Closing Date. Notwithstanding the preceding sentence, Seller
shall remain solely liable with respect to any Contracts not included in the
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Assumed Contracts and any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5. Provided, however, that the Purchase
Price shall be increased by an amount equal to 50% of the remaining license
fees owed by Seller at Closing under the ten (10) Viacom Program License
Agreements identified in Schedule 2.3.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two days prior to the Closing Date.
2.5 Assumption of Liabilities and Obligations. As of the Closing
Date, Buyer shall assume and undertake to pay, discharge, and perform all
obligations and liabilities of Seller under the Licenses and the Assumed
Contracts insofar as they relate to the time on and after the Closing Date, and
arise out of events related to Buyer's ownership of the Assets or its operation
of the Station on or after the Closing Date. Buyer shall not assume any other
obligations or liabilities of Seller, including (i) any obligations or
liabilities under any Contract not included in the Assumed Contracts, (ii) any
obligations or liabilities under the Assumed Contracts relating to the period
prior to the Closing Date, (iii) any claims or pending litigation or
proceedings relating to the operation of the Station prior to the Closing, (iv)
any obligations or liabilities arising under capitalized leases or other
financing agreements, (v) any obligations or liabilities arising under
agreements entered into other than in the ordinary course of business, (vi) any
obligations or liabilities of Seller under any employee pension, retirement, or
other benefit plans or collective bargaining agreements, (vii) any obligation
to any employee of the Station for severance benefits, vacation time, or sick
leave accrued prior to the Closing Date, or (viii) any obligations or
liabilities caused by,
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arising out of, or resulting from any action or omission of Seller prior to the
Closing, and all such obligations and liabilities shall remain and be the
obligations and liabilities solely of Seller.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Indiana. Seller has all requisite power and authority (i) to own,
lease, and use the Assets as now owned, leased, and used, (ii) to conduct the
business and operations of the Station as now conducted, and (iii) to execute
and deliver this Agreement, the Escrow Agreement and the documents contemplated
hereby and thereby, and to perform and comply with all of the terms, covenants,
and conditions to be performed and complied with by Seller hereunder and
thereunder. Seller is not a participant in any joint venture or partnership
with any other person or entity with respect to any part of the operations of
the Station or any of the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Seller have been
duly authorized by all necessary actions on the part of Seller and its
shareholders. This Agreement and the Escrow Agreement have been duly executed
and delivered by Seller and constitute the legal, valid, and binding
obligations of Seller, enforceable against it in accordance with their
respective terms except as the enforceability of this Agreement and the Escrow
Agreement may be affected by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally, and by judicial discretion in the enforcement of
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the Escrow Agreement and the
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documents contemplated hereby and thereby(with or without the giving of notice,
the lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with any provision of the Articles of Incorporation or
Bylaws of Seller; (iii) will not conflict with, result in a breach of, or
constitute a default under, any law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) except as disclosed on Schedule 3.3, will not conflict
with, constitute grounds for termination of, result in a breach of, constitute
a default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Seller is a party or by which Seller may be bound; and (v) will not
create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete copies
of the Licenses (including any amendments and other modifications thereto).
Except as disclosed on Schedule 3.4, the Licenses have been validly issued, and
Seller is the authorized legal holder thereof. The Licenses listed on Schedule
3.4 comprise all of the licenses, permits, and other authorizations required
from any governmental or regulatory authority for the lawful conduct of the
business and operations of the Station in the manner and to the full extent
they are now conducted, and none of the Licenses is subject to any restriction
or condition that would limit the full operation of the Station as now
operated. Except as disclosed on Schedule 3.4, (i) the Licenses are in full
force and effect, and the conduct of the business and operations of the Station
is in accordance therewith and (ii) Seller has no reason to believe that any of
the Licenses would not be renewed by the FCC or other granting authority in the
ordinary course. The Station's city of license, as determined by the FCC, is
located within the Milwaukee, Wisconsin, Area of Dominant Influence as defined
by the 1991-1992 Area of Dominant Influence Market Guide published by The
Arbitron Co. and the Milwaukee, Wisconsin, Designated Market Area as defined by
the 1994 United States Television Household Estimates published by Nielsen
Media Research. On or before June 17, 1993, Seller made a valid election of
must carry with respect to each
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cable system located within the Station's Area of Dominant Influence, no cable
system has advised Seller of any signal quality or copyright indemnity or other
prerequisite to cable carriage of the Station's signal, and no cable system has
declined or threatened to decline such carriage or failed to respond to a
request for carriage or sought any form of relief from carriage from the FCC.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
complete and accurate description of all the Real Property and Seller's
interests therein (including street address, legal description, owner, and use
and the location of all improvements thereon). The Real Property listed on
Schedule 3.5 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted. Except as disclosed
on Schedule 3.5, Seller has good and marketable fee simple title, insurable at
standard rates, to all fee estates (including the improvements thereon)
included in the Real Property, free and clear of all liens, mortgages, pledges,
covenants, easements, restrictions, encroachments, leases, charges, and other
claims and encumbrances of any nature whatsoever, and without reservation or
exclusion of any mineral, timber, or other rights or interests, except for
liens for real estate taxes not yet due and payable and liens disclosed on
Schedule 3.5. With respect to each leasehold or subleasehold interest included
in the Real Property being conveyed under this Agreement so long as Seller
fulfills its obligations under the lease therefor, Seller has enforceable
rights to non-disturbance and quiet enjoyment, and no third party holds any
interest in the leased premises with the right to foreclose upon Seller's
leasehold or subleasehold interest. All towers, guy anchors, and buildings and
other improvements included in the Assets are located entirely on the Real
Property listed in Schedule 3.5. Seller has delivered to Buyer true and
complete copies of all deeds pertaining to the Real Property. All Real
Property (including the improvements thereon) (i) is in good condition and
repair consistent with its present use, (ii) is available for immediate use in
the conduct of the business and operations of the Station, and (iii) complies
with all applicable building or zoning codes and the regulations of any
governmental authority having jurisdiction. Seller has full legal and
practical access to the Real Property. All easements, rights-of-way, and real
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property licenses have been properly recorded in the appropriate public
recording offices.
3.6 Title to and Condition of Tangible Personal Property. Schedule
3.6 lists all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6 comprises all material items of
tangible personal property necessary to conduct the business and operations of
the Station as now conducted. Except as described in Schedule 3.6, Seller owns
and has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for liens for current taxes not yet due and payable. Each item of
Tangible Personal Property is available for immediate use in the business and
operations of the Station. All items of transmitting and studio equipment
included in the Tangible Personal Property (i) have been maintained in a manner
consistent with generally accepted standards of good engineering practice, and
(ii) will permit the Station and any unit auxiliaries thereto to operate in
accordance with the terms of the FCC Licenses and the rules and regulations of
the FCC, and with all other applicable federal, state, and local statutes,
ordinances, rules, and regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list of
all Assumed Contracts except contracts with advertisers for the sale of
advertising time on the Station for cash at prevailing rates and which have not
been prepaid and which may be canceled by the Station without penalty on not
more than thirty days' notice. Seller has delivered to Buyer true and complete
copies of all written Assumed Contracts, true and complete memoranda of all
oral Assumed Contracts (including any amendments and other modifications to
such Assumed Contracts), and a schedule summarizing Seller's obligations under
trade and barter agreements relating to the Station. Other than the Assumed
Contracts listed on Schedule 3.7, Seller requires no contract, lease, or other
agreement to enable it to carry on its business as now conducted. All of the
Assumed Contracts are in full force and effect, and are valid, binding, and
enforceable in accordance with their terms. There is not under any Assumed
Contract any default by any party thereto or any event that, after notice or
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lapse of time or both, could constitute a default. Seller is not aware of any
intention by any party to any Assumed Contract (i) to terminate such contract
or amend the terms thereof, (ii) to refuse to renew the Assumed Contract upon
expiration of its term, or (iii) to renew the Assumed Contract upon expiration
only on terms and conditions which are more onerous than those now existing.
Except for the need to obtain the Consents listed in Schedule 3.3, Seller has
full legal power and authority to assign its rights under the Assumed Contracts
to Buyer in accordance with this Agreement, and such assignment will not affect
the validity, enforceability, or continuation of any of the Assumed Contracts.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.3, no consent, approval, permit,
or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles. Seller is not
infringing upon or otherwise acting adversely to any trademarks, trade names,
service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other person or persons, and there
is no claim or action pending, or to the knowledge of Seller threatened, with
respect thereto. The Intangibles listed on Schedule 3.9 comprise all
intangible property interests necessary to conduct the business and operations
of the Station as now conducted.
3.10 Financial Statements. Schedule 3.10 hereto contains true and
complete copies of financial statements including balance sheets, statements of
operations and a statement of operating cash flow for the period ending _______
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(collectively, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Seller, have been prepared in accordance
with generally accepted accounting principles consistently applied and
maintained throughout the periods indicated, accurately reflect the books,
records, and accounts of the Station (which books, records, and accounts are
complete and correct), are complete and correct in all material respects, and
present fairly the financial condition of the Station as at their respective
dates and the results of operations for the periods then ended. None of the
Financial Statements understates the true costs and expenses of conducting the
business or operations of the Station, fails to disclose any material
contingent liabilities, or inflates the revenues of the Station.
3.11 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in Schedule 3.11 are adequate
in amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Seller on the Assets or the Station has been
canceled by the insurer and no application of Seller for insurance has been
rejected by any insurer.
3.12 Reports. All returns, reports, and statements that the Station
is currently required to file with the FCC or with any other governmental
agency have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction over Seller and the Station have
been complied with. All of such returns, reports, and statements are
substantially complete and correct as filed. Seller has timely paid to the FCC
all annual regulatory fees payable with respect to the FCC Licenses.
3.13 Personnel.
(a) Employees and Compensation. Schedule 3.13 contains a true
and complete list of all employees of the
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Station, their job titles, date of hire, current salary and date and amount of
last salary increase. Schedule 3.13 also contains a true and complete list as
of the date of this Agreement of all employee benefit plans or arrangements
applicable to the employees of the Station and all fixed or contingent
liabilities or obligations of Seller with respect to any person now or formerly
employed by Seller at the Station, including pension or thrift plans,
individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance programs,
incentive plans, bonus arrangements, and vacation, sick leave, disability and
termination arrangements or policies, including workers' compensation policies,
and a description of all fixed or contingent liabilities or obligations of
Seller with respect to any person now or formerly employed at the Station or
any person now or formerly retained as an independent contractor at the
Station. Seller has furnished Buyer with true and complete copies of all
employee handbooks, employee rules and regulations, and summary plan
descriptions of the written plans and arrangements listed in Schedule 3.13, and
with descriptions, in writing, of the unwritten plans and arrangements listed
in Schedule 3.13. At Buyer's request, Seller will furnish Buyer with true and
complete copies of all applicable plan documents, trust documents, and
insurance contracts with respect to the plans and arrangements listed on
Schedule 3.13. All employee benefits and welfare plans or arrangements listed
in Schedule 3.13 were established and have been executed, managed and
administered in accordance with the Internal Revenue Code of 1986, as amended,
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
all other laws. Seller is not aware of the existence of any governmental audit
or examination of any of such plans or arrangements or of any facts which would
lead it to believe that any such audit or examination is pending or threatened.
No action, suit, or claim with respect to any of such plans or arrangements
(other than routine claims for benefits) is pending or, to the knowledge of
Seller, threatened, and Seller possesses no knowledge of any facts which could
give rise to any such action, suit or claim.
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(b) Labor Relations. Seller is not a party to or subject to
any collective bargaining agreements with respect to the Station. Seller has
no written or oral contracts of employment with any employee of the Station,
other than those listed in Schedule 3.7 and the agreement described in Section
10.2(b) below. Seller has complied with all laws, rules, and regulations
relating to the employment of labor, including those related to wages, hours,
collective bargaining, occupational safety, discrimination, and the payment of
social security and other payroll related taxes, and it has not received any
notice alleging that it has failed to comply in any material respect with any
such laws, rules, or regulations. No controversies, disputes, or proceedings
are pending or, to the best of its knowledge, threatened, between it and any
employee (singly or collectively) of the Station. No labor union or other
collective bargaining unit represents or claims to represent any of the
employees of the Station. To Seller's knowledge, there is no union campaign
being conducted to solicit cards from employees to authorize a union to request
a National Labor Relations Board certification election with respect to any
employees at the Station.
(c) Liabilities. Seller has no liability of any kind to or
in respect of any employee benefit plan, including withdrawal liability under
Section 4201 of ERISA. Seller has not incurred any accumulated funding
deficiency within the meaning of ERISA or Section 4971 of the Internal Revenue
Code. Seller has not failed to make any required contributions to any employee
benefit plan. The Pension Benefit Guaranty Corporation has not asserted that
Seller has incurred any liability in connection with any such plan. No lien
has been attached and no person has threatened to attach a lien on any property
of Seller as a result of a failure to comply with ERISA.
3.14 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. There are no governmental investigations or
other legal, administrative, or tax proceedings pursuant to which Seller is or
could be made liable for any taxes, penalties, interest, or other charges, the
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liability for which could extend to Buyer as transferee of the business of the
Station, and no event has occurred that could impose on Buyer any transferee
liability for any taxes, penalties, or interest due or to become due from
Seller.
3.15 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, and as disclosed on
Schedule 3.4, there is no claim, legal action, counterclaim, suit, arbitration,
governmental investigation or other legal, administrative, or tax proceeding,
nor any order, decree or judgment, in progress or pending, or to the knowledge
of Seller threatened, against or relating to Seller with respect to its
ownership or operation of the Station or otherwise relating to the Assets or
the business or operations of the Station, nor does Seller know or have reason
to be aware of any basis for the same. In particular, but without limiting the
generality of the foregoing, there are no applications, complaints or
proceedings pending or, to the best of its knowledge, threatened (i) before the
FCC relating to the business or operations of the Station other than rule
making proceedings which affect the television industry generally, (ii) before
any federal or state agency relating to the business or operations of the
Station involving charges of illegal discrimination under any federal or state
employment laws or regulations, or (iii) before any federal, state, or local
agency relating to the business or operations of the Station involving zoning
issues under any federal, state, or local zoning law, rule, or regulation.
3.16 Environmental Matters.
(a) Seller has complied in all material respects with all
laws, rules, and regulations of all federal, state, and local governments (and
all agencies thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, demand, or notice has been filed or commenced
against Seller in connection with its ownership or operation of the Station
alleging any failure to comply with any such law, rule, or regulation.
(b) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership
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and operation of the Station (and there is no basis related to the past or
present operations, properties, or facilities of Seller for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against Seller giving rise to any such liability) under any
law, rule, or regulation of any federal, state, or local government (or agency
thereof) concerning release or threatened release of hazardous substances,
public health and safety, or pollution or protection of the environment.
(c) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not handled or disposed of any substance,
arranged for the disposal of any substance, or owned or operated any property
or facility in any manner that could form the basis for any present or future
charge, complaint, action, suit, proceeding, hearing, investigation, claim, or
demand (under the common law or pursuant to any statute) against Seller giving
rise to any such liability) for damage to any site, location, or body of water
(surface of subsurface) or for illness or personal injury.
(d) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and there is no basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
against Seller giving rise to any such liability) under any law, rule, or
regulation of any federal, state, or local government (or agency thereof)
concerning employee health and safety.
(e) To the best of Seller's knowledge, after due
investigation, Seller has no liability relating to its ownership and operation
of the Station (and Seller has not exposed any employee to any substance or
condition that could form the basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to statute) against Seller giving rise to any
such liability) for any illness or personal injury to any employee.
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(f) In connection with its ownership or operation of the
Station, Seller has obtained and been in compliance in all material respects
with all of the terms and conditions of all permits, licenses, and other
authorizations which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables which are contained in, all federal,
state, and local laws, rules, and regulations (including all codes, plans,
judgments, orders, decrees, stipulations, injunctions, and charges thereunder)
relating to public health and safety, worker health and safety, and pollution
or protection of the environment, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or wastes into ambient air,
surface water, ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(g) No pollutant, contaminant, or chemical, industrial,
hazardous, or toxic material or waste has ever been manufactured, buried,
stored, spilled, leaked, discharged, emitted, or released by Seller in
connection with its ownership and operation of the Station or, to the best of
Seller's knowledge, after due investigation, by any other party on any Real
Property.
3.17 Compliance with Laws. Seller has complied in all material
respects with the Licenses and all federal, state, and local laws, rules,
regulations, and ordinances applicable or relating to the ownership and
operation of the Station. Neither the ownership or use of the properties of
the Station nor the conduct of the business or operations of the Station
conflicts with the rights of any other person or entity.
3.18 Conduct of Business in Ordinary Course. Since July 1, 1994,
Seller has conducted the business and operations of the Station only in the
ordinary course and has not:
(a) Suffered any material adverse change in the business,
assets, or properties of the Station, including any
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damage, destruction, or loss affecting any assets used or useful in the conduct
of the business of the Station;
(b) Made any material increase in compensation payable or to
become payable to any of the employees of the Station, or any bonus payment
made or promised to any employee of the Station, or any material change in
personnel policies, employee benefits, or other compensation arrangements
affecting the employees of the Station;
(c) Made any sale, assignment, lease, or other transfer of
any of the Station's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(d) Canceled any debts owed to or claims held by Seller with
respect to the Station, except in the normal and usual course of business;
(e) Suffered any material write-down of the value of any
Assets or any material write-off as uncollectible of any accounts receivable of
the Station; or
(f) Transferred or granted any right under, or entered into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, trade name, franchise, or similar right, or modified any
existing right relating to the Station.
3.19 Transactions with Affiliates. Seller has not been involved in
any business arrangement or relationship relating to the Station with any
affiliate of Seller, and no affiliate of Seller owns any property or right,
tangible or intangible, which is used in the business of the Station. As used
in this paragraph, "affiliate" has the meaning set forth in Rule 12b-2
promulgated under the Securities and Exchange Act of 1934.
3.20 Broker. Neither Seller nor any person acting on Seller's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement, except for a
commission payable by Seller to Bruce Fox/Media One, Inc.
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3.21 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Seller pursuant hereto contains or will contain any
untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and at Closing will be duly qualified to conduct business as
a foreign corporation in the State of Wisconsin. Buyer has all requisite power
and authority to execute and deliver this Agreement and the Escrow Agreement
and the documents contemplated hereby and thereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Buyer have been
duly authorized by all necessary actions on the part of Buyer. This Agreement
and the Escrow Agreement have been duly executed and delivered by Buyer and
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
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Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
4.5 Buyer Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act of 1934, as now in effect, and the rules,
regulations and policies of the FCC as now in effect. Buyer knows of no fact
that would, under existing law and the existing rules, regulations, policies
and procedures of the FCC disqualify Buyer as an assignee of the FCC Licenses
or as the owner and operator of the Station.
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station diligently in
the ordinary course of business in accordance with its past practices (except
where such conduct would conflict with the following covenants or with Seller's
other obligations under this Agreement), and in accordance with the other
covenants in this Section 5.
5.2 Compensation. Seller shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the
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business or operations of the Station, except in accordance with past
practices.
5.3 Contracts. Seller will not enter into any contract or commitment
relating to the Station or the Assets, or amend or terminate any Contract (or
waive any material right thereunder), or incur any obligation (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness) that will be binding on Buyer after Closing, except for cash time
sales agreements made in the ordinary course of business. Prior to the Closing
Date, Seller shall deliver to Buyer a list of all Contracts entered into
between the date of this Agreement and the Closing Date, together with copies
of such Contracts. Seller shall make all license fee payments due to Viacom in
accordance with the terms of each of the ten (10) Program License Agreements
identified in Schedule 2.3 in a timely manner and without default thereunder.
