<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 September 30, 1995
--------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- -----------
Commission File Number 1-13452
-------
PAXSON COMMUNICATIONS CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 59-3212788
------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
601 CLEARWATER PARK ROAD
WEST PALM BEACH, FLORIDA 33401
------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (407) 659-4122
--------------
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 November 13, 1995:
<TABLE>
<CAPTION>
CLASS OF STOCK NUMBER OF SHARES
- ---------------------------- --------------------------
<S> <C>
COMMON STOCK-CLASS A, $0.001
PAR VALUE PER SHARE ---------------------------- 26,163,226
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
</TABLE>
<PAGE> 2
PAXSON COMMUNICATIONS CORPORATION
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
--------------------
Consolidated Balance Sheets
September 30, 1995 and December 31, 1994 3-4
Consolidated Statements of Operations
Nine Months Ended September 30, 1995
and September 30, 1994 5
Consolidated Statements of Operations
Three Months Ended September 30, 1995
and September 30, 1994 6
Consolidated Statements of Changes in
Common Stockholders' Equity 7
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1995
and September 30, 1994 8-9
Notes to Consolidated Financial Statements 10-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-17
Part II - Other Information
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of
Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
2
<PAGE> 3
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 57,945,458 $ 21,571,658
Accounts receivable, less allowance for doubtful accounts of
$836,403 and $556,950 respectively 14,172,666 13,569,198
Prepaid expenses and other current assets 1,558,525 1,579,954
Current deferred income taxes 194,940 194,940
Current program rights 1,182,436 1,980,000
------------ ------------
Total current assets 75,054,025 38,895,750
Property and equipment, net 75,063,826 45,350,430
Intangible assets, net 87,686,913 53,350,967
Investments in broadcast properties 28,013,671 -
Other assets, net 15,244,694 13,078,346
Related party notes receivable 2,500,000 1,750,000
Program rights, net 366,344 244,888
------------ ------------
Total assets $283,929,473 $152,670,381
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 6,047,737 $ 5,123,691
Current portion of program rights payable 1,055,599 986,562
Related party note payable 1,200,000 -
Current portion of long-term debt 333,009 6,393,415
------------ ------------
Total current liabilities 8,636,345 12,503,668
Program rights payable 637,043 562,770
Long-term debt 2,664,786 76,013,542
Deferred income taxes 605,145 1,474,940
Minority interest - 1,217,314
Senior subordinated notes, net 227,311,106 -
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
3
<PAGE> 4
PAXSON COMMUNICATIONS CORPORATION
Consolidated Balance Sheets (continued)
- ------------------------------------------------------------------------------
<TABLE>
<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 16,138,416 14,060,054
Redeemable Class A & B common stock warrants 4,378,925 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 2,083,167 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 30,399,729 26,808,053
Class A common stock, $0.001 par value; one vote per share;
150,000,000 shares authorized, 26,157,226 shares issued and
outstanding 26,157 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, $0.001 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 (71,833) (77,666)
Additional paid-in capital 33,904,823 20,647,647
Deferred option plan compensation (2,179,102) -
Accumulated deficit (45,952,498) (8,923,897)
Commitments and contingencies
------------ ------------
Total liabilities and stockholders' equity $283,929,473 $152,670,381
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
4
<PAGE> 5
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 65,333,616 $ 36,450,956
Retail and other 3,837,003 1,557,979
Trade 2,353,098 1,832,282
------------ ------------
Total revenue 71,523,717 39,841,217
Operating expenses:
Direct 17,624,276 11,108,734
Programming 9,358,796 5,620,889
Sales and promotion 6,767,364 3,875,130
Technical 3,674,362 1,428,195
General and administrative 15,912,555 7,906,908
Trade 2,081,962 1,514,811
Time brokerage agreement fees 757,369 365,678
Sports rights fees 1,509,565 539,875
Option plan compensation 9,809,105 -
Program rights amortization 1,291,754 452,710
Depreciation and amortization 13,079,041 8,558,158
------------- ------------
Total operating expenses 81,866,149 41,371,088
------------- ------------
Loss from operations (10,342,432) (1,529,871)
Other income (expense):
Interest expense, net (7,853,189) (3,190,568)
Other income, net (45,773) 161,993
------------- ------------
Loss before income tax benefit (18,241,394) (4,558,446)
Income tax benefit 960,000 1,769,000
------------- ------------
Loss before extraordinary item (17,281,394) (2,789,446)
Extraordinary item (10,625,727) -
------------- ------------
Net loss (27,907,121) (2,789,446)
------------- ------------
Dividends and accretion on preferred stock and common stock warrants (9,121,480) (2,407,459)
------------- ------------
Net loss attributable to common stock and common stock equivalents $ (37,028,601) $ (5,196,905)
============= ============
Net loss per share before extraordinary item $ (.50) $ (.09)
Extraordinary item (.31) -
------------- ------------
Net loss per share (.81) (.09)
Dividends and accretion on preferred stock and common stock
warrants per share (.27) (.07)
------------- ------------
Net loss attributable to common stock and common stock equivalents
per share $ (1.08) $ (.16)
============= ============
Weighted average shares outstanding primary and fully diluted 34,404,800 32,506,032
============= ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
5
<PAGE> 6
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Operations
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenue:
Local and national advertising $ 24,878,716 $ 16,735,366
Retail and other 1,339,280 561,654
Trade 949,373 1,030,436
------------- ------------
Total revenue 27,167,369 18,327,456
Operating expenses:
Direct 6,069,426 4,831,072
Programming 3,418,730 2,625,192
Sales and promotion 2,294,178 1,457,709
Technical 1,527,073 564,822
General and administrative 5,922,881 3,105,159
Trade 888,119 502,495
Time brokerage agreement fees 207,422 140,678
Sports rights fees 490,210 539,875
Option plan compensation 404,976 -
Program rights amortization 514,697 452,710
Depreciation and amortization 5,024,785 3,292,245
------------ ------------
Total operating expenses 26,762,497 17,511,957
------------ ------------
Income from operations 404,872 815,499
Other income (expense):
Interest expense, net (3,544,543) (1,799,853)
Other income, net (32,010) (61,091)
------------ ------------
Loss before income tax benefit (3,171,681) (1,045,445)
Income tax benefit 320,000 373,000
------------ ------------
Loss before extraordinary item (2,851,681) (672,445)
Extraordinary item (10,625,727) -
------------ ------------
Net loss (13,477,408) (672,445)
------------ ------------
Dividends and accretion on preferred stock and common stock warrants (3,257,319) (820,400)
------------ ------------
Net loss attributable to common stock and common stock equivalents $(16,734,727) $ (1,492,845)
============ ============
Net loss per share before extraordinary item $ (.08) $ (.02)
Extraordinary item (.31) -
------------ ------------
Net loss per share (.39) (.02)
Dividends and accretion on preferred stock and common stock
equivalents per share (.10) (.02)
------------ ------------
Net loss attributable to common stock and common stock equivalents
per share $ (.49) $ (.04)
============ ============
Weighted average shares outstanding primary and fully diluted 34,458,766 33,430,116
============ ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
6
<PAGE> 7
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Changes in Common Stockholders' Equity
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock
------------
Stock
Class Class Class Common Class C Subscription
A B C Stock Common Stock Notes
Warrants Receivable
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993
Recapitalization of common
stock $15,791 $5,264 $ 1
Stock issued for ANG
acquisition 1,570 277 (1) $(77,666)
Net proceeds from issuance of
common stock warrants $5,338,952
Dividends on redeemable
preferred stock
Accretion on redeemable
securities
Net Loss
Stock dividend 8,681 2,771
------- ------ ------ ------- ---------- --------
Balance at December 31, 1994 26,042 8,312 $ 0 0 5,338,952 (77,666)
Stock issued for Cookeville
acquisition (unaudited) 95
Deferred Option Plan
Compensation (unaudited)
Option plan compensation
(unaudited)
Stock options exercised
(unaudited) 20
Note repayments (unaudited) 5,833
Dividends on redeemable
preferred stock(unaudited)
Accretion on redeemable
securities (unaudited)
Net loss (unaudited)
------- ------ ------ ------- ---------- --------
Balance at September 30,
1995 (unaudited) $26,157 $8,312 $ 0 $ 0 $5,338,952 $(71,833)
======= ====== ====== ======= ========== ========
<CAPTION>
Additional Deferred Option
Paid-in Plan Accumulated
Capital Compensation Deficit
<S> <C> <C> <C>
Balance at December 31, 1993 $16,895,623 $ (776,367)
Recapitalization of common
stock (21,054)
Stock issued for ANG
acquisition 3,784,530
Net proceeds from issuance of
common stock warrants
Dividends on redeemable
preferred stock (2,216,137)
Accretion on redeemable
securities (1,169,319)
Net Loss (4,762,074)
Stock dividend (11,452)
----------- ----------- -------------
Balance at December 31, 1994 20,647,647 $ 0 (8,923,897)
Stock issued for Cookeville
acquisition (unaudited) 1,199,905
Deferred Option Plan
Compensation (unaudited) 11,988,207 (11,988,207)
Option plan compensation
(unaudited) 9,809,105
Stock options exercised
(unaudited) 69,064
Note repayments (unaudited)
Dividends on redeemable
preferred stock(unaudited) (5,507,650)
Accretion on redeemable
securities (unaudited) (3,613,830)
Net loss (unaudited) (27,907,121)
------------ ----------- ------------
Balance at September 30,
1995 (unaudited) $33,904,823 $(2,179,102) $(45,952,498)
=========== =========== ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
7
<PAGE> 8
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (27,907,121) $ (2,789,446)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 13,079,041 8,558,158
Option plan compensation 9,809,105 -
Program rights amortization 1,291,754 992,585
Provision for doubtful accounts 653,602 271,938
Income tax benefit (960,000) (1,769,000)
Loss on sale of assets 98,556 -
Minority interest in net loss - (6,425)
Extraordinary loss on write-off of loan costs 10,625,727 -
Increase in accounts receivable (1,257,071) (1,623,908)
Decrease (increase) in prepaid expenses and other current assets 21,432 (312,638)
Increase in intangible assets (1,200,000) -
Increase in other assets (1,056,165) (1,005,814)
Increase in accounts payable and accrued liabilities 924,046 1,060,230
------------- ------------
Net cash provided by operating activities 4,122,906 3,375,680
------------- ------------
Cash flows from investing activities:
Acquisitions of broadcast properties (53,847,917) (55,052,599)
Deposits on broadcast properties (2,660,000) (1,220,000)
Increase in related party note receivable (750,000) -
Proceeds from sale of fixed assets 716,820 -
Investments in broadcast properties (28,013,671) -
Purchase of property and equipment (18,864,364) (4,604,001)
------------- ------------
Net cash used for investing activities (103,419,132) (60,876,600)
------------- ------------
Cash flows from financing activities:
Increase in related party note payable 1,200,000 7,700,000
Proceeds from long-term debt 317,539,000 50,000,000
Payments of long-term debt (169,639,157) (401,111)
Payments of loan origination costs (13,032,399) (3,428,451)
Proceeds from exercise of common stock options 69,084 -
Repayments of stock subscription notes receivable 5,833 -
Payments for program rights (472,335) (257,200)
------------- ------------
Net cash provided by financing activities 135,670,026 53,613,238
------------- ------------
Increase (decrease) in cash and cash equivalents 36,373,800 (3,887,682)
------------- ------------
Cash and cash equivalents at beginning of period 21,571,658 7,019,747
------------- ------------
Cash and cash equivalents at end of period $ 57,945,458 $ 3,132,065
============= ============
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
8
<PAGE> 9
PAXSON COMMUNICATIONS CORPORATION
Consolidated Statements of Cash Flows (continued)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid for interest $8,188,957 $2,770,489
========== ==========
Cash paid for income taxes - -
========== ==========
Non-cash operating and financing activities:
Issuance of Common stock for Cookeville acquisition $1,200,000 -
========== ==========
Dividends on redeemable preferred stock $5,507,650 $1,571,425
========== ==========
Accretion on redeemable securities $3,613,830 $ 836,034
========== ==========
Trade revenue $2,353,098 $1,832,282
========== ==========
Trade expense $2,081,962 $1,514,811
========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of the consolidated financial statements.
9
<PAGE> 10
PAXSON COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
Paxson Communications Corporation's (the "Company") financial information
contained in the financial statements and notes thereto as of September 30,
1995 and for the nine month and three month periods ended September 30, 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 since the period ended December 31, 1994. The
composition of accounts has significantly changed since December 31, 1994 to
reflect the operations of acquisitions discussed below, the issuance of
$230,000,000 of 11 5/8% senior subordinated notes ("the Notes"), the
extraordinary expense related to write-off of loan origination costs,
inclusion of the stock incentive plan options and the reclassification of
related party notes receivable amounts to long term assets. The Notes have been
presented net of original issue discount. The Company has classified the notes
receivable amounts advanced in conjunction with its financing of certain
acquisitions of television properties for which it has long-term time brokerage
agreements as Investments in broadcast properties. This classification reflects
the Company's intent to purchase certain assets of the station from the
licensee and the long-term nature of the time brokerage relationships.
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 United States Securities and Exchange Commission on
March 31, 1995, Form 10-Q filed on May 12, 1995, Form 10-Q/A filed August 30,
1995, the definitive proxy statement filed by the Company on May 4, 1995 for
the annual meeting of stock holders held June 1, 1995, Forms 8-K filed June 1,
1995 and August 19, 1995 and Forms 8-K/A filed July 31, 1995 and October 18,
1995. In conjunction with the issuance of the Notes the Company filed a Form
S-4 with the Securities and Exchange Commission on October 27, 1995.
Pro Forma Financial Information
The following represents the unaudited pro forma results of operations as if
the acquisitions and time brokerage arrangements 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.
10
<PAGE> 11
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenues $ 80,791,755 $ 61,969,565
============ ============
Broadcast cash flow $ 21,185,459 $ 11,686,549
============ ============
Loss from operations $ (5,941,957) $(10,700,389)
============ ============
Net loss attributable to common
stock and common stock equivalents $(54,670,222) $(32,717,865)
============ ============
Net loss attributable to common stock and
common stock equivalents per share $ (1.59) $ (1.01)
============ ============
Pro forma weighted average shares
outstanding primary and fully diluted 34,404,800 32,506,032
============ ============
</TABLE>
<TABLE>
<CAPTION>
For the Three Months
Ended September 30,
1995 1994
(Unaudited)
<S> <C> <C>
Revenues $ 28,575,947 $ 20,962,178
============ ============
Broadcast cash flow $ 8,815,139 $ 5,803,914
============ ============
Loss from operations $ (885,814) $ (1,593,871)
============ ============
Net loss attributable to common
stock and common stock equivalents $(32,422,596) $(22,435,631)
============ ============
Net loss attributable to common stock and
common stock equivalents per share $ (.94) $ (.67)
============ ============
Pro forma weighted average shares
outstanding primary and fully diluted 34,458,766 33,430,116
============ ============
</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 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 the 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.
11
<PAGE> 12
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
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
WJRR(FM) Orlando May 1993
WPLA(FM) Jacksonville May 1993
WZNZ(AM) Jacksonville May 1993
WLVE(FM) Miami/Ft. Lauderdale April 1993
WGSQ(FM) Cookeville, TN April 1994
WPTN(AM) Cookeville, TN April 1994
WTLK(TV-14) Atlanta July 1994 April 1994
WCTD(TV-35) Miami Option April 1994
WPBF(TV-25) Palm Beach July 1994
WNZE(AM) Tampa/St. Petersburg February 1995 August 1994
WFCT(TV-66) Tampa/St. Petersburg Option August 1994
WWZN(AM) Orlando December 1994
WIRB(TV-56) Orlando December 1994
WTGI(TV-61) Philadelphia February 1995
KTFH(TV-49) Houston July 1995 March 1995
WTWS(TV-26) Hartford/New Haven March 1995
WSJT(FM) Tampa/St. Petersburg March 1995
WGOT(TV-60) Boston May 1995
KZKI(TV-30) Los Angeles May 1995
KLXV(TV-65) San Francisco June 1995
WFTL(AM) Miami/Ft. Lauderdale June 1995
KUBD(TV-59) Denver Option August 1995
WTVX(TV-34) Palm Beach August 1995
WTJC(TV-26) Dayton, Ohio Option October 1995
WYVN(TV-60) Washington October 1995
WOAC(TV-67) Cleveland October 1995
</TABLE>
In August and October 1995, the Company financed acquisitions by subsidiaries
of the Christian Network, Inc. ("CNI") of WIRB(TV-56), KUBD(TV-59) and
WTJC(TV-26), serving the Orlando, Florida; Denver, Colorado; and Dayton, Ohio
markets, respectively. Upon consumation of these acquisitions CNI entered into
time brokerage agreements with the Company. The Company has operated WIRB
(TV-56) under an assignment of CNI's time brokerage agreement since December
1994.
12
<PAGE> 13
In August and October 1995, the Company also financed the acquisitions of
WTVX(TV-34) and WOAC (TV-67) serving the Palm Beach, Florida and Cleveland,
Ohio markets, respectively, by Whitehead Media, Inc. ("Whitehead"). Upon
consummation of these acquisitions, Whitehead entered into time brokerage
agreements with the Company.
In October 1995, the Company acquired the license and certain assets of
WYVN(TV-60), serving the Washington, D.C. market. The station is not
presently on the air and the Company estimates spending $2,000,000 in build-out
costs before broadcasting can begin.
On August 25, 1995, the Company and Lowell W. Paxson ("Paxson") its Chairman
and Chief Executive Officer agreed with the Home Shopping Network, Inc. ("HSN")
to, among other things, terminate HSN's rights under a consulting agreement
containing various restrictions upon activities by Paxson that might be
considered competitive with HSN, in consideration of a payment to HSN by the
Company of $1,200,000. Shortly before the transaction with HSN, Mr. Paxson
agreed with the Company that upon termination of HSN's rights under the
consulting agreement, he will not compete with the Company for a period ending
on December 31, 1999 (the date that HSN consulting agreement would have
otherwise terminated). In conjunction with this transaction Paxson advanced
$1,200,000 to the Company in the form of a note bearing interest at 6%. The
Company repaid the note in October 1995. An intangible asset has been recorded
for $1,200,000 which will be amortized through maturity of the agreement.
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 NINE MONTHS ENDED
SEPTEMBER 30,
1995 1994 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 24.6% 27.9% -11.8%
Programming 13.1 14.1 -7.1
Sales and promotion 9.5 9.7 -2.1
Technical 5.1 3.6 41.7
General and administrative 22.2 19.8 12.1
Trade 2.9 3.8 -23.7
Time brokerage agreement fees 1.1 0.9 22.2
Sport rights fees 2.1 1.4 50.0
Option plan compensation 13.7 0.0 -
Program rights amortization 1.8 1.1 63.6
Depreciation and amortization 18.3 21.5 -14.9
----- ----- -----
Total operating expenses 114.4 103.8 10.2
----- ----- -----
Loss from operations -14.4 -3.8 -278.9
----- ----- -----
Other income (expense):
Interest expense, net -11.0 -8.0 -37.5
Other income net -0.1 0.4 125.0
----- ----- -----
Loss before income tax benefit -25.5 -11.4 -123.7
----- ----- ------
Income tax benefit 1.3 4.4 70.5
----- ----- ------
Loss before extraordinary item -24.2% -7.0% -245.7%
===== ===== ======
</TABLE>
13
<PAGE> 14
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
1995 1994 % CHANGE
---- ---- --------
<S> <C> <C> <C>
Revenues 100.0% 100.0%
Operating Expenses:
Direct 22.3% 26.4% -15.5%
Programming 12.6 14.3 -11.9
Sales and promotion 8.4 8.0 5.0
Technical 5.6 3.1 80.6
General and administrative 21.8 16.9 29.0
Trade 3.3 2.7 22.2
Time brokerage agreement fees 0.8 0.8 0.0
Sport rights fees 1.8 2.9 -37.9
Option plan compensation 1.5 0.0 -
Program rights amortization 1.9 2.5 -24.0
Depreciation and amortization 18.5 18.0 2.8
----- ----- -----
Total operating expenses 98.5 95.6 3.0
----- ----- -----
Income from operations 1.5 4.4 65.9
----- ----- -----
Other income (expense):
Interest expense, net -13.0 -9.8 -32.7
Other income net -0.1 -0.3 66.7
----- ----- -----
Loss before income tax benefit -11.6 -5.7 -103.5
----- ----- -----
Income tax benefit 1.2 2.0 -40.0
----- ----- -----
Loss before extraordinary item -10.4% -3.7% -181.1%
===== ===== ======
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Consolidated revenues for the nine months ended September 30, 1995 increased
80% (or $31.7 million) to $71.5 million from $39.8 million for the nine months
ended September 30, 1994. This increase was primarily due to the new
television acquisitions and time brokerage operations discussed above,
acquisition of WPBF (TV-25) on July 1, 1994 and increased revenues from
existing television stations.
Operating expenses for the nine months ended September 30, 1995 increased 98%
(or $40.6 million) to $81.9 million from $41.3 million for the nine months
ended September 30, 1994. The increase was primarily due to the costs of
operating these newly acquired television stations, direct expenses such as
commissions which rise in proportion to revenues, higher corporate overhead,
including option plan compensation and higher depreciation and amortization
related to assets acquired. Further, based on the vesting formula associated
with the options granted under the Stock Incentive Plan, the Company expects to
recognize additional compensation expense (related to the Company's Stock
Incentive Plan) over the next five years in the aggregate amount of
approximately $2.2 million.
Broadcast cash flow for the nine months ended September 30, 1995 increased 110%
(or $10 million) to $19.1 million, from $9.1 million for the nine months ended
September 30, 1994. The increase in broadcast cash flow was a direct result
of television acquisitions and improved performance of existing television
properties.
14
<PAGE> 15
Net interest expense for the nine months ended September 30, 1995 increased to
$7.8 million from $3.2 million for the nine months ended September 30, 1994, an
increase of 144% primarily due to a greater level of long-term notes throughout
the period and higher borrowing rates. As a result of acquisitions, at
September 30, 1995, total long-term debt and senior subordinated notes were
$230 million, or 181% higher than the $82.2 million outstanding a year prior.
The Company recognized $960,000 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.
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Consolidated revenues for the three months ended September 30, 1995 increased
48% (or $8.9 million) to $27.2 million from $18.3 million for the three months
ended September 30, 1994. This increase was primarily due to the new
television acquisitions and time brokerage operations and increased revenues
from existing television stations.
Operating expenses for the three months ended September 30, 1995 increased 53%
(or $9.3 million) to $26.8 million from $17.5 million for the three months ended
September 30, 1994. The increase was primarily due to the costs of operating
these newly acquired stations, direct expenses such as commissions which rise
in proportion to revenues, higher corporate overhead, including option plan
compensation, and higher depreciation and amortization related to assets
acquired.
Broadcast cash flow for the three months ended September 30, 1995 increased 76%
(or $3.5 million) to $8.1 million, from $4.6 million for the three months ended
September 30, 1994. The increase in broadcast cash flow was a direct result of
television acquisitions, and improved performance of existing television
properties.
Net interest expense for the three months ended September 30, 1995 increased to
$3.5 million from $1.8 million for the three months ended September 30, 1994, an
increase of 94% primarily due to a greater level of long-term notes throughout
the period and higher borrowing rates. As a result of acquisitions, at
September 30, 1995, total long-term debt and senior subordinated notes were
$230 million, or 181% higher than the $82.2 million outstanding a year prior.
The Company recognized $320,000 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
On September 28, 1995, the Company privately sold $230 million of 11 5/8%
Senior Subordinated Notes (the "Notes") at a discount netting $227.3 million
before approximately $8 million of transaction costs. These transaction costs
have been classified as Other Assets and are being amortized to interest
expense over the term of the Notes. The Notes mature in 2002 with interest
payable semiannually on April 1 and October 1. In connection with the issuance
of the notes, the Company repaid the outstanding balances under its $150
million and $75 million senior credit facilities and a $2.2 million billboard
loan aggregating approximately $170 million. In conjunction with the
repayment of these debt facilities approximately $10.6 million of loan
origination costs were written off as an extraordinary expense.
15
<PAGE> 16
The remaining proceeds from the Notes, in addition to a new senior credit
facility for which the Company has received a $100 million commitment, will be
utilized to fund the acquisitions discussed below along with related capital
requirements.
The Company's working capital at September 30, 1995 and December 31, 1994 was
$66.4 million and $26.4 million, respectively, and the ratio of current assets
to current liabilities was 8.69:1 and 3.11:1, on such dates respectively.
Working capital increased primarily due to proceeds from the Notes net of debt
repaid and acquisitions previously discussed.
Cash provided by operations of $4.1 and $3.4 million for the nine
months ended September 30, 1995 and 1994, respectively, reflect the improvement
in operating results of existing properties, acquisitions and time brokerage
properties net of increased interest expense and increases in other assets.