5.4 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or useful in the business or operations of the Station or in connection with
the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed prior to the Closing
Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the operation of the Station.
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5.7 Rights. Seller shall not waive any right relating to the Station
or any of the Assets. Seller shall not cause, by any act or failure to act,
any cable system located within the Station's Area of Dominant Influence to
refuse to carry the Station's signal.
5.8 No Inconsistent Action. Seller shall not take any action that is
inconsistent with its obligations under this Agreement or that could hinder or
delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books, records,
Contracts, and documents relating to the Station for the purpose of audit and
inspection, including inspections incident to the environmental study described
in Section 6.6 and the engineering study described in Section 6.7, and will
furnish or cause to be furnished to Buyer or its authorized representatives all
information with respect to the affairs and business of the Station that Buyer
may reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Station). Without
limiting the generality of the foregoing, Seller shall give Buyer and its
counsel, accountants and other authorized representatives reasonable access to
Seller's financial records and Seller's employees, counsel, accountants and
other representatives for the purpose of preparing and auditing such financial
statements as Buyer determines, in its sole judgment, are required or advisable
to comply with federal or state securities laws and the rules and regulations
of securities markets as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its best efforts and
take all reasonable actions to maintain all of the Assets in good condition
(ordinary wear and tear excepted), and use, operate, and maintain all of the
Assets in a reasonable manner and in accordance with the terms of the FCC
Licenses, all rules and regulations of the FCC and generally accepted standards
of good engineering practice. Seller shall maintain inventories
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of spare parts and expendable supplies at levels consistent with past
practices. If any loss, damage, impairment, confiscation, or condemnation of
or to any of the Assets occurs, Seller shall repair, replace, or restore the
Assets to their prior condition as represented in this Agreement as soon
thereafter as possible, and Seller shall use the proceeds of any claim under
any insurance policy solely to repair, replace, or restore any of the Assets
that are lost, damaged, impaired, or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance policies
on the Station and the Assets.
5.12 Consents. Seller shall use its best efforts to obtain the
Consents and the estoppel certificates described in Section 8.2(b), without any
change in the terms or conditions of any Contract or License that could be less
advantageous to the Station than those pertaining under the Contract or License
as in effect on the date of this Agreement. Seller shall promptly advise Buyer
of any difficulties experienced in obtaining any of the Consents and of any
conditions proposed, considered, or requested for any of the Consents. Upon
Buyer's request, Seller shall cooperate with Buyer and use it best efforts to
obtain from the lessors under each Real Property lease such estoppel
certificates and consents to the collateral assignment of the lessee's interest
under each such lease as Buyer's senior lenders may request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of
any unusual or material developments with respect to the business or operations
of the Station, and of any material change in any of the information contained
in Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Financial Information. Seller shall furnish to Buyer within
twenty days after the end of each month ending between the date of this
Agreement and the Closing Date a statement of income and expense and a
statement of Operating Cash Flow for the month
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just ended and such other financial information (including information on
payables and receivables) as Buyer may reasonably request. All financial
information delivered by Seller to Buyer pursuant to this Section shall be
prepared from the books and records of Seller in accordance with generally
accepted accounting principles consistently applied, shall accurately reflect
the books, records, and accounts of the Station, shall be complete and correct
in all material respects, and shall present fairly the financial condition of
the Station as at their respective dates and the results of operations for the
periods then ended.
5.16 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
5.17 Financing Leases. Seller will satisfy at or prior to Closing all
outstanding obligations under capital and financing leases with respect to any
of the Assets and obtain good title to the Assets leased by Seller pursuant to
those leases so that those Assets shall be transferred to Buyer at Closing free
of any interest of the lessors.
5.18 Programming. Seller shall not make any material changes in the
broadcast hours or in the percentages of types of programming broadcast by the
Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.19 Preservation of Business. Seller shall use its best efforts to
preserve the business and organization of the Station and use its best efforts
to keep available to the Station its present employees and to preserve the
audience of the Station and the Station's present relationships with suppliers,
advertisers, and others having business relations with it, to the end that the
business, operations, and prospects of the Station shall be unimpaired at the
Closing Date. The ordinary and customary operating, marketing, promotional,
sales, and advertising practices of the Station shall be maintained.
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5.20 Collection of Accounts Receivable. Seller shall collect the
accounts receivable of the Station only in the ordinary course consistent with
its past practices and will not take any action designed or likely to
accelerate the collection of its accounts receivable.
5.21 Personnel Recommendations. Seller shall promptly notify Buyer as
personnel vacancies occur at the Station and consider for employment all
personnel recommended by Buyer for such vacant positions.
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within five (5) business days of the execution of this Agreement. The parties
shall prosecute the application with all reasonable diligence and otherwise use
their best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by
the FCC except that no party shall be required to comply with a condition if
(1) the condition was imposed on it as the result of a circumstance the
existence of which does not constitute a breach by the party of any of its
representations, warranties, or covenants under this Agreement, and (2)
compliance with the condition would have a material adverse effect upon it.
Notwithstanding any other provision to the contrary herein contained, Buyer
will accept and comply with any post-Closing employment reporting requirements
imposed by the FCC. Buyer and Seller shall oppose any requests for
reconsideration or judicial review of the FCC Consent. If the Closing shall
not have occurred for any reason within the original effective period of the
FCC Consent, and neither party shall have terminated this Agreement under
Section 9, the parties shall jointly request an extension of the effective
period of the
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FCC Consent. No extension of the FCC Consent shall limit the exercise by
either party of its rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Risk of Loss. (a) The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
(b) If any damage or destruction of the Assets or any other event
occurs which (i) causes the Station to cease broadcasting operations for a
period of five or more days or (ii) prevents in any material respect signal
transmission by the Station in the normal and usual manner and Seller fails to
restore or replace the Assets so that normal and usual transmission is resumed
within seven days of the damage, destruction or other event, Buyer, in its sole
discretion, may (x) terminate this Agreement forthwith without any further
obligations hereunder upon written notice to Seller, in which event all funds
held by the Escrow Agent pursuant to the Escrow Agreement, including all
interest and other proceeds from the investment of such funds, shall be
immediately returned to Buyer, or (y) proceed to consummate the transaction
contemplated by this Agreement and complete the restoration and replacement of
the Assets after the Closing Date, in which event Seller shall deliver to Buyer
all insurance proceeds received in connection with such damage, destruction or
other event.
6.4 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information
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obtained from the other party in connection with the transactions contemplated
by this Agreement. If this Agreement is terminated, each party will return to
the other party all information obtained by the such party from the other party
in connection with the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.6 Engineering Study. Buyer may, at its option and expense, retain
an engineering firm to conduct a proof of performance study of the Station and
to prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If the survey discloses any material deficiencies in the
operations or equipment of the Station, Buyer shall so notify Seller as soon as
practicable.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.8 Bulk Sales Law. If applicable, the Bulk Sales law of the State
of Wisconsin shall be complied with by Seller. Any loss, liability,
obligation, or cost suffered by Seller or Buyer as the result of the failure of
Seller or Buyer to comply with the provisions of any bulk sales law applicable
to the transfer
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of the Assets as contemplated by this Agreement shall be borne by Seller.
6.9 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to each
parcel of Real Property that Seller owns, Seller will obtain and deliver to
Buyer, at Seller's expense, at or prior to Closing, an ALTA Owner's Policy of
Title Insurance Form B-1987 (or equivalent policy acceptable to Buyer), issued
by a title insurer satisfactory to Buyer, in an amount equal to the fair market
value of the property and any improvements thereon (as reasonably determined by
Buyer), insuring title to such parcel to be in the name of Buyer as of the
Closing, subject only to liens or encumbrances expressly permitted by this
Agreement.
(b) General Requirements as to Title Insurance Policies.
Each title insurance policy obtained and delivered to Buyer pursuant to this
Agreement shall (1) insure title to the Real Property described in the policy
and all recorded easements benefitting such Real Property, (2) contain an
"extended coverage endorsement" insuring over the general exceptions
customarily contained in title policies, (3) contain an ALTA Zoning Endorsement
3.1 (or equivalent), (4) contain an endorsement insuring that the Real Property
described in the policy is the same real estate shown in the survey delivered
with respect to such property, (5) contain an inflation endorsement, if
available at reasonable cost, (6) contain a "contiguity" endorsement with
respect to any Real Property consisting of more than one record parcel, and (7)
not be subject to any survey exception or any defect or encroachment disclosed
by a survey delivered with respect to the property.
(c) Surveys. With respect to each parcel of Real Property,
as to which a title insurance policy is to be procured pursuant to this
Agreement, Seller will procure a current survey of the parcel, prepared by a
licensed surveyor and conforming to current ALTA Minimum Detail Requirements
for Land Title Surveys, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines, and other matters customarily
shown on such surveys, and showing access affirmatively to public streets and
roads.
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6.10 Sales Tax Filings. Seller shall continue to file Wisconsin sales
tax returns with respect to the Station in accordance with Seller's past
practices and shall concurrently deliver copies of all such returns to Buyer.
6.11 Access to Books and Records. Seller shall provide Buyer access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets. Buyer shall provide Seller access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets.
6.12 Broker. Buyer and Seller each represents and warrants that
neither it nor any person or entity acting on its behalf has incurred any
liability for any finders' or brokers' fees or commissions in connection with
the transactions contemplated by this Agreement, except for a commission
payable to Bruce Fox/Media One, Inc. by Seller.
6.13 Noncompetition Agreement. At Closing, Buyer and Seller shall
enter into a Noncompetition Agreement in the form of Schedule 6.15 and $50,000
of the Purchase Price shall be allocated to the covenants of Seller set forth
therein on the Closing Date.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT
CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement
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to be performed or complied with by it prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order. Additionally, the FCC Licenses shall have been renewed
by the FCC for a full term ending on December 1, 1997.
(e) Governmental Authorizations. Seller shall be the holder
of all Licenses and there shall not have been any modification of any License
that could have an adverse effect on the Station or the conduct of its business
and operations. No proceeding shall be pending the effect of which could be to
revoke, cancel, fail to renew, suspend, or modify adversely any License.
(f) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement and
the Closing Date, there shall have been no material adverse change in the
assets, or properties of the Station, including any damage, destruction, or
loss affecting any assets used or useful in the conduct of the business of the
Station.
7.2 Conditions to Obligations of Seller. All obligations of Seller
at the Closing are subject at Seller's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this
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Agreement shall be true and complete in all material respects at and as of the
Closing Date as though made at and as of that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to
make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m.
on a date, to be set by Buyer on at least five days' written notice to Seller,
that is (1) not earlier than the first business day after the FCC Consent is
granted, and (2) not later than ten business days following the date upon which
the FCC Consent has become a Final Order. If Buyer fails to specify the date
for Closing pursuant to the preceding sentence prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the offices
of Dow, Lohnes & Albertson, 1255 23rd Street, N.W., Washington, D.C. 20037, or
any other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
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(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims, and obligations except for liens for current taxes not
yet due and payable;
(b) Estoppel Certificates. Estoppel certificates of the
lessors of all leasehold and subleasehold interests included in the Real
Property and estoppel certificates of contracting parties to those Assumed
Contracts listed in Schedule 3.7 that are designated to indicate that estoppel
certificates are required under this paragraph;
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by its President, certifying (1)
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date; and (2) that Seller has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(e) Title Insurance and Surveys. The title insurance and
surveys described in Section 6.11;
(f) Tax, Lien, and Judgment Searches. Results of a search
for tax, lien, and judgment filings in the Secretary of State's records of the
State of Wisconsin as well as the records of those counties in Wisconsin in
which any of the Assets are located, such searches having been made no earlier
than fifteen days prior to the Closing Date;
(g) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering
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records, and all files and records used by Seller in connection with its
operations;
(h) Accounts Receivable. A complete and accurate list of the
Station's accounts receivable as of a date no more than five business days
prior to the Closing Date, including, with respect to each of the accounts
receivable, the account number, date of issuance, name and address of account
debtor, aggregate amount, and balance due;
(i) Opinion of Counsel. An Opinion of Seller's counsel dated
as of the Closing Date, substantially in the form of Schedule 8.2(i) hereto;
(j) Noncompetition Agreement. The Noncompetition Agreement
in the form as Schedule 6.13, duly executed on behalf of Seller; and
(k) Lenders Certificates. Such certificates and
confirmations to Buyer's senior lenders as Buyer may reasonably request in
connection with obtaining financing for the performance of its payment
obligations hereunder.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.4(a);
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by its President, certifying (1) that
the representations and warranties of Buyer contained in this Agreement are
true and complete in all material respects as of the Closing Date as though
made on and as of that date, and (2) that Buyer has in all material respects
performed and complied with all of its obligations, covenants, and
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agreements set forth in this Agreement to be performed and complied with on or
prior to the Closing Date;
(d) Opinion of Counsel. An opinion of Buyer's counsel dated
as of the Closing Date, substantially in the form of Schedule 8.3(d) hereto.
(e) Noncompetition Agreement. The Noncompetition Agreement
in the form of Schedule 6.13 duly executed by Buyer and the payment of $50,000
to Seller thereunder.
SECTION 9 TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Seller set
forth in this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 30, 1996.
9.2 Termination by Buyer. This Agreement may be terminated by Buyer
and the purchase and sale of the Station abandoned, if Buyer is not then in
material default, upon written notice to Seller, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
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(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
June 30, 1996.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of the Station in the normal and
usual manner for a continuous period of five days.
(e) Environmental Hazards. Buyer shall have notified Seller
of material environmental hazards or the material possibility of environmental
damages or clean-up costs, as indicated in the environmental study described in
Section 6.6, within 30 days prior to the Closing Date, and the cause thereof
shall not have been remedied prior to the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified Seller
of material deficiencies in the operations or equipment of the Station, as
indicated in the engineering study described in Section 6.7, within 30 days
prior to the Closing Date, and the cause thereof shall not have been remedied
prior to the Closing Date.
9.3 Rights on Termination. If this Agreement is terminated pursuant
to Section 9.1 or Section 9.2 and neither party is in material breach of any
provision of this Agreement, the parties hereto shall not have any further
liability to each other with respect to the purchase and sale of the Assets.
If this Agreement is terminated by Seller due to Buyer's material breach of any
provision of this Agreement, then the payment to Seller of $200,000 pursuant to
Section 9.4 below shall be liquidated damages and shall constitute full payment
and the exclusive remedy for any damages suffered by Seller by reason of
Buyer's material breach of this Agreement. Seller and Buyer agree in advance
that actual damages would be difficult to ascertain and that the amount of
$200,000 is a fair and equitable amount to reimburse Seller for damages
sustained due to Buyer's material breach of this Agreement. If this Agreement
is terminated by Buyer due to Seller's material breach of any provision of this
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Agreement, Buyer shall have all rights and remedies available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with First Union National
Bank of Florida, Escrow Agent, the sum of $200,000 in accordance with an Escrow
Agreement among Buyer, Seller and the Escrow Agent (the "Escrow Agreement").
All such funds deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent pursuant to
the Escrow Agreement, including any interest or other proceeds from the
investment of funds held by the Escrow Agent, shall be disbursed to or at the
direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1 or 9.2
and Buyer is not in material breach of any provision of this Agreement, all
amounts held by the Escrow Agent pursuant to the Escrow Agreement, including
any interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to Buyer's material
breach of this Agreement, then all amounts held by the Escrow Agent pursuant to
the Escrow Agreement shall be disbursed to or at the direction of Seller as
liquidated damages under Section 9.3 above and any interest or other proceeds
from the investment of funds held by the Escrow Agent shall be disbursed by the
Escrow Agent to or at the direction of Buyer.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any
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<PAGE> 38
representation or warranty made by Seller or relieve Seller of any obligations
under this Agreement as the result of a breach of any of its representations
and warranties.
10.2 Indemnification by Seller. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of Buyer or
any information Buyer may have, Seller hereby agrees to indemnify and hold
Buyer harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Seller contained in this Agreement or in any certificate, document,
or instrument delivered to Buyer under this Agreement.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to this Agreement, including any liabilities arising at any time under
any Contract not included in the Assumed Contracts, including, without
limitation, that certain Agreement between Seller and John R. Miller, dated
August ___, 1993.
(c) Any loss, liability, obligation, or cost resulting from
the failure of the parties to comply with the provisions of any bulk sales law
applicable to the transfer of the Assets.
(d) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station prior to the Closing, including
any liabilities arising under the Licenses or the Assumed Contracts which
relate to events occurring prior the Closing Date.
(e) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees
and expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on
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<PAGE> 39
behalf of Seller or any information Seller may have, Buyer hereby agrees to
indemnify and hold Seller harmless against and with respect to, and shall
reimburse Seller for:
(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to Seller under this Agreement.
(b) Any and all obligations of Seller assumed by Buyer
pursuant to this Agreement.
(c) Any and all losses, liabilities, or damages resulting
from the operation or ownership of the Station on and after the Closing.
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.4 Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party claiming indemnification (the "Claimant") shall
promptly give notice to the party from which indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying in reasonable detail the factual basis for the claim.
If the claim relates to an action, suit, or proceeding filed by a third party
against Claimant, such notice shall be given by Claimant within five days after
written notice of such action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation,
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<PAGE> 40
the Claimant agrees to make available to the Indemnifying Party and/or its
authorized representatives the information relied upon by the Claimant to
substantiate the claim. If the Claimant and the Indemnifying Party agree at or
prior to the expiration of the thirty-day period (or any mutually agreed upon
extension thereof) to the validity and amount of such claim, the Indemnifying
Party shall immediately pay to the Claimant the full amount of the claim. If
the Claimant and the Indemnifying Party do not agree within the thirty-day
period (or any mutually agreed upon extension thereof), the Claimant may seek
appropriate remedy at law or equity or under the arbitration provisions of this
Agreement, as applicable.
(c) With respect to any claim by a third party as to which
the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
(e) The indemnifications rights provided in Sections 10.2 and
10.3 shall extend to the shareholders, directors, officers, employees, and
representatives of any Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
10.5 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the
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<PAGE> 41
provisions of this Agreement, monetary damages alone would not be adequate to
compensate Buyer for its injury. Buyer shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Agreement. If any action
is brought by Buyer to enforce this Agreement, Seller shall waive the defense
that there is an adequate remedy at law.
10.6 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by the party upon which such
tax is imposed by law. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives, and each
party shall be responsible for all fees or commissions payable to any finder,
broker, advisor, or similar person retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Seller and Buyer
are unable to resolve by themselves shall be settled by arbitration by a panel
of three (3) neutral arbitrators who shall be selected in accordance with the
procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers
shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The
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<PAGE> 42
arbitration hearing shall be conducted in accordance with the commercial
arbitration rules of the American Arbitration Association. The written
decision of a majority of the arbitrators shall be final and binding on Seller
and Buyer. The costs and expenses of the arbitration proceeding shall be
assessed between Seller and Buyer in a manner to be decided by a majority of
the arbitrators, and the assessment shall be set forth in the decision and
award of the arbitrators. Judgment on the award, if it is not paid within
thirty days, may be entered in any court having jurisdiction over the matter.
No action at law or suit in equity based upon any claim arising out of or
related to this Agreement shall be instituted in any court by Seller or Buyer
against the other except (i) an action to compel arbitration pursuant to this
Section, (ii) an action to enforce the award of the arbitration panel rendered
in accordance with this Section, or (iii) a suit for specific performance
pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller: Stephen P. Sumrall, President
LeSea Broadcasting Corporation
61300 South Ironwood Road
South Bend, Indiana 46614
With a copy to: John E. Fiorini
Gardner, Carton & Douglas
1301 K Street, N.W.
Washington, D.C. 20005
If to Buyer: James West, Chairman
The Christian Network, Inc.
14444 66th Street, North
Clearwater, Florida 34624
With a copy to: John R. Feore, Jr., Esq.
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<PAGE> 43
Dow, Lohnes & Albertson
1255 23rd Street, N.W.
Washington, D.C. 20037
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement to one or more subsidiaries or commonly controlled affiliates of
Buyer without seeking or obtaining Seller's prior approval in which event Buyer
shall have no further obligation hereunder and Buyer may collaterally assign
its rights and interests hereunder to its senior lenders without seeking or
obtaining Seller's prior approval. Upon any permitted assignment by Buyer or
Seller in accordance with this Section 11.4, all references to"Buyer" herein
shall be deemed to be references to Buyer's assignee and all references to
"Seller" herein shall be deemed to be references to Seller's assignee, as the
case may be. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
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<PAGE> 44
11.7 Headings. The headings in this Agreement are included for ease
of reference only and shall not control or affect the meaning or construction
of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter hereof. This
Agreement supersedes all prior negotiations between the parties and cannot be
amended, supplemented, or changed except by an agreement in writing that makes
specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
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contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 Guaranty of Paxson Communications Corp.
(a) As an inducement for Seller to enter into this Agreement
and in consideration of other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Paxson Communications Corp.
("PCC") agrees as follows:
(1) PCC hereby guarantees the full, complete, and
timely performance by Buyer of each and every obligation of Buyer under this
Agreement. If any default shall be made by Buyer in the performance of any of
such obligations, then PCC will itself perform or cause to be performed such
obligation upon receipt of notice from Sellers or either Company specifying in
summary form the default.
(2) PCC waives presentment, protest, demand, or
action or delinquency in respect of any of the obligations of Buyer under this
Agreement. PCC waives all notices of nonperformance, notices of protest,
notices of dishonor, and notices of acceptance of this guaranty. Upon any
default by Buyer in its obligations under this Agreement, Seller may proceed
directly and at once against PCC without proceeding first against Buyer.
(3) This guaranty shall be deemed a continuing
guaranty, and the above consents and waivers of PCC shall remain in full force
and effect until the satisfaction in full of all obligations of Buyer under
this Agreement.
(b) PCC hereby represents and warrants to Sellers and the
Companies as follows:
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(1) This Agreement has been duly and validly
executed and delivered by PCC and constitutes its legal, valid, and binding
agreement, enforceable in accordance with its terms, except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
(2) The execution, delivery and performance by PCC
of this Agreement (A) do not require the consent of any third party; (B) will
not conflict with any provision of the Certificate of Incorporation or Bylaws
of PCC; (C) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any court of governmental instrumentality; and (D) will
not conflict with, constitute grounds for termination of, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which PCC is a party of by which PCC may be bound.
11.14 Inducement to Buyer. As an inducement to Buyer to enter into
this Agreement, Seller covenants that in the event that a court of competent
jurisdiction issues a final decision that holds that John Miller, by virture of
the agreement described in Section 10.2(b) hereof, is entitled to acquire all
or substantially all of the Assets to be sold to Buyer hereunder, Seller shall
pay to Buyer the sum of $75,000 within ten (10) business days after closing of
such acquisition, which payment shall be Buyer's sole and exclusive remedy as
to Seller. Seller further covenants that it will defend with due diligence
against any effort by John Miller to assert any claim of right to acquire the
Assets which are the subject of this Agreement.
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WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
THE CHRISTIAN NETWORK, INC.
By: James L. West
---------------------------------------------
Its: Chairman
--------------------------------------------
LeSEA BROADCASTING CORPORATION
By: Stephen P. Sumrall
---------------------------------------------
Its: President
--------------------------------------------
AS TO SECTION 11.13 ONLY:
PAXSON COMMUNICATIONS CORP.
By: Lowell W. Paxson
---------------------------------------------
Its: Chairman
--------------------------------------------
46
<PAGE> 1
Exhibit 10.3
<PAGE> 2
Exhibit 10.3
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is dated as of April 30, 1995, by and
among Channel 59 of Denver, Inc., a Florida corporation ("Buyer"), and David M.
Drucker and Charles Ergen (collectively the "Sellers" and individually the
"Seller").
RECITALS
A. UHF Channel 59 Corp. is the licensee of and owns and operates
Television Station KUBD-TV, Denver, Colorado (the "Station"). UHF Channel 59
Corp. is hereinafter referred to as the "Company."
B. The Sellers own 100% of the issued and outstanding Common
Stock of the Company.
C. The Sellers desires to sell, and Buyer wishes to buy the
Common Stock in the Company from Sellers, for the price and on the terms and
conditions set forth in this Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Sellers, intending to be
bound legally, agree as follows:
SECTION 1 DEFINITIONS
1.1 Definitions. The following terms, as used in this Agreement,
shall have the meanings set forth in this Section:
"Accounts Receivable" means the rights of Company to payment for the
sale of advertising time prior to the Closing Date and any other accounts
receivable prior to the Closing Date.
"Closing" means the consummation of the purchase and sale of the
Common Stock pursuant to this Agreement in accordance with the provisions of
Section 8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of all of (i) the
Sellers as required by the Colorado General Corporation Law, (ii) government
authorities and (iii) other third parties necessary to transfer the Common
Stock to Buyer or otherwise to consummate the transactions contemplated by this
Agreement.
1
<PAGE> 3
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including, without limitation, leases for personal or
real property, employment agreements, advertising contracts and other
operational contracts), written or oral (including any amendments and other
modifications thereto) to which the Company is a party or which are binding
upon the Company or which relate to or affect the Common Stock or the
businesses or operations of the Company, and (i) which are in effect on the
date of this Agreement or (ii) which are entered into by the Company between
the date of this Agreement and the Closing Date as permitted under Section 5.6
hereof.
"Exchanges and Conversions" shall mean (i) the exercise of all
warrants, options (including incentive and non-qualified stock options),
agreements to subscribe for or purchase any Common Stock of the Company and
other similar rights with respect to the Common Stock of the Company and (ii)
the conversion of all convertible stock that can be converted into Common Stock
of the Company (including all warrants, options, similar rights and rights of
convertibility), all of which are set forth in Schedule 3.4 hereto.
"FAA" means the Federal Aviation Administration.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
transfer of the Stock to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to the Company in
connection with the businesses or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Fully Diluted Stock" means all of the Common Stock of the Company
that would be issued and outstanding assuming that all Exchanges and
Conversions have occurred, regardless of whether rights with respect to
Exchanges and Conversions have vested or are currently available for exercise
or conversion.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by the Company or under which the Company is licensed or franchised and which
are used or useful in the businesses and operations of the Company together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC or the FAA to the Company, and all material licenses, permits
and other authorizations issued by any other federal, state, or local
governmental authority to the Company, in connection with the conduct of the
Station or the businesses and operations of the Company, together with any
additions thereto between the date of this Agreement and the Closing Date.
Execution
2
<PAGE> 4
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
governmental authority, or other entity of whatever nature.
"Real Property" means all interests in real property, leaseholds,
easements, rights to access, and rights of way, and all buildings and other
improvements thereon, and other real property interests which are used in the
businesses or operations of the Company or the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Subsidiary" means any corporation or other business entity of which
more than 50% of the total voting power of shares of stock or other interests
entitled to vote in the election of directors is at the time owned or
controlled, directly or indirectly, by such corporation or other business
entity.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements that are not Real Property, office
equipment, inventory, spare parts, and other tangible personal property which
is used or useful in the conduct of the business or operations of the Company
and the Station, together with any additions thereto between the date of this
Agreement and the Closing Date.
1.2 List of Other Definitions. The following is a list of
additional terms used in this Agreement and a reference to the Section hereof
in which such term is defined:
<TABLE>
<CAPTION>
Terms Section
----- -------
<S> <C>
"Claimant" 10.3(a)
"Common Stock" 2.1
"ERISA" 3.18(a)
"Financial Statements" 3.13
"Indemnifying Party" 10.3(a)
"Leased Property" 3.8(b)
"Permitted Exception" 6.11(b)
"Purchase Price" 2.1
"Station" Recitals
</TABLE>
SECTION 2 PURCHASE AND SALE OF STOCK
2.1 Agreement to Sell and Buy. In reliance upon the
representations and warranties and subject to the terms and conditions hereof,
on the Closing Date (as hereinafter defined), Sellers shall sell to Buyer, and
Buyer shall purchase from Sellers 100% of the issued and outstanding common
voting stock of the Company (the "Common Stock") for the aggregate purchase
price of: (i) Six Million Three Hundred Twenty Thousand Dollars ($6,320,000)
(the "Purchase Price") in cash; (ii) the payment of One Hundred Thirty Thousand
Dollars ($130,000) upon the full execution at Closing of the Noncompetition
Agreement in the form of Schedule 6.10; and (iii) the assignment to Sellers of
the Accounts Receivable, Seller's film library and the Company's cash, all as
the full and complete purchase price for the Common Stock.
Execution
3
<PAGE> 5
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to Buyer as follows:
3.1 Organization, Standing, and Authority. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of its state of incorporation or organization, as applicable, and is duly
qualified to conduct business as a foreign corporation in each jurisdiction in
which the activities conducted or the properties owned or leased by the Company
would require such qualification except where the failure to qualify would not
have a material adverse effect on the Company. The Company has all requisite
power and authority (i) to own, lease, and use its properties and assets as now
owned, leased, and used, and (ii) to conduct its businesses and operations as
now conducted. The Company has all requisite power and authority to execute
and deliver this Agreement and the documents contemplated hereby, and to
perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by the Company hereunder and thereunder.
3.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by the Company has been duly
authorized by all necessary actions on the part of the Company, including,
without limitation, approval by the Board of Directors of this Agreement and
the transactions contemplated hereby in accordance with the Colorado
Corporation Law as well as any required action of the shareholders of Company.
This Agreement has been duly executed and delivered by the Company and
constitutes the legal, valid, and binding obligation of the Company,
enforceable against it in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, and by judicial discretion
in the enforcement of equitable remedies.
3.3 Subsidiaries. Schedule 3.3 sets forth each and every
Subsidiary of the Company, and except as described in Schedule 3.3, the Company
does not otherwise own or control, directly or indirectly, any equity or other
ownership interest in any other Person.
3.4 Capitalization. The authorized capital stock of the
Company consists of one million shares of no-par common voting stock with 100
shares issued and outstanding. All the Common Stock has been duly authorized
and validly issued and are fully paid and nonassessable and have been issued in
compliance with all applicable state and federal laws concerning the issuance
of securities. Schedule 3.4 lists all outstanding warrants, options (including
inactive and non-qualified stock options), agreements to subscribe for or
purchase any capital stock or other securities from the Company and other
similar rights (including conversion and preemptive rights), all of which may
be terminated upon the consummation of the Exchanges and Conversions as
contemplated by the terms of this Agreement, without further liability to the
Company. There are no voting trusts or voting agreements among, or irrevocable
proxies executed by, stockholders of the Company. There are no existing rights
of stockholders to require the Company to register any securities of the
Company or to participate with Company in any registration by Company of its
securities. There are no agreements among stockholders providing for the
purchase or sale of the Company's capital stock.
3.5 Validity of Stock. The Common Stock, when transferred and
sold to Buyer in compliance with the provisions of this Agreement, will be
validly issued, will be fully paid and nonassessable, will be free of any
duties or other governmental charges, and will be free of any liens or
encumbrances.
Execution
4
<PAGE> 6
3.6 Absence of Conflicting Agreements. Subject to obtaining
the Consents listed on Schedule 3.6, the execution, delivery, and performance
of this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent
of any third party; (ii) will not conflict with any provision of the Articles
of Incorporation or By-laws of the Company; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; (iv) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which the Company is a
party or by which the Company may be bound; and (v) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon the Common Stock or any of the assets of the Company.
3.7 Governmental Licenses. Schedule 3.7 includes a true and
complete list of the Licenses. The Company has delivered to Buyer true and
complete copies of the Licenses (including any amendments and other
modifications thereto). The Licenses have been validly issued, and the Company
is the authorized legal holder thereof. The Licenses listed on Schedule 3.7
comprise all of the licenses, permits, and other authorizations required from
any governmental or regulatory authority for the lawful conduct of the
Company's businesses and operations except where such failure would not have a
material adverse effect on the Company's business or operations, in the manner
and to the full extent they are now conducted, and none of the Licenses is
subject to any restriction or condition that would limit the full operation of
the Station as it is now operated. The Licenses are in full force and effect;
payments due in connection therewith are not in arrears; and the conduct of the
businesses and operations of the Company is in accordance therewith. The
Company has no reason to believe that any of the Licenses would not be renewed
by the FCC or other granting authority in the ordinary course.
3.8 Title to and Condition of Real Property.
(a) Schedule 3.8 contains a complete and accurate
description of all the Real Property and the Company's interests therein
(including street address, owner, and use and the location of all improvements
thereon). The Real Property listed on Schedule 3.8 comprises all real property
interests necessary to conduct the businesses and operations of the Company as
now conducted. All Real Property is in reasonable condition and repair
consistent with its present use, and available for immediate use in the conduct
of the businesses and operations of the Company. The Company has full legal
and practical access to all Real Property.
(b) With respect to each leasehold interest included in
the Real Property being conveyed under this Agreement (the "Leased Property"),
so long as the Company fulfills its obligations under the lease therefor, the
Company has enforceable rights to non-disturbance and quiet enjoyment, and no
third party holds any interest in the Leased Property with the right to
foreclose on the Company's leasehold interest. The Company has good title to
the Leased Property, free and clear of all liens, claims, and encumbrances,
except as specifically stated in Schedule 3.8. With respect to each such
lease, except as otherwise disclosed in Schedule 3.8, (i) the leases are in
full force and effect, and are valid, binding and enforceable in accordance
with their respective terms, (ii) all accrued and currently payable rents and
other payments required by such leases have been paid, (iii) neither the
Company nor any other party is in default in any material respect under any
such leases, (iv) no party has asserted any defense, set off or counterclaim
thereunder, and (v) no notice of default or termination
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has been given or received, no event of material default has occurred, and no
condition exists and no event has occurred that, with the giving of notice, the
lapse of time, or the happening of any further event would become a material
default or permit early termination under any such lease.
3.9 Title to and Condition of Tangible Personal Property.
Schedule 3.9 lists all material items of Tangible Personal Property. The
Tangible Personal Property listed on Schedule 3.9 comprises all material items
of tangible personal property necessary to conduct the businesses and
operations of the Company as now conducted. Except as described in Schedule
3.9, the Company owns and has good title to each item of its Tangible Personal
Property, and none of its Tangible Personal Property is subject to any security
interest, mortgage, pledge, conditional sales agreement, or other lien or
encumbrance, except for liens for current taxes not yet due and payable. Each
item of Tangible Personal Property is in good operating condition and repair
(ordinary wear and tear excepted), and is available for immediate use in the
businesses and operations of the applicable Company. All items of transmitting
and studio equipment included in the Tangible Personal Property (i) have been
maintained in a manner consistent with generally accepted standards of good
engineering practice, and (ii) will permit the Station to operate in accordance
with the terms of its FCC Licenses and the rules and regulations of the FCC,
the FAA and all other applicable federal, state and local statutes, ordinances,
rules and regulations.
3.10 Contracts.
(a) Schedule 3.10 is a true and complete list of all
Contracts except (i) contracts with advertisers for the sale of advertising
time by the Company for cash at prevailing rates and which have not been
prepaid and which may be cancelled by the Company without penalty on not more
than thirty days' notice, (ii) other contracts or commitments which may be
cancelled by the Company without penalty on not more than thirty days' notice,
(iii) contracts or commitments which do not involve more than $2,500 for the
purchase or sale of goods, supplies, equipment, capital assets, products or
services, not to exceed $10,000 in the aggregate, and (iv) any contracts and
commitments entered into the ordinary and usual course of business from the
date hereof until the Closing Date.
(b) With respect to the contracts listed on Schedule
3.10, the Company has delivered to Buyer true and complete copies of all
written Contracts, true and complete memoranda of all oral Contracts (including
any amendments and other modifications to such Contracts), and a schedule
summarizing the Company's obligations under trade and barter agreements
relating to the Station. Other than the Contracts listed on Schedule 3.10, the
Company does not require any contract, lease or other agreement to enable it to
carry on the business as now conducted. All of the Contracts are in full force
and effect, and are valid, binding, and enforceable in accordance with their
terms. To the best of Seller's knowledge, there is not under any Contract any
material default by any party thereto or any event that, after notice or lapse
of time or both, could constitute a material default. Except as disclosed on
Schedule 3.10, the Company is not aware of any intention by any party to any
Contract (i) to terminate such contract or amend the terms thereof, (ii) to
refuse to renew the Contract upon expiration of its term, or (iii) to renew the
Contract upon expiration only on terms and conditions which are more onerous
than those now existing. Except for the need to obtain the Consents listed in
Schedule 3.6, the consummation of the transactions contemplated by the
Agreement will not affect the validity, enforceability, or continuation of any
of the Contracts. Finally, Buyer agrees to assign to Sellers for $1.00 and
other good and valuable consideration the Telemundo Group, Inc. contract listed
on Schedule 3.10 upon thirty days prior written notice.
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3.11 Consents. Except for the FCC Consent provided for in
Section 6.1 and the other Consents described in Schedule 3.6 no consent,
approval, permit, or authorization of, or declaration to or filing with any
governmental or regulatory authority, or any other third party is required (i)
to render this Agreement and the transactions contemplated by this Agreement
valid and effective, (ii) to consummate this Agreement and the transactions
contemplated hereby, (iii) to permit Sellers to sell the Common Stock, or (iv)
to enable the Company to conduct its businesses and operations in essentially
the same manner as the businesses and operations are now conducted.
3.12 Intangibles. Schedule 3.12 is a true and complete list of
all Intangibles (exclusive of those listed in Schedule 3.7), all of which are
valid and in good standing and uncontested. The Company has delivered to Buyer
copies of all existing documents that establish or evidence any of the
Intangibles. To the best of its knowledge, the Company is not infringing upon
or otherwise acting adversely to any trademarks, trade names, service marks,
service names, copyrights, patents, patent applications, know-how, methods, or
processes owned by any other person or persons, and there is no claim or action
pending, or to the knowledge of the Company threatened, with respect thereto.
The Intangibles listed on Schedule 3.12 comprise all intangible property
interests necessary to conduct the businesses and operations of the Company as
now conducted.
3.13 Financial Statements. Schedule 3.13 represents true and
complete copies of (i) unaudited balance sheets of the Company as of December
31, 1994, and the related consolidated statements of operations, stockholders'
equity and cash flows of the Company, and (ii) unaudited statements of
operations of the Company for the twelve months ended December 31, 1994, (the
"Financial Statements"). The Financial Statements have been prepared from the
books and records of the Company and the Subsidiaries; are true complete and
correct; have been prepared in accordance with generally accepted accounting
principles consistently applied and maintained throughout the periods indicated
(except as may be indicated in the notes thereto). The Financial Statements
accurately reflect the books, records, and accounts of the Company (which
books, records, and accounts are complete and correct), and present fairly the
financial condition of the Company as at their respective dates and the results
of operations for the periods then ended. None of the Financial Statements
understates the true costs and expenses of conducting the businesses or
operations of the Company, fails to disclose any material contingent
liabilities, or inflates the revenues of the Company.