Cash used for investing activities primarily reflects the acquisitions and
investments discussed above, and purchases of equipment for these and existing
properties. Cash provided by financing activities primarily reflects the
proceeds from the Notes and long-term debt net of debt repaid and loan
origination costs incurred. In addition, the Company has advanced $750,000 to
CNI during the second and third quarters under a demand note bearing interest
at 6%. Non-cash activity relates to option plan compensation reciprocal trade
advertising revenue and expense, as well as dividends and accretion on the
preferred stock and common stock warrants.
ACQUISITION COMMITMENTS
The Company has agreements to purchase significant assets of, or to enter into
time brokerage arrangements with respect to, the following television stations,
all of which are subject to various conditions, including the receipt of
regulatory approvals:
<TABLE>
<CAPTION>
Station Market Served Purchase Price
<S> <C> <C>
Channel 68 Dallas, Texas (2) $ 2,000,000
WHKE(TV-55) Milwaukee, Wisconsin (4) $ 2,500,000
WOAC(TV-26) Cleveland, Ohio (1) $ 6,600,000
WTJC(TV-26) Dayton, Ohio (4) $ 3,500,000
WYVN(TV-60) Washington, D.C. (2) $ 1,900,000
KWBF(TV-13) Phoenix, AZ (4) $ 1,400,000
WNGM(TV-34) Atlanta, GA (3) $10,000,000
WCEE(TV-13) St. Louis, MO (4) $ 3,200,000
WHAI(TV-43) New York, NY $22,000,000
WAKC(TV-23) Akron,OH $18,000,000
</TABLE>
(1) Station license was acquired by Whitehead on October 30, 1995 with the
Company financing the purchase price in return for a note from Whitehead. The
Company has entered into a time brokerage agreement and will acquire certain
real and personal tangible assets of the station from Whitehead.
(2) Stations not currently on the air. The Company estimates spending
$2,000,000 in build-out costs for each station before broadcasting can begin.
The broadcast license and certain assets of WYVN (TV-60) were acquired by the
Company during October and November.
(3) Station license will be owned by Whitehead with the Company financing
the purchase price in return for a note from Whitehead. The Company has entered
into a time brokerage agreement and will acquire certain real and personal
tangible assets of the station from Whitehead.
16
<PAGE> 17
(4) Station licenses will be owned by CNI, with the Company financing the
purchase price through a note to CNI. The Company has entered into time
brokerage agreements and will acquire certain real and personal tangible assets
of the stations from CNI. WTJC (TV-26) was acquired by CNI on October 6, 1995.
The Company has committed to loan Roberts Broadcasting Company ("Roberts") up
to $4,000,000 to finance the construction of television station WRMY (TV-47)
serving the Raleigh/Durham North Carolina market. The Company has also entered
into a seven year time brokerage agreement commencing upon the consummation of
the Roberts' acquisition of the license and will pay $1,500,000 for an option
to purchase a 40% limited partnership interest in the station. At September
30, 1995 no advances had been made under the loan commitment.
The Company has committed to loan Cocola Media Corporation of Florida
("Cocola") up to $7,000,000 to finance the construction of television station
WHBI (TV-67) serving the Palm Beach, Florida market. The Company has also
entered into a seven year time brokerage agreement commencing upon the
consummation of the Cocola acquisition of the license. At September 30, 1995
the Company had total advances under the loan commitment of approximately
$840,000.
On October 9, 1995, the Company executed a non-binding letter of intent to
enter into a series of related transactions with Shop at Home, Inc. ("Shop At
Home") and certain affiliates of and parties having an interest in Shop at
Home. Consummation of the transactions would result in the Company's owning a
majority of the outstanding voting common stock of Shop at Home. Shop at Home
currently owns WMFP (TV-62) in Boston and has a 49% interest in KZJL (TV-61)
in Houston, with an option to acquire the remaining interest. In addition,
Shop at Home and CNI have a contract to purchase KLDT (TV-55) in Dallas for
$4.8 million. Shop at Home will own a 49% interest in this station with CNI
owning the remaining 51%. Shop at Home is primarily engaged in the home
shopping and television marketing business and is based in Knoxville,
Tennessee. Shop at Home currently reaches approximately 10 million U.S. homes
via cable and broadcast television and is the fourth largest television
retailer, behind QVC, Inc., Home Shopping Network, Inc. and Value Vision, Inc.
Shop at Home reported annual sales and a net loss of $26.8 million and $1.2
million, respectively, for its fiscal year ended June 30, 1995. Shop at Home's
common stock is traded on NASDAQ under the trading symbol SATH. If the
transactions are consummated, the Company intends to relocate Shop at Home's
business to Palm Beach County, Florida and continue to operate it as a
television retailer separate from the Company's other lines of business. The
proposed transactions are subject to the parties' finalizing certain
transaction structure issues, execution of definitive agreements, approval of
their respective boards of directors and obtaining certain regulatory
approvals. The Company ultimately expects to make an investment of $30.7
million in cash and stock of the Company to acquire its majority interest in
Shop at Home, with options to increase its stake in the future.
The Company has not yet definitively determined the manner in which it
will finance the Shop at Home transactions and other acquisition related
commitments, but is considering the issuance of the Company's Class A Common
Stock together with either proceeds of the Notes, proceeds from the proposed
new senior credit facility or a combination thereof. It is contemplated that
definitive acquisition agreements would require Shop at Home to become a
guarantor of the Notes. There can be no assurance that the Company will be
able to enter into definitive agreements with respect to the proposed Shop at
Home transactions or, if such agreements are reached, to consummate such
transactions.
17
<PAGE> 18
PAXSON COMMUNICATIONS CORPORATION
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. Not Applicable
Item 5. Other Matters. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) List of Exhibits:
EXHIBIT NO. DESCRIPTION
10.01 Loan Agreement by and between Paxson Communications Corp. and
Cocola Media Corporation of Florida.
10.02 Time Brokerage Agreement by and between Cocola Media
Corporation of Florida and Paxson Communications Corp.
10.03 Loan Agreement between Paxson Communications Corporation and
Roberts Broadcasting Company of Raleigh-Durham, Ltd.
10.04 Time Brokerage Agreement by and between Roberts Broadcasting
Company of Raleigh-Durham, Ltd. and Paxson Communications of
Raleigh-Durham-47, Inc.
10.05 Option Agreement by and among Paxson Communications of
Raleigh-Durham-47, Inc., Roberts Broadcasting Company of
Raleigh-Durham, Ltd. and Roberts Broadcasting Company of North
Carolina.
27 Financial Data Schedule (for SEC use only)
EXHIBIT NO. DESCRIPTION
(b) Reports on Form 8-K.
Form 8-K current report filed August 19, 1995, in conjunction with the
$18,000,000 loan to Whitehead Media, Inc., to acquire the assets of
WTVX(TV-34), West Palm Beach, Florida.
Form 8-K/A Amendment to the current report filed October 18, 1995 to file
financial statements and pro forma financial information for the loan to
Whitehead Media, Inc., secured by the assets of WTVX(TV-34).
18
<PAGE> 19
PAXSON COMMUNICATIONS CORPORATION
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: November 13, 1995 By: /s/ Lowell W. Paxson
---------------------------
Lowell W. Paxson
Chairman of the Board of Directors
and Chief Executive Officer
Date: November 13, 1995 By: /s/ Arthur D. Tek
-----------------------
Arthur D. Tek
Vice President, Chief
Financial Officer, Director
19
<PAGE> 1
EXHIBIT 10.01
- --------------------------------------------------------------------------------
LOAN AGREEMENT
BY AND BETWEEN
PAXSON COMMUNICATIONS CORP.
AND
COCOLA MEDIA CORPORATION OF FLORIDA
FOR
TELEVISION STATION WHBI-TV,
LAKE WORTH, FLORIDA
MARCH 23, 1995
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. AMOUNT AND TERMS OF THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.01 The Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 The Promissory Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.04 Repayment of the Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.05 Use of Proceeds and Advancement of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.06 Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.07 Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.08 Payment on Non-Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.01 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 3. SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.01 Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.02 Pledge Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.03 Leasehold Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.04 Mortgages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 4. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.01 Conditions Precedent to Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4.02 Conditions Precedent to Final Installment . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.03 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.01 Representations and Warranties of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) Existence and Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Authorizations, Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(d) Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(e) Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(f) No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
- i -
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
(g) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(h) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(j) Material Misstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE 6. COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.01 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Preservation of Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(d) Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(e) Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(f) Operations in Ordinary Course . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(g) Perfection of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(h) FCC Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(i) Loan And Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.02 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(b) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(d) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(e) Transfer or Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(f) Change of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(g) Remove Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(h) Distributions or Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(i) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(j) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(k) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(l) Employee Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(m) Cancellation of Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(n) Write-Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(o) Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(p) Television Affiliation Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(q) Loan And Option Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.03 Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Default Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
- ii -
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
(c) Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.01 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.02 Effect of Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 8. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.01 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.03 Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.04 Address for Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.05 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.06 Binding Effect; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.07 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.08 Severability of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.09 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.10 Rights Affected by Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.11 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.12 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.13 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.14 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.15 Non-Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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<PAGE> 5
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of March 23, 1995, is by and between
PAXSON COMMUNICATIONS CORP., a Delaware corporation having its principal
offices at 18401 U.S. Highway 19 North, Clearwater, Florida 34624 (the
"Lender"), and COCOLA MEDIA CORPORATION OF FLORIDA, a Delaware corporation
having its principal offices at 706 W. Herndon Avenue, Fresno, California 93650
(the "Borrower").
W I T N E S S E T H:
WHEREAS, WPB Communications, Inc. is a stockholder in Hispanic
Broadcasting, Inc., the permittee of Television Station WHBI-TV, Lake Worth,
Florida (the "Station") and holds an option to purchase control of Hispanic
Broadcasting, Inc.;
WHEREAS, the Borrower wishes to help WPB Communications, Inc. finance
the construction of the Station and exercise an option Borrower holds to
purchase the Station from WPB Communications, Inc.; and
WHEREAS, the Borrower desires to borrow funds from the Lender to
finance the purchase and operation of the Station.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein contained, the Lender and the Borrower agree as follows:
ARTICLE 1. AMOUNT AND TERMS OF THE LOANS
SECTION 1.01 THE LOAN. The Lender agrees, upon the terms and
conditions hereinafter set forth, to make a loan or loans to the Borrower in an
aggregate principal amount not to exceed at any one time outstanding Seven
Million Dollars ($7,000,000.00) plus such additional amounts that are
reasonably requested by Borrower for the purposes set forth in Section 1.05 and
are approved by Lender in its sole discretion (the "Loan").
SECTION 1.02 THE PROMISSORY NOTE. The outstanding principal amount
of the Loan shall be evidenced by and subject to the terms of a promissory
note, dated of even date herewith, substantially in the form set forth as
Exhibit 1 hereto (the "Note") payable to the order of the Lender and
representing the obligation of the Borrower to pay the Lender the amount of the
Loan, with interest thereon, as prescribed in Section 1.04. The Lender is
authorized to endorse the date and amount of the Loan and each repayment of
principal and/or interest with respect thereto on the Schedule A annexed to and
constituting a part of the Note.
SECTION 1.03 INTEREST. The Loan shall bear interest on the unpaid
principal amount thereof at a rate per annum at all times equal to one-half
percent (1/2%) above the rate charged Lender by its senior lenders as adjusted
from time to time. Interest shall be calculated on the basis of a year of
three hundred sixty (360) days and actual number of days elapsed during the
<PAGE> 6
period for which such interest is payable. Interest shall begin to accrue on
the outstanding principal amount of the Loan on the date of disbursement of all
or a portion of the Final Installment (as defined below) pursuant to Section
1.05(b) (the "Final Installment Date"). The first payment of interest to the
Lender shall be due Ninety (90) days after the acquisition of the Station by
the Borrower pursuant to Federal Communications Commission ("FCC") authority at
which time all interest accrued from the Final Installment Date shall become
due and payable; thereafter, accrued interest shall be paid monthly, on the
same date as the principal payments are due pursuant to Section 1.04 hereof.
If any installment of principal or interest is not paid when due, that
installment shall bear interest at a rate per annum equal to the lower of the
highest rate permitted by law or eighteen percent (18%) from the due date
thereof until paid in full.
SECTION 1.04 REPAYMENT OF THE LOAN. In the event that any portion of
the Loan is used by the Borrower to fund an escrow deposit or similar payment
toward the purchase of the Station (the "Deposit"), and such deposit is
returned to the Borrower, the amount of such deposit shall be immediately
repaid to Lender together with all interest earned on such deposit and paid to
the Borrower. One Hundred Twenty (120) days after the acquisition of the
Station by the Borrower pursuant to FCC authority, the Borrower shall begin
repayment to the Lender of the Loan by making consecutive, equal monthly
payments of principal and interest on the basis of an eighty-four (84) month
amortization schedule.
SECTION 1.05 USE OF PROCEEDS AND ADVANCEMENT OF FUNDS.
(a) The proceeds of the Loan are to be used by the Borrower
exclusively for financing the construction and purchase of the Station and for
working capital and operating expenses relating to the Station.
(b) The Lender shall loan to the Borrower the funds required
to acquire the Station, less the Deposit (the "Final Installment"), as required
by the terms of the Loan And Option Agreement entered into by Borrower with WPB
Communications, Inc. ("Loan And Option Agreement") as of March 23, 1995.
SECTION 1.06 INFORMATION. The Borrower agrees to furnish to the
Lender such information as the Lender may reasonably request in connection with
the Loan or the Station.
SECTION 1.07 PREPAYMENT. The Borrower may prepay the Note in whole
at any time, or from time to time in part, with accrued interest to the date of
prepayment on the amount prepaid, without penalty, provided that each payment,
other than for the full amount of the outstanding balance, shall be in the
amount of Ten Thousand Dollars ($10,000.00) or an integral multiple thereof.
Each partial prepayment on the Note shall be applied first to accrued interest
and then to the payment of principal in the inverse order of maturity.
SECTION 1.08 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to
be made hereunder or under the Note shall become due on a Saturday, Sunday or
public holiday, such
<PAGE> 7
payment may be made on the next succeeding business day, and such extension of
time in such case shall be included in the computation of interest hereunder
and under the Note.
ARTICLE 2. CLOSING
SECTION 2.01 CLOSING DATE. Closing of this transaction shall occur
on a date agreed upon by the parties hereto (the "Closing Date").
ARTICLE 3. SECURITY
SECTION 3.01 SECURITY INTEREST. As security for the Loan, the
Borrower shall execute and deliver to the Lender, on or before the Closing
Date, a security agreement in the form of Exhibit 2 hereto (the "Security
Agreement").
SECTION 3.02 PLEDGE AGREEMENT. As further security for the Loan, on
or before the Closing Date, the Borrower shall deliver to the Lender a pledge
agreement in the form of Exhibit 3, duly executed by Gary Cocola (the
"Shareholder"), the sole shareholder of the Borrower (the "Pledge Agreement").
SECTION 3.03 LEASEHOLD MORTGAGES. At such time as the Borrower
enters into any lease, it shall execute with respect to such lease a leasehold
mortgage in form and substance satisfactory to Lender (the "Leasehold
Mortgage"), granting the Lender a lien on its leasehold interest under such
lease. In particular, and without limiting the generality of the foregoing,
the Borrower shall execute a Leasehold Mortgage with respect to each lease, if
any, that it assumes as part of the acquisition of the Station. If requested
by the Lender, the Borrower shall also deliver to the Lender with respect to
any lease to which the Borrower becomes a party (i) evidence of the filing of a
memorandum of lease in form and substance satisfactory to Lender, (ii) an
executed estoppel certificate in form and substance satisfactory to Lender,
(iii) an executed landlord's consent and waiver in form and substance
satisfactory to Lender, and (iv) an ALTA mortgagee's policy of title insurance
in customary form with respect to such lease.
SECTION 3.04 MORTGAGES. As such time as the Borrower acquires any
parcel of real estate, the Borrower shall execute a first mortgage or deed of
trust in favor of the Lender on such parcel, in form and substance satisfactory
to the Lender. If requested by the Lender, the Borrower shall also deliver to
the Lender an ALTA mortgagee's policy of title insurance in customary form with
respect to such parcel.
ARTICLE 4. CONDITIONS OF LENDING
SECTION 4.01 CONDITIONS PRECEDENT TO LOAN. The obligation of the
Lender to disburse from time to time any portion of the Loan hereunder is
subject to the condition precedent that the Lender shall have received all of
the following, on or before the Closing Date, in form and substance
satisfactory to the Lender:
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<PAGE> 8
(a) The Note, duly executed and delivered by the Borrower;
(b) The Security Agreement, together with appropriate UCC-1
forms, duly executed and delivered by the Borrower;
(c) The Pledge Agreement, duly executed and delivered by the
Shareholder together with stock certificates and blank stock powers;
(d) A certified copy of the resolutions of the Board of
Directors of Borrower evidencing approval of the execution, delivery and
performance of this Agreement, the Note and the Security Agreement and other
matters contemplated hereby;
(e) A Certificate of Good Standing for the Borrower;
(f) Copies of all station documents, including, without
limitation, the Loan And Option Agreement (the "Agreement"), entered into with
WPB Communications, Inc.; and
(g) Such other agreements, certificates, opinions of counsel
and documents that the Lender may reasonably require.
SECTION 4.02 CONDITIONS PRECEDENT TO FINAL INSTALLMENT. The
obligation of the Lender to advance the Final Installment to the Borrower is
subject to the condition precedent that the Lender shall have received each of
the following, on or before the Final Installment Date, in form and substance
satisfactory to the Lender:
(a) Leasehold Mortgages, to the extent required by Section
3.03;
(b) A Certificate of Good Standing for the Borrower in the
State of Florida as of a recent date prior to the Final Installment Date;
(c) Copies of the certificates evidencing the insurance
required to be maintained by the Borrower pursuant to Section 6.01(e);
(d) Any memorandum of lease, to the extent required by
Section 3.03;
(e) Executed estoppel certificates, to the extent required by
Section 3.03;
(f) Executed landlord's consents and waivers, to the extent
required by Section 3.03;
(g) Evidence, in form and substance acceptable to Lender,
that Borrower has been approved by the FCC to acquire the Station and that the
FCC approval is a final, non-appealable order;
- 4 -
<PAGE> 9
(h) A copy of the Agreement and each other contract,
certificate and other document executed by the Borrower and WPB Communications,
Inc. in connection with the Borrower's acquisition of the Station; and
(i) Such other agreements, certificates, opinions of counsel
and documents that the Lender may reasonably require.
SECTION 4.03 COMPLIANCE. All of the representations and warranties
of the Borrower in this Agreement shall be true and accurate in all material
respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. The Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with
the lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. The
Borrower shall have performed all obligations and taken all actions to be
performed or taken by it hereunder on or prior to such date. On the Closing
Date, the Borrower shall deliver to the Lender a certificate, dated as of such
date and signed by an executive officer of the Borrower, certifying compliance
with the conditions of this Section 4.03. Each disbursement of all or a
portion of the Loan to the Borrower shall in and of itself, constitute a
representation and warranty that the Borrower as of the date of such Loan, is
in compliance with this Section and if the Borrower is not in compliance with
this Section, the Lender shall not be required to disburse such Loan to the
Borrower.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
SECTION 5.01 REPRESENTATIONS AND WARRANTIES OF BORROWER. In order to
induce the Lender to enter into this Agreement and make the Loan, Borrower
represents and warrants as follows:
(a) Existence and Standing. Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and is qualified to do business and in good standing under the laws
of the State of Florida, and has all requisite power and authority, corporate
or otherwise, to conduct its business, to own its properties and to execute and
deliver, and to perform all of its obligations under this Agreement, the Note,
any Leasehold Mortgage, the Security Agreement and all other documents that
have been or will be executed and delivered by the Borrower pursuant to this
Agreement.
(b) Authorizations, Compliance with Laws. The execution,
delivery and performance by the Borrower of this Agreement, the Note, any
Leasehold Mortgage, the Security Agreement and all other documents required to
be executed and delivered by the Borrower pursuant to this Agreement have been
duly authorized by all necessary corporate action and do not and will not (i)
violate (A) any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to the Borrower or (B) any provision of the charter or by-laws of
the Borrower; or (ii) result in a breach
- 5 -
<PAGE> 10
of or constitute a default under any agreement or instrument to which the
Borrower is a party or by which its properties may be affected; or (iii) result
in the creation of a lien, charge or encumbrance of any nature upon the
Borrower's properties or assets other than as contemplated by this Agreement.
(c) No Consent. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department or agency, except for filing with the FCC, is or will be necessary
to the valid execution, delivery and performance by the Borrower of this
Agreement, the Note, any Leasehold Mortgage, the Security Agreement or any
other document required to be executed and delivered by the Borrower pursuant
to this Agreement.
(d) Binding Obligations. This Agreement, the Note, any
Leasehold Mortgage, the Security Agreement and all other documents required to
be executed and delivered by the Borrower pursuant to this Agreement have been
or will be executed and delivered by duly authorized officers of the Borrower
and constitute or will constitute, legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms.
(e) Litigation. There are no actions, suits or proceedings
pending, or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or its properties before any court or governmental department or
agency which materially adversely affects the transactions contemplated by this
Agreement or which would have a material adverse effect on the business,
properties, operation or condition of the Borrower.
(f) No Default. The Borrower is not in default in the
performance, observance or fulfillment of any of the obligations or conditions
contained in any material agreement or instrument to which it is a party, nor
with respect to any order, judgment, writ, injunction or decree of any court,
governmental authority or arbitration board.
(g) Compliance with Laws. To its best knowledge, Borrower is
in compliance with all applicable federal, state and local laws. The Borrower
has obtained all necessary licenses and permits required for the conduct of its
business and operations or such licenses and permits have been applied for and
are now being diligently pursued.
(h) Taxes. The Borrower has filed all tax returns and
reports (federal, state and local) required to be filed by it, and has paid all
taxes shown thereon, including interest and penalties, and all assessments
received by it (except to the extent that the same are being contested in good
faith by appropriate proceedings diligently prosecuted and as to which adequate
reserves have been set aside on the books of the Borrower in conformity with
generally accepted accounting principles).
(i) Title to Properties. The Borrower has good and
marketable title to all of its property and assets and valid and enforceable
leasehold interests in the property which it holds
- 6 -
<PAGE> 11
under lease. All such property, assets and leasehold interests being free and
clear of any and all mortgages, deeds of trust, assignments, liens, security
interests, charges or encumbrances of any nature whatsoever, except for those
created hereby. No mortgages, deeds of trust, financing statements or other
evidences of security interests covering all or any of the aforesaid property
are on file among the records of any public office, except those evidencing a
security interest in favor of the Lender.
(j) Material Misstatement. No statement made herein or
information, exhibit or report furnished by the Borrower to the Lender in
connection with this Agreement or its negotiation, contains any material
misstatement of fact or omits to state a material fact or any fact necessary to
make the foregoing not misleading.
ARTICLE 6. COVENANTS OF THE BORROWER
SECTION 6.01 AFFIRMATIVE COVENANTS. So long as the Note shall remain
unpaid, the Borrower hereby covenants and agrees that it will, unless the
Lender shall otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and discharge
when due: (i) all indebtedness heretofore or hereafter incurred; (ii) all
taxes, assessments and governmental charges or levies imposed upon it or its
income or profits, or upon any properties belonging to it; (iii) claims or
demands of materialmen, mechanics, carriers, warehousemen, landlords and other
like persons which, if unpaid might become a lien or charge upon the property
of the Borrower; provided that this covenant shall not require the payment of
any of the matters set forth in (i), (ii) and (iii) above if the same shall be
contested in good faith and by proper proceedings diligently pursued and as to
which adequate reserves have been set aside on the books of the Borrower in
accordance with generally accepted accounting principles.
(b) Preservation of Existence. Preserve and maintain its
respective corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation.
(c) Maintenance of Properties. Maintain and preserve all of
its properties necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(d) Compliance with Laws. Comply in all material respects
with the requirements of all applicable laws, rules, regulations and orders of
any governmental authority.
(e) Maintenance of Insurance. Maintain with responsible and
reputable insurance companies policies on all of its properties and covering
such risks, including public liability and workers' compensation, in such
amounts as are usually carried by companies engaged in similar businesses and
owning similar properties as the Borrower, and promptly upon execution thereof
provide to the Lender copies of all such policies and any riders or amendments
thereto. The
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<PAGE> 12
policies of insurance required hereunder shall name the Lender as an additional
loss payee or additional insured, as applicable, and shall provide that the
Lender shall receive at least thirty (30) days' written notice prior to the
cancellation, termination or alteration of any such policy.
(f) Operations in Ordinary Course. Continue to operate its
business in the ordinary course.
(g) Perfection of Liens. Do all things requested by the
Lender to preserve and perfect the liens and security interests of the Lender
arising pursuant to the Security Agreement, the Pledge Agreement, any Leasehold
Mortgage or any other agreement required hereunder as first liens and security
interests.
(h) FCC Approval. If counsel to the Lender reasonably
determines that the consent of the FCC is required in connection with the
execution, delivery and performance of this Agreement, the Pledge Agreement,
the Security Agreement or any other document delivered to the Lender in
connection herewith or therewith or as a result of any action which may be
taken pursuant hereto or thereto, then the Borrower, at its sole cost and
expense, agrees to use its best efforts to secure such consent and to cooperate
with the Lender in any action commenced by the Lender to secure such consent.
(i) Loan And Option Agreement. Borrower shall execute and
deliver the Loan And Option Agreement and comply with its obligations
thereunder.
SECTION 6.02 NEGATIVE COVENANTS. So long as the Note shall remain
unpaid and the Agreement shall not have been terminated, the Borrower hereby
covenants that it will not, without the Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or suffer to exist
any indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several, except for:
(i) indebtedness evidenced by the Note; and (ii) indebtedness (other than for
borrowed money) incurred in the ordinary course of business not to exceed Fifty
Thousand Dollars ($50,000.00) in the aggregate at any one time.
(b) Liens. Create, assume or suffer to exist, directly or
indirectly, any security interest, mortgage, deed of trust, pledge, lien,
charge or other encumbrance, of any nature whatsoever upon any of its
properties or assets, now owned or hereafter as acquired, excluding, however,
from the operation of this covenant:
(i) any security interest or lien created
pursuant to this Agreement;
(ii) liens for taxes or assessments either not
delinquent or the validity of which are being contested in good faith by
appropriate legal or administrative proceedings and
- 8 -
<PAGE> 13
as to which adequate reserves shall have been set aside on its books, in
conformity with generally accepted accounting principles;
(iii) materialmen's, mechanics', carriers',
workmen's, repairmen's, warehousemen's or other like liens arising in the
ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure payment of
workers' compensation, unemployment insurance or other social security benefits
or obligations; or
(v) any judgment lien, unless the judgment it
secures shall not, within thirty (30) days after the entry thereof, have been
discharged, vacated, reversed, or execution thereof stayed pending appeal, or
shall not have been discharged, vacated or reversed within thirty (30) days
after the expiration of any such stay.
(c) Disposition of Assets. Sell, transfer, lease or
otherwise dispose of all or any material part of its assets other than in the
ordinary course of business and in exchange for collateral of like value in
which the Lender shall have a security interest.
(d) Merger. Enter into any consolidation or merger with, or
into any acquisition of all or substantially all of the properties or assets of
any person or entity.
(e) Transfer or Issuance of Shares. Permit the issuance or
transfer of any shares of the capital stock of the Borrower, or any options,
warrants, convertible securities or other rights to purchase the Borrower's
stock. The preceding sentence shall not apply to (i) transfers to the Lender;
(ii) transfers resulting from the death of the Shareholder; and (iii) transfers
effected by the Shareholder with the prior written consent of the Lender (which
shall not be unreasonably withheld), solely for estate planning purposes of the
Shareholder.
(f) Change of Business. Change, in any material respect, the
nature or character of its business as intended, or engage in any activity not
reasonably related to such business.
(g) Remove Assets. Remove any of the assets procured with
the proceeds of the borrowings provided for herein, or any replacements for
such assets, to a jurisdiction in which no financing statement on Form UCC-1
has been filed by the Lender with respect to such assets.
(h) Distributions or Dividends. Declare or make, directly or
indirectly, any payment or distribution, or incur any liability for the
purchase, acquisition, redemption or retirement of any capital stock of the
Borrower or as a dividend, return of capital or other payment or distribution
of any kind to a shareholder of the Borrower or any affiliate of the Borrower
(other than any stock dividend or stock split or similar distribution payable
only in
- 9 -
<PAGE> 14
capital stock of the Borrower) in respect of the Borrower's capital stock,
except that the Borrower may declare one annual dividend per year on all
classes of its capital stock with the prior written consent of the Lender.
Notwithstanding the foregoing, Borrower shall be permitted to distribute to a
shareholder of Borrower, any payments as received by Borrower pursuant to
Attachment I of the Time Brokerage Agreement between Borrower and Lender for
the operation of the Station.
(i) Transactions with Affiliates. Enter into any transaction
or agreement with any affiliate of the Borrower.
(j) Contracts. Enter into any contract or commitment
relating to its stock or assets except for contracts involving aggregate
payments of less than Five Thousand Dollars ($5,000.00) and contracts which can
be terminated without penalty on thirty (30) days' notice or less, or amend or
terminate any material contract (or waive any substantial right thereunder), or
incur any obligation (including obligations relating to the borrowing of money
or guarantee of indebtedness).
(k) Adverse Change. Suffer any material adverse change in
the assets, properties or condition (financial or otherwise) of the Borrower or
the Station, or any damage, destruction or loss affecting any assets used or
useful in the conduct of the business of the Borrower that is not promptly
repaired or replaced in accordance with 6.01(c).
(l) Employee Compensation. Suffer any material increase in
excess of the reasonable range in the broadcast industry in the same or similar
markets in compensation payable or to become payable to any employees, or any
bonus payment made or promised to any employee, or any material change in
personnel policies, insurance benefits or other compensation arrangements
affecting any employees, provided that nothing in this clause shall be
construed to limit or restrict the commission compensation of employees who may
be selling brokered time for the Borrower.
(m) Cancellation of Debts. Cancel any debts owed or claims
held by the Borrower.
(n) Write-Down. Suffer any significant write-down of the
value of any assets without the prior written consent of the Lender except and
as required by generally accepted accounting principles as required to present
accurate financial information on the Borrower.
(o) Rights. Transfer or grant any right under, or enter into
any settlement regarding the breach or infringement of, any license, patent,
copyright, trademark, service mark, trade name, franchise, or similar right, or
modify any existing right relating to the Borrower.
(p) Television Affiliation Agreement. In the event Borrower
acquires the Station, terminate, amend or waive any provision of the Television
Affiliation Agreement, if any, to which the Station is a party.
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<PAGE> 15
(q) Loan And Option Agreement. In the event the Borrower
enters into the Loan And Option Agreement, terminate, materially amend, commit
any material breach or default under or waive any term of the Loan And Option
Agreement.
SECTION 6.03 REPORTING REQUIREMENTS. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, the Borrower
shall, unless the Lender shall otherwise consent in writing, furnish to the
Lender:
(a) Default Certificate. As soon as possible and in any event
within five (5) business days after the occurrence of each Event of Default (as
defined in Section 7.01) of which the Borrower has knowledge, the statement of
the President of the Borrower setting forth details of such Event of Default
and the action which the Borrower proposes to take with respect thereto.
(b) Financial Statements. Beginning with the making of the
Final Installment, quarterly financial statements within thirty (30) days after
the end of each fiscal quarter; within ninety (90) days after the end of each
fiscal year of the Borrower, a copy of the reviewed financial statements for
such year for the Borrower, including therein a balance sheet of the Borrower
as of the end of such fiscal year, statements of income and expense of the
Borrower for such fiscal year, and a statement of cash flow of the Borrower for
such fiscal year, in each case prepared by an independent public accountant of
recognized standing acceptable to the Lender. Lender shall accept a review of
the Borrower's financial records.
(c) Notice of Litigation. Promptly give written notice of
all actions, suits and proceedings before any court or governmental agency,
domestic or foreign, which may be commenced or threatened against the Borrower
in which the claim involved is Five Thousand Dollars ($5,000.00) or more and of
any other matter of the type described in Section 5.01(e).
(d) Budget. An annual budget to the Lender within thirty
(30) days of the beginning of each fiscal year of the Borrower. Such budget
shall be satisfactory in form to the Lender.
(e) Other Information. Such other information respecting the
business, properties, operations or the condition, financial or otherwise, of
the Borrower as the Lender may from time to time reasonably request.
ARTICLE 7. EVENTS OF DEFAULT
SECTION 7.01 EVENTS OF DEFAULT. Under this Agreement, an Event of
Default shall be any of the following:
(a) The Borrower shall fail to pay any installment of
principal or interest on the Note, or any other obligation to the Lender when
due whether at the due date thereof or by
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<PAGE> 16
acceleration or otherwise, and such default shall remain unremedied for a
period of ten (10) days after notice thereof shall have been given to the
Borrower; or
(b) The security interest or lien of the Lender in any
material portion of the collateral covered by the Security Agreement, Pledge
Agreement or any Leasehold Mortgage shall at any time not constitute a legal,
valid and enforceable security interest or lien; or
(c) Any representation or warranty made by the Borrower (or
any of its officers) herein, in the Security Agreement or in any certificate,
agreement, instrument or statement contemplated by or made or delivered
pursuant to or in connection with this Agreement, the Note, any Leasehold
Mortgage or the Security Agreement, or by the Shareholder in the Pledge
Agreement shall prove to have been incorrect in any material respect when made;
or
(d) The Borrower shall fail to perform or observe any other
term, covenant or agreement contained in this Agreement, the Note, the Security
Agreement, any Leasehold Mortgage or any Television Affiliation Agreement
relating to the Station (the "Television Affiliation Agreement"), or the
Shareholder shall fail to perform or observe any term, covenant or agreement
contained in the Pledge Agreement, and any such failure remains unremedied for
thirty (30) days after written notice thereof shall have been given to the
Borrower by the Lender; or
(e) The Borrower shall fail to pay any indebtedness for
borrowed money owing by the Borrower or any interest or premium thereon, when
due, whether such indebtedness shall become due by scheduled maturity, by
required prepayment, by acceleration, by demand or otherwise, or the Borrower
shall fail to perform any term, covenant or agreement under any agreement or
instrument evidencing or securing or relating to any such indebtedness owing by
the Borrower if the effect of such failure is to accelerate, or to permit the
holder of such indebtedness to accelerate the maturity of such indebtedness; or
(f) The Borrower shall expend the proceeds of the Loan for
any purpose other than the purchase of the Station and the operation of the
Station's business without the prior written consent of the Lender, which may
be withheld in the Lender's sole discretion; or
(g) The Borrower shall (i) fail to pay its debts as they
mature in the ordinary course of business; (ii) file a petition commencing a
voluntary case concerning it under any Chapter of Title 11 of the United States
Code entitled "Bankruptcy"; or (iii) the Borrower shall apply for or consent to
the appointment of any receiver, trustee, custodian or similar officer for it
or for all or any substantial part of its property; or (iv) such receiver,
trustee, custodian or similar officer shall be appointed without the
application or consent of the Borrower and such appointment shall continue
undischarged for a period of ninety (90) days; or (v) an involuntary case is
commenced against the Borrower under any Chapter of the aforementioned Title 11
and an order for relief under such Title 11 is entered or the petition
commencing the case is controverted but is not dismissed within ninety (90)
days after the commencement of the case; or
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<PAGE> 17
(vi) the Borrower shall institute (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization, arrangement,
readjustment of debt, dissolution, liquidation or similar proceeding relating
to it under the laws of any jurisdiction; or (vii) any such proceeding shall be
instituted against the Borrower and shall remain undismissed for a period of
ninety (90) days; or (viii) the Borrower shall take any action for the purpose
of effectuating the foregoing; or
(h) Any court, government, or government agency shall
condemn, seize or otherwise appropriate or take custody or control of all or a
substantial portion of the property or assets of the Borrower; or
(i) There shall be an irrevocable and unappealable denial or
revocation of the broadcast license for the Station.
SECTION 7.02 EFFECT OF EVENT OF DEFAULT. Should any Event of Default
occur, the Lender may at its option by written notice to the Borrower declare
the entire unpaid principal amount of the Note, together with all unpaid
interest and all other amounts payable under this Agreement and every other
obligation of the Borrower to the Lender, immediately due and payable,
whereupon the Note and all such obligations shall become and be forthwith due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in the Note or in such other note or evidence of indebtedness to the
contrary notwithstanding; provided, however, that in case of an Event of
Default under Section 7.01(g), all the obligations of the Borrower under this
Agreement and the Note shall become immediately due and payable as of the date
of any such Event of Default regardless of the cause of such Event of Default
and without any notice to the Borrower required from the Lender. The Lender
shall have, in addition to all other rights and remedies allowed by law, the
rights and remedies of a secured party under the Uniform Commercial Code as in
effect in the State of Florida and, without limiting the generality of the
foregoing, the rights and remedies provided for in the Security Agreement,
Pledge Agreements, and any Leasehold Mortgage, which provisions are hereby
incorporated by reference.
ARTICLE 8. MISCELLANEOUS
SECTION 8.01 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on
the part of the Lender in exercising any right, power or remedy hereunder shall
operate as a waiver, nor shall any single or partial exercise of any such
right, power or remedy hereunder. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 8.02 AMENDMENTS. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note, the Security Agreement or
any Leasehold Mortgage, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless in writing, signed by the Lender and
then only in the specific instance and for the specific purpose
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<PAGE> 18
for which given. No notice to or demand on the Borrower in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances.
SECTION 8.03 CONFLICTS. In the event of any conflict or
inconsistency between any provision of this Agreement and a provision of the
Note, the Security Agreement or any Leasehold Mortgage, the provisions of this
Agreement shall control.
SECTION 8.04 ADDRESS FOR NOTICES. All notices and other
communications under this Agreement shall be in writing and shall be served by
personal service or by mailing a copy thereof by registered or certified mail,
return receipt requested, to the applicable party at the addresses indicated
below:
If to the Borrower:
Mr. Gary Cocola
Cocola Media Corporation of Florida
706 W. Herndon Avenue
Fresno, CA 93650
with a copy (which shall not constitute notice) to:
Alan C. Campbell, Esq.
Irwin, Campbell & Tannenwald
1320 18th Street, N.W., Suite 400
Washington, D.C. 20036
If to the Lender:
Mr. Lowell W. Paxson
Paxson Communications Corp.
18401 U.S. Highway 19 North
Clearwater, FL 34624
with a copy (which shall not constitute notice) to:
Anthony L. Morrison, Esq.
General Counsel
Paxson Communications Corp.
18401 U.S. Highway 19 North
Clearwater, FL 34624
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<PAGE> 19
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective when deposited in
the mails.
SECTION 8.05 EXPENSES. The Borrower agrees to pay on demand all
costs and expenses incurred by the Lender directly in the enforcement of this
Agreement, the Note, the Security Agreement, any Leasehold Mortgage, the Pledge
Agreement and other instruments and documents to be delivered hereunder,
including, without limitation, the reasonable fees and expenses of any attorney
to whom the Note is referred for collection (whether or not litigation is
commenced) or for representation in proceedings under any bankruptcy or
insolvency law. In addition, the Borrower shall pay any and all taxes and fees
payable or determined to be payable in connection with the execution, delivery
and recordation of any instruments and documents to be delivered hereunder.
SECTION 8.06 BINDING EFFECT; ASSIGNMENT. This Agreement shall become
effective when executed and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign any rights
or obligations hereunder without the prior written consent of the Lender.
SECTION 8.07 GOVERNING LAW. This Agreement, the Note, the Security
Agreement and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any recordation shall
be determined by the State thereof. The parties agree to the exclusive
jurisdiction and venue of the state and federal district courts for the
district including Palm Beach, Florida.
SECTION 8.08 SEVERABILITY OF PROVISIONS. Any provision of this
Agreement, the Note, the Security Agreement, or any Leasehold Mortgage that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
SECTION 8.09 HEADINGS. Article and Section headings in this
Agreement are including for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
SECTION 8.10 RIGHTS AFFECTED BY EXTENSIONS. The rights of the Lender
and its assigns shall not be impaired by any indulgence, release, renewal,
extension or modification which the Lender may grant with respect to the
indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of the
Borrower or any endorser, guarantee, or surety.
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<PAGE> 20
SECTION 8.11 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of the Borrower to the
Lender hereunder have been paid in full.
SECTION 8.12 ATTORNEYS' FEES. If any litigation arises between the
parties in connection with the transactions contemplated by this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys' fees in
addition to all other damages and remedies.
SECTION 8.13 FURTHER ASSURANCES. From time to time, the Borrower
shall execute and deliver to the Lender such additional documents as the Lender
may reasonably require to carry out the purposes of this Agreement or any of
the documents entered into in connection herewith, or to preserve and protect
the rights of the Lender hereunder or thereunder.
SECTION 8.14 INDEMNIFICATION. The Borrower hereby indemnifies and
holds harmless the Lender and its directors, officers, shareholders, employees,
agents, counsel, subsidiaries and affiliates (the "Indemnified Persons") from
and against any and all losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against any
Indemnified Person in any way relating to or arising out of this Agreement, the
documents entered into in connection herewith, or any of them or any of the
transactions contemplated hereby or thereby; provided, however, that the
Borrower shall not be liable to any Indemnified Person, if there is a judicial
determination that such losses, liabilities, obligations, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulted solely or
in part from the gross negligence or willful misconduct of such Indemnified
Person.
SECTION 8.15 NON-RECOURSE. Notwithstanding anything to the contrary
herein, in any action or proceeding commenced with reference to this Loan
Agreement, no judgment shall be sought or obtained against Gary Cocola
personally or enforced against any of his separate assets, other than his
shareholder interests in Borrower, and such liability under this Loan Agreement
shall be limited to his shareholder interests in Borrower. In any legal action
or suit in equity which the Lender may undertake to enforce its rights and
remedies under the Loan Agreement, any judgment may be satisfied by recourse
only to Gary Cocola's shareholder interests therein and not by recourse to Gary
Cocola personally or by execution on any of his separate and/or joint assets,
other than his shareholder interests in Borrower.
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<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized officers, as of
the date first above written.
WITNESS: COCOLA MEDIA CORPORATION OF
FLORIDA
By:
- ------------------------------ ----------------------------------
Name:
Title:
WITNESS: PAXSON COMMUNICATIONS CORP.
By:
- ------------------------------ ----------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.02
- --------------------------------------------------------------------------------
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
COCOLA MEDIA CORPORATION OF FLORIDA
AND
PAXSON COMMUNICATIONS CORP.
FOR
TELEVISION STATION WHBI-TV, LAKE WORTH, FLORIDA
AS OF
MARCH 23, 1995
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Licensee Operation of Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Licensee Control of Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Programmer Compliance with Copyright Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Children's Television Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Payola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Cooperation on Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.8 Staffing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Programmer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Licensee's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Time Brokerage Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Confidential Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Political Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6.2 Termination Requirements and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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<PAGE> 4
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 23rd day of March, 1995, by and
between Cocola Media Corporation of Florida, a Delaware corporation (the
"Licensee") and Paxson Communications Corp., a Delaware corporation (the
"Programmer").
WHEREAS, Licensee is seeking to acquire Television Station WHBI-TV,
Lake Worth, Florida (the "Station") pursuant to authorizations issued by the
Federal Communications Commission ("FCC").
WHEREAS, Programmer is involved in television station ownership and
operation and programming.
WHEREAS, the Licensee wishes to retain Programmer to provide
programming for the Station that is in conformity with Station policies and
procedures, FCC policies for time brokerage arrangements, and the provisions
hereof.
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Licensee's full authority to manage and
control the operation of the Station.
WHEREAS, Programmer and Licensee agree to cooperate to make this Time
Brokerage Agreement work to the benefit of the public and both parties and as
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Licensee and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
1.2 Effective Date; Term. The effective date of this Agreement
shall be the date of consummation of Licensee's acquisition of the Station
following FCC approval (the "Closing"). It shall continue in force for an
initial term of seven years from that date unless otherwise extended or
terminated as set forth below.
1.3 Scope. During the term of this Agreement and any renewal
thereof, Licensee shall make available to Programmer broadcast time upon the
Station as set forth in this
<PAGE> 5
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Agreement. Programmer shall deliver such programming, at its expense, to the
Station's transmitter facilities or other authorized remote control points as
reasonably designated by Licensee. Subject to Licensee's reasonable approval,
as set forth in this Agreement, Programmer shall provide programming of
Programmer's selection complete with commercial matter, news, public service
announcements and other suitable programming to the Licensee up to one hundred
sixty-two hours per week. Notwithstanding the foregoing, the Licensee may
designate such additional time as it may require without any adjustment of the
monthly consideration to be paid to Licensee under Section 1.5 for the
broadcast of programming necessary for the Station to broadcast news, public
affairs, children's, religious and non-entertainment programming as required by
the Licensee to meet its responsibilities as a licensee of the FCC. All
program time not reserved by or designated for Licensee shall be available for
use by Programmer and no other party.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional term as
mutually agreed upon by the Licensee and the Programmer.
1.5 Consideration. As consideration for the air time made
available hereunder Programmer shall make payments to Licensee as set forth in
Attachments I and II.
1.6 Licensee Operation of Station. Licensee will have full
authority, power and control over the management and operations of the Station
during the term of this Agreement and during any renewal of such term.
Licensee will bear all responsibility for Station's compliance with all
applicable provisions of the Communications Act of 1934, as amended, (the
"Act") the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for and pay in a timely manner all
operating costs of the Station, including but not limited to maintenance of the
studio and transmitting facility and costs of electricity, except that
Programmer shall be responsible for the costs of its programming as provided in
Sections 1.8 and 2.3 hereof. Licensee shall employ at its expense management
level and other employees consisting of a General Manager and such operational
and other personnel as required in order to comply with FCC regulations and
policies and as outlined in the budget previously provided to Programmer, who
will direct the day-to-day operations of the Station, and who will report to
and be accountable to the Licensee. Licensee shall be responsible for the
salaries, taxes, insurance and related costs for all personnel employed by the
Station and shall maintain insurance satisfactory to Programmer covering the
Station's transmission facilities. During the term of the Agreement and any
renewal hereof, Programmer agrees to perform, without charge, routine
monitoring of the Station's transmitter performance and tower lighting by
remote control, if and when requested by Licensee.
1.7 Licensee Representations and Warranties. Licensee represents
and warrants as follows:
<PAGE> 6
- 3 -
(a) Licensee owns and holds or will hold all licenses and
other permits and authorizations necessary for the operation of the Station,
and such licenses, permits and authorizations are and will be in full force and
effect throughout the term of this Agreement. There is not now pending, or to
Licensee's best knowledge, threatened, any action by the FCC or by any other
party to revoke, cancel, suspend, refuse to renew or modify adversely any of
such licenses, permits or authorizations. Licensee is not in material
violation of any statute, ordinance, rule, regulation, policy, order or decree
of any federal, state or local entity, court or authority having jurisdiction
over it or the Station, which would have an adverse effect upon the Licensee,
the Station or upon Licensee's ability to perform this Agreement. Licensee
shall not take any action or omit to take any action which would have an
adverse impact upon the Licensee, the Station or upon Licensee's ability to
perform this Agreement. All reports and applications required to be filed with
the FCC or any other governmental body have been, and during the course of the
term of this Agreement or any renewal thereof, will be filed in a timely and
complete manner. During the term of this Agreement and any renewal thereof,
Licensee shall not dispose of, transfer, assign or pledge any of Licensee's
assets and properties except with the prior written consent of the Programmer,
if such action would adversely affect Licensee's performance hereunder or the
business and operations of Licensee or the Station permitted hereby.
(b) Licensee shall pay, in a timely fashion, all of the
expenses incurred in operating the Station including salaries and benefits of
its employees, lease payments, utilities, taxes, programming expenses, etc., as
set forth in Attachment II (except those for which a good faith dispute has
been raised with the vendor or taxing authority), and shall provide Programmer
with a certificate of such timely payment within thirty (30) days of the end of
each month.
1.8 Programmer Responsibility. Programmer shall be solely
responsible for any expenses incurred in the origination and/or delivery of
programming from any remote location and for any publicity or promotional
expenses incurred by Programmer, including, without limitation, ASCAP and BMI
music license fees for all programming provided by Programmer. Such payments
by Programmer shall be in addition to any other payments to be made by
Programmer under this Agreement.
1.9 Contracts. Programmer will enter into no third-party
contracts, leases or agreements which will bind Licensee in any way except with
Licensee's prior written approval.
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE
2.1 Licensee Authority. Notwithstanding any other provision of
this Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the needs and interests of viewers in Lake Worth,
Florida, the station's
<PAGE> 7
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service area and the educational and informational needs of children. From
time to time the Licensee shall air specific programming on issues of
importance to the local community and educational and informational programming
for children. Nothing in this Agreement shall abrogate the unrestricted
authority of the Licensee to discharge its obligations to the public and to
comply with the Act and the rules and policies of the FCC.
2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Station, Licensee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the good faith judgment of Licensee, is
of greater local or national public importance. Licensee shall also coordinate
with Programmer the Station's hourly station identification and any other
announcements required to be aired by FCC rules. Licensee shall continue to
maintain a main studio, as that term is defined by the FCC, within the
Station's principal community contour, shall maintain its local public
inspection file in accordance with FCC rules, regulations and policies, and
shall prepare and place in such inspection file or files in a timely manner all
material required by Section 73.3526 of the FCC's Rules, including without
limitation the Station's quarterly issues and program lists; information
concerning the broadcast of children's educational and informational
programming; and documentation of compliance with commercial limits applicable
to certain children's television programming. Programmer shall provide
Licensee with such information in a timely fashion concerning Programmer's
programs and advertising as is necessary to assist Licensee in the preparation
of such information. Licensee shall also maintain the station logs and control
and oversee any remote control point which may be established for the Station.
2.3 Responsibility for Employees and Expenses. Programmer shall
employ and be solely responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming (including,
but not limited to, salespeople, technical staff, traffic personnel, board
operators and programming staff). Licensee may, in cooperation with
Programmer, utilize Programmer's personnel for the broadcast transmission of
its own programs pursuant to Section 1.3 hereof but will be responsible for the
salaries, taxes, benefits, insurance and related costs for all the Licensee's
employees used in the broadcast transmission of its programs and necessary to
other aspects of Station operation. Whenever on the Station's premises, all
personnel shall be subject to the overall supervision of Licensee's General
Manager.
SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment III hereto and which
may be amended in a reasonable manner from time to time by Licensee upon notice
to Programmer. Programmer agrees and covenants to comply in all material
respects with the Policy Statement, to all rules and
<PAGE> 8
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regulations of the FCC, and to all changes subsequently made by Licensee or the
FCC. Programmer shall furnish or cause to be furnished the artistic personnel
and material for the programs as provided by this Agreement and all programs
shall be prepared and presented in conformity with the rules, regulations and
policies of the FCC and with the Policy Statement set forth in Attachment III
hereto. All advertising spots and promotional material or announcements shall
comply with applicable federal, state and local regulations and policies and
shall be produced in accordance with quality standards established by
Programmer. If Licensee determines that a program supplied by Programmer is
for any reason, within Licensee's sole discretion, unsatisfactory or unsuitable
or contrary to the public interest, or does not comply with the Policy
Statement it may, upon prior written notice to Programmer (to the extent time
permits such notice), suspend or cancel such program without liability to
Programmer. Licensee will use reasonable efforts to provide such written
notice to Programmer prior to the suspension or cancellation of such program.
3.2 Licensee Control of Programming. Programmer recognizes that
the Licensee has full authority to control the operation of the Station. The
parties agree that Licensee's authority includes but is not limited to the
right to reject or refuse such portions of the Programmer's programming which
Licensee believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming supplied
to Licensee and shall give Licensee at least twenty-four (24) hours notice of
substantial and material changes in such programming.
3.3 Programmer Compliance with Copyright Act. Programmer
represents and warrants to Licensee that Programmer has full authority to
broadcast its programming on the Station, and that Programmer shall not
broadcast any material in violation of the Copyright Act. All music supplied
by Programmer shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the
public domain; or (iii) cleared at the source by Programmer. Licensee will
maintain ASCAP, BMI and SESAC licenses as necessary. The right to use the
programming and to authorize its use in any manner shall be and remain vested
in Programmer.
3.4 Sales. Programmer shall retain all of the Station's network
compensation revenues, any revenues received from any network or program
supplier with respect to affiliation or use of programming by Programmer, any
retransmission consent revenues and all revenues from the sale of advertising
time within the programming it provides to the Licensee. Programmer shall be
responsible for payment of the commissions due to any national sales
representative engaged by it for the purpose of selling national advertising
which is carried during the programming it provides to Licensee. Unless
otherwise agreed between the parties, Licensee shall retain all revenues from
the sale of Station's advertising during the hours each week in which the
Licensee airs its own programming pursuant to this Agreement.
<PAGE> 9
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3.5 Children's Television Advertising. Programmer agrees that it
will not broadcast advertising within programs originally designed for children
aged 12 years and under in excess of the amounts permitted under applicable FCC
rules, and will take all steps necessary to pre-screen children's programming
broadcast during the hours it is providing such programming, to establish that
advertising is not being broadcast in excess of the applicable FCC rules.
3.6 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees to annually, or more frequently at the request
of the Licensee, execute and provide Licensee with a Payola Affidavit from each
of its employees involved with the Station substantially in the form attached
hereto as Attachment IV.
3.7 Cooperation on Programming. Programmer and Licensee mutually
acknowledge their interest in ensuring that the Station serves the needs and
interests of viewers in Lake Worth and the surrounding service area and agree
to cooperate to provide such service. Licensee shall, on a regular basis,
assess the issues of concern to residents of Lake Worth and the surrounding
area and address those issues in its public service programming. Programmer,
in cooperation with Licensee, will endeavor to ensure that programming
responsive to the needs and interests of the community of license and
surrounding area is broadcast, in compliance with applicable FCC requirements.
Licensee will describe those issues and the programming that is broadcast in
response to those issues and place issues/programs lists in the Station's
public inspection file as required by FCC rules. Further, Programmer shall
provide to Licensee in a timely fashion, information concerning such of
Programmer's programs as are responsive to community issues so as to assist
Licensee in the satisfaction of its public service programming obligations.
Licensee shall also evaluate the local need for children's educational and
informational programming and shall inform Programmer of its conclusions in
that regard. Licensee, in cooperation with Programmer, will ensure that
educational and informational programming for children is broadcast over the
Station in compliance with applicable FCC requirements. Programmer shall also
provide Licensee upon request such other information necessary to enable
Licensee to prepare records and reports required by the Commission or other
local, state or federal government entities.
3.8 Staffing Requirements. Licensee will be in full compliance
with the main studio staff requirements as specified by the FCC.
<PAGE> 10
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SECTION 4. INDEMNIFICATION
4.1 Programmer's Indemnification. Programmer shall indemnify and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) Programmer's breach of any
representation, warranty, covenant or agreement contained in this Agreement, or
(ii) any action taken by Programmer or its employees and agents with respect to
the Station, or any failure by Programmer or its employees and agents to take
any action with respect to the Station, including, without limitation, Damages
relating to violations of the Act or any rule, regulation or policy of the FCC,
slander, defamation or other claims relating to programming provided by
Programmer and Programmer's broadcast and sale of advertising time on the
Station.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Licensee's operations and broadcasts to the extent
permitted by law and any action taken by the Licensee or its employees and
agents with respect to the Station, or any failure by Licensee or its employees
and agents to take any action with respect to the Station.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled
to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at
the FCC, whether or not in connection with the Station's license renewal
application, counsel for the Licensee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC Staff, then the parties shall
reform the Agreement as necessary to satisfy the FCC Staff's concerns or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any
programming by Programmer under this Agreement, Programmer shall acquaint the
Licensee with the nature and type of the programming to be provided. Licensee
shall be entitled to review at its discretion from time to time on a
confidential basis any of Programmer's programming material it may
<PAGE> 11
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reasonably request. Programmer shall promptly provide Licensee with copies of
all correspondence and complaints received from the public (including any
telephone logs of complaints called in), and copies of all program logs and
promotional materials. However, nothing in this section shall entitle Licensee
to review the internal corporate or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with
Licensee to assist Licensee in complying with all rules of the FCC regarding
political broadcasting. Licensee shall promptly supply to Programmer, and
Programmer shall promptly supply to Licensee, such information, including all
inquiries concerning the broadcast of political advertising, as may be
necessary to comply with FCC rules and policies, including the lowest unit
rate, equal opportunities, reasonable access, political file and related
requirements of federal law. Licensee, in consultation with Programmer, shall
develop a statement which discloses its political broadcasting policies to
political candidates, and Programmer shall follow those policies and rates in
the sale of political programming and advertising. In the event that
Programmer fails to satisfy the political broadcasting requirements under the
Act and the rules and regulations of the FCC and such failure inhibits Licensee
in its compliance with the political broadcasting requirements of the FCC, then
to the extent reasonably necessary to assure such compliance, Programmer shall
either provide rebates to political advertisers or release broadcast time
and/or advertising availabilities to Licensee at no cost to Licensee.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Termination. In addition to other remedies available at law
or equity, this Agreement may be terminated as set forth below by either
Licensee or Programmer by written notice to the other if the party seeking to
terminate is not then in material default or breach hereof, upon the occurrence
of any of the following:
(a) subject to the provisions of Section 7.9, this
Agreement is declared invalid or illegal in whole or substantial part by an
order or decree of an administrative agency or court of competent jurisdiction
and such order or decree has become final and no longer subject to further
administrative or judicial review;
(b) subject to the provisions of Section 6.2(b), the
other party is in material breach of its obligations hereunder and has failed
to cure such breach within thirty (30) days of notice from the non-breaching
party;
(c) the mutual consent of both parties;
(d) there has been a material change in FCC rules,
policies or precedent that would cause this Agreement to be in violation
thereof and such change is in effect
<PAGE> 12
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and not the subject of an appeal or further administrative review and this
Agreement cannot be reformed, in a manner acceptable to Buyer and Seller, to
remove and/or eliminate the violation; or
(e) by either party upon six months written notice to the
other party.
6.2 Termination Requirements and Procedures.
(a) Programmer may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Licensee upon termination an amount equal
to twelve times the monthly compensation due for the month preceding the notice
of termination by Programmer pursuant to Attachments I and II.
(b) Licensee may terminate this Agreement pursuant to
Section 6.1(e) hereof only if it pays Programmer Liquidated Damages, calculated
in accordance with Attachment V.
(c) If a notice of termination pursuant to Section 6.1(b)
is contested by the other party pursuant to Section 7.10 hereof, such
termination shall not be effective unless and until there is a decision of an
arbitration panel permitting such termination.
(d) During any period prior to the effective date of any
termination of this Agreement, Programmer and Licensee agree to cooperate in
good faith to ensure that Station operations will continue, to the extent
possible, in accordance with the terms of this Agreement and that the
termination of this Agreement is effected in a manner that will minimize, to
the extent possible, the resulting disruption of the Station's ongoing
operations.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast,
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee, or for power reductions necessitated for
maintenance of the Station or for maintenance of other stations located on the
tower from which the Station will be broadcasting, shall not constitute a
breach of this Agreement and Licensee will not be liable to Programmer for
reimbursement or reduction of the consideration owed to Licensee.
6.4 Other Agreements. During the term of this Agreement or any
renewal hereof, Licensee will not enter into any other programming agreement
with any third party that would conflict with or result in a material breach of
this Agreement by Licensee.
<PAGE> 13
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SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) Neither this Agreement nor any of the rights,
interests or obligations of either party hereunder shall be assigned,
delegated, encumbered, hypothecated or otherwise transferred without the prior
written consent of the other party, such consent not to be unreasonably
withheld. Notwithstanding the foregoing, Programmer shall have the right to
collaterally assign its rights and interests hereunder to its senior lenders.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) Licensee agrees to enter into such agreements and
confirmations as Programmer's senior lenders may reasonably require: (i) to
acknowledge and confirm any collateral assignment of this Agreement to such
senior lenders; (ii) to provide for simultaneous notice and reasonable cure
rights, which rights must be exercised within 30 days after the 30-day period
specified in Section 6.1(b) hereof, to such senior lenders of any default by
Programmer under this Agreement; (iii) to provide simultaneous notice and
reasonable cure rights, which rights must be exercised within 30 days after the
expiration of the 30-day period specified in Section 6.1(b) hereof, to such
senior lenders prior to any election or action by Licensee to terminate or
cancel this Agreement pursuant to Section 6.1(b) and, if requested by such
senior lenders, to enter into a new Agreement on the same terms and conditions
as this Agreement with such senior lenders or their nominee, successor or
purchaser who (x) possesses all requisite qualifications to hold FCC licenses
and does in fact hold FCC licenses directly or through affiliates, (y) has not
had an authorization issued by the FCC revoked or an application for license
renewal denied by the FCC, and (z) possesses the financial capacity to perform
Programmer's obligations hereunder ("Lenders' Assignee"); (iv) in the event
that such senior lenders shall be entitled to foreclose or otherwise acquire
Programmer's interest in this Agreement, or if such senior lenders (or their
nominee, successor or purchaser who qualifies as a "Lenders' Assignee") shall
have elected to enter into a new Agreement, on the same terms and conditions as
this Agreement, with Licensee, to enable such senior lenders to acquire
Programmer's interest in this Agreement or assign such interest to any
purchaser or assignee of such senior lenders who qualifies as a "Lenders'
Assignee", or require Licensee to enter into a new Agreement, on the same terms
and conditions as this Agreement, directly with any purchaser or assignee of
such senior lenders who qualifies as a "Lenders' Assignee"; and (v) provide for
such other assurances as such senior lenders shall reasonably request in
connection with the exercise of their rights under this paragraph 7.1(c).
7.2 Call Letters. Upon request of Programmer, subject to the
consent of the Licensee, Licensee shall apply to the FCC for authority to
change the call letters of the Station
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(with the consent of the FCC) to such call letters that Programmer shall
reasonably designate. Licensee must coordinate with Programmer any proposed
changes to the call letters of the Station before taking any action to change
such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement and the Attachments hereto
embodies the entire agreement and understanding of the parties relating to the
operation of the Station. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement will be
effective unless evidenced by an instrument in writing signed by the parties.
7.5 Taxes. Licensee and Programmer shall each pay its own ad
valorem taxes, if any, which may be assessed on such party's respective
personal property for the periods that such items are owned by such party.
Programmer shall pay all taxes, if any, to which the consideration specified in
Section 1.5 herein is subject, provided that Licensee is responsible for
payment of its own income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the
FCC. The construction and performance of the Agreement will be governed by the
laws of the State of Florida.
7.8 Notices. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) sent by telecopy (with receipt personally confirmed by
telephone), delivered by personal delivery, or sent by commercial delivery
service or certified mail, return receipt requested, (iii) deemed to have been
given on the date telecopied with receipt confirmed, the date of personal
delivery, or the date set forth in the records of the delivery service or on
the return receipt, and (iv) addressed as follows:
To Programmer: Paxson Communications Corp.
18401 U.S. Highway 19 North
Clearwater, FL 34624
Telecopy: (813) 536-0208
Telephone: (813) 536-2211
<PAGE> 15
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To Licensee: Cocola Media Corporation of Florida
706 W. Herndon Avenue
Fresno, CA 93650
Telecopy: (209) 435-3201
Telephone: (209) 438-6666
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 7.8.
7.9 Severability. If any provision of this Agreement or the
application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
In the event that the FCC alters or modifies its rules or policies in a fashion
which would raise substantial and material question as to the validity of any
provision of this Agreement, the parties hereto shall negotiate in good faith
to revise any such provision of this Agreement with a view toward assuring
compliance with all then existing FCC rules and policies which may be
applicable, while attempting to preserve, as closely as possible, the intent
of, and economic benefit to, the parties as embodied in the provision of this
Agreement which is to be so modified.
7.10 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves
shall be settled by arbitration in Miami, Florida by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designed shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a 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
Licensee and Programmer. The costs and expenses of the arbitration proceeding
shall be assessed between Licensee and Programmer 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 in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Licensee or
Programmer against the other except: (i) an action to compel arbitration
pursuant to this Section; or (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section.
7.11 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Licensee and the Programmer.
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
LICENSEE: COCOLA MEDIA CORPORATION OF FLORIDA
By:
------------------------------------------
Name:
Title:
PROGRAMMER: PAXSON COMMUNICATIONS CORP.
By:
------------------------------------------
Name:
Title:
<PAGE> 17
ATTACHMENT I
Compensation Schedule
Upon the effective date of this Agreement, Programmer shall have paid
Licensee a fee equal to the lesser of One Hundred Thousand Dollars ($100,000)
or two months operating expenses for the Station (as detailed on Attachment
II).
Programmer shall also reimburse Licensee on a monthly basis for
Licensee's payment of Station expenses listed on Attachment II upon receipt
from the Licensee of a certificate (with attached invoices, etc.) documenting
payment of those expenses.
Programmer shall also pay to Licensee the sum of Twenty-Five Thousand
Dollars ($25,000) each quarter during the term of this Agreement payable in
advance (the "License Service Fee"). The Licensee Service Fee for the first
quarter shall be payable upon the effective date of this Agreement.
Payments shall be made by delivery of a check to Licensee at an
address to be designated.
<PAGE> 18
ATTACHMENT II
Station Operating Expenses
1. Employee salaries and fringe benefits, including withholding taxes and
health insurance in an amount not to exceed $50,000 per year
2. FCC filing and regulatory fees
3. Local, state and federal property taxes, license fees and similar
regulatory charges
4. Professional fees for attorneys, engineers, accountants
5. Lease payments for studio, tower and transmitter sites, and equipment
leases
6. Electric power and utilities
7. Telephone and facsimile charges, copying, printing, postage and
similar administrative expenses
8. Music licensing fees
9. Spare parts and tubes, including Klystron tubes, if necessary
10. Routine maintenance engineering services, control operator services
and chief operator services as required in order to comply with
Section 73.1870 of the FCC rules
11. Capital equipment required to keep the Station in compliance with FCC
requirements (e.g., equipment to comply with new EBS rules)
12. Monthly payments of principal and interest on purchase money financing
13. Travel and related expenses (such as hotel and car rental) of
shareholder of Licensee for no more than four round trips per year to
the Station
14. Administrative, legal, filing fees and related expenses incurred to
comply with requirements of Security Agreement, Pledge Agreement,
collateral assignments and mortgages
15. Program acquisition and production costs for programming broadcast by
Licensee in order to comply with FCC requirements applicable to Time
Brokerage Agreements
The above list is not intended to be all inclusive, but is for illustrative
purposes only.
<PAGE> 19
ATTACHMENT III
Broadcast Station Programming Policy Statement
<PAGE> 20
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station WHBI-TV,
Lake Worth, Florida. All programming and advertising broadcast by the station
must conform to these policies and to the provisions of the Communications Act
of 1034, as amended [the "Act"], and the Rules and Regulations of the Federal
Communications Commission ["FCC"].
Station Identification
The station must broadcast a station identification announcement once an hour
as close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the station's call letters (currently, WHBI);
followed immediately by (2) the station's city of license (Lake Worth,
Florida).
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrent, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the station to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose
behalf the matter is sponsored. Products or services furnished to the station
in consideration for an identification of any person, product, service,
trademark or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the station shall obtain a list of the chief executive officers,
members of the executive committee or board of directors of the sponsoring
organization and shall place this list in the station's public inspection file.
<PAGE> 21
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Payola/Plugola
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the station so
that all required station identification announcements can be made. All
persons responsible for station programming must, from time to time, execute
such documents as may be required by station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The station shall not rebroadcast the signal of any other broadcast station
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The station shall not air attacks upon the honesty, character, integrity or
like personal qualities of any identified person or group. If such an attack
should nonetheless occur during the presentation of views on a controversial
issue of public importance, those responsible for programming shall submit a
tape or transcript of the broadcast to station management and to the person
attacked within 48 hours, and shall offer the person attacked a reasonable
opportunity to respond.
Political Editorials
Unless specifically authorized by station management, the station shall not air
any editorial which either endorses or opposes a legally qualified candidate
for public office.
Political Broadcasting
All "uses" of the station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and
regulations.
<PAGE> 22
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Obscenity and Indecency
The station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing
on the station shall misrepresent the nature or content of aired advertising,
nor the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The station shall not knowingly broadcast false information concerning a crime
or catastrophe.
Children's Programming
The station shall broadcast reasonable amounts of educational and informational
programming designed for children aged 16 years and younger.
Children's Advertising
Programming designed for children aged 12 years and younger shall not include
more than 12 minutes of commercial matter per hour, Monday through Friday, and
shall not include more than
<PAGE> 23
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10.5 minutes of commercial matter per hour on weekend programming. There shall
be no host selling, as that term is defined by the FCC, in children's
programming on the station.
Emergency Information
Any emergency information which is broadcast by the station shall be
transmitted both aurally and visually or only visually.
Lottery
The station shall not advertise or broadcast any information concerning any
lottery (except the Florida State Lottery and any other state lottery). The
station may advertise and provide information about lotteries conducted by
non-profit groups, governmental entities and in certain situations, by
commercial organizations, if and only if there is no state or local restriction
or ban on such advertising or information and the lottery is legal under state
or local law. Any and all lottery advertising must first be approved by
station management.
Advertising
Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
Unfair Imitation. Infringements of another advertiser's rights
through plagiarism or unfair imitation of either program idea or copy,
or any other unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
Profanity . Any programs or announcements that are slanderous,
obscene, profane, vulgar, repulsive or offensive, as evaluated by
station management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
<PAGE> 24
ATTACHMENT IV
Payola Statement
<PAGE> 25
FORM OF PAYOLA AFFIDAVIT
City of ________________________ )
)
County of ______________________ ) SS:
)
State of _______________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________, being first duly sworn, deposes and says as follows:
1. He is _____________________ for _____________________.
Position
2. He has acted in the above capacity since ____________.
3. No matter has been broadcast by Station _____ for which service, money
or other valuable consideration has been directly or indirectly paid,
or promised to, or charged, or accepted, by him from any person, which
matter at the time so broadcast has not been announced or otherwise
indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _____
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted
by Station ____ or by any independent contractor engaged by Station
_____ in furnishing programs, from any person, which matter at the
time so broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation of broadcast
matter on Station _____.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
7. He, his spouse and his immediate family do___ do not___ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
<PAGE> 26
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1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management or persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station _____, or any other station owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none as
----
as follows :
----
----------------------------------------------------------------------
----------------------------------------------------------------------
--------------------------------------
Affiant
Subscribed and sworn to before me
this day of , 19 .
------ --------------- ---
- ------------------------------------------
Notary Public
My Commission expires: .
-------------------
<PAGE> 27
ATTACHMENT V
Liquidated Damages
Licensee acknowledges that Programmer will make a substantial advance
payment in order to enter into the Time Brokerage Agreement; that Programmer
will acquire certain assets associated uniquely with the Station's operation
and will enter into various long-term agreements with program suppliers and
other third parties to produce programming for the Station at substantial
expense and risk; that Programmer will recruit, hire and maintain a staff of
employees dedicated to acquiring and producing quality programming to be
broadcast on the Station; and that Programmer will make substantial investments
in additional hard assets to produce quality programming for the Station.
Licensee also acknowledges that Programmer will make substantial investments,
both in tangible and intangible terms, to promote the Station under the Time
Brokerage Agreement, to create a unique image for the Station, and to develop a
competitive position in the market for the Station and that such efforts on the
part of Programmer will add substantial value to the Station. Licensee and
Programmer acknowledge and agree that any measure of actual damages cannot
compensate Programmer for the loss of Licensee's performance under this
Agreement and that the true measure of damages to Programmer for termination or
material breach of the Time Brokerage Agreement by Licensee is incapable of
accurate estimation with reasonable certainty. Licensee and Programmer
therefore agree that it is a fair and reasonable forecast of just compensation
for the harm caused to be measured by liquidated damages, as defined in
subparagraph (a) of this Attachment, to be paid to Programmer upon the
termination or material breach of the Time Brokerage Agreement by Licensee.
(a) "Liquidated Damages" shall mean an amount equal to funds
expended and/or committed to be expended by Programmer (except (i) with respect
to items (3) through (8) below, such expenditures and/or commitments shall be
consistent with industry practices and (ii) to the extent not theretofore
recovered by Programmer from the Station 's gross revenues prior to the
termination or material breach) in each of the following categories:
(1) the full value of all of Programmer's capital
expenditures incurred in connection with this Agreement, less
any consideration received by Programmer as a consequence of
any sale of such assets;
(2) the advance fee payment described in Attachment I,
less _________________________ Dollars ($____________) for
each full year the Time Brokerage Agreement is in effect;
(3) the full value of all service contracts and
programming agreements assumed and entered into by Programmer
for purposes of providing programming and advertising to be
broadcast on the Station, which Programmer owns at the time of
termination or breach less any consideration received by
Programmer as a consequence of its good faith efforts to sell
or assign such agreements;
<PAGE> 28
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(4) the full value of all severance and employee benefit
packages that Programmer, in its discretion, shall provide to
employees whose services would not be required in the absence
of the Time Brokerage Agreement;
(5) the full value of any contract with third parties,
which could not be performed owing to termination of breach,
for services to be rendered in connection with programming
provided to the Station including, without limitation,
producers, advertising salespeople, technicians, engineers,
and any other independent contractors whose services would not
be required in the absence of the Time Brokerage Agreement;
(6) the full value of all expenses incurred to promote
the Station and position the Station in the marketplace;
(7) all corporate, legal, administrative, professional
and brokerage expenses attributable to Programmer's
negotiation and performance of the Time Brokerage Agreement;
and
(8) the good will and intangible value associated with
Programmer's efforts under this Agreement to create a unique
image and competitive market position for the Station.
(b) Should Licensee terminate or materially breach the Time
Brokerage Agreement, Programmer shall submit its computation of Liquidated
Damages under the categories set forth above to a "Big Six" accounting firm
mutually acceptable to the parties for independent auditing and verification.
Within thirty (30) days of verification, Licensee agrees to tender payment of
all verified amounts to Programmer; provided, however, that if Licensee objects
to any particular enumerated component of the Liquidated Damages, as verified,
it shall notify Programmer of such objection within fifteen (15) days of
verification. If thereafter Programmer and Licensee cannot agree as to the
amount of the objectionable component, either party shall have the right to
elect to arbitrate such dispute pursuant to Section 7.10 of the Time Brokerage
Agreement provided it gives written notice of its election to arbitrate by the
thirtieth (30) day following the date of Licensee's objection to Programmer's
verification. Notwithstanding that Licensee may question a particular
component of the Liquidated Damages and either party may elect arbitration of
the dispute, the reminder of the items comprising the Liquidated Damages shall
be paid by Licensee to Programmer within thirty (30) days of accounting
verification, as specified above. No payment shall be required as to any
contested component until the earlier of (i) Programmer and Licensee reaching
an agreement on the amount or (ii) entering of the arbitration award.