Except as set forth in the Financial Statements, the Company has no
liabilities, contingent or otherwise, other than (i) liabilities incurred in
the ordinary course of business subsequent to September 30, 1994, and (ii)
obligations under contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting principles to be
reflected in the Financial Statements, which, individually or in the aggregate,
are not material to the financial condition or operating results of the
Company.
3.14 Changes. (i) Since September 30, 1994, except as set forth
in Schedule 3.14, the Company has conducted its businesses and operations in
the ordinary course, and there has not been:
(a) any change in assets, liabilities, financial
condition, or operating results of the Company from that reflected in the
Financial Statements, except changes in the ordinary course of business that
have not been in the aggregate materially adverse;
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(b) any damage, destruction or loss, whether or not
covered by insurance, materially adversely affecting the business, properties
or financial condition of the Company (as the business is presently conducted);
(c) any waiver or compromise by the Company of a valuable
right or of a debt owed to it, except in the normal and ordinary course of
business, or any material write-down of the value of any properties or assets
of the Company;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the business, properties or
financial condition of the Company (as the business is presently conducted and
as it is proposed to be conducted);
(e) any material change to a contract or arrangement by
which the Company or any assets of the Company is bound or subject;
(f) any material change in personnel policies, employee
benefits, or other compensation arrangements affecting the employees of the
Company;
(g) any sale, assignment, lease, or other transfer of any
of the Company's properties other than in the normal and usual course of
business with suitable replacements being obtained therefor;
(h) any sale, assignment, license or transfer of or grant
of any right under or entry into of any settlement regarding the breach or
infringement of, any Intangible;
(i) any resignation or termination of employment of any
key officer of the Company (except as contemplated by Section 8.1(h) and (i)
hereof);
(j) any mortgage, pledge, transfer of a security interest
in, or lien or encumbrance created by, the Company with respect to any of its
respective properties or assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for
the benefit of its respective employees, officers, or directors, or any members
of their immediate families, other than travel advances and other advances made
in the ordinary course of its business;
(l) any declaration, setting aside, or payment or other
distribution in respect of any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company; or
(m) any other event or condition of any character that
has adversely affected or could adversely affect the business, prospects,
properties, operations, assets or financial condition of the Company.
(ii) Since December 1, 1994, there has not been any material
increase in compensation payable or to become payable to any of the employees
of the Company, or any bonus payment made or promised to any employee of the
Company.
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3.15 Insurance. Schedule 3.15 is a true and complete list of
all insurance policies of the Company that insure any part of the properties or
assets of the Company or the businesses of the Company. All policies of
insurance listed in Schedule 3.15 are in full force and effect. The insurance
policies listed in Schedule 3.15 are adequate in amount with respect to, and
for the full value (subject to customary deductibles) of all properties and
assets of the Company, and insure all properties and assets of the Company and
the businesses of the Company against all foreseeable risks. No insurance
policy of the Company has been cancelled and no application of the Company for
an insurance policy has been rejected in the last three years.
3.16 Offering. All offers, sales or issuances by the Company of
its capital stock or other securities have been made in full compliance with
federal securities laws and applicable state securities laws. Assuming the
accuracy of Buyer's representation set forth in Section 4.1, the offer and sale
of the Common Stock to Buyer under the terms of this Agreement constitute
transactions exempt from the registration requirements of Section 6 of the
Securities Act of 1933, as amended, and any applicable registration
requirements under state securities laws. The offer, sale and issuance of the
capital stock of the Company as a result of the consummation of any of the
Exchanges or Conversions constitute transactions exempt from the registration
requirements of Section 6 of the Securities Act of 1933, as amended, and any
applicable registration requirements under state securities laws.
3.17 Reports. To the best of Seller's knowledge, all tax
returns, ownership and employment reports, and other material documents that
the Company is currently required to file with the FCC or with any other
governmental agency have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over the Company have
been complied with in all material respects. All of such returns, reports, and
statements are complete and correct in all material respects as filed.
3.18 Personnel.
(a) Employees and Compensation. Schedule 3.18 contains a
true and complete list of all employees of the Company including their job
title, current salary, date of employment and the date and amount of their last
salary increase. Schedule 3.18 also contains a true and complete list as of
the date of this Agreement of all employee benefit plans or arrangements
applicable to the employees of the Company and all fixed or contingent
liabilities or obligations of the Company with respect to any person now or
formerly employed by the Company, including pension or thrift plans, individual
or supplemental pension or accrued compensation arrangements, contributions to
hospitalization or other health or life insurance programs, incentive plans,
bonus arrangements, and vacation, sick leave, disability and termination
arrangements or policies, including workers' compensation policies, and a
description of all fixed or contingent liabilities or obligations of the
Company with respect to any person now or formerly employed by the Company or
any person now or formerly retained as an independent contractor by the
Company. The Company has furnished Buyer with true and complete copies of all
employee handbooks, employee rules and regulations, and with descriptions, in
writing, of the unwritten plans and arrangements listed in Schedule 3.18. All
employee benefits and welfare plans or arrangements listed in Schedule 3.18
were established and have been executed, managed and administered in material
compliance with the Internal Revenue Code of 1986, as amended, the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and all other
laws. The Company is aware of the existence of any governmental audit or
examination of any of such plans or arrangements or of any facts which would
lead it to believe that any such audit or examination is
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pending or threatened. No action, suit, or claim with respect to any of such
plans or arrangements (other than routine claims for benefits) is pending or,
to the knowledge of the Company, threatened.
(b) Labor Relations. The Company is a party to or
subject to any collective bargaining agreements. The Company has no written or
oral contracts of employment with any of its employees, other than those listed
in Schedule 3.10. The Company has complied in all material respects with all
laws, rules, and regulations relating to the employment of labor, including
those related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and it has not received any notice alleging that it has failed to comply
in any material respect with any such laws, rules, or regulations. No
controversies, disputes, or proceedings are pending or, to the best of the
Company's knowledge, threatened, between Company and any employee (singly or
collectively) of the Company. No labor union or other collective bargaining
unit represents or claims to represent any of the employees of the Company.
There is no union campaign being conducted to solicit cards from employees to
authorize a union to request a National Labor Relations Board certification
election with respect to any employees of the Company.
(c) Liabilities. The Company has no liability of any
kind to or in respect of any employee benefit plan, including withdrawal
liability under Section 4201 of ERISA. The Company has not incurred any
accumulated funding deficiency within the meaning of ERISA or Section 4971 of
the Internal Revenue Code. The Company has not failed to make any required
contributions to any employee benefit plan. The Pension Benefit Guaranty
Corporation has not asserted that the Company has incurred any liability in
connection with any such plan. To the best of Seller's knowledge, no lien has
been attached and no person has threatened to attach a lien on any property of
the Company as a result of a failure to comply with ERISA.
3.19 Taxes. Except as set forth on Schedule 3.19, the Company
has filed or caused to be filed all federal and state income tax returns and
all other federal, state, county, local, or city tax returns which are required
to be filed, and the Company has paid or caused to be paid all taxes shown on
those returns or on any tax assessment received by the Company to the extent
that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. To the best of Seller's knowledge, there are
no governmental investigations, audits or other legal, administrative, or tax
proceedings pending or threatened pursuant to which the Company is or could be
made liable for any taxes, penalties, interest, or other charges, the liability
for which could extend to Buyer as holder of Common Stock, and no event has
occurred that could impose on Buyer any liability for any taxes, penalties, or
interest due or to become due from the Company.
3.20 Claims and Legal Actions. Except as disclosed on Schedule
3.20 and except for any FCC rulemaking proceedings generally affecting the
television broadcasting industry, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative, or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Sellers threatened, against or
relating to the Company, or the properties, assets or businesses of the
Company, nor do Sellers know or have reason to be aware of any basis for the
same. In particular, but without limiting the generality of the foregoing,
there are no applications, complaints or proceedings pending or, to the best of
Seller's knowledge, threatened (i) before the FCC relating to the business or
operations of the Company other than rulemaking proceedings which affect the
television industry
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generally, or (ii) before any federal or state agency involving charges of
illegal discrimination under any federal or state employment laws or
regulations.
3.21 Environmental Matters.
(a) The Company has complied in all material respects
with all laws, rules, and regulations of all federal, state, and local
governments (and all agencies thereof) concerning the environment, public
health and safety, and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice has
been filed or commenced against the Company alleging any failure to comply with
any such law, rule, or regulation.
(b) The Company has no liability (and there is no basis
related to the past or present operations, properties, or facilities of the
Company for any present or future charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand against the Company giving rise to any
such liability) under the Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and Recovery Act, the Federal
Water Pollution Control Act, the Clean Air Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, the Refuse Act, the Emergency Planning and
Community Right-to-Know Act, or the Occupational Safety and Health Act (each as
amended), or any other law, rule, or regulation of any federal, state, or local
government (or agency thereof) concerning release or threatened release of
hazardous substances, public or employee health and safety, or pollution or
protection of the environment.
(c) The Company has no liability (and there is no basis
for any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand, under the common law or pursuant to any
statute, against the Company giving rise to any such liability) arising out of
the Company's handling, disposal or arranging for disposal of any substance.
(d) The Company has no liability (and there is no basis
for any present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand, under the common law or pursuant to a statute,
against the Company giving rise to any such liability) for any illness or
personal injury to any employee.
(e) All properties and equipment of the Company are and
have been free of friable asbestos, and all transformers used in the operations
of the businesses of the Company are free of PCB's.
3.22 Compliance with Laws. The Company has complied and is
complying fully with the terms of all Licenses and all federal, state, and
local laws, rules, regulations, and ordinances, including but not limited to
rules and regulations of the FCC (including all FCC reporting requirements),
the states, counties and municipalities in which the businesses of the Company
is located or do business, and any other government or governmental agency
having jurisdiction, all trademark, trade name, or copyright rules and
regulations, all building and zoning laws, codes, and regulations, all laws
relating to the employment of labor, and all environmental laws and
regulations, except where such noncompliance would not have a material adverse
effect on the Company.
3.23 Customers. The relationships of the Station with its
customers are satisfactory commercial working relationships, and Sellers have
no knowledge that any customer intends to cancel or otherwise adversely modify
its relationship with any Station, including any change in payment
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terms, or to decrease or limit its business with any Station, and the
consummation of the transactions contemplated by this Agreement will not, to
the knowledge of the Company, adversely affect the relationship of any Station
with any customer.
3.24 FCC Actions. Sellers are not aware of any facts that could
prevent, hinder, or discourage the FCC from issuing the FCC Consent.
3.25 Brokers. No person or entity acting on the Company's
behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any
action on which a claim for any such payment could be based.
3.26 Transactions with Affiliates. Except as disclosed in
Schedule 3.26, the Company has not been involved in any business arrangement or
relationship with any affiliate of the Company and no affiliate of the Company
owns any property or right, tangible or intangible, which is used in the
business of the Company.
3.27 Accounts of the Company. All of the bank accounts
maintained by the Company are listed on Schedule 3.27.
3.28 Full Disclosure. No representation or warranty made by the
Company on behalf of the Company in this Agreement or in any certificate,
document, or other instrument furnished or to be furnished by the Company
pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make any
statement made herein or therein not misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers and the Company as follows:
4.1 Organization, Standing, and Authority. Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. Buyer has all requisite power and authority to
execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution,
delivery, and performance of this Agreement by Buyer have been duly authorized
by all necessary actions on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability of this Agreement may be affected by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally and by
judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining
the Consents and except as disclosed on Schedule 4.3, the execution, delivery,
and performance by Buyer of this Agreement and the documents contemplated
hereby (with or without the giving of notice, the lapse of time, or both): (i)
do not require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or By-laws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a
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default under, any law, judgment, order, injunction, decree, rule, regulation,
or ruling of any court or governmental instrumentality; and (iv) will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which Buyer is a party or by which Buyer may be bound, that may
impair Buyer's ability to acquire the Common Stock.
4.4 Claims and Legal Actions. Except as disclosed on Schedule
4.4 and except for any FCC rulemaking proceedings generally affecting the
television broadcasting industry, there is no claim, legal action,
counterclaim, suit, arbitration, governmental investigation or other legal,
administrative, or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of Buyer threatened, against or
relating to Buyer which may impair Buyer's ability to acquire the Common Stock.
4.5 Investment. The Common Stock purchased hereunder will be
acquired for investment for Buyer's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof in a manner
that would require registration under the Securities Act, and Buyer has no
present intention of selling, granting participation in, or otherwise
distributing the same.
4.6 Brokers. The Buyer nor any person or entity acting on its
behalf has agreed to pay a commission, finder's fee, or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, nor has it or any person or entity acting on its behalf taken any
action on which a claim for any such payment could be based.
4.7 Full Disclosure. No representation or warranty made by
Buyer in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by Buyer pursuant hereto contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact required to make any statement made herein or therein not
misleading.
SECTION 5 CONDUCT OF OPERATIONS OF COMPANY PRIOR TO CLOSING
5.1 Generally. The Company agrees that, between the date of
this Agreement and the Closing Date, the Company shall operate its businesses
diligently in the ordinary course of business in accordance with its past
practices, and in such a manner so that the representations and warranties
contained in Section 3 shall continue to be true and correct on and as of the
Closing Date as if made on and as of the Closing Date, and in accordance with
the other covenants in this Section 5.
5.2 Compensation. The Company shall not increase the
compensation, bonuses, or other benefits payable or to be payable to any person
employed by the Company.
5.3 Distributions. The Company shall not declare or pay any
dividends; purchase, redeem, retire or otherwise acquire for value any of its
capital stock now or hereafter outstanding; make any distribution of assets to
its stockholders as such whether in cash, assets, or in obligations of the
Company; or allocate or otherwise set apart any sum for the payment of any
dividend or distribution on, or for the purchase, redemption, or retirement of
any shares of its capital stock; or make any other distribution by reduction of
capital or otherwise in respect of any shares of its capital stock.
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5.4 Corporate Status. The Company shall not amend its Articles
of Incorporation or By-laws; issue or commit to issue any additional shares of
capital stock or any other securities; or issue, sell or grant any option,
warrant or right to acquire or otherwise dispose of any of its authorized but
unissued capital stock or other securities (or commit to do any of the
foregoing).
5.5 Submission of Accounts Payable. The Company shall pay
amounts due for payables in accordance with past practices.
5.6 Contracts. Except as disclosed on Schedule 5.6, the
Company shall not enter into any contract or commitment, or amend or terminate
any Contract (or waive any material right thereunder), or incur any obligation
(including obligations relating to the borrowing of money or the guaranteeing
of indebtedness), except for (i) cash time sales agreements made in the
ordinary course of business and (ii) other contracts and commitments entered
into in the ordinary course of business (other than trade or barter agreements
or agreements relating to capital expenditures) which will not obligate the
Company to an amount of more than $10,000 in respect to each contract or
commitment and $50,000 in respect to all such contracts and commitments. As
soon as is reasonably practicable and prior to the Closing Date, the Company
shall deliver to Buyer a list of all Contracts entered into between the date of
this Agreement and the Closing Date, together with copies of such Contracts.
5.7 Disposition of Assets. The Company shall not sell, assign,
lease, or otherwise transfer or dispose of any of its properties or assets,
except (a) assets that are no longer used or useful in the businesses or
operations of the Company, (b) assets that are disposed of in connection with
the acquisition of replacement property of equivalent kind and value, and (c)
assets, such as prize inventory, that are consumed in the ordinary course of
business.
5.8 Encumbrances. The Company shall not create, assume or
permit to exist any claim, liability, mortgage, lien, pledge, condition,
charge, or encumbrance of any nature whatsoever upon or affecting any of the
Company's properties or assets, except for (i) matters disclosed on Schedule
3.8 and Schedule 3.9, which shall be removed prior to the Closing Date, (ii)
liens for current taxes not yet due and payable, (iii) mechanics' liens and
other similar liens, which shall be removed prior to the Closing Date, and (iv)
Permitted Exceptions.
5.9 Licenses. The Company shall not cause or permit, by any
act or failure to act, any of the Licenses to expire or to be surrendered,
revoked, suspended, or modified, or take any action that could cause the FCC or
any other governmental authority to institute proceedings for the suspension,
revocation, or adverse modification of any of the Licenses. The Company shall
not fail to prosecute with due diligence any applications to any governmental
authority in connection with the operation of its businesses or take any other
action within its control that could result in any of its respective businesses
being in noncompliance with the requirements of the Communications Act of 1934,
as amended, or any other law, the rules and regulations of the FCC or any other
governmental authority, or the terms of any License.
5.10 Capital Expenditures. The Company shall not make or commit
to make any capital expenditures without the prior written consent of Buyer.
5.11 Access to Information. The Company shall give Buyer and
its counsel, accountants, engineers, and other authorized representatives
reasonable access to the properties and assets of
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Company, including all equipment, books, records, Contracts, and documents for
the purpose of audit and inspection, including inspections incident to the
environmental study described in Section 7.5 and the engineering study
described in Section 7.6, and will furnish or cause to be furnished to Buyer or
its authorized representatives all information with respect to the affairs and
businesses of the Company that Buyer may reasonably request (including any
financial reports and operations reports produced with respect to the affairs
and businesses of the Company).
5.12 Maintenance of Assets. The Company shall maintain all of
its assets in good condition (ordinary wear and tear excepted), and use,
operate, and maintain all of the Company's assets in a reasonable manner. The
Company shall maintain inventories of spare parts and expendable supplies at
levels consistent with past practices. If any loss, damage, impairment,
confiscation, or condemnation of or to any of the Company's assets occurs, the
Company shall repair, replace, or restore such assets to their prior condition
as represented in this Agreement as soon thereafter as possible.
5.13 Insurance. The Company shall prior to Closing, maintain
its existing insurance policies as disclosed in Schedule 3.15, and the Company
shall use the proceeds of any claims for loss payable under those insurance
policies to repair, replace, or restore any of the assets that are lost,
damaged, impaired or destroyed by fire or other casualty to their former
condition as soon as possible after the loss.
5.14 Consents. The Company shall use its best efforts to obtain
the Consents. Without any change in the terms or conditions of any Contract
that could be less advantageous to the Company than those pertaining under the
Contract or License as in effect on the date of this Agreement. The Company
shall promptly advise Buyer of any difficulties experienced in obtaining any of
the Consents and of any conditions proposed, considered, or requested by any
Person in connection with the acquisition of any of the Consents.
5.15 Books and Records; Accounting. The Company shall maintain
the books and records of Company in accordance with past practices. The
Company maintains and will continue to maintain a system of accounting
established and administered in accordance with generally accepted accounting
principles.
5.16 Notification. The Company shall promptly notify Buyer in
writing of any unusual or material developments with respect to the businesses
or operations of the Company and of any material change in any of the
information contained in the representations and warranties contained in
Section 3 of this Agreement or in the Schedules to this Agreement.