(c) If any category of Liquidated Damages is held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remainder of the categories of
<PAGE> 29
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Liquidated Damages shall not be affected thereby, and the parties agree to use
their best efforts to negotiate a replacement category that is not invalid,
illegal or unenforceable.
<PAGE> 1
EXHIBIT 10.03
LOAN AGREEMENT
BETWEEN
PAXSON COMMUNICATIONS CORPORATION
AND
ROBERTS BROADCASTING COMPANY
OF RALEIGH-DURHAM, LTD.
DATED AS OF
OCTOBER 31, 1995
<PAGE> 2
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of this 31st day of October, 1995, is
by and between PAXSON COMMUNICATIONS CORPORATION, a Delaware corporation having
its principal offices at 601 Clearwater Park Road, West Palm Beach, Florida
33401, (the "Lender"), and ROBERTS BROADCASTING COMPANY OF RALEIGH-DURHAM, LTD.
a Delaware limited partnership having its principal offices at 1408 N. Kings
Highway, Suite 300, St. Louis, Missouri, 63113 (the "Borrower");
W I T N E S S E T H:
WHEREAS, the Borrower is seeking to purchase and modify the
facilities of Television Station WRMY, Rocky Mount, North Carolina (the
"Station"); and
WHEREAS, the Borrower desires to borrow funds from the Lender to
purchase and/or construct of the Station; and
WHEREAS, an affiliate of the Lender wishes to obtain an option to
acquire a 40% equity interest in Borrower as a limited partner.
NOW, THEREFORE, in consideration of the mutual promises and
agreements herein contained, the Lender and the Borrower agree as follows:
ARTICLE 1. AMOUNT AND TERMS OF THE LOANS
Section 1.1 The Loan. The Lender agrees, upon the terms and
conditions hereinafter set forth, to make a loan to the Borrower in an
aggregate principal amount not to exceed Four Million Dollars ($4,000,000) (the
"Loan").
Section 1.2 The Promissory Note. The outstanding principal
amount of the Loan shall be evidenced by and subject to the terms of a
promissory note, dated of even date herewith, substantially in the form set
forth as Exhibit 1 hereto (the "Note") payable to the order of the Lender and
representing the obligation of the Borrower to pay the Lender the amount of the
Loan, with interest thereon, as prescribed in Section 1.4. The Lender is
authorized to endorse the date and amount of the Loan and each repayment of
principal and/or interest with respect thereto on the Schedule A annexed to and
constituting a part of the Note, which endorsement shall constitute prima facie
evidence of the information endorsed.
Section 1.3 Interest. The loan shall bear interest on the
unpaid principal amount thereof at the rate per annum at all times equal to
eleven and seven/eighths (11 7/8%). Interest shall be calculated on the basis
of a year of three hundred sixty (360) days and actual number of days elapsed
during the period for which such interest is payable. Interest shall begin to
accrue on the outstanding principal amount of the Loan on the date of
commencement of broadcast operations at the Station
<PAGE> 3
- 2 -
by the Borrower pursuant to Federal Communications Commission ("FCC")
authorization and the first payment of interest to the Lender shall be due
sixty (60) days thereafter at which time all interest accrued shall become due
and payable; thereafter, accrued interest shall be paid monthly, on the same
date as the principal payments are due pursuant to Section 1.4 hereof. If any
installment of principal or interest is not paid when due, that installment
shall bear interest at a rate per annum equal to the lower of the highest rate
permitted by law or eighteen percent (18%) from the due date thereof until paid
in full.
Section 1.4 Repayment of the Loan. One Hundred Twenty (120)
days after the commencement of broadcast operations at the Station by the
Borrower pursuant to Federal Communications Commission ("FCC") authorization,
the Borrower shall begin repayment to the lender of the loan in eighty-four
(84) consecutive equal monthly installments of principal and interest.
Notwithstanding anything to the contrary in the Loan Agreement, Promissory
Note, Security Agreement or Pledge Agreement, if the monthly time brokerage
payments payable to Borrower are not sufficient to allow Borrower to make
timely monthly payments of principal and interest under the Loan Agreement (as
well as pay the operating expenses of WRMY), Lender hereby agrees that (a) the
failure to make such payments (in the absence of any other event or
circumstance that constitutes an Event of Default under the Loan Agreement)
shall not constitute an Event of Default under the Loan Agreement and (b)
Lender shall make an additional payment to Borrower sufficient to allow
Borrower to pay those operating and debt expenses. Should Lender fail to make
such additional payment, the monthly Lender loan repayment of Borrower shall be
considered paid in full notwithstanding the amount of the shortfall.
Section 1.5 Use of Proceeds and Advancement of Funds.
(a) The proceeds of the Loans are to be used by Borrower
exclusively for the purpose of purchasing the Station and/or completing
construction of the Station pursuant to the Purchase Agreement or Construction
And Equipment Schedule attached hereto as Exhibit 2 and for working capital and
operating expenses.
(b) The Borrower agrees to furnish to the Lender such information
as the Lender may reasonably request in connection with the loans including the
submission of additional documentation involving invoices and other requests
for payment submitted to the Borrower.
Section 1.6 Information. The Borrower agrees to furnish to the
Lender such information as the Lender may reasonably request in connection with
the Loan or the Station.
Section 1.7 Prepayment. The Borrower may prepay the Note in
whole at any time, or from time to time in part, with accrued interest to the
date of prepayment on the amount prepaid, without penalty, provided that each
payment, other than for the full amount of the outstanding
<PAGE> 4
- 3 -
balance, shall be in the amount of Twenty Five Thousand Dollars ($25,000.00) or
an integral multiple thereof. Each prepayment on the Note shall be applied to
installments of principal payable on the Note in the inverse order of maturity.
Section 1.8 Payment on Non-Business Days. Whenever any payment
to be made hereunder or under the Note shall become due on a Saturday, Sunday
or public holiday, such payment may be made on the next succeeding business
day, and such extension of time in such case shall be included in the
computation of interest hereunder and under the Note.
ARTICLE 2. CLOSING
Section
2.1 Closing Date. Closing of this transaction shall occur on a
date set by Lender upon five (5) days written notice to Borrower, or such other
date agreed upon by the parties hereto (the "Closing Date").
ARTICLE 3. SECURITY
Section
3.1 Security Interest. As security for the Loan, the Borrower
shall execute and deliver to the Lender, on or before the Closing Date, a
security agreement in the form of Exhibit 3 hereto (the "Security Agreement").
Section 3.2 Pledge Agreements. As further security for the
Loan, on or before the Closing Date, the Borrower shall deliver to the Lender a
pledge agreement in the form of Exhibit 4, duly executed by the partners of
Roberts Broadcasting Company of Raleigh-Durham, Ltd. (the "Partners"), (the
"Pledge Agreement").
Section 3.3 Leasehold Mortgages. At such time as the Borrower
enters into any lease, including any leases for the station's studio and
transmitter sites, it shall execute with respect to such lease a leasehold
mortgage in the form of Exhibit 5 (the "Leasehold Mortgage"), granting the
lender a lien on its leasehold interest under such lease. If requested by the
Lender, the Borrower shall also deliver to the lender in form and substance
satisfactory to the Lender with respect to any lease to which the Borrower
becomes a party (i) evidence of the filing of a memorandum of lease, (ii) an
executed estoppel certificate, (iii) an executed landlord's consent and waiver
and (iv) an alta mortgagee's policy of title insurance in customary form with
respect to such lease.
Section 3.4 Mortgages. The Borrower shall execute a first
mortgage or deed of trust in favor of the Lender covering any real estate
acquired by Borrower in form and substance satisfactory to the Lender. If
requested by the Lender, the Borrower shall also deliver to the Lender an ALTA
mortgagee's policy of title insurance in customary form with respect to such
parcel.
<PAGE> 5
- 4 -
ARTICLE 4. CONDITIONS OF LENDING
Section 4.1 Conditions Precedent to Loan Funds. The obligation
of the Lender to Loan the funds pursuant to Section 1.5 hereunder is subject to
the condition precedent that the Lender shall have received all of the
following, on or before the Closing Date, in form and substance satisfactory to
the Lender:
(a) The Note, duly executed and delivered by the
Borrower;
(b) The Security Agreement, together with
appropriate UCC-1 forms, duly executed and delivered by the Borrower;
(c) The Pledge Agreements, duly executed and
delivered by the Partners;
(d) Leasehold Mortgages to the extent applicable;
(e) Roberts Broadcasting Company of
Raleigh-Durham, Ltd.'s Certificate of Limited Partnership in the form of
Exhibit 6 and the executed Option Agreement in the form of Exhibit 6A;
(f) A certified copy of the resolutions of the
Partners of the Borrower evidencing approval of the execution, delivery and
performance of this Agreement, the Note and the Security Agreement and other
matters contemplated hereby;
(g) Certificates of Good Standing for the
Borrower as of a recent date prior to the Closing Date from the State of
Delaware;
(h) A certificate of an officer of Borrower
attaching the executed Purchase Agreement and/or Construction And Equipment
Schedule for the Station and evidence of FAA approval for the Station's new
tower;
(i) Copies of the certificates evidencing the
insurance required to be maintained by the Borrower pursuant to Section 6.1(e);
(j) Evidence of the filing of any memorandum of
lease to the extent required by Section 3.3;
(k) Executed estoppel certificates to the extent
required by Section 3.3;
<PAGE> 6
- 5 -
(l) Executed landlord's consents and waivers to
the extent required by Section 3.3;
(m) Such documentation, as required by Section
1.5; and
(n) The executed Time Brokerage Agreement between
the Station and Paxson Communications of Raleigh-Durham-47, Inc. in the form of
Exhibit 7.
Section 4.2 Compliance. All of the representations and
warranties of the Borrower in this Agreement shall be true and accurate in all
material respects on and as of the Closing Date and the date of any subsequent
disbursement of any portion of the Loan, as if made on and as of such date and
time. The Borrower shall be in compliance with all of the applicable terms and
provisions of this Agreement and no Event of Default or any event which with
the lapse of any applicable grace period or the giving of notice or both would
constitute an Event of Default shall have occurred and be continuing. The
Borrower shall have performed all obligations and taken all actions to be
performed or taken by it hereunder on or prior to such date. On the Closing
Date, the Borrower shall deliver to the Lender a certificate, dated as of such
date and signed by an executive officer of the Borrower, certifying compliance
with the conditions of this Section 4.02. Each disbursement of all or a
portion of the Loan to the Borrower shall in and of itself, constitute a
representation and warranty that the Borrower as of the date of such Loan, is
in compliance with this Section and if the Borrower is not in compliance with
this Section, the Lender shall not be required to disburse such Loan to the
Borrower.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES
Section 5.1 Representations and Warranties of the Borrower.
In order to induce the Lender to enter into this Agreement and make the Loan,
the Borrower represents and warrants as follows:
(a) Existence and Standing. The Borrower is a
limited partnership duly organized, validly existing and in good standing under
the laws of the State of Delaware and is qualified to do business and in good
standing under the laws of the State of North Carolina and any other
jurisdiction in which it conducts its business, and has all requisite power and
authority, corporate or otherwise, to conduct its business, to own its
properties and to execute and deliver, and to perform all of its obligations
under this Agreement, the Note, any Leasehold Mortgage, the Security Agreement
and all other documents that have been or will be executed and delivered by the
Borrower pursuant to this Agreement.
(b) Authorizations, Compliance with Laws. The
execution, delivery and performance by the Borrower of this Agreement, the
Note, any Leasehold Mortgage, the Security
<PAGE> 7
- 6 -
Agreement and all other documents required to be executed and delivered by the
Borrower pursuant to this Agreement have been duly authorized by all necessary
partnership action and do not and will not (i) violate (A) any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award presently in effect having applicability to the Borrower or (B) any
provision of the Certificate of Limited Partnership of the Borrower; or (ii)
result in a breach of or constitute a default under any agreement or instrument
to which the Borrower is a party or by which its properties may be affected; or
(iii) result in the creation of a lien, charge or encumbrance of any nature
upon the Borrower's properties or assets other than as contemplated by this
Agreement.
(c) No Consent. No authorization, consent,
approval, license, exemption of or filing or registration with any court or
governmental department or agency, except for filing with the FCC, is or will
be necessary to the valid execution, delivery and performance by the Borrower
of this Agreement, the Note, any Leasehold Mortgage, the Security Agreement or
any other document required to be executed and delivered by the Borrower
pursuant to this Agreement.
(d) Binding Obligations. This Agreement, the
Note, any Leasehold Mortgage, the Security Agreement and all other documents
required to be executed and delivered by the Borrower pursuant to this
Agreement have been or will be executed and delivered by duly authorized
officers of the Borrower and constitute or will constitute, legal, valid and
binding obligations of the Borrower enforceable in accordance with their
respective terms.
(e) Litigation. There are no actions, suits or
proceedings pending, or, to the knowledge of the Borrower, threatened against
or affecting the Borrower or its properties before any court or governmental
department or agency which materially adversely affects the transactions
contemplated by this Agreement or which would have a material adverse effect on
the business, properties, operation or condition of the Borrower.
(f) No Default. The Borrower is not in default
in the performance, observance or fulfillment of any of the obligations or
conditions contained in any material agreement or instrument to which it is a
party, nor with respect to any order, judgment, writ, injunction or decree of
any court, governmental authority or arbitration board.
(g) Compliance with Laws. The Borrower has
complied with all applicable federal, state and local laws. All necessary
licenses and permits related to the Station have either been obtained and are
currently valid or have been applied for and are now being diligently pursued.
(h) Taxes. The Borrower has filed all tax
returns and reports (federal, state and local) required to be filed by it, and
has paid all taxes shown thereon, including interest and penalties, and all
assessments received by it (except to the extent that the same are being
contested in good faith by appropriate proceedings diligently prosecuted and as
to which adequate reserves
<PAGE> 8
- 7 -
have been set aside on the books of the Borrower in conformity with generally
accepted accounting principles).
(i) Title to Properties. The Borrower has good
and marketable title to all of its property and assets and valid and
enforceable leasehold interests in the property which it holds under lease, all
such property, assets and leasehold interests being free and clear of any and
all mortgages, deeds of trust, assignments, liens, security interests, charges
or encumbrances of any nature whatsoever, except for liens created hereby and
no mortgages, deeds of trust, financing statements or other evidences of
security interests covering all or any of the aforesaid property are on file
among the records of any public office, except those evidencing a security
interest in favor of the Lender.
(j) Material Misstatement. No statement made
herein or information, exhibit or report furnished by the Borrower to the
Lender in connection with this Agreement or its negotiation, contains any
material misstatement of fact or omits to state a material fact or any fact
necessary to make the foregoing not misleading.
ARTICLE 6. COVENANTS OF THE BORROWER
Section 6.1 Affirmative Covenants. So long as the Note shall
remain unpaid, the Borrower hereby covenants and agrees that it will, unless the
Lender shall otherwise consent in writing:
(a) Payment of Obligations. Pay punctually and
discharge when due: (i) all indebtedness heretofore or hereafter incurred;
(ii) all taxes, assessments and governmental charges or levies imposed upon it
or its income or profits, or upon any properties belonging to it; (iii) claims
or demands of materialmen, mechanics, carriers, warehousemen, landlords and
other like persons which, if unpaid might become a lien or charge upon the
property of the Borrower; provided that this covenant shall not require the
payment of any of the matters set forth in (i), (ii) and (iii) above if the
same shall be contested in good faith and by proper proceedings diligently
pursued and as to which adequate reserves have been set aside on the books of
the Borrower in accordance with generally accepted accounting principles.
(b) Preservation of Partnership Existence.
Preserve and maintain its partnership existence, rights, franchises and
privileges in the jurisdiction of its creation and act in full compliance with
its Certificate of Limited Partnership.
(c) Maintenance of Properties. Maintain and
preserve all of its properties necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted.
<PAGE> 9
- 8 -
(d) Compliance with Laws. Comply in all material
respects with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority.
(e) Maintenance of Insurance. Maintain with
responsible and reputable insurance companies policies on all of its properties
and covering such risks, including public liability and workers' compensation,
in such amounts as are usually carried by companies engaged in similar
businesses and owning similar properties as the Borrower, and promptly upon
execution thereof provide to the Lender copies of all such policies and any
riders or amendments thereto. The policies of insurance required hereunder
shall name the Lender as an additional loss payee or additional insured, as
applicable, and shall provide that the Lender shall receive at least thirty
(30) days' written notice prior to the cancellation, termination or alteration
of any such policy.
(f) Operations in Ordinary Course. Continue to
operate its business in the ordinary course.
(g) Perfection of Liens. Do all things requested
by the Lender to preserve and perfect the liens and security interests of the
Lender arising pursuant to the Security Agreement, the Pledge Agreements, any
Leasehold Mortgage or any other agreement required hereunder as first liens and
security interests.
(h) FCC Approval. If counsel to the Lender
reasonably determines that the consent of the FCC is required in connection
with the execution, delivery and performance of this Agreement, the Pledge
Agreements, the Security Agreement or any other document delivered to the
Lender in connection herewith or therewith or as a result of any action which
may be taken pursuant hereto or thereto, then the Borrower, at its sole cost
and expense, agrees to use its best efforts to secure such consent and to
cooperate with the Lender in any action commenced by the Lender to secure such
consent.
Section 6.2 Negative Covenants. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, the Borrower
hereby covenants that it will not, without the Lender's prior written approval:
(a) Indebtedness. Create or incur, assume or
suffer to exist any indebtedness, obligation or liability, whether matured or
unmatured, liquidated or unliquidated, direct or contingent, joint or several,
except for: (i) indebtedness evidenced by the Note; and (ii) indebtedness
(other than for borrowed money) incurred in the ordinary course of business not
to exceed Twenty Five Thousand Dollars ($25,000.00) in the aggregate at any one
time.
(b) Liens. Create, assume or suffer to exist,
directly or indirectly, any security interest, mortgage, deed of trust, pledge,
lien, charge or other encumbrance, of any nature whatsoever
<PAGE> 10
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upon any of its properties or assets, now owned or hereafter as acquired,
excluding, however, from the operation of this covenant:
(i) any security interest or lien
created pursuant to this Agreement;
(ii) liens for taxes or assessments
either not delinquent or the validity of which are being contested in good
faith by appropriate legal or administrative proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iii) materialmen's, mechanics',
carriers', workmen's, repairmen's, warehousemen's or other like liens arising
in the ordinary course of business and either not yet due and payable or being
contested in good faith by appropriate legal proceedings and as to which
adequate reserves shall have been set aside on its books, in conformity with
generally accepted accounting principles;
(iv) deposits or pledges to secure
payment of workers' compensation, unemployment insurance or other social
security benefits or obligations;
(v) any judgment lien, unless the
judgment it secures shall not, within thirty (30) days after the entry thereof,
have been discharged, vacated, reversed, or execution thereof stayed pending
appeal, or shall not have been discharged, vacated or reversed within thirty
(30) days after the expiration of any such stay; or
(vi) the Subordinated Liens.
(c) Disposition of Assets. Sell, transfer, lease
or otherwise dispose of all or any material part of its assets other than in
the ordinary course of business and in exchange for collateral of like value in
which the Lender shall have a security interest.
(d) Merger. Enter into any consolidation or
merger with, or into any acquisition of all or substantially all of the
properties or assets of any person or entity.
(e) Transfer or Issuance of Interests. Permit
the issuance or transfer of any partnership interests in the Borrower, or any
options or other rights to purchase partnership interests in the Borrower.
(f) Change of Business. Change, in any material
respect, the nature or character of its business as intended, or engage in any
activity not reasonably related to such business.
<PAGE> 11
- 10 -
(g) Remove Assets. Remove any of the assets
procured with the proceeds of the borrowings provided for herein, or any
replacements for such assets, to a county in which no financing statement on
Form UCC-1 has been filed by the Lender with respect to such assets.
(h) Distributions or Dividends. Declare or make,
directly or indirectly, any payment or distribution, or incur any liability for
the purchase, acquisition, redemption or retirement of any partnership interest
of the Borrower or a return of capital or other payment or distribution of any
kind to a partner of the Borrower or any affiliate of the Borrower in respect
of the Borrower's capital.
(i) Transactions with Affiliates. Enter into any
transaction or agreement with any affiliate of the Borrower (other than the
Lender).
(j) Contracts. Enter into any contract or
commitment relating to its stock or assets except for contracts involving
aggregate payments of less than Five Thousand Dollars ($5,000.00) and contracts
which can be terminated without penalty on thirty (30) days' notice or less, or
amend or terminate any material contract (or waive any substantial right
thereunder), or incur any obligation (including obligations relating to the
borrowing of money or guarantee of indebtedness).
(k) Adverse Change. Suffer any material adverse
change in the business, assets, properties, prospects or condition (financial
or otherwise) of the Borrower or the Station, or any damage, destruction or
loss affecting any assets used or useful in the conduct of the business of the
Borrower.
(l) Employee Compensation. Suffer any material
increase in excess of the reasonable range in the broadcast industry in the
same or similar markets in compensation payable or to become payable to any
employees, or any bonus payment made or promised to any employee, or any
material change in personnel policies, insurance benefits or other compensation
arrangements affecting any employees, provided that nothing in this clause
shall be construed to limit or restrict the commission compensation of
employees who may be selling brokered time for the Borrower.
(m) Cancellation of Debts. Cancel any debts owed
or claims held by the Borrower.
(n) Write-Down. Suffer any significant
write-down of the value of any assets or any significant write-off as
uncollectible of any accounts receivable without the prior written consent of
the Lender.
<PAGE> 12
- 11 -
(o) Rights. Transfer or grant any right under,
or enter into any settlement regarding the breach or infringement of, any
license, patent, copyright, trademark, service mark, trade name, franchise, or
similar right, or modify any existing right relating to the Borrower.
(p) Construction Schedule. Make any material
changes in or departures from the Construction And Equipment Schedule for the
Station.
(q) Time Brokerage Agreement. Terminate, amend
or waive any provision of the Station's Time Brokerage Agreement.
(r) Programming. Make any changes in the
Station's programming except for changes in the Station's non-entertainment,
public affairs programming of less than ten percent (10%) of the weekly hours
between 6 a.m. and midnight.
Section 6.3 Reporting Requirements. So long as the Note shall
remain unpaid and the Agreement shall not have been terminated, the Borrower
shall, unless the Lender shall otherwise consent in writing, furnish to the
Lender:
(a) Default Certificate. As soon as possible and
in any event within five (5) business days after the occurrence of each Event
of Default (as defined in Section 7.1) of which the Borrower has knowledge, the
statement of the chief financial officer of the Borrower setting forth details
of such Event of Default and the action which the Borrower proposes to take
with respect thereto.
(b) Financial Statements. Beginning with the
making of the initial Loan disbursement, quarterly financial statements within
thirty (30) days after the end of each fiscal quarter; within ninety (90) days
after the end of each fiscal year of the Borrower, a copy of the audited
financial statements for such year for the Borrower, including therein a
balance sheet of the Borrower as of the end of such fiscal year, statements of
income and expense of the Borrower for such fiscal year, and a statement of
cash flow of the Borrower for such fiscal year, in each case prepared by an
independent public accountant of recognized standing acceptable to the Lender,
except that the Lender may waive the audit requirement and accept a review of
the Borrower's financial records.
(c) Notice of Litigation. Promptly give written
notice of all actions, suits and proceedings before any court or governmental
agency, domestic or foreign, which may be commenced or threatened against the
Borrower in which the claim involved is Five Thousand Dollars ($5,000.00) or
more and of any other matter of the type described in Section 5.1(e).
<PAGE> 13
- 12 -
(d) Budget. An annual budget to the Lender to be
reviewed semi-annually. Such budgets shall cover all operating expenses and
capital expenditures for the Station and must be satisfactory to Lender.
(e) Other Information. Such other information
respecting the business, properties, operations or the condition, financial or
otherwise, of the Borrower as the Lender may from time to time reasonably
request.