5.17 Financial Information. The Company shall furnish to Buyer
(i) within fifteen days after the end of each calendar month ending between the
date of this Agreement and the Closing Date a consolidated statement of income
and expense and a consolidated statement of cash flows for the month just
ended, (ii) on or before May 1, 1995, consolidated balance sheets of the
Company as of December 31, 1994 and the related consolidated statements of
operations, stockholders' equity and cash flows of the Company for the nine
months ended December 31, 1994, and (iii) such other financial information
(including information on payables and receivables) as Buyer may reasonably
request. All financial information delivered by the Company to Buyer pursuant
to this Section shall be prepared from the books and records of the Company in
accordance with generally accepted accounting principles consistently applied
and maintained on a basis consistent with prior periods, shall accurately
reflect the
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books, records, and accounts of the Company, shall be complete and correct in
all material respects, and shall present fairly the financial condition of the
Company as at their respective dates and the results of operations for the
periods then ended. The Company shall furnish to Buyer as it becomes available
any other information prepared by the Company concerning the financial
condition of the Company.
5.18 Compliance with Laws. The Company shall use its best
efforts to comply in all material respects with all laws, rules, and
regulations. Upon receipt of notice of violation of any law, rule, or
regulation, the Company shall immediately notify Buyer with respect thereto and
contest in good faith or cure the violation as expeditiously as possible.
5.19 Programming. The Company shall not make any material
changes in the broadcast hours or in the percentages of types of programming
broadcast by the Station, or make any other material change in any Station's
programming policies, except such changes with respect to programming broadcast
by any Station as in the good faith judgment of the Company are required by the
public interest.
5.20 Preservation of Business. The Company shall preserve the
businesses and organization of the Company and use its best efforts to keep
available through the Closing its present employees and the Company's present
relationships with suppliers, customers, advertisers, and others having
business relations with it, to the end that the business, operations, and
prospects of the Company shall be unimpaired at the Closing Date. The ordinary
and customary operating, marketing, promotional, sales, and advertising
practices of the Company shall be maintained.
5.21 Collection of Accounts Receivable. The Company shall
collect its Accounts Receivable only in the ordinary course consistent with its
past practices.
5.22 Personnel Recommendations. The Company shall promptly
notify Buyer as personnel vacancies occur.
5.23 Taxes. The Company shall pay all federal, state, local and
foreign income, franchise, sales, use, occupation, property, excise,
alternative or add-on minimum, social security, employees' withholding,
unemployment, disability, transfer, capital stock and other taxes (including,
without limitation, any estimated taxes, and any interest and penalties) as
such taxes become due and payable. The Company shall cause all amounts set
forth on Schedule 3.19 to be paid in full prior to Closing.
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The effect on the FCC Licenses of the transfer of
control of the Company in connection with the purchase and sale of the Common
Stock pursuant to this Agreement shall be subject to the prior consent and
approval of the FCC.
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(b) Promptly upon the execution of this Agreement, the
Company and Buyer shall prepare appropriate applications for the FCC Consent
and shall file the applications with the FCC on or before the fifth business
day after the date of this Agreement. The parties to any application for the
FCC Consent shall prosecute the application with all reasonable diligence and
otherwise use their best efforts to obtain a grant of the application as
expeditiously as practicable. Buyer and the Company shall oppose any requests
for reconsideration or judicial review of the FCC Consent. If the Closing
shall not have occurred for any reason within the original effective period of
the FCC Consent, and the Company nor Buyer shall have terminated this Agreement
under Section 10, the Company and Buyer shall jointly request an extension of
the effective period of the FCC Consent. No extension of the FCC Consent shall
limit the exercise by the Company or Buyer of its rights under Section 10.
(c) Unless applications for FCC Consent have been filed,
within thirty days after the execution of this Agreement, the Company shall
file a copy of this Agreement with the FCC in compliance with Section
73.3613(b) of the rules and regulations of the FCC.
6.2 Control of the Stations. Prior to Closing, Buyer shall
not, directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of any Station; such operations, including
complete control and supervision of all of the Station's programs, employees,
and policies, shall be the sole responsibility of the Company until the
Closing.
6.3 Risk of Loss. The risk of any loss, damage, impairment,
confiscation, or condemnation of any of the assets of the Company from any
cause whatsoever shall be borne by the Company at all times prior to the
Closing.
6.4 Confidentiality. Except as necessary for the consummation
of the transaction contemplated by this Agreement, including Buyer's obtaining
of any financing approval or consent related hereto, and except as and to the
extent required by law, each party shall keep confidential any information
obtained from any other party in connection with the transactions contemplated
by this Agreement; provided, however, that nothing herein shall prevent the
parties from disclosing the terms and provisions of this Agreement or
delivering any documents or disclosing any other information or data relating
to the transaction contemplated herein to such party's consultants, financial
advisors, counsel, accountants, lenders, potential lenders and the shareholders
of Buyer. If this Agreement is terminated, each party shall return to any
other party all information obtained by such party from any other party in
connection with the transactions contemplated by this Agreement.
6.5 Environmental Audit. Buyer may, at its option, retain an
environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Company. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify the Company
as soon as practicable.
6.6 Engineering Study. Buyer may, at its option, retain an
engineering firm to conduct a proof of performance study of the Stations and to
prepare a report on the Stations' compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If the survey discloses any material deficiencies in the
operations or equipment of any of the Station, Buyer shall so notify the
Company as soon as practicable.
6.7 Cooperation. Buyer, Sellers and the Company shall
cooperate fully with each other and their respective counsel, engineers and
accountants in connection with any actions required to be
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taken as part of their respective obligations under this Agreement, and Buyer,
Sellers and the Company shall execute such other documents as may be necessary
and desirable to the implementation and consummation of this Agreement, and
otherwise use their best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations under this Agreement. Notwithstanding
anything herein contained, Buyer shall have no obligation (i) to expend funds
to obtain any of the Consents or (ii) to agree to any adverse change in any
License or Contract to obtain a Consent required with respect thereto.
6.8 No Inconsistent Action. The Company nor Buyer shall take
any action that is inconsistent with its obligations under this Agreement or
that could hinder or delay the consummation of the transactions contemplated by
this Agreement.
6.9 Transfer Taxes. The Company shall bear any sales or
transfer taxes which may be payable in connection with the transfer of the
Common Stock and the transactions contemplated by this Agreement.
6.10 Non-competition Agreement. At Closing, the parties shall
enter into a Non-competition Agreement in the form of Schedule 6.10.
6.11 Exchanges and Conversions. The Company agrees to cause all
Exchanges and Conversions to occur prior to Closing. The Company agrees to
cause each holder of such outstanding warrants, options (including inactive and
non-qualified stock options), and agreements to subscribe for or purchase any
capital stock or other securities from the Company and other similar rights
(including conversion and preemptive rights) to agree (i) to take all steps
necessary to cause the Exchanges and Conversions with respect to his or her
outstanding warrants, options (including inactive and non-qualified stock
options), and agreements to subscribe for or purchase any capital stock or
other securities from the Company and other similar rights (including
conversion and preemptive rights) held by such holder, to occur prior to
Closing and (ii) to release prior to the Closing all rights with respect to any
unexercised or unvested warrants, options (including inactive and non-qualified
stock options), and agreements to subscribe for or purchase any capital stock
or other securities from the Company and other similar rights (including
conversion and preemptive rights), held by such holder.
6.12 Capitalization, Options and Warrants. Prior to Closing,
the Company agrees to take all steps necessary to effectuate the capitalization
of Company as set forth in Section 7.1(i). The Company shall take all steps
necessary to cause all options set forth in Schedule 3.4 hereto with respect to
any stock to be issued or cancelled and all warrants set forth in Schedule 3.4
to be satisfied or cancelled. Each of the Sellers that has any other rights
under such options or warrants agrees to take all steps necessary in
cooperation herewith, including, without limitation, the exercise of any
option, warrant or conversion right.
6.13 Resignations. Immediately prior to the Closing Date, each
of the Sellers agrees to resign as directors of the Company and Sellers along
with the following individuals agree to resign as officers of the Company, and
the Company agrees to accept such resignations: Cantey Ergen; Penny Drucker;
David Moskowitz; and William A. Vanderpoel.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLERS AT
CLOSING
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7.1 Conditions to Obligations of Buyer. All obligations of
Buyer at the Closing are subject, at Buyer's option, to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations
and warranties of the Company contained in this Agreement shall be true and
complete in all material respects at and as of the Closing Date as though made
at and as of that time.
(b) Covenants and Conditions. The Company shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
it prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any material adverse change in the terms or
conditions of any such agreement, governmental license, permit, or other
authorization.
(d) FCC Consent. The FCC Consent shall have been
granted; the Company shall have complied with any conditions imposed on it by
the FCC Consent; and the FCC Consent shall have become a Final Order.
(e) Governmental Authorizations. The Company shall be
the holder of all Licenses and there shall not have been any modification of
any License that could have an adverse effect on the Company or the conduct of
the businesses and operations of the Company. No proceeding shall be pending
the effect of which could be to revoke, cancel, fail to renew, suspend, or
modify adversely any License.
(f) Options and Warrants. Evidence in form satisfactory
to Buyer that all Exchanges and Conversions of all options and warrants set
forth in Schedule 3.4 hereto with respect to any of the capital stock of the
Company shall have been consummated and any unvested or unexercised rights have
been released in accordance with Section 6.12.
(g) Convertible Stock. Evidence in form satisfactory to
Buyer that all Exchanges and Conversions of all conversion rights set forth in
Schedule 3.4 hereto with respect to any of the capital stock of the Company
shall have been consummated and any unvested or unexercised rights have been
released in accordance with Section 6.12.
(h) Resignations. The Company shall have received and
provided copies to Buyer of the effective resignations of all officers and
directors of the Company.
(i) Capitalization. Evidence in form satisfactory to
Buyer that the authorized capital stock of the Company consists of one million
shares of common voting stock, having no par value, 100 shares of which are
issued and outstanding (i.e. the "Common Stock") and none of which are held as
treasury stock.
(j) Deliveries. The Company shall have made or stand
willing to make all the deliveries to Buyer set forth in Section 8.2.
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(k) Adverse Change. Between the date of this Agreement
and the Closing Date, there shall have been no material adverse change in the
businesses, assets, or properties of the Company which are not being retained
by Sellers, including any damage, destruction, or loss affecting any assets
used or useful in the conduct of the Company's businesses that has not been
repaired, restored or remedied, excepting normal wear and tear to such assets.
(l) Litigation. No action or proceeding shall be pending
or threatened to restrain or prevent the carrying out of the transactions
contemplated hereby.
7.2 Conditions to Obligations of Company. All obligations of
the Company at the Closing are subject, at the Company's option, to the
fulfillment prior to or at the Closing Date of each of the following
conditions:
(a) Representations and Warranties. All representations
and warranties of Buyer contained in this Agreement shall be true and complete
in all material respects at and as of the Closing Date as though made at and as
of that time.
(b) Covenants and Conditions. Buyer shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing
to make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00
a.m. on a date to be set by Buyer, no later than the tenth business day
following the date upon which the FCC Consent shall have become a Final Order,
or on such other date as Buyer and Company may mutually agree, but in no event
will the Closing be held later than January 31, 1996.
(b) Closing Place. The Closing shall be held at the
offices of Dow, Lohnes & Albertson, 1255 23rd St., N.W., Washington, D.C.
20037, or any other place that is agreed upon by Buyer and Sellers.
8.2 Deliveries by Company. Prior to or on the Closing Date,
the Company shall deliver to Buyer the following, in form and substance
reasonably satisfactory to Buyer and its counsel:
(a) Common Stock. One or more certificates representing
the Common Stock, together with duly executed stock powers endorsed in blank
with any necessary stock transfer stamps attached thereto;
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(b) Lease. A Lease Agreement substantially in the form
of Schedule 8.2(b) executed by Echo Properties Corp. and Buyer.
(c) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
(d) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of the Company by its President,
certifying (1) that the Company has obtained proper corporate or partnership
authorization, as applicable, including consent of its stockholders or partners
as required, necessary to the consummation of this Agreement; (2) that the
representations and warranties of the Company contained in this Agreement are
true and complete in all material respects as of the Closing Date as though
made on and as of that date; and (2) that the Company has in all material
respects performed and complied with all of its obligations, covenants, and
agreements set forth in this Agreement to be performed and complied with on or
prior to the Closing Date;
(e) Secretary's Certificate. Certificates, dated as of
the Closing Date, executed by the Secretary of the Company: (i) certifying
that the resolutions, as attached to such certificate were duly adopted by the
Board of Directors and shareholders (if required) of the Company, authorizing
and approving the execution of this Agreement and the consummation of the
transaction contemplated hereby, including, without limitation, approval by the
Board of Directors of this Agreement and the transactions contemplated hereby
in accordance with of the Colorado Corporation Law, and that such resolutions
remain in full force and effect; and (ii) providing, as attachments thereto,
the Company's Articles of Incorporation and Certificate of Good Standing,
certified by an appropriate state official in the jurisdiction of its
incorporation or organization, and a Certificate of Good Standing or Existence
as a foreign corporation or partnership certified by an appropriate state
official in each jurisdiction of qualification, all certified by such state
official as of a date not more than 15 days before the Closing Date and by the
Company's Secretary as of the Closing Date, and a copy of the Company's By-laws
as in effect on the date hereof, certified by the Secretary as of the Closing
Date;
(f) Payment of Certain Taxes; Tax, Lien, and Judgment
Searches. Evidence in form satisfactory to Buyer that the Company has paid all
amounts set forth on Schedule 3.19 in full and that any claims with respect
thereto have been released, and results of a search for tax, lien, and judgment
filings in the Secretary of State's records of the State of Colorado for the
Company, such searches having been made no earlier than five days prior to the
Closing Date;
(g) Accounts Receivable. A complete and accurate list of
the Accounts Receivable as of a date no more than five business days prior to
the Closing Date, including, with respect to each of the Accounts Receivable,
the account number, date of issuance, name and address of account debtor,
aggregate amount, and balance due;
(h) Non-competition Agreement. The Non-competition
Agreement in the form of Schedule 6.10, duly executed;
(i) Opinion of Counsel. Opinion of counsel to the
Company dated as of the Closing Date, substantially in the form of Schedule
8.2(i);
(j) Financial Statements. The Company shall have
furnished to Buyer at least 30 days prior to Closing, audited consolidated
balance sheets of the Company as of December 31, 1994 and the related
consolidated statements of operations, stockholders' equity and cash flows of
the Company for the nine months ended December 31, 1994;
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(k) Certificate re: Fully Diluted Stock. A certificate
of an officer of the Company demonstrating the application of the definition of
Fully Diluted Stock, taking into account all Exchanges and Conversions;
(l) Other Documents. Such other documents and
certificates as the Company is required by the terms hereof to deliver or as
Buyer may reasonably request.
8.3 Deliveries by Buyer. Prior to or on the Closing Date,
Buyer shall deliver to the Company the following, in form and substance
reasonably satisfactory to the Company and its counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.1;
(b) Officer's Certificate. A certificate, dated as of
the Closing Date, executed on behalf of Buyer by its President, certifying (1)
that the representations and warranties of Buyer contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date, and (2) that Buyer has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(c) Secretary's Certificate. A certificate, dated as of
the Closing Date, executed by Buyer's Secretary: certifying that the
resolutions, as attached to such certificate, were duly adopted by Buyer's
Board of Directors, authorizing and approving the execution of this Agreement
and the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect;
(d) Lease. A Lease Agreement substantially in the form of
Schedule 8.2(b) executed by Echo Properties Corp. and Buyer.
(e) Non-competition Agreement. The Non-competition
Agreement in the form of Schedule 6.10, duly executed by Buyer;
(f) Opinion of Counsel. An opinion of counsel to Buyer
dated as of the Closing Date, substantially in the form of Schedule 8.3(f); and
(g) Other Documents. Such other documents and
certificates as Buyer is required by the terms hereof to deliver or as the
Company may reasonably request.
SECTION 9 TERMINATION
9.1 Termination by Company. This Agreement may be terminated
by the Company and the purchase and sale of the Common Stock abandoned, if the
Company is not then in material default hereunder, upon written notice to
Buyer, upon the occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of the
Company set forth in this Agreement have not been satisfied or waived in
writing by the Company.
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(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
by January 31, 1996, provided, however, that should the delay in Closing be
solely due to the FCC application processing, such upset date shall be extended
an additional six months.
(d) Breach. Without limiting the Company's rights under
the other provisions of this Section 9.1, if Buyer has failed to cure any
material breach of any of its representations, warranties, or covenants under
this Agreement within fifteen days after Buyer received written notice of such
breach from the Company.
9.2 Termination by Buyer. This Agreement may be terminated by
Buyer and the purchase and sale of the Common Stock abandoned, if Buyer is not
then in material default hereunder, upon written notice to the Company, upon
the occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be
the Closing Date any of the conditions precedent to the obligations of Buyer
set forth in this Agreement have not been satisfied or waived in writing by
Buyer.
(b) Judgments. If there shall be in effect on the date
that would otherwise be the Closing Date any judgment, decree, or order that
would prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred
January 31, 1996, provided, however, that should the delay in Closing be solely
due to the FCC application processing, such upset date shall be extended an
additional six months.
(d) Interruption of Service. If any event shall have
occurred that prevented signal transmission of any of the Stations in the
normal and usual manner for a continuous period of fifteen (15) days.
(e) Environmental Hazards. Buyer shall have notified the
Company of material environmental hazards or the material possibility of
environmental damages or clean-up costs, as indicated in the environmental
study described in Section 6.5, within 30 days prior to the Closing Date, and
the cause thereof shall not have been remedied prior to the Closing Date.
(f) Technical Deficiencies. Buyer shall have notified
the Company of material deficiencies in the operations or equipment of any of
the Networks or the Stations, as indicated in the engineering study described
in Section 6.6, within 30 days prior to the Closing Date, and the cause thereof
shall not have been remedied prior to the Closing Date.
(g) Breach. Without limiting Buyer's rights under the
other provisions of this Section 9.2, if the Company has failed to cure any
material breach of any of its representations, warranties, or covenants under
this Agreement within fifteen days after the Company received written notice of
such breach from Buyer.
9.3 Rights on Termination. If this Agreement is terminated pursuant
to Section 9.1 or Section 9.2 and neither party is in material breach of any
provision of this Agreement, the parties hereto shall
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not have any further liability to each other with respect to the purchase and
sale of the Common Stock. If this Agreement is terminated by Seller due to
Buyer's material breach of any provision of this Agreement, then the payment to
Seller of $500,000 pursuant to Section 9.4 below shall be liquidated damages
and shall constitute full payment and the exclusive remedy for any damages
suffered by Seller by reason of Buyer's material breach of this Agreement.
Seller and Buyer agree in advance that actual damages would be difficult to
ascertain and that the amount of $500,000 is a fair and equitable amount to
reimburse Seller for damages sustained due to Buyer's material breach of this
Agreement. If this Agreement is terminated by Buyer due to Seller's material
breach of any provision of this Agreement, Buyer shall have all rights and
remedies available at law or equity.
9.4 Escrow Deposit. Buyer has deposited with First Union National
Bank of Florida, Escrow Agent, the sum of $500,000 in accordance with an Escrow
Agreement among Buyer, Seller and the Escrow Agent (the "Escrow Agreement").
All such funds deposited with the Escrow Agent shall be held and disbursed in
accordance with the terms of the Escrow Agreement and the following provisions:
(a) At the Closing, all amounts held by the Escrow Agent pursuant to
the Escrow Agreement, including any interest or other proceeds from the
investment of funds held by the Escrow Agent, shall be disbursed to or at the
direction of Buyer.
(b) If this Agreement is terminated pursuant to Section 9.1 or 9.2
and Buyer is not in material breach of any provision of this Agreement, all
amounts held by the Escrow Agent pursuant to the Escrow Agreement, including
any interest or other proceeds from the investment of funds held by the Escrow
Agent, shall be disbursed to or at the direction of Buyer.
(c) If this Agreement is terminated by Seller due to Buyer's material
breach of this Agreement, then all amounts held by the Escrow Agent pursuant to
the Escrow Agreement shall be disbursed to or at the direction of Seller as
liquidated damages under Section 9.3 above and any interest or other proceeds
from the investment of funds held by the Escrow Agent shall be disbursed by the
Escrow Agent to or at the direction of Buyer.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
the Company or Sellers shall affect Buyer's right to rely on any representation
or warranty made by the Company or Sellers or relieve the Company or Sellers of
any obligations under this Agreement as the result of a breach of any of its
representations and warranties.
10.2 Indemnification by Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of the Company
or any information the Company may have, Buyer hereby agrees to indemnify and
hold the Company harmless against and with respect to, and shall reimburse the
Company for:
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(a) Any and all losses, liabilities, or damages resulting
from any untrue representation, breach of warranty, or nonfulfillment of any
covenant by Buyer contained in this Agreement or in any certificate, document,
or instrument delivered to the Company under this Agreement.
(b) Any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses, including reasonable legal
fees and expenses, incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.3 Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The Company, Sellers, or Buyer, as the party claiming
indemnification (the "Claimant"), shall promptly give notice to the other as
the party from which indemnification is claimed (the "Indemnifying Party") of
any claim, whether between the parties or brought by a third party, specifying
in reasonable detail the factual basis for the claim. If the claim relates to
an action, suit, or proceeding filed by a third party against Claimant, such
notice shall be given by Claimant within five days after written notice of such
action, suit, or proceeding was given to Claimant.
(b) With respect to claims solely between the parties,
following receipt of notice from the Claimant of a claim, the Indemnifying
Party shall have thirty days to make such investigation of the claim as the
Indemnifying Party deems necessary or desirable. For the purposes of such
investigation, the Claimant agrees to make available to the Indemnifying Party
or its authorized representatives the information relied upon by the Claimant
to substantiate the claim. If the Claimant and the Indemnifying Party agree at
or prior to the expiration of the thirty-day period (or any mutually agreed
upon extension thereof) to the validity and amount of such claim, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. If the Claimant and the Indemnifying Party do not agree within the
thirty-day period (or any mutually agreed upon extension thereof), the Claimant
may seek appropriate remedy at law (including the rules and regulations of the
SEC) or equity.
(c) With respect to any claim by a third party as to
which the Claimant is entitled to indemnification under this Agreement, the
Indemnifying Party shall have the right at its own expense, to participate in
or assume control of the defense of such claim, and the Claimant shall
cooperate fully with the Indemnifying Party, subject to reimbursement for
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of such claim at its own expense. If the
Indemnifying Party does not elect to assume control or otherwise participate in
the defense of any third party claim, it shall be bound by the results obtained
by the Claimant with respect to such claim.
(d) If a claim, whether between the parties or by a third
party, requires immediate action, the parties will make every effort to reach a
decision with respect thereto as expeditiously as possible.
Execution
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10.4 Specific Performance. The parties recognize that if the
Company or a Seller breaches this Agreement and refuses to perform under the
provisions of this Agreement, monetary damages alone would not be adequate to
compensate Buyer for its injury. Buyer shall therefore be entitled, in
addition to any other remedies that may be available, including money damages,
to obtain specific performance of the terms of this Agreement. If any action
is brought by Buyer to enforce this Agreement, the Company shall waive the
defense that there is an adequate remedy at law.
10.5 Attorneys' Fees. In the event of a default by any party
which results in a lawsuit or other proceeding for any remedy available under
this Agreement, the prevailing party shall be entitled to reimbursement from
the other party of its reasonable legal fees and expenses.
SECTION 11 CERTAIN TAX MATTERS
11.1 Definitions. As used in this Agreement:
(a) "Election" means the election to be made by Buyer and
Sellers pursuant to Section 338(h)(10) of the Internal Revenue Code of 1986.
(b) "Election Taxes" means taxes incurred solely by reason
of the Election, including any taxes received by reason of the adoption of the
Plan of Liquidation.
(c) "Pre-Closing Period" means any taxable period which
ends on or before the Closing Date, including that portion of any Straddle
Period which is treated as ending on the Closing Date.
11.2 Section 338(h)(10) Election.
(a) With respect to the purchase by Buyer of the Common
Stock pursuant to this Agreement (i) Sellers and Buyer shall jointly make the
Election (and any comparable election under state or local tax law), (ii)
Sellers and Buyer shall, on or as promptly as practicable following the
Closing, cooperate with each other to take all actions necessary and
appropriate to effect and preserve a timely Election in accordance with the
provisions of Treasury Regulation Section 1.338(h)(10)-1 (or any comparable
provisions of state or local tax law) or any successor provisions and (iii)
Sellers and Buyer shall report the purchase by Buyer of the Common Stock
pursuant to this Agreement consistent with the Election and shall take no
position inconsistent therewith in any tax return, any proceeding before any
taxing authority or otherwise.
(b) In connection with the Election, Buyer and Sellers
shall agree to the determination of the "Aggregate Deemed Sales Price" (as
defined under applicable Treasury Regulations) of the Common Stock and the
allocation of such "Aggregate Deemed Sales Price" among the assets of the
Company. Such determination and allocation shall be prepared after the Closing
Date in accordance with an appraisal by an appraisal firm selected and retained
by Buyer with experience in the valuation and appraisal of television station
assets. The determination of the amount of the "Aggregate Deemed Sales Price"
and the allocations thereof shall be made in accordance with Section 338(b) of
the Code and the applicable Treasury Regulations thereunder. The Seller and
Buyer shall (i) be bound by such determination and such allocation for purposes
of determining any taxes, (ii) prepare and file its tax returns on a basis
consistent with such determination of the "Aggregate Deemed Sales
Execution
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<PAGE> 28
Price" and such allocation and (iii) take no position inconsistent with such
determination and such allocation on any applicable tax return, in any
proceeding before any taxing authority or otherwise. In the event that any
such determination or allocation is disputed by any taxing authority, the party
receiving notice of the dispute shall promptly notify the other party hereto
concerning resolution of the dispute.
(c) Notwithstanding any other provisions of this Agreement
to the contrary, all sales, use, transfer, gains, stamp, duties and similar
taxes incurred in connection with the transaction contemplated by this
Agreement shall be paid by the Sellers and Sellers shall at their expense,
accurately file or cause to be filed all necessary tax returns and other
documentation with respect to such taxes and timely pay all such taxes. If
required by applicable law, Buyer will joint in the execution of any such tax
returns or such other documentation.
11.3 Return Filings; Refunds and Credits.
(a) Sellers shall prepare and file on a timely basis all
tax returns with respect to the Company for the Pre-Closing Period (the
"Pre-Closing Period Returns"). Sellers shall pay all taxes with respect to the
Company shown to be due on the Pre-Closing Period Returns.
(b) Sellers and Buyer shall reasonably cooperate in
preparing and filing all tax returns including maintaining and making available
to each other all records necessary in connection with taxes and in resolving
all disputes and audits with respect to all taxable periods relating to taxes.
Buyer and Sellers recognize that Sellers will need access, from time to time,
after the Closing Date, to certain accounting and tax records and information
held by the Company to the extent such records and information pertain to
events occurring on or prior to the Closing Date. Sellers shall reimburse
Buyer for reasonable out-of-pocket expenses incurred by Buyer in providing such
assistance to Sellers.
(c) For a period of seven years from the Closing Date,
Buyer shall not dispose of or destroy any of the business records and files of
the Company relating to taxes in existence on the Closing Date without first
offering to turn over possession thereof to Sellers by written notice to
Sellers at least thirty days prior to the proposed date of such disposition or
destruction.
(d) Buyer shall file any refund claims requested by
Sellers. Any refunds and credits of taxes of the Company with respect to any
taxable period ending on or before the Closing Date shall be for the account of
Sellers, and if received or utilized by Buyer or the Company, shall be paid to
Sellers within five business days after Buyer or the Company receives such
refund or utilizes such credit.
11.4 Elections. Buyer shall not make, amend or revoke any tax
election if such action would adversely affect any Seller with respect to any
taxable period ending on or before the Closing Date or for the Pre-Closing
Period or any tax refund with respect thereto.
11.5 Tax Indemnification.
(a) Notwithstanding anything in this Agreement to the
contrary, Sellers shall indemnify, defend and hold harmless Buyer at any time
after Closing, from and against any liability for taxes (including but not
limited to Election Taxes) of the Company for the Pre-Closing Period but, in
Execution
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<PAGE> 29
the case of taxes other than Election Taxes, only to the extent that the amount
of such taxes exceeds any aggregate amount of taxes that may have been reserved
for on the final statement.
(b) Notwithstanding anything in this Agreement to the
contrary, Buyer shall indemnify, defend and hold harmless Sellers at any time
after the Closing from and against any liability for any liability for taxes
for which Buyer is liable pursuant to Section 11.3(a).
(c) If a claim for taxes shall be made by any taxing
authority in writing, which, if successful, might result in an indemnity
payment pursuant to this Section 11, the party seeking indemnification (the
"Tax Indemnified Party") shall promptly notify the other party (the "Tax
Indemnifying Party") in writing of such claim (a "Tax Claim") within a
reasonably sufficient period of time to allow the Tax Indemnifying Party
effectively to contest such Tax Claim, and in reasonable detail to apprise the
Tax Indemnifying Party of the nature of the Tax Claim and provide copies of all
correspondence and documents received by it from the relevant taxing authority.
Failure to give prompt notice of a Tax Claim hereunder shall not affect the Tax
Indemnifying Party's obligation under this Section except to the extent that
the Tax Indemnifying Party is prejudiced by such failure to give prompt notice.
(d) With respect to any Tax Claim which might result in an
indemnity payment to Buyer pursuant to this Section 11.5 (other than any Tax
Claim associated with a Straddle Period, with regard to which Buyer and Seller
shall jointly control all proceedings), Sellers shall control all proceedings
taken in connection with such Tax Claim and may in their sole discretion and at
their sole expense pursue or forego any and all administrative appeals,
proceedings, hearing and conferences with any taxing authority with respect
hereto, and may, in their sole discretion, the pay the tax claimed and sue for
a refund where applicable law permits such refund suits or contest such Tax
Claim. Buyer shall not under any circumstances settle or otherwise compromise
any Tax Claim referred to in the preceding sentence without Sellers' prior
written consent.
(e) With respect to any Tax Claim not described in Section
11.5(d) hereof which might result in an indemnity payment to Seller pursuant
hereto, Buyer shall control all proceedings in accordance with provisions that
are parallel to those in Section 11.5(d) hereof.
SECTION 12 MISCELLANEOUS
12.01 Fees and Expenses. The Buyer shall pay 100% of the FCC
filing fees. Any federal, state, or local sales or transfer tax arising in
connection with the conveyance of the Stock by Company to Buyer pursuant to
this Agreement shall be paid by the party upon which such tax is imposed by
law. Except as otherwise provided in this Agreement, each party shall pay its
own expenses incurred in connection with the authorization, preparation,
execution, and performance of this Agreement, including all fees and expenses
of counsel, accountants, agents, and representatives, and each party shall be
responsible for all fees or commissions payable to any finder, broker, advisor,
or similar person retained by or on behalf of such party.
12.02 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
Execution
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<TABLE>
<S> <C>
If to Company or Seller: UHF Channel 59 Corp.
90 Inverness Circle East
Englewood, Colorado 80155
Attention: Charles Ergen and David K. Moskowitz, Esq.
With a copy to: David M. Drucker, Esq.
P.O. Box 255
Evergreen, CO 80439
If to Buyer: Channel 59 of Denver, Inc.,
14444 66th Street, North
Clearwater, FL 34624
Attention: James West
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
1255 23rd St., N.W.
Washington, D.C. 20037
</TABLE>
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
12.02.
12.03 Benefit and Binding Effect. Neither party hereto may
assign this Agreement without the prior written consent of the other party
hereto; provided, however, that Buyer may assign all of its rights and
obligations under this Agreement to a subsidiary of Buyer without seeking or
obtaining Seller's prior approval and may collaterally assign its rights and
interests hereunder to its lenders without seeking or obtaining Seller's prior
approval. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
12.04 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
the Company, any additional bills of sale, deeds, or other transfer documents
that, in the reasonable opinion of Buyer, may be necessary to ensure, complete,
and evidence the full and effective transfer of the Common Stock to Buyer
pursuant to this Agreement.
12.05 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED,
CONSTRUED, AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO
(WITHOUT REGARD TO THE CHOICE OF LAW PROVISIONS THEREOF).
12.06 Headings. The headings in this Agreement are included for
ease of reference only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
12.07 Gender and Number. Words used in this Agreement,
regardless of the gender and number specifically used, shall be deemed and
construed to include any other gender, masculine, feminine, or neuter, and any
other number, singular or plural, as the context requires.
Execution
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<PAGE> 31
12.08 Entire Agreement. This Agreement, the schedules, hereto,
and all documents, certificates, and other documents to be delivered by the
parties pursuant hereto, collectively represent the entire understanding and
agreement between Buyer, Sellers and the Company with respect to the subject
matter hereof. This Agreement supersedes all prior negotiations between the
parties and cannot be amended, supplemented, or changed except by an agreement
in writing that makes specific reference to this Agreement and which is signed
by the party against which enforcement of any such amendment, supplement, or
modification is sought.
12.09 Waiver of Compliance; Consents. Except as otherwise
provided in this Agreement, any failure of any of the parties to comply with
any obligation, representation, warranty, covenant, agreement, or condition
herein may be waived by the party entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 12.9.
12.10 Publicity. No party hereto shall make or issue, or cause
to be made or issued, any announcement (written or oral) concerning this
Agreement, or the transactions contemplated hereby or thereby for dissemination
to the general public without the prior consent of (i) both Company in the case
of any such announcement proposed to be made by Buyer; (ii) Buyer in the case
of any such announcement proposed to be made by the Company, and (iii) the
Company and Buyer in the case of any such announcement proposed to be made by
any Sellers. This provision shall not apply, however, to any announcement or
written statement required to be made by law or the regulations of any federal
or state governmental agency (including the SEC) or any stock exchange, except
that the party required to make such announcement shall provide a draft copy
thereof to the other parties hereto, and consult with such other parties
concerning the timing and content of such announcement, before such
announcement is made.
12.11 Counterparts. This Agreement may be signed in counterparts
with the same effect as if the signature on each counterpart were upon the same
instrument.
12.12 Guaranty of Paxson Communications Corp.
(a) In consideration of the execution and delivery of this Agreement
by Sellers and the Company, Paxson Communications Corp. ("PCC") agrees as
follows:
(i) PCC hereby guarantees the full, complete, and timely
performance by Buyer of each and every obligation of Buyer under this
Agreement. If any default shall be made by Buyer in the performance of any of
such obligations, then PCC will itself perform or cause to be performed such
obligation upon receipt of notice from Sellers or the Company specifying in
summary form the default.
(ii) PCC waives presentment, protest, demand, or action or
delinquency in respect of any of the obligations of Buyer under this Agreement.
PCC waives all notices of non-performance, notices of protest, notices of
dishonor, and notices of acceptance of this guaranty.
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(iii) This guaranty shall be deemed a continuing guaranty,
and the above consents and waivers of PCC shall remain in full force and effect
until the satisfaction in full of all obligations of Buyer under this
Agreement.
(b) PCC hereby represents and warrants to Sellers and the Company as
follows:
(i) This Agreement has been duly and validly executed and
delivered by PCC and constitutes its legal, valid, and binding agreement,
enforceable in accordance with its terms, except as the enforceability of this
Agreement may be affected by bankruptcy, insolvency or similar laws affecting
creditors' rights generally, and by judicial discretion in the enforcement of
equitable remedies.
(ii) The execution, delivery and performance by PCC of
this Agreement (A) do not require the consent of any third party; (B) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of
PCC; (C) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any court of governmental instrumentality; and (D) will
not conflict with, constitute grounds for termination of, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which PCC is a party of by which PCC may be bound.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
Execution
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IN WITNESS WHEREOF, the parties hereto have duly executed this Stock
Purchase Agreement as of the day and year first above written.
THE CHRISTIAN NETWORK, INC.
By: James L. West
-------------------------------------------
Its: Chairman
------------------------------------------
UHF CHANNEL 59 CORP.
By: Charles Ergen
-------------------------------------------
Its:
------------------------------------------
Charles Ergen
- - - - ----------------------------------------------
Charles Ergen
David M. Drucker
- - - - ----------------------------------------------
David M. Drucker
AS TO SECTION 12.12 ONLY:
PAXSON COMMUNICATIONS CORP.
By: Lowell W. Paxson
-------------------------------------------
Its: Chairman
------------------------------------------
Execution
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<PAGE> 1
Exhibit 10.4
<PAGE> 2
EXHIBIT 10.4
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated as of April 30, 1995, by and
between CHANNEL 59 OF DENVER, INC., a Florida ("Buyer"), and ECHONET
CORPORATION, a Colorado corporation ("Seller").
RECITALS
A. Seller is the licensee of and owns and operates low power
television station K54CQ, Denver, Colorado (the "Station"), pursuant to
licenses issued by the Federal Communications Commission ("FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all
the assets that are used or useful in the business or operations of the
Station, for the price and on the terms and conditions set forth in this
Agreement.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, Buyer and Seller, intending to be
bound legally, agree as follows:
SECTION 1 DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
"Accounts Receivable" means the rights of Seller to payment for the
sale of advertising time run on the Station by Seller prior to the Closing
Date.
"Assets" means the assets to be sold, transferred, or otherwise
conveyed to Buyer under this Agreement, as specified in Section 2.1.
"Assumed Contracts" means all Contracts listed in Schedule 3.7 that
are to be assumed by Buyer upon its purchase of the Station, and any Contracts
entered into by Seller between the date of this Agreement and the Closing Date
that Buyer agrees in writing to assume.
"Closing" means the consummation of the purchase and sale of the
Assets pursuant to this Agreement in accordance with the provisions of Section
8.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 8.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer
or otherwise to consummate the transactions contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including
1
<PAGE> 3
any amendments and other modifications thereto) to which Seller is a party or
which are binding upon Seller and which relate to or affect the Assets or the
business or operations of the Station, and (i) which are in effect on the date
of this Agreement or (ii) which are entered into by Seller between the date of
this Agreement and the Closing Date.
"FCC" means the Federal Communications Commission.
"FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC to Seller in
connection with the business or operations of the Station.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no requests are pending for administrative or judicial review, reconsideration,
appeal, or stay, and the time for filing any such requests and the time for the
FCC to set aside the action on its own motion have expired.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
by Seller or under which Seller is licensed or franchised and which are used or
useful in the business and operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities to Seller in connection with the
conduct of the business or operations of the Station, together with any
additions thereto between the date of this Agreement and the Closing Date.
"Purchase Price" means the purchase price specified in Section 2.3.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Station, together
with any additions thereto between the date of this Agreement and the Closing
Date.