ARTICLE 7. EVENTS OF DEFAULT
Section 7.1 Events of Default. Under this Agreement, an Event
of Default shall be any of the following:
(a) The Borrower shall fail to pay any
installment of principal or interest on the note, or any other obligation to
the Lender when due whether at the due date thereof or by acceleration or
otherwise, and such default shall remain unremedied for a period of five (5)
days after the due date thereof; or
(b) The security interest or lien of the Lender
in any material portion of the collateral covered by the Security Agreement,
Pledge Agreement or any Leasehold Mortgage shall at any time not constitute a
legal, valid and enforceable security interest or lien; or
(c) Any representation or warranty made by the
Borrower (or any of its Partners) herein, in the Security Agreement or in any
certificate, agreement, instrument or statement contemplated by or made or
delivered pursuant to or in connection with this Agreement, the Note, any
Leasehold Mortgage or the Security Agreement, its Certificate of Limited
Partnership or by the Partners in the Pledge Agreement shall prove to have been
incorrect in any material respect when made; or
(d) The Borrower shall fail to perform or observe
any other term, covenant or agreement contained in this Agreement, the Note,
the Security Agreement, any Leasehold Mortgage, its Certificate of Limited
Partnership or the Partners shall fail to perform or observe any term, covenant
or agreement contained in the Pledge Agreement, and any such failure remains
unremedied for thirty (30) days after written notice thereof shall have been
given to the Borrower by the Lender; or
(e) The Borrower or its partners shall fail to
pay any indebtedness for borrowed money owing by the Borrower or its partners
or any interest or premium thereon, when due, whether such indebtedness shall
become due by scheduled maturity, by required prepayment, by acceleration, by
demand or otherwise, or the Borrower or its partners shall fail to perform any
term, covenant or
<PAGE> 14
- 13 -
agreement under any agreement or instrument evidencing or securing or relating
to any such indebtedness owing by the Borrower or its partners if the effect of
such failure is to accelerate, or to permit the holder of such indebtedness to
accelerate the maturity of such indebtedness; or
(f) The Borrower shall expend the proceeds of the
Loan for any purpose other than as set forth in Section 1.5 hereof, without the
prior written consent of the Lender, which may be withheld in the Lender's sole
discretion; or
(g) The Borrower shall (i) fail to pay its debts
as they mature in the ordinary course of business; (ii) file a petition
commencing a voluntary case concerning it under any Chapter of Title 11 of the
United States Code entitled "Bankruptcy"; or (iii) the Borrower shall apply for
or consent to the appointment of any receiver, trustee, custodian or similar
officer for it or for all or any substantial part of its property; or (iv) such
receiver, trustee, custodian or similar officer shall be appointed without the
application or consent of the Borrower and such appointment shall continue
undischarged for a period of thirty (30) days; or (v) an involuntary case is
commenced against the Borrower under any Chapter of the aforementioned Title 11
and an order for relief under such Title 11 is entered or the petition
commencing the case is controverted but is not dismissed within thirty (30)
days after the commencement of the case; or (vi) the Borrower shall institute
(by petition, application, answer, consent or otherwise) any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, dissolution,
liquidation or similar proceeding relating to it under the laws of any
jurisdiction; or (vii) any such proceeding shall be instituted against the
Borrower and shall remain undismissed for a period of thirty (30) days; or
(viii) the Borrower shall take any action for the purpose of effectuating the
foregoing; or
(h) Any court, government, or government agency
shall condemn, seize or otherwise appropriate or take custody or control of all
or a substantial portion of the property or assets of the Borrower; or
(i) There shall be a cancellation, denial or
revocation of any material broadcast license for the Station, the Borrower
shall be finally denied renewal of any such license, or any such license shall
be renewed on terms that materially adversely affect the economic or commercial
value or usefulness thereof; or
(j) Any event constituting an Event of Default
under Section 6.1(i) shall occur.
Section 7.2 Effect of Event of Default. Should any Event of
Default occur, the Lender may at its option by written notice to the Borrower
declare the entire unpaid principal amount of the Note, together with all
unpaid interest and all other amounts payable under this Agreement and every
other obligation of the Borrower to the Lender, immediately due and payable,
whereupon the Note and all such obligations shall become and be forthwith due
and payable, without presentment,
<PAGE> 15
- 14 -
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower, anything contained herein or in the Note or in such
other note or evidence of indebtedness to the contrary notwithstanding;
provided, however, that in case of an Event of Default under Section 7.1(g),
all the obligations of the Borrower under this Agreement and the Note shall
become immediately due and payable as of the date of any such Event of Default
regardless of the cause of such Event of Default and without any notice to the
Borrower required from the Lender. The Lender shall have, in addition to all
other rights and remedies allowed by law, the rights and remedies of a secured
party under the Uniform Commercial Code as in effect in the State of Florida
and, without limiting the generality of the foregoing, the rights and remedies
provided for in the Security Agreement, Pledge Agreements, and any Leasehold
Mortgage, which provisions are hereby incorporated by reference.
ARTICLE 8. MISCELLANEOUS
Section 8.1 No Waiver; Cumulative Remedies. No failure or
delay on the part of the Lender in exercising any right, power or remedy
hereunder shall operate as a waiver, nor shall any single or partial exercise
of any such right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
Section 8.2 Amendments. No amendment, modification,
termination or waiver of any provision of this Agreement, the Note, the
Security Agreement, the Escrow Agreement or any Leasehold Mortgage, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless in writing, signed by the Lender and then only in the specific instance
and for the specific purpose for which given. No notice to or demand on the
Borrower in any case shall entitle it to any other or further notice or demand
in similar or other circumstances.
Section 8.3 Conflicts. In the event of any conflict or
inconsistency between any provision of this Agreement and a provision of the
Note, the Security Agreement or any Leasehold Mortgage, the provisions of this
Agreement shall control.
Section 8.4 Address for Notices. All notices and other
communications under this Agreement shall be in writing and shall be served by
personal service or by mailing a copy thereof by registered or certified mail,
return receipt requested, to the applicable party at the addresses indicated
below:
<PAGE> 16
- 15 -
If to the Borrower:
Roberts Broadcasting Company of Raleigh-Durham, Ltd.
1408 N. Kings Highway
Suite 300
St. Louis, Missouri 63113
If to the Lender:
Paxson Communications Corporation
601 Clearwater Park Road
West Palm Beach, FL 33401
or at such other address as may be designated by either party in a written
notice to the other complying as to delivery with the terms of this Section.
All such notices and other communications shall be effective on the date of
personal delivery or the date set forth on the return receipt.
Section 8.5 Expenses. The Lender shall pay any and all taxes
and fees payable or determined to be payable in connection with the execution,
delivery and recordation of any instruments and documents to be delivered
hereunder. In addition, Lender agrees to pay (i) the costs and expenses in
connection with the negotiation, preparation and execution of the Loan
Agreement, the Note, the Security Agreement, the Pledge Agreement and all other
documents and instruments to be delivered hereunder (collectively, the "Loan
Documents"); (ii) the fees, expenses and disbursements of counsel in connection
with the negotiation, preparation, execution and administration of the Loan
Documents and the loan and any consents, amendments, waivers or other
modifications hereto or thereto; and (iii) all the costs and expenses of
creating and perfecting liens in favor of Lender pursuant to any loan document.
Section 8.6 Binding Effect; Assignment. This Agreement shall
become effective when executed and thereafter shall be binding upon and inure
to the benefit of the Borrower, the Lender and their respective successors and
assigns, except that the Borrower shall not have the right to assign any rights
or obligations hereunder without the prior written consent of the Lender. The
Lender shall be permitted to assign any of its rights, interest and obligations
hereunder, whereupon the Lender shall be released from performing all
obligations so assigned which arise after the effective date of such
assignment.
Section 8.7 Governing Law. This Agreement, the Note, the
Security Agreement and related documents shall be governed by, and construed in
accordance with, the laws of the State of Florida with the exception of its
conflicts of laws provisions; provided that the effect of any
<PAGE> 17
- 16 -
recordation shall be determined by the State thereof. The Borrower hereby
irrevocably submits to the jurisdiction of the state and federal district
courts for the district including Palm Beach, Florida for the purposes of any
action or proceeding arising out of or relating to this Agreement or the
subject matter hereof or thereof; waives and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action or proceeding, any claim
that (A) it is not personally subject to the jurisdiction of such courts, (B)
the action or proceeding is brought in an inconvenient forum or (C) the venue
of the action or proceeding is improper; and agrees that, notwithstanding any
right or privilege it may possess at any time, the Borrower and its property
are and shall be generally subject to suit on account of the obligations
assumed by it hereunder.
The Borrower agrees that service in person or by certified or
registered U.S. mail to its address set forth in Section 8.04 shall constitute
valid in personam service upon the Borrower and its successors and assigns in
any action or proceeding with respect to any matter as to which it has
submitted to jurisdiction hereunder.
Notwithstanding the foregoing, the Lender may at its option bring
any action or other proceeding arising out of or relating to this Agreement or
the subject matter hereof or thereof against the Borrower or any of its assets
in the courts of any jurisdiction or place where the Borrower or such assets
may be found or where the Borrower may be subject to personal jurisdiction, and
may effect service of process as provided under any applicable Governmental
Rule.
The obligations of the Borrower under this Section shall survive any
termination of this Agreement.
Section 8.8 Severability of Provisions. Any provision of this
Agreement, the Note, the Security Agreement, or any Leasehold Mortgage that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions or affecting the validity or
enforceability of any provisions in any other jurisdiction.
Section 8.9 Headings. Article and Section headings in this
Agreement are including for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
Section 8.10 Rights Affected by Extensions. The rights of the
Lender and its assigns shall not be impaired by any indulgence, release,
renewal, extension or modification which the Lender may grant with respect to
the indebtedness or any part thereof, or with respect to the collateral or with
respect to any endorser, guarantor, or surety without notice or consent of the
Borrower or any endorser, guarantee, or surety.
<PAGE> 18
- 17 -
Section 8.11 Survival of Representations and Warranties. All
representations and warranties made in this Agreement and in any documents or
certificates delivered pursuant hereto or thereto shall survive the execution
and delivery of this Agreement and the Note and the making of the Loan
hereunder and continue in full force and effect, as of the respective dates as
of which they were made, until all of the obligations of the Borrower to the
Lender hereunder have been paid in full.
Section 8.12 Attorneys' Fees. If any litigation arises between
the parties in connection with the transactions contemplated by this Agreement,
the prevailing party shall be entitled to recover reasonable attorneys' fees in
addition to all other damages and remedies.
Section 8.13 Further Assurances. From time to time, the
Borrower shall execute and deliver to the Lender such additional documents as
the Lender may reasonably require to carry out the purposes of this Agreement
or any of the documents entered into in connection herewith, or to preserve and
protect the rights of the Lender hereunder or thereunder.
Section 8.14 Indemnification. The Borrower hereby indemnifies
and holds harmless the Lender and its directors, officers, shareholders,
employees, agents, counsel, subsidiaries and affiliates (the "Indemnified
Persons") from and against any and all losses, liabilities, obligations,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against any Indemnified Person in any way relating to or arising out
of this Agreement, the documents entered into in connection herewith, or any of
them or any of the transactions contemplated hereby or thereby; provided,
however, that the Borrower shall not be liable to any Indemnified Person, if
there is a judicial determination that such losses, liabilities, obligations,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person.
Section 8.15 Counterparts. This agreement may be executed in
any number of counterparts, and by each of the parties on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all of which shall constitute but one and the same instrument.
Section 8.16 Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.17 Waiver. EACH OF LENDER AND BORROWER HEREBY AGREES
TO WAIVE ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN
<PAGE> 19
- 18 -
DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, REPLACEMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT, THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE LOAN.
Section 8.18 Maximum Interest. Lender and Borrower intend that
this Agreement and the other Loan Documents conform to all applicable usury
laws. Accordingly, no provisions of the Loan Documents shall require the
payment or permit the collection of interest in excess of the maximum rate
permitted by applicable law ("Maximum Rate"), or obligate Borrower to pay any
taxes, assessments, charges, insurance premiums or other amounts which are held
to constitute interest to the extent that such payments, when added to the
other obligations under the Loan Documents, would be held to constitute
contracting for, or the payment by Borrower of, interest at a rate greater than
the Maximum Rate. Lender and Borrower further agree that:
(i) if any excess of interest in
such respect is herein or in any such other instrument provided for, or shall
be adjudicated to be so provided for herein or in any such instrument, the
provisions of this subsection 8.16 shall govern, and neither Borrower nor its
successors or assigns shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate;
(ii) if at any time the amount of
interest under any of the Loan Documents for a calendar year exceeds the
Maximum Rate had the Maximum Rate at all times been in effect, the interest
chargeable under any such Loan Document shall be limited to the amount of
interest that could have been charged if the Maximum Rate had at all times been
in effect, but any subsequent reductions in the interest due shall not reduce
the rate of interest chargeable under any such Loan Document below the Maximum
Rate until the total amount of interest accrued under any such Loan Document
equals the amount of interest that would have accrued if the interest provided
for in any such Loan Document had at all times been in effect and collectible;
(iii) if the maturity of any Loan
Document is accelerated for any reason, or in the event of any prepayment by
Borrower, or in any other event, earned interest may never include more than
the Maximum Rate, computed from the date of disbursement of the funds evidenced
by such Loan Document until payment, and any interest otherwise payable under
such Loan Document that is in excess of the Maximum Rate shall be canceled
automatically as of such acceleration or such other event and (if theretofore
paid) shall be credited against principal;
(iv) if it should be held that any
interest payable or chargeable under any Loan Document is in excess of the
Maximum Rate, the interest payable or chargeable under such
<PAGE> 20
- 19 -
Loan Document shall be reduced to the maximum amount permitted by applicable
federal or state law, whichever shall permit the higher lawful interest, as
construed by courts having jurisdiction thereof; and
(v) the spreading, prorating and
amortizing of interest over the term of the Loan Documents shall be allowed to
the fullest extent permitted by applicable law.
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective duly authorized officers, as of the date first
above written.
WITNESS: ROBERTS BROADCASTING COMPANY OF
RALEIGH-DURHAM, LTD.
By: Roberts Broadcasting L.L.C., as
general partner
By:
- -------------------------- ------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
WITNESS: PAXSON COMMUNICATIONS
CORPORATION
By:
- -------------------------- ------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
<PAGE> 22
LOAN AGREEMENT
Index to Exhibits
No. Document
1. Promissory Note
2. Asset Purchase Agreement
3. Security Agreement
4. Pledge Agreement
5. Leasehold Mortgage
6. Limited Partnership Agreement
6A. Option Agreement
7. Time Brokerage Agreement
<PAGE> 23
EXHIBIT 1
PROMISSORY NOTE
<PAGE> 24
EXHIBIT 2
ASSET PURCHASE AGREEMENT
<PAGE> 25
EXHIBIT 3
SECURITY AGREEMENT
<PAGE> 26
EXHIBIT 4
PLEDGE AGREEMENT
<PAGE> 27
EXHIBIT 5
LEASEHOLD MORTGAGE
<PAGE> 28
EXHIBIT 6
LIMITED PARTNERSHIP AGREEMENT
<PAGE> 29
EXHIBIT 6A
OPTION AGREEMENT
<PAGE> 30
EXHIBIT 7
TIME BROKERAGE AGREEMENT
<PAGE> 1
EXHIBIT 10.04
- --------------------------------------------------------------------------------
TIME BROKERAGE AGREEMENT
BY AND BETWEEN
ROBERTS BROADCASTING COMPANY OF RALEIGH-DURHAM, LTD.
AND
PAXSON COMMUNICATIONS OF RALEIGH-DURHAM-47, INC.
FOR
TELEVISION STATION WRMY(TV), ROCKY MOUNT, NORTH CAROLINA
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1. LEASE OF STATION AIR TIME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effective Date; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Option to Renew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Licensee Operation of Station . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Licensee Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Programmer Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Licensee Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Additional Licensee Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Responsibility for Employees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 3. STATION PROGRAMMING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Broadcast Station Programming Policy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Licensee Control of Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Programmer Compliance with Copyright Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Children's Television Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 Payola . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Cooperation on Programming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.8 Staffing Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 4. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1 Programmer's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Licensee's Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3 Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Time Brokerage Challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Confidential Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Political Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C> <C>
6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.2 Termination Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.3 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
6.4 Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 7. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Call Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.8 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.10 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
- ii -
<PAGE> 4
TIME BROKERAGE AGREEMENT
TIME BROKERAGE AGREEMENT, made this 31st day of October, 1995, by and
between Roberts Broadcasting Company of Raleigh-Durham, Ltd., a Delaware
limited partnership (the "Licensee") and Paxson Communications of
Raleigh-Durham-47, Inc., a Florida corporation (the "Programmer").
WHEREAS, Licensee is seeking to acquire Television Station WRMY(TV),
Rocky Mount, North Carolina (the "Station") pursuant to authorizations issued
by the Federal Communications Commission ("FCC").
WHEREAS, Programmer is involved in television station programming and
operation.
WHEREAS, the Licensee wishes to retain Programmer to provide
programming for the Station that is in conformity with Station policies and
procedures, FCC policies for time brokerage arrangements, and the provisions
hereof.
WHEREAS, Programmer agrees to use the Station to broadcast such
programming of its selection that is in conformity with all rules, regulations
and policies of the FCC, subject to Licensee's full authority to manage and
control the operation of the Station.
WHEREAS, Programmer and Licensee agree to cooperate to make this Time
Brokerage Agreement work to the benefit of the public and both parties and as
contemplated in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and mutual
promises and covenants contained herein, the parties, intending to be legally
bound, agree as follows:
SECTION 1. LEASE OF STATION AIR TIME
1.1 Representations. Both Licensee and Programmer represent that
they are legally qualified, empowered and able to enter into this Agreement and
that the execution, delivery, and performance hereof shall not constitute a
breach or violation of any material agreement, contract or other obligation to
which either party is subject or by which it is bound.
1.2 Effective Date; Term. The effective date of this Agreement
shall be the date of consummation of Licensee's acquisition of the Station
following FCC approval (the "Closing"). It shall continue in force for an
initial term of seven years from that date unless otherwise extended or
terminated as set forth below.
<PAGE> 5
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1.3 Scope. During the term of this Agreement and any renewal
thereof, Licensee shall make available to Programmer broadcast time upon the
Station as set forth in this Agreement. Programmer shall deliver such
programming, at its expense, to the Station's transmitter facilities or other
authorized remote control points as reasonably designated by Licensee. Subject
to Licensee's reasonable approval, as set forth in this Agreement, Programmer
shall provide programming of Programmer's selection complete with commercial
matter, news, public service announcements and other suitable programming to
the Licensee up to one hundred sixty-two (162) hours per week. Notwithstanding
the foregoing, the Licensee may designate such additional time as it may
require without any adjustment of the monthly consideration to be paid to
Licensee under Section 1.5 for the broadcast of programming necessary for the
Station to broadcast news, public affairs, children's, religious and
non-entertainment programming as required by the FCC. All program time not
reserved by or designated for Licensee shall be available for use by Programmer
and no other party.
1.4 Option to Renew. Subject to the termination provisions of
Section 6 hereof, this Agreement may be renewed for an additional term as
mutually agreed upon by the Licensee and the Programmer.
1.5 Consideration. As consideration for the air time made
available hereunder Programmer shall make payments to Licensee as set forth in
Attachment I.
1.6 Licensee Operation of Station. Licensee will have full
authority, power and control over the management and operations of the Station
during the term of this Agreement and during any renewal of such term.
Licensee will bear all responsibility for Station's compliance with all
applicable provisions of the Communications Act of 1934, as amended, (the
"Act") the rules, regulations and policies of the FCC and all other applicable
laws. Licensee shall be solely responsible for and pay in a timely manner all
operating costs of the Station, including but not limited to maintenance of the
studio and transmitting facility and costs of electricity, except that
Programmer shall be responsible for the costs of its programming as provided in
Sections 1.8 and 2.3 hereof. Licensee shall employ at its expense management
level and other employees consisting of a General Manager and such operational
and other personnel as outlined in the budget previously provided to
Programmer, who will direct the day-to-day operations of the Station, and who
will report to and be accountable to the Licensee. Licensee shall be
responsible for the salaries, taxes, insurance and related costs for all
personnel employed by the Station and shall maintain insurance satisfactory to
Programmer covering the Station's transmission facilities. During the term of
the Agreement and any renewal hereof, Programmer agrees to perform, without
charge, routine monitoring of the Station's transmitter performance and tower
lighting by remote control, if and when requested by Licensee.
<PAGE> 6
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1.7 Licensee Representations and Warranties. Licensee represents
and warrants as follows:
(a) Licensee owns and holds or will hold all licenses and
other permits and authorizations necessary for the operation of the Station,
and such licenses, permits and authorizations are and will be in full force and
effect throughout the term of this Agreement. There is not now pending, or to
Licensee's best knowledge, threatened, any action by the FCC or by any other
party to revoke, cancel, suspend, refuse to renew or modify adversely any of
such licenses, permits or authorizations. Licensee is not in material
violation of any statute, ordinance, rule, regulation, policy, order or decree
of any federal, state or local entity, court or authority having jurisdiction
over it or the Station, which would have an adverse effect upon the Licensee,
the Station or upon Licensee's ability to perform this Agreement. Licensee
shall not take any action or omit to take any action which would have an
adverse impact upon the Licensee, the Station or upon Licensee's ability to
perform this Agreement. All reports and applications required to be filed with
the FCC or any other governmental body have been, and during the course of the
term of this Agreement or any renewal thereof, will be filed in a timely and
complete manner. During the term of this Agreement and any renewal thereof,
Licensee shall not dispose of, transfer, assign or pledge any of Licensee's
assets and properties except with the prior written consent of the Programmer,
if such action would adversely affect Licensee's performance hereunder or the
business and operations of Licensee or the Station permitted hereby.
(b) Licensee shall pay, in a timely fashion, all of the
expenses incurred in operating the Station including salaries and benefits of
its employees, lease payments, utilities, taxes, programming expenses, etc.
1.8 Programmer Responsibility. Programmer shall be solely
responsible for any expenses incurred in the origination and/or delivery of
programming from any remote location and for any publicity or promotional
expenses incurred by Programmer, including, without limitation, ASCAP and BMI
music license fees for all programming provided by Programmer. Such payments
by Programmer shall be in addition to any other payments to be made by
Programmer under this Agreement.
1.9 Contracts. Programmer will enter into no third-party
contracts, leases or agreements which will bind Licensee in any way except with
Licensee's prior written approval.
SECTION 2. STATION OBLIGATIONS TO ITS COMMUNITY OF LICENSE
2.1 Licensee Authority. Notwithstanding any other provision of
this Agreement, Programmer recognizes that Licensee has certain obligations to
broadcast programming to meet the
<PAGE> 7
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needs and interests of viewers in Rocky Mount, North Carolina, the station's
service area and the educational and informational needs of children. From
time to time the Licensee shall air specific programming on issues of
importance to the local community and educational and informational programming
for children. Nothing in this Agreement shall abrogate the unrestricted
authority of the Licensee to discharge its obligations to the public and to
comply with the Act and the rules and policies of the FCC.
2.2 Additional Licensee Obligations. Although both parties shall
cooperate in the broadcast of emergency information over the Station, Licensee
shall also retain the right to interrupt Programmer's programming in case of an
emergency or for programming which, in the good faith judgment of Licensee, is
of greater local or national public importance. Licensee shall also coordinate
with Programmer the Station's hourly station identification and any other
announcements required to be aired by FCC rules. Licensee shall continue to
maintain a main studio, as that term is defined by the FCC, within the
Station's principal community contour, shall maintain its local public
inspection file in accordance with FCC rules, regulations and policies, and
shall prepare and place in such inspection file or files in a timely manner all
material required by Section 73.3526 of the FCC's Rules, including without
limitation the Station's quarterly issues and program lists; information
concerning the broadcast of children's educational and informational
programming; and documentation of compliance with commercial limits applicable
to certain children's television programming. Programmer shall, upon request
by Licensee, provide Licensee with such information concerning Programmer's
programs and advertising as is necessary to assist Licensee in the preparation
of such information. Licensee shall also maintain the station logs, receive
and respond to telephone inquiries, and control and oversee any remote control
point which may be established for the Station.
2.3 Responsibility for Employees and Expenses. Programmer shall
employ and be solely responsible for the salaries, taxes, insurance and related
costs for all personnel used in the production of its programming (including,
but not limited to, salespeople, technical staff, traffic personnel, board
operators and programming staff). Licensee will provide and be responsible for
the Station personnel necessary for the broadcast transmission of its own
programs (including, without limitation, the Station's General Manager and such
operational and other personnel as may be necessary or appropriate), and will
be responsible for the salaries, taxes, benefits, insurance and related costs
for all the Licensee's employees used in the broadcast transmission of its
programs and necessary to other aspects of Station operation. Whenever on the
Station's premises, all personnel shall be subject to the overall supervision
of Licensee's General Manager.
<PAGE> 8
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SECTION 3. STATION PROGRAMMING POLICIES
3.1 Broadcast Station Programming Policy Statement. Licensee has
adopted and will enforce a Broadcast Station Programming Policy Statement (the
"Policy Statement"), a copy of which appears as Attachment III hereto and which
may be amended in a reasonable manner from time to time by Licensee upon notice
to Programmer. Programmer agrees and covenants to comply in all material
respects with the Policy Statement, to all rules and regulations of the FCC,
and to all changes subsequently made by Licensee or the FCC. Programmer shall
furnish or cause to be furnished the artistic personnel and material for the
programs as provided by this Agreement and all programs shall be prepared and
presented in conformity with the rules, regulations and policies of the FCC and
with the Policy Statement set forth in Attachment II hereto. All advertising
spots and promotional material or announcements shall comply with applicable
federal, state and local regulations and policies and shall be produced in
accordance with quality standards established by Programmer. If Licensee
determines that a program supplied by Programmer is for any reason, within
Licensee's sole discretion, unsatisfactory or unsuitable or contrary to the
public interest, or does not comply with the Policy Statement it may, upon
prior written notice to Programmer (to the extent time permits such notice),
suspend or cancel such program without liability to Programmer. Licensee will
use reasonable efforts to provide such written notice to Programmer prior to
the suspension or cancellation of such program.