SECTION 2 PURCHASE AND SALE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions
set forth in this Agreement, Seller hereby agrees to sell, transfer, and
deliver to Buyer on the Closing Date, and Buyer agrees to purchase, all of the
tangible and intangible assets of the Station, together with any
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<PAGE> 4
additions thereto between the date of this Agreement and the Closing Date, but
excluding the assets described in Section 2.2, free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for liens for current
taxes not yet due and payable), including the following, any and all:
(a) Tangible Personal Property;
(b) Real Property;
(c) Licenses;
(d) Assumed Contracts;
(e) Intangibles and all intangible assets of Seller relating
to the Station that are not specifically included within the Intangibles,
including the goodwill of the Station, if any;
(f) Seller's proprietary information, technical information
and data, machinery and equipment warranties, maps, computer discs and tapes,
plans, diagrams, blueprints, and schematics, including filings with the FCC
relating to the business and operation of the Station;
(g) All choses in action of Seller relating to the Station;
and
(h) All books and records relating to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept by the Station.
(i) The Accounts Receivable as of 11:59 p.m., local time, on
the day prior to the Closing Date ("Seller's Receivables"); and
2.2 Excluded Assets. The Assets shall exclude the following assets:
(a) Seller's cash on hand as of the Closing and all other
cash in any of Seller's bank or savings accounts; any insurance policies,
letters of credit, or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments;
(b) All books and records that Seller is required by law to
retain and that pertain to Seller's corporate organization;
(c) Any pension, profit-sharing, or employee benefit plans,
and any collective bargaining agreements;
(d) All property listed on Schedule 2.2 hereto.
2.3 Purchase Price. The Purchase Price for the Assets shall be FIFTY
THOUSAND AND NO/100 DOLLARS ($50,000.00), adjusted as provided below:
3
<PAGE> 5
(a) Prorations. The Purchase Price shall be increased or
decreased as required to effectuate the proration of expenses. All expenses
arising from the operation of the Station, including business and license fees,
utility charges, real and personal property taxes and assessments levied
against the Assets, property and equipment rentals, applicable copyright or
other fees, sales and service charges, taxes (except for taxes arising from the
transfer of the Assets under this Agreement), and similar prepaid and deferred
items, shall be prorated between Buyer and Seller in accordance with the
principle that Seller shall be responsible for all expenses, costs, and
liabilities allocable to the period prior to the Closing Date, and Buyer shall
be responsible for all expenses, costs, and obligations allocable to the period
on and after the Closing Date.
(b) Manner of Determining Adjustments. Any adjustments
will, insofar as feasible, be determined and paid on the Closing Date, with
final settlement and payment by the appropriate party occurring no later than
ninety (90) days after the Closing Date or such other date as the parties shall
mutually agree upon.
2.4 Payment of Purchase Price. The Purchase Price, as adjusted,
shall be paid by Buyer to Seller at Closing by wire transfer of same-day funds
pursuant to wire instructions which shall be delivered by Seller to Buyer, at
least two days prior to the Closing Date.
SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing, and Authority. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Colorado. Seller has all requisite power and authority (i) to own,
lease, and use the Assets as now owned, leased, and used, (ii) to conduct the
business and operations of the Station as now conducted, and (iii) to execute
and deliver this Agreement and the documents contemplated hereby and thereby,
and to perform and comply with all of the terms, covenants, and conditions to
be performed and complied with by Seller hereunder and thereunder. Seller is
not a participant in any joint venture or partnership with any other person or
entity with respect to any part of the operations of the Station or any of the
Assets.
3.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement by Seller has been duly authorized by all
necessary actions on the part of Seller and its shareholders. This Agreement
has been duly executed and delivered by Seller and constitute the legal, valid,
and binding obligations of Seller, enforceable against it in accordance with
their respective terms except as the enforceability of this Agreement may be
affected by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally, and by judicial discretion in the enforcement of equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents listed on Schedule 3.3, the execution, delivery, and performance of
this Agreement and the documents contemplated hereby (with or without the
giving of notice, the lapse of time, or both): (i) do not require the consent
of any third party; (ii) will not conflict with any provision of the
Certificate of Incorporation of Seller; (iii) will not conflict with, result in
a breach of, or constitute a default under, any law, judgment, order,
ordinance, injunction, decree, rule, regulation, or ruling of any court or
governmental instrumentality; (iv) will not conflict with, constitute grounds
for termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance
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<PAGE> 6
required by the terms of, any agreement, instrument, license, or permit to
which Seller is a party or by which Seller may be bound; and (v) will not
create any claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon any of the Assets.
3.4 Governmental Licenses. Schedule 3.4 includes a true and complete
list of the Licenses. Seller has delivered to Buyer true and complete copies
of the Licenses (including any amendments and other modifications thereto).
The Licenses have been validly issued, and Seller is the authorized legal
holder thereof. The Licenses listed on Schedule 3.4 comprise all of the
licenses, permits, and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business and operations of
the Station in the manner and to the full extent they are now conducted, and
none of the Licenses is subject to any restriction or condition that would
limit the full operation of the Station as now operated.
3.5 Title to and Condition of Real Property. Schedule 3.5 contains a
complete and accurate description of all the Real Property and Seller's
interests therein (including street address, legal description, owner, and use
and the location of all improvements thereon). The Real Property listed on
Schedule 3.5 comprises all real property interests necessary to conduct the
business and operations of the Station as now conducted. Seller has good and
marketable fee simple title, insurable at standard rates, to all fee estates
(including the improvements thereon) included in the Real Property, free and
clear of all liens, mortgages, pledges, covenants, easements, restrictions,
encroachments, leases, charges, and other claims and encumbrances of any nature
whatsoever, and without reservation or exclusion of any mineral, timber, or
other rights or interests, except for liens for real estate taxes not yet due
and payable and liens disclosed on Schedule 3.5. With respect to each
leasehold or subleasehold interest included in the Real Property being conveyed
under this Agreement so long as Seller fulfills its obligations under the lease
therefor, Seller has enforceable rights to non-disturbance and quiet enjoyment,
and no third party holds any interest in the leased premises with the right to
foreclose upon Seller's leasehold or subleasehold interest.
3.6 Title to and Condition of Tangible Personal Property. Schedule
3.6 lists all material items of Tangible Personal Property. The Tangible
Personal Property listed on Schedule 3.6 comprises all material items of
tangible personal property necessary to conduct the business and operations of
the Station as now conducted. Except as described in Schedule 3.6, Seller owns
and has good title to each item of Tangible Personal Property, and none of the
Tangible Personal Property owned by Seller is subject to any security interest,
mortgage, pledge, conditional sales agreement, or other lien or encumbrance,
except for liens for current taxes not yet due and payable. Each item of
Tangible Personal Property is available for immediate use in the business and
operations of the Station. All items of transmitting and studio equipment
included in the Tangible Personal Property (i) have been maintained in a manner
consistent with generally accepted standards of good engineering practice, and
(ii) will permit the Station and any unit auxiliaries thereto to operate in
accordance with the terms of the FCC Licenses and the rules and regulations of
the FCC, and with all other applicable federal, state, and local statutes,
ordinances, rules, and regulations.
3.7 Assumed Contracts. Schedule 3.7 is a true and complete list of
all Assumed Contracts except contracts with advertisers for the sale of
advertising time on the Station for cash at prevailing rates and which have not
been prepaid and which may be canceled by the Station without penalty on not
more than thirty days' notice. Seller has delivered to Buyer true and complete
copies of all written Assumed Contracts, true and complete memoranda of all
oral Assumed Contracts (including any amendments and other modifications to
such Assumed Contracts), and a schedule summarizing
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Seller's obligations under trade and barter agreements relating to the Station.
Other than the Assumed Contracts listed on Schedule 3.7, Seller requires no
contract, lease, or other agreement to enable it to carry on its business as
now conducted.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1
and the other Consents described in Schedule 3.3, no consent, approval, permit,
or authorization of, or declaration to or filing with any governmental or
regulatory authority, or any other third party is required (i) to consummate
this Agreement and the transactions contemplated hereby, (ii) to permit Seller
to assign or transfer the Assets to Buyer, or (iii) to enable Buyer to conduct
the business and operations of the Station in essentially the same manner as
such business and operations are now conducted.
3.9 Intangibles. Schedule 3.9 is a true and complete list of all
Intangibles (exclusive of those listed in Schedule 3.4), all of which are valid
and in good standing and uncontested. Seller has delivered to Buyer copies of
all documents establishing or evidencing all Intangibles.
3.10 Insurance. Schedule 3.11 is a true and complete list of all
insurance policies of Seller that insure any part of the Assets or the business
of the Station. All policies of insurance listed in Schedule 3.11 are in full
force and effect. The insurance policies listed in Schedule 3.11 are adequate
in amount with respect to, and for the full value (subject to customary
deductibles) of, the Assets, and insure the Assets and the business of the
Station against all customary and foreseeable risks. During the past three
years, no insurance policy of Seller on the Assets or the Station has been
canceled by the insurer and no application of Seller for insurance has been
rejected by any insurer.
3.11 Reports. All returns, reports, and statements that the Station
is currently required to file with the FCC or with any other governmental
agency have been filed, and all reporting requirements of the FCC and other
governmental authorities having jurisdiction over Seller and the Station have
been complied with. All of such returns, reports, and statements are
substantially complete and correct as filed. Seller has timely paid to the FCC
all annual regulatory fees payable with respect to the FCC Licenses.
3.12 Personnel.
Employees and Compensation. Schedule 3.13 contains a true and
complete list of all employees of the Station, their job titles, date of hire,
current salary and date and amount of last salary increase.
3.13 Taxes. Seller has filed or caused to be filed all federal income
tax returns and all other federal, state, county, local, or city tax returns
which are required to be filed, and it has paid or caused to be paid all taxes
shown on those returns or on any tax assessment received by it to the extent
that such taxes have become due, or has set aside on its books adequate
reserves (segregated to the extent required by generally accepted accounting
principles) with respect thereto. To the knowledge of Seller, there are no
governmental investigations or other legal, administrative, or tax proceedings
pursuant to which Seller is or could be made liable for any taxes, penalties,
interest, or other charges, the liability for which could extend to Buyer as
transferee of the business of the Station, and no event has occurred that could
impose on Buyer any transferee liability for any taxes, penalties, or interest
due or to become due from Seller.
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3.14 Claims and Legal Actions. Except for any FCC rulemaking
proceedings generally affecting the broadcasting industry, to the knowledge of
Seller, there is no claim, legal action, counterclaim, suit, arbitration,
governmental investigation or other legal, administrative, or tax proceeding,
nor any order, decree or judgment, in progress or pending, or to the knowledge
of Seller threatened, against or relating to Seller with respect to its
ownership or operation of the Station or otherwise relating to the Assets or
the business or operations of the Station, nor does Seller know or have reason
to be aware of any basis for the same.
3.15 Environmental Matters. To the knowledge of Seller, Seller has
complied with all laws, rules, and regulations of all federal, state, and local
governments (and all agencies thereof) concerning the environment, public
health and safety, and employee health and safety, and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice has
been filed or commenced against Seller in connection with its ownership or
operation of the Station alleging any failure to comply with any such law,
rule, or regulation.
3.16 Compliance with Laws. To the knowledge of Seller, Seller has
complied in all material respects with the Licenses and all federal, state, and
local laws, rules, regulations, and ordinances applicable or relating to the
ownership and operation of the Station. To the knowledge of Seller, Neither
the ownership or use of the properties of the Station nor the conduct of the
business or operations of the Station conflicts with the rights of any other
person or entity.
3.17 Full Disclosure. No representation or warranty made by Seller in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Seller pursuant hereto contains or will contain any
untrue statement of a material fact, or omits or will omit to state any
material fact and required to make any statement made herein or therein not
misleading.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing, and Authority. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Florida and at Closing will be duly qualified to conduct business as a
foreign corporation in the State of Colorado. Buyer has all requisite power
and authority to execute and deliver this Agreement and the Escrow Agreement
and the documents contemplated hereby and thereby, and to perform and comply
with all of the terms, covenants, and conditions to be performed and complied
with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery,
and performance of this Agreement and the Escrow Agreement by Buyer have been
duly authorized by all necessary actions on the part of Buyer. This Agreement
and the Escrow Agreement have been duly executed and delivered by Buyer and
constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms except as the
enforceability of this Agreement and the Escrow Agreement may be affected by
bankruptcy, insolvency, or similar laws affecting creditors' rights generally
and by judicial discretion in the enforcement of equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the
Consents, the execution, delivery, and performance by Buyer of this Agreement
and the Escrow Agreement and the documents contemplated hereby and thereby
(with or without the giving of notice, the lapse of time, or both): (i)
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do not require the consent of any third party; (ii) will not conflict with the
Articles of Incorporation or Bylaws of Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which Buyer is a party or
by which Buyer may be bound, such that Buyer could not acquire or operate the
Assets.
4.4 Full Disclosure. No representation or warranty made by Buyer in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Buyer pursuant hereto contains or will contain any untrue
statement of a material fact, or omits or will omit to state any material fact
and required to make any statement made herein or therein not misleading.
4.5 Buyer Qualifications. Buyer is legally, financially and
otherwise qualified to be the licensee of, acquire, own and operate the Station
under the Communications Act of 1934, as now in effect, and the rules,
regulations and policies of the FCC as now in effect. Buyer knows of no fact
that would, under existing law and the existing rules, regulations, policies
and procedures of the FCC disqualify Buyer as an assignee of the FCC Licenses
or as the owner and operator of the Station.
SECTION 5 OPERATIONS OF THE STATION PRIOR TO CLOSING
5.1 Generally. Seller agrees that, between the date of this
Agreement and the Closing Date, Seller shall operate the Station diligently in
the ordinary course of business in accordance with its past practices (except
where such conduct would conflict with the following covenants or with Seller's
other obligations under this Agreement), and in accordance with the other
covenants in this Section 5.
5.2 Compensation. Seller shall not increase the compensation,
bonuses, or other benefits payable or to be payable to any person employed in
connection with the conduct of the business or operations of the Station,
except in accordance with past practices.
5.3 Contracts. Seller will not enter into any contract or commitment
relating to the Station or the Assets, that will be binding on Buyer after
Closing, or amend or terminate any Contract (or waive any material right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or the guaranteeing of indebtedness) that will be binding on
Buyer after Closing, except for cash time sales agreements made in the ordinary
course of business. Prior to the Closing Date, Seller shall deliver to Buyer a
list of all Contracts entered into between the date of this Agreement and the
Closing Date, together with copies of such Contracts.
5.4 Disposition of Assets. Seller shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets, except where no longer used
or useful in the business or operations of the Station or in connection with
the acquisition of replacement property of equivalent kind and value.
5.5 Encumbrances. Seller shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets, except for (i) liens disclosed on
Schedule 3.5 and Schedule 3.6, which shall be removed prior to the Closing
Date, (ii) liens for current taxes not yet due and payable, and (iii)
mechanics' liens and other similar liens, which shall be removed prior to the
Closing Date.
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5.6 Licenses. Seller shall not cause or permit, by any act or
failure to act, any of the Licenses to expire or to be revoked, suspended, or
modified, or take any action that could cause the FCC or any other governmental
authority to institute proceedings for the suspension, revocation, or adverse
modification of any of the Licenses. Seller shall not fail to prosecute with
due diligence any applications to any governmental authority in connection with
the operation of the Station.
5.7 Rights. Seller shall not waive any right relating to the Station
or any of the Assets. Seller shall not cause, by any act or failure to act,
any cable system located within the Station's Area of Dominant Influence to
refuse to carry the Station's signal.
5.8 No Inconsistent Action. Seller shall not take any action that is
inconsistent with its obligations under this Agreement or that could hinder or
delay the consummation of the transactions contemplated by this Agreement.
5.9 Access to Information. Seller shall give Buyer and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books, records,
Contracts, and documents relating to the Station for the purpose of audit and
inspection, including inspections incident to the environmental study described
in Section 6.6 and the engineering study described in Section 6.7, and will
furnish or cause to be furnished to Buyer or its authorized representatives all
information with respect to the affairs and business of the Station that Buyer
may reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Station). Without
limiting the generality of the foregoing, Seller shall give Buyer and its
counsel, accountants and other authorized representatives reasonable access to
Seller's financial records and Seller's employees, counsel, accountants and
other representatives for the purpose of preparing and auditing such financial
statements as Buyer determines, in its sole judgment, are required or advisable
to comply with federal or state securities laws and the rules and regulations
of securities markets as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
5.10 Maintenance of Assets. Seller shall use its best efforts and
take all reasonable actions to maintain all of the Assets in good condition
(ordinary wear and tear excepted), and use, operate, and maintain all of the
Assets in a reasonable manner and in accordance with the terms of the FCC
Licenses, all rules and regulations of the FCC and generally accepted standards
of good engineering practice.. Seller shall maintain inventories of spare
parts and expendable supplies at levels consistent with past practices. If any
loss, damage, impairment, confiscation, or condemnation of or to any of the
Assets occurs, Seller shall repair, replace, or restore the Assets to their
prior condition as represented in this Agreement as soon thereafter as
possible, and Seller shall use the proceeds of any claim under any insurance
policy solely to repair, replace, or restore any of the Assets that are lost,
damaged, impaired, or destroyed.
5.11 Insurance. Seller shall maintain the existing insurance policies
on the Station and the Assets.
5.12 Consents. Seller shall obtain the Consents and the estoppel
certificates described in Section 8.2(b), without any change in the terms or
conditions of any Contract or License that could be less advantageous to the
Station than those pertaining under the Contract or License as in effect on the
date of this Agreement. Seller shall promptly advise Buyer of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the
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Consents. Upon Buyer's request, Seller shall cooperate with Buyer and use it
best efforts to obtain from the lessors under each Real Property lease such
estoppel certificates and consents to the collateral assignment of the lessee's
interest under each such lease as Buyer's senior lenders may request.
5.13 Books and Records. Seller shall maintain its books and records
relating to the Station in accordance with past practices.
5.14 Notification. Seller shall promptly notify Buyer in writing of
any unusual or material developments with respect to the business or operations
of the Station, and of any material change in any of the information contained
in Seller's representations and warranties contained in Section 3 of this
Agreement.
5.15 Compliance with Laws. Seller shall comply in all material
respects with all laws, rules, and regulations applicable or relating to the
ownership and operation of the Station.
5.16 Financing Leases. Seller will satisfy at or prior to Closing all
outstanding obligations under capital and financing leases with respect to any
of the Assets and obtain good title to the Assets leased by Seller pursuant to
those leases so that those Assets shall be transferred to Buyer at Closing free
of any interest of the lessors.
5.17 Programming. Seller shall not make any material changes in the
broadcast hours or in the percentages of types of programming broadcast by the
Station, or make any other material change in the Station's programming
policies, except such changes as in the good faith judgment of the Seller are
required by the public interest.
5.18 Preservation of Business. Seller shall generally preserve the
business and organization of the Station and use reasonable efforts to keep
available to the Station its present employees and to preserve the audience of
the Station and the Station's present relationships with suppliers,
advertisers, and others having business relations with it, to the end that the
business, operations, and prospects of the Station shall be generally
unimpaired at the Closing Date. The ordinary and customary operating,
marketing, promotional, sales, and advertising practices of the Station shall
be generally maintained.
SECTION 6 SPECIAL COVENANTS AND AGREEMENTS
6.1 FCC Consent.
(a) The assignment of the FCC Licenses in connection with the
purchase and sale of the Assets pursuant to this Agreement shall be subject to
the prior consent and approval of the FCC.
(b) Seller and Buyer shall promptly prepare an appropriate
application for the FCC Consent and shall file the application with the FCC
within five (5) business days of the execution of this Agreement. The parties
shall prosecute the application with all reasonable diligence and otherwise use
their best efforts to obtain a grant of the application as expeditiously as
practicable. Each party agrees to comply with any condition imposed on it by
the FCC Consent, except that no party shall be required to comply with a
condition if (1) the condition was imposed on it as the result of a
circumstance the existence of which does not constitute a breach by the party
of any of its
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representations, warranties, or covenants under this Agreement, and (2)
compliance with the condition would have a material adverse effect upon it.