3.2 Licensee Control of Programming. Programmer recognizes that
the Licensee has full authority to control the operation of the Station. The
parties agree that Licensee's authority includes but is not limited to the
right to reject or refuse such portions of the Programmer's programming which
Licensee believes to be unsatisfactory, unsuitable or contrary to the public
interest. Programmer shall have the right to change the programming supplied
to Licensee and shall give Licensee at least twenty-four (24) hours notice of
substantial and material changes in such programming.
3.3 Programmer Compliance with Copyright Act. Programmer
represents and warrants to Licensee that Programmer has full authority to
broadcast its programming on the Station, and that Programmer shall not
broadcast any material in violation of the Copyright Act. All music supplied
by Programmer shall be: (i) licensed by ASCAP, SESAC or BMI; (ii) in the
public domain; or (iii) cleared at the source by Programmer. Licensee will
maintain ASCAP, BMI and SESAC licenses as necessary. The right to use the
programming and to authorize its use in any manner shall be and remain vested
in Programmer.
3.4 Sales. Programmer shall retain all of the Station's network
compensation revenues, any revenues received from any network or program
supplier with respect to affiliation or use of programming by Programmer, any
retransmission consent revenues and all revenues from
<PAGE> 9
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the sale of advertising time within the programming it provides to the
Licensee. Programmer shall be responsible for payment of the commissions due
to any national sales representative engaged by it for the purpose of selling
national advertising which is carried during the programming it provides to
Licensee. Unless otherwise agreed between the parties, Licensee shall retain
all revenues from the sale of Station's advertising during the hours each week
in which the Licensee airs its own programming pursuant to Section 1.3 hereof.
3.5 Children's Television Advertising. Programmer agrees that it
will not broadcast advertising within programs originally designed for children
aged 12 years and under in excess of the amounts permitted under applicable FCC
rules, and will take all steps necessary to pre-screen children's programming
broadcast during the hours it is providing such programming, to establish that
advertising is not being broadcast in excess of the applicable FCC rules.
3.6 Payola. Programmer agrees that it will not accept any
consideration, compensation, gift or gratuity of any kind whatsoever,
regardless of its value or form, including, but not limited to, a commission,
discount, bonus, material, supplies or other merchandise, services or labor
(collectively "Consideration"), whether or not pursuant to written contracts or
agreements between Programmer and merchants or advertisers, unless the payer is
identified in the program for which Consideration was provided as having paid
for or furnished such Consideration, in accordance with the Act and FCC
requirements. Programmer agrees to annually, or more frequently at the request
of the Licensee, execute and provide Licensee with a Payola Affidavit from each
of its employees involved with the Station substantially in the form attached
hereto as Attachment III.
3.7 Cooperation on Programming. Programmer and Licensee mutually
acknowledge their interest in ensuring that the Station serves the needs and
interests of viewers in Rocky Mount and the surrounding service area and agree
to cooperate to provide such service. Licensee shall, on a regular basis,
assess the issues of concern to residents of Rocky Mount and the surrounding
area and address those issues in its public service programming. Programmer,
in cooperation with Licensee, will endeavor to ensure that programming
responsive to the needs and interests of the community of license and
surrounding area is broadcast, in compliance with applicable FCC requirements.
Licensee will describe those issues and the programming that is broadcast in
response to those issues and place issues/programs lists in the Station's
public inspection file as required by FCC rules. Further, Licensee may
request, and Programmer shall provide, information concerning such of
Programmer's programs as are responsive to community issues so as to assist
Licensee in the satisfaction of its public service programming obligations.
Licensee shall also evaluate the local need for children's educational and
informational programming and shall inform Programmer of its conclusions in
that regard. Licensee, in cooperation with Programmer, will ensure that
educational and informational programming for children is broadcast over the
Station in compliance with applicable FCC requirements. Programmer shall also
provide Licensee
<PAGE> 10
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upon request such other information necessary to enable Licensee to prepare
records and reports required by the Commission or other local, state or federal
government entities.
3.8 Staffing Requirements. Licensee will be in full compliance
with the main studio staff requirements as specified by the FCC.
SECTION 4. INDEMNIFICATION
4.1 Programmer's Indemnification. Programmer shall indemnify and
hold harmless Licensee from and against any and all claims, losses, costs,
liabilities, damages, forfeitures and expenses (including reasonable legal fees
and other expenses incidental thereto) of every kind, nature and description
(collectively, "Damages") resulting from (i) Programmer's breach of any
representation, warranty, covenant or agreement contained in this Agreement, or
(ii) any action taken by Programmer or its employees and agents with respect to
the Station, or any failure by Programmer or its employees and agents to take
any action with respect to the Station, including, without limitation, Damages
relating to violations of the Act or any rule, regulation or policy of the FCC,
slander, defamation or other claims relating to programming provided by
Programmer and Programmer's broadcast and sale of advertising time on the
Station.
4.2 Licensee's Indemnification. Licensee shall indemnify and hold
harmless Programmer from and against any and all claims, losses, consents,
liabilities, damages, FCC forfeitures and expenses (including reasonable legal
fees and other expenses incidental thereto) of every kind, nature and
description, arising out of Licensee's operations and broadcasts to the extent
permitted by law and any action taken by the Licensee or its employees and
agents with respect to the Station, or any failure by Licensee or its employees
and agents to take any action with respect to the Station.
4.3 Limitation. Neither Licensee nor Programmer shall be entitled
to indemnification pursuant to this section unless such claim for
indemnification is asserted in writing delivered to the other party.
4.4 Time Brokerage Challenge. If this Agreement is challenged at
the FCC, whether or not in connection with the Station's license renewal
application, counsel for the Licensee and counsel for the Programmer shall
jointly defend the Agreement and the parties' performance thereunder throughout
all FCC proceedings at the sole expense of the Programmer. If portions of this
Agreement do not receive the approval of the FCC Staff, then the parties shall
reform the Agreement as necessary to satisfy the FCC Staff's concerns or, at
Programmer's option and expense, seek reversal of the Staff's decision and
approval from the full Commission or a court of law.
<PAGE> 11
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SECTION 5. ACCESS TO PROGRAMMER MATERIALS AND CORRESPONDENCE
5.1 Confidential Review. Prior to the commencement of any
programming by Programmer under this Agreement, Programmer shall acquaint the
Licensee with the nature and type of the programming to be provided. Licensee
shall be entitled to review at its discretion from time to time on a
confidential basis any of Programmer's programming material it may reasonably
request. Programmer shall promptly provide Licensee with copies of all
correspondence and complaints received from the public (including any telephone
logs of complaints called in), and copies of all program logs and promotional
materials. However, nothing in this section shall entitle Licensee to review
the internal corporate or financial records of the Programmer.
5.2 Political Advertising. Programmer shall cooperate with
Licensee to assist Licensee in complying with all rules of the FCC regarding
political broadcasting. Licensee shall promptly supply to Programmer, and
Programmer shall promptly supply to Licensee, such information, including all
inquiries concerning the broadcast of political advertising, as may be
necessary to comply with FCC rules and policies, including the lowest unit
rate, equal opportunities, reasonable access, political file and related
requirements of federal law. Licensee, in consultation with Programmer, shall
develop a statement which discloses its political broadcasting policies to
political candidates, and Programmer shall follow those policies and rates in
the sale of political programming and advertising. In the event that
Programmer fails to satisfy the political broadcasting requirements under the
Act and the rules and regulations of the FCC and such failure inhibits Licensee
in its compliance with the political broadcasting requirements of the FCC, then
to the extent reasonably necessary to assure such compliance, Programmer shall
either provide rebates to political advertisers or release broadcast time
and/or advertising availabilities to Licensee at no cost to Licensee.
SECTION 6. TERMINATION AND REMEDIES UPON DEFAULT
6.1 Termination. In addition to other remedies available at law
or equity, this Agreement may be terminated as set forth below by either
Licensee or Programmer by written notice to the other if the party seeking to
terminate is not then in material default or breach hereof, upon the occurrence
of any of the following:
(a) subject to the provisions of Section 7.9, this
Agreement is declared invalid or illegal in whole or substantial part by an
order or decree of an administrative agency or court of competent jurisdiction
and such order or decree has become final and no longer subject to further
administrative or judicial review;
<PAGE> 12
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(b) the other party is in material breach of its
obligations hereunder and has failed to cure such breach within thirty (30)
days of notice from the non-breaching party;
(c) the mutual consent of both parties; or
(d) there has been a material change in FCC rules,
policies or precedent that would cause this Agreement to be in violation
thereof and such change is in effect and not the subject of an appeal or
further administrative review and this Agreement cannot be reformed, in a
manner acceptable to Licensee and Programmer, to remove and/or eliminate the
violation.
6.2 Termination Procedures. During any period prior to the
effective date of any termination of this Agreement, Programmer and Licensee
agree to cooperate in good faith to ensure that Station operations will
continue, to the extent possible, in accordance with the terms of this
Agreement and that the termination of this Agreement is effected in a manner
that will minimize, to the extent possible, the resulting disruption of the
Station's ongoing operations.
6.3 Force Majeure. Any failure or impairment of the Station's
facilities or any delay or interruption in the broadcast of programs, or
failure at any time to furnish facilities, in whole or in part, for broadcast,
due to Acts of God, strikes, lockouts, material or labor restrictions by any
governmental authority, civil riot, floods and any other cause not reasonably
within the control of Licensee, or for power reductions necessitated for
maintenance of the Station or for maintenance of other stations located on the
tower from which the Station will be broadcasting, shall not constitute a
breach of this Agreement and Licensee will not be liable to Programmer for
reimbursement or reduction of the consideration owed to Licensee.
6.4 Other Agreements. During the term of this Agreement or any
renewal hereof, Licensee will not enter into any other agreement with any third
party that would conflict with or result in a material breach of this Agreement
by Licensee.
SECTION 7. MISCELLANEOUS
7.1 Assignment.
(a) Neither this Agreement nor any of the rights,
interests or obligations of either party hereunder shall be assigned,
encumbered, hypothecated or otherwise transferred without the prior written
consent of the other party, such consent not to be unreasonably withheld.
Notwithstanding the foregoing, Programmer shall have the right to collaterally
assign its rights and interests hereunder to its senior lenders.
<PAGE> 13
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(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.
(c) Licensee agrees to enter into such agreements and
confirmations as Programmer's senior lenders may reasonably require: (i) to
acknowledge and confirm any collateral assignment of this Agreement to such
senior lenders; (ii) to provide for simultaneous notice and reasonable cure
rights, which rights must be exercised within 30 days after the 30-day period
specified in Section 6.1(b) hereof, to such senior lenders of any default by
Programmer under this Agreement; (iii) to provide simultaneous notice and
reasonable cure rights, which rights must be exercised within 30 days after the
expiration of the 30-day period specified in Section 6.1(b) hereof, to such
senior lenders prior to any election or action by Licensee to terminate or
cancel this Agreement pursuant to Section 6.1(b) and, if requested by such
senior lenders, to enter into a new Agreement on the same terms and conditions
as this Agreement with such senior lenders or their nominee, successor or
purchaser who (x) possesses all requisite qualifications to hold FCC licenses,
(y) has not had an authorization issued by the FCC revoked or an application
for license renewal denied by the FCC, and (z) possesses the financial capacity
to perform Programmer's obligations hereunder ("Lenders' Assignee"); (iv) in
the event that such senior lenders shall be entitled to foreclose or otherwise
acquire Programmer's interest in this Agreement, or if such senior lenders (or
their nominee, successor or purchaser who qualifies as a "Lenders' Assignee")
shall have elected to enter into a new Agreement, on the same terms and
conditions as this Agreement, with Licensee, to enable such senior lenders to
acquire Programmer's interest in this Agreement or assign such interest to any
purchaser or assignee of such senior lenders who qualifies as a "Lenders'
Assignee", or require Licensee to enter into a new Agreement, on the same terms
and conditions as this Agreement, directly with any purchaser or assignee of
such senior lenders who qualifies as a "Lenders' Assignee"; and (v) provide for
such other assurances as such senior lenders shall reasonably request in
connection with the exercise of their rights under this paragraph 7.1(c).
7.2 Call Letters. Upon request of Programmer, subject to the
consent of the Licensee, Licensee shall apply to the FCC for authority to
change the call letters of the Station (with the consent of the FCC) to such
call letters that Programmer shall reasonably designate. Licensee must
coordinate with Programmer any proposed changes to the call letters of the
Station before taking any action to change such letters.
7.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
7.4 Entire Agreement. This Agreement and the Attachments hereto
embodies the entire agreement and understanding of the parties relating to the
operation of the Station. No
<PAGE> 14
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amendment, waiver of compliance with any provision or condition hereof, or
consent pursuant to this Agreement will be effective unless evidenced by an
instrument in writing signed by the parties.
7.5 Taxes. Licensee and Programmer shall each pay its own ad
valorem taxes, if any, which may be assessed on such party's respective
personal property for the periods that such items are owned by such party.
Programmer shall pay all taxes, if any, to which the consideration specified in
Section 1.5 herein is subject, provided that Licensee is responsible for
payment of its own income taxes.
7.6 Headings. The headings are for convenience only and will not
control or affect the meaning or construction of the provisions of this
Agreement.
7.7 Governing Law. The obligations of Licensee and Programmer are
subject to applicable federal, state and local law, rules and regulations,
including, but not limited to, the Act and the Rules and Regulations of the
FCC. The construction and performance of the Agreement will be governed by the
laws of the State of Florida.
7.8 Notices. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement shall be (i) in
writing, (ii) sent by telecopy (with receipt personally confirmed by
telephone), delivered by personal delivery, or sent by commercial delivery
service or certified mail, return receipt requested, (iii) deemed to have been
given on the date telecopied with receipt confirmed, the date of personal
delivery, or the date set forth in the records of the delivery service or on
the return receipt, and (iv) addressed as follows:
To Programmer: Paxson Communications of Raleigh-Durham-47, Inc.
601 Clearwater Park Road
West Palm Beach, FL 33401
Telecopy: (407) 659-4252
Telephone: (407) 659-4122
To Licensee: Roberts Broadcasting Company of Raleigh-Durham, Ltd.
1408 N. Kings Highway
Suite 300
St. Louis, MO 63113
Telecopy: (314) 367-0174
Telephone: (314) 367-0090
or to any such other or additional persons and addresses as the parties may
from time to time designate in a writing delivered in accordance with this
Section 7.8.
<PAGE> 15
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7.9 Severability. If any provision of this Agreement or
the application thereof to any person or circumstances shall be invalid or
unenforceable to any extent, the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by
law. In the event that the FCC alters or modifies its rules or policies in a
fashion which would raise substantial and material question as to the validity
of any provision of this Agreement, the parties hereto shall negotiate in good
faith to revise any such provision of this Agreement with a view toward
assuring compliance with all then existing FCC rules and policies which may be
applicable, while attempting to preserve, as closely as possible, the intent of
the parties as embodied in the provision of this Agreement which is to be so
modified.
7.10 Arbitration. Any dispute arising out of or related to this
Agreement that Licensee and Programmer are unable to resolve by themselves
shall be settled by arbitration in Miami, Florida by a panel of three
arbitrators. Licensee and Programmer shall each designate one disinterested
arbitrator and the two arbitrators designed shall select the third arbitrator.
The persons selected as arbitrators need not be professional arbitrators, and
persons such as lawyers, accountants and bankers shall be acceptable. Before
undertaking to resolve a 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
Licensee and Programmer. The costs and expenses of the arbitration proceeding
shall be assessed between Licensee and Programmer 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 in equity based upon any claim arising out of
or related to this Agreement shall be instituted in any court by Licensee or
Programmer against the other except: (i) an action to compel arbitration
pursuant to this Section; or (ii) an action to enforce the award of the
arbitration panel rendered in accordance with this Section.
7.11 No Joint Venture. Nothing in this Agreement shall be deemed
to create a joint venture between the Licensee and the Programmer.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
LICENSEE: ROBERTS BROADCASTING COMPANY OF
RALEIGH-DURHAM, LTD.
<PAGE> 16
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By: Roberts Broadcasting L.L.C., as
general partner
By:
--------------------------------------------------
Name:
Title:
PROGRAMMER: PAXSON COMMUNICATIONS OF
RALEIGH-DURHAM-47, INC.
By:
--------------------------------------------------
Name:
Title:
<PAGE> 17
ATTACHMENT I
Compensation Schedule
Programmer shall pay Licensee a monthly fee sufficient to allow
Licensee to make timely monthly payments of principal and interest under its
Loan Agreement with Paxson Communications Corporation and to permit Licensee to
pay the Station's monthly operating expenses in accordance with the terms of
the Station's approved budget.
The net revenue of the Station (gross revenue less payment of the
operating expenses and debt amortization) shall be distributed on a quarterly
basis to Programmer and Licensee with Licensee receiving 60% and Programmer
receiving 40% of the net revenues. Both Licensee and Programmer shall have
full access to the books and records of the Station to determine the quarterly
distributions.
<PAGE> 18
ATTACHMENT II
Broadcast Station Programming Policy Statement
<PAGE> 19
BROADCAST STATION PROGRAMMING POLICY STATEMENT
The following sets forth the policies generally applicable to the
presentation of programming and advertising over Television Station WRMY(TV),
Rocky Mount, North Carolina. All programming and advertising broadcast by the
station must conform to these policies and to the provisions of the
Communications Act of 1034, as amended [the "Act"], and the Rules and
Regulations of the Federal Communications Commission ["FCC"].
Station Identification
The station must broadcast a station identification announcement once an hour
as close to the hour as feasible in a natural break in the programming. The
announcement must include (1) the station's call letters (currently, WRMY);
followed immediately by (2) the station's city of license (Rocky Mount, North
Carolina).
Broadcast of Telephone Conversations
Before recording a telephone conversation for broadcast or broadcasting such a
conversation simultaneously with its occurrence, any party to the call must be
informed that the call will be broadcast or will be recorded for later
broadcast, and the party's consent to such broadcast must be obtained. This
requirement does not apply to calls initiated by the other party which are made
in a context in which it is customary for the station to broadcast telephone
calls.
Sponsorship Identification
When money, service, or other valuable consideration is either directly or
indirectly paid or promised as part of an arrangement to transmit any
programming, the station at the time of broadcast shall announce (1) that the
matter is sponsored, either whole or in part; and (2) by whom or on whose
behalf the matter is sponsored. Products or services furnished to the station
in consideration for an identification of any person, product, service,
trademark or brand name shall be identified in this manner.
In the case of any political or controversial issue broadcast for which any
material or service is furnished as an inducement for its transmission, an
announcement shall be made at the beginning and conclusion of the broadcast
stating (1) the material or service that has been furnished; and (2) the
person(s) or association(s) on whose behalf the programming is transmitted.
However, if the broadcast is 5 minutes duration or less, the required
announcement need only be made either at its beginning or end.
Prior to any sponsored broadcast involving political matters or controversial
issues, the station shall obtain a list of the chief executive officers,
members of the executive committee or board of directors of the sponsoring
organization and shall place this list in the station's public inspection file.
<PAGE> 20
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Payola/Plugola
The station, its personnel, or its programmers shall not accept or agree to
accept from any person any money, service, or other valuable consideration for
the broadcast of any matter unless such fact is disclosed to the station so
that all required station identification announcements can be made. All
persons responsible for station programming must, from time to time, execute
such documents as may be required by station management to confirm their
understanding of and compliance with the FCC's sponsorship identification
requirements.
Rebroadcasts
The station shall not rebroadcast the signal of any other broadcast station
without first obtaining such station's prior written consent to such
rebroadcast.
Fairness
Station shall seek to afford coverage to contrasting viewpoints concerning
controversial issues of public importance.
Personal Attacks
The station shall not air attacks upon the honesty, character, integrity or
like personal qualities of any identified person or group. If such an attack
should nonetheless occur during the presentation of views on a controversial
issue of public importance, those responsible for programming shall submit a
tape or transcript of the broadcast to station management and to the person
attacked within 48 hours, and shall offer the person attacked a reasonable
opportunity to respond.
Political Editorials
Unless specifically authorized by station management, the station shall not air
any editorial which either endorses or opposes a legally qualified candidate
for public office.
Political Broadcasting
All "uses" of the station by legally qualified candidates for elective office
shall be in accordance with the Act and the FCC's Rules and policies, including
without limitation, equal opportunities requirements, reasonable access
requirements, lowest unit charge requirements and similar rules and
regulations.
<PAGE> 21
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Obscenity and Indecency
The station shall not broadcast any obscene material. Material is deemed to be
obscene if the average person, applying contemporary community standards in the
local community, would find that the material, taken as a whole, appeals to the
prurient interest; depicts or describes in a patently offensive way sexual
conduct specifically defined by applicable state law; and taken as a whole,
lacks serious literary artistic, political or scientific value.
The station shall not broadcast any indecent material outside of the periods of
time prescribed by the Commission. Material is deemed to be indecent if it
includes language or material that, in context, depicts or describes, in terms
patently offensive as measured by contemporary community standards for the
broadcast medium, sexual or excretory activities or organs.
Billing
No entity which sells advertising for airing on the station shall knowingly
issue any bill, invoice or other document which contains false information
concerning the amount charged or the broadcast of advertising which is the
subject of the bill or invoice. No entity which sells advertising for airing
on the station shall misrepresent the nature or content of aired advertising,
nor the quantity, time of day, or day on which such advertising was broadcast.
Contests
Any contests conducted on the station shall be conducted substantially as
announced or advertised. Advertisements or announcements concerning such
contests shall fully and accurately disclose the contest's material terms. No
contest description shall be false, misleading or deceptive with respect to any
material term.
Hoaxes
The station shall not knowingly broadcast false information concerning a crime
or catastrophe.
Children's Programming
The station shall broadcast reasonable amounts of educational and informational
programming designed for children aged 16 years and younger.
<PAGE> 22
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Children's Advertising
Programming designed for children aged 12 years and younger shall not include
more than 12 minutes of commercial matter per hour, Monday through Friday, and
shall not include more than 10.5 minutes of commercial matter per hour on
weekend programming. There shall be no host selling, as that term is defined
by the FCC, in children's programming on the station.
Emergency Information
Any emergency information which is broadcast by the station shall be
transmitted both aurally and visually or only visually.
Lottery
The station shall not advertise or broadcast any information concerning any
lottery (except the North Carolina State Lottery and any other state lottery).
The station may advertise and provide information about lotteries conducted by
non-profit groups, governmental entities and in certain situations, by
commercial organizations, if and only if there is no state or local restriction
or ban on such advertising or information and the lottery is legal under state
or local law. Any and all lottery advertising must first be approved by
station management.
Advertising
Station shall comply with all federal, state and local laws concerning
advertising, including without limitation, all laws concerning misleading
advertising, and the advertising of alcoholic beverages.
Programming Prohibitions.
Knowing broadcast of the following types of programs and announcements is
prohibited:
False Claims. False or unwarranted claims for any product or service.
Unfair Imitation. Infringements of another advertiser's rights
through plagiarism or unfair imitation of either program idea or copy,
or any other unfair competition.
Commercial Disparagement. Any unfair disparagement of competitors or
competitive goods.
<PAGE> 23
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Profanity. Any programs or announcements that are slanderous,
obscene, profane, vulgar, repulsive or offensive, as evaluated by
station management.
Violence. Any programs which are excessively violent.
Unauthenticated Testimonials. Any testimonials which cannot be
authenticated.
<PAGE> 24
ATTACHMENT III
Payola Statement
<PAGE> 25
FORM OF PAYOLA AFFIDAVIT
City of ________________________ )
)
County of ______________________ ) SS:
)
State of _______________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________, being first duly sworn, deposes and says as follows:
1. He is _____________________ for _____________________.
Position
2. He has acted in the above capacity since ____________.
3. No matter has been broadcast by Station _____ for which service, money
or other valuable consideration has been directly or indirectly paid,
or promised to, or charged, or accepted, by him from any person, which
matter at the time so broadcast has not been announced or otherwise
indicated as paid for or furnished by such person.
4. So far as he is aware, no matter has been broadcast by Station _____
for which service, money, or other valuable consideration has been
directly or indirectly paid, or promised to, or charged, or accepted
by Station ____ or by any independent contractor engaged by Station
_____ in furnishing programs, from any person, which matter at the
time so broadcast has not been announced or otherwise indicated as
paid for or furnished by such person.
5. In future, he will not pay, promise to pay, request, or receive any
service, money, or any other valuable consideration, direct or
indirect, from a third party, in exchange for the influencing of, or
the attempt to influence, the preparation of presentation of broadcast
matter on Station _____.
6. Nothing contained herein is intended to, or shall prohibit receipt or
acceptance of anything with the expressed knowledge and approval of my
employer, but henceforth any such approval must be given in writing by
someone expressly authorized to give such approval.
<PAGE> 26
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7. He, his spouse and his immediate family do___ do not___ have any
present direct or indirect ownership interest in (other than an
investment in a corporation whose stock is publicly held), serve as an
officer or director of, whether with or without compensation, or serve
as an employee of, any person, firm or corporation engaged in:
1. The publishing of music;
2. The production, distribution (including wholesale and retail
sales outlets), manufacture or exploitation of music, films,
tapes, recordings or electrical transcriptions of any program
material intended for radio broadcast use;
3. The exploitation, promotion, or management or persons
rendering artistic, production and/or other services in the
entertainment field;
4. The ownership or operation of one or more radio or television
stations;
5. The wholesale or retail sale of records intended for public
purchase;
6. Advertising on Station _____, or any other station owned by
its licensee (excluding nominal stockholdings in publicly
owned companies).