Buyer and Seller shall oppose any requests for reconsideration or judicial
review of the FCC Consent. If the Closing shall not have occurred for any
reason within the original effective period of the FCC Consent, and neither
party shall have terminated this Agreement under Section 9, the parties shall
jointly request an extension of the effective period of the FCC Consent. No
extension of the FCC Consent shall limit the exercise by either party of its
rights under Section 9.
6.2 Control of the Station. Prior to Closing, Buyer shall not,
directly or indirectly, control, supervise, direct, or attempt to control,
supervise, or direct, the operations of the Station; such operations, including
complete control and supervision of all of the Station programs, employees, and
policies, shall be the sole responsibility of Seller until the Closing.
6.3 Confidentiality. Except as necessary for the consummation of the
transaction contemplated by this Agreement, including Buyer's obtaining of
financing related hereto, and except as and to the extent required by law,
including, without limitation, disclosure requirements of federal or state
securities laws and the rules and regulations of securities markets, each party
will keep confidential any information obtained from the other party in
connection with the transactions contemplated by this Agreement. If this
Agreement is terminated, each party will return to the other party all
information obtained by the such party from the other party in connection with
the transactions contemplated by this Agreement.
6.4 Environmental Audit. Buyer may, at its option and expense,
retain an environmental consultant to be selected by Buyer to perform a Phase I
environmental survey of the properties of the Station. If the survey discloses
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, Buyer shall so notify Seller as
soon as practicable.
6.5 Engineering Study. Buyer may, at its option and expense, retain
an engineering firm to conduct a proof of performance study of the Station and
to prepare a report on the Station's compliance with customary engineering
practices and all applicable FCC rules, regulations, prescribed practices, and
technical standards. If the survey discloses any material deficiencies in the
operations or equipment of the Station, Buyer shall so notify Seller as soon as
practicable.
6.6 Cooperation. Buyer and Seller shall cooperate fully with each
other and their respective counsel and accountants in connection with any
actions required to be taken as part of their respective obligations under this
Agreement, and Buyer and Seller shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their best efforts to consummate the transaction
contemplated hereby and to fulfill their obligations under this Agreement.
Notwithstanding the foregoing, Buyer shall have no obligation (i) to expend
funds to obtain any of the Consents or (ii) to agree to any adverse change in
any License or Assumed Contract to obtain a Consent required with respect
thereto.
6.7 Bulk Sales Law. If applicable, the Bulk Sales law of the State
of Colorado shall be complied with by Seller. Any loss, liability, obligation,
or cost suffered by Seller or Buyer as the result of the failure of Seller or
Buyer to comply with the provisions of any bulk sales law applicable to the
transfer of the Assets as contemplated by this Agreement shall be borne by
Seller.
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6.8 Access to Books and Records. Seller shall provide Buyer access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets. Buyer shall provide Seller access
and the right to copy for a period of three years from the Closing Date any
books and records relating to the Assets.
6.9 Appraisal. Buyer and Seller agree to allocate the Purchase Price
for tax and recording purposes in accordance with an appraisal to be conducted
by an appraisal firm selected and retained by Buyer with experience in the
valuation and appraisal of television station assets.
6.10 Risk of Loss. The risk of any loss, damage, impairment,
confiscation or condemnation of any of the Assets from any cause whatsoever
shall be borne by Seller at all times prior to the Closing.
SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER AT
CLOSING
7.1 Conditions to Obligations of Buyer. All obligations of Buyer at
the Closing are subject at Buyer's option to the fulfillment prior to or at the
Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Seller shall have performed
and complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Consents. All Consents shall have been obtained and
delivered to Buyer without any adverse change in the terms or conditions of any
agreement or any governmental license, permit, or other authorization.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Buyer of any conditions that need not be complied
with by Buyer under Section 6.1 hereof, Seller shall have complied with any
conditions imposed on it by the FCC Consent, and the FCC Consent shall have
become a Final Order.
(e) Governmental Authorizations. Seller shall be the holder
of all Licenses and there shall not have been any modification of any License
that could have an adverse effect on the Station or the conduct of its business
and operations. No proceeding shall be pending the effect of which could be to
revoke, cancel, fail to renew, suspend, or modify adversely any License.
(f) Deliveries. Seller shall have made or stand willing to
make all the deliveries to Buyer set forth in Section 8.2.
(g) Adverse Change. Between the date of this Agreement and
the Closing Date, there shall have been no material adverse change in the
business, assets, or properties of the Station,
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including any damage, destruction, or loss affecting any assets used or useful
in the conduct of the business of the Station.
7.2 Conditions to Obligations of Seller. All obligations of Seller
at the Closing are subject at Seller's option to the fulfillment prior to or at
the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions. Buyer shall have performed and
complied in all material respects with all covenants, agreements, and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) Deliveries. Buyer shall have made or stand willing to
make all the deliveries set forth in Section 8.3.
(d) FCC Consent. The FCC Consent shall have been granted
without the imposition on Seller of any conditions that need not be complied
with by Seller under Section 6.1 hereof and Buyer shall have complied with any
conditions imposed on it by the FCC Consent.
SECTION 8 CLOSING AND CLOSING DELIVERIES
8.1 Closing.
(a) Closing Date. The Closing shall take place at 10:00 a.m.
on a date, to be set by Buyer on at least five days' written notice to Seller,
that is (1) not earlier than the first business day after the FCC Consent is
granted, and (2) not later than ten business days following the date upon which
the FCC Consent has become a Final Order. If Buyer fails to specify the date
for Closing pursuant to the preceding sentence prior to the fifth business day
after the date upon which the FCC Consent becomes a Final Order, the Closing
shall take place on the tenth business day after the date upon which the FCC
Consent becomes a Final Order.
(b) Closing Place. The Closing shall be held at the offices
of Dow, Lohnes & Albertson, 1255 23rd St., N.W., Washington, D.C. 20037, or
any other place that is agreed upon by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
shall deliver to Buyer the following, in form and substance reasonably
satisfactory to Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty bills of
sale, deeds, motor vehicle titles, assignments, and other transfer documents
which shall be sufficient to vest good and marketable title to the Assets in
the name of Buyer, free and clear of all mortgages, liens, restrictions,
encumbrances, claims, and obligations except for liens for current taxes not
yet due and payable;
(b) Consents. A manually executed copy of any instrument
evidencing receipt of any Consent;
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(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Seller by its President, certifying (1)
that the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date as though
made on and as of that date; and (2) that Seller has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(d) Tax, Lien, and Judgment Searches. Results of a search
for tax, lien, and judgment filings in the Secretary of State's records of the
State of Colorado, and in the records of those counties in Florida in which any
of the Assets are located, such searches having been made no earlier than
fifteen days prior to the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies of
all Licenses, Assumed Contracts, blueprints, schematics, working drawings,
plans, projections, engineering records, and all files and records used by
Seller in connection with its operations;
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in
Section 2.4(a);
(b) Assumption Agreements. Appropriate assumption
agreements pursuant to which Buyer shall assume and undertake to perform
Seller's obligations under the Licenses and Assumed Contracts arising on or
after the Closing Date;
(c) Officer's Certificate. A certificate, dated as of the
Closing Date, executed on behalf of Buyer by its President, certifying (1) that
the representations and warranties of Buyer contained in this Agreement are
true and complete in all material respects as of the Closing Date as though
made on and as of that date, and (2) that Buyer has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
SECTION 9 TERMINATION
9.1 Termination by Seller. This Agreement may be terminated by
Seller and the purchase and sale of the Station abandoned, if Seller is not
then in material default, upon written notice to Buyer, upon the occurrence of
any of the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Seller set
forth in this Agreement have not been satisfied or waived in writing by Seller.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
January 31, 1996, provided, however, that should the delay in Closing be solely
due to the FCC application processing, such upset date shall be extended an
additional six months.
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9.2 Termination by Buyer. This Agreement may be terminated by Buyer
and the purchase and sale of the Station abandoned, if Buyer is not then in
material default, upon written notice to Seller, upon the occurrence of any of
the following:
(a) Conditions. If on the date that would otherwise be the
Closing Date any of the conditions precedent to the obligations of Buyer set
forth in this Agreement have not been satisfied or waived in writing by Buyer.
(b) Judgments. If there shall be in effect on the date that
would otherwise be the Closing Date any judgment, decree, or order that would
prevent or make unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by
January 31, 1996, provided, however, that should the delay in Closing be solely
due to the FCC application processing, such upset date shall be extended an
additional six months.
(d) Technical Deficiencies. Buyer shall have notified Seller
of material deficiencies in the operations or equipment of the Station, as
indicated in the engineering study described in Section 6.7, within 30 days
prior to the Closing Date, and the cause thereof shall not have been remedied
prior to the Closing Date.
9.3 Rights on Termination. If this Agreement is terminated pursuant
to Section 9.1 or Section 9.2 and neither party is in material breach of any
provision of this Agreement, the parties hereto shall not have any further
liability to each other with respect to the purchase and sale of the Assets.
If this Agreement is terminated by either party due to the other's material
breach of any provision of this Agreement, then the payment to such party of
$5,000 by the other party shall be liquidated damages and shall constitute full
payment and the exclusive remedy for any damages suffered by such party by
reason of the other party's material breach of this Agreement. Seller and
Buyer agree in advance that actual damages would be difficult to ascertain and
that the amount of $5,000 is a fair and equitable amount to reimburse either
party for damages it may sustain due to one party's material breach of this
Agreement.
SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION; CERTAIN REMEDIES
10.1 Representations and Warranties. All representations and
warranties contained in this Agreement shall be deemed continuing
representations and warranties and shall survive the Closing for a period of
eighteen months. Any investigations by or on behalf of any party hereto shall
not constitute a waiver as to enforcement of any representation, warranty, or
covenant contained in this Agreement. No notice or information delivered by
Seller shall affect Buyer's right to rely on any representation or warranty
made by Seller or relieve Seller of any obligations under this Agreement as the
result of a breach of any of its representations and warranties.
10.2 Specific Performance. The parties recognize that if Seller
breaches this Agreement and refuses to perform under the provisions of this
Agreement, monetary damages alone would not be adequate to compensate Buyer for
its injury. Buyer shall therefore be entitled, in addition to any other
remedies that may be available, including money damages, to obtain specific
performance of the
15
<PAGE> 17
terms of this Agreement. If any action is brought by Buyer to enforce this
Agreement, Seller shall waive the defense that there is an adequate remedy at
law.
10.3 Attorneys' Fees. In the event of a default by either party which
results in a lawsuit or other proceeding for any remedy available under this
Agreement, the prevailing party shall be entitled to reimbursement from the
other party of its reasonable legal fees and expenses.
SECTION 11 MISCELLANEOUS
11.1 Fees and Expenses. Any federal, state, or local sales or
transfer tax arising in connection with the conveyance of the Assets by Seller
to Buyer pursuant to this Agreement shall be paid by the party upon which such
tax is imposed by law. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives, and each
party shall be responsible for all fees or commissions payable to any finder,
broker, advisor, or similar person retained by or on behalf of such party.
11.2 Arbitration. Except as otherwise provided to the contrary below,
any dispute arising out of or related to this Agreement that Seller and Buyer
are unable to resolve by themselves shall be settled by arbitration by a panel
of three (3) neutral arbitrators who shall be selected in accordance with the
procedures set forth in the commercial arbitration rules of the American
Arbitration Association. The persons selected as arbitrators shall have prior
experience in the broadcasting industry but need not be professional
arbitrators, and persons such as lawyers, accountants, brokers and bankers
shall be acceptable. Before undertaking to resolve the dispute, each
arbitrator shall be duly sworn faithfully and fairly to hear and examine the
matters in controversy and to make a just award according to the best of his or
her understanding. The arbitration hearing shall be conducted in accordance
with the commercial arbitration rules of the American Arbitration Association.
The written decision of a majority of the arbitrators shall be final and
binding on Seller and Buyer. The costs and expenses of the arbitration
proceeding shall be assessed between Seller and Buyer in a manner to be decided
by a majority of the arbitrators, and the assessment shall be set forth in the
decision and award of the arbitrators. Judgment on the award, if it is not
paid within thirty days, may be entered in any court having jurisdiction over
the matter. No action at law or suit in equity based upon any claim arising
out of or related to this Agreement shall be instituted in any court by Seller
or Buyer against the other except (i) an action to compel arbitration pursuant
to this Section, (ii) an action to enforce the award of the arbitration panel
rendered in accordance with this Section, or (iii) a suit for specific
performance pursuant to Section 10.5.
11.3 Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be (a) in
writing, (b) delivered by personal delivery, or sent by commercial delivery
service or registered or certified mail, return receipt requested, (c) deemed
to have been given on the date of personal delivery or the date set forth in
the records of the delivery service or on the return receipt, and (d) addressed
as follows:
If to Seller: Echonet Corporation
90 Inverness Circle East
Englewood, Colorado 80155
Attention: Charles Ergen and David K. Moskowitz, Esq.
16
<PAGE> 18
With a copy to: David M. Drucker, Esq.
P.O. Box 255
Evergreen, CO 80439
If to Buyer: Channel 59 of Denver, Inc.
14444 66th Street, North
Clearwater, Florida 34624
Attention: James West
With a copy to: John R. Feore, Jr., Esq.
Dow, Lohnes & Albertson
1255 23rd Street, N.W.
Washington, D.C. 20037
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.3.
11.4 Benefit and Binding Effect. Neither party hereto may assign this
Agreement without the prior written consent of the other party hereto;
provided, however, that Buyer may assign its rights and obligations under this
Agreement to one or more subsidiaries or commonly controlled affiliates of
Buyer without seeking or obtaining Seller's prior approval in which event Buyer
shall have no further obligation hereunder and Buyer may collaterally assign
its rights and interests hereunder to its senior lenders without seeking or
obtaining Seller's prior approval. Upon any permitted assignment by Buyer or
Seller in accordance with this Section 11.4, all references to"Buyer" herein
shall be deemed to be references to Buyer's assignee and all references to
"Seller" herein shall be deemed to be references to Seller's assignee, as the
case may be. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
11.5 Further Assurances. The parties shall take any actions and
execute any other documents that may be necessary or desirable to the
implementation and consummation of this Agreement, including, in the case of
Seller, any additional bills of sale, deeds, or other transfer documents that,
in the reasonable opinion of Buyer, may be necessary to ensure, complete, and
evidence the full and effective transfer of the Assets to Buyer pursuant to
this Agreement.
11.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO (WITHOUT REGARD
TO THE CHOICE OF LAW PROVISIONS THEREOF).
11.7 Headings. The headings in this Agreement are included for ease
of reference only and shall not control or affect the meaning or construction
of the provisions of this Agreement.
11.8 Gender and Number. Words used in this Agreement, regardless of
the gender and number specifically used, shall be deemed and construed to
include any other gender, masculine, feminine, or neuter, and any other number,
singular or plural, as the context requires.
11.9 Entire Agreement. This Agreement, the schedules, hereto, and all
documents, certificates, and other documents to be delivered by the parties
pursuant hereto, collectively represent the entire understanding and agreement
between Buyer and Seller with respect to the subject matter
17
<PAGE> 19
hereof. This Agreement supersedes all prior negotiations between the parties
and cannot be amended, supplemented, or changed except by an agreement in
writing that makes specific reference to this Agreement and which is signed by
the party against which enforcement of any such amendment, supplement, or
modification is sought.
11.10 Waiver of Compliance; Consents. Except as otherwise provided in
this Agreement, any failure of any of the parties to comply with any
obligation, representation, warranty, covenant, agreement, or condition herein
may be waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 11.10.
11.11 Press Release. Neither party shall publish any press release,
make any other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that nothing
contained herein shall prevent either party from promptly making all filings
with governmental authorities as may, in its judgement be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
11.12 Counterparts. This Agreement may be signed in counterparts with
the same effect as if the signature on each counterpart were upon the same
instrument.
11.13 Guaranty of Paxson Communications Corp.
(a) In consideration of the execution and delivery of this Agreement
by Seller, Paxson Communications Corp., a Delaware corporation ("PCC") agrees
as follows:
(i) PCC hereby guarantees the full, complete, and timely
performance by Buyer of each and every obligation of Buyer under this
Agreement. If any default shall be made by Buyer in the performance of any of
such obligations, then PCC will itself perform or cause to be performed such
obligation upon receipt of notice from Seller specifying in summary form the
default.
(ii) PCC waives presentment, protest, demand, or action or
delinquency in respect of any of the obligations of Buyer under this Agreement.
PCC waives all notices of non-performance, notices of protest, notices of
dishonor, and notices of acceptance of this guaranty.
(iii) This guaranty shall be deemed a continuing guaranty,
and the above consents and waivers of PCC shall remain in full force and effect
until the satisfaction in full of all obligations of Buyer under this
Agreement.
(b) PCC hereby represents and warrants to Seller as follows:
(i) This Agreement has been duly and validly executed and
delivered by PCC and constitutes its legal, valid, and binding agreement,
enforceable in accordance with its terms, except as
18
<PAGE> 20
the enforceability of this Agreement may be affected by bankruptcy, insolvency
or similar laws affecting creditors' rights generally, and by judicial
discretion in the enforcement of equitable remedies.
(ii) The execution, delivery and performance by PCC of this
Agreement (A) do not require the consent of any third party; (B) will not
conflict with any provision of the Certificate of Incorporation or Bylaws of
PCC; (C) will not conflict with, result in a breach of, or constitute a default
under, any law, judgment, order, ordinance, injunction, decree, rule,
regulation or ruling of any court of governmental instrumentality; and (D) will
not conflict with, constitute grounds for termination of, result in a breach
of, constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of, any agreement, instrument, license, or
permit to which PCC is a party of by which PCC may be bound.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
19
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have duly executed this Asset
Purchase Agreement as of the day and year first above written.
CHANNEL 59 OF DENVER, INC.
By: James L. West
-----------------------------------
Its: Chairman
-----------------------------------
Echonet Corporation
By: Charles Ergen
-----------------------------------
Its:
-----------------------------------
AS TO SECTION 11.13 ONLY:
Paxson Communications Corp.
By: Lowell W. Paxson
-----------------------------------
Its: Chairman
-----------------------------------
20
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF PAXSON COMMUNICATIONS FOR THE PERIOD ENDED MARCH 31,
1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,442,238
<SECURITIES> 0
<RECEIVABLES> 14,725,050
<ALLOWANCES> 716,349
<INVENTORY> 0
<CURRENT-ASSETS> 21,499,405
<PP&E> 57,061,102
<DEPRECIATION> 0
<TOTAL-ASSETS> 154,928,998
<CURRENT-LIABILITIES> 15,111,880
<BONDS> 88,698,810
<COMMON> 34,354
44,187,757
0
<OTHER-SE> 13,423,054
<TOTAL-LIABILITY-AND-EQUITY> 154,928,998
<SALES> 0
<TOTAL-REVENUES> 20,619,703
<CGS> 0
<TOTAL-COSTS> 5,634,155
<OTHER-EXPENSES> 16,832,008
<LOSS-PROVISION> 143,257
<INTEREST-EXPENSE> 1,794,159
<INCOME-PRETAX> (3,572,984)
<INCOME-TAX> 320,000
<INCOME-CONTINUING> (3,252,984)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,252,984)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> (.16)
</TABLE>