8. The facts and circumstances relating to such interest are none____ as
follows___:
_______________________________________________________________________
_________________________________________
__________________________________________
Affiant
Subscribed and sworn to before me
this ______ day of _______________, 19___.
__________________________________________
Notary Public
My Commission expires: ___________________.
<PAGE> 1
EXHIBIT 10.05
OPTION AGREEMENT
THIS OPTION AGREEMENT is entered into as of October 31, 1995, by and
among PAXSON COMMUNICATIONS OF RALEIGH- DURHAM-47, INC.,a Florida corporation
(the "Purchaser"), ROBERTS BROADCASTING COMPANY OF RALEIGH-DURHAM, LTD., a
Delaware limited partnership (the "Company"), and ROBERTS BROADCASTING COMPANY
OF NORTH CAROLINA, a Delaware corporation (the "Limited Partner").
WHEREAS, Paxson Communications Corporation ("PCC"), the parent of the
Purchaser and the Company have entered into a Loan Agreement dated as of
October 31, 1995 (the "Loan Agreement"), pursuant to which PCC has agreed to
loan the Company up to $4,000,000 (the "Loan") for the purpose of purchasing
television station WRMY(TV), Rocky Mount, North Carolina (the "Station") and
constructing new facilities for the Station; and
WHEREAS, pursuant to the terms of the Loan Agreement, the Company has
delivered to PCC its Promissory Note in the principal amount of $4,000,000, PCC
and the Company have entered into a Security Agreement dated as of October 31,
1995, and PCC and the Limited Partner have entered into a Pledge Agreement
dated as of October 31, 1995 (the Loan Agreement and such Promissory Note,
Security Agreement and Pledge Agreement are collectively, the "Loan
Documents"); and
WHEREAS, the Loan Agreement provides that the Purchaser, the Limited
Partner and the Company shall enter into this Agreement; and
WHEREAS, the Limited Partner owns all of the limited partner interests
of the Company, and the Company and the Limited Partner desire to grant the
Purchaser an exclusive option to purchase the Limited Partner's entire interest
in the Company at the price and upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants, agreements and conditions hereinafter set forth, the parties,
intending to be legally bound, agree as follows:
ARTICLE 1. DEFINITIONS
As used herein, the following terms shall have the meanings set forth
below, unless the context otherwise requires:
"Agreement" means this Option Agreement, as amended, supplemented, or
modified from time to time.
<PAGE> 2
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"Assets" means collectively all the tangible and intangible assets,
real, personal or mixed, owned or held by the Company and used or useful in the
business or operations of the Station, including personal property, real
property, contracts, intangibles, and all other information relating to the
Station.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 2.3.
"Option Period" has the meaning set forth in Section 2.2.
"Partnership Interest" means the limited partnership interest in the
Company held by Roberts Broadcasting Company of North Carolina.
"Purchase Price" has the meaning set forth in Section 2.4.
All other capitalized terms shall have the meanings set forth in the
Loan Documents unless otherwise defined in this Agreement.
ARTICLE 2. OPTION
2.1 Option. In consideration of the payment by Purchaser
to Limited Partner of One Million Five Hundred Thousand Dollars ($1,500,000)
which payment shall be made simultaneously with the Company's closing on the
acquisition of the Station, the receipt and sufficiency of which are hereby
acknowledged, the Limited Partner hereby grants the Purchaser an irrevocable
and exclusive option (the "Option") to purchase, at the Purchaser's sole
discretion, all of the Limited Partner's interest in the Company as set forth
in the Limited Partnership Agreement of Roberts Broadcasting Company of
Raleigh-Durham, Ltd. attached hereto as Exhibit 1 free and clear of all debts,
liens, encumbrances or other liabilities, subject to the terms and conditions
set forth herein.
2.2 Option Period. The Option shall run for a period
(the "Option Period") commencing on the date of execution of this Agreement and
ending on the seventh anniversary of the Company's acquisition of the Station.
The Purchaser in its sole discretion may exercise the Option at any time during
this period.
2.3 Option Exercise. The Purchaser, in its sole
discretion, may exercise the Option by delivering a written notice of its
election to exercise the Option to the Company and the Limited Partner,
specifying the date of purchase and agreeing to accept and assume all the terms
and
<PAGE> 3
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provisions of the Company's Limited Partnership Agreement. In the event that
the acquisition of the Limited Partner's interest pursuant to the Option
requires the prior consent of the FCC, then the Closing Date for such
acquisition shall be the fifth day following the date of such FCC consent or,
at the option of Purchaser in its sole discretion, the fifth day following the
date on which such FCC consent shall have become a final order no longer
subject to administrative or judicial review, reconsideration or appeal ("Final
Order").
2.4 Purchase Price. The purchase price for the Limited
Partnership's interest shall be: One Thousand Dollars ($1,000).
ARTICLE 3. CLOSING
3.1 Closing. Except as otherwise mutually agreed upon by
the Purchaser and the Limited Partner, the closing of this transaction (the
"Closing") shall take place at 10:00 a.m. on the Closing Date, in the offices
of Dow, Lohnes & Albertson, 1255 Twenty-Third Street, N.W., Washington, D.C.,
or at such other place as the parties hereto may agree.
3.2 Delivery of Certificate and Payment of Purchase
Price. At the Closing, the Limited Partner shall deliver to the Purchaser a
certificate representing the Limited Partner's interests and the Purchaser
shall pay the Purchase Price by wire transfer of immediately available federal
funds to a bank or other financial institution designated by the Limited
Partner.
ARTICLE 4. COVENANTS
4.1 Authorization of Partnership Interests. The Company
and the Limited Partner hereby represent that prior to the date of execution of
this Agreement, they have taken all actions necessary to authorize the
interests currently held by the Limited Partner. The Company and the Limited
Partner further covenant that they shall not amend the Limited Partnership
Agreement of the Company without the prior written consent of the Purchaser,
except as required by this Agreement.
4.2 Limited Partner Transfer Restrictions. From the date
hereof until the earlier of the Closing Date or the end of the Option Period,
the Limited Partner shall not voluntarily transfer (as such term is defined
herein) any of its interests in the Company without the prior written consent
of the Purchaser. For purposes of this Section 4.2, the term "transfer" shall
include any sale, pledge, gift, assignment or other disposition, including a
disposition under judicial order, legal process, execution, attachment or
enforcement of a pledge, trust or other encumbrance.
<PAGE> 4
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4.3 Governmental Licenses and Franchises. The Company
shall not, and the Limited Partner shall not permit the Company to cause or
permit, by any act or failure to act, any of the licenses, permits, or other
authorizations issued to the Company by the FCC or any other governmental
authority (the "Governmental Licenses") to expire or to be surrendered or
modified, or take any action that would cause any governmental authority to
institute proceedings for the suspension, revocation, or adverse modification
of any of the Governmental Licenses, or fail to prosecute with due diligence
any pending applications to any governmental authority in connection with the
construction and operation of the Station, or take any other action within
their control that would result in the Station being in noncompliance with the
requirements of any law, the rules and regulations of any governmental
authority, or the terms of any Governmental License.
4.4 Access to Information. The Limited Partner and the
Company shall give to Purchaser and its counsel, accountants, engineers, and
other authorized representatives access to the Assets, to the officers,
employees, and agents of the Company, and to all books and records relating
thereto, and will furnish or cause to be furnished to Purchaser and its
authorized representatives all information relating to the Assets, the Company
and the Station that they reasonably request at any time during the Option
Period (including any FCC or Copyright Office filings, financial reports and
operations reports produced with respect to the Station).
4.5 Notification. The Limited Partner and the Company
shall give Purchaser prompt written notice of any material change in any of the
information contained in their representations and warranties in this
Agreement.
4.6 Preservation of Business. The Limited Partner shall
use its best efforts to cause the Company to preserve the business and
organization of the Company intact and use their best efforts to keep available
to the Company its employees and to preserve its relationships with suppliers
and 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.
4.7 Confidentiality. Each party hereto shall keep
confidential any information obtained from the other party in connection with
the transactions contemplated by this Agreement, except as and to the extent
required by applicable law and, in the case of Purchaser, as disclosure may be
required in connection with Purchaser's review and financing of this
transaction.
4.8 Cooperation. Purchaser, the Limited Partner, and the
Company 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 obligations under this Agreement, and the parties will
<PAGE> 5
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use their best efforts to consummate the transactions contemplated hereby and
to fulfill their obligations hereunder. No party shall take any action that is
inconsistent with its obligations under this Agreement, that would render any
of its representations or warranties herein untrue or incomplete or that could
hinder or delay the consummation of the transactions contemplated by this
Agreement.
4.9 Representations and Warranties True at Closing. Each
party hereto shall take all actions necessary to make its respective
representations and warranties hereunder true and correct as of the Closing.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF THE LIMITED PARTNER
The Limited Partner hereby represents and warrants to the Purchaser
that:
5.1 Authority; Binding Obligation. The Limited Partner
has all requisite capacity, power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby. This Agreement
constitutes a legal, valid and binding obligation of the Limited Partner,
enforceable in accordance with its terms.
5.2 Title. The Limited Partner is the sole direct owner,
beneficially and of record, of all of the Limited Partner's interests in the
Company, and has good, valid and marketable title to such interests, free and
clear of all liens and other encumbrances other than encumbrances created by
the Loan Documents. There are no outstanding agreements, arrangements,
commitments or understandings of any kind affecting or relating to the Limited
Partner interests of the Company other than as set forth herein and in the Loan
Documents.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6.1 Authority; Binding Obligation. The execution,
delivery and performance of this Agreement and all transactions contemplated
hereby have been and shall be duly and validly authorized by all necessary
action on the part of the Company (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
6.2 Business of the Company. The sole business of the
Company is the acquisition and the operation of the Station, and the Company
has taken, and at Closing will have taken, no actions that are not in
furtherance of the operation of the Station.
<PAGE> 6
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6.3 Organization, Standing, and Authority. The Company
(a) is a limited partnership duly organized, validly existing, and in good
standing under the laws of the State of Delaware and has the requisite power
and authority to (i) own, lease, and use the Company's assets as now and
hereafter owned, leased and used by it, and (ii) conduct its business as now
and hereafter conducted. The Company has delivered to Purchaser true and
complete copies of its Limited Partnership Agreement..
6.4 Absence of Conflicting Agreements. 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): (a)
do not require the consent of any third party; (b) will not conflict with any
provision of the Company's Limited Partnership Agreement; (c) will not conflict
with, result in a breach of, or constitute a default under any applicable law,
judgment, order, ordinance, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; (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, franchise, instrument, license, or
permit to which the Company is a party or by which the Company is bound; and
which (e) will not create any claim, lien, charge, or encumbrance upon any of
the Partnership Interest or Assets.
6.5 Consents. No consent, approval, permit, or
authorization of or declaration to or filing with any governmental or
regulatory authority or any other public or private third party is required (a)
to render this Agreement and the transactions contemplated hereby valid and
effective or (b) to permit this Agreement and the transactions contemplated
hereby to be consummated.
6.6 Claims and Legal Actions. 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 best knowledge of the Company, threatened,
against or relating to the Company, the Limited Partner's interests, the
Assets, or the business of the Company, nor does the Company know or have
reason to be aware of any basis for the same.
6.7 Compliance with Laws. In its operation of the
Station and its ownership and maintenance of the Assets, the Company has
complied and is complying fully with the terms of all Governmental Licenses and
with all laws, rules, regulations, and ordinances, including all trademark,
service mark, trade name, or copyright rules and regulations, all building and
zoning laws, codes, and regulations, all rules and regulations of the Federal
Aviation Administration relating to tower heights, lighting and marking, all
environmental and other land use laws and all laws relating to the
<PAGE> 7
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employment of labor. Neither the ownership nor use of any properties nor the
conduct of its business conflicts with the rights of any other person or
entity.
6.8 Full Disclosure. No representation or warranty made
by 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 shall contain any untrue statement of a material fact, or omits or shall
omit to state any material fact required to make any statement contained herein
or therein not misleading. The Company is not aware of any impending or
contemplated event or occurrence that would cause any of the foregoing
representations not to be true and complete on the date of such event or
occurrence as if made on that date.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
7.1 Authority; Binding Obligation. The Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. On the Closing Date, the Purchaser shall be duly
qualified to conduct its business in the State of North Carolina. The Purchaser
has all requisite corporate power and authority to enter into this Agreement
and to carry out the transactions contemplated hereby. This Agreement
constitutes a legal, valid and binding obligation of the Purchaser, enforceable
in accordance with its terms.
7.2 Financial and Character Qualifications. The
Purchaser has the financial qualifications to make the payments to the Limited
Partner called for in this Agreement.
7.3 Absence of Conflicting Agreements and Required
Consents. The execution, deliver, and performance by Purchaser of this
Agreement and the documents contemplated hereby (with or without the giving of
notice, the lapse of time, or both): (a) do not require the consent of any
third party, (b) will not conflict with the Bylaws or Certificate of
Incorporation of Purchaser, (c) will not conflict with, result in a breach of,
or constitute a default under, any applicable law, judgment, order, ordinance,
injunction, decree, rule, regulation, or ruling of any court or 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 Purchaser is a party
or by which Purchaser may be bound, such that Purchaser could not acquire the
Partnership Interest.
ARTICLE 8. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATION TO CLOSE
<PAGE> 8
- 8 -
The obligations of the Purchaser to purchase the Limited Partner's
interests and pay the Purchase Price to the Limited Partner are subject to the
satisfaction at or prior to Closing of each of the following conditions:
8.1 Representations, Warranties and Covenants. The
representations and warranties of the Company and the Limited Partner made
herein and in the Loan Documents shall have been true and correct when made and
shall be true and correct on the date of Closing as though such representations
and warranties were made on and as of such date, except for changes in the
ordinary course of business or of which Purchaser has received notice; and the
Company and the Limited Partner shall have performed and complied with all
covenants and agreements required to be performed or complied with by the
Company and the Limited Partner prior to Closing.
8.2 No Breach or Default. There shall be no existing
default under, or breach by the Company or the Limited Partner of, this
Agreement or the Loan Documents.
8.3 Governmental Licenses. The Company shall be the
holder of all Governmental Licenses, and there shall not have been any
modification of any of the Governmental Licenses that could have an adverse
effect on the conduct of the business and operations of the Station. No
proceeding shall be pending the effect of which would be revoke, cancel, fail
to renew, suspend or modify adversely any of the Governmental Licenses.
8.4 FCC Consent. If required, the FCC shall have
consented to the Purchaser's acquisition of the Limited Partner's interests
and, at the option of the Purchaser, such consent shall have become a Final
Order.
ARTICLE 9. CONDITIONS PRECEDENT TO THE LIMITED PARTNER'S OBLIGATION TO CLOSE
The obligation of the Limited Partner to sell its partnership interest
in the Company to the Purchaser is subject to the satisfaction at or prior to
Closing of each of the following conditions:
9.1 Representations and Warranties. The representations
and warranties of the Purchaser made herein and in the Loan Documents shall be
true and correct on the date of Closing as though such representations and
warranties were made as of such date; and the Purchaser shall have performed
and complied with all covenants and agreements required to be performed or
complied with by the Purchaser prior to Closing.
<PAGE> 9
- 9 -
9.2 Payment of Purchase Price. The Purchaser shall be
ready, willing and able to deliver the Purchase Price pursuant to Section 3.3.
9.3 FCC Consent. If required, the FCC shall have
consented to the Purchaser's acquisition of the Limited Partner's interests.
ARTICLE 10. TERMINATION
This Agreement may be terminated by the Purchaser without liability,
if the Purchaser is not then in material
default, upon written notice to the other parties, upon the occurrence of any
of the following:
(a) Conditions. If on the Closing Date any of
the conditions precedent to the obligations of the Purchaser set forth in this
Agreement have not been satisfied or waived in writing by the terminating
party;
(b) Judgments. If there shall be in effect on
the Closing Date any judgment, decree, or order that would prevent or make
unlawful the Closing of this Agreement; or
(c) Expiration of Option. The Option has not
been exercised before the end of the Option Period.
ARTICLE 11. INDEMNIFICATION
11.1 Indemnification By the Limited Partner and the
Company. The Limited Partner and the Company shall, jointly and severally,
indemnify, defend and hold harmless the Purchaser and its officers, directors,
agents, employees and shareholders from and against any and all demands,
claims, complaints, actions or causes of action, suits, proceedings,
investigations, arbitrations, assessments, losses, damages, liabilities, costs
and expenses, including, but not limited to, interest, penalties and attorneys'
fees and disbursements (collectively, "Damages"), asserted against, imposed
upon or incurred by the Purchaser, or its officers, directors, agents,
employees or shareholders, directly or indirectly, by reason of or resulting
from (a) any breach of the representations and warranties of the Limited
Partner or the Company contained in or made in connection with this Agreement;
or (b) any noncompliance by the Limited Partner or the Company with any
covenants, agreements or undertakings of the Limited Partner or the Company
contained in or made in connection with this Agreement. In the event of any
indemnification of the Purchaser pursuant to this Section 11.1, the Purchaser
shall be entitled, in addition to its rights and remedies pursuant to this
Agreement, or otherwise at law or in equity, to deduct the amount of such
<PAGE> 10
- 10 -
indemnification from any payment otherwise due to the Limited Partner in
connection with the transactions contemplated hereunder or hereby.
11.2 Indemnification By the Purchaser. The Purchaser
shall indemnify, defend and hold harmless the Limited Partner and the Company
and its partners, agents and employees from and against any Damages asserted
against, imposed upon or incurred by the Limited Partner or the Company,
directly or indirectly, by reason of or resulting from (a) any breach of the
representations and warranties of the Purchaser contained in or made in
connection with this Agreement; or (b) any noncompliance by the Purchaser with
any covenants, agreements or undertakings of the Purchaser contained in or made
in connection with this Agreement.
11.3 Conditions of Indemnification. The obligations and
liabilities of the parties hereunder with respect to their indemnities pursuant
to this Article 11, resulting from any claim or other assertion of liability by
third parties (collectively, "Claims"), shall be subject to the following terms
and conditions:
(a) The party seeking indemnification (the
"Indemnified Party") must give the other party or parties, as the case may be
(the "Indemnifying Party"), notice of any such Claim promptly after the
Indemnified Party receives notice thereof.
(b) The Indemnifying Party shall have the right
to undertake, by counsel or other representatives of its own choosing, the
defense of such claim.
(c) In the event that the Indemnifying Party
shall elect not to undertake such defense, or within a reasonable time after
notice of any such Claim from the Indemnified Party shall fail to defend, the
Indemnified Party (upon further written notice to the Indemnifying Party) shall
have the right to undertake the defense, compromise or settlement of such
Claim, by counsel or other representatives of its own choosing, on behalf of
and for the account and risk of the Indemnifying Party (subject to the right of
the Indemnifying Party to assume defense of such Claim at any time prior to
settlement, compromise or final determination thereof).
(d) Anything in this Article 11 to the contrary
notwithstanding, (i) if there is a reasonable probability that a Claim may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise
or settlement of the Claim, (ii) the Indemnifying Party shall not, without the
Indemnified Party's written consent, settle or compromise any Claim or consent
to entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified Party of
a release from all liability in respect of such Claim, and (iii) in the event
that the Indemnifying Party
<PAGE> 11
- 11 -
undertakes defense of any Claim, the Indemnified Party, by counsel or other
representative of its own choosing and at its sole cost and expense, shall have
the right to consult with the Indemnifying Party and its counsel or other
representatives concerning such Claim and the Indemnifying Party and the
Indemnified Party and their respective counsel or other representatives shall
cooperate with respect to such claim.
ARTICLE 12. CERTAIN REMEDIES
12.1 Specific Performance. The Limited Partner and the
Company recognize that if either of them refuses to perform under the
provisions of this Agreement, monetary damages alone would not be adequate to
compensate Purchaser. Purchaser 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
to enforce this Agreement, the Limited Partner and the Company agree to waive
the defense that there is an adequate remedy at law.
12.2 Attorney's Fees. In the event of an alleged default
by any party which results in the filing of a lawsuit for damages, specific
performance, or other remedy, the prevailing party shall be entitled to
reimbursement by the other party of reasonable legal fees and expenses incurred
by the prevailing party.
ARTICLE 13. MISCELLANEOUS
13.1 Additional Actions and Documents. Each of the
parties hereto hereby agrees to take or cause to be taken such further actions,
to execute, deliver and file or cause to be executed, delivered and filed such
further documents and instruments, and to obtain such consents, as may be
necessary or as may be reasonably requested in order to fully effectuate the
purposes, terms and conditions of this Agreement.
13.2 Expenses. Each party shall pay such party's expenses
incident to this Agreement and the transactions contemplated hereunder,
including all legal and accounting fees and disbursements.
13.3 Notices. All notices, requests, demands or other
communications which may be or are required to be given, served or sent by any
party to any other party pursuant to this Agreement shall be in writing and
shall be (a) hand delivered, (b) mailed by first class, registered or certified
mail, return receipt requested, postage prepaid, or (c) delivered by an
overnight commercial courier service such as Federal Express, in each case
addressed as follows:
<PAGE> 12
- 12 -
(i) If to the Company or the Limited Partner:
Roberts Broadcasting Company of
Raleigh-Durham, Ltd.
1408 N. Kings Highway
Suite 300
St. Louis, Missouri 63113
(ii) If to the Purchaser:
Paxson Communications of
Raleigh-Durham-47, Inc.
601 Clearwater Park Road
West Palm Beach, Florida 33401
13.4 Each party may designate by notice in writing a new
address to which any notice, demand, request or communication may thereafter be
so given, served or sent. Each notice, demand, request or communication which
shall be mailed or delivered in the manner described above shall be deemed
sufficiently given, served, sent and received for all purposes at such time as
it is delivered to the addressee (with the return receipt, the delivery receipt
or the affidavit of messenger being deemed conclusive evidence of such
delivery) or at such time as delivery is refused by the addressee upon
presentation.
13.5 Assignment. This Agreement shall not be assignable
by the Limited Partner or the Company without prior written consent of the
Purchaser. This Agreement shall be assignable by the Purchaser to a
wholly-owned subsidiary of the Purchaser or to any other person who is able to
demonstrate its financial and other qualifications to perform the Purchaser's
obligations hereunder.
13.6 Amendment. No amendment, modification or discharge
of this Agreement, and no waiver hereunder, shall be valid or binding unless
set forth in writing and duly executed by the party against whom enforcement of
the amendment, modification, discharge or waiver is sought.
13.7 Headings. Article and section headings contained in
this Agreement are inserted for convenience of reference only, shall not be
deemed to be a part of this Agreement for any purpose, and shall not in any way
define or affect the meaning, construction or scope of any of the provisions
hereof.
<PAGE> 13
- 13 -
13.8 Binding Effect. Subject to any provision hereof
restricting assignment, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
13.9 Governing Law. This Agreement, the rights and
obligations of the parties hereto, and any claims or disputes relating
thereto, shall be governed by and construed in accordance with the laws of the
State of Florida (excluding the choice-of-law rules thereof), and exclusive
venue and jurisdiction shall be in the state or federal district court for the
district including Palm Beach, Florida.
13.10 Execution in Counterparts. This Agreement may be
executed in two or more counterparts, none of which need contain the signatures
of all parties hereto and each of which shall be deemed an original.
13.11 Survival of Representations. The representations,
warranties, covenants and agreements made by the parties in this Agreement and
in any document or instrument delivered in connection herewith or the
transaction contemplated hereby, shall survive without limitation except as
imposed by law.
13.12 Attorneys' Fees. If any litigation should arise
among the parties in connection with the transactions contemplated by this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees in addition to all other damages and remedies.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 14
IN WITNESS WHEREOF, each of the undersigned has duly executed this
Agreement, or has caused this Agreement to be duly executed on its behalf, on
the day and year first hereinabove set forth.
COMPANY:
WITNESS: ROBERTS BROADCASTING COMPANY OF
RALEIGH-DURHAM, LTD.
By: Roberts Broadcasting, L.L.C., as
general partner .
By:
- --------------------------- ---------------------------------------
Name:
Title:
LIMITED PARTNER:
WITNESS: ROBERTS BROADCASTING COMPANY
OF NORTH CAROLINA
By:
- --------------------------- ---------------------------------------
Name:
Title:
PURCHASER:
WITNESS: PAXSON COMMUNICATIONS OF
RALEIGH-DURHAM-47, INC.
By:
- --------------------------- ---------------------------------------
Name:
Title
<PAGE> 15
Roberts Broadcasting, LLC hereby GENERAL PARTNER:
consents to the transfer of the
Limited Partnership interests of ROBERTS BROADCASTING, LLC
Roberts Broadcasting Company of
North Carolina, to Paxson
Communications of Raleigh-Durham-47,
Inc. pursuant to this Agreement. By:
---------------------------------------
<PAGE> 16
EXHIBIT 1
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0
48,621,312
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